Justia Department Of Health And Human Services Centers For Medicare & Medicaid Services Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and Proposed Policy Changes and Fiscal Year 2019 Rates; Proposed Quality Reporting Requirements for Specific Providers; Proposed Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs (Promoting Interoperability Programs) Requirements for Eligible Hospitals, Critical Access Hospitals, and Eligible Professionals; Medicare Cost Reporting Requirements; and Physician Certification and Recertification of Claims, 20164-20643 [2018-08705]

Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and Proposed Policy Changes and Fiscal Year 2019 Rates; Proposed Quality Reporting Requirements for Specific Providers; Proposed Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs (Promoting Interoperability Programs) Requirements for Eligible Hospitals, Critical Access Hospitals, and Eligible Professionals; Medicare Cost Reporting Requirements; and Physician Certification and Recertification of Claims, 20164-20643 [2018-08705]

Download as PDF 20164 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services 42 CFR Parts 412, 413, 424, and 495 [CMS–1694–P] RIN 0938–AT27 Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and Proposed Policy Changes and Fiscal Year 2019 Rates; Proposed Quality Reporting Requirements for Specific Providers; Proposed Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs (Promoting Interoperability Programs) Requirements for Eligible Hospitals, Critical Access Hospitals, and Eligible Professionals; Medicare Cost Reporting Requirements; and Physician Certification and Recertification of Claims Centers for Medicare & Medicaid Services (CMS), HHS. ACTION: Proposed rule. AGENCY: We are proposing to revise the Medicare hospital inpatient prospective payment systems (IPPS) for operating and capital-related costs of acute care hospitals to implement changes arising from our continuing experience with these systems for FY 2019. Some of these proposed changes implement certain statutory provisions contained in the 21st Century Cures Act and the Bipartisan Budget Act of 2018, and other legislation. We also are proposing to make changes relating to Medicare graduate medical education (GME) affiliation agreements for new urban teaching hospitals. In addition, we are proposing to provide the market basket update that would apply to the rate-of-increase limits for certain hospitals excluded from the IPPS that are paid on a reasonable cost basis subject to these limits for FY 2019. We are proposing to update the payment policies and the annual payment rates for the Medicare prospective payment system (PPS) for inpatient hospital services provided by long-term care hospitals (LTCHs) for FY 2019. In addition, we are proposing to establish new requirements or revise existing requirements for quality reporting by specific Medicare providers (acute care hospitals, PPS-exempt cancer hospitals, and LTCHs). We also are proposing to establish new daltland on DSKBBV9HB2PROD with PROPOSALS2 SUMMARY: VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 requirements or revise existing requirements for eligible professionals (EPs), eligible hospitals, and critical access hospitals (CAHs) participating in the Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs (now referred to as the Promoting Interoperability Programs). In addition, we are proposing changes to the requirements that apply to States operating Medicaid Promoting Interoperability Prrograms. We are proposing to update policies for the Hospital Value-Based Purchasing (VBP) Program, the Hospital Readmissions Reduction Program, and the HospitalAcquired Condition (HAC) Reduction Program. We also are proposing to make changes relating to the required supporting documentation for an acceptable Medicare cost report submission and the supporting information for physician certification and recertification of claims. DATES: Comment Period: To be assured consideration, comments must be received at one of the addresses provided in the ADDRESSES section, no later than 5 p.m. on June 25, 2018. ADDRESSES: In commenting, please refer to file code CMS–1694–P. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission. Comments, including mass comment submissions, must be submitted in one of the following three ways (please choose only one of the ways listed): 1. Electronically. You may submit electronic comments on this regulation to https://www.regulations.gov. Follow the ‘‘Submit a comment’’ instructions. 2. By regular mail. You may mail written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS–1694–P, P.O. Box 8011, Baltimore, MD 21244–1850. Please allow sufficient time for mailed comments to be received before the close of the comment period. 3. By express or overnight mail. You may send written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS–1694–P, Mail Stop C4–26–05, 7500 Security Boulevard, Baltimore, MD 21244–1850. For information on viewing public comments, we refer readers to the beginning of the SUPPLEMENTARY INFORMATION section. FOR FURTHER INFORMATION CONTACT: Donald Thompson, (410) 786–4487, and Michele Hudson, (410) 786–4487, PO 00000 Frm 00002 Fmt 4701 Sfmt 4702 Operating Prospective Payment, MS– DRGs, Wage Index, New Medical Service and Technology Add-On Payments, Hospital Geographic Reclassifications, Graduate Medical Education, Capital Prospective Payment, Excluded Hospitals, Sole Community Hospitals, Medicare Disproportionate Share Hospital (DSH) Payment Adjustment, Medicare-Dependent Small Rural Hospital (MDH) Program, and Low-Volume Hospital Payment Adjustment Issues. Michele Hudson, (410) 786–4487, Mark Luxton, (410) 786–4530, and Emily Lipkin, (410) 786–3633, Long-Term Care Hospital Prospective Payment System and MS–LTC–DRG Relative Weights Issues. Siddhartha Mazumdar, (410) 786– 6673, Rural Community Hospital Demonstration Program Issues. Jeris Smith, (410) 786–0110, Frontier Community Health Integration Project Demonstration Issues. Cindy Tourison, (410) 786–1093, Hospital Readmissions Reduction Program—Readmission Measures for Hospitals Issues. James Poyer, (410) 786–2261, Hospital Readmissions Reduction Program— Administration Issues. Elizabeth Bainger, (410) 786–0529, Hospital-Acquired Condition Reduction Program Issues. Joseph Clift, (410) 786–4165, Hospital-Acquired Condition Reduction Program—Measures Issues. Grace Snyder, (410) 786–0700 and James Poyer, (410) 786–2261, Hospital Inpatient Quality Reporting and Hospital Value-Based Purchasing— Program Administration, Validation, and Reconsideration Issues. Reena Duseja, (410) 786–1999 and Cindy Tourison, (410) 786–1093, Hospital Inpatient Quality Reporting— Measures Issues Except Hospital Consumer Assessment of Healthcare Providers and Systems Issues; and Readmission Measures for Hospitals Issues. Kim Spalding Bush, (410) 786–3232, Hospital Value-Based Purchasing Efficiency Measures Issues. Elizabeth Goldstein, (410) 786–6665, Hospital Inpatient Quality Reporting— Hospital Consumer Assessment of Healthcare Providers and Systems Measures Issues. Joel Andress, (410) 786–5237 and Caitlin Cromer, (410) 786–3106, PPSExempt Cancer Hospital Quality Reporting Issues. Mary Pratt, (410) 786–6867, LongTerm Care Hospital Quality Data Reporting Issues. E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules Elizabeth Holland, (410) 786-1309, Promoting Interoperability Programs Clinical Quality Measure Related Issues. Kathleen Johnson, (410) 786–3295 and Steven Johnson (410) 786–3332, Promoting Interoperability Programs Nonclinical Quality Measure Related Issues. Kellie Shannon, (410) 786–0416, Acceptable Medicare Cost Report Submissions Issues. Thomas Kessler, (410) 786–1991, Physician Certification and Recertification of Claims. SUPPLEMENTARY INFORMATION: Inspection of Public Comments: All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following website as soon as possible after they have been received: https:// www.regulations.gov. Follow the search instructions on that website to view public comments. daltland on DSKBBV9HB2PROD with PROPOSALS2 Electronic Access This Federal Register document is available from the Federal Register online database through Federal Digital System (FDsys), a service of the U.S. Government Printing Office. This database can be accessed via the Internet at: https://www.gpo.gov/fdsys. Tables Available Only Through the Internet on the CMS Website In the past, a majority of the tables referred to throughout this preamble and in the Addendum to the proposed rule and the final rule were published in the Federal Register as part of the annual proposed and final rules. However, beginning in FY 2012, the majority of the IPPS tables and LTCH PPS tables are no longer published in the Federal Register. Instead, these tables generally will be available only through the Internet. The IPPS tables for this proposed rule are available through the Internet on the CMS website at: https://www.cms.hhs.gov/Medicare/ Medicare-Fee-for-Service-Payment/ AcuteInpatientPPS/. Click on the link on the left side of the screen titled, ‘‘FY 2019 IPPS Proposed Rule Home Page’’ or ‘‘Acute Inpatient—Files for Download’’. The LTCH PPS tables for this FY 2019 proposed rule are available through the Internet on the CMS website at: https://www.cms.gov/ Medicare/Medicare-Fee-for-ServicePayment/LongTermCareHospitalPPS/ index.html under the list item for Regulation Number CMS–1694–P. For VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 further details on the contents of the tables referenced in this proposed rule, we refer readers to section VI. of the Addendum to this proposed rule. Readers who experience any problems accessing any of the tables that are posted on the CMS websites identified above should contact Michael Treitel at (410) 786–4552. Table of Contents I. Executive Summary and Background A. Executive Summary B. Background Summary C. Summary of Provisions of Recent Legislation Proposed To Be Implemented in This Proposed Rule D. Summary of Provisions of This Proposed Rule II. Proposed Changes to Medicare Severity Diagnosis-Related Group (MS–DRG) Classifications and Relative Weights A. Background B. MS–DRG Reclassifications C. Adoption of the MS–DRGs in FY 2008 D. Proposed FY 2019 MS–DRG Documentation and Coding Adjustment E. Refinement of the MS–DRG Relative Weight Calculation F. Proposed Changes to Specific MS–DRG Classifications G. Recalibration of the Proposed FY 2019 MS–DRG Relative Weights H. Proposed Add-On Payments for New Services and Technologies for FY 2019 III. Proposed Changes to the Hospital Wage Index for Acute Care Hospitals A. Background B. Worksheet S–3 Wage Data for the Proposed FY 2019 Wage Index C. Verification of Worksheet S–3 Wage Data D. Method for Computing the Proposed FY 2019 Unadjusted Wage Index E. Proposed Occupational Mix Adjustment to the FY 2019 Wage Index F. Analysis and Implementation of the Proposed Occupational Mix Adjustment and the Proposed FY 2019 Occupational Mix Adjusted Wage Index G. Proposed Application of the Rural, Imputed, and Frontier Floors H. Proposed FY 2019 Wage Index Tables I. Proposed Revisions to the Wage Index Based on Hospital Redesignations and Reclassifications J. Proposed Out-Migration Adjustment Based on Commuting Patterns of Hospital Employees K. Reclassification From Urban to Rural Under Section 1886(d)(8)(E) of the Act Implemented at 42 CFR 412.103 and Proposed Change to Lock-In Date L. Process for Requests for Wage Index Data Corrections M. Proposed Labor-Related Share for the Proposed FY 2019 Wage Index N. Request for Public Comments on Wage Index Disparities IV. Other Decisions and Proposed Changes to the IPPS for Operating System A. Proposed Changes to MS–DRGs Subject to Postacute Care Transfer Policy and MS-DRG Special Payment Policies (§ 412.4) PO 00000 Frm 00003 Fmt 4701 Sfmt 4702 20165 B. Proposed Changes in the Inpatient Hospital Updates for FY 2019 (§ 412.64(d)) C. Rural Referral Centers (RRCs) Proposed Annual Updates to Case-Mix Index and Discharge Criteria (§ 412.96) D. Proposed Payment Adjustment for LowVolume Hospitals (§ 412.101) E. Indirect Medical Education (IME) Payment Adjustment Factor (§ 412.105) F. Proposed Payment Adjustment for Medicare Disproportionate Share Hospitals (DSHs) for FY 2019 (§ 412.106) G. Sole Community Hospitals (SCHs) and Medicare-Dependent, Small Rural Hospitals (MDHs) (§§ 412.90, 412.92, and 412.108) H. Hospital Readmissions Reduction Program: Proposed Updates and Changes (§§ 412.150 Through 412.154) I. Hospital Value-Based Purchasing (VBP) Program: Proposed Policy Changes J. Hospital-Acquired Condition (HAC) Reduction Program K. Payments for Indirect and Direct Graduate Medical Education Costs (§§ 412.105 and 413.75 Through 413.83) L. Rural Community Hospital Demonstration Program M. Proposed Revision of Hospital Inpatient Admission Orders Documentation Requirements Under Medicare Part A V. Proposed Changes to the IPPS for CapitalRelated Costs A. Overview B. Additional Provisions C. Proposed Annual Update for FY 2019 VI. Proposed Changes for Hospitals Excluded From the IPPS A. Proposed Rate-of-Increase in Payments to Excluded Hospitals for FY 2019 B. Proposed Changes to Regulations Governing Satellite Facilities C. Proposed Changes to Regulations Governing Excluded Units of Hospitals D. Critical Access Hospitals (CAHs) VII. Proposed Changes to the Long-Term Care Hospital Prospective Payment System (LTCH PPS) for FY 2019 A. Background of the LTCH PPS B. Proposed Medicare Severity Long-Term Care Diagnosis-Related Group (MS–LTC– DRG) Classifications and Relative Weights for FY 2019 C. Proposed Modifications to the Application of the Site Neutral Payment Rate (§ 412.522) D. Proposed Changes to the LTCH PPS Payment Rates and Other Proposed Changes to the LTCH PPS for FY 2019 E. Proposed Elimination of the ‘‘25-Percent Threshold Policy’’ Adjustment (§ 412.538) VIII. Quality Data Reporting Requirements for Specific Providers and Suppliers A. Hospital Inpatient Quality Reporting (IQR) Program B. PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program C. Long-Term Care Hospital Quality Reporting Program (LTCH QRP) D. Proposed Changes to the Medicare and Medicaid EHR Incentive Programs (Now Referred to as the Medicare and Medicaid Promoting Interoperability Programs) E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20166 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules IX. Proposed Revisions of the Supporting Documentation Required for Submission of an Acceptable Medicare Cost Report X. Requirements for Hospitals To Make Public a List of Their Standard Charges via the Internet XI. Proposed Revisions Regarding Physician Certification and Recertification of Claims XII. Request for Information on Promoting Interoperability and Electronic Healthcare Information Exchange Through Possible Revisions to the CMS Patient Health and Safety Requirements for Hospitals and Other Medicare- and Medicaid-Participating Providers and Suppliers XIII. MedPAC Recommendations XIV. Other Required Information A. Publicly Available Data B. Collection of Information Requirements C. Response to Public Comments Regulation Text Addendum—Proposed Schedule of Proposed Standardized Amounts, Update Factors, Rate-of-Increase Percentages Effective With Cost Reporting Periods Beginning on or After October 1, 2018, and Payment Rates for LTCHs Effective for Discharges Occurring on or After October 1, 2018 I. Summary and Background II. Proposed Changes to the Prospective Payment Rates for Hospital Inpatient Operating Costs for Acute Care Hospitals for FY 2019 A. Calculation of the Adjusted Standardized Amount B. Proposed Adjustments for Area Wage Levels and Cost-of-Living C. Calculation of the Prospective Payment Rates III. Proposed Changes to Payment Rates for Acute Care Hospital Inpatient Capital-Related Costs for FY 2019 A. Determination of Federal Hospital Inpatient Capital-Related Prospective Payment Rate Update for FY 2019 B. Calculation of the Inpatient Capital-Related Prospective Payments for FY 2019 C. Capital Input Price Index IV. Proposed Changes to Payment Rates for Excluded Hospitals: Rate-of-Increase Percentages for FY 2019 V. Proposed Changes to the Payment Rates for the LTCH PPS for FY 2019 A. Proposed LTCH PPS Standard Federal Payment Rate for FY 2019 B. Proposed Adjustment for Area Wage Levels Under the LTCH PPS for FY 2019 C. Proposed LTCH PPS Cost-of-Living Adjustment (COLA) for LTCHs Located in Alaska and Hawaii D. Proposed Adjustment for LTCH PPS High-Cost Outlier (HCO) Cases E. Proposed Update to the IPPS Comparable/Equivalent Amounts To Reflect the Statutory Changes to the IPPS DSH Payment Adjustment Methodology F. Computing the Proposed Adjusted LTCH PPS Federal Prospective Payments for FY 2019 VI. Tables Referenced in This Proposed Rule Generally Available Only Through the Internet on the CMS Website VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Appendix A—Economic Analyses I. Regulatory Impact Analysis A. Statement of Need B. Overall Impact C. Objectives of the IPPS and the LTCH PPS D. Limitations of Our Analysis E. Hospitals Included in and Excluded From the IPPS F. Effects on Hospitals and Hospital Units Excluded From the IPPS G. Quantitative Effects of the Proposed Policy Changes Under the IPPS for Operating Costs H. Effects of Other Proposed Policy Changes I. Effects of Proposed Changes in the Capital IPPS J. Effects of Proposed Payment Rate Changes and Policy Changes Under the LTCH PPS K. Effects of Proposed Requirements for Hospital Inpatient Quality Reporting (IQR) Program L. Effects of Proposed Requirements for the PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program M. Effects of Proposed Requirements for the Long-Term Care Hospital Quality Reporting Program (LTCH QRP) N. Effects of Proposed Requirements Regarding the Promoting Interoperability Programs O. Alternatives Considered P. Reducing Regulation and Controlling Regulatory Costs Q. Overall Conclusion R. Regulatory Review Costs II. Accounting Statements and Tables A. Acute Care Hospitals B. LTCHs III. Regulatory Flexibility Act (RFA) Analysis IV. Impact on Small Rural Hospitals V. Unfunded Mandate Reform Act (UMRA) Analysis VI. Executive Order 13175 VII. Executive Order 12866 Appendix B—Recommendation of Update Factors for Operating Cost Rates of Payment for Inpatient Hospital Services I. Background II. Inpatient Hospital Update for FY 2019 A. Proposed FY 2019 Inpatient Hospital Update B. Proposed Update for SCHs and MDHs for FY 2019 C. Proposed FY 2019 Puerto Rico Hospital Update D. Proposed Update for Hospitals Excluded From the IPPS for FY 2019 E. Proposed Update for LTCHs for FY 2019 III. Secretary’s Recommendation IV. MedPAC Recommendation for Assessing Payment Adequacy and Updating Payments in Traditional Medicare I. Executive Summary and Background A. Executive Summary 1. Purpose and Legal Authority This proposed rule would make payment and policy changes under the Medicare inpatient prospective payment systems (IPPS) for operating and capital-related costs of acute care PO 00000 Frm 00004 Fmt 4701 Sfmt 4702 hospitals as well as for certain hospitals and hospital units excluded from the IPPS. In addition, it would make payment and policy changes for inpatient hospital services provided by long-term care hospitals (LTCHs) under the long-term care hospital prospective payment system (LTCH PPS). This proposed rule also would make policy changes to programs associated with Medicare IPPS hospitals, IPPS-excluded hospitals, and LTCHs. We are proposing to establish new requirements and revise existing requirements for quality reporting by specific providers (acute care hospitals, PPS-exempt cancer hospitals, and LTCHs) that are participating in Medicare. We also are proposing to establish new requirements and revise existing requirements for eligible professionals (EPs), eligible hospitals, and CAHs participating in the Medicare and Medicaid Promoting Interoperability Programs. We are proposing to update policies for the Hospital Value-Based Purchasing (VBP) Program, the Hospital Readmissions Reduction Program, and the HospitalAcquired Condition (HAC) Reduction Program. We also are proposing to make changes relating to the supporting documentation required for an acceptable Medicare cost report submission and the supporting information for physician certification and recertification of claims. Under various statutory authorities, we are proposing to make changes to the Medicare IPPS, to the LTCH PPS, and to other related payment methodologies and programs for FY 2019 and subsequent fiscal years. These statutory authorities include, but are not limited to, the following: • Section 1886(d) of the Social Security Act (the Act), which sets forth a system of payment for the operating costs of acute care hospital inpatient stays under Medicare Part A (Hospital Insurance) based on prospectively set rates. Section 1886(g) of the Act requires that, instead of paying for capital-related costs of inpatient hospital services on a reasonable cost basis, the Secretary use a prospective payment system (PPS). • Section 1886(d)(1)(B) of the Act, which specifies that certain hospitals and hospital units are excluded from the IPPS. These hospitals and units are: Rehabilitation hospitals and units; LTCHs; psychiatric hospitals and units; children’s hospitals; cancer hospitals; extended neoplastic disease care hospitals, and hospitals located outside the 50 States, the District of Columbia, and Puerto Rico (that is, hospitals located in the U.S. Virgin Islands, E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules Guam, the Northern Mariana Islands, and American Samoa). Religious nonmedical health care institutions (RNHCIs) are also excluded from the IPPS. • Sections 123(a) and (c) of the BBRA (Pub. L. 106-113) and section 307(b)(1) of the BIPA (Pub. L. 106-554) (as codified under section 1886(m)(1) of the Act), which provide for the development and implementation of a prospective payment system for payment for inpatient hospital services of LTCHs described in section 1886(d)(1)(B)(iv) of the Act. • Sections 1814(l), 1820, and 1834(g) of the Act, which specify that payments are made to critical access hospitals (CAHs) (that is, rural hospitals or facilities that meet certain statutory requirements) for inpatient and outpatient services and that these payments are generally based on 101 percent of reasonable cost. • Section 1866(k) of the Act, as added by section 3005 of the Affordable Care Act, which establishes a quality reporting program for hospitals described in section 1886(d)(1)(B)(v) of the Act, referred to as ‘‘PPS-exempt cancer hospitals.’’ • Section 1886(a)(4) of the Act, which specifies that costs of approved educational activities are excluded from the operating costs of inpatient hospital services. Hospitals with approved graduate medical education (GME) programs are paid for the direct costs of GME in accordance with section 1886(h) of the Act. • Section 1886(b)(3)(B)(viii) of the Act, which requires the Secretary to reduce the applicable percentage increase that would otherwise apply to the standardized amount applicable to a subsection (d) hospital for discharges occurring in a fiscal year if the hospital does not submit data on measures in a form and manner, and at a time, specified by the Secretary. • Section 1886(o) of the Act, which requires the Secretary to establish a Hospital Value-Based Purchasing (VBP) Program under which value-based incentive payments are made in a fiscal year to hospitals meeting performance standards established for a performance period for such fiscal year. • Section 1886(p) of the Act, as added by section 3008 of the Affordable Care Act, which establishes a HospitalAcquired Condition (HAC) Reduction Program, under which payments to applicable hospitals are adjusted to provide an incentive to reduce hospitalacquired conditions. • Section 1886(q) of the Act, as added by section 3025 of the Affordable Care Act and amended by section 10309 of VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 the Affordable Care Act and section 15002 of the 21st Century Cures Act, which establishes the ‘‘Hospital Readmissions Reduction Program.’’ Under the program, payments for discharges from an ‘‘applicable hospital’’ under section 1886(d) of the Act will be reduced to account for certain excess readmissions. Section 15002 of the 21st Century Cures Act requires the Secretary to compare cohorts of hospitals to each other in determining the extent of excess readmissions. • Section 1886(r) of the Act, as added by section 3133 of the Affordable Care Act, which provides for a reduction to disproportionate share hospital (DSH) payments under section 1886(d)(5)(F) of the Act and for a new uncompensated care payment to eligible hospitals. Specifically, section 1886(r) of the Act requires that, for fiscal year 2014 and each subsequent fiscal year, subsection (d) hospitals that would otherwise receive a DSH payment made under section 1886(d)(5)(F) of the Act will receive two separate payments: (1) 25 percent of the amount they previously would have received under section 1886(d)(5)(F) of the Act for DSH (‘‘the empirically justified amount’’), and (2) an additional payment for the DSH hospital’s proportion of uncompensated care, determined as the product of three factors. These three factors are: (1) 75 percent of the payments that would otherwise be made under section 1886(d)(5)(F) of the Act; (2) 1 minus the percent change in the percent of individuals who are uninsured (minus 0.2 percentage point for FY 2018 through FY 2019); and (3) a hospital’s uncompensated care amount relative to the uncompensated care amount of all DSH hospitals expressed as a percentage. • Section 1886(m)(6) of the Act, as added by section 1206(c) of the Pathway for Sustainable Growth Rate (SGR) Reform Act of 2013 (Pub. L. 113–67) and amended by section 51005(a) of the Bipartisan Budget Act of 2018 (Pub. L. 115–123), which provided for the establishment of site neutral payment rate criteria under the LTCH PPS with implementation beginning in FY 2016, and provides for a 4-year transitional blended payment rate for discharges occurring in LTCH cost reporting periods beginning in FYs 2016 through 2019. Section 51005(b) of the Bipartisan Budget Act of 2018 amended section 1886(m)(6)(B)(ii) by adding new clause (iv), which specifies that the IPPS comparable amount defined in subclause (I) shall be reduced by 4.6 percent for FYs 2018 through 2026. PO 00000 Frm 00005 Fmt 4701 Sfmt 4702 20167 • Section 1886(m)(6) of the Act, as amended by section 15009 of the 21st Century Cures Act (Pub. L. 114–255), which provides for a temporary exception to the application of the site neutral payment rate under the LTCH PPS for certain spinal cord specialty hospitals for discharges in cost reporting periods beginning during FYs 2018 and 2019. • Section 1886(m)(6) of the Act, as amended by section 15010 of the 21st Century Cures Act (Pub. L. 114–255), which provides for a temporary exception to the application of the site neutral payment rate under the LTCH PPS for certain LTCHs with certain discharges with severe wounds occurring in cost reporting periods beginning during FY 2018. • Section 1886(m)(5)(D)(iv) of the Act, as added by section 1206(c) of the Pathway for Sustainable Growth Rate (SGR) Reform Act of 2013 (Pub. L. 113– 67), which provides for the establishment of a functional status quality measure in the LTCH QRP for change in mobility among inpatients requiring ventilator support. • Section 1899B of the Act, as added by section 2(a) of the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act, Pub. L. 113–185), which provides for the establishment of standardized data reporting for certain post-acute care providers, including LTCHs. 2. Improving Patient Outcomes and Reducing Burden Through Meaningful Measures Regulatory reform and reducing regulatory burden are high priorities for CMS. To reduce the regulatory burden on the healthcare industry, lower health care costs, and enhance patient care, in October 2017, we launched the Meaningful Measures Initiative.1 This initiative is one component of our agency-wide Patients Over Paperwork Initiative,2 which is aimed at evaluating and streamlining regulations with a goal to reduce unnecessary cost and burden, increase efficiencies, and improve beneficiary experience. The Meaningful Measures Initiative is aimed at identifying the highest priority areas for quality measurement and quality improvement in order to assess the core quality of care issues that are most vital 1 Meaningful Measures webpage: https:// www.cms.gov/Medicare/Quality-Initiatives-PatientAssessment-Instruments/QualityInitiativesGenInfo/ MMF/General-info-Sub-Page.html. 2 Remarks by Administrator Seema Verma at the Health Care Payment Learning and Action Network (LAN) Fall Summit, as prepared for delivery on October 30, 2017. Available at: https:// www.cms.gov/Newsroom/MediaReleaseDatabase/ Fact-sheets/2017-Fact-Sheet-items/2017-10-30.html. E:\FR\FM\07MYP2.SGM 07MYP2 20168 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules to advancing our work to improve patient outcomes. The Meaningful Measures Initiative represents a new approach to quality measures that will foster operational efficiencies and will reduce costs, including collection and reporting burden while producing quality measurement that is more focused on meaningful outcomes. The Meaningful Measures framework has the following objectives: • Address high-impact measure areas that safeguard public health; • Patient-centered and meaningful to patients; • Outcome-based where possible; • Fulfill each program’s statutory requirements; • Minimize the level of burden for health care providers (for example, through a preference for EHR-based measures where possible, such as electronic clinical quality measures; 3 Quality priority Meaningful measure area Making Care Safer by Reducing Harm Caused in the Delivery of Care Strengthen Person and Family Engagement as Partners in Their Care Promote Effective Communication and Coordination of Care ................. Promote Effective Prevention and Treatment of Chronic Disease .......... Work with Communities to Promote Best Practices of Healthy Living .... Make Care Affordable .............................................................................. By including Meaningful Measures in our programs, we believe that we can also address the following cross-cutting measure criteria: • Eliminating disparities; • Tracking measurable outcomes and impact; • Safeguarding public health; • Achieving cost savings; • Improving access for rural communities; and • Reducing burden. We believe that the Meaningful Measures Initiative will improve outcomes for patients, their families, and health care providers while reducing burden and costs for clinicians and providers as well as promoting operational efficiencies. daltland on DSKBBV9HB2PROD with PROPOSALS2 • Significant opportunity for improvement; • Address measure needs for population based payment through alternative payment models; and • Align across programs and/or with other payers. In order to achieve these objectives, we have identified 19 Meaningful Measures areas and mapped them to six overarching quality priorities as shown in the following table: Healthcare-Associated Infections Preventable Healthcare Harm Care is Personalized and Aligned with Patient’s Goals End of Life Care According to Preferences Patient’s Experience of Care Patient Reported Functional Outcomes Medication Management Admissions and Readmissions to Hospitals Transfer of Health Information and Interoperability Preventive Care Management of Chronic Conditions Prevention, Treatment, and Management of Mental Health Prevention and Treatment of Opioid and Substance Use Disorders Risk Adjusted Mortality Equity of Care Community Engagement Appropriate Use of Healthcare Patient-focused Episode of Care Risk Adjusted Total Cost of Care a. MS–DRG Documentation and Coding Adjustment 3. Summary of the Major Provisions Below we provide a summary of the major provisions in this proposed rule. In general, these major provisions are being proposed as part of the annual update to the payment policies and payment rates, consistent with the applicable statutory provisions. A general summary of the proposed changes included in this proposed rule is presented below in section I.D. of this preamble. Section 631 of the American Taxpayer Relief Act of 2012 (ATRA, Pub. L. 112– 240) amended section 7(b)(1)(B) of Public Law 110–90 to require the Secretary to make a recoupment adjustment to the standardized amount of Medicare payments to acute care hospitals to account for changes in MS– DRG documentation and coding that do not reflect real changes in case-mix, totaling $11 billion over a 4-year period of FYs 2014, 2015, 2016, and 2017. The FY 2014 through FY 2017 adjustments represented the amount of the increase in aggregate payments as a result of not completing the prospective adjustment authorized under section 7(b)(1)(A) of Public Law 110–90 until FY 2013. Prior to the ATRA, this amount could not have been recovered under Public Law 110–90. Section 414 of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (Pub. L. 114–10) replaced the single positive adjustment we intended to make in FY 2018 with a 0.5 percent positive adjustment to the standardized amount of Medicare payments to acute care hospitals for FYs 2018 through 2023. (The FY 2018 3 Refer to section VIII.A.9.c.of the preamble of this proposed rule where we are seeking public adjustment was subsequently adjusted to 0.4588 percent by section 15005 of the 21st Century Cures Act.) Therefore, for FY 2019, we are proposing to make an adjustment of +0.5 percent to the standardized amount. comment on the potential future development and adoption of eCQMs. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00006 Fmt 4701 Sfmt 4702 b. Expansion of the Postacute Care Transfer Policy Section 53109 of the Bipartisan Budget Act of 2018 amended section 1886(d)(5)(J)(ii) of the Act to also include discharges to hospice care by a hospice program as a qualified discharge, effective for discharges occurring on or after October 1, 2018. Accordingly, we are proposing to make conforming amendments to § 412.4(c) of the regulation, effective for discharges on or after October 1, 2018, to specify that if a discharge is assigned to one of the MS–DRGs subject to the postacute care transfer policy and the individual is transferred to hospice care by a hospice program, the discharge would be subject to payment as a transfer case. c. DSH Payment Adjustment and Additional Payment for Uncompensated Care Section 3133 of the Affordable Care Act modified the Medicare E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules disproportionate share hospital (DSH) payment methodology beginning in FY 2014. Under section 1886(r) of the Act, which was added by section 3133 of the Affordable Care Act, starting in FY 2014, DSHs receive 25 percent of the amount they previously would have received under the statutory formula for Medicare DSH payments in section 1886(d)(5)(F) of the Act. The remaining amount, equal to 75 percent of the amount that otherwise would have been paid as Medicare DSH payments, is paid as additional payments after the amount is reduced for changes in the percentage of individuals that are uninsured. Each Medicare DSH will receive an additional payment based on its share of the total amount of uncompensated care for all Medicare DSHs for a given time period. In this proposed rule, we are proposing to update our estimates of the three factors used to determine uncompensated care payments for FY 2019. We are continuing to use uninsured estimates produced by CMS’ Office of the Actuary (OACT) as part of the development of the National Health Expenditure Accounts (NHEA) in the calculation of Factor 2. We also are continuing to incorporate data from Worksheet S–10 in the calculation of hospitals’ share of the aggregate amount of uncompensated care by combining data on uncompensated care costs from Worksheet S–10 for FYs 2014 and 2015 with proxy data regarding a hospital’s share of low-income insured days for FY 2013 to determine Factor 3 for FY 2019. In addition, we are proposing to use only data regarding low-income insured days for FY 2013 to determine the amount of uncompensated care payments for Puerto Rico hospitals, Indian Health Service and Tribal hospitals, and all-inclusive rate providers. For this proposed rule, we also are proposing the following policies: (1) For providers with multiple cost reports beginning in the same fiscal year, to use the longest cost report and annualize Medicaid data and uncompensated care data if a hospital’s cost report does not equal 12 months of data; (2) in the rare case where a provider has multiple cost reports beginning in the same fiscal year, but one report also spans the entirety of the following fiscal year such that the hospital has no cost report for that fiscal year, the cost report that spans both fiscal years would be used for the latter fiscal year; and (3) to apply statistical trim methodologies to potentially aberrant cost-to-charge ratios (CCRs) and potentially aberrant uncompensated VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 care costs reported on the Worksheet S– 10. d. Proposed Changes to the LTCH PPS In this proposed rule, we set forth proposed changes to the LTCH PPS Federal payment rates, factors, and other payment rate policies under the LTCH PPS for FY 2019. In addition, we are proposing to eliminate the 25percent threshold policy, and under this proposal we would apply a one-time permanent adjustment of approximately ¥0.9 percent to the LTCH PPS standard Federal payment rate to ensure this proposed elimination of the 25-percent threshold policy is budget neutral. e. Reduction of Hospital Payments for Excess Readmissions We are proposing to make changes to policies for the Hospital Readmissions Reduction Program, which is established under section 1886(q) of the Act, as added by section 3025 of the Affordable Care Act, as amended by section 10309 of the Affordable Care Act and further amended by section 15002 of the 21st Century Cures Act. The Hospital Readmissions Reduction Program requires a reduction to a hospital’s base operating DRG payment to account for excess readmissions of selected applicable conditions. For FY 2018 and subsequent years, the reduction is based on a hospital’s riskadjusted readmission rate during a 3year period for acute myocardial infarction (AMI), heart failure (HF), pneumonia, chronic obstructive pulmonary disease (COPD), total hip arthroplasty/total knee arthroplasty (THA/TKA), and coronary artery bypass graft (CABG). In this proposed rule, we are proposing to establish the applicable periods for FY 2019, FY 2020, and FY 2021. We are also proposing to codify the definitions of dual-eligible patients, the proportion of dual-eligibles, and the applicable period for dual-eligibility. f. Hospital Value-Based Purchasing (VBP) Program Section 1886(o) of the Act requires the Secretary to establish a Hospital VBP Program under which value-based incentive payments are made in a fiscal year to hospitals based on their performance on measures established for a performance period for such fiscal year. As part of agency-wide efforts under the Meaningful Measures Initiative to use a parsimonious set of the most meaningful measures for patients, clinicians, and providers in our quality programs and the Patients Over Paperwork Initiative to reduce costs and burden and program complexity as discussed in section PO 00000 Frm 00007 Fmt 4701 Sfmt 4702 20169 I.A.2. of the preamble of this proposed rule, we are proposing to remove a total of 10 measures from the Hospital VBP Program, all of which would continue to be used in the Hospital IQR Program or the HAC Reduction Program, in order to reduce the costs and complexity of tracking these measures in multiple programs. We also are proposing to adopt measure removal factors for the Hospital VBP Program. Specifically, we are proposing to remove six measures beginning with the FY 2021 program year: (1) Elective Delivery (NQF #0469) (PC–01); (2) National Healthcare Safety Network (NHSN) Catheter-Associated Urinary Tract Infection (CAUTI) Outcome Measure (NQF #0138); (3) National Healthcare Safety Network (NHSN) Central Line-Associated Bloodstream Infection (CLABSI) Outcome Measure (NQF #0139); (4) American College of Surgeons-Centers for Disease Control and Prevention (ACS–CDC) Harmonized Procedure Specific Surgical Site Infection (SSI) Outcome Measure (NQF #0753); (5) National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Methicillin-resistant Staphylococcus aureus Bacteremia (MRSA) Outcome Measure (NQF #1716); and (6) National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Clostridium difficile Infection (CDI) Outcome Measure (NQF #1717). We are also proposing to remove four measures from the Hospital VBP Program effective with the effective date of the FY 2019 IPPS/ LTCH PPS final rule: (1) Patient Safety and Adverse Events (Composite) (NQF #0531) (PSI 90); (2) Hospital-Level, RiskStandardized Payment Associated With a 30-Day Episode-of-Care for Acute Myocardial Infarction (NQF #2431) (AMI Payment); (3) Hospital-Level, RiskStandardized Payment Associated With a 30-Day Episode-of-Care for Heart Failure (NQF #2436) (HF Payment); and (4) Hospital-Level, Risk-Standardized Payment Associated With a 30-Day Episode-of-Care for Pneumonia (PN Payment) (NQF #2579). In addition, we are proposing to rename the Clinical Care domain as the Clinical Outcomes domain beginning with the FY 2020 program year; we are proposing to remove the Safety domain from the Hospital VBP Program, if our proposals to removal all of the measures in this domain are finalized, and to weight the three remaining domains as follows: Clinical Outcomes domain—50 percent; Person and Community Engagement domain—25 percent; and Efficiency and Cost Reduction domain—25 percent. E:\FR\FM\07MYP2.SGM 07MYP2 20170 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules g. Hospital-Acquired Condition (HAC) Reduction Program Section 1886(p) of the Act, as added under section 3008(a) of the Affordable Care Act, establishes an incentive to hospitals to reduce the incidence of hospital-acquired conditions by requiring the Secretary to make an adjustment to payments to applicable hospitals effective for discharges beginning on October 1, 2014. This 1percent payment reduction applies to a hospital whose ranking in the worstperforming quartile (25 percent) of all applicable hospitals, relative to the national average, of conditions acquired during the applicable period and on all of the hospital’s discharges for the specified fiscal year. As part of our agency-wide Patients over Paperwork and Meaningful Measures Initiatives, discussed in section I.A.2. of the preamble of this proposed rule, we are proposing that the measures currently included in the HAC Reduction Program should be retained because the measures address a performance gap in patient safety and reducing harm caused in the delivery of care. In this proposed rule, we are proposing to: (1) Establish administrative policies to collect, validate, and publicly report NHSN healthcare-associated infection (HAI) quality measure data that facilitate a seamless transition, independent of the Hospital IQR Program, beginning with January 1, 2019 infectious events; (2) change the scoring methodology by removing domains and assigning equal weighting to each measure for which a hospital has a measure; and (3) establish the applicable period for FY 2021. In addition, we are seeking stakeholder comment regarding the potential future inclusion of additional measures, including eCQMs. daltland on DSKBBV9HB2PROD with PROPOSALS2 h. Hospital Inpatient Quality Reporting (IQR) Program Under section 1886(b)(3)(B)(viii) of the Act, subsection (d) hospitals are required to report data on measures selected by the Secretary for a fiscal year in order to receive the full annual percentage increase that would otherwise apply to the standardized amount applicable to discharges occurring in that fiscal year. In this proposed rule, we are proposing several changes. As part of agency-wide efforts under the Meaningful Measures Initiative to use a parsimonious set of the most meaningful measures for patients and clinicians in our quality programs and the Patients Over Paperwork initiative to reduce burden, cost, and program complexity as discussed in section VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 I.A.2. of the preamble of this proposed rule, we are proposing to add a new measure removal factor and to remove a total of 39 measures from the Hospital IQR Program. For a full list of measures proposed for removal, we refer readers to section VIII.A.4.b. of the preamble of this proposed rule. Beginning with the CY 2018 reporting period/FY 2020 payment determination and subsequent years, we are proposing to remove 17 claims-based measures and two structural measures. Beginning with the CY 2019 reporting period/FY 2021 payment determination and subsequent years, we are proposing to remove eight chart-abstracted measures and two claims-based measures. Beginning with the CY 2020 reporting period/FY 2022 payment determination and subsequent years, we are proposing to remove one chart-abstracted measure, one claims-based measure, and seven eCQMs from the Hospital IQR Program measure set. Beginning with the CY 2021 reporting period/FY 2023 payment determination, we are proposing to remove one claims-based measure. In addition, for the CY 2019 reporting period/FY 2021 payment determination, we are proposing to: (1) Require the same eCQM reporting requirements that were adopted for the CY 2018 reporting period/FY 2020 payment determination (82 FR 38355 through 38361), such that hospitals submit one, self-selected calendar quarter of 2019 discharge data for 4 eCQMs in the Hospital IQR Program measure set; and (2) require that hospitals use the 2015 Edition certification criteria for CEHRT. These proposals are in alignment with proposals or current established policies under the Medicare and Medicaid Promoting Interoperability Programs (previously known as the Medicare and Medicaid EHR Incentive Programs). In addition, we are seeking public comment on two measures for potential future inclusion in the Hospital IQR Program, as well as the potential future development and adoption of electronic clinical quality measures generally. i. Long-Term Care Hospital Quality Reporting Program (LTCH QRP) The LTCH QRP is authorized by section 1886(m)(5) of the Act and applies to all hospitals certified by Medicare as long-term care hospitals (LTCHs). Under the LTCH QRP, the Secretary reduces by 2 percentage points the annual update to the LTCH PPS standard Federal rate for discharges for an LTCH during a fiscal year if the LTCH fails to submit data in accordance with the LTCH QRP requirements specified for that fiscal year. As part of agency-wide efforts under the PO 00000 Frm 00008 Fmt 4701 Sfmt 4702 Meaningful Measures Initiative to use a parsimonious set of the most meaningful measures for patients and clinicians in our quality programs and the Patients Over Paperwork Initiative to reduce cost and burden and program complexity as discussed in section I.A.2. of the preamble of this proposed rule, we are proposing to remove three measures from the LTCH QRP. We also are proposing to adopt a new measure removal factor and are proposing to codify the measure removal factors in our regulations. In addition, we are proposing to update our regulations to change methods by which an LTCH is notified of noncompliance with the requirements of the LTCH QRP for a program year; and how CMS will notify an LTCH of a reconsideration decision. 4. Summary of Costs and Benefits • Adjustment for MS–DRG Documentation and Coding Changes. Section 414 of the MACRA replaced the single positive adjustment we intended to make in FY 2018 once the recoupment required by section 631 of the ATRA was complete with a 0.5 percent positive adjustment to the standardized amount of Medicare payments to acute care hospitals for FYs 2018 through 2023. (The FY 2018 adjustment was subsequently adjusted to 0.4588 percent by section 15005 of the 21st Century Cures Act.) For FY 2019, we are proposing to make an adjustment of +0.5 percent to the standardized amount consistent with the MACRA. • Expansion of the Postacute Care Transfer Policy. Section 53109 of the Bipartisan Budget Act of 2018 amended section 1886(d)(5)(J)(ii) of the Act to also include discharges to hospice care by a hospice program as a qualified discharge, effective for discharges occurring on or after October 1, 2018. Accordingly, we are proposing to make conforming amendments to § 412.4(c) of the regulation to specify that, effective for discharges on or after October 1, 2018, if a discharge is assigned to one of the MS–DRGs subject to the postacute care transfer policy and the individual is transferred to hospice care by a hospice program, the discharge would be subject to payment as a transfer case. We estimate that this statutory expansion to the postacute care transfer policy will reduce Medicare payments under the IPPS by approximately $240 million in FY 2019. • Proposed Medicare DSH Payment Adjustment and Additional Payment for Uncompensated Care. Under section 1886(r) of the Act (as added by section 3133 of the Affordable Care Act), DSH payments to hospitals under section E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 1886(d)(5)(F) of the Act are reduced and an additional payment for uncompensated care is made to eligible hospitals beginning in FY 2014. Hospitals that receive Medicare DSH payments receive 25 percent of the amount they previously would have received under the statutory formula for Medicare DSH payments in section 1886(d)(5)(F) of the Act. The remainder, equal to an estimate of 75 percent of what otherwise would have been paid as Medicare DSH payments, is the basis for determining the additional payments for uncompensated care after the amount is reduced for changes in the percentage of individuals that are uninsured and additional statutory adjustments. Each hospital that receives Medicare DSH payments will receive an additional payment for uncompensated care based on its share of the total uncompensated care amount reported by Medicare DSHs. The reduction to Medicare DSH payments is not budget neutral. For FY 2019, we are proposing to update our estimates of the three factors used to determine uncompensated care payments. We are continuing to use uninsured estimates produced by OACT as part of the development of the NHEA in the calculation of Factor 2. We also are continuing to incorporate data from Worksheet S–10 in the calculation of hospitals’ share of the aggregate amount of uncompensated care by combining data on uncompensated care costs from Worksheet S–10 for FY 2014 and FY 2015 with proxy data regarding a hospital’s share of low-income insured days for FY 2013 to determine Factor 3 for FY 2019. To determine the amount of uncompensated care for Puerto Rico hospitals, Indian Health Service and Tribal hospitals, and all-inclusive rate providers, we are proposing to use only the data regarding low-income insured days for FY 2013. In addition, in this proposed rule, we are proposing the following policies: (1) For providers with multiple cost reports beginning in the same fiscal year, to use the longest cost report and annualize Medicaid data and uncompensated care data if a hospital’s cost report does not equal 12 months of data; (2) in the rare case where a provider has multiple cost reports beginning in the same fiscal year, but one report also spans the entirety of the following fiscal year such that the hospital has no cost report for that fiscal year, the cost report that spans both fiscal years would be used for the latter fiscal year; and (3) to apply statistical trim methodologies to potentially aberrant CCRs and VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 potentially aberrant uncompensated care costs. We are projecting that proposed estimated Medicare DSH payments, and additional payments for uncompensated care made for FY 2019, would increase payments overall by approximately 1.3 percent as compared to the estimate of overall payments, including Medicare DSH payments and uncompensated care payments that will be distributed in FY 2018. The additional payments have redistributive effects based on a hospital’s uncompensated care amount relative to the uncompensated care amount for all hospitals that are estimated to receive Medicare DSH payments, and the calculated payment amount is not directly tied to a hospital’s number of discharges. • Proposed Update to the LTCH PPS Payment Rates and Other Payment Policies. Based on the best available data for the 409 LTCHs in our database, we estimate that the proposed changes to the payment rates and factors that we are presenting in the preamble and Addendum of this proposed rule, which reflects the continuation of the transition of the statutory application of the site neutral payment rate, the update to the LTCH PPS standard Federal payment rate for FY 2019, and the proposed one-time permanent adjustment of approximately-0.9 percent to the LTCH PPS standard Federal payment rate to ensure this proposed elimination of the 25-percent threshold policy is budget neutral would result in an estimated decrease in payments in FY 2019 of approximately $5 million. • Proposed Changes to the Hospital Readmissions Reduction Program. For FY 2019 and subsequent years, the reduction is based on a hospital’s riskadjusted readmission rate during a 3year period for acute myocardial infarction (AMI), heart failure (HF), pneumonia, chronic obstructive pulmonary disease (COPD), total hip arthroplasty/total knee arthroplasty (THA/TKA), and coronary artery bypass graft (CABG). Overall, in this proposed rule, we estimate that 2,610 hospitals would have their base operating DRG payments reduced by their determined proposed proxy FY 2019 hospitalspecific readmission adjustment. As a result, we estimate that the Hospital Readmissions Reduction Program would save approximately $566 million in FY 2019. • Value-Based Incentive Payments under the Hospital VBP Program. We estimate that there will be no net financial impact to the Hospital VBP Program for the FY 2019 program year in the aggregate because, by law, the amount available for value-based PO 00000 Frm 00009 Fmt 4701 Sfmt 4702 20171 incentive payments under the program in a given year must be equal to the total amount of base operating MS–DRG payment amount reductions for that year, as estimated by the Secretary. The estimated amount of base operating MS– DRG payment amount reductions for the FY 2019 program year and, therefore, the estimated amount available for value-based incentive payments for FY 2019 discharges is approximately $1.9 billion. • Proposed Changes to the HAC Reduction Program. A hospital’s Total HAC score and its ranking in comparison to other hospitals in any given year depend on several different factors. Any significant impact due to the proposed HAC Reduction Program changes for FY 2019, including which hospitals would receive the adjustment, would depend on actual experience. The proposed removal of NHSN HAI measures from the Hospital IQR Program and the subsequent cessation of its validation processes for NHSN HAI measures and proposed creation of a validation process for the HAC Reduction program represent no net change in reporting burden across CMS hospital quality programs. However, if our proposal to remove HAI chartabstracted measures from the Hospital IQR Program is finalized, we anticipate a total burden shift of 43,200 hours and approximately $1.6 million as a result of no longer needing to validate those HAI measures under the Hospital IQR Program and beginning the validation process under the HAC Reduction Program. • Proposed Changes to the Hospital Inpatient Quality Reporting (IQR) Program. Across 3,300 IPPS hospitals, we estimate that our proposed requirements for the Hospital IQR Program would result in the following changes to costs and burdens related to information collection for this program compared to previously adopted requirements: (1) A total collection of information burden reduction of 1,046,071 hours and a total cost reduction of approximately $38.3 million for the CY 2019 reporting period/FY 2021 payment determination, due to the proposed removal of ED–1, IMM–2, and VTE–6 measures; and (2) a total collection of information burden reduction of 901,200 hours and a total cost reduction of $33 million for the CY 2020 reporting period/FY 2022 payment determination, due to: (a) The proposed removal of ED–2, and (b) validation of the NHSN HAI measures no longer being conducted under the Hospital IQR Program once the HAC Reduction Program begins validating these measures, as proposed in the preamble E:\FR\FM\07MYP2.SGM 07MYP2 20172 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules of this proposed rule for the HAC Reduction Program. Further, we anticipate that the proposed removal of 39 measures would result in a reduction in costs unrelated to information collection. For example, it may be costly for health care providers to track the confidential feedback, preview reports, and publicly reported information on a measure where we use the measure in more than one program. Also, when measures are in multiple programs, maintaining the specifications for those measures, as well as the tools we need to collect, validate, analyze, and publicly report the measure data may result in costs to CMS. In addition, beneficiaries may find it confusing to see public reporting on the same measure in different programs. We anticipate that our proposals will reduce the above-described costs. • Proposed Changes Related to the LTCH QRP. In this proposed rule, we are proposing to remove three measures from the LTCH QRP, two measures beginning with the FY 2020 LTCH QRP and one measure beginning with the FY 2021 LTCH QRP. We also are proposing a new quality measure removal factor for the LTCH QRP. We estimate that the impact of these proposed changes is a reduction in costs of approximately $1,148 per LTCH annually or approximately $482,469 for all LTCHs annually. B. Background Summary daltland on DSKBBV9HB2PROD with PROPOSALS2 1. Acute Care Hospital Inpatient Prospective Payment System (IPPS) Section 1886(d) of the Social Security Act (the Act) sets forth a system of payment for the operating costs of acute care hospital inpatient stays under Medicare Part A (Hospital Insurance) based on prospectively set rates. Section 1886(g) of the Act requires the Secretary to use a prospective payment system (PPS) to pay for the capital-related costs of inpatient hospital services for these ‘‘subsection (d) hospitals.’’ Under these PPSs, Medicare payment for hospital inpatient operating and capital-related costs is made at predetermined, specific rates for each hospital discharge. Discharges are classified according to a list of diagnosis-related groups (DRGs). The base payment rate is comprised of a standardized amount that is divided into a labor-related share and a nonlabor-related share. The laborrelated share is adjusted by the wage index applicable to the area where the hospital is located. If the hospital is located in Alaska or Hawaii, the nonlabor-related share is adjusted by a cost-of-living adjustment factor. This VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 base payment rate is multiplied by the DRG relative weight. If the hospital treats a high percentage of certain low-income patients, it receives a percentage add-on payment applied to the DRG-adjusted base payment rate. This add-on payment, known as the disproportionate share hospital (DSH) adjustment, provides for a percentage increase in Medicare payments to hospitals that qualify under either of two statutory formulas designed to identify hospitals that serve a disproportionate share of low-income patients. For qualifying hospitals, the amount of this adjustment varies based on the outcome of the statutory calculations. The Affordable Care Act revised the Medicare DSH payment methodology and provides for a new additional Medicare payment that considers the amount of uncompensated care beginning on October 1, 2013. If the hospital is training residents in an approved residency program(s), it receives a percentage add-on payment for each case paid under the IPPS, known as the indirect medical education (IME) adjustment. This percentage varies, depending on the ratio of residents to beds. Additional payments may be made for cases that involve new technologies or medical services that have been approved for special add-on payments. To qualify, a new technology or medical service must demonstrate that it is a substantial clinical improvement over technologies or services otherwise available, and that, absent an add-on payment, it would be inadequately paid under the regular DRG payment. The costs incurred by the hospital for a case are evaluated to determine whether the hospital is eligible for an additional payment as an outlier case. This additional payment is designed to protect the hospital from large financial losses due to unusually expensive cases. Any eligible outlier payment is added to the DRG-adjusted base payment rate, plus any DSH, IME, and new technology or medical service add-on adjustments. Although payments to most hospitals under the IPPS are made on the basis of the standardized amounts, some categories of hospitals are paid in whole or in part based on their hospitalspecific rate, which is determined from their costs in a base year. For example, sole community hospitals (SCHs) receive the higher of a hospital-specific rate based on their costs in a base year (the highest of FY 1982, FY 1987, FY 1996, or FY 2006) or the IPPS Federal rate based on the standardized amount. SCHs are the sole source of care in their areas. Specifically, section 1886(d)(5)(D)(iii) of the Act defines an PO 00000 Frm 00010 Fmt 4701 Sfmt 4702 SCH as a hospital that is located more than 35 road miles from another hospital or that, by reason of factors such as isolated location, weather conditions, travel conditions, or absence of other like hospitals (as determined by the Secretary), is the sole source of hospital inpatient services reasonably available to Medicare beneficiaries. In addition, certain rural hospitals previously designated by the Secretary as essential access community hospitals are considered SCHs. Under current law, the Medicaredependent, small rural hospital (MDH) program is effective through FY 2022. Through and including FY 2006, an MDH received the higher of the Federal rate or the Federal rate plus 50 percent of the amount by which the Federal rate was exceeded by the higher of its FY 1982 or FY 1987 hospital-specific rate. For discharges occurring on or after October 1, 2007, but before October 1, 2022, an MDH receives the higher of the Federal rate or the Federal rate plus 75 percent of the amount by which the Federal rate is exceeded by the highest of its FY 1982, FY 1987, or FY 2002 hospital-specific rate. MDHs are a major source of care for Medicare beneficiaries in their areas. Section 1886(d)(5)(G)(iv) of the Act defines an MDH as a hospital that is located in a rural area (or, as amended by the Bipartisan Budget Act of 2018, a hospital located in a State with no rural area that meets certain statutory criteria), has not more than 100 beds, is not an SCH, and has a high percentage of Medicare discharges (not less than 60 percent of its inpatient days or discharges in its cost reporting year beginning in FY 1987 or in two of its three most recently settled Medicare cost reporting years). Section 1886(g) of the Act requires the Secretary to pay for the capital-related costs of inpatient hospital services in accordance with a prospective payment system established by the Secretary. The basic methodology for determining capital prospective payments is set forth in our regulations at 42 CFR 412.308 and 412.312. Under the capital IPPS, payments are adjusted by the same DRG for the case as they are under the operating IPPS. Capital IPPS payments are also adjusted for IME and DSH, similar to the adjustments made under the operating IPPS. In addition, hospitals may receive outlier payments for those cases that have unusually high costs. The existing regulations governing payments to hospitals under the IPPS are located in 42 CFR part 412, subparts A through M. E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 2. Hospitals and Hospital Units Excluded From the IPPS daltland on DSKBBV9HB2PROD with PROPOSALS2 Under section 1886(d)(1)(B) of the Act, as amended, certain hospitals and hospital units are excluded from the IPPS. These hospitals and units are: Inpatient rehabilitation facility (IRF) hospitals and units; long-term care hospitals (LTCHs); psychiatric hospitals and units; children’s hospitals; cancer hospitals; extended neoplastic disease care hospitals, and hospitals located outside the 50 States, the District of Columbia, and Puerto Rico (that is, hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa). Religious nonmedical health care institutions (RNHCIs) are also excluded from the IPPS. Various sections of the Balanced Budget Act of 1997 (BBA, Pub. L. 105–33), the Medicare, Medicaid and SCHIP [State Children’s Health Insurance Program] Balanced Budget Refinement Act of 1999 (BBRA, Pub. L. 106–113), and the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA, Pub. L. 106–554) provide for the implementation of PPSs for IRF hospitals and units, LTCHs, and psychiatric hospitals and units (referred to as inpatient psychiatric facilities (IPFs)). (We note that the annual updates to the LTCH PPS are included along with the IPPS annual update in this document. Updates to the IRF PPS and IPF PPS are issued as separate documents.) Children’s hospitals, cancer hospitals, hospitals located outside the 50 States, the District of Columbia, and Puerto Rico (that is, hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa), and RNHCIs continue to be paid solely under a reasonable cost-based system subject to a rate-of-increase ceiling on inpatient operating costs. Similarly, extended neoplastic disease care hospitals are paid on a reasonable cost basis subject to a rate-of-increase ceiling on inpatient operating costs. The existing regulations governing payments to excluded hospitals and hospital units are located in 42 CFR parts 412 and 413. 3. Long-Term Care Hospital Prospective Payment System (LTCH PPS) The Medicare prospective payment system (PPS) for LTCHs applies to hospitals described in section 1886(d)(1)(B)(iv) of the Act effective for cost reporting periods beginning on or after October 1, 2002. The LTCH PPS was established under the authority of sections 123 of the BBRA and section VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 307(b) of the BIPA (as codified under section 1886(m)(1) of the Act). During the 5-year (optional) transition period, a LTCH’s payment under the PPS was based on an increasing proportion of the LTCH Federal rate with a corresponding decreasing proportion based on reasonable cost principles. Effective for cost reporting periods beginning on or after October 1, 2006 through September 30, 2016, all LTCHs were paid 100 percent of the Federal rate. Section 1206(a) of the Pathway for SGR Reform Act of 2013 (Pub. L. 113–67) established the site neutral payment rate under the LTCH PPS, which made the LTCH PPS a dual rate payment system beginning in FY 2016. Under this statute, based on a rolling effective date that is linked to the date on which a given LTCH’s Federal FY 2016 cost reporting period begins, LTCHs are generally paid for discharges at the site neutral payment rate unless the discharge meets the patient criteria for payment at the LTCH PPS standard Federal payment rate. The existing regulations governing payment under the LTCH PPS are located in 42 CFR part 412, subpart O. Beginning October 1, 2009, we issue the annual updates to the LTCH PPS in the same documents that update the IPPS (73 FR 26797 through 26798). 4. Critical Access Hospitals (CAHs) Under sections 1814(l), 1820, and 1834(g) of the Act, payments made to critical access hospitals (CAHs) (that is, rural hospitals or facilities that meet certain statutory requirements) for inpatient and outpatient services are generally based on 101 percent of reasonable cost. Reasonable cost is determined under the provisions of section 1861(v) of the Act and existing regulations under 42 CFR part 413. 5. Payments for Graduate Medical Education (GME) Under section 1886(a)(4) of the Act, costs of approved educational activities are excluded from the operating costs of inpatient hospital services. Hospitals with approved graduate medical education (GME) programs are paid for the direct costs of GME in accordance with section 1886(h) of the Act. The amount of payment for direct GME costs for a cost reporting period is based on the hospital’s number of residents in that period and the hospital’s costs per resident in a base year. The existing regulations governing payments to the various types of hospitals are located in 42 CFR part 413. PO 00000 Frm 00011 Fmt 4701 Sfmt 4702 20173 C. Summary of Provisions of Recent Legislation Proposed To Be Implemented in This Proposed Rule 1. Pathway for SGR Reform Act of 2013 (Pub. L. 113–67) The Pathway for SGR Reform Act of 2013 (Pub. L. 113–67) introduced new payment rules in the LTCH PPS. Under section 1206 of this law, discharges in cost reporting periods beginning on or after October 1, 2015 under the LTCH PPS will receive payment under a site neutral rate unless the discharge meets certain patient-specific criteria. In this proposed rule, we are continuing to update certain policies that implemented provisions under section 1206 of the Pathway for SGR Reform Act. 2. Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act) (Pub. L. 113–185) The Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act) (Pub. L. 113–185), enacted on October 6, 2014, made a number of changes that affect the LongTerm Care Hospital Quality Reporting Program (LTCH QRP). In this proposed rule, we are proposing to continue to implement portions of section 1899B of the Act, as added by section 2(a) of the IMPACT Act, which, in part, requires LTCHs, among other postacute care providers, to report standardized patient assessment data, data on quality measures, and data on resource use and other measures. 3. The Medicare Access and CHIP Reauthorization Act of 2015 (Pub. L. 114–10) Section 414 of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA, Pub. L. 114–10) specifies a 0.5 percent positive adjustment to the standardized amount of Medicare payments to acute care hospitals for FYs 2018 through 2023. These adjustments follow the recoupment adjustment to the standardized amounts under section 1886(d) of the Act based upon the Secretary’s estimates for discharges occurring from FYs 2014 through 2017 to fully offset $11 billion, in accordance with section 631 of the ATRA. The FY 2018 adjustment was subsequently adjusted to 0.4588 percent by section 15005 of the 21st Century Cures Act. 4. The 21st Century Cures Act (Pub. L. 114–255) The 21st Century Cures Act (Pub. L. 114–255), enacted on December 13, 2016, contained the following provision affecting payments under the Hospital Readmissions Reduction Program, E:\FR\FM\07MYP2.SGM 07MYP2 20174 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules which we are proposing to continue to implement in this proposed rule: • Section 15002, which amended section 1886(q)(3) of the Act by adding subparagraphs (D) and (E), which requires the Secretary to develop a methodology for calculating the excess readmissions adjustment factor for the Hospital Readmissions Reduction Program based on cohorts defined by the percentage of dual-eligible patients (that is, patients who are eligible for both Medicare and full-benefit Medicaid coverage) cared for by a hospital. In this proposed rule, we are proposing to continue to implement changes to the payment adjustment factor to assess penalties based on a hospital’s performance relative to other hospitals treating a similar proportion of dualeligible patients. daltland on DSKBBV9HB2PROD with PROPOSALS2 5. The Bipartisan Budget Act of 2018 (Pub. L. 115–123) The Bipartisan Budget Act of 2018 (Pub. L. 115–123), enacted on February 9, 2018, contains provisions affecting payments under the IPPS and the LTCH PPS, which we are proposing to implement or continue to implement in this proposed rule: • Section 50204 amended section 1886(d)(12) of the Act to provide for certain temporary changes to the lowvolume hospital payment adjustment policy for FYs 2018 through 2022. For FY 2018, this provision extends the qualifying criteria and payment adjustment formula that applied for FYs 2011 through 2017. For FYs 2019 through 2022, this provision modifies the discharge criterion and payment adjustment formula. In FY 2023 and subsequent fiscal years, the qualifying criteria and payment adjustment revert to the requirements that were in effect for FYs 2005 through 2010. • Section 50205 extends the MDH program through FY 2022. It also provides for an eligible hospital that is located in a State with no rural area to qualify for MDH status under an expanded definition if the hospital satisfies any of the statutory criteria at section 1886(d)(8)(E)(ii)(I), (II) (as of January 1, 2018), or (III) of the Act to be reclassified as rural. • Section 51005(a) modified section 1886(m)(6) of the Act by extending the blended payment rate for site neutral payment rate LTCH discharges for cost reporting periods beginning in FY 2016 by an additional 2 years (FYs 2018 and 2019). In addition, section 51005(b) reduces the LTCH IPPS comparable per diem amount used in the site neutral payment rate for FYs 2018 through 2026 by 4.6 percent. In this proposed rule, we VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 are proposing to make conforming changes to the existing regulations. • Section 53109 modified section 1886(d)(5)(J) of the Act to require that, beginning in FY 2019, discharges to hospice care will also qualify as a postacute care transfer and be subject to payment adjustments. D. Summary of the Provisions of This Proposed Rule In this proposed rule, we are setting forth proposed payment and policy changes to the Medicare IPPS for FY 2019 operating costs and for capitalrelated costs of acute care hospitals and certain hospitals and hospital units that are excluded from IPPS. In addition, we are setting forth proposed changes to the payment rates, factors, and other payment and policy-related changes to programs associated with payment rate policies under the LTCH PPS for FY 2019. Below is a general summary of the proposed changes included in this proposed rule. 1. Proposed Changes to MS–DRG Classifications and Recalibrations of Relative Weights In section II. of the preamble of this proposed rule, we include— • Proposed changes to MS–DRG classifications based on our yearly review for FY 2019. • Proposed adjustment to the standardized amounts under section 1886(d) of the Act for FY 2019 in accordance with the amendments made to section 7(b)(1)(B) of Public Law 110– 90 by section 414 of the MACRA. • Proposed recalibration of the MS– DRG relative weights. • A discussion of the proposed FY 2019 status of new technologies approved for add-on payments for FY 2018 and a presentation of our evaluation and analysis of the FY 2019 applicants for add-on payments for high-cost new medical services and technologies (including public input, as directed by Pub. L. 108–173, obtained in a town hall meeting). 2. Proposed Changes to the Hospital Wage Index for Acute Care Hospitals In section III. of the preamble to this proposed rule, we are proposing to make revisions to the wage index for acute care hospitals and the annual update of the wage data. Specific issues addressed include, but are not limited to, the following: • The proposed FY 2019 wage index update using wage data from cost reporting periods beginning in FY 2015. • Proposal regarding other wagerelated costs in the wage index. PO 00000 Frm 00012 Fmt 4701 Sfmt 4702 • Calculation of the proposed occupational mix adjustment for FY 2019 based on the 2016 Occupational Mix Survey. • Analysis and implementation of the proposed FY 2019 occupational mix adjustment to the wage index for acute care hospitals. • Proposed application of the rural floor and the frontier State floor and the proposed expiration of the imputed floor. • Proposals to codify policies regarding multicampus hospitals. • Proposed revisions to the wage index for acute care hospitals based on hospital redesignations and reclassifications under sections 1886(d)(8)(B), (d)(8)(E), and (d)(10) of the Act. • The proposed adjustment to the wage index for acute care hospitals for FY 2019 based on commuting patterns of hospital employees who reside in a county and work in a different area with a higher wage index. • Determination of the labor-related share for the proposed FY 2019 wage index. • Public comment solicitation on wage index disparities. 3. Other Decisions and Proposed Changes to the IPPS for Operating Costs In section IV. of the preamble of this proposed rule, we discuss proposed changes or clarifications of a number of the provisions of the regulations in 42 CFR parts 412 and 413, including the following: • Proposed changes to MS–DRGs subject to the postacute care transfer policy and special payment policy and implementation of the statutory changes to the postacute care transfer policy. • Proposed changes to the inpatient hospital update for FY 2019. • Proposed changes related to the statutory changes to the low-volume hospital payment adjustment policy. • Proposed updated national and regional case-mix values and discharges for purposes of determining RRC status. • The statutorily required IME adjustment factor for FY 2019. • Proposed changes to the methodologies for determining Medicare DSH payments and the additional payments for uncompensated care. • Proposed changes to the effective date of SCH and MDH classification status determinations. • Proposed changes related to the extension of the MDH program. • Proposed changes to the rules for payment adjustments under the Hospital Readmissions Reduction Program based on hospital readmission E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules measures and the process for hospital review and correction of those rates for FY 2019. • Proposed changes to the requirements and provision of valuebased incentive payments under the Hospital Value-Based Purchasing Program. • Proposed requirements for payment adjustments to hospitals under the HAC Reduction Program for FY 2019. • Proposed changes to Medicare GME affiliation agreements for new urban teaching hospitals. • Discussion of and proposals relating to the implementation of the Rural Community Hospital Demonstration Program in FY 2019. • Proposed revisions of the hospital inpatient admission orders documentation requirements. 4. Proposed FY 2019 Policy Governing the IPPS for Capital-Related Costs In section V. of the preamble to this proposed rule, we discuss the proposed payment policy requirements for capital-related costs and capital payments to hospitals for FY 2019. 5. Proposed Changes to the Payment Rates for Certain Excluded Hospitals: Rate-of-Increase Percentages In section VI. of the preamble of this proposed rule, we discuss— • Proposed changes to payments to certain excluded hospitals for FY 2019. • Proposed changes to the regulations governing satellite facilities. • Proposed changes to the regulations governing excluded units of hospitals. • Proposed continued implementation of the Frontier Community Health Integration Project (FCHIP) Demonstration. 6. Proposed Changes to the LTCH PPS daltland on DSKBBV9HB2PROD with PROPOSALS2 In section VII. of the preamble of the proposed rule, we set forth— • Proposed changes to the LTCH PPS Federal payment rates, factors, and other payment rate policies under the LTCH PPS for FY 2019. • Proposed changes to the blended payment rate for site neutral payment rate cases. • Proposed elimination of the 25percent threshold policy. 7. Proposed Changes Relating to Quality Data Reporting for Specific Providers and Suppliers In section VIII. of the preamble of the proposed rule, we address— • Proposed requirements for the Hospital Inpatient Quality Reporting (IQR) Program. • Proposed changes to the requirements for the quality reporting VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 program for PPS-exempt cancer hospitals (PCHQR Program). • Proposed changes to the requirements under the LTCH Quality Reporting Program (LTCH QRP). • Proposed changes to requirements pertaining to the clinical quality measurement for eligible hospitals and CAHs participating in the Medicare and Medicaid Promoting Interoperability Programs. 8. Proposed Revision to the Supporting Documentation Requirements for an Acceptable Medicare Cost Report Submission In section IX. of the preamble of this proposed rule, we set forth proposed revisions to the supporting documentation required for an acceptable Medicare cost report submission. 9. Requirements for Hospitals To Make Public List of Standard Charges In section X. of the preamble of this proposed rule, we discuss our efforts to further improve the public accessibility of hospital standard charge information, effective January 1, 2019, in accordance with section 2718(e) of the Public Health Service Act. 10. Proposed Revisions Regarding Physician Certification and Recertification of Claims In section XI. of the preamble of this proposed rule, we set forth proposed revisions to the requirements for supporting information used for physician certification and recertification of claims. 11. Request for Information In section XII. of the preamble of this proposed rule, we include a request for information on possible establishment of CMS patient health and safety requirements for hospitals and other Medicare- and Medicaid-participating providers and suppliers for interoperable electronic health records and systems for electronic health care information exchange. 12. Determining Prospective Payment Operating and Capital Rates and Rate-of-Increase Limits for Acute Care Hospitals In section V. of the Addendum to this proposed rule, we set forth proposed changes to the amounts and factors for determining the proposed FY 2019 prospective payment rates for operating costs and capital-related costs for acute care hospitals. We are proposing to establish the threshold amounts for outlier cases. In addition, we address the update factors for determining the PO 00000 Frm 00013 Fmt 4701 Sfmt 4702 20175 rate-of-increase limits for cost reporting periods beginning in FY 2019 for certain hospitals excluded from the IPPS. 13. Determining Prospective Payment Rates for LTCHs In section V. of the Addendum to this proposed rule, we set forth proposed changes to the amounts and factors for determining the proposed FY 2019 LTCH PPS standard Federal payment rate and other factors used to determine LTCH PPS payments under both the LTCH PPS standard Federal payment rate and the site neutral payment rate in FY 2019. We are proposing to establish the adjustments for wage levels, the labor-related share, the cost-of-living adjustment, and high-cost outliers, including the applicable fixed-loss amounts and the LTCH cost-to-charge ratios (CCRs) for both payment rates. 14. Impact Analysis In Appendix A of this proposed rule, we set forth an analysis of the impact that the proposed changes would have on affected acute care hospitals, CAHs, LTCHs, and PCHs. 15. Recommendation of Update Factors for Operating Cost Rates of Payment for Hospital Inpatient Services In Appendix B of this proposed rule, as required by sections 1886(e)(4) and (e)(5) of the Act, we provide our recommendations of the appropriate percentage changes for FY 2019 for the following: • A single average standardized amount for all areas for hospital inpatient services paid under the IPPS for operating costs of acute care hospitals (and hospital-specific rates applicable to SCHs and MDHs). • Target rate-of-increase limits to the allowable operating costs of hospital inpatient services furnished by certain hospitals excluded from the IPPS. • The LTCH PPS standard Federal payment rate and the site neutral payment rate for hospital inpatient services provided for LTCH PPS discharges. 16. Discussion of Medicare Payment Advisory Commission Recommendations Under section 1805(b) of the Act, MedPAC is required to submit a report to Congress, no later than March 15 of each year, in which MedPAC reviews and makes recommendations on Medicare payment policies. MedPAC’s March 2018 recommendations concerning hospital inpatient payment policies address the update factor for hospital inpatient operating costs and capital-related costs for hospitals under E:\FR\FM\07MYP2.SGM 07MYP2 20176 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules the IPPS. We address these recommendations in Appendix B of this proposed rule. For further information relating specifically to the MedPAC March 2018 report or to obtain a copy of the report, contact MedPAC at (202) 220–3700 or visit MedPAC’s website at: https://www.medpac.gov. II. Proposed Changes to Medicare Severity Diagnosis-Related Group (MS– DRG) Classifications and Relative Weights A. Background Section 1886(d) of the Act specifies that the Secretary shall establish a classification system (referred to as diagnosis-related groups (DRGs)) for inpatient discharges and adjust payments under the IPPS based on appropriate weighting factors assigned to each DRG. Therefore, under the IPPS, Medicare pays for inpatient hospital services on a rate per discharge basis that varies according to the DRG to which a beneficiary’s stay is assigned. The formula used to calculate payment for a specific case multiplies an individual hospital’s payment rate per case by the weight of the DRG to which the case is assigned. Each DRG weight represents the average resources required to care for cases in that particular DRG, relative to the average resources used to treat cases in all DRGs. Section 1886(d)(4)(C) of the Act requires that the Secretary adjust the DRG classifications and relative weights at least annually to account for changes in resource consumption. These adjustments are made to reflect changes in treatment patterns, technology, and any other factors that may change the relative use of hospital resources. daltland on DSKBBV9HB2PROD with PROPOSALS2 B. MS–DRG Reclassifications For general information about the MS–DRG system, including yearly reviews and changes to the MS–DRGs, we refer readers to the previous discussions in the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43764 through 43766) and the FYs 2011 through 2018 IPPS/LTCH PPS final rules (75 FR 50053 through 50055; 76 FR 51485 through 51487; 77 FR 53273; 78 FR 50512; 79 FR 49871; 80 FR 49342; 81 FR 56787 through 56872; and 82 FR 38010 through 38085, respectively). C. Adoption of the MS–DRGs in FY 2008 For information on the adoption of the MS–DRGs in FY 2008, we refer readers to the FY 2008 IPPS final rule with comment period (72 FR 47140 through 47189). VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 D. Proposed FY 2019 MS–DRG Documentation and Coding Adjustment 1. Background on the Prospective MS– DRG Documentation and Coding Adjustments for FY 2008 and FY 2009 Authorized by Public Law 110–90 and the Recoupment or Repayment Adjustment Authorized by Section 631 of the American Taxpayer Relief Act of 2012 (ATRA) In the FY 2008 IPPS final rule with comment period (72 FR 47140 through 47189), we adopted the MS–DRG patient classification system for the IPPS, effective October 1, 2007, to better recognize severity of illness in Medicare payment rates for acute care hospitals. The adoption of the MS–DRG system resulted in the expansion of the number of DRGs from 538 in FY 2007 to 745 in FY 2008. By increasing the number of MS–DRGs and more fully taking into account patient severity of illness in Medicare payment rates for acute care hospitals, MS–DRGs encourage hospitals to improve their documentation and coding of patient diagnoses. In the FY 2008 IPPS final rule with comment period (72 FR 47175 through 47186), we indicated that the adoption of the MS–DRGs had the potential to lead to increases in aggregate payments without a corresponding increase in actual patient severity of illness due to the incentives for additional documentation and coding. In that final rule with comment period, we exercised our authority under section 1886(d)(3)(A)(vi) of the Act, which authorizes us to maintain budget neutrality by adjusting the national standardized amount, to eliminate the estimated effect of changes in coding or classification that do not reflect real changes in case-mix. Our actuaries estimated that maintaining budget neutrality required an adjustment of ¥4.8 percentage points to the national standardized amount. We provided for phasing in this ¥4.8 percentage point adjustment over 3 years. Specifically, we established prospective documentation and coding adjustments of ¥1.2 percentage points for FY 2008, ¥1.8 percentage points for FY 2009, and ¥1.8 percentage points for FY 2010. On September 29, 2007, Congress enacted the TMA [Transitional Medical Assistance], Abstinence Education, and QI [Qualifying Individuals] Programs Extension Act of 2007 (Pub. L. 110–90). Section 7(a) of Public Law 110–90 reduced the documentation and coding adjustment made as a result of the MS– DRG system that we adopted in the FY 2008 IPPS final rule with comment PO 00000 Frm 00014 Fmt 4701 Sfmt 4702 period to ¥0.6 percentage point for FY 2008 and ¥0.9 percentage point for FY 2009. As discussed in prior year rulemakings, and most recently in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56780 through 56782), we implemented a series of adjustments required under sections 7(b)(1)(A) and 7(b)(1)(B) of Public Law 110–90, based on a retrospective review of FY 2008 and FY 2009 claims data. We completed these adjustments in FY 2013, but indicated in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53274 through 53275) that delaying full implementation of the adjustment required under section 7(b)(1)(A) of Public Law 110–90 until FY 2013 resulted in payments in FY 2010 through FY 2012 being overstated, and that these overpayments could not be recovered under Public Law 110–90. In addition, as discussed in prior rulemakings and most recently in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38008 through 38009), section 631 of the ATRA amended section 7(b)(1)(B) of Public Law 110–90 to require the Secretary to make a recoupment adjustment or adjustments totaling $11 billion by FY 2017. This adjustment represented the amount of the increase in aggregate payments as a result of not completing the prospective adjustment authorized under section 7(b)(1)(A) of Public Law 110–90 until FY 2013. 2. Adjustment Made for FY 2018 as Required Under Section 414 of Public Law 114–10 (MACRA) and Section 15005 of Public Law 114–255 As stated in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56785), once the recoupment required under section 631 of the ATRA was complete, we had anticipated making a single positive adjustment in FY 2018 to offset the reductions required to recoup the $11 billion under section 631 of the ATRA. However, section 414 of the MACRA (which was enacted on April 16, 2015) replaced the single positive adjustment we intended to make in FY 2018 with a 0.5 percentage point positive adjustment for each of FYs 2018 through 2023. In the FY 2017 rulemaking, we indicated that we would address the adjustments for FY 2018 and later fiscal years in future rulemaking. Section 15005 of the 21st Century Cures Act (Pub. L. 114–255), which was enacted on December 13, 2016, amended section 7(b)(1)(B) of the TMA, as amended by section 631 of the ATRA and section 414 of the MACRA, to reduce the adjustment for FY 2018 from a 0.5 percentage point to a 0.4588 percentage point. As we discussed in the FY 2018 E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules rulemaking, we believe the directive under section 15005 of Public Law 114– 255 is clear. Therefore, in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38009) for FY 2018, we implemented the required +0.4588 percentage point adjustment to the standardized amount. This is a permanent adjustment to payment rates. While we did not address future adjustments required under section 414 of the MACRA and section 15005 of Public Law 114–255 at that time, we stated that we expected to propose positive 0.5 percentage point adjustments to the standardized amounts for FYs 2019 through 2023. the proposed MS–DRG relative weights for FY 2019 is included in section II.G. of the preamble to this FY 2019 IPPS/ LTCH PPS proposed rule. As we did with the FY 2018 IPPS/LTCH PPS final rule, for this proposed rule, we are providing the version of the HCRIS from which we calculated these proposed 19 CCRs on the CMS website at: https:// www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ AcuteInpatientPPS/. Click on the link on the left side of the screen titled ‘‘FY 2019 IPPS Proposed Rule Home Page’’ or ‘‘Acute Inpatient Files for Download.’’ 3. Proposed Adjustment for FY 2019 F. Proposed Changes to Specific MS– DRG Classifications Consistent with the requirements of section 414 of the MACRA, we are proposing to implement a positive 0.5 percentage point adjustment to the standardized amount for FY 2019. This would be a permanent adjustment to payment rates. We plan to propose future adjustments required under section 414 of the MACRA for FYs 2020 through 2023 in future rulemaking. E. Refinement of the MS–DRG Relative Weight Calculation 1. Background Beginning in FY 2007, we implemented relative weights for DRGs based on cost report data instead of charge information. We refer readers to the FY 2007 IPPS final rule (71 FR 47882) for a detailed discussion of our final policy for calculating the cost-based DRG relative weights and to the FY 2008 IPPS final rule with comment period (72 FR 47199) for information on how we blended relative weights based on the CMS DRGs and MS–DRGs. We also refer readers to the FY 2017 IPPS/LTCH PPS final rule (81 FR 56785 through 56787) for a detailed discussion of the history of changes to the number of cost centers used in calculating the DRG relative weights. Since FY 2014, we calculate the IPPS MS–DRG relative weights using 19 CCRs, which now include distinct CCRs for implantable devices, MRIs, CT scans, and cardiac catheterization. daltland on DSKBBV9HB2PROD with PROPOSALS2 2. Discussion of Policy for FY 2019 Consistent with our established policy, we are calculating the proposed MS–DRG relative weights for FY 2019 using two data sources: The MedPAR file as the claims data source and the HCRIS as the cost report data source. We adjusted the charges from the claims to costs by applying the 19 national average CCRs developed from the cost reports. The description of the calculation of the proposed 19 CCRs and VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 1. Discussion of Changes to Coding System and Basis for Proposed FY 2019 MS–DRG Updates a. Conversion of MS–DRGs to the International Classification of Diseases, 10th Revision (ICD–10) As of October 1, 2015, providers use the International Classification of Diseases, 10th Revision (ICD–10) coding system to report diagnoses and procedures for Medicare hospital inpatient services under the MS–DRG system instead of the ICD–9–CM coding system, which was used through September 30, 2015. The ICD–10 coding system includes the International Classification of Diseases, 10th Revision, Clinical Modification (ICD– 10–CM) for diagnosis coding and the International Classification of Diseases, 10th Revision, Procedure Coding System (ICD–10–PCS) for inpatient hospital procedure coding, as well as the ICD–10–CM and ICD–10–PCS Official Guidelines for Coding and Reporting. For a detailed discussion of the conversion of the MS–DRGs to ICD– 10, we refer readers to the FY 2017 IPPS/LTCH PPS final rule (81 FR 56787 through 56789). b. Basis for Proposed FY 2019 MS–DRG Updates CMS has previously encouraged input from our stakeholders concerning the annual IPPS updates when that input was made available to us by December 7 of the year prior to the next annual proposed rule update. As discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38010), as we work with the public to examine the ICD–10 claims data used for updates to the ICD–10 MS DRGs, we would like to examine areas where the MS–DRGs can be improved, which will require additional time for us to review requests from the public to make specific updates, analyze claims data, and consider any proposed PO 00000 Frm 00015 Fmt 4701 Sfmt 4702 20177 updates. Given the need for more time to carefully evaluate requests and propose updates, we changed the deadline to request updates to the MS– DRGs to November 1 of each year. This will provide an additional 5 weeks for the data analysis and review process. Interested parties had to submit any comments and suggestions for FY 2019 by November 1, 2017, and are encouraged to submit any comments and suggestions for FY 2020 by November 1, 2018 via the CMS MS– DRG Classification Change Request Mailbox located at: MSDRGClassificationChange@ cms.hhs.gov. The comments that were submitted in a timely manner for FY 2019 are discussed in this section of the preamble of this proposed rule. Following are the changes that we are proposing to the MS–DRGs for FY 2019 in this FY 2019 IPPS/LTCH PPS proposed rule. We are inviting public comments on each of the MS–DRG classification proposed changes, as well as our proposals to maintain certain existing MS–DRG classifications discussed in this proposed rule. In some cases, we are proposing changes to the MS–DRG classifications based on our analysis of claims data and consultation with our clinical advisors. In other cases, we are proposing to maintain the existing MS–DRG classifications based on our analysis of claims data and consultation with our clinical advisors. For this FY 2019 IPPS/LTCH PPS proposed rule, our MS–DRG analysis was based on ICD–10 claims data from the September 2017 update of the FY 2017 MedPAR file, which contains hospital bills received through September 30, 2017, for discharges occurring through September 30, 2017. In our discussion of the proposed MS– DRG reclassification changes, we refer to our analysis of claims data from the ‘‘September 2017 update of the FY 2017 MedPAR file.’’ As explained in previous rulemaking (76 FR 51487), in deciding whether to propose to make further modifications to the MS–DRGs for particular circumstances brought to our attention, we consider whether the resource consumption and clinical characteristics of the patients with a given set of conditions are significantly different than the remaining patients represented in the MS–DRG. We evaluate patient care costs using average costs and lengths of stay and rely on the judgment of our clinical advisors to determine whether patients are clinically distinct or similar to other patients represented in the MS–DRG. In evaluating resource costs, we consider both the absolute and percentage differences in average costs E:\FR\FM\07MYP2.SGM 07MYP2 20178 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules between the cases we select for review and the remainder of cases in the MS– DRG. We also consider variation in costs within these groups; that is, whether observed average differences are consistent across patients or attributable to cases that are extreme in terms of costs or length of stay, or both. Further, we consider the number of patients who will have a given set of characteristics and generally prefer not to create a new MS–DRG unless it would include a substantial number of cases. In our examination of the claims data, we apply the following criteria established in FY 2008 (72 FR 47169) to determine if the creation of a new complication or comorbidity (CC) or major complication or comorbidity (MCC) subgroup within a base MS–DRG is warranted: • A reduction in variance of costs of at least 3 percent; • At least 5 percent of the patients in the MS–DRG fall within the CC or MCC subgroup; • At least 500 cases are in the CC or MCC subgroup; • There is at least a 20-percent difference in average costs between subgroups; and • There is a $2,000 difference in average costs between subgroups. In order to warrant creation of a CC or MCC subgroup within a base MS– DRG, the subgroup must meet all five of the criteria. 2. Pre-MDC a. Heart Transplant or Implant of Heart Assist System In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38012), we stated our intent to review the ICD–10 logic for Pre-MDC MS–DRGs 001 and 002 (Heart Transplant or Implant of Heart Assist System with and without MCC, respectively), as well as MS–DRG 215 ICD–10–PCS code 02HA0QZ ............. 02HA3QZ ............. 02HA4QZ ............. Code description Insertion of implantable heart assist system into heart, open approach. Insertion of implantable heart assist system into heart, percutaneous approach. Insertion of implantable heart assist system into heart, percutaneous endoscopic approach. In addition to these three procedure codes, there are also 33 pairs of code combinations or procedure code ‘‘clusters’’ that, when reported together, satisfy the logic for assignment to MS– DRGs 001 and 002. The code combinations are represented by two procedure codes and include either one code for the insertion of the device with one code for removal of the device or Code Code description 02HA0RS ........... Insertion of biventricular short-term external heart assist system into heart, open approach. Insertion of biventricular short-term external heart assist system into heart, open approach. Insertion of biventricular short-term external heart assist system into heart, open approach. Insertion of short-term external heart assist system into heart, open approach. Insertion of short-term external heart assist system into heart, open approach. Insertion of short-term external heart assist system into heart, open approach. Insertion of biventricular heart assist system into approach. Insertion of biventricular heart assist system into approach. Insertion of biventricular heart assist system into approach. Insertion of biventricular heart assist system into endoscopic approach. 02HA0RS ........... 02HA0RS ........... 02HA0RZ ........... 02HA0RZ ........... 02HA0RZ ........... 02HA3RS ........... daltland on DSKBBV9HB2PROD with PROPOSALS2 02HA3RS ........... 02HA3RS ........... 02HA4RS ........... VerDate Sep<11>2014 (Other Heart Assist System Implant) and MS–DRGs 268 and 269 (Aortic and Heart Assist Procedures Except Pulsation Balloon with and without MCC, respectively) where procedures involving heart assist devices are currently assigned. We also encouraged the public to submit any comments on restructuring the MS–DRGs for heart assist system procedures to the CMS MS–DRG Classification Change Request Mailbox located at: MSDRGClassificationChange@ cms.hhs.gov by November 1, 2017. The logic for Pre-MDC MS–DRGs 001 and 002 is comprised of two lists. The first list includes procedure codes identifying a heart transplant procedure, and the second list includes procedure codes identifying the implantation of a heart assist system. The list of procedure codes identifying the implantation of a heart assist system includes the following three codes. 20:30 May 04, 2018 Jkt 244001 one code for the revision of the device with one code for the removal of the device. The 33 pairs of code combinations are listed below. Code Code description with 02PA0RZ .......... Removal of short-term external heart assist system from heart, open approach. with 02PA3RZ .......... Removal of short-term external heart assist system from heart, percutaneous approach. with 02PA4RZ .......... with 02PA0RZ .......... with 02PA3RZ .......... with 02PA4RZ .......... short-term external heart, percutaneous with 02PA0RZ .......... Removal of short-term external heart assist system from heart, percutaneous endoscopic approach. Removal of short-term external heart assist system from heart, open approach. Removal of short-term external heart assist system from heart, percutaneous approach. Removal of short-term external heart assist system from heart, percutaneous endoscopic approach. Removal of short-term external heart assist system from heart, open approach. short-term external heart, percutaneous with 02PA3RZ .......... Removal of short-term external heart assist system from heart, percutaneous approach. short-term external heart, percutaneous with 02PA4RZ .......... short-term external heart, percutaneous with 02PA0RZ .......... Removal of short-term external heart assist system from heart, percutaneous endoscopic approach. Removal of short-term external heart assist system from heart, open approach. PO 00000 Frm 00016 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules Code Code description 02HA4RS ........... Insertion of biventricular short-term external heart assist system into heart, percutaneous endoscopic approach. Insertion of biventricular short-term external heart assist system into heart, percutaneous endoscopic approach. Insertion of short-term external heart assist system into heart, percutaneous endoscopic approach. Insertion of short-term external heart assist system into heart, percutaneous endoscopic approach. Insertion of short-term external heart assist system into heart, percutaneous endoscopic approach. Revision of implantable heart assist system in heart, open approach. Revision of implantable heart assist system in heart, open approach. Revision of implantable heart assist system in heart, open approach. 02HA4RS ........... 02HA4RZ ........... 02HA4RZ ........... 02HA4RZ ........... 02WA0QZ .......... 02WA0QZ .......... 02WA0QZ .......... 02WA0RZ ........... 02WA0RZ ........... 02WA0RZ ........... 02WA3QZ .......... 02WA3QZ .......... 02WA3QZ .......... 02WA3RZ ........... 02WA3RZ ........... 02WA3RZ ........... 02WA4QZ .......... 02WA4QZ .......... 02WA4QZ .......... 02WA4RZ ........... 02WA4RZ ........... daltland on DSKBBV9HB2PROD with PROPOSALS2 02WA4RZ ........... Code Code description with 02PA3RZ .......... Removal of short-term external heart assist system from heart, percutaneous approach. with 02PA4RZ .......... with 02PA0RZ .......... Removal of short-term external heart assist system from heart, percutaneous endoscopic approach. Removal of short-term external heart assist system from heart, open approach. with 02PA3RZ .......... Removal of short-term external heart assist system from heart, percutaneous approach. with 02PA4RZ .......... with 02PA0RZ .......... with 02PA3RZ .......... with 02PA4RZ .......... external heart assist approach. external heart assist approach. external heart assist approach. with 02PA0RZ .......... with 02PA3RZ .......... with 02PA4RZ .......... Revision of implantable heart assist system in heart, percutaneous approach. Revision of implantable heart assist system in heart, percutaneous approach. Revision of implantable heart assist system in heart, percutaneous approach. with 02PA0RZ .......... with 02PA3RZ .......... with 02PA4RZ .......... Revision system Revision system Revision system of short-term external heart assist in heart, percutaneous approach. of short-term external heart assist in heart, percutaneous approach. of short-term external heart assist in heart, percutaneous approach. with 02PA0RZ .......... with 02PA3RZ .......... with 02PA4RZ .......... Revision of implantable heart assist system in heart, percutaneous endoscopic approach. Revision of implantable heart assist system in heart, percutaneous endoscopic approach. Revision of implantable heart assist system in heart, percutaneous endoscopic approach. with 02PA0RZ .......... with 02PA3RZ .......... with 02PA4RZ .......... Revision of system in approach. Revision of system in approach. Revision of system in approach. short-term external heart assist heart, percutaneous endoscopic with 02PA0RZ .......... Removal of short-term external heart assist system from heart, percutaneous endoscopic approach. Removal of short-term external heart assist system from heart, open approach. Removal of short-term external heart assist system from heart, percutaneous approach. Removal of short-term external heart assist system from heart, percutaneous endoscopic approach. Removal of short-term external heart assist system from heart, open approach. Removal of short-term external heart assist system from heart, percutaneous approach. Removal of short-term external heart assist system from heart, percutaneous endoscopic approach. Removal of short-term external heart assist system from heart, open approach. Removal of short-term external heart assist system from heart, percutaneous approach. Removal of short-term external heart assist system from heart, percutaneous endoscopic approach. Removal of short-term external heart assist system from heart, open approach. Removal of short-term external heart assist system from heart, percutaneous approach. Removal of short-term external heart assist system from heart, percutaneous endoscopic approach. Removal of short-term external heart assist system from heart, open approach. Removal of short-term external heart assist system from heart, percutaneous approach. Removal of short-term external heart assist system from heart, percutaneous endoscopic approach. Removal of short-term external heart assist system from heart, open approach. short-term external heart assist heart, percutaneous endoscopic with 02PA3RZ .......... Removal of short-term external heart assist system from heart, percutaneous approach. short-term external heart assist heart, percutaneous endoscopic with 02PA4RZ .......... Removal of short-term external heart assist system from heart, percutaneous endoscopic approach. 2018 IPPS/LTCH PPS final rule (82 FR 38011 through 38012) involving MS– DRG 215 (Other Heart Assist System Implant), the commenters provided examples of common clinical scenarios involving a left ventricular assist device (LVAD) and included the procedure codes that were reported under the ICD– 9 based MS–DRGs in comparison to the procedure codes reported under the ICD–10 MS–DRGs, which are reflected in the following table. Revision system Revision system Revision system of short-term in heart, open of short-term in heart, open of short-term in heart, open In response to our solicitation for public comments on restructuring the MS–DRGs for heart assist system procedures, commenters recommended that CMS maintain the current logic under the Pre-MDC MS–DRGs 001 and 002. Similar to the discussion in the FY VerDate Sep<11>2014 20179 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00017 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 20180 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules Procedure ICD–9–CM procedure code New LVAD inserted .......... 37.66 (Insertion of implantable heart assist system). 001 or 002 LVAD Exchange—existing LVAD is removed and replaced with either new LVAD system or new LVAD pump. 37.63 (Repair of heart assist system). 215 LVAD revision and repair—existing LVAD is adjusted or repaired without removing the existing LVAD device. 37.63 (Repair of heart assist system). 215 The commenters noted that, for PreMDC MS–DRGs 001 and 002, the procedures involving the insertion of an implantable heart assist system, such as the insertion of a LVAD, and the procedures involving exchange of an LVAD (where an existing LVAD is removed and replaced with either a new LVAD or a new LVAD pump) demonstrate clinical similarities and utilize similar resources. Although the commenters recommended that CMS maintain the current logic under the Pre-MDC MS–DRGs 001 and 002, they also recommended that CMS continue to monitor the data in these MS–DRGs for future consideration of distinctions (for example, different approaches and evolving technologies) that may impact the clinical and resource use of patients undergoing procedures utilizing heart assist devices. The commenters also ICD–9 MS–DRG ICD–10 MS–DRG ICD–10–PCS codes 02WA0QZ (Insertion of implantable heart assist system into heart, open approach). 02WA3QZ (Insertion of implantable heart assist system into heart, percutaneous approach). 02WA4QZ (Insertion of implantable heart assist system into heart, percutaneous endoscopic approach). 02PA0QZ (Removal of implantable heart assist system from heart, open approach). 02PA3QZ (Removal of implantable heart assist system from heart, percutaneous approach). 02PA4QZ (Removal of implantable heart assist system from heart, percutaneous endoscopic approach) and. 02WA0QZ (Insertion of implantable heart assist system into heart, open approach). 02WA3QZ (Insertion of implantable heart assist system into heart, percutaneous approach). 02WA4QZ (Insertion of implantable heart assist system into heart, percutaneous endoscopic approach). 02WA0QZ (Revision of implantable heart assist system in heart, open approach). 02WA3QZ (Revision of implantable heart assist system in heart, percutaneous approach). 02WA4QZ (Revision of implantable heart assist system in heart, percutaneous endoscopic approach). requested that coding guidance be issued for assignment of the correct ICD–10–PCS procedure codes describing LVAD exchanges to encourage accurate reporting of these procedures. We agree with the commenters that we should continue to monitor the data in Pre-MDC MS–DRGs 001 and 002 for future consideration of distinctions (for example, different approaches and evolving technologies) that may impact the clinical and resource use of patients undergoing procedures utilizing heart assist devices. In response to the request that coding guidance be issued for assignment of the correct ICD–10–PCS procedure codes describing LVAD exchanges to encourage accurate reporting of these procedures, as we noted in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38012), coding advice 001 or 002 001 or 002 215 is issued independently from payment policy. We also noted that, historically, we have not provided coding advice in rulemaking with respect to policy (82 FR 38045). We collaborate with the American Hospital Association (AHA) through the Coding Clinic for ICD–10– CM and ICD–10–PCS to promote proper coding. We recommend that the requestor and other interested parties submit any questions pertaining to correct coding for these technologies to the AHA. In response to the public comments we received on this topic, we are providing the results of our claims analysis from the September 2017 update of the FY 2017 MedPAR file for cases in Pre-MDC MS–DRGs 001 and 002. Our findings are shown in the following table. MS–DRGS FOR HEART TRANSPLANT OR IMPLANT OF HEART ASSIST SYSTEM Number of cases MS–DRG daltland on DSKBBV9HB2PROD with PROPOSALS2 MS–DRG 001—All cases ............................................................................................................ MS–DRG 002—All cases ............................................................................................................ As shown in this table, for MS–DRG 001, there were a total of 1,993 cases with an average length of stay of 35.6 days and average costs of $185,660. For MS–DRG 002, there were a total of 179 VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 cases with an average length of stay of 18.3 days and average costs of $99,635. We then examined claims data in PreMDC MS–DRGs 001 and 002 for cases that reported one of the three procedure PO 00000 Frm 00018 Fmt 4701 Sfmt 4702 1,993 179 Average length of stay 35.6 18.3 Average costs $185,660 99,635 codes identifying the implantation of a heart assist system such as the LVAD. Our findings are shown in the following table. E:\FR\FM\07MYP2.SGM 07MYP2 20181 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules MS–DRGS FOR HEART TRANSPLANT OR IMPLANT OF HEART ASSIST SYSTEM MS–DRG 001—All cases ............................................................................................................ MS–DRG 001—Cases with procedure code 02HA0QZ (Insertion of implantable heart assist system into heart, open approach) .......................................................................................... MS–DRG 001—Cases with procedure code 02HA3QZ (Insertion of implantable heart assist system into heart, percutaneous approach) ............................................................................ MS–DRG 001—Cases with procedure code 02HA4QZ (Insertion of implantable heart assist system into heart, percutaneous endoscopic approach) ......................................................... MS–DRG 002—All cases ............................................................................................................ MS–DRG 002—Cases with procedure code 02HA0QZ (Insertion of implantable heart assist system into heart, open approach) .......................................................................................... MS–DRG 002—Cases with procedure code 02HA3QZ (Insertion of implantable heart assist system into heart, percutaneous approach) ............................................................................ MS–DRG 002—Cases with procedure code 02HA4QZ (Insertion of implantable heart assist system into heart, percutaneous endoscopic approach) ......................................................... As shown in this table, for MS–DRG 001, there were a total of 1,260 cases reporting procedure code 02HA0QZ (Insertion of implantable heart assist system into heart, open approach) with an average length of stay of 35.5 days and average costs of $206,663. There was one case that reported procedure code 02HA3QZ (Insertion of implantable heart assist system into heart, percutaneous approach) with an average length of stay of 8 days and average costs of $33,889. There were no cases reporting procedure code 02HA4QZ (Insertion of implantable Average length of stay Number of cases MS–DRG heart assist system into heart, percutaneous endoscopic approach). For MS–DRG 002, there were a total of 82 cases reporting procedure code 02HA0QZ (Insertion of implantable heart assist system into heart, open approach) with an average length of stay of 19.9 days and average costs of $131,957. There were no cases reporting procedure codes 02HA3QZ (Insertion of implantable heart assist system into heart, percutaneous approach) or 02HA4QZ (Insertion of implantable heart assist system into heart, percutaneous endoscopic approach). Average costs 1,993 35.6 $185,660 1,260 35.5 206,663 1 8 33,889 0 179 0 18.3 0 99,635 82 19.9 131,957 0 0 0 0 0 0 We also examined the cases in MS– DRGs 001 and 002 that reported one of the possible 33 pairs of code combinations or clusters. Our findings are shown in the following 8 tables. The first table provides the total number of cases reporting a procedure code combination (or cluster) compared to all of the cases in the respective MS–DRG, followed by additional detailed tables showing the number of cases, average length of stay, and average costs for each specific code combination that was reported in the claims data. HEART TRANSPLANT OR IMPLANT OF HEART ASSIST SYSTEM MS–DRG MS–DRG MS–DRG MS–DRG Average length of stay Number of cases MS–DRG 001 and 002 001—All cases ............................................................................................................ 001—Cases with a procedure code combination (cluster) ......................................... 002—All cases ............................................................................................................ 002—Cases with a procedure code combination (cluster) ......................................... 1,993 149 179 6 Average costs 35.6 28.4 18.3 3.8 $185,660 179,607 99,635 57,343 PROCEDURE CODE COMBINATIONS FOR IMPLANT OF HEART ASSIST SYSTEM daltland on DSKBBV9HB2PROD with PROPOSALS2 Cases with a procedure code combination of 02HA0RS (Insertion of biventricular short-term external heart assist system into heart, open approach) with 02PA0RZ (Removal of shortterm external heart assist system from heart, open approach) .............................................. Cases with a procedure code combination of 02HA0RS (Insertion of biventricular short-term external heart assist system into heart, open approach) with 02PA3RZ (Removal of shortterm external heart assist system from heart, percutaneous approach) ................................. All cases reporting one or more of the above procedure code combinations in MS–DRG 001 VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Average length of stay Number of cases MS–DRG 001 Frm 00019 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM Average costs 3 20.3 $121,919 2 5 12 17 114,688 119,027 07MYP2 20182 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules PROCEDURE CODE COMBINATIONS FOR IMPLANT OF HEART ASSIST SYSTEM Average length of stay Number of cases Average costs MS–DRG 001 Cases with a procedure code combination of 02HA0RZ (Insertion of short-term external heart assist system into heart, open approach) with 02PA0RZ (Removal of short-term external heart assist system from heart, open approach) ..................................................................... Cases with a procedure code combination of 02HA0RZ (Insertion of short-term external heart assist system into heart, open approach) with 02PA3RZ (Removal of short-term external heart assist system from heart, percutaneous approach) ....................................................... All cases reporting one or more of the above procedure code combinations in MS–DRG 001 30 55.6 $351,995 19 49 29.8 45.6 191,163 289,632 1 4 48,212 2 3 4.5 4.3 66,386 60,328 52 43.3 276,403 MS–DRG 002 Cases with a procedure code combination of 02HA0RZ (Insertion of short-term external heart assist system into heart, open approach) with 02PA0RZ (Removal of short-term external heart assist system from heart, open approach) ..................................................................... Cases with a procedure code combination of 02HA0RZ (Insertion of short-term external heart assist system into heart, open approach) with 02PA3RZ (Removal of short-term external heart assist system from heart, percutaneous approach) ....................................................... All cases reporting one or more of the above procedure code combinations in MS–DRG 002 All cases reporting one or more of the above procedure code combinations across both MS– DRGs 001 and 002 .................................................................................................................. PROCEDURE CODE COMBINATIONS FOR IMPLANT OF HEART ASSIST SYSTEM Average length of stay Number of cases Average costs MS–DRG 001 Cases with a procedure code combination of 02HA3RS (Insertion of biventricular short-term external heart assist system into heart, percutaneous approach) with 02PA0RZ (Removal of short-term external heart assist system from heart, open approach) ................................. Cases with a procedure code combination of 02HA3RS (Insertion of biventricular short-term external heart assist system into heart, percutaneous approach) with 02PA3RZ (Removal of short-term external heart assist system from heart, percutaneous approach) ................... Cases with a procedure code combination of 02HA3RS (Insertion of biventricular short-term external heart assist system into heart, percutaneous approach) with 02PA4RZ (Removal of short-term external heart assist system from heart, percutaneous endoscopic approach) All cases reporting one or more of the above procedure code combinations in MS–DRG 001 3 43.3 $233,330 24 14.8 113,955 1 28 44 18.9 153,284 128,150 2 2 4 4 $30,954 30,954 30 17.9 121,670 MS–DRG 002 Cases with a procedure code combination of 02HA3RS (Insertion of biventricular short-term external heart assist system into heart, percutaneous approach) with 02PA3RZ (Removal of short-term external heart assist system from heart, percutaneous approach) ................... All cases reporting one of the above procedure code combinations in MS–DRG 002 .............. All cases reporting one or more of the above procedure code combinations across both MS-DRGs 001 and 002 ........................................................................................................... PROCEDURE CODE COMBINATIONS FOR IMPLANT OF HEART ASSIST SYSTEM daltland on DSKBBV9HB2PROD with PROPOSALS2 Cases with a procedure code combination of 02HA4RZ (Insertion of short-term external heart assist system into heart, percutaneous endoscopic approach) with 02PA3RZ (Removal of short-term external heart assist system from heart, percutaneous approach) ....................... Cases with a procedure code combination of 02HA4RZ (Insertion of short-term external heart assist system into heart, open approach) with 02PA4RZ (Removal of short-term external heart assist system from heart, percutaneous endoscopic approach) .................................... All cases reporting one or more of the above procedure code combinations in MS–DRG 001 VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Average length of stay Number of cases MS–DRG 001 Frm 00020 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM Average costs 4 17.3 $154,885 2 6 15.5 16.7 80,852 130,207 07MYP2 20183 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules PROCEDURE CODE COMBINATIONS FOR IMPLANT OF HEART ASSIST SYSTEM Average length of stay Number of cases MS–DRG 001 Cases with a procedure code combination of 02WA0QZ (Revision of implantable heart assist system in heart, open approach) with 02PA0RZ (Removal of short-term external heart assist system from heart, open approach) .................................................................................. 1 Average costs 105 $516,557 PROCEDURE CODE COMBINATIONS FOR IMPLANT OF HEART ASSIST SYSTEM Average length of stay Number of cases MS–DRG 001 Cases with a procedure code combination of 02WA0RZ (Revision of short-term external heart assist system in heart, open approach) with 02PA0RZ (Removal of short-term external heart assist system from heart, open approach) ............................................................... Cases with a procedure code combination of 02WA0RZ (Revision of short-term external heart assist system in heart, open approach) with 02PA03Z (Removal of short-term external heart assist system from heart, percutaneous approach) ................................................. All cases reporting one or more of the above procedure code combinations in MS–DRG 001 Average costs 2 40 $285,818 1 3 43 41 372,673 314,770 PROCEDURE CODE COMBINATIONS FOR IMPLANT OF HEART ASSIST SYSTEM Average length of stay Number of cases Average costs MS–DRG 001 Cases with a procedure code combination of 02WA3RZ (Revision of short-term external heart assist system in heart, percutaneous approach) with 02PA0RZ (Removal of shortterm external heart assist system from heart, open approach) .............................................. Cases with a procedure code combination of 02WA3RZ (Revision of short-term external heart assist system in heart, percutaneous approach) with 02PA3RZ (Removal of shortterm external heart assist system from heart, percutaneous approach) ................................. All cases reporting one or more of the above procedure code combinations in MS–DRG 001 2 24 $123,084 55 57 14.7 15 104,963 105,599 1 2 101,168 58 14.8 105,522 1 10 112,698 MS–DRG 002 Cases with a procedure code combination of 02WA3RZ (Revision of short-term external heart assist system in heart, percutaneous approach) with 02PA3RZ (Removal of shortterm external heart assist system from heart, percutaneous approach) ................................. All cases reporting one or more of the above procedure code combinations across both MS– DRGs 001 and 002 .................................................................................................................. MS–DRG 001 Cases with a procedure code combination of 02WA4RZ (Revision of short-term external heart assist system in heart, percutaneous endoscopic approach) with 02PA0RZ (Removal of short-term external heart assist system from heart, open approach) ................................. We did not find any cases reporting the following procedure code 02HA4RS ........... daltland on DSKBBV9HB2PROD with PROPOSALS2 02HA4RS ........... 02HA4RS ........... 02WA3QZ .......... 02WA3QZ .......... VerDate Sep<11>2014 combinations (clusters) in the claims data. Insertion of biventricular short-term external heart assist system into heart, percutaneous endoscopic approach. Insertion of biventricular short-term external heart assist system into heart, percutaneous endoscopic approach. Insertion of biventricular short-term external heart assist system into heart, percutaneous endoscopic approach. Revision of implantable heart assist system in heart, percutaneous approach. Revision of implantable heart assist system in heart, percutaneous approach. 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00021 with 02PA0RZ .......... Removal of short-term external heart assist system from heart, open approach. with 02PA3RZ .......... Removal of short-term external heart assist system from heart, percutaneous approach. with 02PA4RZ .......... with 02PA0RZ .......... with 02PA3RZ .......... Removal of short-term external heart assist system from heart, percutaneous endoscopic approach. Removal of short-term external heart assist system from heart, open approach. Removal of short-term external heart assist system from heart, percutaneous approach. Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 20184 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 02WA3QZ .......... Revision of implantable heart assist system in heart, percutaneous approach. The data show that there are differences in the average length of stay and average costs for cases in Pre-MDC MS–DRGs 001 and 002 according to the type of procedure (insertion, revision, or removal), the type of device (biventricular short-term external heart assist system, short-term external heart assist system or implantable heart assist system), and the approaches that were utilized (open, percutaneous, or percutaneous endoscopic). We agree with the commenters’ recommendation to maintain the structure of Pre-MDC MS–DRGs 001 and 002 for FY 2019 and with 02PA4RZ .......... will continue to analyze the claims data. We are inviting public comments on our decision to maintain the current structure of Pre-MDC MS–DRGs 001 and 002 for FY 2019. Commenters also suggested that CMS maintain the current logic for MS–DRG 215 (Other Heart Assist System Implant), but they recommended that CMS continue to monitor the data in MS–DRG 215 for future consideration of distinctions (for example, different approaches and evolving technologies) that may impact the clinical and resource use of procedures utilizing heart assist devices. We also received a Removal of short-term external heart assist system from heart, percutaneous endoscopic approach. request to review claims data for procedures involving extracorporeal membrane oxygenation (ECMO) in combination with the insertion of a percutaneous short-term external heart assist device to determine if the current MS–DRG assignment is appropriate. The logic for MS–DRG 215 is comprised of the procedure codes shown in the following table, for which we examined claims data in the September 2017 update of the FY 2017 MedPAR file in response to the commenters’ requests. Our findings are shown in the following table. MS–DRG 215 [Other heart assist system implant] Average length of stay daltland on DSKBBV9HB2PROD with PROPOSALS2 Number of cases All cases ...................................................................................................................................... Cases with procedure code 02HA0RJ (Insertion of short-term external heart assist system into heart, intraoperative, open approach) ............................................................................... Cases with procedure code 02HA0RS (Insertion of biventricular short-term external heart assist system into heart, open approach) ................................................................................... Cases with procedure code 02HA0RZ (Insertion of short-term external heart assist system into heart, open approach) ....................................................................................................... Cases with procedure code 02HA3RJ (Insertion of short-term external heart assist system into heart, intraoperative, percutaneous approach) ................................................................. Cases with procedure code 02HA3RS (Insertion of biventricular short-term external heart assist system into heart, percutaneous approach) ...................................................................... Cases with procedure code 02HA3RZ (Insertion of short-term external heart assist system into heart, percutaneous approach) ......................................................................................... Cases with procedure code 02HA4RJ (Insertion of short-term external heart assist system into heart, intraoperative, percutaneous endoscopic approach) ............................................. Cases with procedure code 02HA4RS (Insertion of biventricular short-term external heart assist system into heart, percutaneous endoscopic approach) .................................................. Cases with procedure code 02HA4RZ (Insertion of short-term external heart assist system into heart, percutaneous endoscopic approach) ..................................................................... Cases with procedure code 02WA0JZ (Revision of synthetic substitute in heart, open approach) ..................................................................................................................................... Cases with procedure code 02WA0QZ (Revision of implantable heart assist system in heart, open approach) ........................................................................................................................ Cases with procedure code 02WA0RS (Revision of biventricular short-term external heart assist system in heart, open approach) ...................................................................................... Cases with procedure code 02WA0RZ (Revision of short-term external heart assist system in heart, open approach) .............................................................................................................. Cases with procedure code 02WA3QZ (Revision of implantable heart assist system in heart, percutaneous approach) .......................................................................................................... Cases with procedure code 02WA3RS (Revision of biventricular short-term external heart assist system in heart, percutaneous approach) ......................................................................... Cases with procedure code 02WA3RZ (Revision of short-term external heart assist system in heart, percutaneous approach) ................................................................................................ Cases with procedure code 02WA4QZ (Revision of implantable heart assist system in heart, percutaneous endoscopic approach) ....................................................................................... Cases with procedure code 02WA4RS (Revision of biventricular short-term external heart assist system in heart, percutaneous endoscopic approach) ..................................................... Cases with procedure code 02WA4RZ (Revision of short-term external heart assist system in heart, percutaneous endoscopic approach) ............................................................................ As shown in this table, for MS–DRG 215, we found a total of 3,428 cases with VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 an average length of stay of 8.7 days and average costs of $68,965. For procedure PO 00000 Frm 00022 Fmt 4701 Sfmt 4702 Average costs 3,428 8.7 $68,965 0 0 0 9 10 118,361 66 11.5 99,107 0 0 0 117 7.2 64,302 3,136 8.4 67,670 0 0 0 1 2 43,988 31 5.3 57,042 1 84 366,089 56 25.1 123,410 0 0 0 8 13.5 99,378 0 0 0 0 0 0 80 10 71,077 0 0 0 0 0 0 0 0 0 codes describing the insertion of a biventricular short-term external heart E:\FR\FM\07MYP2.SGM 07MYP2 20185 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules assist system with open, percutaneous or percutaneous endoscopic approaches, we found a total of 127 cases with an average length of stay ranging from 2 to 10 days and average costs ranging from $43,988 to $118,361. For procedure codes describing the insertion of a shortterm external heart assist system with open, percutaneous or percutaneous endoscopic approaches, we found a total of 3,233 cases with an average length of stay ranging from 5.3 days to 11.5 days and average costs ranging from $57,042 to $99,107. For procedure codes describing the revision of a shortterm external heart assist system with open or percutaneous approaches, we found a total of 88 cases with an average length of stay ranging from 10 to 13.5 days and average costs ranging from $71,077 to $99,378. We found 1 case reporting procedure code 02WA0JZ (Revision of synthetic substitute in heart, open approach), with an average length of stay of 84 days and average costs of $366,089. Lastly, we found 56 cases reporting procedure code 02WA0QZ (Revision of implantable heart assist system in heart, open approach) with an average length of stay of 25.1 days and average costs of $123,410. As the data show, there is a wide range in the average length of stay and the average costs for cases reporting procedures that involve a biventricular short-term external heart assist system versus a short-term external heart assist system. There is an even greater range in the average length of stay and the average costs when comparing the revision of a short-term external heart assist system to the revision of a synthetic substitute in the heart or to the revision an implantable heart assist system. We agree with the commenters that continued monitoring of the data and further analysis is necessary prior to proposing any modifications to MS– DRG 215. As stated in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38012), we are aware that the AHA ICD–10–PCS code 02HA0RJ .............. 02HA3RJ .............. 02HA4RJ .............. published Coding Clinic advice that clarified coding and reporting for certain external heart assist devices due to the technology being approved for new indications. The current claims data do not yet reflect that updated guidance. We also note that there have been recent updates to the descriptions of the codes for heart assist devices in the past year. For example, the qualifier ‘‘intraoperative’’ was added effective October 1, 2017 (FY 2018) to the procedure codes describing the insertion of short-term external heart assist system procedures to distinguish between procedures where the device was only used intraoperatively and was removed at the conclusion of the procedure versus procedures where the device was not removed at the conclusion of the procedure and for which that qualifier would not be reported. The current claims data do not yet reflect these new procedure codes, which are displayed in the following table and are assigned to MS–DRG 215. Code description Insertion of short-term external heart assist system into heart, intraoperative, open approach. Insertion of short-term external heart assist system into heart, intraoperative, percutaneous approach. Insertion of short-term external heart assist system into heart, intraoperative, percutaneous endoscopic approach. Our clinical advisors agree that additional claims data are needed for analysis prior to proposing any changes to MS–DRG 215. Therefore, we are proposing not to make any modifications to MS–DRG 215 for FY 2019. We are inviting public comments on our proposal. As stated earlier in this section, we also received a request to review cases reporting the use of ECMO in combination with the insertion of a percutaneous short-term external heart assist device. Under ICD–10–PCS, ECMO is identified with procedure code 5A15223 (Extracorporeal membrane oxygenation, continuous) and the insertion of a percutaneous short-term external heart assist device is identified with procedure code 02HA3RZ (Insertion of short-term external heart assist system into heart, percutaneous approach). According to the commenter, when ECMO procedures are performed percutaneously, they are less invasive and less expensive than traditional ECMO. The commenter also noted that, currently under ICD–10–PCS, there is not a specific procedure code to identify percutaneous ECMO, and providers are only able to report ICD–10–PCS procedure code 5A15223, which may be inappropriately resulting in a higher paying MS–DRG. Therefore, the commenter submitted a separate request to create a new ICD–10–PCS procedure code specifically for percutaneous ECMO which was discussed at the March 6–7, 2018 ICD–10 Coordination and Maintenance Committee Meeting. We refer readers to section II.F.18. of the preamble of this proposed rule for further information regarding this meeting and the discussion for a new procedure code. The requestor suggested that cases reporting a procedure code for ECMO in combination with the insertion of a percutaneous short-term external heart assist device could be reassigned from Pre-MDC MS–DRG 003 (ECMO or Tracheostomy with Mechanical Ventilation >96 Hours or Principal Diagnosis Except Face, Mouth and Neck with Major O.R. Procedure) to MS–DRG 215. Our analysis involved examining cases in Pre-MDC MS–DRG 003 in the September 2017 update of the FY 2017 MedPAR file for cases reporting ECMO with and without the insertion of a percutaneous short-term external heart assist device. Our findings are shown in the following table. daltland on DSKBBV9HB2PROD with PROPOSALS2 ECMO AND PERCUTANEOUS SHORT-TERM EXTERNAL HEART ASSIST DEVICE MS–DRG 003—All cases ............................................................................................................ MS–DRG 003—Cases with procedure code 5A15223 (Extracorporeal membrane oxygenation, continuous) ..................................................................................................................... MS–DRG 003—Cases with procedure code 5A15223 (Extracorporeal membrane oxygenation, continuous) and 02HA3RZ (Insertion of short-term external heart assist system into heart, percutaneous approach) ................................................................................................ VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00023 Average length of stay Number of cases Pre-MDC MS–DRG Fmt 4701 Sfmt 4702 Average costs 14,383 29.5 $118,218 1,786 19 119,340 94 11.4 110,874 E:\FR\FM\07MYP2.SGM 07MYP2 20186 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules ECMO AND PERCUTANEOUS SHORT-TERM EXTERNAL HEART ASSIST DEVICE—Continued MS–DRG 003—Cases with procedure code 5A15223 (Extracorporeal membrane oxygenation, continuous) and 02HA4RZ (Insertion of short-term external heart assist system into heart, percutaneous endoscopic approach) ............................................................................ As shown in this table, we found a total of 14,383 cases with an average length of stay of 29.5 days and average costs of $118,218 in Pre-MDC MS–DRG 003. We found 1,786 cases reporting procedure code 5A15223 (Extracorporeal membrane oxygenation, continuous) with an average length of stay of 19 days and average costs of Average length of stay Number of cases Pre-MDC MS–DRG $119,340. We found 94 cases reporting procedure code 5A15223 and 02HA3RZ (Insertion of short-term external heart assist system into heart, percutaneous approach) with an average length of stay of 11.4 days and average costs of $110,874. Lastly, we found 1 case reporting procedure code 5A15223 and 02HA4RZ (Insertion of short-term Average costs 1 1 64,319 external heart assist system into heart, percutaneous endoscopic approach) with an average length of stay of 1 day and average costs of $64,319. We also reviewed the cases in MS– DRG 215 for procedure codes 02HA3RZ and 02HA4RZ. Our findings are shown in the following table. PERCUTANEOUS SHORT-TERM EXTERNAL HEART ASSIST DEVICE MS–DRG 215—All cases ............................................................................................................ MS–DRG 215—Cases with procedure code 02HA3RZ (Insertion of short-term external heart assist system into heart, percutaneous approach) .................................................................. MS–DRG 215—Cases with procedure code 02HA4RZ (Insertion of short-term external heart assist system into heart, percutaneous endoscopic approach) .............................................. As shown in this table, we found a total of 3,428 cases with an average length of stay of 8.7 days and average costs of $68,965. We found a total of 3,136 cases reporting procedure code 02HA3RZ with an average length of stay of 8.4 days and average costs of $67,670. We found a total of 31 cases reporting procedure code 02HA4RZ with an average length of stay of 5.3 days and average costs of $57,042. For Pre-MDC MS–DRG 003, while the average length of stay and average costs for cases where procedure code 5A15223 was reported with procedure code 02HA3RZ or procedure code 02HA4RZ are lower than the average length of stay and average costs for cases where procedure code 5A15223 was reported alone, we are unable to determine from the data if those ECMO procedures were performed Average length of stay Number of cases MS–DRG percutaneously in the absence of a unique code. In addition, the one case reporting procedure code 5A15223 with 02HA4RZ only had a 1 day length of stay and it is unclear from the data what the circumstances of that case may have involved. For example, the patient may have been transferred or may have expired. Therefore, we are proposing to not reassign cases reporting procedure code 5A15223 when reported with procedure code 02HA3RZ or procedure code 02HA4RZ for FY 2019. Our clinical advisors agree that until there is a way to specifically identify percutaneous ECMO in the claims data to enable further analysis, a proposal at this time is not warranted. We are inviting public comments on our proposal. A commenter also suggested that CMS maintain the current logic for MS–DRGs Average costs 3,428 8.7 $68,965 3,136 8.4 67,670 31 5.3 57,042 268 and 269 (Aortic and Heart Assist Procedures Except Pulsation Balloon with and without MCC, respectively), but recommended that CMS continue to monitor the data in these MS–DRGs for future consideration of distinctions (for example, different approaches and evolving technologies) that may impact the clinical and resource use of procedures involving heart assist devices. The logic for heart assist system devices in MS–DRGs 268 and 269 is comprised of the procedure codes shown in the following table, for which we examined claims data in the September 2017 update of the FY 2017 MedPAR file in response to the commenter’s request. Our findings are shown in the following table. MS–DRGS FOR AORTIC AND HEART ASSIST PROCEDURES EXCEPT PULSATION BALLOON Average length of stay daltland on DSKBBV9HB2PROD with PROPOSALS2 Number of cases MS–DRG 268—All cases ............................................................................................................ MS–DRG 268—Cases with procedure code 02PA0QZ (Removal of implantable heart assist system from heart, open approach) ......................................................................................... MS–DRG 268—Cases with procedure code 02PA0RS (Removal of biventricular short-term external heart assist system from heart, open approach) ....................................................... MS–DRG 268—Cases with procedure code 02PA0RZ (Removal of short-term external heart assist system from heart, open approach) .............................................................................. MS–DRG 268—Cases with procedure code 02PA3QZ (Removal of implantable heart assist system from heart, percutaneous approach) ........................................................................... VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00024 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM Average costs 3,798 9.6 $49,122 16 23.4 79,850 0 0 0 0 0 0 28 10.5 31,797 07MYP2 20187 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules MS–DRGS FOR AORTIC AND HEART ASSIST PROCEDURES EXCEPT PULSATION BALLOON—Continued Average length of stay Number of cases daltland on DSKBBV9HB2PROD with PROPOSALS2 MS–DRG 268—Cases with procedure code 02PA3RS (Removal of biventricular short-term external heart assist system from heart, percutaneous approach) ......................................... MS–DRG 268—Cases with procedure code 02PA3RZ (Removal of short-term external heart assist system from heart, percutaneous approach) ................................................................ MS–DRG 268—Cases with procedure code 02PA4QZ (Removal of implantable heart assist system from heart, percutaneous endoscopic approach) ....................................................... MS–DRG 268—Cases with procedure code 02PA4RS (Removal of biventricular short-term external heart assist system from heart, percutaneous endoscopic approach) ...................... MS–DRG 268—Cases with procedure code 02PA4RZ (Removal of short-term external heart assist system from heart, percutaneous endoscopic approach) ............................................. MS–DRG 269—All cases ............................................................................................................ MS–DRG 269—Cases with procedure code 02PA0QZ (Removal of implantable heart assist system from heart, open approach) ......................................................................................... MS–DRG 269—Cases with procedure code 02PA0RS (Removal of biventricular short-term external heart assist system from heart, open approach) ....................................................... MS–DRG 269—Cases with procedure code 02PA0RZ (Removal of short-term external heart assist system from heart, open approach) .............................................................................. MS–DRG 269—Cases with procedure code 02PA3QZ (Removal of implantable heart assist system from heart, percutaneous approach) ........................................................................... MS–DRG 269—Cases with procedure code 02PA3RS (Removal of biventricular short-term external heart assist system from heart, percutaneous approach) ......................................... MS–DRG 269—Cases with procedure code 02PA3RZ (Removal of short-term external heart assist system from heart, percutaneous approach) ................................................................ MS–DRG 269—Cases with procedure code 02PA4QZ (Removal of implantable heart assist system from heart, percutaneous endoscopic approach) ....................................................... MS–DRG 269—Cases with procedure code 02PA4RS (Removal of biventricular short-term external heart assist system from heart, percutaneous endoscopic approach) ...................... MS–DRG 269—Cases with procedure code 02PA4RZ (Removal of short-term external heart assist system from heart, percutaneous endoscopic approach) ............................................. As shown in this table, for MS–DRG 268, there were a total of 3,798 cases, with an average length of stay of 9.6 days and average costs of $49,122. There were 16 cases reporting procedure code 02PA0QZ (Removal of implantable heart assist system from heart, open approach), with an average length of stay of 23.4 days and average costs of $79,850. There were no cases that reported procedure codes 02PA0RS (Removal of biventricular short-term external heart assist system from heart, open approach), 02PA0RZ (Removal of short-term external heart assist system from heart, open approach), 02PA3RS (Removal of biventricular short-term external heart assist system from heart, percutaneous approach), 02PA4RS (Removal of biventricular short-term external heart assist system from heart, percutaneous endoscopic approach) or 02PA4RZ (Removal of short-term external heart assist system from heart, percutaneous endoscopic approach). There were 28 cases reporting procedure code 02PA3QZ (Removal of implantable heart assist system from heart, percutaneous approach), with an average length of stay of 10.5 days and average costs of $31,797. There were 96 cases reporting procedure code 02PA3RZ (Removal of short-term external heart assist system from heart, VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 percutaneous approach), with an average length of stay of 12.4 days and average costs of $51,469. There were 5 cases reporting procedure code 02PA4QZ (Removal of implantable heart assist system from heart, percutaneous endoscopic approach), with an average length of stay of 7.8 days and average costs of $37,592. For MS–DRG 269, there were a total of 16,900 cases, with an average length of stay of 2.4 days and average costs of $30,793. There were 10 cases reporting procedure code 02PA0QZ (Removal of implantable heart assist system from heart, open approach), with an average length of stay of 8 days and average costs of $23,741. There were no cases reporting procedure codes 02PA0RS (Removal of biventricular short-term external heart assist system from heart, open approach), 02PA0RZ (Removal of shortterm external heart assist system from heart, open approach), 02PA3RS (Removal of biventricular short-term external heart assist system from heart, percutaneous approach), 02PA4RS (Removal of biventricular short-term external heart assist system from heart, percutaneous endoscopic approach) or 02PA4RZ (Removal of short-term external heart assist system from heart, percutaneous endoscopic approach). There were 6 cases reporting procedure PO 00000 Frm 00025 Fmt 4701 Sfmt 4702 Average costs 0 0 0 96 12.4 51,469 5 7.8 37,592 0 0 0 0 16,900 0 2.4 0 30,793 10 8 23,741 0 0 0 0 0 0 6 5 19,421 0 0 0 11 4 25,719 1 3 14,415 0 0 0 0 0 0 code 02PA3QZ (Removal of implantable heart assist system from heart, percutaneous approach), with an average length of stay of 5 days and average costs of $19,421. There were 11 cases reporting procedure code 02PA3RZ (Removal of short-term external heart assist system from heart, percutaneous approach), with an average length of stay of 4 days and average costs of $25,719. There was 1 case reporting procedure code 02PA4QZ (Removal of implantable heart assist system from heart, percutaneous endoscopic approach), with an average length of stay of 3 days and average costs of $14,415. The data show that there are differences in the average length of stay and average costs for cases in MS–DRGs 268 and 269 according to the type of device (short-term external heart assist system or implantable heart assist system), and the approaches that were utilized (open, percutaneous, or percutaneous endoscopic). We agree with the recommendation to maintain the structure of MS–DRGs 268 and 269 for FY 2019 and will continue to analyze the claims data for possible future updates. As such, we are proposing to not make any changes to the structure of MS–DRGs 268 and 269 E:\FR\FM\07MYP2.SGM 07MYP2 20188 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules for FY 2019. We are inviting public comments on our proposal. b. Brachytherapy We received a request to create a new Pre-MDC MS–DRG for all procedures involving the CivaSheet® technology, an implantable, planar brachytherapy source designed to enable delivery of radiation to the site of the cancer tumor excision or debulking, while protecting neighboring tissue. The requestor stated that physicians have used the CivaSheet® technology for a number of indications, such as colorectal, gynecological, head and neck, soft tissue sarcomas and pancreatic cancer. The requestor noted that potential uses also include nonsmall-cell lung cancer, ocular melanoma, and atypical meningioma. Currently, procedures involving the CivaSheet® technology are reported using ICD–10–PCS Section D—Radiation Therapy codes, with the root operation ‘‘Brachytherapy.’’ These codes are non-O.R. codes and group to the MS–DRG to which the principal diagnosis is assigned. In response to this request, we have analyzed claims data from the September 2017 update of the FY 2017 MedPAR file for cases representing patients who received treatment that reported low dose rate (LDR) brachytherapy procedure codes across all MS–DRGs. We refer readers to Table 6P.—ICD–10–CM and ICD–10–PCS Codes for Proposed MS–DRG Changes associated with this proposed rule, which is available via the Internet on the CMS website at: https:// www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ AcuteInpatientPPS/. A detailed list of these procedure codes are shown in Table 6P.1. Our findings are reflected in the following table. CASES REPORTING LOW DOSE RATE (LDR) BRACHYTHERAPY PROCEDURE CODES ACROSS ALL MS–DRGS MS–DRG 129 (Major Head and Neck Procedures with CC/MCC or Major Device)—Cases with procedure code D710BBZ (Low dose rate (LDR) brachytherapy of bone marrow using Palladium-103 (Pd-103)) .......................................................................................................... MS–DRG 724 (Malignancy, Male Reproductive System without CC/MCC)—Cases with procedure code DV10BBZ (Low dose rate (LDR) brachytherapy of prostate using Palladium-103 (Pd-103)) .................................................................................................................. MS–DRG 129—Cases with procedure code DW11BBZ (Low dose rate (LDR) brachytherapy of head and neck using Palladium-103 (Pd-103)) ................................................................... MS–DRG 330 (Major Small and Large Bowel Procedures with CC)—Cases with procedure code DW16BBZ (Low dose rate (LDR) brachytherapy of pelvic region using Palladium-103 (Pd-103)) .................................................................................................................................. As shown in the immediately preceding table, we identified 4 cases reporting one of these LDR brachytherapy procedure codes across all MS–DRGs, with an average length of stay of 6.3 days and average costs of $39,853. We believe that creating a new Pre-MDC MS–DRG based on such a small number of cases could lead to distortion in the relative payment weights for the Pre-MDC MS–DRG. Having a larger number of clinically cohesive cases within the Pre-MDC MS– DRG provides greater stability for annual updates to the relative payment weights. Therefore, we are not proposing to create a new Pre-MDC MS– DRG for procedures involving the CivaSheet® technology for FY 2019. We are inviting public comments on our proposal to maintain the current MS-DRG structure for procedures involving the CivaSheet® technology. daltland on DSKBBV9HB2PROD with PROPOSALS2 c. Laryngectomy The logic for case assignment to PreMDC MS–DRGs 11, 12, and 13 (Tracheostomy for Face, Mouth and Neck Diagnoses with MCC, with CC, and without CC/MCC, respectively) as displayed in the ICD–10 MS–DRG Version 35 Definitions Manual, which is available via the Internet on the CMS website at: https://www.cms.gov/ VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/FY2018IPPS-Final-Rule-Home-Page-Items/ FY2018-IPPS-Final-Rule-DataFiles.html?DLPage=1&DLEntries= 10&DLSort=0&DLSortDir=ascending, is comprised of a list of procedure codes for laryngectomies, a list of procedure codes for tracheostomies, and a list of diagnosis codes for conditions involving the face, mouth, and neck. The procedure codes for laryngectomies are listed separately and are reported differently from the procedure codes listed for tracheostomies. The procedure codes listed for tracheostomies must be reported with a diagnosis code involving the face, mouth, or neck as a principal diagnosis to satisfy the logic for assignment to Pre-MDC MS–DRG 11, 12, or 13. Alternatively, any principal diagnosis code reported with a procedure code from the list of procedure codes for laryngectomies will satisfy the logic for assignment to Pre-MDC MS–DRG 11, 12, or 13. To improve the manner in which the logic for assignment is displayed in the ICD–10 MS–DRG Definitions Manual and to clarify how it is applied for grouping purposes, we are proposing to reorder the lists of the diagnosis and procedure codes. The list of principal diagnosis codes for face, mouth, and PO 00000 Frm 00026 Average length of stay Number of cases ICD–10–PCS procedures Fmt 4701 Sfmt 4702 Average costs 1 7 $10,357 1 7 32,298 1 3 42,565 1 8 74,190 neck would be sequenced first, followed by the list of the tracheostomy procedure codes and, lastly, the list of laryngectomy procedure codes. We also are proposing to revise the titles of Pre-MDC MS–DRGs 11, 12, and 13 from ‘‘Tracheostomy for Face, Mouth and Neck Diagnoses with MCC, with CC and without CC/MCC, respectively’’ to ‘‘Tracheostomy for Face, Mouth and Neck Diagnoses or Laryngectomy with MCC’’, ‘‘Tracheostomy for Face, Mouth and Neck Diagnoses or Laryngectomy with CC’’, and ‘‘Tracheostomy for Face, Mouth and Neck Diagnoses or Laryngectomy without CC/MCC’’, respectively, to reflect that laryngectomy procedures may also be assigned to these MS–DRGs. We are inviting public comments on our proposals. d. Chimeric Antigen Receptor (CAR) TCell Therapy Chimeric Antigen Receptor (CAR) Tcell therapy is a cell-based gene therapy in which a patient’s own T-cells are genetically engineered in a laboratory and used to assist in the patient’s treatment to attack certain cancerous cells. Blood is drawn from the patient and the T-cells are separated. The laboratory then utilizes the CAR process to genetically engineer the T-cells, E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules resulting in the addition of a chimeric antigen receptor that will bind to a certain protein on the patient’s cancerous cells. The CAR T-cells are then administered to the patient by infusion. Two CAR T-cell therapy drugs received FDA approval in 2017. KYMRIAHTM (manufactured by Novartis Pharmaceuticals Corporation) was approved for the use in the treatment of patients up to 25 years of age with Bcell precursor acute lymphoblastic leukemia (ALL) that is refractory or in second or later relapse. YESCARTATM (manufactured by Kite Pharma, Inc.) was approved for use in the treatment of adult patients with relapsed or refractory large B-cell lymphoma and who have not responded to or who have relapsed after at least two other kinds of treatment. Procedures involving the CAR T-cell therapy drugs are currently identified with ICD–10–PCS procedure codes XW033C3 (Introduction of engineered autologous chimeric antigen receptor tcell immunotherapy into peripheral vein, percutaneous approach, new technology group 3) and XW043C3 (Introduction of engineered autologous chimeric antigen receptor t-cell immunotherapy into central vein, percutaneous approach, new technology group 3), which both became effective October 1, 2017. Procedures described by these two ICD–10–PCS procedure codes are designated as non-O.R. procedures that have no impact on MS– DRG assignment. We have received many inquiries from the public regarding payment of CAR T-cell therapy under the IPPS. Suggestions for the MS–DRG assignment for FY 2019 ranged from assigning ICD– 10–PCS procedure codes XW033C3 and XW043C3 to an existing MS–DRG to the creation of a new MS–DRG for CAR T-cell therapy. In the context of the recommendation to create a new MS– DRG for FY 2019, we also received suggestions that payment should be established in a way that promotes comparability between the inpatient setting and outpatient setting. As part of our review of these suggestions, we examined the existing MS–DRGs to identify the MS–DRGs that represent cases most clinically similar to those cases in which the CAR T-cell therapy procedures would be reported. The CAR T-cell procedures involve a type of autologous immunotherapy in which the patient’s cells are genetically transformed and then returned to that patient after the patient undergoes cell depleting chemotherapy. Our clinical advisors believe that patients receiving treatment utilizing CAR T-cell therapy VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 procedures would have similar clinical characteristics and comorbidities to those seen in cases representing patients receiving treatment for other hematopoietic carcinomas who are treated with autologous bone marrow transplant therapy that are currently assigned to MS–DRG 016 (Autologous Bone Marrow Transplant with CC/ MCC). Therefore, after consideration of the inquiries received as to how the IPPS can appropriately group cases reporting the use of CAR T-cell therapy, we are proposing to assign ICD–10–PCS procedure codes XW033C3 and XW043C3 to Pre-MDC MS–DRG 016 for FY 2019. In addition, we are proposing to revise the title of MS–DRG 016 from ‘‘Autologous Bone Marrow Transplant with CC/MCC’’ to ‘‘Autologous Bone Marrow Transplant with CC/MCC or Tcell Immunotherapy.’’ However, we note that, as discussed in greater detail in section II.H.5.a. of the preamble of this proposed rule, the manufacturer of KYMRIAHTM and the manufacturer of YESCARTATM submitted applications for new technology add-on payments for FY 2019. We also recognize that many members of the public have noted that the combination of the new technology add-on payment applications, the extremely high-cost of these CAR T-cell therapy drugs, and the potential for volume increases over time present unique challenges with respect to the MS–DRG assignment for procedures involving the utilization of CAR T-cell therapy drugs and cases representing patients receiving treatment involving CAR T-cell therapy. We believe that, in the context of these pending new technology add-on payment applications, there may also be merit in the alternative suggestion we received to create a new MS–DRG for procedures involving the utilization of CAR T-cell therapy drugs and cases representing patients receiving treatment involving CAR T-cell therapy to which we could assign ICD–10–PCS procedure codes XW033C3 and XW043C3, effective for discharges occurring in FY 2019. As noted in section II.H.5.a. of the preamble of this proposed rule, if a new MS–DRG were to be created then consistent with section 1886(d)(5)(K)(ix) of the Act there may no longer be a need for a new technology add-on payment under section 1886(d)(5)(K)(ii)(III) of the Act. We are inviting public comments on our proposed approach of assigning ICD–10–PCS procedure codes XW033C3 and XW043C3 to Pre-MDC MS–DRG 016 for FY 2019. We also are inviting public comments on alternative approaches, including in the context of the pending PO 00000 Frm 00027 Fmt 4701 Sfmt 4702 20189 KYMRIAHTM and YESCARTATM new technology add-on payment applications, and the most appropriate way to establish payment for FY 2019 under any alternative approaches. Such payment alternatives may include using a CCR of 1.0 for charges associated with ICD–10–PCS procedure codes XW033C3 and XW043C3, given that many public inquirers believed that hospitals would be unlikely to set charges different from the costs for KYMRIAHTM and YESCARTATM CAR T-cell therapy drugs, as discussed further in section II.A.4.g.2. of the Addendum of this proposed rule. These payment alternatives, including payment under any potential new MS–DRG, also could take into account an appropriate portion of the average sales price (ASP) for these drugs, including in the context of the pending new technology add-on payment applications. We are inviting comments on how these payment alternatives would affect access to care, as well as how they affect incentives to encourage lower drug prices, which is a high priority for this Administration. In addition, we are considering approaches and authorities to encourage value-based care and lower drug prices. We solicit comments on how the payment methodology alternatives may intersect and affect future participation in any such alternative approaches. As stated in section II.F.1.b. of the preamble of this proposed rule, we described the criteria used to establish new MS–DRGs. In particular, we consider whether the resource consumption and clinical characteristics of the patients with a given set of conditions are significantly different than the remaining patients in the MS– DRG. We evaluate patient care costs using average costs and lengths of stay and rely on the judgment of our clinical advisors to decide whether patients are clinically distinct or similar to other patients in the MS–DRG. In evaluating resource costs, we consider both the absolute and percentage differences in average costs between the cases we select for review and the remainder of cases in the MS–DRG. We also consider whether observed average differences are consistent across patients or attributable to cases that were extreme in terms of costs or length of stay, or both. Further, we consider the number of patients who will have a given set of characteristics and generally prefer not to create a new MS–DRG unless it would include a substantial number of cases. Based on the principles typically used to establish a new MS–DRG, we are soliciting comments on how the administration of the CAR T-cell E:\FR\FM\07MYP2.SGM 07MYP2 20190 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules therapy drugs and associated services meet the criteria for the creation of a new MS–DRG. Also, section 1886(d)(4)(C)(iii) of the Act specifies that, beginning in FY 1991, the annual DRG reclassification and recalibration of the relative weights must be made in a manner that ensures that aggregate payments to hospitals are not affected. Given that a new MS–DRG must be established in a budget neutral manner, we are concerned with the redistributive effects away from core hospital services over time toward specialized hospitals and how that may affect payment for these core services. Therefore, we are soliciting public comments on our concerns with the payment alternatives that we are considering for CAR T-cell therapy drugs and therapies. 3. MDC 1 (Diseases and Disorders of the Nervous System) a. Epilepsy With Neurostimulator In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38015 through 38019), based on a request we received and our review of the claims data, the advice of our clinical advisors, and consideration of public comments, we finalized our proposal to reassign all cases reporting a principal diagnosis of epilepsy and one of the following ICD–10–PCS code combinations, which capture cases involving neurostimulator generators inserted into the skull (including cases involving the use of the RNS© neurostimulator), to retitled MS–DRG 023 (Craniotomy with Major Device Implant or Acute Complex Central Nervous System (CNS) Principal Diagnosis (PDX) with MCC or Chemotherapy Implant or Epilepsy with Neurostimulator), even if there is no MCC reported: • 0NH00NZ (Insertion of neurostimulator generator into skull, open approach), in combination with 00H00MZ (Insertion of neurostimulator lead into brain, open approach); • 0NH00NZ (Insertion of neurostimulator generator into skull, open approach), in combination with 00H03MZ (Insertion of neurostimulator lead into brain, percutaneous approach); and • 0NH00NZ (Insertion of neurostimulator generator into skull, open approach), in combination with 00H04MZ (Insertion of neurostimulator lead into brain, percutaneous endoscopic approach). The finalized listing of epilepsy diagnosis codes (82 FR 38018 through 38019) contained codes provided by the requestor (82 FR 38016), in addition to diagnosis codes organized in subcategories G40.A– and G40.B– as recommended by a commenter in response to the proposed rule (82 FR 38018) because the diagnosis codes organized in these subcategories also are representative of diagnoses of epilepsy. For FY 2019, we received a request to include two additional diagnosis codes organized in subcategory G40.1– in the listing of epilepsy diagnosis codes for cases assigned to MS–DRG 023 because these diagnosis codes also represent diagnoses of epilepsy. The two additional codes identified by the requestor are: • G40.109 (Localization-related (focal) (partial) symptomatic epilepsy and epileptic syndromes with simple partial seizures, not intractable, without status epilepticus); and • G40.111 (Localization-related (focal) (partial) symptomatic epilepsy and epileptic syndromes with simple partial seizures, intractable, with status epilepticus). We agree with the requestor that diagnosis codes G40.109 and G40.111 also are representative of epilepsy diagnoses and should be added to the listing of epilepsy diagnosis codes for cases assigned to MS–DRG 023 because they also capture a type of epilepsy. Our clinical advisors reviewed this issue and agree that adding the two additional epilepsy diagnosis codes is appropriate. Therefore, we are proposing to add ICD– 10–CM diagnosis codes G40.109 and G40.111 to the listing of epilepsy diagnosis codes for cases assigned to MS–DRG 023, effective October 1, 2018. We are inviting public comments on our proposal. b. Neurological Conditions With Mechanical Ventilation We received two separate, but related requests to create new MS–DRGs for daltland on DSKBBV9HB2PROD with PROPOSALS2 MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG 061 062 063 064 065 066 VerDate Sep<11>2014 cases that identify patients who have been diagnosed with neurological conditions classified under MDC 1 (Diseases and Disorders of the Nervous System) and who require mechanical ventilation with and without a thrombolytic and in the absence of an O.R. procedure. The requestors suggested that CMS consider when mechanical ventilation is reported with a neurological condition for the ICD–10 MS–DRG GROUPER assignment logic, similar to the current logic for MS– DRGs 207 and 208 (Respiratory System Diagnosis with Ventilator Support >96 Hours and <=96 Hours, respectively) under MDC 4 (Diseases and Disorders of the Respiratory System), which consider respiratory conditions that require mechanical ventilation and are assigned a higher relative weight. The requestors stated that patients with a principal diagnosis of respiratory failure requiring mechanical ventilation are currently assigned to MS–DRG 207 (Respiratory System Diagnoses with Ventilator Support >96 Hours), which has a relative weight of 5.4845, and to MS–DRG 208 (Respiratory System Diagnoses with Ventilator Support <=96 Hours), which has a relative weight of 2.3678. The requestors also stated that patients with a principal diagnosis of ischemic cerebral infarction who received a thrombolytic agent during the hospital stay and did not undergo an O.R. procedure are assigned to MS– DRGs 061, 062, and 063 (Ischemic Stroke, Precerebral Occlusion or Transient Ischemia with Thrombolytic Agent with MCC, with CC, and without CC/MCC, respectively) under MDC 1, while patients with a principal diagnosis of intracranial hemorrhage or ischemic cerebral infarction who did not receive a thrombolytic agent during the hospital stay and did not undergo an O.R. procedure are assigned to MS– DRGs 064, 065 and 66 (Intracranial Hemorrhage or Cerebral Infarction with MCC, with CC or TPA in 24 Hours, and without CC/MCC, respectively) under MDC 1. The requestors provided the current FY 2018 relative weights for these MS– DRGs as shown in the following table. Relative weight MS–DRG title ....... ....... ....... ....... ....... ....... Ischemic Stroke, Precerebral Occlusion or Transient Ischemia with Thrombolytic Agent with MCC .............. Ischemic Stroke, Precerebral Occlusion or Transient Ischemia with Thrombolytic Agent with CC ................. Ischemic Stroke, Precerebral Occlusion or Transient Ischemia with Thrombolytic Agent without CC/MCC .. Intracranial Hemorrhage or Cerebral Infarction with MCC ............................................................................... Intracranial Hemorrhage or Cerebral Infarction with CC or TPA in 24 hours .................................................. Intracranial Hemorrhage or Cerebral Infarction with MCC ............................................................................... 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00028 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 2.7979 l.9321 l.6169 l.7685 1.0311 .7466 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules The requestors stated that although the ICD–10–CM Official Guidelines for Coding and Reporting allow sequencing of acute respiratory failure as the principal diagnosis when it is jointly responsible (with an acute neurologic event) for admission, which would result in assignment to MS–DRGs 207 or 208 when the patient requires mechanical ventilation, it would not be appropriate to sequence acute respiratory failure as the principal diagnosis when it is secondary to intracranial hemorrhage or ischemic cerebral infarction. The requestors also stated that reporting for other purposes, such as quality measures, clinical trials, and Joint Commission and State certification or survey cases, is based on the principal diagnosis, and it is important, from a quality of care perspective, that the intracranial hemorrhage or cerebral infarction codes continue to be sequenced as principal diagnosis. The requestors believed that cases of patients who present with cerebral infarction or cerebral hemorrhage and acute respiratory failure are currently in conflict for principal diagnosis sequencing because the cerebral infarction or cerebral hemorrhage code is needed as the principal diagnosis for quality reporting and other purposes. However, acute respiratory failure is needed as the principal diagnosis for purposes of appropriate payment under the MS–DRGs. The requestors stated that by creating new MS–DRGs for neurological conditions with mechanical ventilation, those patients who require mechanical ventilation for airway protection on admission and those patients who develop acute respiratory failure requiring mechanical ventilation after admission can be grouped to MS–DRGs that provide appropriate payment for the mechanical ventilation resources. The requestors suggested two new MS– DRGs, citing as support that new MS– DRGs were created for patients with sepsis requiring mechanical ventilation greater than and less than 96 hours. As discussed earlier in this section, the requests we received were separate, but related requests. The first request was to specifically identify patients ICD–10–PCS code 5A1935Z ............... 5A1945Z ............... 5A1955Z ............... Respiratory ventilation, less than 96 consecutive hours. Respiratory ventilation, 24–96 consecutive hours. Respiratory ventilation, greater than 96 consecutive hours. example, TPA) during the current episode of care and did not undergo an O.R. procedure. For the first subset of patients, we analyzed claims data from the September 2017 update of the FY 2017 MedPAR file for MS–DRGs 061, 062, and 063 because cases that are assigned to these MS–DRGs specifically identify patients who were diagnosed with a cerebral infarction and received a thrombolytic. The 90 ICD–10–CM diagnosis codes that specify a cerebral daltland on DSKBBV9HB2PROD with PROPOSALS2 ICD–10–PCS code ............... ............... ............... ............... ............... ............... ............... ............... ............... ............... infarction and were included in our analysis are listed in Table 6P.1a associated with this proposed rule (which is available via the Internet on the CMS website at: https:// www.cms.hhs.gov/Medicare/MedicareFee-for-Service-Payment/ AcuteInpatientPPS/). The ICD–10–PCS procedure codes displayed in the following table describe use of a thrombolytic agent. Code description Introduction Introduction Introduction Introduction Introduction Introduction Introduction Introduction Introduction Introduction of of of of of of of of of of other other other other other other other other other other thrombolytic thrombolytic thrombolytic thrombolytic thrombolytic thrombolytic thrombolytic thrombolytic thrombolytic thrombolytic We examined claims data in MS– DRGs 061, 062, and 063 and identified cases that reported mechanical VerDate Sep<11>2014 presenting with intracranial hemorrhage or cerebral infarction with mechanical ventilation and create two new MS– DRGs as follows: • Suggested new MS–DRG XXX (Intracranial Hemorrhage or Cerebral Infarction with Mechanical Ventilation >96 Hours); and • Suggested new MS–DRG XXX (Intracranial Hemorrhage or Cerebral Infarction with Mechanical Ventilation <=96 Hours). The second request was to consider any principal diagnosis under the current GROUPER logic for MDC 1 with mechanical ventilation and create two new MS–DRGs as follows: • Suggested New MS–DRG XXX (Neurological System Diagnosis with Mechanical Ventilation 96+ Hours); and • Suggested New MS–DRG XXX (Neurological System Diagnosis with Mechanical Ventilation ≤96 Hours). Both requesters suggested that CMS use the three ICD–10–PCS codes identifying mechanical ventilation to assign cases to the respective suggested new MS–DRGs. The three ICD–10–PCS codes are shown in the following table. Code description Below we discuss the different aspects of each request in more detail. The first request involved two aspects: (1) Analyzing patients diagnosed with cerebral infarction and required mechanical ventilation who received a thrombolytic (for example, TPA) and did not undergo an O.R. procedure; and (2) analyzing patients diagnosed with intracranial hemorrhage or ischemic cerebral infarction and required mechanical ventilation who did not receive a thrombolytic (for 3E03017 3E03317 3E04017 3E04317 3E05017 3E05317 3E06017 3E06317 3E08017 3E08317 20191 20:30 May 04, 2018 Jkt 244001 into into into into into into into into into into peripheral vein, open approach. peripheral vein, percutaneous approach. central vein, open approach. central vein, percutaneous approach. peripheral artery, open approach. peripheral artery, percutaneous approach. central artery, open approach. central artery, percutaneous approach. heart, open approach. heart, percutaneous approach. ventilation of any duration with a principal diagnosis of cerebral infarction where a thrombolytic agent PO 00000 Frm 00029 Fmt 4701 Sfmt 4702 was administered and the patient did not undergo an O.R. procedure. Our E:\FR\FM\07MYP2.SGM 07MYP2 20192 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules findings are shown in the following table. CEREBRAL INFARCTION WITH THROMBOLYTIC AND MV MS–DRG 061—All cases ............................................................................................................ MS–DRG 061—Cases with principal diagnosis of cerebral infarction and mechanical ventilation >96 hours .......................................................................................................................... MS–DRG 061—Cases with principal diagnosis of cerebral infarction and mechanical ventilation =24–96 hours .................................................................................................................... MS–DRG 061—Cases with principal diagnosis of cerebral infarction and mechanical ventilation <24 hours .......................................................................................................................... MS–DRG 062—All cases ............................................................................................................ MS–DRG 062—Cases with principal diagnosis of cerebral infarction and mechanical ventilation >96 hours .......................................................................................................................... MS–DRG 062—Cases with principal diagnosis of cerebral infarction and mechanical ventilation =24–96 hours .................................................................................................................... MS–DRG 062—Cases with principal diagnosis of cerebral infarction and mechanical ventilation <24 hours .......................................................................................................................... MS–DRG 063—All cases ............................................................................................................ MS–DRG 063—Cases with principal diagnosis of cerebral infarction and mechanical ventilation >96 hours .......................................................................................................................... MS–DRG 063—Cases with principal diagnosis of cerebral infarction and mechanical ventilation =24–96 hours .................................................................................................................... MS–DRG 063—Cases with principal diagnosis of cerebral infarction and mechanical ventilation <24 hours .......................................................................................................................... As shown in this table, there were a total of 5,192 cases in MS–DRG 061 with an average length of stay of 6.4 days and average costs of $20,097. There were a total of 758 cases reporting the use of mechanical ventilation in MS– DRG 061 with an average length of stay ranging from 4.9 days to 12.8 days and average costs ranging from $19,795 to $41,691. For MS–DRG 062, there were a total of 9,730 cases with an average length of stay of 3.9 days and average costs of $13,865. There were a total of 33 cases reporting the use of mechanical Average length of stay Number of cases MS–DRG ventilation in MS–DRG 062 with an average length of stay ranging from 3.8 days to 5.3 days and average costs ranging from $14,026 to $19,817. For MS-DRG 063, there were a total of 1,984 cases with an average length of stay of 2.7 days and average costs of $11,771. There were a total of 8 cases reporting the use of mechanical ventilation in MS–DRG 063 with an average length of stay ranging from 2.0 days to 2.7 days and average costs ranging from $11,195 to $14,588. We then compared the total number of cases in MS–DRGs 061, 062, and 063 Average costs 5,192 6.4 $20,097 166 12.8 41,691 378 7.5 26,368 214 9,730 4.9 3.9 19,795 13,865 0 0.0 0 10 5.3 19,817 23 1,984 3.8 2.7 14,026 11,771 0 0.0 0 3 2.7 14,588 5 2.0 11,195 specifically reporting mechanical ventilation >96 hours with a principal diagnosis of cerebral infarction where a thrombolytic agent was administered and the patient did not undergo an O.R. procedure against the total number of cases reporting mechanical ventilation <=96 hours with a principal diagnosis of cerebral infarction where a thrombolytic agent was administered and the patient did not undergo an O.R. procedure. Our findings are shown in the following table. CEREBRAL INFARCTION WITH THROMBOLYTIC AND MV daltland on DSKBBV9HB2PROD with PROPOSALS2 MS–DRG 061—All cases ............................................................................................................ MS–DRG 061—Cases with principal diagnosis of cerebral infarction and mechanical ventilation >96 hours .......................................................................................................................... MS–DRG 061—Cases with principal diagnosis of cerebral infarction and mechanical ventilation <=96 hours ........................................................................................................................ MS–DRG 062—All cases ............................................................................................................ MS–DRG 062—Cases with principal diagnosis of cerebral infarction and mechanical ventilation >96 hours .......................................................................................................................... MS–DRG 062—Cases with principal diagnosis of cerebral infarction and mechanical ventilation <=96 hours ........................................................................................................................ MS–DRG 063—All cases ............................................................................................................ MS–DRG 063—Cases with principal diagnosis of cerebral infarction and mechanical ventilation >96 hours .......................................................................................................................... MS–DRG 063—Cases with principal diagnosis of cerebral infarction and mechanical ventilation <=96 hours ........................................................................................................................ As shown in this table, the total number of cases reported in MS–DRG VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 061 was 5,192, with an average length of stay of 6.4 days and average costs of PO 00000 Average length of stay Number of cases MS–DRG Frm 00030 Fmt 4701 Sfmt 4702 Average costs 5,192 6.4 $20,097 166 12.8 41,691 594 9,730 6.5 3.9 23,780 13,865 0 0.0 0 34 1,984 4.2 2.7 15,558 11,771 0 0.0 $0 8 2.3 12,467 $20,097. There were 166 cases that reported mechanical ventilation >96 E:\FR\FM\07MYP2.SGM 07MYP2 20193 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules hours, with an average length of stay of 12.8 days and average costs of $41,691. There were 594 cases that reported mechanical ventilation <=96 hours, with an average length of stay of 6.5 days and average costs of $23,780. The total number of cases reported in MS–DRG 062 was 9,730, with an average length of stay of 3.9 days and average costs of $13,865. There were no cases identified in MS–DRG 062 where mechanical ventilation >96 hours was reported. However, there were 34 cases that reported mechanical ventilation <=96 hours, with an average length of stay of 4.2 days and average costs of $15,558. The total number of cases reported in MS–DRG 63 was 1,984 with an average length of stay of 2.7 days and average costs of $11,771. There were no cases identified in MS–DRG 063 where mechanical ventilation >96 hours was reported. However, there were 8 cases that reported mechanical ventilation <=96 hours, with an average length of stay of 2.3 days and average costs of $12,467. For the second subset of patients, we examined claims data for MS–DRGs 064, 065, and 066. We identified cases reporting mechanical ventilation of any duration with a principal diagnosis of cerebral infarction or intracranial hemorrhage where a thrombolytic agent was not administered during the current hospital stay and the patient did not undergo an O.R. procedure. The 33 ICD– 10–CM diagnosis codes that specify an intracranial hemorrhage and were included in our analysis are listed in Table 6P.1b associated with this proposed rule (which is available via the Internet on the CMS website at: https://www.cms.hhs.gov/Medicare/ Medicare-Fee-for-Service-Payment/ AcuteInpatientPPS/). We also used the list of 90 ICD–10– CM diagnosis codes that specify a cerebral infarction listed in Table 6P.1a associated with this proposed rule for our analysis. We note that the GROUPER logic for case assignment to MS–DRG 065 includes that a thrombolytic agent (for example, TPA) was administered within 24 hours of the current hospital stay. The ICD–10–CM diagnosis code that describes this scenario is Z92.82 (Status post administration of tPA (rtPA) in a different facility within the last 24 hours prior to admission to current facility). We did not review the cases reporting that diagnosis code for our analysis. Our findings are shown in the following table. CEREBRAL INFARCTION OR INTRACRANIAL HEMORRHAGE WITH MV AND WITHOUT THROMBOLYTIC daltland on DSKBBV9HB2PROD with PROPOSALS2 MS–DRG 064—All cases ............................................................................................................ MS–DRG 064—Cases with principal diagnosis of cerebral infarction or intracranial hemorrhage and mechanical ventilation >96 hours ........................................................................... MS–DRG 064—Cases with principal diagnosis of cerebral infarction or intracranial hemorrhage and mechanical ventilation =24–96 hours ..................................................................... MS–DRG 064—Cases with principal diagnosis of cerebral infarction or intracranial hemorrhage and mechanical ventilation <24 hours ........................................................................... MS–DRG 065—All cases ............................................................................................................ MS–DRG 065—Cases with principal diagnosis of cerebral infarction or intracranial hemorrhage and mechanical ventilation >96 hours ........................................................................... MS–DRG 065—Cases with principal diagnosis of cerebral infarction or intracranial hemorrhage and mechanical ventilation =24–96 hours ..................................................................... MS–DRG 065—Cases with principal diagnosis of cerebral infarction or intracranial hemorrhage and mechanical ventilation <24 hours ........................................................................... MS–DRG 066—All cases ............................................................................................................ MS–DRG 066—Cases with principal diagnosis of cerebral infarction or intracranial hemorrhage and mechanical ventilation >96 hours ........................................................................... MS–DRG 066—Cases with principal diagnosis of cerebral infarction or intracranial hemorrhage and mechanical ventilation =24–96 hours ..................................................................... MS–DRG 066—Cases with principal diagnosis of cerebral infarction or intracranial hemorrhage and mechanical ventilation <24 hours ........................................................................... The total number of cases reported in MS–DRG 064 was 76,513, with an average length of stay of 6.0 days and average costs of $12,574. There were a total of 10,997 cases reporting the use of mechanical ventilation in MS–DRG 064 with an average length of stay ranging from 3.1 days to 13.4 days and average costs ranging from $8,675 to $38,262. For MS–DRG 065, there were a total of 106,554 cases with an average length of stay of 3.7 days and average costs of $7,236. There were a total of 450 cases reporting the use of mechanical ventilation in MS–DRG 065 with an VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 average length of stay ranging from 2.1 days to 10.2 days and average costs ranging from $6,145 to $20,759. For MS–DRG 066, there were a total of 34,689 cases with an average length of stay of 2.5 days and average costs of $5,321. There were a total of 195 cases reporting the use of mechanical ventilation in MS–DRG 066 with an average length of stay ranging from 1.4 days to 4.0 days and average costs ranging from $3,426 to $10,364. We then compared the total number of cases in MS–DRGs 064, 065, and 066 specifically reporting mechanical PO 00000 Average length of stay Number of cases MS–DRG Frm 00031 Fmt 4701 Sfmt 4702 Average costs 76,513 6.0 $12,574 2,153 13.4 38,262 4,843 6.6 18,119 4,001 106,554 3.1 3.7 8,675 7,236 22 10.2 20,759 127 4.2 12,688 301 34,689 2.1 2.5 6,145 5,321 1 4.0 3,426 31 3.7 10,364 163 1.4 4,148 ventilation >96 hours with a principal diagnosis of cerebral infarction or intracranial hemorrhage where a thrombolytic agent was not administered and the patient did not undergo an O.R. procedure against the total number of cases reporting mechanical ventilation <=96 hours with a principal diagnosis of cerebral infarction or intracranial hemorrhage where a thrombolytic agent was not administered and the patient did not undergo an O.R. procedure. Our findings are shown in the following table. E:\FR\FM\07MYP2.SGM 07MYP2 20194 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules CEREBRAL INFARCTION OR INTRACRANIAL HEMORRHAGE WITH MV AND WITHOUT THROMBOLYTIC MS–DRG 064—All cases ............................................................................................................ MS–DRG 064—Cases with principal diagnosis of cerebral infarction or intracranial hemorrhage and mechanical ventilation >96 hours ........................................................................... MS–DRG 064—Cases with principal diagnosis of cerebral infarction or intracranial hemorrhage and mechanical ventilation <=96 hours ......................................................................... MS–DRG 065—All cases ............................................................................................................ MS–DRG 065—Cases with principal diagnosis of cerebral infarction or intracranial hemorrhage and mechanical ventilation >96 hours ........................................................................... MS–DRG 065—Cases with principal diagnosis of cerebral infarction or intracranial hemorrhage and mechanical ventilation <=96 hours ......................................................................... MS–DRG 066—All cases ............................................................................................................ MS–DRG 066—Cases with principal diagnosis of cerebral infarction or intracranial hemorrhage and mechanical ventilation >96 hours ........................................................................... MS–DRG 066—Cases with principal diagnosis of cerebral infarction or intracranial hemorrhage and mechanical ventilation <=96 hours ......................................................................... The total number of cases reported in MS–DRG 064 was 76,513, with an average length of stay of 6.0 days and average costs of $12,574. There were 2,153 cases that reported mechanical ventilation >96 hours, with an average length of stay of 13.4 days and average costs of $38,262, and there were 8,794 cases that reported mechanical ventilation <=96 hours, with an average length of stay of 4.9 days and average costs of $13,704. The total number of cases reported in MS–DRG 65 was 106,554, with an average length of stay of 3.7 days and average costs of $7,236. There were 22 Average length of stay Number of cases MS–DRG cases that reported mechanical ventilation >96 hours, with an average length of stay of 10.2 days and average costs of $20,759, and there were 428 cases that reported mechanical ventilation<=96 hours, with an average length of stay of 2.7 days and average costs of $8,086. The total number of cases reported in MS–DRG 66 was 34,689, with an average length of stay of 2.5 days and average costs of $5,321. There was one case that reported mechanical ventilation >96 hours, with an average length of stay of 4.0 days and average costs of $3,426, and there were 194 Average costs 76,513 6.0 $12,574 2,153 13.4 38,262 8,794 106,554 4.9 3.7 13,704 7,236 22 10.2 20,759 428 34,689 2.7 2.5 8,086 5,321 1 4.0 3,426 194 1.8 5,141 cases that reported mechanical ventilation <=96 hours, with an average length of stay of 1.8 days and average costs of $5,141. We also analyzed claims data for MS– DRGs 207 and 208. As shown in the following table, there were a total of 19,471cases found in MS–DRG 207 with an average length of stay of 13.8 days and average costs of $38,124. For MS– DRG 208, there were a total of 55,802 cases found with an average length of stay of 6.7 days and average costs of $17,439. RESPIRATORY SYSTEM DIAGNOSIS WITH VENTILATOR SUPPORT Number of cases MS–DRG daltland on DSKBBV9HB2PROD with PROPOSALS2 MS–DRG 207—All cases ............................................................................................................ MS–DRG 208—All cases ............................................................................................................ Our analysis of claims data relating to the first request for MS–DRGs 061, 062, 063, 064, 065, and 066 and consultation with our clinical advisors do not support creating new MS–DRGs for cases that identify patients diagnosed with cerebral infarction or intracranial hemorrhage who require mechanical ventilation with or without a thrombolytic and in the absence of an O.R. procedure. For the first subset of patients (in MS– DRGs 061, 062 and 063), our data findings for MS–DRG 061 demonstrate the 166 cases that reported mechanical ventilation >96 hours had a longer average length of stay (12.8 days versus 6.4 days) and higher average costs ($41,691 versus $20,097) compared to all the cases in MS–DRG 061. However, there were no cases that reported VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 mechanical ventilation >96 hours for MS–DRG 062 or MS–DRG 063. For the 594 cases that reported mechanical ventilation <=96 hours in MS-DRG 061, the data show that the average length of stay was consistent with the average length of stay of all of the cases in MS– DRG 061 (6.5 days versus 6.4 days) and the average costs were also consistent with the average costs of all of the cases in MS-DRG 061 ($23,780 versus $20,097). For the 34 cases that reported mechanical ventilation <=96 hours in MS–DRG 062, the data show that the average length of stay was consistent with the average length of stay of all of the cases in MS–DRG 062 (4.2 days versus 3.9 days) and the average costs were also consistent with the average costs of all of the cases in MS DRG 062 ($15,558 versus $13,865). Lastly, for the PO 00000 Frm 00032 Fmt 4701 Sfmt 4702 19,471 55,802 Average length of stay 13.8 6.7 Average costs $38,124 17,439 8 cases that reported mechanical ventilation <=96 hours in MS–DRG 063, the data show that the average length of stay was consistent with the average length of stay of all of the cases in MS– DRG 063 (2.3 days versus 2.7 days) and the average costs were also consistent with the average costs of all of the cases in MS DRG 063 ($12,467 versus $11,771). For the second subset of patients (in MS–DRGs 064, 065 and 066), the data findings for the 2,153 cases that reported mechanical ventilation >96 hours in MS–DRG 064 showed a longer average length of stay (13.4 days versus 6.0 days) and higher average costs ($38,262 versus $12,574) compared to all of the cases in MS–DRG 064. However, the 2,153 cases represent only 2.8 percent of all the cases in MS–DRG E:\FR\FM\07MYP2.SGM 07MYP2 20195 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 064. For the 22 cases that reported mechanical ventilation >96 hours in MS–DRG 065, the data showed a longer average length of stay (10.2 days versus 3.7 days) and higher average costs ($20,759 versus $7,236) compared to all of the cases in MS–DRG 065. However, the 22 cases represent only 0.02 percent of all the cases in MS–DRG 065. For the one case that reported mechanical ventilation >96 hours in MS–DRG 066, the data showed a longer average length of stay (4.0 days versus 2.5 days) and lower average costs ($3,426 versus $5,321) compared to all of the cases in MS–DRG 066. For the 8,794 cases that reported mechanical ventilation <=96 hours in MS–DRG 064, the data showed that the average length of stay was shorter than the average length of stay for all of the cases in MS–DRG 064 (4.9 days versus 6.0 days) and the average costs were consistent with the average costs of all of the cases in MS–DRG 064 ($13,704 versus $12,574). For the 428 cases that reported mechanical ventilation <=96 hours in MS–DRG 065, the data showed that the average length of stay was shorter than the average length of stay for all of the cases in MS– DRG 065 (2.7 days versus 3.7 days) and the average costs were consistent with the average costs of all the cases in MS– DRG 065 ($8,086 versus $7,236). For the 194 cases that reported mechanical ventilation <=96 hours in MS–DRG 066, the data showed that the average length of stay was shorter than the average length of stay for all of the cases in MS– DRG 066 (1.8 days versus 2.5 days) and the average costs were less than the average costs of all of the cases in MS– DRG 066 ($5,141 versus $5,321). Based on the analysis described above, the current MS–DRG assignment for the cases in MS–DRGs 061, 062, 063, 064, 065 and 066 that identify patients diagnosed with cerebral infarction or intracranial hemorrhage who require mechanical ventilation with or without a thrombolytic and in the absence of an O.R. procedure appears appropriate. Our clinical advisors also noted that patients requiring mechanical ventilation (in the absence of an O.R. procedure) are known to be more resource intensive and it would not be practical to create new MS–DRGs specifically for this subset of patients diagnosed with an acute neurologic event, given the various indications for which mechanical ventilation may be utilized. If we were to create new MS– DRGs for patients diagnosed with an intracranial hemorrhage or cerebral infarction who require mechanical ventilation, it would not address all of the other patients who also utilize mechanical ventilation resources. It would also necessitate further extensive analysis and evaluation for several other conditions that require mechanical ventilation across each of the 25 MDCs under the ICD–10 MS–DRGs. To evaluate the frequency in which the use of mechanical ventilation is reported for different clinical scenarios, we examined claims data across each of the 25 MDCs to determine the number of cases reporting the use of mechanical ventilation >96 hours. Our findings are shown in the table below. MECHANICAL VENTILATION >96 HOURS ACROSS ALL MDCS daltland on DSKBBV9HB2PROD with PROPOSALS2 All cases with mechanical ventilation >96 hours ......................................................................... MDC 1 (Diseases and Disorders of the Nervous System)—Cases with mechanical ventilation >96 hours ................................................................................................................................. MDC 2 (Disease and Disorders of the Eye)—Cases with mechanical ventilation >96 hours .... MDC 3 (Diseases and Disorders of the Ear, Nose, Mouth and Throat)—Cases with mechanical ventilation >96 hours ......................................................................................................... MDC 4 (Diseases and Disorders of the Respiratory System)—Cases with mechanical ventilation >96 hours .......................................................................................................................... MDC 5 (Diseases and Disorders of the Circulatory System)—Cases with mechanical ventilation >96 hours .......................................................................................................................... MDC 6 (Diseases and Disorders of the Digestive System)—Cases with mechanical ventilation >96 hours .......................................................................................................................... MDC 7 (Diseases and Disorders of the Hepatobiliary System and Pancreas)—Cases with mechanical ventilation >96 hours ............................................................................................ MDC 8 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue)— Cases with mechanical ventilation >96 hours ......................................................................... MDC 9 (Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast)—Cases with mechanical ventilation >96 hours ............................................................................................ MDC 10 (Endocrine, Nutritional and Metabolic Diseases and Disorders)—Cases with mechanical ventilation >96 hours ................................................................................................. MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract)—Cases with mechanical ventilation >96 hours ................................................................................................................ MDC 12 (Diseases and Disorders of the Male Reproductive System)—Cases with mechanical ventilation >96 hours ......................................................................................................... MDC 13 (Diseases and Disorders of the Female Reproductive System)—Cases with mechanical ventilation >96 hours ................................................................................................. MDC 14 (Pregnancy, Childbirth and the Puerperium)—Cases with mechanical ventilation >96 hours ........................................................................................................................................ MDC 16 (Diseases and Disorders of Blood, Blood Forming Organs, Immunologic Disorders)—Cases with mechanical ventilation >96 hours .......................................................... MDC 17 (Myeloproliferative Diseases and Disorders, Poorly Differentiated Neoplasms)— Cases with mechanical ventilation >96 hours ......................................................................... MDC 18 (Infectious and Parasitic Diseases, Systemic or Unspecified Sites)—Cases with mechanical ventilation >96 hours ................................................................................................. MDC 19 (Mental Diseases and Disorders)—Cases with mechanical ventilation >96 hours ...... MDC 20 (Alcohol/Drug Use and Alcohol/Drug Induced Organic Mental Disorders)—Cases with mechanical ventilation >96 hours ..................................................................................... VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Average length of stay Number of cases MDC Frm 00033 Fmt 4701 Sfmt 4702 Average costs 127,626 18.4 $61,056 13,668 33 18.3 22.7 61,234 79,080 602 20.3 62,625 27,793 16.6 48,869 16,923 20.7 84,565 6,401 22.4 73,759 1,803 24.5 80,477 2,780 22.3 83,271 390 22.2 68,288 1,168 20.9 60,682 2,325 19.6 57,893 54 26.8 95,204 89 24.6 83,319 22 17.4 56,981 468 20.1 68,658 538 29.7 99,968 48,176 54 17.3 29.3 55,022 52,749 312 20.5 47,637 E:\FR\FM\07MYP2.SGM 07MYP2 20196 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules MECHANICAL VENTILATION >96 HOURS ACROSS ALL MDCS—Continued MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs)—Cases with mechanical ventilation >96 hours ................................................................................................................................. MDC 22 (Burns)—Cases with mechanical ventilation >96 hours ............................................... MDC 23 (Factors Influencing Health Status and Other Contacts with Health Services)— Cases with mechanical ventilation >96 hours ......................................................................... MDC 24 (Multiple Significant Trauma)—Cases with mechanical ventilation >96 hours ............. MDC 25 (Human Immunodeficiency Virus Infections)—Cases with mechanical ventilation >96 hours ........................................................................................................................................ As shown in the table, the top 5 MDCs with the largest number of cases reporting mechanical ventilation >96 hours are MDC 18, with 48,176 cases; MDC 4, with 27,793 cases; MDC 5, with 16,923 cases; MDC 1, with 13,668 cases; and MDC 6, with 6,401 cases. We note that the claims data demonstrate that the average length of stay is consistent with what we would expect for cases reporting the use of mechanical ventilation >96 hours across each of the Average length of stay Number of cases MDC 25 MDCs. The top 5 MDCs with the highest average costs for cases reporting mechanical ventilation >96 hours were MDC 22, with average costs of $188,704; MDC 17, with average costs of $99,968; MDC 12, with average costs of $95,204; MDC 5, with average costs of $84,565; and MDC 13, with average costs of $83,319. We note that the data for MDC 8 demonstrated similar results compared to MDC 13 with average costs of $83,271 for cases reporting Average costs 2,436 242 18.2 34.8 57,712 188,704 64 922 17.7 17.6 50,821 72,358 363 19.1 56,688 mechanical ventilation >96 hours. In summary, the claims data reflect a wide variance with regard to the frequency and average costs for cases reporting the use of mechanical ventilation >96 hours. We also examined claims data across each of the 25 MDCs for the number of cases reporting the use of mechanical ventilation <=96 hours. Our findings are shown in the table below. MECHANICAL VENTILATION <=96 HOURS ACROSS ALL MDCS daltland on DSKBBV9HB2PROD with PROPOSALS2 All cases with mechanical ventilation <=96 hours ...................................................................... MDC 1 (Diseases and Disorders of the Nervous System)—Cases with mechanical ventilation <=96 hours ............................................................................................................................... MDC 2 (Disease and Disorders of the Eye)—Cases with mechanical ventilation <=96 hours .. MDC 3 (Diseases and Disorders of the Ear, Nose, Mouth and Throat)—Cases with mechanical ventilation <=96 hours ....................................................................................................... MDC 4 (Diseases and Disorders of the Respiratory System)—Cases with mechanical ventilation <=96 hours ........................................................................................................................ MDC 5 (Diseases and Disorders of the Circulatory System)—Cases with mechanical ventilation <=96 hours ........................................................................................................................ MDC 6 (Diseases and Disorders of the Digestive System)—Cases with mechanical ventilation <=96 hours ........................................................................................................................ MDC 7 (Diseases and Disorders of the Hepatobiliary System and Pancreas)—Cases with mechanical ventilation <=96 hours .......................................................................................... MDC 8 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue)— Cases with mechanical ventilation <=96 hours ....................................................................... MDC 9 (Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast)—Cases with mechanical ventilation <=96 hours .......................................................................................... MDC 10 (Endocrine, Nutritional and Metabolic Diseases and Disorders)—Cases with mechanical ventilation <=96 hours ............................................................................................... MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract)—Cases with mechanical ventilation <=96 hours .............................................................................................................. MDC 12 (Diseases and Disorders of the Male Reproductive System)—Cases with mechanical ventilation <=96 hours ....................................................................................................... MDC 13 (Diseases and Disorders of the Female Reproductive System)—Cases with mechanical ventilation <=96 hours ............................................................................................... MDC 14 (Pregnancy, Childbirth and the Puerperium)—Cases with mechanical ventilation <=96 hours ............................................................................................................................... MDC 16 (Diseases and Disorders of Blood, Blood Forming Organs, Immunologic Disorders)—Cases with mechanical ventilation <=96 hours ........................................................ MDC 17 (Myeloproliferative Diseases and Disorders, Poorly Differentiated Neoplasms)— Cases with mechanical ventilation <=96 hours ....................................................................... MDC 18 (Infectious and Parasitic Diseases, Systemic or Unspecified Sites)—Cases with mechanical ventilation <=96 hours ............................................................................................... MDC 19 (Mental Diseases and Disorders)—Cases with mechanical ventilation <=96 hours .... MDC 20 (Alcohol/Drug Use and Alcohol/Drug Induced Organic Mental Disorders)—Cases with mechanical ventilation <=96 hours ................................................................................... MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs)—Cases with mechanical ventilation <=96 hours ............................................................................................................................... VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Average length of stay Number of cases MDC Frm 00034 Fmt 4701 Sfmt 4702 Average costs 266,583 8.5 $26,668 29,896 60 7.4 8.4 22,838 29,708 1,397 9.8 29,479 64,861 7.8 20,929 45,147 8.8 35,818 15,629 11.3 33,660 4,678 10.5 31,565 7,140 10.4 40,183 1,036 10.7 26,809 3,591 9.0 23,863 5,506 10.2 27,951 168 11.5 35,009 310 10.8 32,382 55 7.6 21,785 1,171 8.7 26,138 1,178 15.3 46,335 69,826 264 8.5 10.4 25,253 18,805 918 8.3 19,376 10,842 6.5 17,843 E:\FR\FM\07MYP2.SGM 07MYP2 20197 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules MECHANICAL VENTILATION <=96 HOURS ACROSS ALL MDCS—Continued Number of cases MDC daltland on DSKBBV9HB2PROD with PROPOSALS2 MDC 22 (Burns)—Cases with mechanical ventilation <=96 hours ............................................. MDC 23 (Factors Influencing Health Status and Other Contacts with Health Services)— Cases with mechanical ventilation <=96 hours ....................................................................... MDC 24 (Multiple Significant Trauma)—Cases with mechanical ventilation <=96 hours ........... MDC 25 (Human Immunodeficiency Virus Infections)—Cases with mechanical ventilation <=96 hours ............................................................................................................................... As shown in the table, the top 5 MDCs with the largest number of cases reporting mechanical ventilation <=96 hours are MDC 18, with 69,826 cases; MDC 4, with 64,861 cases; MDC 5, with 45,147 cases; MDC 1, with 29,896 cases; and MDC 6, with 15,629 cases. We note that the claims data demonstrate that the average length of stay is consistent with what we would expect for cases reporting the use of mechanical ventilation <=96 hours across each of the 25 MDCs. The top 5 MDCs with the highest average costs for cases reporting mechanical ventilation <=96 hours are MDC 17, with average costs of $46,335; MDC 22, with average costs of $45,557; MDC 8, with average costs of $40,183; MDC 24, with average costs of $36,475; and MDC 5, with average costs of $35,818. Similar to the cases reporting mechanical ventilation >96 hours, the claims data for cases reporting the use of mechanical ventilation <=96 hours also reflect a wide variance with regard to the frequency and average costs. Depending on the number of cases in each MS–DRG, it may be difficult to detect patterns of complexity and resource intensity. With respect to the requestor’s statement that reporting for other purposes, such as quality measures, clinical trials, and Joint Commission and State certification or survey cases, is based on the principal diagnosis, and their belief that patients who present with cerebral infarction or cerebral hemorrhage and acute respiratory failure are currently in conflict for principal diagnosis sequencing because the cerebral infarction or cerebral hemorrhage code is needed as the principal diagnosis for quality reporting and other purposes (however, acute respiratory failure is needed as the principal diagnosis for purposes of appropriate payment under the MS– DRGs), we note that providers are required to assign the principal diagnosis according to the ICD–10–CM Official Guidelines for Coding and Reporting and these assignments are not based on factors such as quality measures or clinical trials indications. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Furthermore, we do not base MS–DRG reclassification decisions on those factors. If the cerebral hemorrhage or ischemic cerebral infarction is the reason for admission to the hospital, the cerebral hemorrhage or ischemic cerebral infarction diagnosis code should be assigned as the principal diagnosis. We acknowledge that new MS–DRGs were created for cases of patients with sepsis requiring mechanical ventilation greater than and less than 96 hours. However, those MS–DRGs (MS–DRG 575 (Septicemia with Mechanical Ventilation 96+ Hours Age >17) and MS–DRG 576 (Septicemia without Mechanical Ventilation 96+ Hours Age >17)) were created several years ago, in FY 2007 (71 FR 47938 through 47939) in response to public comments suggesting alternatives for the need to recognize the treatment for that subset of patients with severe sepsis who exhibit a greater degree of severity and resource consumption as septicemia is a systemic condition, and also as a preliminary step in the transition from the CMS DRGs to MS–DRGs. We believe that additional analysis and efforts toward a broader approach to refining the MS–DRGs for cases of patients requiring mechanical ventilation across the MDCs involves carefully examining the potential for instability in the relative weights and disrupting the integrity of the MS–DRG system based on the creation of separate MS-DRGs involving small numbers of cases for various indications in which mechanical ventilation may be required. The second request focused on patients diagnosed with any neurological condition classified under MDC 1 requiring mechanical ventilation in the absence of an O.R. procedure and without having received a thrombolytic agent. Because the first request specifically involved analysis for the acute neurological conditions of cerebral infarction and intracranial hemorrhage under MDC 1 and our findings do not support creating new MS–DRGs for those specific conditions, we did not perform separate claims PO 00000 Frm 00035 Fmt 4701 Sfmt 4702 Average length of stay Average costs 353 9.7 45,557 307 1,709 6.6 8.8 16,159 36,475 541 10.4 29,255 analysis for other conditions classified under MDC 1. Therefore, we are not proposing to create new MS–DRGs for cases that identify patients diagnosed with neurological conditions classified under MDC 1 who require mechanical ventilation with or without a thrombolytic and in the absence of an O.R. procedure. We are inviting public comments on our proposal. 4. MDC 5 (Diseases and Disorders of the Circulatory System) a. Pacemaker Insertions In the FY 2017 IPPS/LTCH PPS final rule (81 FR 56804 through 56809), we discussed a request to examine the ICD– 10–PCS procedure code combinations that describe procedures involving pacemaker insertions to determine if some procedure code combinations were excluded from the Version 33 ICD– 10 MS–DRG assignments for MS–DRGs 242, 243, and 244 (Permanent Cardiac Pacemaker Implant with MCC, with CC, and without CC/MCC, respectively) under MDC 5. We finalized our proposal to modify the Version 34 ICD–10 MS– DRG GROUPER logic so the specified procedure code combinations were no longer required for assignment into those MS–DRGs. As a result, the logic for pacemaker insertion procedures was simplified by separating the procedure codes describing cardiac pacemaker device insertions into one list and separating the procedure codes describing cardiac pacemaker lead insertions into another list. Therefore, when any ICD–10–PCS procedure code describing the insertion of a pacemaker device is reported from that specific logic list with any ICD–10–PCS procedure code describing the insertion of a pacemaker lead from that specific logic list (81 FR 56804 through 56806), the case is assigned to MS–DRGs 242, 243, and 244 under MDC 5. We then discussed our examination of the Version 33 GROUPER logic for MS-DRGs 258 and 259 (Cardiac Pacemaker Device Replacement with and without MCC, respectively) because assignment of cases to these MS–DRGs E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20198 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules also included qualifying ICD–10–PCS procedure code combinations involving pacemaker insertions (81 FR 56806 through 56808). Specifically, the logic for Version 33 ICD–10 MS–DRGs 258 and 259 included ICD–10–PCS procedure code combinations describing the removal of pacemaker devices and the insertion of new pacemaker devices. We finalized our proposal to modify the Version 34 ICD–10 MS–DRG GROUPER logic for MS–DRGs 258 and 259 to establish that a case reporting any procedure code from the list of ICD–10– PCS procedure codes describing procedures involving pacemaker device insertions without any other procedure codes describing procedures involving pacemaker leads reported would be assigned to MS–DRGs 258 and 259 (81 FR 56806 through 56807) under MDC 5. In addition, we pointed out that a limited number of ICD–10–PCS procedure codes describing pacemaker insertion are classified as non-operating room (non-O.R.) codes within the MS– DRGs and that the Version 34 ICD–10 MS–DRG GROUPER logic would continue to classify these procedure codes as non-O.R. codes. We noted that a case reporting any one of these nonO.R. procedure codes describing a pacemaker device insertion without any other procedure code involving a pacemaker lead would be assigned to MS–DRGs 258 and 259. Therefore, the listed procedure codes describing a pacemaker device insertion under MS– DRGs 258 and 259 are designated as non-O.R. affecting the MS–DRG. Lastly, we discussed our examination of the Version 33 GROUPER logic for MS–DRGs 260, 261, and 262 (Cardiac Pacemaker Revision Except Device Replacement with MCC, with CC, and without CC/MCC, respectively), and noted that cases assigned to these MS– DRGs also included lists of procedure code combinations describing procedures involving the removal of pacemaker leads and the insertion of new leads, in addition to lists of single procedure codes describing procedures involving the insertion of pacemaker leads, removal of cardiac devices, and revision of cardiac devices (81 FR 56808). We finalized our proposal to modify the ICD–10 MS–DRG GROUPER logic for MS–DRGs 260, 261, and 262 so that cases reporting any one of the listed ICD–10–PCS procedure codes describing procedures involving pacemakers and related procedures and associated devices are assigned to MS DRGs 260, 261, and 262 under MDC 5. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Therefore, the GROUPER logic that required a combination of procedure codes be reported for assignment into MS–DRGs 260, 261 and 262 under Version 33 was no longer required effective with discharges occurring on or after October 1, 2016 (FY 2017) under Version 34 of the ICD–10 MS–DRGs. We note that while the discussion in the FY 2017 IPPS/LTCH PPS final rule focused on the MS–DRGs involving pacemaker procedures under MDC 5, similar GROUPER logic exists in Version 33 of the ICD–10 MS–DRGs under MDC 1 (Diseases and Disorders of the Nervous System) in MS–DRGs 040, 041 and 042 (Peripheral, Cranial Nerve and Other Nervous System Procedures with MCC, with CC or Peripheral Neurostimulator and without CC/MCC, respectively) and MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs) in MS–DRGs 907, 908, and 909 (Other O.R. Procedures for Injuries with MCC, with CC, and without MCC, respectively) where procedure code combinations involving cardiac pacemaker device insertions or removals and cardiac pacemaker lead insertions or removals are required to be reported together for assignment into those MS–DRGs. We also note that, with the exception of when a principal diagnosis is reported from MDC 1, MDC 5, or MDC 21, the procedure codes describing the insertion, removal, replacement, or revision of pacemaker devices are assigned to a medical MS– DRG in the absence of another O.R. procedure according to the GROUPER logic. We refer the reader to the ICD–10 MS–DRG Definitions Manual Version 33, which is available via the Internet on the CMS Web site at: https:// www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient PPS/FY2016-IPPS-Final-Rule-HomePage-Items/FY2016-IPPS-Final-RuleData-Files.html?DLPage=1&DLEntries =10&DLSort=0&DLSortDir=ascending for complete documentation of the GROUPER logic that was in effect at that time for the Version 33 ICD–10 MS– DRGs discussed earlier. For FY 2019, we received a request to assign all procedures involving the insertion of pacemaker devices to surgical MS–DRGs, regardless of the principal diagnosis. The requestor recommended that procedures involving pacemaker insertion be grouped to surgical MS–DRGs within the MDC to which the principal diagnosis is assigned, or that they group to MS– DRGs 981, 982, and 983 (Extensive O.R. PO 00000 Frm 00036 Fmt 4701 Sfmt 4702 Procedure Unrelated to Principal Diagnosis with MCC, with CC and without CC/MCC, respectively). Currently, in Version 35 of the ICD–10 MS–DRGs, procedures involving pacemakers are assigned to MS–DRGs 040, 041, and 042 (Peripheral, Cranial Nerve and Other Nervous System Procedures with MCC, with CC or Peripheral Neurostimulator and without CC/MCC, respectively) under MDC 1 (Diseases and Disorders of the Nervous System), to MS–DRGs 242, 243, and 244 (Permanent Cardiac Pacemaker Implant with MCC, with CC, and without CC/ MCC, respectively), MS–DRGs 258 and 259 (Cardiac Pacemaker Device Replacement with MCC and without MCC, respectively), and MS–DRGs 260, 261 and 262 (Cardiac Pacemaker Revision Except Device Replacement with MCC, with CC, and without CC/ MCC, respectively) under MDC 5 (Diseases and Disorders of the Circulatory System), and to MS–DRGs 907, 908, and 909 (Other O.R. Procedures for Injuries with MCC, with CC, and without CC/MCC, respectively), under MDC 21 (Injuries, Poisoning and Toxic Effects of Drugs), with all other unrelated principal diagnoses resulting in a medical MS–DRG assignment. According to the requestor, the medical MS–DRGs do not provide adequate payment for the pacemaker device, specialized operating suites, time, skills, and other resources involved for pacemaker insertion procedures. Therefore, the requestor recommended that procedures involving pacemaker insertions be grouped to surgical MS– DRGs. We refer readers to the ICD–10 MS–DRG Definitions Manual Version 35, which is available via the Internet on the CMS website at: https:// www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient PPS/FY2018-IPPS-Final-Rule-HomePage-Items/FY2018-IPPS-Final-RuleData-Files.html?DLPage=1&DL Entries=10&DLSort=0&DLSortDir= ascending for complete documentation of the GROUPER logic for the MS–DRGs discussed earlier. The following procedure codes describe procedures involving the insertion of a cardiac rhythm related device which are classified as a type of pacemaker insertion under the ICD–10 MS–DRGs. These four codes are assigned to MS–DRGs 040, 041, and 042, as well as MS–DRGs 907, 908, and 909, and are designated as O.R. procedures. E:\FR\FM\07MYP2.SGM 07MYP2 20199 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules ICD–10–PCS code 0JH60PZ 0JH63PZ 0JH80PZ 0JH83PZ .............. .............. .............. .............. Code description Insertion Insertion Insertion Insertion of of of of cardiac cardiac cardiac cardiac rhythm rhythm rhythm rhythm We examined cases from the September update of the FY 2017 MedPAR claims data for cases involving related related related related device device device device into into into into chest subcutaneous tissue and fascia, open approach. chest subcutaneous tissue and fascia, percutaneous approach. abdomen subcutaneous tissue and fascia, open approach. abdomen subcutaneous tissue and fascia, percutaneous approach. pacemaker insertion procedures reporting the above ICD–10–PCS codes in MS–DRGs 040, 041 and 042 under MDC 1. Our findings are shown in the following table. CASES INVOLVING PACEMAKER INSERTION PROCEDURES IN MDC 1 Number of cases MS–DRG in MDC 1 MS–DRG 040—All cases ............................................................................................................ MS–DRG 040—Cases with procedure code 0JH60PZ (Insertion of cardiac rhythm related device into chest subcutaneous tissue and fascia, open approach) ........................................... MS–DRG 040—Cases with procedure code 0JH63PZ (Insertion of cardiac rhythm related device into chest subcutaneous tissue and fascia, percutaneous approach) ............................. MS–DRG 040—Cases with procedure code 0JH80PZ (Insertion of cardiac rhythm related device into abdomen subcutaneous tissue and fascia, open approach) .................................... MS–DRG 040—Cases with procedure code 0JH83PZ (Insertion of cardiac rhythm related device into abdomen subcutaneous tissue and fascia, percutaneous approach) ...................... MS–DRG 041—All cases ............................................................................................................ MS–DRG 041—Cases with procedure code 0JH60PZ (Insertion of cardiac rhythm related device into chest subcutaneous tissue and fascia, open approach) ........................................... MS–DRG 041—Cases with procedure code 0JH63PZ (Insertion of cardiac rhythm related device into chest subcutaneous tissue and fascia, percutaneous approach) ............................. MS–DRG 041—Cases with procedure code 0JH80PZ (Insertion of cardiac rhythm related device into abdomen subcutaneous tissue and fascia, open approach) .................................... MS–DRG 041—Cases with procedure code 0JH83PZ (Insertion of cardiac rhythm related device into abdomen subcutaneous tissue and fascia, percutaneous approach) ...................... MS–DRG 042—All cases ............................................................................................................ MS–DRG 042—Cases with procedure code 0JH60PZ (Insertion of cardiac rhythm related device into chest subcutaneous tissue and fascia, open approach) ........................................... MS–DRG 042—Cases with procedure code 0JH83PZ (Insertion of cardiac rhythm related device into abdomen subcutaneous tissue and fascia, percutaneous approach) ...................... MS–DRG 042—Cases with procedure code 0JH80PZ (Insertion of cardiac rhythm related device into abdomen subcutaneous tissue and fascia, open approach) .................................... MS–DRG 042—Cases with procedure code 0JH83PZ (Insertion of cardiac rhythm related device into abdomen subcutaneous tissue and fascia, percutaneous approach) ...................... The following table is a summary of the findings shown above from our review of MS–DRGs 040, 041 and 042 Average length of stay Average costs 4,462 10.4 $26,877 13 14.2 55,624 2 3.5 15,826 0 0 0 0 5,648 0 5.2 0 16,927 12 6.4 22,498 4 5 17,238 0 0 0 0 2,154 0 3.1 0 13,730 5 8 18,183 0 0 0 0 0 0 0 0 0 and the total number of cases reporting a pacemaker insertion procedure. MS–DRGS FOR CASES INVOLVING PACEMAKER INSERTION PROCEDURES IN MDC 1 Number of cases MS–DRG in MDC 1 daltland on DSKBBV9HB2PROD with PROPOSALS2 MS–DRGs 040, 041, and 042—All cases ................................................................................... MS–DRGs 040, 041, and 042—Cases with a pacemaker insertion procedure ......................... We found a total of 12,264 cases in MS–DRGs 040, 041, and 042 with an average length of stay of 6.7 days and average costs of $19,986. We found a total of 36 cases in MS–DRGs 040, 041, and 042 reporting procedure codes VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 describing the insertion of a pacemaker device with an average length of stay of 9.1 days and average costs of $32,906. We then examined cases involving pacemaker insertion procedures reporting those same four ICD–10–PCS PO 00000 Frm 00037 Fmt 4701 Sfmt 4702 12,264 36 Average length of stay Average costs 6.7 9.1 $19,986 32,906 procedure codes 0JH60PZ, 0JH63PZ, 0JH80PZ and 0JH83PZ in MS–DRGs 907, 908, and 909 under MDC 21. Our findings are shown in the following table. E:\FR\FM\07MYP2.SGM 07MYP2 20200 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules MS–DRGS FOR CASES INVOLVING PACEMAKER INSERTION PROCEDURES IN MDC 21 MS–DRG 907—All cases ............................................................................................................ MS–DRG 907—Cases with procedure code 0JH60PZ (Insertion of cardiac rhythm related device into chest subcutaneous tissue and fascia, open approach) ........................................... MS–DRG 908—All cases ............................................................................................................ MS–DRG 908—Cases with procedure code 0JH60PZ (Insertion of cardiac rhythm related device into chest subcutaneous tissue and fascia, open approach) ........................................... MS–DRG 909—All cases ............................................................................................................ MS–DRG 909—Cases with procedure code 0JH60PZ (Insertion of cardiac rhythm related device into chest subcutaneous tissue and fascia, open approach) ........................................... We note that there were no cases found where procedure codes 0JH63PZ, 0JH80PZ or 0JH83PZ were reported in MS–DRGs 907, 908 and 909 under MDC Average length of stay Number of cases MS–DRG in MDC 21 21 and, therefore, they are not displayed in the table. The following table is a summary of the findings shown above from our Average costs 7,405 10.1 $28,997 7 8,519 11.1 5.2 60,141 14,282 4 3,224 3.8 3.1 35,678 9,688 2 2 42,688 review of MS–DRGs 907, 908, and 909 and the total number of cases reporting a pacemaker insertion procedure. MS–DRGS FOR CASES INVOLVING PACEMAKER INSERTION PROCEDURES IN MDC 21 Number of cases MS–DRG in MDC 21 MS–DRGs 907, 908 and 909—All cases .................................................................................... MS–DRGs 907, 908 and 909—Cases with a pacemaker insertion procedure .......................... We found a total of 19,148 cases in MS–DRGs 907, 908, and 909 with an average length of stay of 6.7 days and average costs of $19,199. We found a total of 13 cases in MS–DRGs 907, 908, and 909 reporting pacemaker insertion procedures with an average length of stay of 7.5 days and average costs of $49,929. ICD–10–PCS code 0JH604Z 0JH605Z 0JH606Z 0JH607Z ............... ............... ............... ............... 0JH60PZ .............. 0JH634Z ............... 0JH635Z ............... 0JH636Z ............... 0JH637Z ............... 0JH63PZ .............. 0JH804Z ............... 0JH805Z ............... 0JH806Z ............... 0JH807Z ............... 0JH80PZ .............. 0JH834Z ............... 0JH835Z ............... daltland on DSKBBV9HB2PROD with PROPOSALS2 0JH836Z ............... 0JH837Z ............... 0JH83PZ .............. Average costs 6.7 7.5 $19,199 49,929 We also examined cases involving pacemaker insertion procedures reporting the following procedure codes that are assigned to MS–DRGs 242, 243, and 244 under MDC 5. Code description Insertion of pacemaker, single chamber into chest subcutaneous tissue and fascia, open approach. Insertion of pacemaker, single chamber rate responsive into chest subcutaneous tissue and fascia, open approach. Insertion of pacemaker, dual chamber into chest subcutaneous tissue and fascia, open approach. Insertion of cardiac resynchronization pacemaker pulse generator into chest subcutaneous tissue and fascia, open approach. Insertion of cardiac rhythm related device into chest subcutaneous tissue and fascia, open approach. Insertion of pacemaker, single chamber into chest subcutaneous tissue and fascia, percutaneous approach. Insertion of pacemaker, single chamber rate responsive into chest subcutaneous tissue and fascia, percutaneous approach. Insertion of pacemaker, dual chamber into chest subcutaneous tissue and fascia, percutaneous approach. Insertion of cardiac resynchronization pacemaker pulse generator into chest subcutaneous tissue and fascia, percutaneous approach. Insertion of cardiac rhythm related device into chest subcutaneous tissue and fascia, percutaneous approach. Insertion of pacemaker, single chamber into abdomen subcutaneous tissue and fascia, open approach. Insertion of pacemaker, single chamber rate responsive into abdomen subcutaneous tissue and fascia, open approach. Insertion of pacemaker, dual chamber into abdomen subcutaneous tissue and fascia, open approach. Insertion of cardiac resynchronization pacemaker pulse generator into abdomen subcutaneous tissue and fascia, open approach. Insertion of cardiac rhythm related device into abdomen subcutaneous tissue and fascia, open approach. Insertion of pacemaker, single chamber into abdomen subcutaneous tissue and fascia, percutaneous approach. Insertion of pacemaker, single chamber rate responsive into abdomen subcutaneous tissue and fascia, percutaneous approach. Insertion of pacemaker, dual chamber into abdomen subcutaneous tissue and fascia, percutaneous approach. Insertion of cardiac resynchronization pacemaker pulse generator into abdomen subcutaneous tissue and fascia, percutaneous approach. Insertion of cardiac rhythm related device into abdomen subcutaneous tissue and fascia, percutaneous approach. Our data findings are shown in the following table. We note that procedure codes displayed with an asterisk (*) in VerDate Sep<11>2014 19,148 13 Average length of stay 20:30 May 04, 2018 Jkt 244001 the table are designated as non-O.R. procedures affecting the MS–DRG. PO 00000 Frm 00038 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 20201 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules CASES INVOLVING PACEMAKER INSERTION PROCEDURES IN MDC 5 daltland on DSKBBV9HB2PROD with PROPOSALS2 MS–DRG 242—All cases ............................................................................................................ MS–DRG 242—Cases with procedure code 0JH604Z* (Insertion of pacemaker, single chamber into chest subcutaneous tissue and fascia, open approach) ............................................ MS–DRG 242—Cases with procedure code 0JH605Z* (Insertion of pacemaker, single chamber rate responsive into chest subcutaneous tissue and fascia, open approach) .................. MS–DRG 242—Cases with procedure code 0JH606Z* (Insertion of pacemaker, dual chamber into chest subcutaneous tissue and fascia, open approach) ............................................ MS–DRG 242—Cases with procedure code 0JH607Z (Insertion of cardiac resynchronization pacemaker pulse generator into chest subcutaneous tissue and fascia, open approach) ..... MS–DRG 242—Cases with procedure code 0JH60PZ (Insertion of cardiac rhythm related device into chest subcutaneous tissue and fascia, open approach) ........................................... MS–DRG 242—Cases with procedure code 0JH634Z* (Insertion of pacemaker, single chamber into chest subcutaneous tissue and fascia, percutaneous approach) .............................. MS–DRG 242—Cases with procedure code 0JH635Z* (Insertion of pacemaker, single chamber rate responsive into chest subcutaneous tissue and fascia, percutaneous approach) .... MS–DRG 242—Cases with procedure code 0JH636Z* (Insertion of pacemaker, dual chamber into chest subcutaneous tissue and fascia, percutaneous approach) .............................. MS–DRG 242—Cases with procedure code 0JH637Z (Insertion of cardiac resynchronization pacemaker pulse generator into chest Subcutaneous tissue and fascia, percutaneous approach) ..................................................................................................................................... MS–DRG 242—Cases with procedure code 0JH63PZ (Insertion of cardiac rhythm related device into chest subcutaneous tissue and fascia, percutaneous approach) ............................. MS–DRG 242—Cases with procedure code 0JH804Z* (Insertion of pacemaker, single chamber into abdomen subcutaneous tissue and fascia, open approach) ..................................... MS–DRG 242—Cases with procedure code 0JH805Z* (Insertion of pacemaker, single chamber rate responsive into abdomen subcutaneous tissue and fascia, open approach) ........... MS–DRG 242—Cases with procedure code 0JH806Z* (Insertion of pacemaker, dual chamber into abdomen subcutaneous tissue and fascia, open approach) ..................................... MS–DRG 242—Cases with procedure code 0JH807Z (Insertion of cardiac resynchronization pacemaker pulse generator into abdomen subcutaneous tissue and fascia, open approach) MS–DRG 242—Cases with procedure code 0JH836Z (Insertion of pacemaker, dual chamber into abdomen subcutaneous tissue and fascia, percutaneous approach) .............................. MS–DRG 243—All cases ............................................................................................................ MS–DRG 243—Cases with procedure code 0JH604Z* (Insertion of pacemaker, single chamber into chest subcutaneous tissue and fascia, open approach) ............................................ MS–DRG 243—Cases with procedure code 0JH605Z* (Insertion of pacemaker, single chamber rate responsive into chest subcutaneous tissue and fascia, open approach) .................. MS–DRG 243—Cases with procedure code 0JH606Z* (Insertion of pacemaker, dual chamber into chest subcutaneous tissue and fascia, open approach) ............................................ MS–DRG 243—Cases with procedure code 0JH607Z (Insertion of cardiac resynchronization pacemaker pulse generator into chest subcutaneous tissue and fascia, open approach) ..... MS–DRG 243—Cases with procedure code 0JH60PZ (Insertion of cardiac rhythm related device into chest subcutaneous tissue and fascia, open approach) ........................................... MS–DRG 243—Cases with procedure code 0JH634Z* (Insertion of pacemaker, single chamber into chest subcutaneous tissue and fascia, percutaneous approach) .............................. MS–DRG 243—Cases with procedure code 0JH635Z* (Insertion of pacemaker, single chamber rate responsive into chest subcutaneous tissue and fascia, percutaneous approach) .... MS–DRG 243—Cases with procedure code 0JH636Z* (Insertion of pacemaker, dual chamber into chest subcutaneous tissue and fascia, percutaneous approach) .............................. MS–DRG 243—Cases with procedure code 0JH637Z (Insertion of cardiac resynchronization pacemaker pulse generator into chest subcutaneous tissue and fascia, percutaneous approach) ..................................................................................................................................... MS–DRG 243—Cases with procedure code 0JH63PZ (Insertion of cardiac rhythm related device into chest subcutaneous tissue and fascia, percutaneous approach) ............................. MS–DRG 243—Cases with procedure code 0JH804Z* (Insertion of pacemaker, single chamber into abdomen subcutaneous tissue and fascia, open approach) ..................................... MS–DRG 243—Cases with procedure code 0JH805Z* (Insertion of pacemaker, single chamber rate responsive into abdomen subcutaneous tissue and fascia, open approach) ........... MS–DRG 243—Cases with procedure code 0JH806Z* (Insertion of pacemaker, dual chamber into abdomen subcutaneous tissue and fascia, open approach) ..................................... MS–DRG 243—Cases with procedure code 0JH807Z (Insertion of cardiac resynchronization pacemaker pulse generator into abdomen subcutaneous tissue and fascia, open approach) MS–DRG 243—Cases with procedure code 0JH80PZ (Insertion of cardiac rhythm related device into abdomen subcutaneous tissue and fascia, open approach) .................................... MS–DRG 243—Cases with procedure code 0JH836Z* (Insertion of pacemaker, dual chamber into abdomen subcutaneous tissue and fascia, percutaneous approach) ........................ MS–DRG 244—All cases ............................................................................................................ MS–DRG 244—Cases with procedure code 0JH604Z* (Insertion of pacemaker, single chamber into chest subcutaneous tissue and fascia, open approach) ............................................ VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00039 Average length of stay Number of cases MS–DRG in MDC 5 Fmt 4701 Sfmt 4702 Average costs 18,205 6.9 $26,414 2,518 7.7 25,004 306 7.7 24,454 13,323 6.7 25,497 1,528 8.1 37,060 5 16.6 59,334 65 8.5 26,789 10 7 35,104 313 6.4 23,699 82 7.1 35,382 2 12.5 32,405 25 14.4 43,080 2 4 26,949 50 6.8 25,306 5 21.2 67,908 1 24,586 5 4 36,111 18,669 2,537 4.7 17,118 271 4.4 17,268 19,921 3.9 18,306 1,236 4.4 28,658 6 4.2 20,994 55 5.2 16,784 15 4.1 17,938 431 3.7 16,164 58 5 28,926 3 8.3 23,717 10 8.2 20,871 1 4 15,739 57 4.4 18,787 3 4 19,653 1 7 16,224 1 15,974 2 2.7 14,005 15,670 1,045 3.2 14,541 E:\FR\FM\07MYP2.SGM 07MYP2 20202 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules CASES INVOLVING PACEMAKER INSERTION PROCEDURES IN MDC 5—Continued MS–DRG 244—Cases with procedure code 0JH605Z* (Insertion of pacemaker, single chamber rate responsive into chest subcutaneous tissue and fascia, open approach) .................. MS–DRG 244—Cases with procedure code 0JH606Z* (Insertion of pacemaker, dual chamber into chest subcutaneous tissue and fascia, open approach) ............................................ MS–DRG 244—Cases with procedure code 0JH607Z (Insertion of cardiac resynchronization pacemaker pulse generator into chest subcutaneous tissue and fascia, open approach) ..... MS–DRG 244—Cases with procedure code 0JH60PZ (Insertion of cardiac rhythm related device into chest subcutaneous tissue and fascia, open approach) ........................................... MS–DRG 244—Cases with procedure code 0JH634Z* (Insertion of pacemaker, single chamber into chest subcutaneous tissue and fascia, percutaneous approach) .............................. MS–DRG 244—Cases with procedure code 0JH635Z* (Insertion of pacemaker, single chamber rate responsive into chest subcutaneous tissue and fascia, percutaneous approach) .... MS–DRG 244—Cases with procedure code 0JH636Z* (Insertion of pacemaker, dual chamber into chest subcutaneous tissue and fascia, percutaneous approach) .............................. MS–DRG 244—Cases with procedure code 0JH637Z (Insertion of cardiac resynchronization pacemaker pulse generator into chest subcutaneous tissue and fascia, percutaneous approach) ..................................................................................................................................... MS–DRG 244—Cases with procedure code 0JH63PZ (Insertion of cardiac rhythm related device into chest subcutaneous tissue and fascia, percutaneous approach) ............................. MS–DRG 244—Cases with procedure code 0JH805Z* (Insertion of pacemaker, single chamber rate responsive into abdomen subcutaneous tissue and fascia, open approach) ........... MS–DRG 244—Cases with procedure code 0JH806Z* (Insertion of pacemaker, dual chamber into abdomen subcutaneous tissue and fascia, open approach) ..................................... MS–DRG 244—Cases with procedure code 0JH836Z* (Insertion of pacemaker, dual chamber into abdomen subcutaneous tissue and fascia, percutaneous approach) ........................ The following table is a summary of the findings shown above from our review of MS–DRGs 242, 243, and 244 Average length of stay Number of cases MS–DRG in MDC 5 Average costs 127 3 13,208 14,092 2.7 15,596 303 2.8 26,221 2 4.5 9,248 32 2.8 11,525 1 2 30,100 320 2.6 13,670 20 2.7 19,218 1 3 12,120 1 1 21,604 36 3.2 16,492 1 3 12,160 and the total number of cases reporting a pacemaker insertion procedure. CASES INVOLVING PACEMAKER INSERTION PROCEDURES IN MDC 5 Number of cases MS–DRG in MDC 5 MS–DRGs 242, 243 and 244—All cases .................................................................................... MS–DRGs 242, 243, and 244—Cases with a pacemaker insertion procedure ......................... Average length of stay 58,765 * 58,822 Average costs 4.6 4.6 $20,253 20,270 * The figure is not adjusted for cases reporting more than one pacemaker insertion procedure code. The figure represents the frequency in which the number of pacemaker insertion procedures was reported. We found a total of 58,765 cases in MS–DRGs 242, 243, and 244 with an average length of stay of 4.6 days and average costs of $20,253. We found a total of 58,822 cases reporting pacemaker insertion procedures in MS– DRGs 242, 243, and 244 with an average length of stay of 4.6 days and average costs of $20,270. We note that the analysis performed is by procedure code, and because multiple pacemaker insertion procedures may be reported on a single claim, the total number of these pacemaker insertion procedure cases exceeds the total number of all cases found across MS–DRGs 242, 243, and 244 (58,822 procedures versus 58,765 cases). We then analyzed claims for cases reporting a procedure code describing (1) the insertion of a pacemaker device only, (2) the insertion of a pacemaker lead only, and (3) both the insertion of a pacemaker device and a pacemaker lead across all the MDCs except MDC 5 to determine the number of cases currently grouping to medical MS–DRGs and the potential impact of these cases moving into the surgical unrelated MS– DRGs 981, 982 and 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC and without CC/MCC, respectively). Our findings are shown in the following table. daltland on DSKBBV9HB2PROD with PROPOSALS2 PACEMAKER INSERTION PROCEDURES IN MEDICAL MS–DRGS Number of cases All MDCs except MDC 5 Procedures for insertion of pacemaker device ............................................................................ Procedures for insertion of pacemaker lead ............................................................................... Procedures for insertion of pacemaker device with insertion of pacemaker lead ...................... VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00040 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 2,747 2,831 2,709 07MYP2 Average length of stay Average costs 9.5 9.4 9.4 $29,389 29,240 29,297 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules We found a total of 2,747 cases reporting the insertion of a pacemaker device in 177 medical MS–DRGs with an average length of stay of 9.5 days and average costs of $29,389 across all the MDCs except MDC 5. We found a total of 2,831 cases reporting the insertion of a pacemaker lead in 175 medical MS– DRGs with an average length of stay of 9.4 days and average costs of $29,240 across all the MDCs except MDC 5. We found a total of 2,709 cases reporting both the insertion of a pacemaker device and the insertion of a pacemaker lead in 170 medical MS–DRGs with an average length of stay of 9.4 days and average costs of $29,297 across all the MDCs except MDC 5. 20203 We also analyzed claims for cases reporting a procedure code describing the insertion of a pacemaker device with a procedure code describing the insertion of a pacemaker lead in all the surgical MS–DRGs across all the MDCs except MDC 5. Our findings are shown in the following table. PACEMAKER INSERTION PROCEDURES IN MEDICAL MS–DRGS Number of cases Average length of stay Average costs Procedures for insertion of pacemaker device with insertion of pacemaker lead ...................... daltland on DSKBBV9HB2PROD with PROPOSALS2 All MDCs except MDC 5 3,667 12.8 $48,856 We found a total of 3,667 cases reporting the insertion of a pacemaker device and the insertion of a pacemaker lead in 194 surgical MS–DRGs with an average length of stay of 12.8 days and average costs of $48,856 across all the MDCs except MDC 5. For cases where the insertion of a pacemaker device, the insertion of a pacemaker lead or the insertion of both a pacemaker device and lead were reported on a claim grouping to a medical MS–DRG, the average length of stay and average costs were generally higher for these cases when compared to the average length of stay and average costs for all the cases in their assigned MS–DRGs. For example, we found 113 cases reporting both the insertion of a pacemaker device and lead in MS–DRG 378 (G.I. Hemorrhage with CC), with an average length of stay of 7.1 days and average costs of $23,711. The average length of stay for all cases in MS–DRG 378 was 3.6 days and the average cost for all cases in MS–DRG 378 was $7,190. The average length of stay for cases reporting both the insertion of a pacemaker device and lead were twice as long as the average length of stay for all the cases in MS–DRG 378 (7.1 days versus 3.6 days). In addition, the average costs for the cases reporting both the insertion of a pacemaker device and lead were approximately $16,500 higher than the average costs of all the cases in MS–DRG 378 ($23,711 versus $7,190). We refer readers to Table 6P.1c associated with this proposed rule (which is available via the internet on the CMS website) for the detailed report of our findings across the other medical MS–DRGs. We note that the average costs and average length of stay for cases reporting the insertion of a pacemaker device, the insertion of a pacemaker lead or the insertion of both a pacemaker device and lead are reflected in Columns D and E, while the average costs and average length of stay for all VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 cases in the respective MS–DRG are reflected in Columns I and J. The claims data results from our analysis of this request showed that if we were to support restructuring the GROUPER logic so that pacemaker insertion procedures that include a combination of the insertion of the pacemaker device with the insertion of the pacemaker lead are designated as an O.R. procedure across all the MDCs, we would expect approximately 2,709 cases to move or ‘‘shift’’ from the medical MS–DRGs where they are currently grouping into the surgical unrelated MS–DRGs 981, 982, and 983. Our clinical advisors reviewed the data results and recommended that pacemaker insertion procedures involving a complete pacemaker system (insertion of pacemaker device combined with insertion of pacemaker lead) warrant classification into surgical MS–DRGs because the patients receiving these devices demonstrate greater treatment difficulty and utilization of resources when compared to procedures that involve the insertion of only the pacemaker device or the insertion of only the pacemaker lead. We note that the request we addressed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24981 through 24984) was to determine if some procedure code combinations were excluded from the ICD–10 MS–DRG assignments for MS–DRGs 242, 243, and 244. We proposed and, upon considering public comments received, finalized an alternate approach that we believed to be less complicated. We also stated in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56806) that we would continue to monitor the MS–DRGs for pacemaker insertion procedures as we receive ICD–10 claims data. Upon further review, we believe that recreating the procedure code combinations for pacemaker insertion procedures would allow for the PO 00000 Frm 00041 Fmt 4701 Sfmt 4702 grouping of these procedures to the surgical MS–DRGs, which we believe is warranted to better recognize the resources and complexity of performing these procedures. Therefore, we are proposing to recreate pairs of procedure code combinations involving both the insertion of a pacemaker device with the insertion of a pacemaker lead to act as procedure code combination pairs or ‘‘clusters’’ in the GROUPER logic that are designated as O.R. procedures outside of MDC 5 when reported together. We are inviting public comments on our proposal. We also are proposing to designate all the procedure codes describing the insertion of a pacemaker device or the insertion of a pacemaker lead as nonO.R. procedures when reported as a single, individual stand-alone code based on the recommendation of our clinical advisors as noted earlier in this section and consistent with how these procedures were classified under the Version 33 ICD–10 MS–DRG GROUPER logic. We are inviting public comments on our proposal. We refer readers to Table 6P.1d, Table 6P.1e, and Table 6P.1f associated with this proposed rule (which is available via the internet on the CMS website at: https://www.cms.hhs.gov/Medicare/ Medicare-Fee-for-Service-Payment/ AcuteInpatientPPS/) for (1) a complete list of the proposed procedure code combinations or ‘‘pairs’’; (2) a complete list of the procedure codes describing the insertion of a pacemaker device; and (3) a complete list of the procedure codes describing the insertion of a pacemaker lead. We are inviting public comments on our lists of procedure codes that we are proposing to include for restructuring the ICD–10 MS–DRG GROUPER logic for pacemaker insertion procedures. In addition, we are proposing to maintain the current GROUPER logic for MS–DRGs 258 and 259 (Cardiac E:\FR\FM\07MYP2.SGM 07MYP2 20204 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules Pacemaker Device Replacement with MCC and without MCC, respectively) where the listed procedure codes as shown in the ICD–10 MS–DRG Definitions Manual Version 35, which is available via the internet on the CMS website at: https://www.cms.gov/ Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/FY2018IPPS-Final-Rule-Home-Page-Items/ FY2018-IPPS-Final-Rule-DataFiles.html?DLPage=1&DLEntries= 10&DLSort=0&DLSortDir=ascending, describing a pacemaker device insertion, continue to be designated as ‘‘non-O.R. affecting the MS–DRG’’ because they are reported when a pacemaker device requires replacement and have a corresponding diagnosis from MDC 5. Also, we are proposing to maintain the current GROUPER logic for MS–DRGs 260, 261, and 262 (Cardiac Pacemaker Revision Except Device Replacement with MCC, with CC, and without CC/MCC, respectively) so that cases reporting any one of the listed ICD–10–PCS procedure codes as shown in the ICD–10 MS–DRG Definitions Manual Version 35 describing procedures involving pacemakers and ICD–10–PCS code 02PA0MZ ............. 02PA3MZ ............. 02PA4MZ ............. 02WA0MZ ............ 02WA3MZ ............ 02WA4MZ ............ 0JPT0PZ .............. 0JPT3PZ .............. 0JWT0PZ ............. 0JWT3PZ ............. Code description Removal of cardiac lead from heart, open approach. Removal of cardiac lead from heart, percutaneous approach. Removal of cardiac lead from heart, percutaneous endoscopic approach. Revision of cardiac lead in heart, open approach. Revision of cardiac lead in heart, percutaneous approach. Revision of cardiac lead in heart, percutaneous endoscopic approach. Removal of cardiac rhythm related device from trunk subcutaneous tissue and fascia, open approach. Removal of cardiac rhythm related device from trunk subcutaneous tissue and fascia, percutaneous approach. Revision of cardiac rhythm related device in trunk subcutaneous tissue and fascia, open approach. Revision of cardiac rhythm related device in trunk subcutaneous tissue and fascia, percutaneous approach. We are soliciting public comments on whether these procedure codes describing the removal or revision of a cardiac lead and removal or revision of a cardiac rhythm related (pacemaker) device should also be designated as non-O.R. procedure codes for FY 2019 when reported as a single, individual stand-alone code with a principal diagnosis outside of MDC 5 for consistency in the classification among these devices. We also note that, while the requestor did not include the following procedure codes in its request, the codes in the following table became effective October 1, 2016 (FY 2017) and also describe procedures involving the insertion of a ICD–10–PCS code daltland on DSKBBV9HB2PROD with PROPOSALS2 02H40NZ .............. 02H43NZ .............. 02H44NZ .............. 02H60NZ .............. 02H63NZ .............. 02H64NZ .............. 02H70NZ .............. 02H73NZ .............. 02H74NZ .............. 02HK0NZ ............. 02HK3NZ ............. 02HK4NZ ............. 02HL0NZ .............. 02HL3NZ .............. 02HL4NZ .............. 02WA0NZ ............. 02WA3NZ ............. 02WA4NZ ............. 02WAXNZ ............ 02H40NZ .............. 02H43NZ .............. pacemaker. Specifically, the following list includes procedure codes that describe an intracardiac or ‘‘leadless’’ pacemaker. These procedure codes are designated as O.R. procedure codes and are currently assigned to MS–DRGs 228 and 229 (Other Cardiothoracic Procedures with MCC and without MCC, respectively) under MDC 5. Code description Insertion Insertion Insertion Insertion Insertion Insertion Insertion Insertion Insertion Insertion Insertion Insertion Insertion Insertion Insertion Revision Revision Revision Revision Insertion Insertion of of of of of of of of of of of of of of of of of of of of of intracardiac intracardiac intracardiac intracardiac intracardiac intracardiac intracardiac intracardiac intracardiac intracardiac intracardiac intracardiac intracardiac intracardiac intracardiac intracardiac intracardiac intracardiac intracardiac intracardiac intracardiac We examined claims data for procedures involving an intracardiac pacemaker reporting any of the above VerDate Sep<11>2014 related procedures and associated devices will continue to be assigned to those MS–DRGs under MDC 5 because they are reported when a pacemaker device requires revision and they have a corresponding circulatory system diagnosis. We are inviting public comments on our proposal. We note that, while the requestor did not include the following procedure codes in its request, these codes are also currently designated as O.R. procedure codes and are assigned to MS–DRGs 260, 261, and 262 under MDC 5. 20:30 May 04, 2018 Jkt 244001 pacemaker pacemaker pacemaker pacemaker pacemaker pacemaker pacemaker pacemaker pacemaker pacemaker pacemaker pacemaker pacemaker pacemaker pacemaker pacemaker pacemaker pacemaker pacemaker pacemaker pacemaker into coronary vein, open approach. into coronary vein, percutaneous approach. into coronary vein, percutaneous endoscopic approach. into right atrium, open approach. into right atrium, percutaneous approach. into right atrium, percutaneous endoscopic approach. into left atrium, open approach. into left atrium, percutaneous approach. into left atrium, percutaneous endoscopic approach. into right ventricle, open approach. into right ventricle, percutaneous approach. into right ventricle, percutaneous endoscopic approach. into left ventricle, open approach. into left ventricle, percutaneous Approach. into left ventricle, percutaneous endoscopic approach. in heart, open approach. in heart, percutaneous approach. in heart, percutaneous endoscopic approach. in heart, external approach. into coronary vein, open approach. into coronary vein, percutaneous approach. codes across all MS–DRGs. Our findings are shown in the following table. PO 00000 Frm 00042 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20205 INTRACARDIAC PACEMAKER PROCEDURES Across all MS–DRGs Number of cases Average length of stay Average costs Procedures for intracardiac pacemaker ...................................................................................... 1,190 8.6 $38,576 We found 1,190 cases reporting a procedure involving an intracardiac pacemaker with an average length of stay of 8.6 days and average costs of $38,576. Of these 1,190 cases, we found 1,037 cases in MS–DRGs under MDC 5. We also found that the 153 cases that grouped to MS–DRGs outside of MDC 5 grouped to surgical MS–DRGs; therefore, another O.R. procedure was also reported on the claim. However, we are soliciting public comments on whether these procedure codes describing the insertion and revision of intracardiac pacemakers should also be considered for classification into all surgical unrelated MS–DRGs outside of MDC 5 for FY 2019. b. Drug-Coated Balloons in Endovascular Procedures In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38111), we discontinued new technology add-on payments for the LUTONIX® and IN.PACTTM AdmiralTM drug-coated balloon (DCB) technologies, effective for FY 2018, because the technology no longer met the newness criterion for new technology add-on payments. For FY 2019, we received a request to reassign cases that utilize a drug-coated balloon in the performance of an endovascular procedure involving the treatment of superficial femoral arteries for peripheral arterial disease from the lower severity level MS–DRG 254 (Other Vascular Procedures without CC/MCC) and MS–DRG 253 (Other Vascular Procedures with CC) to the highest severity level MS–DRG 252 (Other Vascular Procedures with MCC). We also received a request to revise the title of MS–DRG 252 to ‘‘Other Vascular Procedures with MCC or Drug-Coated Balloon Implant’’. There are currently 36 ICD–10–PCS procedure codes that describe the performance of endovascular procedures involving treatment of the superficial femoral arteries that utilize a drug-coated balloon, which are listed in the following table. ICD–10–PCS code Code description 047K041 ............... 047K0D1 .............. 047K0Z1 ............... 047K341 ............... 047K3D1 .............. 047K3Z1 ............... 047K441 ............... Dilation of right femoral artery with drug-eluting intraluminal device using drug-coated balloon, open approach. Dilation of right femoral artery with intraluminal device using drug-coated balloon, open approach. Dilation of right femoral artery using drug-coated balloon, open approach. Dilation of right femoral artery with drug-eluting intraluminal device using drug-coated balloon, percutaneous approach. Dilation of right femoral artery with intraluminal device using drug-coated balloon, percutaneous approach. Dilation of right femoral artery using drug-coated balloon, percutaneous approach. Dilation of right femoral artery with drug-eluting intraluminal device using drug-coated balloon, percutaneous endoscopic approach. Dilation of right femoral artery with intraluminal device using drug-coated balloon, percutaneous endoscopic approach. Dilation of right femoral artery using drug-coated balloon, percutaneous endoscopic approach. Dilation of left femoral artery with drug-eluting intraluminal device using drug-coated balloon, open approach. Dilation of left femoral artery with intraluminal device using drug-coated balloon, open approach. Dilation of left femoral artery using drug-coated balloon, open approach. Dilation of left femoral artery with drug-eluting intraluminal device using drug-coated balloon, percutaneous approach. Dilation of left femoral artery with intraluminal device using drug-coated balloon, percutaneous approach. Dilation of left femoral artery using drug-coated balloon, percutaneous approach. Dilation of left femoral artery with drug-eluting intraluminal device using drug-coated balloon, percutaneous endoscopic approach. Dilation of left femoral artery with intraluminal device using drug-coated balloon, percutaneous endoscopic approach. Dilation of left femoral artery using drug-coated balloon, percutaneous endoscopic approach. Dilation of right popliteal artery with drug-eluting intraluminal device using drug-coated balloon, open approach. Dilation of right popliteal artery with intraluminal device using drug-coated balloon, open approach. Dilation of right popliteal artery using drug-coated balloon, open approach. Dilation of right popliteal artery with drug-eluting intraluminal device using drug-coated balloon, percutaneous approach. Dilation of right popliteal artery with intraluminal device using drug-coated balloon, percutaneous approach. Dilation of right popliteal artery using drug-coated balloon, percutaneous approach. Dilation of right popliteal artery with drug-eluting intraluminal device using drug-coated balloon, percutaneous endoscopic approach. Dilation of right popliteal artery with intraluminal device using drug-coated balloon, percutaneous endoscopic approach. Dilation of right popliteal artery using drug-coated balloon, percutaneous endoscopic approach. Dilation of left popliteal artery with drug-eluting intraluminal device using drug-coated balloon, open approach. Dilation of left popliteal artery with intraluminal device using drug-coated balloon, open approach. Dilation of left popliteal artery using drug-coated balloon, open approach. Dilation of left popliteal artery with drug-eluting intraluminal device using drug-coated balloon, percutaneous approach. Dilation of left popliteal artery with intraluminal device using drug-coated balloon, percutaneous approach. Dilation of left popliteal artery using drug-coated balloon, percutaneous approach. Dilation of left popliteal artery with drug-eluting intraluminal device using drug-coated balloon, percutaneous endoscopic approach. Dilation of left popliteal artery with intraluminal device using drug-coated balloon, percutaneous endoscopic approach. Dilation of left popliteal artery using drug-coated balloon, percutaneous endoscopic approach. 047K4D1 .............. 047K4Z1 ............... 047L041 ............... 047L0D1 ............... 047L0Z1 ............... 047L341 ............... 047L3D1 ............... 047L3Z1 ............... 047L441 ............... daltland on DSKBBV9HB2PROD with PROPOSALS2 047L4D1 ............... 047L4Z1 ............... 047M041 .............. 047M0D1 .............. 047M0Z1 .............. 047M341 .............. 047M3D1 .............. 047M3Z1 .............. 047M441 .............. 047M4D1 .............. 047M4Z1 .............. 047N041 ............... 047N0D1 .............. 047N0Z1 .............. 047N341 ............... 047N3D1 .............. 047N3Z1 .............. 047N441 ............... 047N4D1 .............. 047N4Z1 .............. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00043 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 20206 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules The requestor performed its own analysis of claims data and expressed concern that it found that the average costs of cases using a drug-coated balloon in the performance of percutaneous endovascular procedures involving treatment of patients who have been diagnosed with peripheral arterial disease are significantly higher than the average costs of all of the cases in the MS–DRGs where these procedures are currently assigned. The requestor also expressed concern that payments may no longer be adequate because the new technology add-on payments have been discontinued and may affect patient access to these procedures. We first examined claims data from the September 2017 update of the FY 2017 MedPAR file for cases reporting any 1 of the 36 ICD–10–PCS procedure codes listed in the immediately preceding table that describe the use of a drug-coated balloon in the performance of endovascular procedures in MS–DRGs 252, 253, and 254. Our findings are shown in the following table. MS–DRGS FOR OTHER VASCULAR PROCEDURES WITH DRUG-COATED BALLOON Number of cases MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG 252—All cases ............................................................................................................ 252—Cases with drug-coated balloon ........................................................................ 253—All cases ............................................................................................................ 253—Cases with drug-coated balloon ........................................................................ 254—All cases ............................................................................................................ 254—Cases with drug-coated balloon ........................................................................ As shown in this table, there were a total of 33,583 cases in MS–DRG 252, with an average length of stay of 7.6 days and average costs of $23,906. There were 870 cases in MS–DRG 252 reporting the use of a drug-coated balloon in the performance of an endovascular procedure, with an average length of stay of 8.8 days and average costs of $30,912. The total number of cases in MS–DRG 253 was 25,714, with an average length of stay of 5.4 days and average costs of $18,986. There were 1,532 cases in MS–DRG 253 reporting the use of a DCB in the performance of an endovascular procedure, with an average length of stay of 5.4 days and average costs of $23,051. The total number of cases in MS–DRG 254 was 12,344, with an average length of stay of 2.8 days and average costs of $13,287. There were 488 cases in MS–DRG 254 reporting the use of a DCB in the performance of an endovascular procedure, with an average length of stay of 2.4 days and average costs of $17,445. The results of our data analysis show that there is not a very high volume of cases reporting the use of a drug-coated balloon in the performance of endovascular procedures compared to all of the cases in the assigned MS– DRGs. The data results also show that the average length of stay for cases reporting the use of a drug-coated balloon in the performance of endovascular procedures in MS–DRGs 253 and 254 is lower compared to the average length of stay for all of the cases in the assigned MS–DRGs, while the average length of stay for cases reporting the use of a drug-coated balloon in the performance of endovascular procedures in MS–DRG 252 is slightly higher compared to all of the cases in MS–DRG 252 (8.8 days versus 7.6 days). Lastly, the data results showed that the average costs for cases reporting the use of a drug-coated balloon in the performance of percutaneous endovascular procedures were higher compared to all of the cases in the assigned MS–DRGs. Specifically, for Average length of stay 33,583 870 25,714 1,532 12,344 488 Average costs 7.6 8.8 5.4 5.4 2.8 2.4 $23,906 30,912 18,986 23,051 13,287 17,445 MS–DRG 252, the average costs for cases reporting the use of a DCB in the performance of endovascular procedures were $30,912 versus the average costs of $23,906 for all cases in MS–DRG 252, a difference of $7,006. For MS–DRG 253, the average costs for cases reporting the use of a drug-coated balloon in the performance of endovascular procedures were $23,051 versus the average costs of $18,986 for all cases in MS–DRG 253, a difference of $4,065. For MS–DRG 254, the average costs for cases reporting the use of a drug-coated balloon in the performance of endovascular procedures were $17,445 versus the average costs of $13,287 for all cases in MS–DRG 254, a difference of $4,158. The following table is a summary of the findings discussed above from our review of MS–DRGs 252, 253 and 254 and the total number of cases that used a drug-coated balloon in the performance of the procedure across MS–DRGs 252, 253, and 254. MS–DRGS FOR OTHER VASCULAR PROCEDURES AND CASES WITH DRUG-COATED BALLOON Number of cases MS–DRG daltland on DSKBBV9HB2PROD with PROPOSALS2 MS–DRGs 252, 253, and 254—All cases ................................................................................... MS–DRGs 252, 253, and 254—Cases with drug-coated balloon .............................................. As shown in this table, there were a total of 71,641 cases across MS–DRGs 252, 253, and 254, with an average length of stay of 6.0 days and average costs of $20,310. There were a total of 2,890 cases across MS–DRGs 252, 253, and 254 reporting the use of a drug- VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 coated balloon in the performance of the procedure, with an average length of stay of 6.0 days and average costs of $24,569. The data analysis showed that cases reporting the use of a drug-coated balloon in the performance of the procedure across MS–DRGs 252, 253 PO 00000 Frm 00044 Fmt 4701 Sfmt 4702 71,641 2,890 Average Length of stay Average costs 6.0 6.0 $20,310 24,569 and 254 have similar lengths of stay (6.0 days) compared to the average length of stay for all of the cases in MS–DRGs 252, 253, and 254. The data results also showed that the cases reporting the use of a drug-coated balloon in the performance of the procedure across E:\FR\FM\07MYP2.SGM 07MYP2 20207 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules these MS–DRGs have higher average costs ($24,569 versus $20,310) compared to the average costs for all of the cases across these MS–DRGs. The results of our claims data analysis and the advice from our clinical advisors do not support reassigning cases reporting the use of a drug-coated balloon in the performance of these procedures from the lower severity level MS–DRGs 253 and 254 to the highest severity level MS–DRG 252 at this time. If we were to reassign cases that utilize a drug-coated balloon in the performance of these types of procedures from MS–DRG 254 to MS– DRG 252, the cases would result in overpayment and also would have a shorter length of stay compared to all of the cases in MS–DRG 252. While the cases reporting the use of a drug-coated balloon in the performance of these procedures are higher compared to the average costs for all cases in their assigned MS–DRGs, it is not by a significant amount. We believe that as use of a drug-coated balloon becomes more common, the costs will be reflected in the data. Our clinical advisors also agreed that it would not be clinically appropriate to reassign cases for patients from the lowest severity level (without CC/MCC) MS–DRG to the highest severity level (with MCC) MS– DRG in the absence of additional data to better determine the resource utilization for this subset of patients. Therefore, for these reasons, we are proposing to not reassign cases reporting the use of a drug-coated balloon in the performance of endovascular procedures from MS– DRGs 253 and 254 to MS–DRG 252. We are inviting public comments on our proposal. We note that because 24 of the 36 ICD–10–PCS procedure codes describing the use of a drug-coated balloon in the performance of endovascular procedures also include the use of an intraluminal device, we conducted further analysis to determine the number of cases reporting an intraluminal device with the use of a drug-coated balloon in the performance of the procedure versus the number of cases reporting the use of a drug-coated balloon alone. We analyzed the number of cases across MS–DRGs 252, 253, and 254 reporting: (1) The use of an intraluminal device (stent) with use of a drug-coated balloon in the performance of the procedure; (2) the use of a drug-eluting intraluminal device (stent) with the use of a drugcoated balloon in the performance of the procedure; and (3) the use of a drugcoated balloon only in the performance of the procedure. Our findings are shown in the following table. MS–DRGS FOR OTHER VASCULAR PROCEDURES AND CASES WITH DRUG-COATED BALLOON Number of cases MS–DRG daltland on DSKBBV9HB2PROD with PROPOSALS2 MS–DRGs 252, 253 and 254—All cases .................................................................................... MS–DRGs 252, 253 and 254—Cases with intraluminal device with drug-coated balloon ......... MS–DRGs 252, 253 and 254—Cases with drug-eluting intraluminal device with drug-coated balloon ...................................................................................................................................... MS–DRGs 252, 253 and 254—Cases with drug-coated balloon only ........................................ As shown in this table, there were a total of 71,641 cases across MS–DRGs 252, 253, and 254, with an average length of stay of 6.0 days and average costs of $20,310. There were 522 cases across MS–DRGs 252, 253, and 254 reporting the use of an intraluminal device with use of a drug-coated balloon in the performance of the procedure, with an average length of stay of 6.0 days and average costs of $28,418. There were 447 cases across MS–DRGs 252, 253, and 254 reporting the use of a drug-eluting intraluminal device with use of a drug-coated balloon in the performance of the procedure, with an average length of stay of 6.0 days and average costs of $26,098. Lastly, there were 2,705 cases across MS–DRGs 252, 253, and 254 reporting the use of a drugcoated balloon alone in the performance of the procedure, with an average length of stay of 6.1 days and average costs of $24,553. The data showed that the 2,705 cases in MS–DRGs 252, 253, and 254 reporting the use of a drug-coated balloon alone in the performance of the procedure have lower average costs compared to the 969 cases in MS–DRGs 252, 253, and 254 reporting the use of an intraluminal device (522 cases) or a VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 drug-eluting intraluminal device (447 cases) with a drug-coated balloon in the performance of the procedure ($24,553 versus $28,418 and $26,098, respectively). The data also showed that the cases reporting the use of a drugcoated balloon alone in the performance of the procedure have a comparable average length of stay compared to the cases reporting the use of an intraluminal device or a drug-eluting intraluminal device with a drug-coated balloon in the performance of the procedure (6.1 days versus 6.0 days). In summary, we believe that further analysis of endovascular procedures involving the treatment of superficial femoral arteries for peripheral arterial disease that utilize a drug-coated balloon in the performance of the procedure would be advantageous. As additional claims data become available, we will be able to more fully evaluate the differences in cases where a procedure utilizes a drug-coated balloon alone in the performance of the procedure versus cases where a procedure utilizes an intraluminal device or a drug-eluting intraluminal device in addition to a drug-coated balloon in the performance of the procedure. PO 00000 Frm 00045 Fmt 4701 Sfmt 4702 Average length of stay Average costs 71,641 522 6.0 6.0 $20,310 28,418 447 2,705 6.0 6.1 26,098 24,553 5. MDC 6 (Diseases and Disorders of the Digestive System) a. Benign Lipomatous Neoplasm of Kidney We received a request to reassign ICD–10–CM diagnosis code D17.71 (Benign lipomatous neoplasm of kidney) from MDC 06 (Diseases and Disorders of the Digestive System) to MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract). The requestor stated that this diagnosis code is used to describe a kidney neoplasm and believed that because the ICD–10–CM code is specific to the kidney, a more appropriate assignment would be under MDC 11. In FY 2015, under the ICD–9– CM classification, there was not a specific diagnosis code for a benign lipomatous neoplasm of the kidney. The only diagnosis code available was ICD– 9–CM diagnosis code 214.3 (Lipoma of intra-abdominal organs), which was assigned to MS–DRGs 393, 394, and 395 (Other Digestive System Diagnoses with MCC, with CC, and without CC/MCC, respectively) under MDC 6. Therefore, when we converted from the ICD–9 based MS-DRGs to the ICD-10 MS-DRGs, there was not a specific code available that identified the kidney from which to E:\FR\FM\07MYP2.SGM 07MYP2 20208 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules replicate. As a result, ICD–10–CM diagnosis code D17.71 was assigned to those same MS–DRGs (MS–DRGs 393, 394, and 395) under MDC 6. While reviewing the MS–DRG classification of ICD–10–CM diagnosis code D17.71, we also reviewed the MS– DRG classification of another diagnosis code organized in subcategory D17.7, ICD–10–CM diagnosis code D17.72 (Benign lipomatous neoplasm of other genitourinary organ). ICD–10–CM diagnosis code D17.72 is currently assigned under MDC 09 (Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast) to MS–DRGs 606 and 607 (Minor Skin Disorders with and without MCC, respectively). Similar to the replication issue with ICD–10–CM diagnosis code D17.71, with ICD–10– CM diagnosis code D17.72, under the ICD–9–CM classification, there was not a specific diagnosis code to identify a benign lipomatous neoplasm of genitourinary organ. The only diagnosis code available was ICD–9–CM diagnosis code 214.8 (Lipoma of other specified sites), which was assigned to MS–DRGs 606 and 607 under MDC 09. Therefore, when we converted from the ICD–9 based MS-DRGs to the ICD–10 MS-DRGs, there was not a specific code available that identified another genitourinary organ (other than the kidney) from which to replicate. As a result, ICD–10–CM diagnosis code D17.72 was assigned to those same MS– DRGs (MS–DRGs 606 and 607) under MDC 9. We are proposing to reassign ICD–10– CM diagnosis code D17.71 from MS– DRGs 393, 394, and 395 (Other Digestive System Diagnoses with MCC, with CC, and without CC/MCC, respectively) under MDC 06 to MS–DRGs 686, 687, and 688 (Kidney and Urinary Tract Neoplasms with MCC, with CC, and without CC/MCC, respectively) under MDC 11 because this diagnosis code is used to describe a kidney neoplasm. We also are proposing to reassign ICD–10– CM diagnosis code D17.72 from MS– DRGs 606 and 607 under MDC 09 to MS–DRGs 686, 687, and 688 under MDC 11 because this diagnosis code is used to describe other types of neoplasms ICD–10–PCS code 0DSK0ZZ ............. 0DKL4ZZ .............. 0DSL0ZZ .............. 0DSL4ZZ .............. 0DSM0ZZ ............. 0DSM4ZZ ............. 0DSN0ZZ ............. 0DSN4ZZ ............. Reposition Reposition Reposition Reposition Reposition Reposition Reposition Reposition that group to MS–DRGs 329, 330, and 331, such as repositioning of the large intestine (unspecified segment). We analyzed the claims data from the September 2017 update of the FY 2017 daltland on DSKBBV9HB2PROD with PROPOSALS2 cases cases cases cases cases cases Med PAR file for MS–DRGs 344, 345 and 346 for all cases reporting the 8 ICD-10–PCS procedure codes listed in the table above. Our findings are shown in the following table: Number of cases ............................................................................................................ with a specific large bowel reposition procedure .............................. ............................................................................................................ with a specific large bowel reposition ................................................ ............................................................................................................ with a specific large bowel reposition procedure .............................. The data showed that the average length of stay and average costs for cases that reported a specific large bowel reposition procedure were generally consistent with the average length of VerDate Sep<11>2014 We received a request to reassign the following 8 ICD–10–PCS procedure codes that describe repositioning of the colon and takedown of end colostomy from MS–DRGs 344, 345, and 346 (Minor Small and Large Bowel Procedures with MCC, with CC, and without CC/MCC, respectively) to MS– DRGs 329, 330, and 331 (Major Small and Large Bowel Procedures with MCC, with CC, and without CC/MCC, respectively): ascending colon, open approach. ascending colon, percutaneous endoscopic approach. transverse colon, open approach. transverse colon, percutaneous endoscopic approach. descending colon, open approach. descending colon, percutaneous endoscopic approach. sigmoid colon, open approach. sigmoid colon, percutaneous endoscopic approach. MS–DRG 344—All 344—All 345—All 345—All 346—All 346—All b. Bowel Procedures Code description The requestor indicated that the resources required for procedures identifying repositioning of specified segments of the large bowel are more closely aligned with other procedures MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG classified to the genitourinary tract that do not have a specific code identifying the site. Our clinical advisors agree that the conditions described by the ICD–10– CM diagnosis codes provide specific anatomic detail involving the kidney and genitourinary tract and, therefore, if reclassified under this proposed MDC and reassigned to these MS–DRGs, would improve the clinical coherence of the patients assigned to these groups. We are inviting public comments on our proposals. 20:30 May 04, 2018 Jkt 244001 stay and average costs for all of the cases in their assigned MS–DRG. We then examined the claims data in the September 2017 update of the FY 2017 MedPAR file for MS–DRGs 329, PO 00000 Frm 00046 Fmt 4701 Sfmt 4702 1,452 52 2,674 246 990 223 Average length of stay Average costs 9.5 9.6 5.6 6 3.8 4.5 $20,609 23,409 11,552 14,915 8,977 12,279 330 and 331. Our findings are shown in the following table. E:\FR\FM\07MYP2.SGM 07MYP2 20209 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules Number of cases MS–DRG MS–DRGs 329, 330, and MS–DRG 329—All cases MS–DRG 330—All cases MS–DRG 331—All cases 331—All cases ................................................................................... ............................................................................................................ ............................................................................................................ ............................................................................................................ As shown in this table, across MS– DRGs 329, 330, and 331, we found a total of 112,388 cases, with an average length of stay of 8.4 days and average costs of $21,382. The results of our analysis indicate that the resources required for cases reporting the specific large bowel repositioning procedures are more aligned with those resources required for all cases assigned to MS– DRGs 344, 345, and 346, with the average costs being lower than the average costs for all cases assigned to MS–DRGs 329, 330, and 331. Our clinical advisors also indicated that the 8 specific bowel repositioning procedures are best aligned with those in MS–DRGs 344, 345, and 346. Therefore, we are proposing to maintain the current assignment of the 8 specific ICD–10–PCS code 0DQK0ZZ 0DQK4ZZ 0DQL0ZZ 0DQL4ZZ 0DQM0ZZ 0DQM4ZZ 0DQN0ZZ 0DQN4ZZ 0DSB0ZZ 0DSB4ZZ 0DSE0ZZ 0DSE4ZZ ............. ............. ............. ............. ............ ............ ............. ............. ............. ............. ............. ............. $21,382 34,015 17,896 12,132 bowel repositioning procedures in MS-DRGs 344, 345, and 346 for FY 2019. We are inviting public comments on this proposal. In conducting our analysis of MS– DRGs 329, 330, and 331, we also examined the subset of cases reporting one of the bowel procedures listed in the following table as the only O.R. procedure. Repair ascending colon, open approach. Repair ascending colon, percutaneous endoscopic approach. Repair transverse colon, open approach. Repair transverse colon, percutaneous endoscopic approach. Repair descending colon, open approach. Repair descending colon, percutaneous endoscopic approach. Repair sigmoid colon, open approach. Repair sigmoid colon, percutaneous endoscopic approach. Reposition ileum, open approach. Reposition ileum, percutaneous endoscopic approach. Reposition large intestine, open approach. Reposition large intestine, percutaneous endoscopic approach. resource use. As shown in the following table, we identified 398 cases reporting a bowel procedure as the only O.R. procedure, with an average length of stay of 6.3 days and average costs of $13,595 across MS–DRGs 329, 330, and MS–DRGs 329, 330 and 331—All cases .................................................................................... MS–DRGs 329, 330 and 331—All cases with a bowel procedure as only O.R. procedure ...... MS–DRG 329—All cases ............................................................................................................ MS–DRG 329—Cases with a bowel procedure as only O.R. procedure ................................... MS–DRG 330—All cases ............................................................................................................ MS–DRG 330—Cases with a bowel procedure as only O.R. procedure ................................... MS–DRG 331—All cases ............................................................................................................ MS–DRG 331—Cases with a bowel procedure as only O.R. procedure ................................... The resources required for these cases are more aligned with the resources required for cases assigned to MS–DRGs 344, 345, and 346 than with the resources required for cases assigned to MS–DRGs 329, 330, and 331. Our clinical advisors also agreed that these cases are more clinically aligned with cases in MS–DRGs 344, 345, and 346, as they are minor procedures relative to 20:30 May 04, 2018 Jkt 244001 the major bowel procedures assigned to MS–DRGs 329, 330, and 331. Therefore, we are proposing to reassign the 12 ICD–10–PCS procedure codes listed above from MS–DRGs 329, 330, and 331 to MS–DRGs 344, 345, and 346. We are inviting public comments on this proposal. PO 00000 331, compared to the overall average length of stay of 8.4 days and average costs of $21,382 for all cases in MS– DRGs 329, 330, and 331. Number of cases MS–DRG daltland on DSKBBV9HB2PROD with PROPOSALS2 8.4 13.3 7.3 4.1 Average costs Code description This approach can be useful in determining whether resource use is truly associated with a particular procedure or whether the procedure frequently occurs in cases with other procedures with higher than average VerDate Sep<11>2014 112,388 33,640 52,644 26,104 Average length of stay Frm 00047 Fmt 4701 Sfmt 4702 112,388 398 33,640 86 52,644 183 26,104 129 Average length of stay 8.4 6.3 13.3 8.3 7.3 6.9 4.1 4.3 Average costs $21,382 13,595 34,015 19,309 17,896 13,617 12,132 9,754 6. MDC 8 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue): Spinal Fusion In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38036), we announced our plans to review the ICD–10 logic for the MS–DRGs where procedures involving spinal fusion are currently assigned for FY 2019. After publication of the FY 2018 IPPS/LTCH PPS final rule, we E:\FR\FM\07MYP2.SGM 07MYP2 20210 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules received a comment suggesting that CMS publish findings from this review and discuss possible future actions. The commenter agreed that it is important to be able to fully evaluate the MS–DRGs to which all spinal fusion procedures are currently assigned with additional claims data, particularly considering the 33 clinically invalid codes that were identified through the rulemaking process (82 FR 38034 through 38035) and the 87 codes identified from the upper and lower joint fusion tables in the ICD–10–PCS classification and discussed at the September 12, 2017 ICD–10 Coordination and Maintenance Committee that were proposed to be deleted effective October 1, 2018 (FY 2019). The agenda and handouts from that meeting can be obtained from the CMS website at: https://www.cms.gov/ Medicare/Coding/ ICD9ProviderDiagnosticCodes/ICD-9CM-C-and-M-Meeting-Materials.html. According to the commenter, deleting the 33 procedure codes describing clinically invalid spinal fusion procedures for FY 2018 partially resolves the issue for data used in setting the FY 2020 payment rates. However, the commenter also noted that the problem will not be fully resolved MS–DRG daltland on DSKBBV9HB2PROD with PROPOSALS2 453 454 455 456 457 458 459 460 471 472 473 Description ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... Combined Anterior/Posterior Spinal Fusion with MCC. Combined Anterior/Posterior Spinal Fusion with CC. Combined Anterior/Posterior Spinal Fusion without CC/MCC. Spinal Fusion Except Cervical with Spinal Curvature or Malignancy or Infection or Extensive Fusions with MCC. Spinal Fusion Except Cervical with Spinal Curvature or Malignancy or Infection or Extensive Fusions with CC. Spinal Fusion Except Cervical with Spinal Curvature or Malignancy or Infection or Extensive Fusions without CC/MCC. Spinal Fusion Except Cervical with MCC. Spinal Fusion Except Cervical without MCC. Cervical Spinal Fusion with MCC. Cervical Spinal Fusion with CC. Cervical Spinal Fusion without CC/MCC. In addition, the commenter noted that it also identified a number of discharges for the 33 clinically invalid codes we identified in the FY 2018 IPPS/LTCH PPS final rule in the same MS–DRGs listed above. According to the commenter, its findings of these invalid spinal fusion procedure codes in the FY 2016 claims data comprise approximately 30 percent of all discharges for spinal fusion procedures. The commenter expressed its appreciation that CMS is making efforts to address coding inaccuracies within the classification and suggested that CMS publish findings from its own review of spinal fusion coding issues in those MS–DRGs where cases reporting spinal fusion procedures are currently assigned and include a discussion of possible future actions in the FY 2019 IPPS/LTCH PPS proposed rule. The commenter believed that such an approach would allow time for stakeholder input on any possible proposals along with time for the invalid codes to be worked out of the datasets. The commenter also noted that publishing CMS’ findings will put the agency, as well as the public, in a better position to address any potential payment issues for these services beginning in FY 2021. We thank the commenter for acknowledging the steps we have taken in our efforts to address coding VerDate Sep<11>2014 until the FY 2019 claims are available for FY 2021 ratesetting (due to the 87 codes identified at the ICD–10 Coordination and Maintenance Committee meeting for deletion effective October 1, 2018 (FY 2019)). The commenter noted that it analyzed claims data from the FY 2016 MedPAR data set and was surprised to discover a significant number of discharges reporting 1 of the 87 clinically invalid codes that were identified and discussed by the ICD–10 Coordination and Maintenance Committee among the following spinal fusion MS–DRGs. 20:30 May 04, 2018 Jkt 244001 inaccuracies within the classification as we continue to refine the ICD–10 MS– DRGs. We are not proposing any changes to the MS–DRGs involving spinal fusion procedures for FY 2019. However, in response to the commenter’s suggestion and findings, we are providing the results from our analysis of the September 2017 update of the FY 2017 MedPAR claims data for the MS–DRGs involving spinal fusion procedures. We note that while the commenter stated that 87 codes were identified from the upper and lower joint fusion tables in the ICD–10–PCS classification and discussed at the September 12, 2017 ICD–10 Coordination and Maintenance Committee meeting to be deleted effective October 1, 2018 (FY 2019), there were 99 spinal fusion codes identified in the meeting materials, as shown in Table 6P.1g associated with this proposed rule (which is available via the Internet on the CMS website at: https://www.cms.hhs.gov/Medicare/ Medicare-Fee-for-Service-Payment/ AcuteInpatientPPS/). As shown in Table 6P.1g associated with this proposed rule, the 99 procedure codes describe spinal fusion procedures that have device value ‘‘Z’’ representing No Device for the 6th character in the code. Because a spinal fusion procedure always requires some type of device (for example, PO 00000 Frm 00048 Fmt 4701 Sfmt 4702 instrumentation with bone graft or bone graft alone) to facilitate the fusion of vertebral bones, these codes are considered clinically invalid and were proposed for deletion at the September 12, 2017 ICD–10 Coordination and Maintenance Committee meeting. We received public comments in support of the proposal to delete the 99 codes describing a spinal fusion without a device, in addition to receiving support for the deletion of other procedure codes describing fusion of body sites other than the spine. A total of 213 procedure codes describing fusion of a specific body part with device value ‘‘Z’’ No Device are being deleted effective October 1, 2018 (FY 2019) as shown in Table 6D.—Invalid Procedure Codes associated with this proposed rule (which is available via the Internet on the CMS website at: https:// www.cms.hhs.gov/Medicare/MedicareFee-for-Service-Payment/ AcuteInpatientPPS/). We examined claims data from the September 2017 update of the FY 2017 MedPAR file for cases reporting any of the clinically invalid spinal fusion procedures with device value ‘‘Z’’ No Device in MS–DRGs 028 (Spinal Procedures with MCC), 029 (Spinal Procedures with CC or Spinal Neurostimulators), and 030 (Spinal Procedures without CC/MCC) under E:\FR\FM\07MYP2.SGM 07MYP2 20211 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules MDC 1 and MS–DRGs 453, 454, 455, 456, 457, 458, 459, 460, 471, 472, and 473 under MDC 8 (that are listed and shown earlier in this section). Our findings are shown in the following tables. SPINAL FUSION PROCEDURES Number of cases MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG 028—All cases ............................................................................................................ 028—Cases with invalid spinal fusion procedures ..................................................... 029—All cases ............................................................................................................ 029—Cases with invalid spinal fusion procedures ..................................................... 030—All cases ............................................................................................................ 030—Cases with invalid spinal fusion procedures ..................................................... 453—All cases ............................................................................................................ 453—Cases with invalid spinal fusion procedures ..................................................... 454—All cases ............................................................................................................ 454—Cases with invalid spinal fusion procedures ..................................................... 455—All cases ............................................................................................................ 455—Cases with invalid spinal fusion procedures ..................................................... 456—All cases ............................................................................................................ 456—Cases with invalid spinal fusion procedures ..................................................... 457—All cases ............................................................................................................ 457—Cases with invalid spinal fusion procedures ..................................................... 458—All cases ............................................................................................................ 458—Cases with invalid spinal fusion procedures ..................................................... 459—All cases ............................................................................................................ 459—Cases with invalid spinal fusion procedures ..................................................... 460—All cases ............................................................................................................ 460—Cases with invalid spinal fusion procedures ..................................................... 471—All cases ............................................................................................................ 471—Cases with invalid spinal fusion procedures ..................................................... 472—All cases ............................................................................................................ 472—Cases with invalid spinal fusion procedures ..................................................... 473—All cases ............................................................................................................ 473—Cases with invalid spinal fusion procedures ..................................................... 1,927 132 3,426 171 1,578 52 2,891 823 12,288 2,473 12,751 2,332 1,439 404 3,644 960 1,368 244 4,904 726 59,459 5,311 3,568 389 15,414 1,270 18,095 1,185 Average length of stay Average costs 11.7 13 5.7 7.4 3 2.6 9.5 10.1 4.7 5.4 3 3.2 11.5 12.5 6 6.7 3.6 4.1 7.8 9 3.4 3.9 8.4 9.9 3.2 4 1.8 2.3 $37,524 52,034 22,525 33,668 15,984 22,471 70,005 84,829 47,334 59,814 37,440 45,888 66,447 71,385 48,595 53,298 37,804 43,182 43,862 49,387 29,870 31,936 36,272 43,014 21,836 25,780 17,694 19,503 SUMMARY TABLE FOR SPINAL FUSION PROCEDURES Number of cases MS–DRG daltland on DSKBBV9HB2PROD with PROPOSALS2 MS–DRGs 028, 029, 030, 453, 454, 455, 456, 457, 458, 459, 460, 471, 472, and 473—All cases ........................................................................................................................................ MS–DRGs 028, 029, 030, 453, 454, 455, 456, 457, 458, 459, 460, 471, 472, and 473— Cases with invalid spinal fusion procedures ............................................................................ As shown in this summary table, we found a total of 142,752 cases in MS– DRGs 028, 029, 030, 453, 454, 455, 456, 457, 458, 459, 460, 471, 472, and 473 with an average length of stay of 3.9 days and average costs of $31,788. We found a total of 16,472 cases reporting a procedure code for an invalid spinal fusion procedure with device value ‘‘Z’’ No Device across MS–DRGs 028, 029, and 030 under MDC 1 and MS–DRGs 453, 454, 455, 456, 457, 458, 459, 460, 471, 472, and 473 under MDC 8, with an average length of stay of 5.1 days and average costs of $42,929. The results of the data analysis demonstrate that these invalid spinal fusion procedures represent approximately 12 percent of all discharges across the spinal fusion MS–DRGs. Because these procedure codes describe clinically invalid procedures, we would not expect these VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 codes to be reported on any claims data. It is unclear why providers assigned procedure codes for spinal fusion procedures with the device value ‘‘Z’’ No Device. Our analysis did not examine whether these claims were isolated to a specific provider or whether this inaccurate reporting was widespread among a number of providers. With regard to possible future action, we will continue to monitor the claims data for resolution of the coding issues previously identified. Because the procedure codes that we analyzed and presented findings for in this FY 2019 IPPS/LTCH PPS proposed rule are no longer in the classification effective October 1, 2018 (FY 2019), the claims data that we examine for FY 2020 may still contain claims with the invalid codes. As such, we will continue to PO 00000 Frm 00049 Fmt 4701 Sfmt 4702 Average length of stay Average costs 142,752 3.9 $31,788 16,472 5.1 42,929 collaborate with the AHA as one of the four Cooperating Parties through the AHA’s Coding Clinic for ICD–10–CM/ PCS and provide further education on spinal fusion procedures and the proper reporting of the ICD–10–PCS spinal fusion procedure codes. We agree with the commenter that until these coding inaccuracies are no longer reflected in the claims data, it would be premature to propose any MS–DRG modifications for spinal fusion procedures. Possible MS–DRG modifications may include taking into account the approach that was utilized in performing the spinal fusion procedure (for example, open versus percutaneous). For the reasons described, stated earlier in our discussion, we are proposing to not make any changes to the spinal fusion MS–DRGs for FY 2019. E:\FR\FM\07MYP2.SGM 07MYP2 20212 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules We are inviting public comments on our proposal. 7. MDC 9 (Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast): Cellulitis With Methicillin Resistant Staphylococcus Aureus (MSRA) Infection We received a request to reassign ICD–10–CM diagnosis codes reported with a primary diagnosis of cellulitis and a secondary diagnosis code of B95.62 (Methicillin resistant Staphylococcus aureus infection as the cause of diseases classified elsewhere) or A49.02 (Methicillin resistant Staphylococcus aureus infection, unspecified site). Currently, these cases are assigned to MS–DRG 602 (Cellulitis with MCC) and MS–DRG 603 (Cellulitis without MCC) in MDC 9. The requestor believed that cases of cellulitis with MSRA infection should be reassigned to MS–DRG 867 (Other Infectious and Parasitic Diseases Diagnoses with MCC) because MS–DRGs 602 and 603 include cases that do not accurately reflect the severity of illness or risk of mortality for patients diagnosed with cellulitis and MRSA. The requestor acknowledged that the organism is not to be coded before the localized infection, but stated in its request that patients diagnosed with cellulitis and MRSA are entirely different from patients diagnosed only with cellulitis. The requestor stated that Number of cases MS–DRG MS–DRG 602—All cases ............................................................................................................ MS–DRG 603—All cases ............................................................................................................ MS–DRGs 602 and 603—Cases reported with a primary diagnosis of cellulitis and a secondary diagnosis of B95.62 ..................................................................................................... MS–DRGs 602 and 603—Cases reported with a primary diagnosis of cellulitis and a secondary diagnosis of A49.02 ..................................................................................................... As shown in this table, we examined the subsets of cases in MS–DRGs 602 and 603 reported with a primary diagnosis of cellulitis and a secondary diagnosis code B95.62 or A49.02. Both of these subsets of cases had an average length of stay that was comparable to the average length of stay for all cases in MS–DRG 602 and greater than the average length of stay for all cases in MS–DRG 603, and average costs that were lower than the average costs of all cases in MS–DRG 602 and higher than there is a genuine threat to life or limb in these cases. The requestor further stated that, with the opioid crisis and the frequency of MRSA infection among this population, cases of cellulitis with MRSA should be identified with a specific combination code and assigned to MS–DRG 867. We analyzed claims data from the September 2017 update of the FY 2017 MedPAR file for all cases assigned to MS–DRGs 602 and 603 and subsets of these cases reporting a primary ICD–10– CM diagnosis of cellulitis and a secondary diagnosis code of B95.62 or A49.02. Our findings are shown in the following table. the average costs of all cases in MS– DRG 603. As we have discussed in prior rulemaking (77 FR 53309), it is a fundamental principle of an averaged payment system that half of the procedures in a group will have above average costs. It is expected that there will be higher cost and lower cost subsets, especially when a subset has low numbers. To examine the request to reassign ICD–10–CM diagnosis codes reported with a primary diagnosis of cellulitis 5.8 3.9 $10,034 6,128 5,364 5.3 8,245 309 5.4 8,832 and a secondary diagnosis code of B95.62 or A49.02 from MS–DRGs 602 and 603 to MS–DRG 867 (which would typically involve also reassigning those cases to the two other severity level MS–DRGs 868 and 869 (Other Infectious and Parasitic Diseases Diagnoses with CC and Other Infectious and Parasitic Diseases Diagnoses without CC/MCC, respectively)), we then analyzed the data for all cases in MS–DRGs 867, 868 and 869. The results of our analysis are shown in the following table. daltland on DSKBBV9HB2PROD with PROPOSALS2 MS–DRG 867–All cases .............................................................................................................. MS–DRG 868–All cases .............................................................................................................. MS–DRG 869–All cases .............................................................................................................. We compared the average length of stay and average costs for MS–DRGs 867, 868, and 869 to the average length of stay and average costs for the subsets of cases in MS–DRGs 602 and 603 reported with a primary diagnosis of cellulitis and a secondary diagnosis code of B95.62 or A49.02. We found that the average length of stay for these subsets of cases was shorter and the average costs were lower than those for all cases in MS–DRG 867, but that the average length of stay and average costs were higher than those for all cases in MS–DRG 868 and MS–DRG 869. Our findings from the analysis of claims data VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 do not support reassigning cellulitis cases reported with ICD–10–CM diagnosis code B95.62 or A49.02 from MS–DRGs 602 and 603 to MS–DRGs 867, 868 and 869. Our clinical advisors noted that when a primary diagnosis of cellulitis is accompanied by a secondary diagnosis of B95.62 or A49.02 in MS– DRGs 602 or 603, the combination of these primary and secondary diagnoses is the reason for the hospitalization, and the level of acuity of these subsets of patients is similar to other patients in MS–DRGs 602 and 603. Therefore, these cases are more clinically aligned with all cases in MS–DRGs 602 and 603. For PO 00000 Frm 00050 Fmt 4701 Sfmt 4702 Average costs 26,244 104,491 Number of cases MS–DRG Average length of stay 2,653 2,096 499 Average length of stay Average costs 7.5 4.4 3.3 $14,762 7,532 5,624 these reasons, we are not proposing to reassign cellulitis cases reported with ICD–10–CM diagnosis code of B95.62 or A49.02 to MS–DRG 867, 868, or 869 for FY 2019. We are inviting public comments on our proposal to maintain the current MS–DRG assignment for ICD–10–CM codes B95.62 and A49.02 when reported as secondary diagnoses with a primary diagnosis of cellulitis. 8. MDC 10 (Endocrine, Nutritional and Metabolic Diseases and Disorders): Acute Intermittent Porphyria We received a request to revise the MS–DRG classification for cases of E:\FR\FM\07MYP2.SGM 07MYP2 20213 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules patients diagnosed with porphyria and reported with ICD–10–CM diagnosis code E80.21 (Acute intermittent (hepatic) porphyria) to recognize the resource requirements in caring for these patients, to ensure appropriate payment for these cases, and to preserve patient access to necessary treatments. Porphyria is defined as a group of rare disorders (‘‘porphyrias’’) that interfere with the production of hemoglobin that is needed for red blood cells. While some of these disorders are genetic (inborn) and others are acquired, they all result in the abnormal accumulation of hemoglobin building blocks, called porphyrins, which can be deposited in the tissues where they particularly interfere with the functioning of the nervous system and the skin. Treatment for patients suffering from disorders of porphyrin metabolism consists of an intravenous injection of Panhematin® (hemin for injection). ICD–10–CM diagnosis code E80.21 is currently assigned to MS–DRG 642 (Inborn and Other Disorders of Metabolism). (We note that this issue has been discussed previously in the FY 2013 IPPS/LTCH PPS proposed and final rules (77 FR 27904 through 27905 and 77 FR 53311 through 53313, respectively) and the FY 2015 IPPS/LTCH PPS proposed and final rules (79 FR 28016 and 79 FR 49901, respectively).) We analyzed claims data from the September 2017 update of the FY 2017 MedPAR file for cases assigned to MS– DRG 642. Our findings are shown in the following table. Number of cases MS–DRG MS–DRG 642—All cases ............................................................................................................ MS–DRG 642—Cases reporting diagnosis code E80.21 as principal diagnosis ....................... MS–DRG 642—Cases not reporting diagnosis code E80.21 as principal diagnosis ................. As shown in this table, cases reporting diagnosis code E80.21 as the principal diagnosis in MS–DRG 642 had higher average costs and longer average lengths of stay compared to the average costs and lengths of stay for all other cases in MS–DRG 642. To examine the request to reassign cases with ICD–10–CM diagnosis code E80.21 as the principal diagnosis, we analyzed claims data for all cases in MS–DRGs for endocrine disorders, including MS–DRG 643 (Endocrine Disorders with MCC), MS-DRG 644 MS–DRG 643—All cases ............................................................................................................ MS–DRG 644—All cases ............................................................................................................ MS–DRG 645—All cases ............................................................................................................ daltland on DSKBBV9HB2PROD with PROPOSALS2 The data results showed that the average length of stay for the subset of cases reporting ICD–10–CM diagnosis code E80.21 as the principal diagnosis in MS–DRG 642 is lower than the average length of stay for all cases in MS–DRG 643, but higher than the average length of stay for all cases in MS–DRGs 644 and 645. The average costs for the subset of cases reporting ICD–10–CM diagnosis code E80.21 as the principal diagnosis in MS–DRG 642 are much higher than the average costs for all cases in MS–DRGs 643, 644, and 645. However, after considering these findings in the context of the current MS–DRG structure, we were unable to identify an MS–DRG that would more closely parallel these cases with respect to average costs and length of stay that would also be clinically aligned. Our clinical advisors believe that, in the current MS–DRG structure, the clinical characteristics of patients in these cases are most closely aligned with the clinical characteristics of patients in all cases in MS–DRG 642. Moreover, given the small number of porphyria cases, we do not believe there is justification for creating a new MS–DRG. Basing a new MS–DRG on such a small number of cases could lead to distortions in the relative payment weights for the MS– DRG because several expensive cases could impact the overall relative payment weight. Having larger clinical cohesive groups within an MS–DRG provides greater stability for annual ICD–10–CM code Z49.01 Z49.02 Z49.31 Z49.32 .................. .................. .................. .................. VerDate Sep<11>2014 1,801 183 1,618 9,337 11,306 4,297 20:30 May 04, 2018 for for for for PO 00000 Frm 00051 Fmt 4701 Sfmt 4702 $9,157 19,244 8,016 Average length of stay Average costs 6.3 4.2 3.2 $11,268 7,154 5,406 9. MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract): Admit for Renal Dialysis We received a request to review the codes assigned to MS–DRG 685 (Admit for Renal Dialysis) to determine if the MS–DRG should be deleted, or if it should remain as a valid MS–DRG. Currently, the ICD–10–CM diagnosis codes shown in the table below are assigned to MS–DRG 685: fitting and adjustment of extracorporeal dialysis catheter. fitting and adjustment of peritoneal dialysis catheter. adequacy testing for hemodialysis. adequacy testing for peritoneal dialysis. Jkt 244001 4.3 5.6 4.1 updates to the relative payment weights. In summary, we are not proposing to revise the MS–DRG classification for porphyria cases. We are inviting public comments on our proposal to maintain porphyria cases in MS–DRG 642. ICD–CM code title Encounter Encounter Encounter Encounter Average costs (Endocrine Disorders with CC), and MS–DRG 645 (Endocrine Disorders without CC/MCC). The results of our analysis are shown in the following table. Number of cases MS–DRG Average length of stay E:\FR\FM\07MYP2.SGM 07MYP2 20214 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules The requestor stated that, under ICD– 9–CM, diagnosis code V56.0 (Encounter for extracorporeal dialysis) was reported as the principal diagnosis to identify patients who were admitted for an encounter for dialysis. However, under ICD–10–CM, there is no comparable code in which to replicate such a diagnosis. The requestor noted that, while patients continue to be admitted under inpatient status (under certain circumstances) for dialysis services, there is no existing ICD–10–CM diagnosis code within the classification that specifically identifies a patient being admitted for an encounter for dialysis services. The requestor also noted that three of the four ICD–10–CM diagnosis codes currently assigned to MS–DRG 685 are on the ‘‘Unacceptable Principal Diagnosis’’ edit code list in the Medicare Code Editor (MCE). Therefore, these codes are not allowed to be reported as a principal diagnosis for an inpatient admission. We examined claims data from the September 2017 update of the FY 2017 MedPAR file for cases reporting ICD– 10–CM diagnosis codes Z49.01, Z49.02, Z49.31, and Z49.32. Our findings are shown in the following table. ADMIT FOR RENAL DIALYSIS ENCOUNTER daltland on DSKBBV9HB2PROD with PROPOSALS2 MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG 685—All cases ............................................................................................................ 685—Cases reporting ICD–10–CM diagnosis code Z49.01 ...................................... 685—Cases reporting ICD–10–CM diagnosis code Z49.02 ...................................... 685—Cases reporting ICD–10–CM diagnosis code Z49.31 ...................................... 685—Cases reporting ICD–10–CM diagnosis code Z49.32 ...................................... As shown in the table above, for MS– DRG 685, there were a total of 78 cases reporting ICD–10–CM diagnosis code Z49.01, with an average length of stay of 4 days and average costs of $8,871. There were no cases reporting ICD–10– CM diagnosis code Z49.02, Z49.31, or Z49.32. Our clinical advisors reviewed the clinical issues, as well as the claims data for MS–DRG 685. Based on their review of the data analysis, our clinical advisors recommended that MS–DRG 685 be deleted and ICD–10–CM diagnosis codes Z49.01, Z49.02, Z49.31, and Z49.32 be reassigned. Historically, patients were admitted as inpatients to receive hemodialysis services. However, over time, that practice has shifted to outpatient and ambulatory settings. Because of this change in medical practice, we do not believe that it is appropriate to maintain a vestigial MS– DRG, particularly due to the fact that the transition to ICD–10 has resulted in three out of four codes that map to the MS–DRG being precluded from being used as principal diagnosis codes on the claim. In addition, our clinical advisors believe that reassigning the ICD–10–CM diagnosis codes from MS–DRG 685 to MS–DRGs 698, 699, and 700 (Other Kidney and Urinary Tract Diagnoses with MCC, with CC, and without CC\MCC, respectively) is clinically appropriate because the reassignment will result in an accurate MS–DRG assignment of a specific case or inpatient service and encounter based VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 on acceptable principal diagnosis codes under these MS–DRGs. Therefore, for FY 2019, because there is no existing ICD–10–CM diagnosis code within the classification system that specifically identifies a patient being admitted for an encounter for dialysis services and three of the four ICD–10–CM diagnosis codes, Z49.02, Z49.31, and Z49.32, currently assigned to MS–DRG 685 are on the Unacceptable Principal Diagnosis edit code list in the Medicare Code Editor (MCE), we are proposing to delete MS–DRG 685 and reassign ICD–10–CM diagnosis codes Z49.01, Z49.02, Z49.31, and Z49.32 from MS–DRG 685 to MS–DRGs 698, 699, and 700. We are inviting public comments on our proposals. 10. MDC 14 (Pregnancy, Childbirth and the Puerperium) In the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19834) and final rule (82 FR 38036 through 38037), we noted that the MS–DRG logic involving a vaginal delivery under MDC 14 is technically complex as a result of the requirements that must be met to satisfy assignment to the affected MS–DRGs. As a result, we solicited public comments on further refinement to the following four MS–DRGs related to vaginal delivery: MS–DRG 767 (Vaginal Delivery with Sterilization and/or D&C); MS–DRG 768 (Vaginal Delivery with O.R. Procedure Except Sterilization and/ or D&C); MS–DRG 774 (Vaginal Delivery with Complicating Diagnosis); and MS– DRG 775 (Vaginal Delivery without PO 00000 Average length of stay Number of cases MS–DRG Frm 00052 Fmt 4701 Sfmt 4702 78 78 0 0 0 Average costs 4 4 0 0 0 $8,871 8,871 0 0 0 Complicating Diagnosis). In addition, we sought public comments on further refinements to the conditions defined as a complicating diagnosis in MS–DRG 774 and MS–DRG 781 (Other Antepartum Diagnoses with Medical Complications). We indicated that we would review public comments received in response to the solicitation as we continued to evaluate these MS– DRGs under MDC 14 and, if warranted, we would propose refinements for FY 2019. Commenters were instructed to direct comments for consideration to the CMS MS–DRG Classification Change Request Mailbox located at MSDRGClassificationChange@ cms.hhs.gov by November 1, 2017. In response to our solicitation for public comments on the MS–DRGs related to vaginal delivery, one commenter recommended that CMS convene a workgroup that would include hospital staff and physicians to systematically review the MDC 14 MS–DRGs and to identify which conditions should appropriately be considered complicating diagnoses. As an interim step, this commenter recommended that CMS consider the following suggestions as a result of its own evaluation of MS–DRGs 767, 774 and 775. For MS–DRG 767, the commenter recommended that the following ICD– 10–CM diagnosis codes and ICD–10– PCS procedure code be removed from the GROUPER logic and provided the rationale for why the commenter suggested removing each code. E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20215 SUGGESTIONS FOR MS–DRG 767 [Vaginal delivery with sterilization and/or D&C] ICD–10–CM code Code description Rationale for removing code from MS–DRG 767 O66.41 ................... Failed attempted vaginal birth after previous cesarean delivery. Rupture of uterus before onset of labor, unspecified trimester. This code indicates that the attempt at vaginal delivery has failed. This code indicates that the uterus has ruptured before onset of labor and therefore, a vaginal delivery would not be possible. This code indicates the encounter is for a cesarean delivery. This code indicates this is a cesarean delivery. O71.00 ................... O82 ........................ Encounter for cesarean delivery without indication ............... O75.82 ................... Onset (spontaneous) of labor after 37 weeks of gestation but before 39 completed weeks, with delivery by (planned) C-section. SUGGESTIONS FOR MS–DRG 767 [Vaginal delivery with sterilization and/or D&C] ICD–10–PCS code Code description Rationale for removing code from MS–DRG 767 10A07Z6 ................ Abortion of products of conception, vacuum, via natural or artificial opening. This code indicates the procedure to be an abortion rather than a vaginal delivery. For MS–DRG 774, the commenter recommended that the following ICD– 10–CM diagnosis codes be removed from the GROUPER logic and provided the rationale for why the commenter suggested removing each code. SUGGESTIONS FOR MS–DRG 774 [Vaginal delivery with Complicating Diagnoses] ICD–10–CM code Code description Rationale for removing code from MS–DRG 774 O66.41 ................... Failed attempted vaginal birth after previous cesarean delivery. Rupture of uterus before onset of labor, unspecified trimester. This code indicates that the attempt at vaginal delivery has failed. This code indicates that the uterus has ruptured before onset of labor and therefore, a vaginal delivery would not be possible. This code indicates this is a planned cesarean delivery. O71.00 ................... O75.82 ................... O82 ........................ Onset (spontaneous) of labor after 37 weeks of gestation but before 39 completed weeks, with delivery by (planned) C-section. Encounter for cesarean delivery without indication ............... O80 ........................ Encounter for full-term uncomplicated delivery ...................... For MS–DRG 775, the commenter recommended that the following ICD– 10–CM diagnosis codes and ICD–10– This code indicates the encounter is for a cesarean delivery. According to the Official Guidelines for Coding and Reporting, ‘‘Code O80 should be assigned when a woman is admitted for a full term normal delivery and delivers a single, healthy infant without any complications antepartum, during the delivery, or postpartum during the delivery episode.’’ PCS procedure code be removed from the GROUPER logic and provided the rationale for why the commenter suggested removing each code. daltland on DSKBBV9HB2PROD with PROPOSALS2 SUGGESTIONS FOR MS–DRG 775 [Vaginal delivery without complicating diagnoses] ICD–10–CM code Code description Rationale for removing code from MS–DRG 775 O66.41 ................... Failed attempted vaginal birth after previous cesarean delivery. Labor and delivery complicated by vasa previa, not applicable or unspecified. This code indicates that the attempt at vaginal delivery has failed. According to the physicians consulted, vasa previa always results in C-section. Research indicates that when vasa previa is diagnosed, C-section before labor begins can save the baby’s life. O69.4XX0 .............. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00053 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 20216 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules SUGGESTIONS FOR MS–DRG 775—Continued [Vaginal delivery without complicating diagnoses] ICD–10–CM code Code description Rationale for removing code from MS–DRG 775 O69.4XX2 .............. Labor and delivery complicated by vasa previa, fetus 2 ....... O69.4XX3 .............. Labor and delivery complicated by vasa previa, fetus 3 ....... O69.4XX4 .............. Labor and delivery complicated by vasa previa, fetus 4 ....... O69.4XX5 .............. Labor and delivery complicated by vasa previa, fetus 5 ....... O69.4XX9 .............. Labor and delivery complicated by vasa previa, other fetus O71.00 ................... Rupture of uterus before onset of labor, unspecified trimester. O82 ........................ Encounter for cesarean delivery without indication ............... According to the physicians consulted, vasa previa always results in C-section. Research indicates that when vasa previa is diagnosed, C-section before labor begins can save the baby’s life. According to the physicians consulted, vasa previa always results in C-section. Research indicates that when vasa previa is diagnosed, C-section before labor begins can save the baby’s life. According to the physicians consulted, vasa previa always results in C-section. Research indicates that when vasa previa is diagnosed, C-section before labor begins can save the baby’s life. According to the physicians consulted, vasa previa always results in C-section. Research indicates that when vasa previa is diagnosed, C-section before labor begins can save the baby’s life. According to the physicians consulted, vasa previa always results in C-section. Research indicates that when vasa previa is diagnosed, C-section before labor begins can save the baby’s life. This code indicates that the uterus has ruptured before onset of labor and therefore, a vaginal delivery would not be possible. This code indicates the encounter is for a cesarean delivery. SUGGESTIONS FOR MS–DRG 775 [Vaginal delivery without Complicating Diagnosis] ICD–10–CM code Code description Rationale for removing code from MS–DRG 775 10A07Z6 ................ Abortion of Products of Conception, Vacuum, Via Natural or Artificial Opening. This code indicates the procedure to be an abortion rather than a vaginal delivery. Another commenter agreed that the MS–DRG logic for a vaginal delivery under MDC 14 is technically complex and provided examples to illustrate these facts. For instance, the commenter noted that the GROUPER logic code lists appear redundant with several of the same codes listed for different MS– DRGs and that the GROUPER logic code list for a vaginal delivery in MS–DRG 774 is comprised of diagnosis codes while the GROUPER logic code list for a vaginal delivery in MS–DRG 775 is comprised of procedure codes. The commenter also noted that several of the ICD–10–CM diagnosis codes shown in daltland on DSKBBV9HB2PROD with PROPOSALS2 ICD–10–CM code O11.4 ................... O11.5 ................... 012.04 .................. 012.05 .................. 012.14 .................. 012.15 .................. 012.24 .................. 012.25 .................. O13.4 ................... O13.5 ................... O14.04 ................. O14.05 ................. O14.14 ................. O14.15 ................. O14.24 ................. O14.25 ................. O14.94 ................. O14.95 ................. O15.00 ................. VerDate Sep<11>2014 the table below that became effective with discharges on and after October 1, 2016 (FY 2017) or October 1, 2017 (FY 2018) appear to be missing from the GROUPER logic code lists for MS–DRGs 781 and 774. Code description Pre-existing hypertension with pre-eclampsia, complicating childbirth. Pre-existing hypertension with pre-eclampsia, complicating the puerperium. Gestational edema, complicating childbirth. Gestational edema, complicating the puerperium. Gestational proteinuria, complicating childbirth. Gestational proteinuria, complicating the puerperium. Gestational edema with proteinuria, complicating childbirth. Gestational edema with proteinuria, complicating the puerperium. Gestational [pregnancy-induced] hypertension without significant proteinuria, complicating childbirth. Gestational [pregnancy-induced] hypertension without significant proteinuria, complicating the puerperium. Mild to moderate pre-eclampsia, complicating childbirth. Mild to moderate pre-eclampsia, complicating the puerperium. Severe pre-eclampsia, complicating childbirth. Severe pre-eclampsia, complicating the puerperium. HELLP syndrome, complicating childbirth. HELLP syndrome, complicating the puerperium. Unspecified pre-eclampsia, complicating childbirth. Unspecified pre-eclampsia, complicating the puerperium. Eclampsia complicating pregnancy, unspecified trimester. 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00054 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules ICD–10–CM code daltland on DSKBBV9HB2PROD with PROPOSALS2 O15.02 ................. O15.03 ................. O15.1 ................... O15.2 ................... O16.4 ................... O16.5 ................... O24.415 ............... O24.425 ............... O24.435 ............... O44.20 ................. O44.21 ................. O44.22 ................. O44.23 ................. O44.30 ................. O44.31 ................. O44.32 ................. O44.33 ................. O44.40 ................. O44.41 ................. O44.42 ................. O44.43 ................. O44.50 ................. O44.51 ................. O44.52 ................. O44.53 ................. O70.20 ................. O70.21 ................. O70.22 ................. O70.23 ................. O86.11 ................. O86.12 ................. O86.13 ................. O86.19 ................. O86.20 ................. O86.21 ................. O86.22 ................. O86.29 ................. O86.81 ................. O86.89 ................. Code description Eclampsia complicating pregnancy, second trimester. Eclampsia complicating pregnancy, third trimester. Eclampsia complicating labor. Eclampsia complicating puerperium, second trimester. Unspecified maternal hypertension, complicating childbirth. Unspecified maternal hypertension, complicating the puerperium. Gestational diabetes mellitus in pregnancy, controlled by oral hypoglycemic drugs. Gestational diabetes mellitus in childbirth, controlled by oral hypoglycemic drugs. Gestational diabetes mellitus in puerperium, controlled by oral hypoglycemic drugs. Partial placenta previa NOS or without hemorrhage, unspecified trimester. Partial placenta previa NOS or without hemorrhage, first trimester. Partial placenta previa NOS or without hemorrhage, second trimester. Partial placenta previa NOS or without hemorrhage, third trimester. Partial placenta previa with hemorrhage, unspecified trimester. Partial placenta previa with hemorrhage, first trimester. Partial placenta previa with hemorrhage, second trimester. Partial placenta previa with hemorrhage, third trimester. Low lying placenta NOS or without hemorrhage, unspecified trimester. Low lying placenta NOS or without hemorrhage, first trimester. Low lying placenta NOS or without hemorrhage, second trimester. Low lying placenta NOS or without hemorrhage, third trimester. Low lying placenta with hemorrhage, unspecified trimester. Low lying placenta with hemorrhage, first trimester. Low lying placenta with hemorrhage, second trimester. Low lying placenta with hemorrhage, third trimester. Third degree perineal laceration during delivery, unspecified. Third degree perineal laceration during delivery, IIIa. Third degree perineal laceration during delivery, IIIb. Third degree perineal laceration during delivery, IIIc. Cervicitis following delivery. Endometritis following delivery. Vaginitis following delivery. Other infection of genital tract following delivery. Urinary tract infection following delivery, unspecified. Infection of kidney following delivery. Infection of bladder following delivery. Other urinary tract infection following delivery. Puerperal septic thrombophlebitis. Other specified puerperal infections. Lastly, the commenter stated that the list of ICD–10–PCS procedure codes appears comprehensive, but indicated that inpatient coding is not their expertise. We note that it was not clear which list of procedure codes the commenter was specifically referencing. The commenter did not provide a list of any procedure codes for CMS to review or reference a specific MS–DRG in its comment. Another commenter expressed concern that ICD–10–PCS procedure codes 10D17Z9 (Manual extraction of products of conception, retained, via natural or artificial opening) and 10D18Z9 (Manual extraction of products of conception, retained, via natural or artificial opening endoscopic) are not assigned to the appropriate MS–DRG. ICD–10–PCS procedure codes 10D17Z9 and 10D18Z9 describe the manual removal of a retained placenta and are currently assigned to MS–DRG 767 (Vaginal Delivery with Sterilization and/or D&C). According to the commenter, a patient that has a vaginal delivery with manual removal of a VerDate Sep<11>2014 20217 20:30 May 04, 2018 Jkt 244001 retained placenta is not having a sterilization or D&C procedure. The commenter noted that, under ICD–9– CM, a vaginal delivery with manual removal of retained placenta grouped to MS–DRG 774 (Vaginal Delivery with Complicating Diagnosis) or MS–DRG 775 (Vaginal Delivery without Complicating Diagnosis). The commenter suggested CMS review these procedure codes for appropriate MS– DRG assignment under the ICD–10 MS– DRGs. We thank the commenters and appreciate the recommendations and suggestions provided in response to our solicitation for comments on the GROUPER logic for the MS–DRGs involving a vaginal delivery or complicating diagnosis under MDC 14. With regard to the commenter who recommended that we convene a workgroup that would include hospital staff and physicians to systematically review the MDC 14 MS–DRGs and to identify which conditions should appropriately be considered complicating diagnoses, we note that we PO 00000 Frm 00055 Fmt 4701 Sfmt 4702 formed an internal workgroup comprised of clinical advisors that included physicians, coding specialists, and other IPPS policy staff that assisted in our review of the GROUPER logic for a vaginal delivery and complicating diagnoses. We also received clinical input from 3M/Health Information Systems (HIS) staff, which, under contract with CMS, is responsible for updating and maintaining the GROUPER program. We note that our analysis involved other MS–DRGs under MDC 14, in addition to those for which we specifically solicited public comments. As one of the other commenters correctly pointed out, there is redundancy, with several of the same codes listed for different MS–DRGs. Below we provide a summary of our internal analysis with responses to the commenters’ recommendations and suggestions incorporated into the applicable sections. We refer readers to the ICD–10 MS–DRG Version 35 Definitions Manual located via the Internet on the CMS website at: https:// www.cms.gov/Medicare/Medicare-Fee- E:\FR\FM\07MYP2.SGM 07MYP2 20218 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules for-Service-Payment/ AcuteInpatientPPS/FY2018-IPPS-FinalRule-Home-Page-Items/FY2018-IPPSFinal-Rule-Data-Files.html?DLPage= 1&DLEntries=10&DLSort=0&DLSortDir= ascending for documentation of the GROUPER logic associated with the MDC 14 MS–DRGs to assist in the review of our discussion that follows. We started our evaluation of the GROUPER logic for the MS–DRGs under MDC 14 by first reviewing the current concepts that exist. For example, there are ‘‘groups’’ for cesarean section procedures, vaginal delivery procedures, and abortions. There also are groups where no delivery occurs, and lastly, there are groups for after the delivery occurs, or the ‘‘postpartum’’ period. These groups are then further subdivided based on the presence or absence of complicating conditions or MS–DRG daltland on DSKBBV9HB2PROD with PROPOSALS2 MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG 765 766 769 770 776 777 778 779 780 782 Description ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... Cesarean Section with CC/MCC. Cesarean Section without CC/MCC. Postpartum and Post Abortion Diagnoses with O.R. Procedure. Abortion with D&C, Aspiration Curettage or Hysterotomy. Postpartum and Post Abortion Diagnoses without O.R. Procedure. Ectopic Pregnancy. Threatened Abortion. Abortion without D&C. False Labor. Other Antepartum Diagnoses without Medical Complications. The first issue we reviewed was the GROUPER logic for complicating conditions (MS–DRGs 774 and 781). Because one of the main objectives in our transition to the MS–DRGs was to better recognize the severity of illness of a patient, we believed we could structure the vaginal delivery and other MDC 14 MS–DRGs in a similar way. Therefore, we began working with the concept of vaginal delivery ‘‘with MCC, with CC and without CC/MCC’’ to replace the older, ‘‘complicating conditions’’ logic. Next, we compared the additional GROUPER logic that exists between the vaginal delivery and the cesarean section MS–DRGs (MS–DRGs 765, 766, 767, 774, and 775). Currently, the vaginal delivery MS–DRGs take into account a sterilization procedure; however, the cesarean section MS–DRGs do not. Because a patient can have a sterilization procedure performed along with a cesarean section procedure, we adopted a working concept of ‘‘cesarean section with and without sterilization with MCC, with CC and without CC/ MCC’’, as well as ‘‘vaginal delivery with and without sterilization with MCC, with CC and without CC/MCC’’. We then reviewed the GROUPER logic for the MS–DRGs involving abortion and where no delivery occurs (MS– DRGs 770, 777, 778, 779, 780, and 782). We believed that we could consolidate the groups in which no delivery occurs. Finally, we considered the GROUPER logic for the MS–DRGs related to the postpartum period (MS–DRGs 769 and 776) and determined that the structure of these MS–DRGs did not appear to require modification. VerDate Sep<11>2014 the presence of another procedure. We examined how we could simplify some of the older, complex GROUPER logic and remain consistent with the structure of other ICD–10 MS–DRGs. We identified the following MS–DRGs for closer review, in addition to MS–DRG 767, MS–DRG 768, MS–DRG 774, MS– DRG 775 and MS–DRG 781. 20:30 May 04, 2018 Jkt 244001 After we established those initial working concepts for the MS–DRGs discussed above, we examined the list of the ICD–10–PCS procedure codes that comprise the sterilization procedure GROUPER logic for the vaginal delivery MS–DRG 767. We identified the two manual extraction of placenta codes that the commenter had brought to our attention (ICD–10–PCS codes 10D17Z9 and 10D18Z9). We also identified two additional procedure codes, ICD–10– PCS codes 10D17ZZ (Extraction of products of conception, retained, via natural or artificial opening) and 10D18ZZ (Extraction of products of conception, retained, via natural or artificial opening endoscopic) in the list that are not sterilization procedures. Two of the four procedure codes describe manual extraction (removal) of retained placenta and the other two procedure codes describe dilation and curettage procedures. We then identified four more procedure codes in the list that do not describe sterilization procedures. ICD–10–PCS procedure codes 0UDB7ZX (Extraction of endometrium, via natural or artificial opening, diagnostic), 0UDB7ZZ (Extraction of endometrium, via natural or artificial opening), 0UDB8ZX (Extraction of endometrium, via natural or artificial opening endoscopic, diagnostic), and 0UDB8ZZ (Extraction of endometrium, via natural or artificial opening endoscopic) describe dilation and curettage procedures that can be performed for diagnostic or therapeutic purposes. We believe that these ICD– 10–PCS procedure codes would be more appropriately assigned to MDC 13 (Diseases and Disorders of the Female PO 00000 Frm 00056 Fmt 4701 Sfmt 4702 Reproductive System) in MS–DRGs 744 and 745 (D&C, Conization, Laparascopy and Tubal Interruption with and without CC/MCC, respectively) and, therefore, removed them from our working list of sterilization and/or D&C procedures. Because the GROUPER logic for MS–DRG 767 includes both sterilization and/or D&C, we agreed that all the other procedure codes currently included under that logic list of sterilization procedures should remain, with the exception of the two identified by the commenter. Therefore, we agree with the commenter that the manual extraction of retained placenta procedure codes should be reassigned to a more clinically appropriate vaginal delivery MS–DRG because they are not describing sterilization procedures. Our attention then turned to other MDC 14 GROUPER logic code lists starting with the ‘‘CC for C-section’’ list under MS–DRGs 765 and 766 (Cesarean Section with and without CC/MCC, respectively). As noted earlier in this section, in conducting our review, we considered how we could utilize the severity level concept (with MCC, with CC, and without CC/MCC) where applicable. Consistent with this approach, we removed the ‘‘CC for Csection’’ logic from these MS–DRGs as part of our working concept and efforts to refine MDC 14. We determined it would be less complicated to simply allow the existing ICD–10 MS-DRG CC and MCC code list logic to apply for these MS–DRGs. Next, we reviewed the logic code lists for ‘‘Malpresentation’’ and ‘‘Twins’’ and concluded that this logic was not necessary for the cesarean section MS–DRGs because these are E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules describing antepartum conditions and it is the procedure of the cesarean section that determines whether or not a patient would be classified to these MS–DRGs. Therefore, those code lists were also removed for purposes of our working concept. With regard to the ‘‘Operating Room Procedure’’ code list, we agreed there should be no changes. However, we note that the title to ICD–10–PCS procedure code 10D00Z0 (Extraction of products of conception, classical, open approach) is being revised effective October 1, 2018, to replace the term ‘‘classical’’ with ‘‘high’’ and ICD–10– PCS procedure code 10D00Z1 (Extraction of products of conception, low cervical, open approach) is being revised to replace the term ‘‘low cervical’’ to ‘‘low’’. These revisions are also shown in Table 6F—Revised Procedure Code Titles available via the Internet on the CMS website at: https:// www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ AcuteInpatientPPS/. Next, we reviewed the ‘‘Delivery Procedure’’ and ‘‘Delivery Outcome’’ GROUPER logic code lists for the vaginal delivery MS–DRGs 767, 768, 774, and 775. We identified ICD–10– PCS procedure code 10A0726 (Abortion of products of conception, vacuum, via natural or artificial opening) and ICD– 10–PCS procedure code 10S07ZZ (Reposition products of conception, via natural or artificial opening) under the ‘‘Delivery Procedure’’ code list as procedure codes that should not be included because ICD–10–PCS procedure code 10A07Z6 describes an abortion procedure and ICD–10–PCS procedure code 10S07ZZ describes repositioning of the fetus and does not indicate a delivery took place. We also note that, as described earlier in this discussion, a commenter recommended ICD–10–PCS code daltland on DSKBBV9HB2PROD with PROPOSALS2 0DQP7ZZ 0DQQ0ZZ 0DQQ3ZZ 0DQQ4ZZ 0DQQ7ZZ 0DQQ8ZZ 0DQR0ZZ 0DQR3ZZ 0DQR4ZZ ............. ............. ............. ............. ............. ............. ............. ............. ............. that ICD–10–PCS procedure code 10A07Z6 be removed from the GROUPER logic specifically for MS– DRGs 767 and 775. Therefore, we removed these two procedure codes from the logic code list for ‘‘Delivery Procedure’’ in MS–DRGs 767, 768, 774, and 775. We agreed with the commenter that ICD–10–PCS procedure code 10A07Z6 would be more appropriately assigned to one of the Abortion MS– DRGs. For the remaining procedures currently included in the ‘‘Delivery Procedure’’ code list we considered which procedures would be expected to be performed during the course of a standard, uncomplicated delivery episode versus those that would reasonably be expected to require additional resources outside of the delivery room. The list of procedure codes we reviewed is shown in the following table. Code description Repair Repair Repair Repair Repair Repair Repair Repair Repair rectum, via natural or artificial opening. anus, open approach. anus, percutaneous approach. anus, percutaneous endoscopic approach. anus, via natural or artificial opening. anus, via natural or artificial opening endoscopic. anal sphincter, open approach. anal sphincter, percutaneous approach. anal sphincter, percutaneous endoscopic approach. While we acknowledge that these procedures may be performed to treat obstetrical lacerations as discussed in prior rulemaking (81 FR 56853), we also believe that these procedures would reasonably be expected to require a separate operative episode and would not be performed immediately at the time of the delivery. Therefore, we removed those procedure codes describing repair of the rectum, anus, and anal sphincter shown in the table above from our working concept list of procedures to consider for a vaginal delivery. Our review of the list of diagnosis codes for the ‘‘Delivery Outcome’’ as a secondary diagnosis did not prompt any changes. We agreed that the current list of diagnosis codes continues to appear appropriate for describing the outcome of a delivery. As the purpose of our analysis and this review was to clarify what constitutes a vaginal delivery to satisfy the ICD–10 MS–DRG logic for the vaginal delivery MS–DRGs, we believed it was appropriate to expect that a procedure code describing the vaginal delivery or extraction of ‘‘products of conception’’ procedure and a diagnosis VerDate Sep<11>2014 20219 20:30 May 04, 2018 Jkt 244001 code describing the delivery outcome should be reported on every claim in which a vaginal delivery occurs. This is also consistent with Section I.C.15.b.5 of the ICD–10–CM Official Guidelines for Coding and Reporting, which states ‘‘A code from category Z37, Outcome of delivery, should be included on every maternal record when a delivery has occurred. These codes are not to be used on subsequent records or on the newborn record.’’ Therefore, we adopted the working concept that, regardless of the principal diagnosis, if there is a procedure code describing the vaginal delivery or extraction of ‘‘products of conception’’ procedure and a diagnosis code describing the delivery outcome, this logic would result in assignment to a vaginal delivery MS– DRG. We note that, as a result of this working concept, there would no longer be a need to maintain the ‘‘third condition’’ list under MS–DRG 774. In addition, as noted earlier in this discussion, because we were working with the concept of vaginal delivery ‘‘with MCC, with CC, and without CC/MCC’’ to replace the older, ‘‘complicating conditions’’ logic, there PO 00000 Frm 00057 Fmt 4701 Sfmt 4702 would no longer be a need to maintain the ‘‘second condition’’ list of complicating diagnosis under MS–DRG 774. We then reviewed the GROUPER logic code list of ‘‘Or Other O.R. procedures’’ (MS–DRG 768) to determine if any changes to these lists were warranted. Similar to our analysis of the procedures listed under the ‘‘Delivery Procedure’’ logic code list, our examination of the procedures currently described in the ‘‘Or Other O.R. procedures’’ procedure code list also considered which procedures would be expected to be performed during the course of a standard, uncomplicated delivery episode versus those that would reasonably be expected to require additional resources outside of the delivery room. Our analysis of all the procedures resulted in the working concept to allow all O.R. procedures to be applicable for assignment to MS– DRG 768, with the exception of the procedure codes for sterilization and/or D&C and ICD–10–PCS procedure codes 0KQM0ZZ (Repair perineum muscle, open approach) and 0UJM0ZZ (Inspection of vulva, open approach), E:\FR\FM\07MYP2.SGM 07MYP2 20220 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules which we determined would be reasonably expected to be performed during a standard delivery episode and, therefore, assigned to MS–DRG 774 or MS–DRG 775. We also note that, this working concept for MS–DRG 768 would eliminate vaginal delivery cases with an O.R. procedure grouping to the unrelated MS-DRGs because all O.R. procedures would be included in the GROUPER logic procedure code list for ‘‘Or Other O.R. Procedures’’. The next set of MS–DRGs we examined more closely included MS– DRGs 777, 778, 780, 781, and 782. We believed that, because the conditions in these MS–DRGs are all describing antepartum related conditions, we could group the conditions together clinically. Diagnoses described as occurring during pregnancy and diagnoses specifying a trimester or maternal care in the absence of a delivery procedure reported were considered antepartum conditions. We also believed we could better classify these groups of patients based on the presence or absence of a procedure. Therefore, we worked with the concept of ‘‘antepartum diagnoses with and without O.R. procedure’’. As noted earlier in the discussion, we adopted a working concept of ‘‘cesarean section with and without sterilization with MCC, with CC, and without CC/ MCC.’’ This concept is illustrated in the following table and includes our suggested modifications. SUGGESTED MODIFICATIONS TO MS– DRGS FOR MDC 14 [Pregnancy, childbirth and the puerperium] DELETE 2 MS–DRGs: MS–DRG 765 (Cesarean Section with CC/MCC). MS–DRG 766 (Cesarean Section without CC/ MCC). CREATE 6 MS–DRGs: MS–DRG XXX (Cesarean Section with Sterilization with MCC). MS–DRG XXX (Cesarean Section with Sterilization with CC). MS–DRG XXX (Cesarean Section with Sterilization without CC/MCC). MS–DRG XXX (Cesarean Section without Sterilization with MCC). SUGGESTED MODIFICATIONS TO MS– DRGS FOR MDC 14—Continued [Pregnancy, childbirth and the puerperium] MS–DRG XXX (Cesarean Section without Sterilization with CC). MS–DRG XXX (Cesarean Section without Sterilization without CC/MCC). As shown in the table, we suggest deleting MS–DRGs 765 and 766. We also suggest creating 6 new MS–DRGs that are subdivided by a 3-way severity level split that includes ‘‘with Sterilization’’ and ‘‘without Sterilization’’. We also adopted a working concept of ‘‘vaginal delivery with and without sterilization with MCC, with CC, and without CC/MCC’’. This concept is illustrated in the following table and includes our suggested modifications. SUGGESTED MODIFICATIONS TO MS– DRGS FOR MDC 14 [Pregnancy, childbirth and the puerperium] DELETE 3 MS–DRGs: MS–DRG 767 (Vaginal Delivery with Sterilization and/or D&C). MS–DRG 774 (Vaginal Delivery with Complicating Diagnosis). MS–DRG 775 (Vaginal Delivery without Complicating Diagnosis). CREATE 6 MS–DRGs: MS–DRG XXX (Vaginal Delivery with Sterilization/ D&C with MCC). MS–DRG XXX (Vaginal Delivery with Sterilization/ D&C with CC). MS–DRG XXX (Vaginal Delivery with Sterilization/ D&C without CC/MCC). MS–DRG XXX (Vaginal Delivery without Sterilization/D&C with MCC). MS–DRG XXX (Vaginal Delivery without Sterilization/D&C with CC). MS–DRG XXX (Vaginal Delivery without Sterilization/D&C without CC/MCC). As shown in the table, we suggest deleting MS–DRGs 767, 774, and 775. We also suggest creating 6 new MS– DRGs that are subdivided by a 3-way severity level split that includes ‘‘with Sterilization/D&C’’ and ‘‘without Sterilization/D&C’’. In addition, as indicated above, we believed that we could consolidate the groups in which no delivery occurs. We believe that consolidating MS–DRGs where clinically coherent conditions exist is consistent with our approach to MS–DRG reclassification and our continued refinement efforts. This concept is illustrated in the following table and includes our suggested modifications. SUGGESTED MODIFICATIONS TO MS– DRGS FOR MDC 14 [Pregnancy, childbirth and the puerperium] DELETE 5 MS–DRGs: MS–DRG 777 (Ectopic Pregnancy). MS–DRG 778 (Threatened Abortion). MS–DRG 780 (False Labor). MS–DRG 781 (Other Antepartum Diagnoses with Medical Complications). MS–DRG 782 (Other Antepartum Diagnoses without Medical Complications). CREATE 6 MS–DRGs: MS–DRG XXX (Other Antepartum Diagnoses with O.R. Procedure with MCC). MS–DRG XXX (Other Antepartum Diagnoses with O.R. Procedure with CC). MS–DRG XXX (Other Antepartum Diagnoses with O.R. Procedure without CC/MCC). MS–DRG XXX (Other Antepartum Diagnoses without O.R. Procedure with MCC). MS–DRG XXX (Other Antepartum Diagnoses without O.R. Procedure with CC). MS–DRG XXX (Other Antepartum Diagnoses without O.R. Procedure without CC/MCC). As shown in the table, we suggest deleting MS–DRGs 777, 778, 780, 781, and 782. We also suggest creating 6 new MS–DRGs that are subdivided by a 3way severity level split that includes ‘‘with O.R. Procedure’’ and ‘‘without O.R. Procedure’’. Once we established each of these fundamental concepts from a clinical perspective, we were able to analyze the data to determine if our initial suggested modifications were supported. To analyze our suggested modifications for the cesarean section and vaginal delivery MS–DRGs, we examined the claims data from the September 2017 update of the FY 2017 MedPAR file for MS–DRGs 765, 766, 767, 768, 774, and 775. MS–DRGS FOR MDC 14 PREGNANCY, CHILDBIRTH AND THE PUERPERIUM Number of cases daltland on DSKBBV9HB2PROD with PROPOSALS2 MS–DRG MS–DRG 765 (Cesarean Section with CC/MCC)—All cases ..................................................... MS–DRG 766 (Cesarean Section without CC/MCC)—All cases ................................................ MS–DRG 767 (Vaginal Delivery with Sterilization and/or D&C)—All cases ............................... MS–DRG 768 (Vaginal Delivery with O.R. Procedure Except Sterilization and/or D&C)—All cases ........................................................................................................................................ MS–DRG 774 (Vaginal Delivery with Complicating Diagnosis)—All cases ................................ MS–DRG 775 (Vaginal Delivery without Complicating Diagnosis)—All cases ........................... VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00058 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM Average length of stay Average costs 3,494 1,974 351 4.6 3.1 3.2 $8,929 6,488 7,886 17 1,650 4,676 6.2 3.3 2.4 26,164 6,046 4,769 07MYP2 20221 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules As shown in the table, there were a total of 3,494 cases in MS–DRG 765, with an average length of stay of 4.6 days and average costs of $8,929. For MS–DRG 766, there were a total of 1,974 cases, with an average length of stay of 3.1 days and average costs of $6,488. For MS–DRG 767, there were a total of 351 cases, with an average length of stay of 3.2 days and average costs of $ 7,886. For MS–DRG 768, there were a total of 17 cases, with an average length of stay of 6.2 days and average costs of $26,164. For MS–DRG 774, there were a total of 1,650 cases, with an average length of stay of 3.3 days and average costs of $6,046. Lastly, for MS–DRG 775, there were a total of 4,676 cases, with an average length of stay of 2.4 days and average costs of $4,769. To compare and analyze the impact of our suggested modifications, we ran a simulation using the Version 35 ICD–10 MS–DRG GROUPER. The following table reflects our findings for the suggested Cesarean Section MS–DRGs with a 3-way severity level split. SUGGESTED MS–DRGS FOR CESAREAN SECTION Number of cases MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG 783 784 785 786 787 788 (Cesarean (Cesarean (Cesarean (Cesarean (Cesarean (Cesarean Section Section Section Section Section Section with Sterilization with MCC) .................................................. with Sterilization with CC) ..................................................... with Sterilization without CC/MCC) ...................................... without Sterilization with MCC) ............................................. without Sterilization with CC) ................................................ without Sterilization without CC/MCC) ................................. As shown in the table, there were a total of 178 cases for the cesarean section with sterilization with MCC group, with an average length of stay of 6.4 days and average costs of $12,977. There were a total of 511 cases for the cesarean section with sterilization with CC group, with an average length of stay of 4.1 days and average costs of $8,042. There were a total of 475 cases for the cesarean section with sterilization without CC/MCC group, with an average length of stay of 3.0 days and average costs of $6,259. For the cesarean section without sterilization with MCC group there were a total of 707 cases, with an average length of stay of 5.9 days and average costs of $11,515. There were a total of 1,887 cases for the cesarean section without sterilization with CC group, with an average length of stay of 4.2 days and average costs of $7,990. Average Length of stay 178 511 475 707 1,887 1,710 Average costs 6.4 4.1 3.0 5.9 4.2 3.3 $12,977 8,042 6,259 11,515 7,990 6,663 Lastly, there were a total of 1,710 cases for the cesarean section without sterilization without CC/MCC group, with an average length of stay of 3.3 days and average costs of $6,663. The following table reflects our findings for the suggested Vaginal Delivery MS–DRGs with a 3-way severity level split. SUGGESTED MS–DRGS FOR VAGINAL DELIVERY Number of cases MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG 796 797 798 805 806 807 (Vaginal (Vaginal (Vaginal (Vaginal (Vaginal (Vaginal Delivery Delivery Delivery Delivery Delivery Delivery with Sterilization/D&C with MCC) ............................................ with Sterilization/D&C with CC) ............................................... with Sterilization/D&C without CC/MCC) ................................. without Sterilization/D&C with MCC) ....................................... without Sterilization/D&C with CC) .......................................... without Sterilization/D&C without CC/MCC) ............................ daltland on DSKBBV9HB2PROD with PROPOSALS2 As shown in the table, there were a total of 25 cases for the vaginal delivery with sterilization/D&C with MCC group, with an average length of stay of 6.7 days and average costs of $11,421. There were a total of 63 cases for the vaginal delivery with sterilization/D&C with CC group, with an average length of stay of 2.4 days and average costs of $6,065. There were a total of 126 cases for vaginal delivery with sterilization/D&C without CC/MCC group, with an average length of stay of 2.3 days and average costs of $6,697. There were a total of 406 cases for the vaginal delivery without sterilization/D&C with MCC group, with an average length of stay of 5.0 days and average costs of $9,605. There were a total of 1,952 cases for the vaginal delivery without sterilization/ D&C with CC group, with an average length of stay of 2.9 days and average costs of $5,506. There were a total of 4,105 cases for the vaginal delivery Average length of stay 25 63 126 406 1,952 4,105 Average costs 6.7 2.4 2.3 5.0 2.9 2.3 $11,421 6,065 6,697 9,605 5,506 4,601 without sterilization/D&C without CC/MCC group, with an average length of stay of 2.3 days and average costs of $4,601. We then reviewed the claims data from the September 2017 update of the FY 2017 MedPAR file for MS–DRGs 777, 778, 780, 781, and 782. Our findings are shown in the following table. MS–DRGS FOR MDC 14 PREGNANCY, CHILDBIRTH AND THE PUERPERIUM Number of cases MS–DRG MS–DRG 777 (Ectopic Pregnancy)—All cases .......................................................................... MS–DRG 778 (Threatened Abortion)—All cases ........................................................................ VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00059 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 72 205 07MYP2 Average length of stay Average costs 1.9 2.7 $7,149 4,001 20222 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules MS–DRGS FOR MDC 14 PREGNANCY, CHILDBIRTH AND THE PUERPERIUM—Continued Number of cases MS–DRG MS–DRG 780 (False Labor)—All cases ..................................................................................... MS–DRG 781 (Other Antepartum Diagnoses with Medical Complications)—All cases ............. MS–DRG 782 (Other Antepartum Diagnoses without Medical Complications)—All cases ........ As shown in the table, there were a total of 72 cases in MS–DRG 777, with an average length of stay of 1.9 days and average costs of $7,149. For MS–DRG 778, there were a total of 205 cases, with an average length of stay of 2.7 days and average costs of $4,001. For MS–DRG 780, there were a total of 41 cases, with an average length of stay of 2.1 days and average costs of $3,045. For MS–DRG 781, there were a total of 2,333 cases, with an average length of stay of 3.7 days and average costs of $5,817. Lastly, for MS–DRG 782, there were a total of 70 cases, with an average length of stay of 2.1 days and average costs of $3,381. To compare and analyze the impact of deleting those 5 MS–DRGs and creating Average length of stay 41 2,333 70 Average costs 2.1 3.7 2.1 3,045 5,817 3,381 6 new MS–DRGs, we ran a simulation using the Version 35 ICD–10 MS–DRG GROUPER. Our findings below represent what we found and would expect under the suggested modifications. The following table reflects the MS–DRGs for the suggested Other Antepartum Diagnoses MS–DRGs with a 3-way severity level split. SUGGESTED MS–DRGS FOR OTHER ANTEPARTUM DIAGNOSES Number of cases MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG 817 818 819 831 832 833 (Other (Other (Other (Other (Other (Other Antepartum Antepartum Antepartum Antepartum Antepartum Antepartum Diagnoses Diagnoses Diagnoses Diagnoses Diagnoses Diagnoses with O.R. Procedure with MCC) ......................... with O.R. Procedure with CC) ............................ with O.R. Procedure without CC/MCC) .............. without O.R. Procedure with MCC) .................... without O.R. Procedure with CC) ....................... without O.R. Procedure without CC/MCC) ......... Our analysis of claims data from the September 2017 update of the FY 2017 MedPAR file recognized that when the criteria to create subgroups were applied for the 3-way severity level splits for the suggested MS–DRGs, those criteria were not met in all instances. For example, the criteria that there are at least 500 cases in the MCC or CC group was not met for the suggested Vaginal Delivery with Sterilization/D&C 3-way severity level split or the suggested Other Antepartum Diagnoses with O.R. Procedure 3-way severity level split. However, as we have noted in prior rulemaking (72 FR 47152), we cannot adopt the same approach to refine the maternity and newborn MS–DRGs because of the extremely low volume of Medicare patients there are in these DRGs. While there is not a high volume of these cases represented in the Medicare data, and while we generally advise that other payers should develop MS–DRGs to address the needs of their patients, we believe that our suggested 3-way severity level splits would Average length of stay 60 66 44 786 910 855 Average costs 5.1 4.2 1.7 4.3 3.5 2.7 $13,117 10,483 5,904 7,248 4,994 3,843 address the complexity of the current MDC 14 GROUPER logic for a vaginal delivery and takes into account the new and different clinical concepts that exist under ICD–10 for this subset of patients while also maintaining the existing MS– DRG structure for identifying severity of illness, utilization of resources and complexity of service. However, as an alternative option, we also performed analysis for a 2-way severity level split for the suggested MS–DRGs. Our findings are shown in the following tables. SUGGESTED MS–DRGS FOR CESAREAN SECTION Number of cases MS–DRG daltland on DSKBBV9HB2PROD with PROPOSALS2 MS–DRG MS–DRG MS–DRG MS–DRG XXX XXX XXX XXX (Cesarean (Cesarean (Cesarean (Cesarean Section Section Section Section with Sterilization with CC/MCC) .......................................... with Sterilization without CC/MCC) ..................................... without Sterilization with MCC) ........................................... without Sterilization without CC/MCC) ................................ Average length of stay 689 475 2,594 1,710 Average costs 4.7 3.0 4.7 3.3 $9,317 6,259 8,951 6,663 SUGGESTED MS–DRGS FOR VAGINAL DELIVERY Number of cases MS–DRG MS–DRG XXX (Vaginal Delivery with Sterilization/D&C with CC/MCC) .................................... MS–DRG XXX (Vaginal Delivery with Sterilization/D&C without CC/MCC) ............................... MS–DRG XXX (Vaginal Delivery without Sterilization/D&C with MCC) ...................................... VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00060 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 88 126 2,358 07MYP2 Average length of stay Average costs 3.6 2.3 3.2 $7,586 6,697 6,212 20223 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules SUGGESTED MS–DRGS FOR VAGINAL DELIVERY—Continued Number of cases MS–DRG MS–DRG XXX (Vaginal Delivery without Sterilization/D&C without CC/MCC) .......................... Average length of stay 4,105 Average costs 2.3 4,601 SUGGESTED MS–DRGS FOR OTHER ANTEPARTUM DIAGNOSES Number of cases MS–DRG daltland on DSKBBV9HB2PROD with PROPOSALS2 MS–DRG MS–DRG MS–DRG MS–DRG XXX XXX XXX XXX (Other (Other (Other (Other Antepartum Antepartum Antepartum Antepartum Diagnoses Diagnoses Diagnoses Diagnoses with O.R. Procedure with MCC) ........................ with O.R. Procedure without CC/MCC) ............. without O.R. Procedure with MCC) ................... without O.R. Procedure without CC/MCC) ........ Similar to the analysis performed for the 3-way severity level split, we acknowledge that when the criteria to create subgroups was applied for the alternative 2-way severity level splits for the suggested MS–DRGs, those criteria were not met in all instances. For example, the suggested Vaginal Delivery with Sterilization/D&C and the Other Antepartum Diagnoses with O.R. Procedure alternative option 2-way severity level splits did not meet the criteria for 500 or more cases in the MCC or CC group. Based on our review, which included support from our clinical advisors, and the analysis of claims data described above, we are proposing the deletion of 10 MS–DRGs and the creation of 18 new MS–DRGs (as shown below). This proposal is based on the approach described above, which involves consolidating specific conditions and concepts into the structure of existing logic and making additional modifications, such as adding severity levels, as part of our refinement efforts for the ICD–10 MS–DRGs. Our proposals are intended to address the vaginal delivery ‘‘complicating diagnosis’’ logic and antepartum diagnoses with ‘‘medical complications’’ logic with the proposed addition of the existing and familiar severity level concept (with MCC, with CC, and without CC/MCC) to the MDC 14 MS–DRGs to provide the ability to distinguish the varying resource requirements for this subset of patients and allow the opportunity to make more meaningful comparisons with regard to severity across the MS– DRGs. Our proposals, as set forth below, would also simplify the vaginal delivery procedure logic that we identified and commenters acknowledged as technically complex by eliminatng the extensive diagnosis and procedure code lists for several conditions that must be met for assignment to the vaginal VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 delivery MS–DRGs. Our proposals are also intended to respond to issues identified and brought to our attention through public comments for consideration in updating the GROUPER logic code lists in MDC 14. Specifically, we are proposing to delete the following 10 MS–DRGs under MDC 14: • MS–DRG 765 (Cesarean Section with CC/MCC); • MS–DRG 766 (Cesarean Section without CC/MCC); • MS–DRG 767 (Vaginal Delivery with Sterilization and/or D&C); • MS–DRG 774 (Vaginal Delivery with Complicating Diagnosis); • MS–DRG 775 (Vaginal Delivery without Complicating Diagnosis); • MS–DRG 777 (Ectopic Pregnancy); • MS–DRG 778 (Threatened Abortion); • MS–DRG 780 (False Labor); • MS–DRG 781 (Other Antepartum Diagnoses with Medical Complications); and • MS–DRG 782 (Other Antepartum Diagnoses without Medical Complications). We are proposing to create the following new 18 MS–DRGs under MDC 14: • Proposed new MS–DRG 783 (Cesarean Section with Sterilization with MCC); • Proposed new MS–DRG 784 (Cesarean Section with Sterilization with CC); • Proposed new MS–DRG 785 (Cesarean Section with Sterilization without CC/MCC); • Proposed new MS–DRG 786 (Cesarean Section without Sterilization with MCC); • Proposed new MS–DRG 787 (Cesarean Section without Sterilization with CC); • Proposed new MS–DRG 788 Cesarean Section without Sterilization without CC/MCC); PO 00000 Frm 00061 Fmt 4701 Sfmt 4702 126 44 1,696 855 Average length of stay Average costs 4.7 1.7 3.9 2.7 $11,737 5,904 6,039 3,843 • Proposed new MS–DRG 796 (Vaginal Delivery with Sterilization/ D&C with MCC); • Proposed new MS–DRG 797 (Vaginal Delivery with Sterilization/ D&C with CC); • Proposed new MS–DRG 798 (Vaginal Delivery with Sterilization/ D&C without CC/MCC); • Proposed new MS–DRG 805 (Vaginal Delivery without Sterilization/ D&C with MCC); • Proposed new MS–DRG 806 (Vaginal Delivery without Sterilization/ D&C with CC); • Proposed new MS–DRG 807 (Vaginal Delivery without Sterilization/ D&C without CC/MCC); • Proposed new MS–DRG 817 (Other Antepartum Diagnoses with O.R. Procedure with MCC); • Proposed new MS–DRG 818 (Other Antepartum Diagnoses with O.R. Procedure with CC); • Proposed new MS–DRG 819 (Other Antepartum Diagnoses with O.R. Procedure without CC/MCC); • Proposed new MS–DRG 831 (Other Antepartum Diagnoses without O.R. Procedure with MCC); • Proposed new MS–DRG 832 (Other Antepartum Diagnoses without O.R. Procedure with CC); and • Proposed new MS–DRG 833 (Other Antepartum Diagnoses without O.R. Procedure without CC/MCC). The diagrams below illustrate how the proposed MS–DRG logic for MDC 14 would function. The first diagram (Diagram 1.) begins by asking if there is a principal diagnosis from MDC 14. If no, the GROUPER logic directs the case to the appropriate MDC based on the principal diagnosis reported. Next, the logic asks if there is a cesarean section procedure reported on the claim. If yes, the logic asks if there was a sterilization procedure reported on the claim. If yes, the logic assigns the case to one of the proposed new MS–DRGs 783, 784, or E:\FR\FM\07MYP2.SGM 07MYP2 20224 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 785. If no, the logic assigns the case to one of the proposed new MS–DRGs 786, 787, or 788. If there was not a cesarean section procedure reported on the claim, the logic asks if there was a vaginal delivery procedure reported on the claim. If yes, the logic asks if there was another O.R. procedure other than the logic assigns the case to one of the proposed new MS–DRGs 805, 806, or 807. If there was not a vaginal delivery procedure reported on the claim, the GROUPER logic directs you to the other non-delivery MS–DRGs as shown in Diagram 2. sterilization, D&C, delivery procedure or a delivery inclusive O.R. procedure. If yes, the logic assigns the case to existing MS–DRG 768. If no, the logic asks if there was a sterilization and/or D&C reported on the claim. If yes, the logic assigns the case to one of the proposed new MS–DRGs 796, 797, or 798. If no, BILLING CODE 4120–01–P MS–DRG 770. If no, the logic assigns the case to existing MS–DRG 779. If there was not a principal diagnosis of abortion reported on the claim, the logic asks if there was a principal diagnosis of an antepartum condition reported on the claim. If yes, the logic then asks if there was an O.R. procedure reported on the claim. If yes, the logic assigns the case to one of the proposed new MS– DRGs 817, 818, or 819. If no, the logic assigns the case to one of the proposed new MS–DRGs 831, 832, or 833. If there was not a principal diagnosis of an The logic for Diagram 2. begins by asking if there is a principal diagnosis of abortion reported on the claim. If yes, the logic then asks if there was a D&C, aspiration curettage or hysterotomy procedure reported on the claim. If yes, the logic assigns the case to existing VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00062 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 EP07MY18.000</GPH> daltland on DSKBBV9HB2PROD with PROPOSALS2 Diagram 1. Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20225 a principal diagnosis describing childbirth, delivery or an intrapartum condition reported on the claim without any other procedures, and assigns the case to existing MS–DRG 998 (Principal Diagnosis Invalid as Discharge Diagnosis). To assist in detecting coding and MS– DRG assignment errors for MS–DRG 998 that could result when a provider does not report the procedure code for either a cesarean section or a vaginal delivery along with an outcome of delivery diagnosis code, as discussed in section II.F.13.d., we are proposing to add a new Questionable Obstetric Admission edit under the MCE. We are inviting public comments on this proposed MCE edit and we also are inviting public comments on the need for any additional MCE considerations with regard to the proposed changes for the MDC 14 MS–DRGs. BILLING CODE 4120–01–C diagnosis and procedure codes that we are proposing to assign to the GROUPER logic for the proposed new MS–DRGs and the existing MS–DRGs under MDC We refer readers to Tables 6P.1h through 6P.1k for the lists of the VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00063 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 EP07MY18.001</GPH> daltland on DSKBBV9HB2PROD with PROPOSALS2 antepartum condition reported on the claim, the logic asks if there was a principal diagnosis of a postpartum condition reported on the claim. If yes, the logic then asks if there was an O.R. procedure reported on the claim. If yes, the logic assigns the case to existing MS–DRG 769. If no, the logic assigns the case to existing MS–DRG 776. If there was not a principal diagnosis of a postpartum condition reported on the claim, the logic identifies that there was 20226 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 14. We are inviting public comments on our proposed list of diagnosis codes, which also addresses the list of diagnosis codes that a commenter identified as missing from the GROUPER logic. We note that, as a result of our proposed GROUPER logic changes to the vaginal delivery MS– DRGs, which would only take into account the procedure codes for a vaginal delivery and the outcome of delivery secondary diagnosis codes, there is no longer a need to maintain a specific principal diagnosis logic list for those MS–DRGs. Therefore, while we appreciate the detailed suggestions and rationale submitted by the commenter for why specific diagnosis codes should be removed from the vaginal delivery principal diagnosis logic as displayed earlier in this discussion, we are proposing to remove that logic. We are inviting public comments on our proposal. We also are inviting public comments on our proposal to reassign ICD–10–PCS procedure codes 0UDB7ZX, 0UDB7ZZ, 0UDB8ZX, and 0UDB8ZZ that describe dilation and curettage procedures from MS–DRG 767 under MDC 14 to MS– DRGs 744 and 745 under MDC 13. In addition, we are inviting public comments on our proposed list of procedure codes for the proposed revised MDC 14 MS–DRG logic, which would require a procedure code for case assignment. Finally, we are inviting public comments on the proposed deletion of the 10 MS–DRGs and the proposed creation of 18 new MS–DRGs with a 3-way severity level split listed above in this section, as well as on the potential alternative new MS–DRGs using a 2-way severity level split as also presented above. 11. MDC 18 (Infectious and Parasitic Diseases (Systematic or Unspecified Sites): Systemic Inflammatory Response Syndrome (SIRS) of Non-Infectious Origin ICD–10–CM diagnosis codes R65.10 (Systemic Inflammatory Response Syndrome (SIRS) of non-infectious origin without acute organ dysfunction) and R65.11 (Systemic Inflammatory Response Syndrome (SIRS) of noninfectious origin with acute organ dysfunction) are currently assigned to MS–DRGs 870 (Septicemia or Severe Sepsis with Mechanical Ventilation >96 Hours), 871 (Septicemia or Severe Sepsis with Mechanical Ventilation >96 Hours with MCC), and 872 (Septicemia or Severe Sepsis with Mechanical Ventilation >96 Hours without MCC) under MDC 18 (Infectious and Parasitic Diseases, Systemic or Unspecified Sites). Our clinical advisors noted that these diagnosis codes are specifically describing conditions of a noninfectious origin, and recommended that they be reassigned to a more clinically appropriate MS–DRG. We examined claims data from the September 2017 update of the FY 2017 MedPAR file for cases in MS–DRGs 870, 871, and 872. Our findings are shown in the following table. SEPTICEMIA OR SEVERE SEPSIS WITH AND WITHOUT MECHANICAL VENTILATION >96 HOURS WITH AND WITHOUT MCC Number of cases MS–DRG MS–DRG 870—All cases ............................................................................................................ MS–DRG 871—All cases ............................................................................................................ MS–DRG 872—All cases ............................................................................................................ As shown in this table, we found a total of 31,658 cases in MS–DRG 870, with an average length of stay of 14.3 days and average costs of $42,981. We found a total of 566,531 cases in MS– DRG 871, with an average length of stay of 6.3 days and average costs of $13,002. Lastly, we found a total of 150,437 cases in MS–DRG 872, with an average length of stay of 4.3 days and average costs of $7,532. Average length of stay 31,658 566,531 150,437 Average costs 14.3 6.3 4.3 $42,981 13,002 7,532 We then examined claims data in MS–DRGs 870, 871, or 872 for cases reporting an ICD–10–CM diagnosis code of R65.10 or R65.11. Our findings are shown in the following table. SIRS OF NON-INFECTIOUS ORIGIN WITH AND WITHOUT ACUTE ORGAN DYSFUNCTION Number of cases MS–DRGs 870, 871 and 872 daltland on DSKBBV9HB2PROD with PROPOSALS2 MS–DRGs MS–DRGs MS–DRGs MS–DRGs 870, 870, 870, 870, 871, 871, 871, 871, and and and and 872—Cases 872—Cases 872—Cases 872—Cases reporting reporting reporting reporting As shown in this table, we found a total of 1,254 cases reporting a principal diagnosis code of R65.10 in MS–DRGs 870, 871, and 872, with an average length of stay of 3.8 days and average costs of $6,615. We found a total of 138 cases reporting a principal diagnosis code of R65.11 in MS–DRGs 870, 871, and 872, with an average length of stay of 4.8 days and average costs of $9,655. We found a total of 1,232 cases reporting a secondary diagnosis code of VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 a a a a principal diagnosis code of R65.10 ............ principal diagnosis code of R65.11 ............ secondary diagnosis code of R65.10 ........ secondary diagnosis code of R65.11 ........ R65.10 in MS–DRGs 870, 871, and 872, with an average length of stay of 5.5 days and average costs of $10,670. Lastly, we found a total of 117 cases reporting a secondary diagnosis code of R65.11 in MS–DRGs 870, 871, and 872, with an average length of stay of 6.2 days and average costs of $12,525. The claims data included a total of 1,392 cases in MS–DRGs 870, 871, and 872 that reported a principal diagnosis code of R65.10 or R65.11. We note that PO 00000 Frm 00064 Fmt 4701 Sfmt 4702 1,254 138 1,232 117 Average length of stay Average costs 3.8 4.8 5.5 6.2 $6,615 9,655 10,670 12,525 these 1,392 cases appear to have been coded inaccurately according to the ICD–10–CM Official Guidelines for Coding and Reporting at Section I.C.18.g., which specifically state: ‘‘The systemic inflammatory response syndrome (SIRS) can develop as a result of certain non-infectious disease processes, such as trauma, malignant neoplasm, or pancreatitis. When SIRS is documented with a non-infectious condition, and no subsequent infection E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules is documented, the code for the underlying condition, such as an injury, should be assigned, followed by code R65.10, Systemic inflammatory response syndrome (SIRS) of noninfectious origin without acute organ dysfunction or code R65.11, Systemic inflammatory response syndrome (SIRS) of non-infectious origin with acute organ dysfunction.’’ Therefore, according to the Coding Guidelines, ICD–10–CM diagnosis codes R65.10 and R65.11 should not be reported as the principal diagnosis on an inpatient claim. We have acknowledged in past rulemaking the challenges with coding for SIRS (and sepsis) (71 FR 24037). In addition, we note that there has been confusion with regard to how these codes are displayed in the ICD–10 MS– DRG Definitions Manual under MS– DRGs 870, 871, and 872, which may also impact the reporting of these conditions. For example, in Version 35 of the ICD–10 MS–DRG Definitions Manual (which is available via the Internet on the CMS website at: https:// www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient PPS/FY2018-IPPS-Final-Rule-HomePage-Items/FY2018-IPPS-Final-RuleData-Files.html?DLPage=1&DLEntries= 10&DLSort=0&DLSortDir=ascending, the logic for case assignment to MS– DRGs 870, 871, and 872 is comprised of a list of several diagnosis codes, of which ICD–10–CM diagnosis codes R65.10 and R65.11 are included. Because these codes are listed under the heading of ‘‘Principal Diagnosis’’, it may appear that these codes are to be reported as a principal diagnosis for assignment to MS–DRGs 870, 871, or 872. However, the Definitions Manual display of the GROUPER logic assignment for each diagnosis code is for grouping purposes only. The GROUPER (and, therefore, documentation in the MS–DRG Definitions Manual) was not designed to account for coding guidelines or coverage policies. Since the inception of the IPPS, the data editing function has been a separate and independent step in the process of determining a DRG assignment. Except for extreme data integrity issues that prevent a DRG from being assigned, such as an invalid principal diagnosis, the DRG assignment GROUPER does not edit for data integrity. Prior to assigning the MS–DRG to a claim, the MACs apply a series of data integrity edits using programs such as the Medicare Code Editor (MCE). The MCE is designed to identify cases that require further review before classification into an MS–DRG. These data integrity edits address issues such as data validity, coding rules, and 20227 coverage policies. The separation of the MS–DRG grouping and data editing functions allows the MS–DRG GROUPER to remain stable during a fiscal year even though coding rules and coverage policies may change during the fiscal year. As such, in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38050 through 38051), we finalized our proposal to add ICD–10–CM diagnosis codes R65.10 and R65.11 to the Unacceptable Principal Diagnosis edit in the MCE as a result of the Official Guidelines for Coding and Reporting related to SIRS, in efforts to improve coding accuracy for these types of cases. To address the issue of determining a more appropriate MS–DRG assignment for ICD–10–CM diagnosis codes R65.10 and R65.11, we reviewed alternative options under MDC 18. Our clinical advisors determined the most appropriate option is MS–DRG 864 (Fever) because the conditions that are assigned here describe conditions of a non-infectious origin. Therefore, we are proposing to reassign ICD–10–CM diagnosis codes R65.10 and R65.11 to MS–DRG 864 and to revise the title of MS–DRG 864 to ‘‘Fever and Inflammatory Conditions’’ to better reflect the diagnoses assigned there. PROPOSED REVISED MS–DRG 864 (FEVER AND INFLAMMATORY CONDITIONS) MS–DRG Number of cases Average length of stay Average costs MS–DRG 864—All cases ............................................................................................................ 12,144 3.4 $6,232 We are inviting public comments on our proposals. daltland on DSKBBV9HB2PROD with PROPOSALS2 12. MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs): Corrosive Burns ICD–10–CM Coding Guidelines include ‘‘Code first’’ sequencing instructions for cases reporting a primary diagnosis of toxic effect (ICD– 10–CM codes T51 through T65) and a secondary diagnosis of corrosive burn (ICD–10–CM codes T21.40 through T21.79). We received a request to reassign these cases from MS–DRGs 901 (Wound Debridements for Injuries with MCC), 902 (Wound Debridements for Injuries with CC), 903 (Wound Debridements for Injuries without CC/ MCC), 904 (Skin Grafts for Injuries with CC/MCC), 905 (Skin Grafts for Injuries without CC/MCC), 917 (Poisoning and Toxic Effects of Drugs with MCC), and 918 (Poisoning and Toxic Effects of Drugs without MCC) to MS–DRGs 927 VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 (Extensive Burns or Full Thickness Burns with Mechanical Ventilation >96 Hours with Skin Graft), 928 (Full Thickness Burn with Skin Graft or Inhalation Injury with CC/MCC), 929 (Full Thickness Burn with Skin Graft or Inhalation Injury without CC/MCC), 933 (Extensive Burns or Full Thickness Burns with Mechanical Ventilation >96 Hours without Skin Graft), 934 (Full Thickness Burn without Skin Graft or Inhalation Injury), and 935 (Nonextensive Burns). The requestor noted that, for corrosion burns codes T21.40 through T21.79, ICD-10–CM Coding Guidelines instruct to ‘‘Code first (T51 through T65) to identify chemical and intent.’’ Because code first notes provide sequencing directive, when patients are admitted with corrosive burns (which can be full thickness and extensive), toxic effect codes T51 through T65 must be sequenced first followed by codes for PO 00000 Frm 00065 Fmt 4701 Sfmt 4702 the corrosive burns. This causes fullthickness and extensive burns to group to MS–DRGs 901 through 905 when excisional debridement and split thickness skin grafts are performed, and to MS–DRGs 917 and 918 when procedures are not performed. This is in contrast to cases reporting a primary diagnosis of corrosive burn, which group to MS-DRGs 927 through 935. The requestor stated that MS–DRGs 456 (Spinal Fusion except Cervical with Spinal Curvature or Malignancy or Infection or Extensive Fusions with MCC), 457 (Spinal Fusion Except Cervical with Spinal Curvature or Malignancy or Infection or Extensive Fusions with CC), and 458 (Spinal Fusion Except Cervical with Spinal Curvature or Malignancy or Infection or Extensive Fusions without CC/MCC) are grouped based on the procedure performed in combination with the principal diagnosis or secondary E:\FR\FM\07MYP2.SGM 07MYP2 20228 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules diagnosis (secondary scoliosis). The requestor stated that when codes for corrosive burns are reported as secondary diagnoses in conjunction with principal diagnoses codes T5l through T65, particularly when skin grafts are performed, they would be more appropriately assigned to MS– DRGs 927 through 935. We analyzed claims data from the September 2017 update of the FY 2017 MedPAR file for all cases assigned to MS–DRGs 901, 902, 903, 904, 905, 917, and 918, and subsets of these cases with primary diagnosis of toxic effect with secondary diagnosis of corrosive burn. We note that we found no cases from this subset in MS-DRGs 903, 907, 908, and 909 and, therefore, did not include the results for these MS-DRGs in the table below. We also analyzed all cases assigned to MS–DRGs 927, 928, 929, 933, 934, and 935 and those cases that reported a primary diagnosis of corrosive burn. Our findings are shown in the following two tables. MDC 21 INJURIES, POISONINGS AND TOXIC EFFECTS OF DRUGS All Cases with primary diagnosis of toxic effect and secondary diagnosis of corrosive burn— Across all MS–DRGs ............................................................................................................... MS–DRG 901—All cases ............................................................................................................ MS–DRG 901—Cases with primary diagnosis of toxic effect and secondary diagnosis of corrosive burn ............................................................................................................................... MS–DRG 902—All cases ............................................................................................................ MS–DRG 902—Cases with primary diagnosis of toxic effect and secondary diagnosis of corrosive burn ............................................................................................................................... MS–DRG 904—All cases ............................................................................................................ MS–DRG 904—Cases with primary diagnosis of toxic effect and secondary diagnosis of corrosive burn ............................................................................................................................... MS–DRG 905—All cases ............................................................................................................ MS–DRG 905—Cases with primary diagnosis of toxic effect and secondary diagnosis of corrosive burn ............................................................................................................................... MS–DRG 906—All cases ............................................................................................................ MS–DRG 906—Cases with primary diagnosis of toxic effect and secondary diagnosis of corrosive burn ............................................................................................................................... MS–DRG 917—All cases ............................................................................................................ MS–DRG 917—Cases with primary diagnosis of toxic effect and secondary diagnosis of corrosive burn ............................................................................................................................... MS–DRG 918—All cases ............................................................................................................ MS–DRG 918—Cases with primary diagnosis of toxic effect and secondary diagnosis of corrosive burn ............................................................................................................................... As shown in this table, there were a total of 55 cases with a primary diagnosis of toxic effect and a secondary diagnosis of corrosive burn across MS– DRGs 901, 902, 903, 904, 905, 917, and 918. When comparing this subset of codes relative to those of each MS–DRG as a whole, we noted that, in most of these MS–DRGs, the average costs and average length of stay for this subset of cases were roughly equivalent to or lower than the average costs and average length of stay for cases in the MS–DRG as a whole, while in one case, they were higher. As we have noted in prior Average length of stay Number of cases MS–DRG rulemaking (77 FR 53309) and elsewhere in this rule, it is a fundamental principle of an averaged payment system that half of the procedures in a group will have above average costs. It is expected that there will be higher cost and lower cost subsets, especially when a subset has low numbers. The results of this analysis indicate that these cases are appropriately placed within their current MDC. Our clinical advisors reviewed this request and indicated that patients with a primary diagnosis of toxic effect and Average costs 55 968 5.5 13 $18,077 31,479 1 1,775 8 6.6 12,388 14,206 8 905 10.3 9.8 20,940 23,565 8 263 6.4 4.9 22,624 13,291 2 458 2.5 4.8 7,682 13,555 1 31,730 5 4.8 7,409 10,280 6 19,819 4.8 3 7,336 5,529 28 3.5 5,643 a secondary diagnosis of corrosive burn have been exposed to an irritant or corrosive substance and, therefore, are clinically similar to those patients in MDC 21. Furthermore, our clinical advisors do not believe that the size of this subset of cases justifies the significant changes to the GROUPER logic that would be required to address the commenter’s request, which would involve rerouting cases when the primary and secondary diagnoses are in different MDCs. MDC 22 BURNS Number of cases daltland on DSKBBV9HB2PROD with PROPOSALS2 MS–DRG All cases with primary diagnosis of corrosive burn—Across all MS–DRGs ............................... MS–DRG 927—All cases ............................................................................................................ MS–DRG 927—Cases with primary diagnosis of corrosive burn ............................................... MS–DRG 928—All cases ............................................................................................................ MS–DRG 928—Cases with primary diagnosis of corrosive burn ............................................... MS–DRG 929—All cases ............................................................................................................ MS–DRG 929—Cases with primary diagnosis of corrosive burn ............................................... MS–DRG 933—All cases ............................................................................................................ MS–DRG 933—Cases with primary diagnosis of corrosive burn ............................................... MS–DRG 934—All cases ............................................................................................................ VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00066 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 60 159 1 1,021 13 295 4 121 1 503 07MYP2 Average length of stay 8.5 28.1 41 15.1 13.2 7.9 12.5 4.6 7 6.1 Average costs $19,456 128,960 75,985 42,868 31,118 21,600 18,527 21,291 91,779 13,286 20229 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules MDC 22 BURNS—Continued Number of cases MS–DRG MS–DRG 934—Cases with primary diagnosis of corrosive burn ............................................... MS–DRG 935—All cases ............................................................................................................ MS–DRG 935—Cases with primary diagnosis of corrosive burn ............................................... To address the request of reassigning cases with a primary diagnosis of toxic effect and secondary diagnosis of corrosive burn, we reviewed the data for all cases in MS–DRGs 927, 928, 929, 933, 934, and 935 and those cases reporting a primary diagnosis of corrosive burn. We found a total of 60 cases reporting a primary diagnosis of corrosive burn, with an average length of stay of 8.5 days and average costs of $19,456. Our clinical advisors believe that these cases reporting a primary diagnosis of corrosive burn are appropriately placed in MDC 22 as they are clinically aligned with other patients in this MDC. In summary, the results of our claims data analysis and the advice from our clinical advisors do not support reassigning cases in MS–DRGs 901, 902, 903, 904, 905, 917, and 918 reporting a primary diagnosis of toxic effect and a secondary diagnosis of corrosive burn to MS–DRGs 927, 928, 929, 933, 934 and 935. Therefore, we are not proposing to reassign these cases. We are inviting public comments on our proposal to maintain the current MS-DRG structure for these cases. 13. Proposed Changes to the Medicare Code Editor (MCE) The Medicare Code Editor (MCE) is a software program that detects and reports errors in the coding of Medicare claims data. Patient diagnoses, procedure(s), and demographic information are entered into the Medicare claims processing systems and are subjected to a series of automated screens. The MCE screens are designed to identify cases that require further review before classification into an MS– DRG. As discussed in the FY 2018 IPPS/ LTCH PPS final rule (82 FR 38045), we made available the FY 2018 ICD–10 MCE Version 35 manual file. The link to this MCE manual file, along with the link to the mainframe and computer software for the MCE Version 35 (and ICD–10 MS–DRGs) are posted on the CMS website at https://www.cms.gov/ Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/ through the FY 2018 IPPS Final Rule Home Page. For this FY 2019 IPPS/LTCH PPS proposed rule, below we address the MCE requests we received by the November 1, 2017 deadline. We also discuss the proposals we are making based on our internal review and analysis. a. Age Conflict Edit In the MCE, the Age Conflict edit exists to detect inconsistencies between a patient’s age and any diagnosis on the patient’s record; for example, a 5-yearold patient with benign prostatic hypertrophy or a 78-year-old patient coded with a delivery. In these cases, the diagnosis is clinically and virtually impossible for a patient of the stated age. Therefore, either the diagnosis or the age is presumed to be incorrect. Currently, in the MCE, the following four age diagnosis categories appear under the Age Conflict edit and are listed in the manual and written in the software program: • Perinatal/Newborn—Age of 0 years only; a subset of diagnoses which will only occur during the perinatal or newborn period of age 0 (for example, tetanus neonatorum, health examination for newborn under 8 days old). daltland on DSKBBV9HB2PROD with PROPOSALS2 ICD–10–CM code Z05.0 .................... Z05.1 .................... Z05.2 .................... Z05.3 .................... Z05.41 .................. Z05.42 .................. Z05.43 .................. Z05.5 .................... Z05.6 .................... Z05.71 .................. VerDate Sep<11>2014 11 1,705 29 Average length of stay Average costs 5.8 5.2 5 • Pediatric—Age is 0–17 years inclusive (for example, Reye’s syndrome, routine child health exam). • Maternity—Age range is 12–55 years inclusive (for example, diabetes in pregnancy, antepartum pulmonary complication). • Adult—Age range is 15–124 years inclusive (for example, senile delirium, mature cataract). (1) Perinatal/Newborn Diagnoses Category Under the ICD–10 MCE, the Perinatal/ Newborn Diagnoses category under the Age Conflict edit considers the age of 0 years only; a subset of diagnoses which will only occur during the perinatal or newborn period of age 0 to be inclusive. This includes conditions that have their origin in the fetal or perinatal period (before birth through the first 28 days after birth) even if morbidity occurs later. For that reason, the diagnosis codes on this Age Conflict edit list would be expected to apply to conditions or disorders specific to that age group only. In the ICD–10–CM classification, there are 14 diagnosis codes that describe specific suspected conditions that have been evaluated and ruled out during the newborn period and are currently not on the Perinatal/Newborn Diagnoses Category edit code list. We consulted with staff at the Centers for Disease Control’s (CDC’s) National Center for Health Statistics (NCHS) because NCHS has the lead responsibility for the ICD–10–CM diagnosis codes. The NCHS’ staff confirmed that the following diagnosis codes are appropriate to add to the edit code list for the Perinatal/Newborn Diagnoses Category. Code description Observation Observation Observation Observation Observation Observation Observation Observation Observation Observation 20:30 May 04, 2018 and and and and and and and and and and evaluation evaluation evaluation evaluation evaluation evaluation evaluation evaluation evaluation evaluation Jkt 244001 of of of of of of of of of of newborn newborn newborn newborn newborn newborn newborn newborn newborn newborn PO 00000 for for for for for for for for for for Frm 00067 suspected suspected suspected suspected suspected suspected suspected suspected suspected suspected Fmt 4701 cardiac condition ruled out. infectious condition ruled out. neurological condition ruled out. respiratory condition ruled out. genetic condition ruled out. metabolic condition ruled out. immunologic condition ruled out. gastrointestinal condition ruled out. genitourinary condition ruled out. skin and subcutaneous tissue condition ruled out. Sfmt 4702 13,280 13,065 9,822 E:\FR\FM\07MYP2.SGM 07MYP2 20230 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules ICD–10–CM code Z05.72 .................. Z05.73 .................. Z05.8 .................... Z05.9 .................... Code description Observation Observation Observation Observation and and and and evaluation evaluation evaluation evaluation Therefore, we are proposing to add the ICD–10–CM diagnosis codes listed in the table above to the Age Conflict edit under the Perinatal/Newborn Diagnoses Category edit code list. We also are proposing to continue to include the existing diagnosis codes currently listed under the Perinatal/ Newborn Diagnoses Category edit code list. We are inviting public comments on our proposals. (2) Pediatric Diagnoses Category Under the ICD–10 MCE, the Pediatric Diagnoses Category for the Age Conflict edit considers the age range of 0 to 17 years inclusive. For that reason, the diagnosis codes on this Age Conflict edit list would be expected to apply to conditions or disorders specific to that age group only. As discussed in section II.F.15. of the preamble of this proposed rule, Table 6C.—Invalid Diagnosis Codes associated with this proposed rule (which is available via the Internet on the CMS of of of of newborn newborn newborn newborn for for for for suspected musculoskeletal condition ruled out. suspected connective tissue condition ruled out. other specified suspected condition ruled out. unspecified suspected condition ruled out. website at: https://www.cms.hhs.gov/ Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/ index.html) lists the diagnoses that are no longer effective as of October 1, 2018. Included in this table is an ICD–10–CM diagnosis code currently listed on the Pediatric Diagnoses Category edit code list, ICD–10–CM diagnosis code Z13.4 (Encounter for screening for certain developmental disorders in childhood). We are proposing to remove this code from the Pediatric Diagnoses Category edit code list. We also are proposing to continue to include the other existing diagnosis codes currently listed under the Pediatric Diagnoses Category edit code list. We are inviting public comments on our proposals. (3) Maternity Diagnoses Under the ICD–10 MCE, the Maternity Diagnoses Category for the Age Conflict edit considers the age range of 12 to 55 years inclusive. For that reason, the diagnosis codes on this Age Conflict edit list would be expected to apply to conditions or disorders specific to that age group only. As discussed in section II.F.15. of the preamble of this proposed rule, Table 6A.—New Diagnosis Codes associated with this proposed rule (which is available via the Internet on the CMS website at: https://www.cms.hhs.gov/ Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/ index.html) lists the new diagnoses codes that have been approved to date, which will be effective with discharges occurring on and after October 1, 2018. The following table lists the new ICD– 10–CM diagnosis codes included in Table 6A associated with pregnancy and maternal care that we believe are appropriate to add to the Maternity Diagnoses Category edit code list under the Age Conflict edit. Therefore, we are proposing to add these codes to the Maternity Diagnoses Category edit code list under the Age Conflict edit. ICD–10–CM code Code description F53.0 .................... F53.1 .................... O30.131 ............... O30.132 ............... O30.133 ............... O30.139 ............... O30.231 ............... O30.232 ............... O30.233 ............... O30.239 ............... O30.831 ............... O30.832 ............... Postpartum depression. Puerperal psychosis. Triplet pregnancy, trichorionic/triamniotic, first trimester. Triplet pregnancy, trichorionic/triamniotic, second trimester. Triplet pregnancy, trichorionic/triamniotic, third trimester. Triplet pregnancy, trichorionic/triamniotic, unspecified trimester. Quadruplet pregnancy, quadrachorionic/quadra-amniotic, first trimester. Quadruplet pregnancy, quadrachorionic/quadra-amniotic, second trimester. Quadruplet pregnancy, quadrachorionic/quadra-amniotic, third trimester. Quadruplet pregnancy, quadrachorionic/quadra-amniotic, unspecified trimester. Other specified multiple gestation, number of chorions and amnions are both equal to the number of fetuses, first trimester. Other specified multiple gestation, number of chorions and amnions are both equal to the number of fetuses, second trimester. Other specified multiple gestation, number of chorions and amnions are both equal to the number of fetuses, third trimester. Other specified multiple gestation, number of chorions and amnions are both equal to the number of fetuses, unspecified trimester. Infection of obstetric surgical wound, unspecified. Infection of obstetric surgical wound, superficial incisional site. Infection of obstetric surgical wound, deep incisional site. Infection of obstetric surgical wound, organ and space site. Sepsis following an obstetrical procedure. Infection of obstetric surgical wound, other surgical site. O30.833 ............... O30.839 ............... daltland on DSKBBV9HB2PROD with PROPOSALS2 O86.00 O86.01 O86.02 O86.03 O86.04 O86.09 ................. ................. ................. ................. ................. ................. In addition, as discussed in section II.F.15. of the preamble of this proposed rule, Table 6C.—Invalid Diagnosis Codes associated with this proposed rule (which is available via the Internet on the CMS website at: https:// www.cms.hhs.gov/Medicare/MedicareFee-for-Service-Payment/AcuteInpatient VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PPS/) lists the diagnosis codes that are no longer effective as of October 1, 2018. Included in this table are two ICD–10–CM diagnosis codes currently listed on the Maternity Diagnoses Category edit code list: ICD– 10–CM diagnosis codes F53 (Puerperal psychosis) and O86.0 (Infection of PO 00000 Frm 00068 Fmt 4701 Sfmt 4702 obstetric surgical wound). We are proposing to remove these codes from the Maternity Diagnoses Category Edit code list. We also are proposing to continue to include the other existing diagnosis codes currently listed under the Maternity Diagnoses Category edit E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules code list. We are inviting public comments on our proposals. example, a male patient with cervical cancer (diagnosis) or a female patient with a prostatectomy (procedure). In both instances, the indicated diagnosis or the procedure conflicts with the stated sex of the patient. Therefore, the patient’s diagnosis, procedure, or sex is presumed to be incorrect. b. Sex Conflict Edit In the MCE, the Sex Conflict edit detects inconsistencies between a patient’s sex and any diagnosis or procedure on the patient’s record; for ICD–10–CM code Z30.015 ................ Z31.7 .................... Z98.891 ................ 20231 (1) Diagnoses for Females Only Edit We received a request to consider the addition of the following ICD–10–CM diagnosis codes to the list for the Diagnoses for Females Only edit. Code description Encounter for initial prescription of vaginal ring hormonal contraceptive. Encounter for procreative management and counseling for gestational carrier. History of uterine scar from previous surgery. The requestor noted that, currently, ICD–10–CM diagnosis code Z30.44 (Encounter for surveillance of vaginal ring hormonal contraceptive device) is on the Diagnoses for Females Only edit code list and suggested that ICD–10–CM diagnosis code Z30.015, which also describes an encounter involving a vaginal ring hormonal contraceptive, be added to the Diagnoses for Females Only edit code list as well. In addition, the requestor suggested that ICD–10–CM diagnosis codes Z31.7 and Z98.891 be added to the Diagnoses for Females Only edit code list. We reviewed ICD–10–CM diagnosis codes Z30.015, Z31.7, and Z98.891, and we agree with the requestor that it is clinically appropriate to add these three ICD–10–CM diagnosis codes to the Diagnoses for Females Only edit code list because the conditions described by these codes are specific to and consistent with the female sex. In addition, as discussed in section II.F.15. of the preamble of this proposed rule, Table 6A.—New Diagnosis Codes associated with this proposed rule (which is available via the Internet on the CMS website at: https:// www.cms.hhs.gov/Medicare/MedicareFee-for-Service-Payment/ AcuteInpatientPPS/) lists the new diagnosis codes that have been approved to date, which will be effective with discharges occurring on and after October 1, 2018. The following table lists the new diagnosis codes that are associated with conditions consistent with the female sex. We are proposing to add these ICD–10–CM diagnosis codes to the Diagnoses for Females Only edit code list under the Sex Conflict edit. ICD–10–CM code Code description F53.0 .................... F53.1 .................... N35.82 .................. N35.92 .................. O30.131 ............... O30.132 ............... O30.133 ............... O30.139 ............... O30.231 ............... O30.232 ............... O30.233 ............... O30.239 ............... O30.831 ............... O30.832 ............... Postpartum depression. Puerperal psychosis. Other urethral stricture, female. Unspecified urethral stricture, female. Triplet pregnancy, trichorionic/triamniotic, first trimester. Triplet pregnancy, trichorionic/triamniotic, second trimester. Triplet pregnancy, trichorionic/triamniotic, third trimester. Triplet pregnancy, trichorionic/triamniotic, unspecified trimester. Quadruplet pregnancy, quadrachorionic/quadra-amniotic, first trimester. Quadruplet pregnancy, quadrachorionic/quadra-amniotic, second trimester. Quadruplet pregnancy, quadrachorionic/quadra-amniotic, third trimester. Quadruplet pregnancy, quadrachorionic/quadra-amniotic, unspecified trimester. Other specified multiple gestation, number of chorions and amnions are both equal to the number of fetuses, first trimester. Other specified multiple gestation, number of chorions and amnions are both equal to the number of fetuses, second trimester. Other specified multiple gestation, number of chorions and amnions are both equal to the number of fetuses, third trimester. Other specified multiple gestation, number of chorions and amnions are both equal to the number of fetuses, unspecified trimester. Infection of obstetric surgical wound, unspecified. Infection of obstetric surgical wound, superficial incisional site. Infection of obstetric surgical wound, deep incisional site. Infection of obstetric surgical wound, organ and space site. Sepsis following an obstetrical procedure. Infection of obstetric surgical wound, other surgical site. Other doubling of uterus, unspecified. Other complete doubling of uterus. Other partial doubling of uterus. Other doubling of uterus, other specified. Encounter for screening for maternal depression. daltland on DSKBBV9HB2PROD with PROPOSALS2 O30.833 ............... O30.839 ............... O86.00 O86.01 O86.02 O86.03 O86.04 O86.09 Q51.20 Q51.21 Q51.22 Q51.28 Z13.32 ................. ................. ................. ................. ................. ................. ................. ................. ................. ................. .................. We are inviting public comments on our proposals. In addition, as discussed in section II.F.15. of the preamble of this proposed rule, Table 6C.—Invalid Diagnosis VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Codes associated with this proposed rule (which is available via the internet on the CMS website at: https:// www.cms.hhs.gov/Medicare/Medicare- PO 00000 Frm 00069 Fmt 4701 Sfmt 4702 Fee-for-Service-Payment/ AcuteInpatientPPS/) lists the diagnosis codes that are no longer effective as of October 1, 2018. Included E:\FR\FM\07MYP2.SGM 07MYP2 20232 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules in this table are the following three ICD– 10–CM diagnosis codes currently listed on the Diagnoses for Females Only edit code list. ICD–10–CM code F53 ....................... O86.00 ................. Q51.20 ................. Code description Puerperal psychosis. Infection of obstetric surgical wound. Other doubling of uterus, unspecified. Because these three ICD–10–CM diagnosis codes will no longer be effective as of October 1, 2018, we are proposing to remove them from the Diagnoses for Females Only edit code list under the Sex Conflict edit. We are inviting public comments on our proposal. (2) Procedures for Females Only Edit As discussed in section II.F.15. of the preamble of this proposed rule, Table 6B.—New Procedure Codes associated with this proposed rule (which is available via the Internet on the CMS website at: https://www.cms.hhs.gov/ Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/ ICD–10–CM code 0UY90Z0 .............. 0UY90Z1 .............. 0UY90Z2 .............. Code description Transplantation of uterus, allogeneic, open approach. Transplantation of uterus, syngeneic, open approach. Transplantation of uterus, zooplastic, open approach. We also are proposing to continue to include the existing procedure codes currently listed under the Procedures for Females Only edit code list. We are inviting public comments on our proposals. (3) Diagnoses for Males Only Edit As discussed in section II.F.15. of the preamble of this proposed rule, Table 6A.—New Diagnosis Codes associated with this proposed rule (which is available via the Internet on the CMS website at: https://www.cms.hhs.gov/ Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/ index.html) lists the new diagnosis codes that have been approved to date, which will be effective with discharges ICD–10–CM code daltland on DSKBBV9HB2PROD with PROPOSALS2 N35.016 N35.116 N35.811 N35.812 N35.813 N35.814 N35.816 N35.819 N35.911 N35.912 N35.913 N35.914 N35.916 N35.919 N99.116 R93.811 R93.812 R93.813 R93.819 ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ occurring on and after October 1, 2018. The following table lists the new diagnosis codes that are associated with conditions consistent with the male sex. We are proposing to add these ICD–10– CM diagnosis codes to the Diagnoses for Males Only edit code list under the Sex Conflict edit. Code description Post-traumatic urethral stricture, male, overlapping sites. Postinfective urethral stricture, not elsewhere classified, male, overlapping sites. Other urethral stricture, male, meatal. Other urethral bulbous stricture, male. Other membranous urethral stricture, male. Other anterior urethral stricture, male, anterior. Other urethral stricture, male, overlapping sites. Other urethral stricture, male, unspecified site. Unspecified urethral stricture, male, meatal. Unspecified bulbous urethral stricture, male. Unspecified membranous urethral stricture, male. Unspecified anterior urethral stricture, male. Unspecified urethral stricture, male, overlapping sites. Unspecified urethral stricture, male, unspecified site. Postprocedural urethral stricture, male, overlapping sites. Abnormal radiologic findings on diagnostic imaging of right testicle. Abnormal radiologic findings on diagnostic imaging of left testicle. Abnormal radiologic findings on diagnostic imaging of testicles, bilateral. Abnormal radiologic findings on diagnostic imaging of unspecified testicle. We also are proposing to continue to include the existing diagnosis codes currently listed under the Diagnoses for Males Only edit code list. We are inviting public comments on our proposals. VerDate Sep<11>2014 index.html) lists the procedure codes that have been approved to date, which will be effective with discharges occurring on and after October 1, 2018. We are proposing to add the three ICD– 10–PCS procedure codes in the following table describing procedures associated with the female sex to the Procedures for Females Only edit code list. 20:30 May 04, 2018 Jkt 244001 c. Manifestation Code as Principal Diagnosis Edit In the ICD–10–CM classification system, manifestation codes describe the manifestation of an underlying disease, not the disease itself and, PO 00000 Frm 00070 Fmt 4701 Sfmt 4702 therefore, should not be used as a principal diagnosis. As discussed in section II.F.15. of the preamble of this proposed rule, Table 6A.—New Diagnosis Codes associated with this proposed rule (which is available via the Internet on the CMS E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules website at: https://www.cms.hhs.gov/ Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/ index.html) lists the new diagnosis codes that have been approved to date which will be effective with discharges occurring on and after October 1, 2018. Included in this table are ICD–10–CM diagnosis codes K82.A1 (Gangrene of gallbladder in cholecystitis) and K82.A2 (Perforation of gallbladder in cholecystitis). We are proposing to add these two ICD–10–CM diagnosis codes to the Manifestation Code as Principal Diagnosis edit code list because the type of cholecystitis would be required to be reported first. We also are proposing to continue to include the existing diagnosis codes currently listed under the Manifestation Code as Principal Diagnosis edit code list. We are inviting public comments on our proposals. d. Questionable Admission Edit In the MCE, some diagnoses are not usually sufficient justification for admission to an acute care hospital. For example, if a patient is assigned ICD– 10–CM diagnosis code R03.0 (Elevated blood pressure reading, without diagnosis of hypertension), the patient would have a questionable admission because an elevated blood pressure reading is not normally sufficient justification for admission to a hospital. As discussed in section II.F.10. of the preamble of this proposed rule, we are proposing several modifications to the MS–DRGs under MDC 14 (Pregnancy, Childbirth and the Puerperium). One aspect of these proposed modifications involves the GROUPER logic for the cesarean section and vaginal delivery MS–DRGs. We refer readers to section II.F.10. of the preamble of this proposed rule for a detailed discussion of the proposals regarding these MS–DRG modifications under MDC 14 and the relation to the MCE. If a patient presents to the hospital and either a cesarean section or a vaginal delivery occurs, it is expected that, in addition to the specific type of delivery code, an outcome of delivery code is also assigned and reported on the claim. The outcome of delivery codes are ICD–10–CM diagnosis codes that are to be reported as secondary diagnoses as instructed in Section I.C.15.b.5 of the ICD–10–CM Official Guidelines for Coding and Reporting which states: ‘‘A code from category Z37, Outcome of delivery, should be included on every maternal record when a delivery has occurred. These codes are not to be used on subsequent records or on the newborn record.’’ Therefore, to encourage accurate coding and appropriate MS–DRG assignment in alignment with the proposed modifications to the delivery MS–DRGs, we are proposing to create a new ‘‘Questionable Obstetric Admission Edit’’ under the Questionable Admission edit to read as follows: 20233 10D07Z5 Extraction of Products of Conception, High Forceps, Via Natural or Artificial Opening 10D07Z6 Extraction of Products of Conception, Vacuum, Via Natural or Artificial Opening 10D07Z7 Extraction of Products of Conception, Internal Version, Via Natural or Artificial Opening 10D07Z8 Extraction of Products of Conception, Other, Via Natural or Artificial Opening 10D17Z9 Manual Extraction of Products of Conception, Retained, Via Natural or Artificial Opening 10D18Z9 Manual Extraction of Products of Conception, Retained, Via Natural or Artificial Opening Endoscopic 10E0XZZ Delivery of Products of Conception, External Approach Secondary diagnosis code list for outcome of delivery Procedure code list for cesarean section 10D00Z0 Extraction of Products of Conception, High, Open Approach 10D00Z1 Extraction of Products of Conception, Low, Open Approach 10D00Z2 Extraction of Products of Conception, Extraperitoneal, Open Approach Z37.0 Single live birth Z37.1 Single stillbirth Z37.2 Twins, both liveborn Z37.3 Twins, one liveborn and one stillborn Z37.4 Twins, both stillborn Z37.50 Multiple births, unspecified, all liveborn Z37.51 Triplets, all liveborn Z37.52 Quadruplets, all liveborn Z37.53 Quintuplets, all liveborn Z37.54 Sextuplets, all liveborn Z37.59 Other multiple births, all liveborn Z37.60 Multiple births, unspecified, some liveborn Z37.61 Triplets, some liveborn Z37.62 Quadruplets, some liveborn Z37.63 Quintuplets, some liveborn Z37.64 Sextuplets, some liveborn Z37.69 Other multiple births, some liveborn Z37.7 Other multiple births, all stillborn Z37.9 Outcome of delivery, unspecified’’ Procedure code list for vaginal delivery 10D07Z3 Extraction of Products of Conception, Low Forceps, Via Natural or Artificial Opening 10D07Z4 Extraction of Products of Conception, Mid Forceps, Via Natural or Artificial Opening We are proposing that the three ICD– 10–PCS procedure codes listed in the following table would be used to establish the list of codes for the proposed Questionable Obstetric Admission edit logic for cesarean section. ‘‘b. Questionable obstetric admission ICD–10–PCS procedure codes describing a cesarean section or vaginal delivery are considered to be a questionable admission except when reported with a corresponding secondary diagnosis code describing the outcome of delivery. ICD–10–PCS PROCEDURE CODES FOR CESAREAN SECTION UNDER THE PROPOSED QUESTIONABLE OBSTETRIC ADMISSION EDIT CODE LIST IN THE MCE ICD–10–CM code daltland on DSKBBV9HB2PROD with PROPOSALS2 10D00Z0 .............. 10D00Z1 .............. 10D00Z2 .............. Code description Extraction of products of conception, high, open approach. Extraction of products of conception, low, open approach. Extraction of products of conception, extraperitoneal, open approach. We are proposing that the nine ICD– 10–PCS procedure codes listed in the following table would be used to VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 establish the list of codes for the proposed new Questionable Obstetric PO 00000 Frm 00071 Fmt 4701 Sfmt 4702 Admission edit logic for vaginal delivery. E:\FR\FM\07MYP2.SGM 07MYP2 20234 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules ICD–10–PCS PROCEDURE CODES FOR VAGINAL DELIVERY UNDER THE PROPOSED QUESTIONABLE OBSTETRIC ADMISSION EDIT CODE LIST IN THE MCE ICD–10–CM code 10D07Z3 10D07Z4 10D07Z5 10D07Z6 10D07Z7 10D07Z8 10D17Z9 10D18Z9 10E0XZZ .............. .............. .............. .............. .............. .............. .............. .............. .............. Code description Extraction of products of conception, low forceps, via natural or artificial opening. Extraction of products of conception, mid forceps, via natural or artificial opening. Extraction of products of conception, high forceps, via natural or artificial opening. Extraction of products of conception, vacuum, via natural or artificial opening. Extraction of products of conception, internal version, via natural or artificial opening. Extraction of products of conception, other, via natural or artificial opening. Manual extraction of products of conception, retained, via natural or artificial opening. Manual extraction of products of conception, retained, via natural or artificial opening. Delivery of products of conception, external approach. We are proposing that the 19 ICD–10– CM diagnosis codes listed in the following table would be used to establish the list of secondary diagnosis codes for the proposed new Questionable Obstetric Admission edit logic for outcome of delivery. ICD–10–CM SECONDARY DIAGNOSIS CODES FOR OUTCOME OF DELIVERY UNDER THE PROPOSED QUESTIONABLE OBSTETRIC ADMISSION EDIT CODE LIST IN THE MCE ICD–10–CM code Z37.0 .................... Z37.1 .................... Z37.2 .................... Z37.3 .................... Z37.4 .................... Z37.50 .................. Z37.51 .................. Z37.52 .................. Z37.53 .................. Z37.54 .................. Z37.59 .................. Z37.60 .................. Z37.61 .................. Z37.62 .................. Z37.63 .................. Z37.64 .................. Z37.69 .................. Z37.7 .................... Z37.9 .................... Code description Single live birth. Single stillbirth. Twins, both liveborn. Twins, one liveborn and one stillborn. Twins, both stillborn. Multiple births, unspecified, all liveborn. Triplets, all liveborn. Quadruplets, all liveborn. Quintuplets, all liveborn. Sextuplets, all liveborn. Other multiple births, all liveborn. Multiple births, unspecified, some liveborn. Triplets, some liveborn. Quadruplets, some liveborn. Quintuplets, some liveborn. Sextuplets, some liveborn. Other multiple births, some liveborn. Other multiple births, all liveborn. Outcome of delivery, unspecified. We are inviting public comments on our proposal to create this new Questionable Obstetric Admission edit. We also are inviting public comments on the lists of diagnosis and procedure codes that we are proposing to include for this edit. daltland on DSKBBV9HB2PROD with PROPOSALS2 e. Unacceptable Principal Diagnosis Edit In the MCE, there are select codes that describe a circumstance which influences an individual’s health status, but does not actually describe a current illness or injury. There also are codes that are not specific manifestations, but may be due to an underlying cause. These codes are considered unacceptable as a principal diagnosis. In limited situations, there are a few codes on the MCE Unacceptable Principal Diagnosis edit code list that are considered ‘‘acceptable’’ when a VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 specified secondary diagnosis is also coded and reported on the claim. As discussed in section II.F.9. of the preamble of this proposed rule, ICD–10– CM diagnosis codes Z49.02 (Encounter for fitting and adjustment of peritoneal dialysis catheter), Z49.31 (Encounter for adequacy testing for hemodialysis), and Z49.32 (Encounter for adequacy testing for peritoneal dialysis) are currently on the Unacceptable Principal Diagnosis edit code list. We are proposing to add diagnosis code Z49.01 (Encounter for fitting and adjustment of extracorporeal dialysis catheter) to the Unacceptable Principal Diagnosis edit code list because this is an encounter code that would more likely be performed in an outpatient setting. As discussed in section II.F.15. of the preamble of this proposed rule, Table 6C.—Invalid Diagnosis Codes associated with this proposed rule (which is PO 00000 Frm 00072 Fmt 4701 Sfmt 4702 available via the Internet on the CMS website at: https://www.cms.hhs.gov/ Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/ index.html) lists the diagnosis codes that are no longer effective as of October 1, 2018. As previously noted, included in this table is an ICD–10–CM diagnosis code Z13.4 (Encounter for screening for certain developmental disorders in childhood) which is currently listed on the Unacceptable Principal diagnoses Category edit code list. We are proposing to remove this code from the Unacceptable Principal Diagnoses Category edit code list. We also are proposing to continue to include the other existing diagnosis codes currently listed under the Unacceptable Principal Diagnosis edit code list. We are inviting public comments on our proposals. E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules f. Future Enhancement daltland on DSKBBV9HB2PROD with PROPOSALS2 In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38053 through 38054), we noted the importance of ensuring accuracy of the coded data from the reporting, collection, processing, coverage, payment, and analysis aspects. We have engaged a contractor to assist in the review of the limited coverage and noncovered procedure edits in the MCE that may also be present in other claims processing systems that are utilized by our MACs. The MACs must adhere to criteria specified within the National Coverage Determinations (NCDs) and may implement their own edits in addition to what are already incorporated into the MCE, resulting in duplicate edits. The objective of this review is to identify where duplicate edits may exist and to determine what the impact might be if these edits were to be removed from the MCE. We have noted that the purpose of the MCE is to ensure that errors and inconsistencies in the coded data are recognized during Medicare claims processing. We are considering whether the inclusion of coverage edits in the MCE necessarily aligns with that specific goal because the focus of coverage edits is on whether or not a particular service is covered for payment purposes and not whether it was coded correctly. As we continue to evaluate the purpose and function of the MCE with respect to ICD–10, we encourage public input for future discussion. As we discussed in the FY 2018 IPPS/LTCH PPS final rule, we recognize a need to further examine the current list of edits and the definitions of those edits. We continue to encourage public comments on whether there are additional concerns with the current edits, including specific edits or language that should be removed or revised, edits that should be combined, or new edits that should be added to assist in detecting errors or inaccuracies in the coded data. Comments should be directed to the MS–DRG Classification Change Mailbox located at: MSDRGClassificationChange@ cms.hhs.gov by November 1, 2018 for FY 2020. 14. Proposed Changes to Surgical Hierarchies Some inpatient stays entail multiple surgical procedures, each one of which, occurring by itself, could result in assignment of the case to a different MS–DRG within the MDC to which the principal diagnosis is assigned. Therefore, it is necessary to have a VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 decision rule within the GROUPER by which these cases are assigned to a single MS–DRG. The surgical hierarchy, an ordering of surgical classes from most resource-intensive to least resource-intensive, performs that function. Application of this hierarchy ensures that cases involving multiple surgical procedures are assigned to the MS–DRG associated with the most resource-intensive surgical class. A surgical class can be composed of one or more MS–DRGs. For example, in MDC 11, the surgical class ‘‘kidney transplant’’ consists of a single MS–DRG (MS–DRG 652) and the class ‘‘major bladder procedures’’ consists of three MS–DRGs (MS–DRGs 653, 654, and 655). Consequently, in many cases, the surgical hierarchy has an impact on more than one MS–DRG. The methodology for determining the most resource–intensive surgical class involves weighting the average resources for each MS–DRG by frequency to determine the weighted average resources for each surgical class. For example, assume surgical class A includes MS–DRGs 001 and 002 and surgical class B includes MS–DRGs 003, 004, and 005. Assume also that the average costs of MS–DRG 001 are higher than that of MS–DRG 003, but the average costs of MS–DRGs 004 and 005 are higher than the average costs of MS– DRG 002. To determine whether surgical class A should be higher or lower than surgical class B in the surgical hierarchy, we would weigh the average costs of each MS–DRG in the class by frequency (that is, by the number of cases in the MS–DRG) to determine average resource consumption for the surgical class. The surgical classes would then be ordered from the class with the highest average resource utilization to that with the lowest, with the exception of ‘‘other O.R. procedures’’ as discussed in this proposed rule. This methodology may occasionally result in assignment of a case involving multiple procedures to the lower-weighted MS–DRG (in the highest, most resource-intensive surgical class) of the available alternatives. However, given that the logic underlying the surgical hierarchy provides that the GROUPER search for the procedure in the most resource-intensive surgical class, in cases involving multiple procedures, this result is sometimes unavoidable. We note that, notwithstanding the foregoing discussion, there are a few instances when a surgical class with a lower average cost is ordered above a surgical class with a higher average cost. For example, the ‘‘other O.R. PO 00000 Frm 00073 Fmt 4701 Sfmt 4702 20235 procedures’’ surgical class is uniformly ordered last in the surgical hierarchy of each MDC in which it occurs, regardless of the fact that the average costs for the MS–DRG or MS–DRGs in that surgical class may be higher than those for other surgical classes in the MDC. The ‘‘other O.R. procedures’’ class is a group of procedures that are only infrequently related to the diagnoses in the MDC, but are still occasionally performed on patients with cases assigned to the MDC with these diagnoses. Therefore, assignment to these surgical classes should only occur if no other surgical class more closely related to the diagnoses in the MDC is appropriate. A second example occurs when the difference between the average costs for two surgical classes is very small. We have found that small differences generally do not warrant reordering of the hierarchy because, as a result of reassigning cases on the basis of the hierarchy change, the average costs are likely to shift such that the higher-ordered surgical class has lower average costs than the class ordered below it. Based on the changes that we are proposing to make in this FY 2019 IPPS/ LTCH PPS proposed rule, as discussed in section II.F.10. of the preamble of this proposed rule, we are proposing to revise the surgical hierarchy for MDC 14 (Pregnancy, Childbirth & the Puerperium) as follows: In MDC 14, we are proposing to delete MS–DRGs 765 and 766 (Cesarean Section with and without CC/MCC, respectively) and MS–DRG 767 (Vaginal Delivery with Sterilization and/or D&C) from the surgical hierarchy. We are proposing to sequence proposed new MS–DRGs 783, 784, and 785 (Cesarean Section with Sterilization with MCC, with CC and without CC/MCC, respectively) above proposed new MS–DRGs 786, 787, and 788 (Cesarean Section without Sterilization with MCC, with CC and without CC/MCC, respectively). We are proposing to sequence proposed new MS–DRGs 786, 787, and 788 (Cesarean Section without Sterilization with MCC, with CC and without CC/MCC, respectively) above MS–DRG 768 (Vaginal Delivery with O.R. Procedure Except Sterilization and/or D&C). We also are proposing to sequence proposed new MS–DRGs 796, 797, and 798 (Vaginal Delivery with Sterilization/ D&C with MCC, with CC and without CC/MCC, respectively) below MS–DRG 768 and above MS–DRG 770 (Abortion with D&C, Aspiration Curettage or Hysterotomy). Finally, we are proposing to sequence proposed new MS–DRGs 817, 818, and 819 (Other Antepartum Diagnoses with O.R. procedure with E:\FR\FM\07MYP2.SGM 07MYP2 20236 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules MCC, with CC and without CC/MCC, respectively) below MS–DRG 770 and above MS–DRG 769 (Postpartum and Post Abortion Diagnoses with O.R. Procedure). Our proposals for Appendix D MS–DRG Surgical Hierarchy by MDC and MS–DRG of the ICD–10 MS–DRG Definitions Manual Version 36 are illustrated in the following table. PROPOSED SURGICAL HIERARCHY: MDC 14 [Pregnancy, childbirth and the puerperium] Proposed Proposed MS–DRG Proposed MS–DRG Proposed MS–DRG New MS–DRGs 783–785 ........................................................ New MS–DRGs 786–788 ........................................................ 768 ........................................................................................... New MS–DRGs 796–798 ........................................................ 770 ........................................................................................... New MS–DRGs 817–819 ........................................................ 769 ........................................................................................... We are inviting public comments on our proposals. As with other MS–DRG related issues, we encourage commenters to submit requests to examine ICD–10 claims pertaining to the surgical hierarchy via the CMS MS-DRG Classification Change Request Mailbox located at: MSDRGClassificationChange@ cms.hhs.gov by November 1, 2018 for FY 2020 consideration. 15. Proposed Changes to the MS–DRG Diagnosis Codes for FY 2019 daltland on DSKBBV9HB2PROD with PROPOSALS2 a. Background of the CC List and the CC Exclusions List Under the IPPS MS–DRG classification system, we have developed a standard list of diagnoses that are considered CCs. Historically, we developed this list using physician panels that classified each diagnosis code based on whether the diagnosis, when present as a secondary condition, would be considered a substantial complication or comorbidity. A substantial complication or comorbidity was defined as a condition that, because of its presence with a specific principal diagnosis, would cause an increase in the length-of-stay by at least 1 day in at least 75 percent of the patients. However, depending on the principal diagnosis of the patient, some diagnoses on the basic list of complications and comorbidities may be excluded if they are closely related to the principal diagnosis. In FY 2008, we evaluated each diagnosis code to determine its impact on resource use and to determine the most appropriate CC subclassification (non-CC, CC, or MCC) assignment. We refer readers to sections II.D.2. and 3. of the preamble of the FY 2008 IPPS final rule with comment period for a discussion of the refinement of CCs in relation to the MS-DRGs we adopted for FY 2008 (72 FR 47152 through 47171). VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Cesarean Section with Sterilization. Cesarean Section without Sterilization. Vaginal Delivery with O.R. Procedures. Vaginal Delivery with Sterilization/D&C. Abortion with D&C, Aspiration Curettage or Hysterotomy. Other Antepartum Diagnoses with O.R. Procedure. Postpartum and Post Abortion Diagnoses with O.R. Procedure. b. Proposed Additions and Deletions to the Diagnosis Code Severity Levels for FY 2019 The following tables identifying the proposed additions and deletions to the MCC severity levels list and the proposed additions and deletions to the CC severity levels list for FY 2019 are available via the Internet on the CMS website at: https://www.cms.gov/ Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/ index.html. Table 6I.1—Proposed Additions to the MCC List—FY 2019; Table 6I.2—Proposed Deletions to the MCC List—FY 2019; Table 6J.1—Proposed Additions to the CC List—FY 2019; and Table 6J.2—Proposed Deletions to the CC List—FY 2019. We are inviting public comments on our proposed severity level designations for the diagnosis codes listed in Table 6I.1. and Table 6J.1. We note that, for Table 6I.2. and Table 6J.2., the proposed deletions are a result of code expansions, with the exception of diagnosis codes B20 and J80, which are the result of proposed severity level designation changes. Therefore, the diagnosis codes on these lists will no longer be valid codes, effective FY 2019. We refer readers to the Tables 6I.1, 6I.2, 6J.1, and 6J.2 associated with this proposed rule, which are available via the Internet on the CMS website at: https://www.cms.gov/Medicare/ Medicare-Fee-for-Service-Payment/ AcuteInpatientPPS/. c. Principal Diagnosis Is Its Own CC or MCC In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38060), we provided the public with notice of our plans to conduct a comprehensive review of the CC and MCC lists for FY 2019. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38056 through 38057), we also finalized our proposal to maintain the existing lists of principal diagnosis codes in Table 6L.—Principal Diagnosis Is Its PO 00000 Frm 00074 Fmt 4701 Sfmt 4702 Own MCC List and Table 6M.— Principal Diagnosis Is Its Own CC List for FY 2018, without any changes to the existing lists, noting our plans to conduct a comprehensive review of the CC and MCC lists for FY 2019 (82 FR 38060). We stated that having multiple lists for CC and MCC diagnoses when reported as a principal and/or secondary diagnosis may not provide an accurate representation of resource utilization for the MS–DRGs. We also stated that the purpose of the Principal Diagnosis Is Its Own CC or MCC Lists was to ensure consistent MS– DRG assignment between the ICD–9–CM and ICD–10 MS–DRGs. The Principal Diagnosis Is Its Own CC or MCC Lists were developed for the FY 2016 implementation of the ICD–10 version of the MS–DRGs to facilitate replication of the ICD–9–CM MS–DRGs. As part of our efforts to replicate the ICD–9–CM MS–DRGs, we implemented logic that may have increased the complexity of the MS–DRG assignment hierarchy and altered the format of the ICD–10 MS– DRG Definitions Manual. Two examples of workarounds used to facilitate replication are the proliferation of procedure clusters in the surgical MS– DRGs and the creation of the Principal Diagnosis Is Its Own CC or MCC Lists special logic. The following paragraph was added to the Version 33 ICD–10 MS–DRG Definitions Manual to explain the use of the Principal Diagnosis Is Its Own CC or MCC Lists: ‘‘A few ICD–10–CM diagnosis codes express conditions that are normally coded in ICD–9–CM using two or more ICD–9–CM diagnosis codes. In the interest of ensuring that the ICD– 10 MS–DRGs Version 33 places a patient in the same DRG regardless whether the patient record were to be coded in ICD–9–CM or ICD–10–CM/ PCS, whenever one of these ICD–10–CM combination codes is used as principal diagnosis, the cluster of ICD–9–CM codes that would be coded on an ICD– 9–CM record is considered. If one of the ICD–9–CM codes in the cluster is a CC E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules or MCC, then the single ICD–10–CM combination code used as a principal diagnosis must also imply the CC or MCC that the ICD–9–CM cluster would have presented. The ICD–10–CM diagnoses for which this implication must be made are listed here.’’ Versions 34 and 35 of the ICD–10 MS–DRG Definitions Manual also include this special logic for the MS–DRGs. The Principal Diagnosis Is Its Own CC or MCC Lists were developed in the absence of ICD–10 coded data by mapping the ICD–9–CM diagnosis codes to the new ICD–10–CM combination codes. CMS has historically used clinical judgment combined with data analysis to assign a principal diagnosis describing a complex or severe condition to the appropriate DRG or MS–DRG. The initial ICD–10 version of the MS-DRGs replicated from the ICD– 9 version can now be evaluated using clinical judgment combined with ICD– 10 coded data because it is no longer necessary to replicate MS–DRG assignment across the ICD–9 and ICD– 10 versions of the MS–DRGs for purposes of calculating relative weights. Now that ICD–10 coded data are available, in addition to using the data for calculating relative weights, ICD–10 data can be used to evaluate the effectiveness of the special logic for assigning a severity level to a principal diagnosis, as an indicator of resource utilization. To evaluate the effectiveness of the special logic, we have conducted analysis of the ICD–10 coded data combined with clinical review to determine whether to propose to keep the special logic for assigning a severity level to a principal diagnosis, or to propose to remove the special logic and use other available means of assigning a complex principal diagnosis to the appropriate MS-DRG. Using claims data from the September 2017 update of the FY 2017 MedPAR file, we employed the following method to determine the impact of removing the special logic used in the current Version 35 GROUPER to process claims containing a code on the Principal Diagnosis Is Its Own CC or MCC Lists. Edits and cost estimations used for relative weight calculations were applied, resulting in 9,070,073 IPPS claims analyzed for this special logic impact evaluation. We refer readers to section II.G. of the preamble of this proposed rule for further information regarding the methodology for calculation of the proposed relative weights. First, we identified the number of cases potentially impacted by the special logic. We identified 310,184 cases reporting a principal diagnosis on the Principal Diagnosis Is Its Own CC or MCC lists. Of the 310,184 total cases that reported a principal diagnosis code on the Principal Diagnosis Is Its Own CC or MCC Lists, 204,749 cases also reported a secondary diagnosis code at the same severity level or higher severity level, and therefore the special logic had no impact on MS–DRG assignment. However, of the 310,184 total cases, there were 105,435 cases that did not report a secondary diagnosis code at the same severity level 20237 or higher severity level, and therefore the special logic could potentially impact MS–DRG assignment, depending on the specific severity leveling structure of the base DRG. Next, we removed the special logic in the GROUPER that is used for processing claims reporting a principal diagnosis on the Principal Diagnosis Is Its Own CC or MCC Lists, thereby creating a Modified Version 35 GROUPER. Using this Modified Version 35 GROUPER, we reprocessed the 105,435 claims for which the principal diagnosis code was the sole source of a MCC or CC on the case, to obtain data for comparison showing the effect of removing the special logic. After removing the special logic in the Version 35 GROUPER for processing claims containing diagnosis codes on the Principal Diagnosis Is Its Own CC or MCC Lists, and reprocessing the claims using the Modified Version 35 GROUPER software, we found that 18,596 (6 percent) of the 310,184 cases reporting a principal diagnosis on the Principal Diagnosis Is Its Own CC or MCC Lists resulted in a different MS– DRG assignment. Overall, the number of claims impacted by removal of the special logic (18,596) represents 0.2 percent of the 9,070,073 IPPS claims analyzed. Below we provide a summary of the steps that we followed for the analysis performed. Step 1. We analyzed 9,070,073 claims to determine the number of cases impacted by the special logic. WITH SPECIAL LOGIC—9,070,073 CLAIMS ANALYZED Number of cases reporting a principal diagnosis from the Principal Diagnosis Is Its Own CC/MCC lists (special logic) ................. Number of cases reporting an additional CC/MCC secondary diagnosis code at or above the level of the designated severity level of the principal diagnosis ......................................................................................................................................................... Number of cases not reporting an additional CC/MCC secondary diagnosis code ........................................................................... Step 2. We removed special logic from GROUPER and created a modified GROUPER. 310,184 204,749 105,435 Step 3. We reprocessed 105,435 claims with modified GROUPER. WITHOUT SPECIAL LOGIC—105,435 CLAIMS ANALYZED daltland on DSKBBV9HB2PROD with PROPOSALS2 Number of cases reporting a principal diagnosis from the Principal Diagnosis Is Its Own CC/MCC lists ......................................... Number of cases resulting in different MS–DRG assignment ............................................................................................................ To estimate the overall financial impact of removing the special logic from the GROUPER, we calculated the aggregate change in estimated payment for the MS–DRGs by comparing average costs for each MS–DRG affected by the change, before and after removing the special logic. Before removing the VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 special logic in the Version 35 GROUPER, the cases impacted by the special logic had an estimated average payment of $58 million above the average costs for all the MS–DRGs to which the claim was originally assigned. After removing the special logic in the Version 35 GROUPER, the PO 00000 Frm 00075 Fmt 4701 Sfmt 4702 310,184 18,596 18,596 cases impacted by the special logic had an estimated average payment of $39 million below the average costs for the newly assigned MS–DRGs. We performed regression analysis to compare the proportion of variance in the MS–DRGs with and without the special logic. The results of the E:\FR\FM\07MYP2.SGM 07MYP2 20238 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 regression analysis showed a slight decrease in variance when the logic was removed. While the decrease itself was not statistically significant (an Rsquared of 36.2603 percent after the special logic was removed, compared with an R-squared of 36.2501 percent in the current version 35 GROUPER), we note that the proportion of variance across the MS–DRGs essentially stayed the same, and certainly did not increase, when the special logic was removed. We further examined the 18,596 claims that were impacted by the special logic in the GROUPER for processing claims containing a code on the Principal Diagnosis Is Its Own CC or MCC Lists. The 18,596 claims were analyzed by the principal diagnosis code and the MS–DRG assigned, resulting in 588 principal diagnosis and MS–DRG combinations or subsets. Of the 588 subsets of cases that utilized the special logic, 556 of the 588 subsets (95 percent) had fewer than 100 cases, 529 of the 588 subsets (90 percent) had fewer than 50 cases, and 489 of the 588 subsets (83 percent) had fewer than 25 cases. We examined the 32 subsets of cases (5 percent of the 588 subsets) that utilized the special logic and had 100 or more cases. Of the 32 subsets of cases, 18 (56 percent) are similar in terms of average costs and length of stay to the MS–DRG assignment that results when the special logic is removed, and 14 of the 32 subsets of cases (44 percent) are similar in terms of average costs and length of stay to the MS–DRG assignment that results when the special logic is utilized. The table below contains examples of four subsets of cases that utilize the special logic, comparing average length of stay and average costs between two MS–DRGs within a base DRG, corresponding to the MS–DRG assigned when the special logic is removed and the MS–DRG assigned when the special logic is utilized. All four subsets of cases involve the principal diagnosis code E11.52 (Type 2 diabetes mellitus with diabetic peripheral angiopathy with gangrene). There are four subsets of cases in this example because the records involving the principal diagnosis code E11.52 are assigned to four different base DRGs, one medical MS–DRG and three surgical MS-DRGs, depending on the procedure code(s) reported on the claim. All subsets of cases contain more than 100 claims. In three of the four subsets, the cases are similar in terms of average length of stay and average costs to the MS–DRG assignment that results when the special logic is removed, and in one of the four subsets, the cases are similar in terms of average length of stay and average costs to the MS–DRG assignment that results when the special logic is utilized. As shown in the following table, using ICD–10–CM diagnosis code E11.52 (Type 2 diabetes mellitus with diabetic peripheral angiopathy with gangrene) as our example, the data findings show four different MS–DRG pairs for which code E11.52 was the principal diagnosis on the claim and where the special logic impacted MS– DRG assignment. For the first MS–DRG pair, we examined MS–DRGs 240 and 241 (Amputation for Circulatory System Disorders Except Upper Limb and Toe with CC and without CC/MCC, respectively). We found 436 cases reporting diagnosis code E11.52 as the principal diagnosis, with an average length of stay of 5.5 days and average costs of $11,769. These 436 cases are assigned to MS–DRG 240 with the special logic utilized, and assigned to MS–DRG 241 with the special logic removed. The total number of cases reported in MS–DRG 240 was 7,675, with an average length of stay of 8.3 days and average costs of $17,876. The total number of cases reported in MS– DRG 241 was 778, with an average length of stay of 5.0 days and average costs of $10,882. The 436 cases are more similar to MS–DRG 241 in terms of length of stay and average cost and less similar to MS–DRG 240. For the second MS–DRG pair, we examined MS–DRGs 256 and 257 (Upper Limb and Toe Amputation for Circulatory System Disorders with CC and without CC/MCC, respectively). We found 193 cases reporting ICD–10–CM diagnosis code E11.52 as the principal diagnosis, with an average length of stay of 4.2 days and average costs of $8,478. These 193 cases are assigned to MS– DRG 256 with the special logic utilized, and assigned to MS–DRG 257 with the special logic removed. The total number of cases reported in MS–DRG 256 was 2,251, with an average length of stay of 6.1 days and average costs of $11,987. The total number of cases reported in MS–DRG 257 was 115, with an average length of stay of 4.6 days and average costs of $7,794. These 193 cases are more similar to MS–DRG 257 in terms of average length of stay and average costs and less similar to MS–DRG 256. For the third MS–DRG pair, we examined MS–DRGs 300 and 301 (Peripheral Vascular Disorders with CC and without CC/MCC, respectively). We found 185 cases reporting ICD–10–CM diagnosis code E11.52 as the principal diagnosis, with an average length of stay of 3.6 days and average costs of $5,981. These 185 cases are assigned to MS– DRG 300 with the special logic utilized, and assigned to MS–DRG 301 with the special logic removed. The total number of cases reported in MS–DRG 300 was 29,327, with an average length of stay of 4.1 days and average costs of $7,272. The total number of cases reported in MS–DRG 301 was 9,611, with an average length of stay of 2.8 days and average costs of $5,263. These 185 cases are more similar to MS–DRG 301 in terms of average length of stay and average costs and less similar to MS– DRG 300. For the fourth MS–DRG pair, we examined MS–DRGs 253 and 254 (Other Vascular Procedures with CC and without CC/MCC, respectively). We found 225 cases reporting diagnosis code E11.52 as the principal diagnosis, with an average length of stay of 5.2 days and average costs of $17,901. These 225 cases are assigned to MS– DRG 253 with the special logic utilized, and assigned to MS–DRG 254 with the special logic removed. The total number of cases reported in MS–DRG 253 was 25,714, with an average length of stay of 5.4 days and average costs of $18,986. The total number of cases reported in MS–DRG 254 was 12,344, with an average length of stay of 2.8 days and average costs of $13,287. Unlike the previous three MS–DRG pairs, these 225 cases are more similar to MS–DRG 253 in terms of average length of stay and average costs and less similar to MS– DRG 254. MS–DRG PAIRS FOR PRINCIPAL DIAGNOSIS ICD–10–CM CODE E11.52 WITH AND WITHOUT SPECIAL MS–DRG LOGIC Number of cases MS–DRG MS–DRGs 240 and 241—Special logic impacted cases with ICD–10–CM code E11.52 as principal diagnosis .................................................................................................................... MS–DRG 240—All cases ............................................................................................................ MS–DRG 241—All cases ............................................................................................................ VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00076 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 436 7,675 778 07MYP2 Average length of stay Average costs 5.5 8.3 5.0 $11,769 17,876 10,882 20239 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules MS–DRG PAIRS FOR PRINCIPAL DIAGNOSIS ICD–10–CM CODE E11.52 WITH AND WITHOUT SPECIAL MS–DRG LOGIC— Continued Number of cases MS–DRG MS–DRGs 253 and 254—Special logic impacted cases with ICD–10–CM E11.52 as principal diagnosis .................................................................................................................................. MS–DRG 253—All cases ............................................................................................................ MS–DRG 254—All cases ............................................................................................................ MS–DRGs 256 and 257—Special logic impacted cases with ICD–10–CM E11.52 as principal diagnosis .................................................................................................................................. MS–DRG 256—All cases ............................................................................................................ MS–DRG 257—All cases ............................................................................................................ MS–DRGs 300 and 301—Special logic impacted cases with ICD–10–CM E11.52 as principal diagnosis .................................................................................................................................. MS–DRG 300—All cases ............................................................................................................ MS–DRG 301—All cases ............................................................................................................ daltland on DSKBBV9HB2PROD with PROPOSALS2 Based on our analysis of the data, we believe that there may be more effective indicators of resource utilization than the Principal Diagnosis Is Its Own CC or MCC Lists and the special logic used to assign clinical severity to a principal diagnosis. As stated earlier in this discussion, it is no longer necessary to replicate MS–DRG assignment across the ICD–9 and ICD–10 versions of the MS–DRGs. The available ICD–10 data can now be used to evaluate other indicators of resource utilization. Therefore, as an initial recommendation from the first phase in our comprehensive review of the CC and MCC lists, we are proposing to remove the special logic in the GROUPER for processing claims containing a diagnosis code from the Principal Diagnosis Is Its Own CC or MCC Lists, and we are proposing to delete the tables containing the lists of principal diagnosis codes, Table 6L.— Principal Diagnosis Is Its Own MCC List and Table 6M.—Principal Diagnosis Is Its Own CC List, from the ICD–10 MS– DRG Definitions Manual for FY 2019. We are inviting public comments on our proposals. d. Proposed CC Exclusions List for FY 2019 In the September 1, 1987 final notice (52 FR 33143) concerning changes to the DRG classification system, we modified the GROUPER logic so that certain diagnoses included on the standard list of CCs would not be considered valid CCs in combination with a particular principal diagnosis. We created the CC Exclusions List for the following reasons: (1) To preclude coding of CCs for closely related conditions; (2) to preclude duplicative or inconsistent coding from being treated as CCs; and (3) to ensure that cases are appropriately classified between the complicated and uncomplicated DRGs in a pair. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 In the May 19, 1987 proposed notice (52 FR 18877) and the September 1, 1987 final notice (52 FR 33154), we explained that the excluded secondary diagnoses were established using the following five principles: • Chronic and acute manifestations of the same condition should not be considered CCs for one another; • Specific and nonspecific (that is, not otherwise specified (NOS)) diagnosis codes for the same condition should not be considered CCs for one another; • Codes for the same condition that cannot coexist, such as partial/total, unilateral/bilateral, obstructed/ unobstructed, and benign/malignant, should not be considered CCs for one another; • Codes for the same condition in anatomically proximal sites should not be considered CCs for one another; and • Closely related conditions should not be considered CCs for one another. The creation of the CC Exclusions List was a major project involving hundreds of codes. We have continued to review the remaining CCs to identify additional exclusions and to remove diagnoses from the master list that have been shown not to meet the definition of a CC. We refer readers to the FY 2014 IPPS/LTCH PPS final rule (78 FR 50541 through 50544) for detailed information regarding revisions that were made to the CC and CC Exclusion Lists under the ICD–9–CM MS–DRGs. In this proposed rule, for FY 2019, we are proposing changes to the ICD–10 MS–DRGs Version 36 CC Exclusion List. Therefore, we developed Table 6G.1.— Proposed Secondary Diagnosis Order Additions to the CC Exclusions List— FY 2019; Table 6G.2.—Proposed Principal Diagnosis Order Additions to the CC Exclusions List—FY 2019; Table 6H.1.—Proposed Secondary Diagnosis Order Deletions to the CC Exclusions PO 00000 Frm 00077 Fmt 4701 Sfmt 4702 Average length of stay Average costs 225 25,714 12,344 5.2 5.4 2.8 17,901 18,986 13,287 193 2,251 115 4.2 6.1 4.6 8,478 11,987 7,794 185 29,327 9,611 3.6 4.1 2.8 5,981 7,272 5,263 List—FY 2019; and Table 6H.2.— Proposed Principal Diagnosis Order Deletions to the CC Exclusions List—FY 2019. For Table 6G.1, each secondary diagnosis code proposed for addition to the CC Exclusion List is shown with an asterisk and the principal diagnoses proposed to exclude the secondary diagnosis code are provided in the indented column immediately following it. For Table 6G.2, each of the principal diagnosis codes for which there is a CC exclusion is shown with an asterisk and the conditions proposed for addition to the CC Exclusion List that will not count as a CC are provided in an indented column immediately following the affected principal diagnosis. For Table 6H.1, each secondary diagnosis code proposed for deletion from the CC Exclusion List is shown with an asterisk followed by the principal diagnosis codes that currently exclude it. For Table 6H.2, each of the principal diagnosis codes is shown with an asterisk and the proposed deletions to the CC Exclusions List are provided in an indented column immediately following the affected principal diagnosis. Tables 6G.1., 6G.2., 6H.1., and 6H.2. associated with this proposed rule are available via the Internet on the CMS website at: https://www.cms.gov/ Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/ index.html. To identify new, revised and deleted diagnosis and procedure codes, for FY 2019, we developed Table 6A.—New Diagnosis Codes, Table 6B.—New Procedure Codes, Table 6C.—Invalid Diagnosis Codes, Table 6D.—Invalid Procedure Codes, Table 6E.—Revised Diagnosis Code Titles, and Table 6F.— Revised Procedure Code Titles for this proposed rule. These tables are not published in the Addendum to the proposed rule but are available via the Internet on the CMS E:\FR\FM\07MYP2.SGM 07MYP2 20240 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules website at: https://www.cms.gov/ Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/ as described in section VI. of the Addendum to this proposed rule. As discussed in section II.F.18. of the preamble of this proposed rule, the code titles are adopted as part of the ICD–10 (previously ICD–9–CM) Coordination and Maintenance Committee process. Therefore, although we publish the code titles in the IPPS proposed and final rules, they are not subject to comment in the proposed or final rules. In this FY 2019 IPPS/LTCH PPS proposed rule, we are inviting public comments on the MDC and MS–DRG assignments for the new diagnosis and procedure codes as set forth in Table 6A.—New Diagnosis Codes and Table 6B.—New Procedure Codes. In addition, we are inviting public comments on the proposed severity level designations for the new diagnosis codes as set forth in Table 6A. and the proposed O.R. status for the new procedure codes as set forth in Table 6B. We are making available on the CMS website at https://www.cms.gov/ Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/ the following tables associated with this proposed rule: • Table 6A.—New Diagnosis Codes— FY 2019; • Table 6B.—New Procedure Codes— FY 2019; • Table 6C.—Invalid Diagnosis Codes—FY 2019; • Table 6D.—Invalid Procedure Codes—FY 2019; • Table 6E.—Revised Diagnosis Code Titles—FY 2019; • Table 6F.—Revised Procedure Code Titles—FY 2019; • Table 6G.1.—Proposed Secondary Diagnosis Order Additions to the CC Exclusions List—FY 2019; daltland on DSKBBV9HB2PROD with PROPOSALS2 Code Diagnosis 20:30 May 04, 2018 16. Comprehensive Review of CC List for FY 2019 a. Overview of Comprehensive CC/MCC Analysis In the FY 2008 IPPS/LTCH PPS final rule (72 FR 47159), we described our process for establishing three different levels of CC severity into which we would subdivide the diagnosis codes. The categorization of diagnoses as an MCC, CC, or non-CC was accomplished using an iterative approach in which each diagnosis was evaluated to determine the extent to which its presence as a secondary diagnosis resulted in increased hospital resource use. We refer readers to the FY 2008 IPPS/LTCH PPS final rule (72 FR 47159) for a complete discussion of our approach. Since this comprehensive analysis was completed for FY 2008, we have evaluated diagnosis codes individually when receiving requests to change the severity level of specific diagnosis codes. However, given the Cnt1 Count (Cnt) is the number of patients in each subset and C1, C2, and C3 are a measure of the impact on resource use of patients in each of the subsets. The C1, C2, and C3 values are a measure of the ratio of average costs for patients with these conditions to the expected average cost across all cases. The C1 value reflects a patient with no other secondary diagnosis or with all other secondary diagnoses that are non-CCs. The C2 value reflects a patient with at least one other secondary diagnosis that is a CC but none that is a major CC. The C3 value reflects a patient with at least VerDate Sep<11>2014 • Table 6G.2.—Proposed Principal Diagnosis Order Additions to the CC Exclusions List—FY 2019; • Table 6H.1.—Proposed Secondary Diagnosis Order Deletions to the CC Exclusions List—FY 2019; • Table 6H.2.—Proposed Principal Diagnosis Order Deletions to the CC Exclusions List—FY 2019; • Table 6I.1.—Proposed Additions to the MCC List—FY 2019; • Table 6I.2.—Proposed Deletions to the MCC List—FY 2019; • Table 6J.1.—Proposed Additions to the CC List—FY 2019; and • Table 6J.2.—Proposed Deletions to the CC List—FY 2019. We note that, as discussed in section II.F.15.c. of the preamble of this proposed rule, we are proposing to delete Table 6L. and Table 6M. from the ICD–10 MS–DRG Definitions Manual for FY 2019. Jkt 244001 C1 Cnt2 Frm 00078 Fmt 4701 Sfmt 4702 Value Meaning 0 .......... Significantly below expected value for the non-CC subgroup. Approximately equal to expected value for the non-CC subgroup. Approximately equal to expected value for the CC subgroup. Approximately equal to expected value for the MCC subgroup. Significantly above the expected value for the MCC subgroup. 1 .......... 2 .......... 3 .......... 4 .......... Each diagnosis for which Medicare data were available was evaluated to determine its impact on resource use and to determine the most appropriate CC subclass (non-CC, CC, or MCC) assignment. In order to make this determination, the average cost for each subset of cases was compared to the expected cost for cases in that subset. The following format was used to evaluate each diagnosis: C2 one other secondary diagnosis that is a major CC. A value close to 1.0 in the C1 field would suggest that the code produces the same expected value as a non-CC diagnosis. That is, average costs for the case are similar to the expected average costs for that subset and the diagnosis is not expected to increase resource usage. A higher value in the C1 (or C2 and C3) field suggests more resource usage is associated with the diagnosis and an increased likelihood that it is more like a CC or major CC than a non-CC. Thus, a value close to 2.0 suggests the condition is more like PO 00000 transition to ICD–10–CM and the significant changes that have occurred to diagnosis codes since this review, we believe it is necessary to conduct a comprehensive analysis once again. We have begun this analysis and will discuss our findings in future rulemaking. We are currently using the same methodology utilized in FY 2008 and described below to conduct this analysis. For each secondary diagnosis, we measured the impact in resource use for the following three subsets of patients: (1) Patients with no other secondary diagnosis or with all other secondary diagnoses that are non-CCs. (2) Patients with at least one other secondary diagnosis that is a CC but none that is an MCC. (3) Patients with at least one other secondary diagnosis that is an MCC. Numerical resource impact values were assigned for each diagnosis as follows: Cnt3 C3 a CC than a non-CC but not as significant in resource usage as an MCC. A value close to 3.0 suggests the condition is expected to consume resources more similar to an MCC than a CC or non-CC. For example, a C1 value of 1.8 for a secondary diagnosis means that for the subset of patients who have the secondary diagnosis and have either no other secondary diagnosis present, or all the other secondary diagnoses present are non-CCs, the impact on resource use of the secondary diagnoses is greater than the expected value for a non-CC by an amount equal to 80 E:\FR\FM\07MYP2.SGM 07MYP2 20241 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules percent of the difference between the expected value of a CC and a non-CC (that is, the impact on resource use of the secondary diagnosis is closer to a CC than a non-CC). These mathematical constructs are used as guides in conjunction with the judgment of our clinical advisors to classify each secondary diagnosis reviewed as an MCC, CC or non-CC. Our clinical panel reviews the resource use impact reports and suggests modifications to the initial CC subclass assignments when clinically appropriate. b. Requested Changes to Severity Levels ICD–10–CM diagnosis code B20 (Human immunodeficiency virus [HIV] disease) from an MCC to a CC. We used the approach outlined above to evaluate this request. The table below contains the data that were evaluated for this request. (1) Human Immunodeficiency Virus [HIV] Disease We received a request that we consider changing the severity level of ICD–10–CM diagnosis code Cnt1 C1 Cnt2 C2 Cnt3 C3 Current CC subclass Proposed CC subclass B20 (Human immunodeficiency virus [HIV] disease) ........................................................ 2,918 0.9946 8,938 2.1237 11,479 3.0960 MCC CC While the data did not strongly suggest that the categorization of HIV as an MCC was inaccurate, our clinical advisors indicated that, for many patients with HIV disease, symptoms are well controlled by medications. Our clinical advisors stated that if these patients have an HIV-related complicating disease, that complicating disease would serve as a CC or an MCC. Therefore, they advised us that ICD–10– CM diagnosis code B20 is more similar to a CC than an MCC. Based on the data results and the advice of our clinical advisors, we are proposing to change the severity level of ICD–10–CM diagnosis code B20 from an MCC to a CC. We are inviting public comments on our proposal. (2) Acute Respiratory Distress Syndrome We also received a request to change the severity level for ICD–10–CM diagnosis code J80 (Acute respiratory distress syndrome) from a CC to a MCC. We used the approach outlined above to evaluate this request. The following table contains the data that were evaluated for this request. ICD–10–CM diagnosis code Cnt1 C1 Cnt2 C2 Cnt3 C3 Current CC subclass Proposed CC subclass J80 (Acute respiratory distress syndrome) ...... 1,840 1.7704 6,818 2.5596 18,376 3.3428 CC MCC The data suggest that the resources involved in caring for a patient with this condition are 77 percent greater than expected when the patient has either no other secondary diagnosis present, or all the other secondary diagnoses present are non-CCs. The resources are 56 percent greater than expected when reported in conjunction with another secondary diagnosis that is a CC, and 34 percent greater than expected when reported in conjunction with another secondary diagnosis code that is an MCC. Our clinical advisors agree that the resources required to care for a patient with this secondary diagnosis are consistent with those of an MCC. Therefore, we are proposing to change the severity level of ICD–10–CM diagnosis code J80 from a CC to an MCC. We are inviting public comments on our proposal. (3) Encephalopathy We also received a request to change the severity level for ICD–10–CM diagnosis code G93.40 (Encephalopathy, unspecified) from an MCC to a non-CC. The requestor pointed out that the nature of the encephalopathy or its underlying cause should be coded. The requestor also noted that unspecified heart failure is a non-CC. We used the approach outlined earlier to evaluate this request. The following table contains the data that were evaluated for this request. Cnt1 C1 Cnt2 C2 Cnt3 C3 Current CC subclass Proposed CC subclass G93.40 (Encephalopathy, unspecified) ............ daltland on DSKBBV9HB2PROD with PROPOSALS2 ICD–10–CM diagnosis code 1.840 16,306 1.8471 80,222 2.4901 139,066 MCC MCC The data suggest that the resources involved in caring for a patient with this condition are 84 percent greater than expected when the patient has either no other secondary diagnosis present, or all the other secondary diagnoses present are non-CCs. The resources are 15 percent lower than expected when reported in conjunction with another secondary diagnosis that is a CC, and 49 percent greater than expected when VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 reported in conjunction with another secondary diagnosis code that is an MCC. We note that the pattern observed in resource use for the condition of unspecified heart failure (ICD–10–CM diagnosis code I50.9) differs from that of unspecified encephalopathy. Our clinical advisors reviewed this request and agree that the resources involved in caring for a patient with this condition are aligned with those of an MCC. PO 00000 Frm 00079 Fmt 4701 Sfmt 4702 Therefore, we are not proposing a change to the severity level for ICD–10– CM diagnosis code G93.40. We are inviting public comments on our proposal. 17. Review of Procedure Codes in MS DRGs 981 Through 983 and 987 Through 989 Each year, we review cases assigned to MS–DRGs 981, 982, and 983 E:\FR\FM\07MYP2.SGM 07MYP2 20242 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) and MS–DRGs 987, 988, and 989 (Nonextensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) to determine whether it would be appropriate to change the procedures assigned among these MS–DRGs. MS– DRGs 981 through 983 and 987 through 989 are reserved for those cases in which none of the O.R. procedures performed are related to the principal diagnosis. These MS–DRGs are intended to capture atypical cases, that is, those cases not occurring with sufficient frequency to represent a distinct, recognizable clinical group. daltland on DSKBBV9HB2PROD with PROPOSALS2 a. Moving Procedure Codes From MS– DRGs 981 Through 983 or MS–DRGs 987 Through 989 Into MDCs We annually conduct a review of procedures producing assignment to MS–DRGs 981 through 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) or MS– DRGs 987 through 989 (Nonextensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) on the basis of volume, by procedure, to see if it would be appropriate to move procedure codes out of these MS–DRGs into one of the surgical MS–DRGs for the MDC into which the principal diagnosis falls. The data are arrayed in two ways for comparison purposes. We look at a frequency count of each major operative procedure code. We also compare procedures across MDCs by volume of procedure codes within each MDC. We identify those procedures occurring in conjunction with certain principal diagnoses with sufficient frequency to justify adding them to one of the surgical MS–DRGs for the MDC in which the diagnosis falls. Based on the results of our review of the claims data from the September 2017 update of the FY 2017 MedPAR file, we are not proposing to move any procedures from MS–DRGs 981 through 983 or MS–DRGs 987 through 989 into one of the surgical MS–DRGs for the MDC into which the principal diagnosis is assigned. We are inviting public comments on our proposal to maintain the current structure of these MS–DRGs. b. Reassignment of Procedures Among MS–DRGs 981 Through 983 and 987 Through 989 We also review the list of ICD–10– PCS procedures that, when in combination with their principal diagnosis code, result in assignment to MS–DRGs 981 through 983, or 987 through 989, to ascertain whether any of those procedures should be reassigned from one of those two groups of MS– DRGs to the other group of MS–DRGs based on average costs and the length of stay. We look at the data for trends such as shifts in treatment practice or reporting practice that would make the resulting MS–DRG assignment illogical. If we find these shifts, we would propose to move cases to keep the MS– DRGs clinically similar or to provide payment for the cases in a similar manner. Generally, we move only those procedures for which we have an adequate number of discharges to analyze the data. Based on the results of our review of the September 2017 update of the FY 2017 MedPAR file, we are proposing to maintain the current structure of MS– DRGs 981 through 983 and MS–DRGs 987 through 989. We are inviting public comments on our proposal. c. Adding Diagnosis or Procedure Codes to MDCs We received a request recommending that CMS reassign cases for congenital pectus excavatum (congenital depression of the sternum or concave chest) when reported with a procedure describing repositioning of the sternum (the Nuss procedure) from MS–DRGs 981, 982, and 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) to MS– DRGs 515, 516, and 517 (Other Musculoskeletal System and Connective Tissue O.R. Procedures with MCC, with CC, and without CC/MCC, respectively). ICD–10–CM diagnosis code Q67.6 (Pectus excavatum) is reported for this ICD–10–CM code Q67.7 Q76.6 Q76.7 Q76.8 Q76.9 Q77.2 ................... ................... ................... ................... ................... ................... VerDate Sep<11>2014 congenital condition and is currently assigned to MDC 4 (Diseases and Disorders of the Respiratory System). ICD–10–PCS procedure code 0PS044Z (Reposition sternum with internal fixation device, percutaneous endoscopic approach) may be reported to identify the Nuss procedure and is currently assigned to MDC 8 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue) in MS– DRGs 515, 516, and 517. The requester noted that acquired pectus excavatum (ICD–10–CM diagnosis code M95.4) groups to MS–DRGs 515, 516, and 517 when reported with a ICD–10–PCS procedure code describing repositioning of the sternum and requested that cases involving diagnoses describing congenital pectus excavatum also group to those MS–DRGs when reported with a ICD–10–PCS procedure code describing repositioning of the sternum. Our analysis of this grouping issue confirmed that, when pectus excavatum (ICD–10–CM diagnosis code Q67.6) is reported as a principal diagnosis with a procedure such as the Nuss procedure (ICD–10–PCS procedure code 0PS044Z), these cases group to MS–DRGs 981, 982, and 983. The reason for this grouping is because whenever there is a surgical procedure reported on a claim, which is unrelated to the MDC to which the case was assigned based on the principal diagnosis, it results in an MS–DRG assignment to a surgical class referred to as ‘‘unrelated operating room procedures.’’ In the example provided, because the ICD–10–CM diagnosis code Q67.6 describing pectus excavatum is classified to MDC 4 and the ICD–10– PCS procedure code 0PS044Z is classified to MDC 8, the GROUPER logic assigns this case to the ‘‘unrelated operating room procedures’’ set of MS– DRGs. During our review of ICD–10–CM diagnosis code Q67.6, we also reviewed additional ICD–10–CM diagnosis codes in the Q65 through Q79 code range to determine if there might be other conditions classified to MDC 4 that describe congenital malformations and deformities of the musculoskeletal system. We identified the following six ICD–10–CM diagnosis codes: Code description Pectus carinatum. Other congenital malformations of ribs. Congenital malformation of sternum. Other congenital malformations of bony thorax. Congenital malformation of bony thorax, unspecified. Short rib syndrome. 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00080 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules We are proposing to reassign ICD–10– CM diagnosis code Q67.6, as well as the additional six ICD–10–CM diagnosis codes above describing congenital musculoskeletal conditions, from MDC 4 to MDC 8 where other related congenital conditions that correspond to the musculoskeletal system are classified, as discussed further below. We identified other related ICD–10– CM diagnosis codes that are currently assigned to MDC 8 in categories Q67 (Congenital musculoskeletal deformities ICD–10–CM code Q67.0 ................... Q67.1 ................... Q67.2 ................... Q67.3 ................... Q67.4 ................... Q67.5 ................... Q67.8 ................... Q76.1 ................... Q76.2 ................... Q76.3 ................... Q76.411 ............... Q76.412 ............... Q76.413 ............... Q76.414 ............... Q76.415 ............... Q76.419 ............... Q76.425 ............... Q76.426 ............... Q76.427 ............... Q76.428 ............... Q76.429 ............... Q76.49 ................. Q76.5 ................... Q77.0 ................... Q77.1 ................... Q77.3 ................... Q77.4 ................... Q77.5 ................... Q77.6 ................... Q77.7 ................... Q77.8 ................... Q77.9 ................... Congenital facial asymmetry. Congenital compression facies. Dolichocephaly. Plagiocephaly. Other congenital deformities of skull, face and jaw. Congenital deformity of spine. Other congenital deformities of chest. Klippel-Feil syndrome. Congenital spondylolisthesis. Congenital scoliosis due to congenital bony malformation. Congenital kyphosis, occipito-atlanto-axial region. Congenital kyphosis, cervical region. Congenital kyphosis, cervicothoracic region. Congenital kyphosis, thoracic region. Congenital kyphosis, thoracolumbar region. Congenital kyphosis, unspecified region. Congenital lordosis, thoracolumbar region. Congenital lordosis, lumbar region. Congenital lordosis, lumbosacral region. Congenital lordosis, sacral and sacrococcygeal region. Congenital lordosis, unspecified region. Other congenital malformations of spine, not associated with scoliosis. Cervical rib. Achondrogenesis. Thanatophoric short stature. Chondrodysplasia punctate. Achondroplasia. Diastrophic dysplasia. Chondroectodermal dysplasia. Spondyloepiphyseal dysplasia. Other osteochondrodysplasia with defects of growth of tubular bones and spine. Osteochondrodysplasia with defects of growth of tubular bones and spine, unspecified. following conditions are assigned to MS–DRGs 551 and 552 (Medical Back ICD–10–CM code daltland on DSKBBV9HB2PROD with PROPOSALS2 Congenital spondylolisthesis. Congenital kyphosis, occipito-atlanto-axial region. Congenital kyphosis, cervical region. Congenital kyphosis, cervicothoracic region. Congenital kyphosis, thoracic region. Congenital kyphosis, thoracolumbar region. Congenital kyphosis, unspecified region. Other congenital malformations of spine, not associated with scoliosis. System and Connective Tissue Diagnoses with MCC, with CC, and ICD–10–CM code ................... ................... ................... ................... VerDate Sep<11>2014 Problems with and without MCC, respectively) under MDC 8. Code description The remaining conditions shown below are assigned to MS–DRGs 564, 565, and 566 (Other Musculoskeletal Q67.0 Q67.1 Q67.2 Q67.3 of head, face, spine and chest), Q76 (Congenital malformations of spine and bony thorax), and Q77 (Osteochondrodysplasia with defects of growth of tubular bones and spine) that are listed in the following table. Code description Next, we analyzed the MS–DRG assignments for the related codes listed above and found that cases with the Q76.2 ................... Q76.411 ............... Q76.412 ............... Q76.413 ............... Q76.414 ............... Q76.415 ............... Q76.419 ............... Q76.49 ................. 20243 without CC/MCC, respectively) under MDC 8. Code description Congenital facial asymmetry. Congenital compression facies. Dolichocephaly. Plagiocephaly. 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00081 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 20244 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules ICD–10–CM code Q67.4 ................... Q67.5 ................... Q67.8 ................... Q76.1 ................... Q76.3 ................... Q76.425 ............... Q76.426 ............... Q76.427 ............... Q76.428 ............... Q76.429 ............... Q76.5 ................... Q77.0 ................... Q77.1 ................... Q77.3 ................... Q77.4 ................... Q77.5 ................... Q77.6 ................... Q77.7 ................... Q77.8 ................... Q77.9 ................... Code description Other congenital deformities of skull, face and jaw. Congenital deformity of spine. Other congenital deformities of chest. Klippel-Feil syndrome. Congenital scoliosis due to congenital bony malformation. Congenital lordosis, thoracolumbar region. Congenital lordosis, lumbar region. Congenital lordosis, lumbosacral region. Congenital lordosis, sacral and sacrococcygeal region. Congenital lordosis, unspecified region. Cervical rib. Achondrogenesis. Thanatophoric short stature. Chondrodysplasia punctate. Achondroplasia. Diastrophic dysplasia. Chondroectodermal dysplasia. Spondyloepiphyseal dysplasia. Other osteochondrodysplasia with defects of growth of tubular bones and spine. Osteochondrodysplasia with defects of growth of tubular bones and spine, unspecified. As a result of our review, we are proposing to reassign ICD–10–CM diagnosis code Q67.6, as well as the additional six ICD–10–CM diagnosis codes above describing congenital musculoskeletal conditions, from MDC 4 to MDC 8 in MS–DRGs 564, 565, and 566. Our clinical advisors agree with this proposed reassignment because it is clinically appropriate and consistent with the other related ICD–10–CM diagnosis codes grouped in the Q65 through Q79 range that describe congenital malformations and deformities of the musculoskeletal system that are classified under MDC 8 in MS–DRGs 564, 565, and 566. By reassigning ICD–10–CM diagnosis code Q67.6 and the additional six ICD–10– CM diagnosis codes listed in the table above from MDC 4 to MDC 8, cases reporting these ICD–10–CM diagnosis codes in combination with the respective ICD–10–PCS procedure code will reflect a more appropriate grouping from a clinical perspective because they will now be classified under a surgical musculoskeletal system related MS– DRG and will no longer result in an MS–DRG assignment to the ‘‘unrelated operating room procedures’’ surgical class. In summary, we are proposing to reassign ICD–10–CM diagnosis codes Q67.6, Q67.7, Q76.6, Q76.7, Q76.8, Q76.9, and Q77.2 from MDC 4 to MDC 8 in MS–DRGs 564, 565, and 566 (Other Musculoskeletal System and Connective Tissue Diagnoses with MCC, with CC, and without CC/MCC, respectively). We are inviting public comments on our proposals. We also received a request recommending that CMS reassign cases for sternal fracture repair procedures from MS–DRGs 981, 982, and 983 and from MS–DRGs 166, 167 and 168 (Other Respiratory System O.R. Procedures with MCC, with CC and without CC/ MCC, respectively) under MDC 4 to MS–DRGs 515, 516, and 517 under MDC ICD–10–PCS code daltland on DSKBBV9HB2PROD with PROPOSALS2 0PS000Z 0PS004Z 0PS00ZZ 0PS030Z 0PS034Z .............. .............. .............. .............. .............. Code description Reposition Reposition Reposition Reposition Reposition sternum with rigid plate internal fixation device, open approach. sternum with internal fixation device, open approach. sternum, open approach. sternum with rigid plate internal fixation device, percutaneous approach. sternum with internal fixation device, percutaneous approach. We note that the above five ICD–10– PCS procedure codes that may be reported to describe a sternal fracture repair are already assigned to MS–DRGs 515, 516, and 517 under MDC 8. In addition, ICD–10–PCS procedure codes 0PS000Z and 0PS030Z are assigned to MS–DRGs 166, 167 and 168 under MDC 4. VerDate Sep<11>2014 8. The requester noted that clavicle fracture repair procedures with an internal fixation device group to MS– DRGs 515, 516, and 517 when reported with an ICD–10–CM diagnosis code describing a fractured clavicle. However, sternal fracture repair procedures with an internal fixation device group to MS–DRGs 981, 982, and 983 or MS–DRGs 166, 167 and 168 when reported with an ICD–10–CM diagnosis code describing a fracture of the sternum. According to the requestor, because the clavicle and sternum are in the same anatomical region of the body, it would appear that assignment to MS– DRGs 515, 516, and 517 would be more appropriate for sternal fracture repair procedures. The requestor provided the following list of ICD–10–PCS procedure codes in its request for consideration to reassign to MS–DRGs 515, 516 and 517 when reported with an ICD–10–CM diagnosis code for sternal fracture. 20:30 May 04, 2018 Jkt 244001 As noted in the previous discussion, whenever there is a surgical procedure reported on a claim, which is unrelated to the MDC to which the case was assigned based on the principal diagnosis, it results in an MS–DRG assignment to a surgical class referred to as ‘‘unrelated operating room procedures.’’ In the examples provided PO 00000 Frm 00082 Fmt 4701 Sfmt 4702 by the requestor, when the ICD–10–CM diagnosis code describing a sternal fracture is classified under MDC 4 and the ICD–10–PCS procedure code describing a sternal fracture repair procedure is classified under MDC 8, the GROUPER logic assigns these cases to the ‘‘unrelated operating room procedures’’ group of MS–DRGs (981, E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 982, and 983) and when the ICD–10–CM diagnosis code describing a sternal fracture is classified under MDC 4 and the ICD–10–PCS procedure code describing a sternal repair procedure is also classified under MDC 4, the GROUPER logic assigns these cases to MS–DRG 166, 167, or 168. For our review of this grouping issue and the request to have procedures for sternal fracture repairs assigned to MDC 8, we analyzed the ICD–10–CM diagnosis codes describing a sternal ICD–10–CM code S22.20XA S22.20XB S22.21XA S22.21XB S22.22XA S22.22XB S22.23XA S22.23XB S22.24XA S22.24XB ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. Unspecified fracture of sternum, initial encounter for closed fracture. Unspecified fracture of sternum, initial encounter for open fracture. Fracture of manubrium, initial encounter for closed fracture. Fracture of manubrium, initial encounter for open fracture. Fracture of body of sternum, initial encounter for closed fracture. Fracture of body of sternum, initial encounter for open fracture. Sternal manubrial dissociation, initial encounter for closed fracture. Sternal manubrial dissociation, initial encounter for open fracture. Fracture of xiphoid process, initial encounter for closed fracture. Fracture of xiphoid process, initial encounter for open fracture. above from MDC 4 is reported as a principal diagnosis with an ICD–10– PCS procedure code for a sternal repair procedure from MDC 4, these cases group to MS–DRG 166, 167 or 168. Our clinical advisors agree with the requested reclassification of ICD–10–CM diagnosis codes S22.20XA, S22.20XB, S22.21XA, S22.21XB, S22.22XA, S22.22XB, S22.23XA, S22.23XB, S22.24XA, and S22.24XB describing a sternal fracture with an initial encounter ICD–10–CM code daltland on DSKBBV9HB2PROD with PROPOSALS2 ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. from MDC 4 to MDC 8. They advised that this requested reclassification is clinically appropriate because it is consistent with the other related ICD– 10–CM diagnosis codes that describe fractures of the sternum and which are classified under MDC 8. The ICD–10– CM diagnosis codes describing a sternal fracture currently classified under MDC 8 to MS–DRGs 564, 565, and 566 are listed in the following table. Code description Unspecified fracture of sternum, subsequent encounter for fracture with routine healing. Unspecified fracture of sternum, subsequent encounter for fracture with delayed healing. Unspecified fracture of sternum, subsequent encounter for fracture with nonunion. Unspecified fracture of sternum, sequela. Fracture of manubrium, subsequent encounter for fracture with routine healing. Fracture of manubrium, subsequent encounter for fracture with delayed healing. Fracture of manubrium, subsequent encounter for fracture with nonunion. Fracture of manubrium, sequela. Fracture of body of sternum, subsequent encounter for fracture with routine healing. Fracture of body of sternum, subsequent encounter for fracture with delayed healing. Fracture of body of sternum, subsequent encounter for fracture with nonunion. Fracture of body of sternum, sequela. Sternal manubrial dissociation, subsequent encounter for fracture with routine healing. Sternal manubrial dissociation, subsequent encounter for fracture with delayed healing. Sternal manubrial dissociation, subsequent encounter for fracture with nonunion. Sternal manubrial dissociation, sequela. Fracture of xiphoid process, subsequent encounter for fracture with routine healing. Fracture of xiphoid process, subsequent encounter for fracture with delayed healing. Fracture of xiphoid process, subsequent encounter for fracture with nonunion. Fracture of xiphoid process, sequela. By reclassifying the 10 ICD–10–CM diagnosis codes listed in the table earlier in this section describing sternal fracture codes with an ‘‘initial encounter’’ from MDC 4 to MDC 8, the cases reporting these ICD–10–CM diagnosis codes in combination with the respective ICD–10–PCS procedure codes will reflect a more appropriate grouping from a clinical perspective and will no VerDate Sep<11>2014 fracture currently classified under MDC 4. We identified 10 ICD–10–CM diagnosis codes describing a sternal fracture with an ‘‘initial encounter’’ classified under MDC 4 that are listed in the following table. Code description Our analysis of this grouping issue confirmed that when 1 of the 10 ICD– 10–CM diagnosis codes describing a sternal fracture listed in the table above from MDC 4 is reported as a principal diagnosis with an ICD–10–PCS procedure code for a sternal repair procedure from MDC 8, these cases group to MS–DRG 981, 982, or 983. We also confirmed that when 1 of the 10 ICD–10–CM diagnosis codes describing a sternal fracture listed in the table S22.20XD S22.20XG S22.20XK S22.20XS S22.21XD S22.21XG S22.21XK S22.21XS S22.22XD S22.22XG S22.22XK S22.22XS S22.23XD S22.23XG S22.23XK S22.23XS S22.24XD S22.24XG S22.24XK S22.24XS 20245 20:30 May 04, 2018 Jkt 244001 longer result in an MS–DRG assignment to the ‘‘unrelated operating room procedures’’ surgical class when reported with a surgical procedure classified under MDC 8. Therefore, we are proposing to reassign ICD–10–CM diagnosis codes S22.20XA, S22.20XB, S22.21XA, S22.21XB, S22.22XA, S22.22XB, S22.23XA, S22.23XB, S22.24XA, and PO 00000 Frm 00083 Fmt 4701 Sfmt 4702 S22.24XB from under MDC 4 to MDC 8 to MS–DRGs 564, 565, and 566. We are inviting public comments on our proposals. In addition, we received a request recommending that CMS reassign cases for rib fracture repair procedures from MS–DRGs 981, 982, and 983, and from MS–DRGs 166, 167 and 168 (Other Respiratory System O.R. Procedures E:\FR\FM\07MYP2.SGM 07MYP2 20246 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules with MCC, with CC, and without CC/ MCC, respectively) under MDC 4 to MS–DRGs 515, 516, and 517 under MDC 8. The requestor noted that clavicle fracture repair procedures with an internal fixation device group to MS– DRGs 515, 516, and 517 when reported with an ICD–10–CM diagnosis code describing a fractured clavicle. However, rib fracture repair procedures with an internal fixation device group to MS–DRGs 981, 982, and 983 or to MS– DRGs 166, 167 and 168 when reported with an ICD–10–CM diagnosis code describing a rib fracture. According to the requestor, because the clavicle and ribs are in the same anatomical region of the body, it would appear that ICD–10–PCS code 0PH104Z 0PH134Z 0PH144Z 0PH204Z 0PH234Z 0PH244Z 0PS104Z 0PS134Z 0PS204Z 0PS234Z .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. Code description Insertion of internal fixation device into 1 to 2 ribs, open approach. Insertion of internal fixation device into 1 to 2 ribs, percutaneous approach. Insertion of internal fixation device into 1 to 2 ribs, percutaneous endoscopic approach. Insertion of internal fixation device into 3 or more ribs, open approach. Insertion of internal fixation device into 3 or more ribs, percutaneous approach. Insertion of internal fixation device into 3 or more ribs, percutaneous endoscopic approach. Reposition 1 to 2 ribs with internal fixation device, open approach. Reposition 1 to 2 ribs with internal fixation device, percutaneous approach. Reposition 3 or more ribs with internal fixation, device, open approach. Reposition 3 or more ribs with internal fixation device, percutaneous approach. We note that the above 10 ICD–10– PCS procedure codes that may be reported to describe a rib fracture repair are already assigned to MS–DRGs 515, 516, and 517 under MDC 8. In addition, 6 of the 10 ICD 10–PCS procedure codes listed above (0PH104Z, 0PH134Z, 0PH144Z, 0PH204Z, 0PH234Z and 0PH244Z) are also assigned to MS– DRGs 166, 167, and 168 under MDC 4. As noted in the previous discussions above, whenever there is a surgical procedure reported on a claim, which is unrelated to the MDC to which the case was assigned based on the principal diagnosis, it results in an MS–DRG assignment to a surgical class referred to as ‘‘unrelated operating room procedures.’’ In the examples provided by the requestor, when the ICD–10–CM diagnosis code describing a rib fracture is classified under MDC 4 and the ICD– 10–PCS procedure code describing a rib fracture repair procedure is classified under MDC 8, the GROUPER logic assigns these cases to the ‘‘unrelated operating room procedures’’ group of MS–DRGs (981, 982, and 983) and when the ICD–10–CM diagnosis code describing a rib fracture is classified under MDC 4 and the ICD–10–PCS procedure code describing a rib repair procedure is also classified under MDC 4, the GROUPER logic assigns these cases to MS–DRG 166, 167, or 168. ICD–10–PCS code daltland on DSKBBV9HB2PROD with PROPOSALS2 S2231XA S2231XB S2232XA S2232XB S2239XA S2239XB S2241XA S2241XB S2242XA S2242XB S2243XA S2243XB S2249XA S2249XB S225XXA S225XXB .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. For our review of this grouping issue and the request to have procedures for rib fracture repairs assigned to MDC 8, we analyzed the ICD–10–CM diagnosis codes describing a rib fracture and found that, while some rib fracture ICD– 10–CM diagnosis codes are classified under MDC 8 (which would result in those cases grouping appropriately to MS–DRGs 515, 516, and 517), there are other ICD–10–CM diagnosis codes that are currently classified under MDC 4. We identified the following ICD–10–CM diagnosis codes describing a rib fracture with an initial encounter classified under MDC 4, as listed in the following table. Code description Fracture of one rib, right side, initial encounter for closed fracture. Fracture of one rib, right side, initial encounter for open fracture. Fracture of one rib, left side, initial encounter for closed fracture. Fracture of one rib, left side, initial encounter for open fracture. Fracture of one rib, unspecified side, initial encounter for closed fracture. Fracture of one rib, unspecified side, initial encounter for open fracture. Multiple fractures of ribs, right side, initial encounter for closed fracture. Multiple fractures of ribs, right side, initial encounter for open fracture. Multiple fractures of ribs, left side, initial encounter for closed fracture. Multiple fractures of ribs, left side, initial encounter for open fracture. Multiple fractures of ribs, bilateral, initial encounter for closed fracture. Multiple fractures of ribs, bilateral, initial encounter for open fracture. Multiple fractures of ribs, unspecified side, initial encounter for closed fracture. Multiple fractures of ribs, unspecified side, initial encounter for open fracture. Flail chest, initial encounter for closed fracture. Flail chest, initial encounter for open fracture. Our analysis of this grouping issue confirmed that, when one of the following four ICD–10–PCS procedure codes identified by the requestor (and listed in the table earlier in this section) from MDC 8 (0PS104Z, 0PS134Z, VerDate Sep<11>2014 assignment to MS–DRGs 515, 516, and 517 would be more appropriate for rib fracture repair procedures. The requestor provided the following list of 10 ICD–10–PCS procedure codes in its request for consideration for reassignment to MS–DRGs 515, 516 and 517 when reported with an ICD–10–CM diagnosis code for rib fracture. 20:30 May 04, 2018 Jkt 244001 0PS204Z, or 0PS234Z) is reported to describe a rib fracture repair procedure with a principal diagnosis code for a rib fracture with an initial encounter listed in the table above from MDC 4, these PO 00000 Frm 00084 Fmt 4701 Sfmt 4702 cases group to MS–DRG 981, 982, or 983. During our review of those four repositioning of the rib procedure codes, we also identified the following four ICD–10–PCS procedure codes classified E:\FR\FM\07MYP2.SGM 07MYP2 20247 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules to MDC 8 that describe repositioning of the ribs. ICD–10–PCS code 0PS10ZZ 0PS144Z 0PS20ZZ 0PS244Z .............. .............. .............. .............. Code description Reposition Reposition Reposition Reposition 1 1 3 3 to 2 ribs, open approach. to 2 ribs with internal fixation device, percutaneous endoscopic approach. or more ribs, open approach. or more ribs with internal fixation device, percutaneous endoscopic approach. We confirmed that when one of the above four procedure codes is reported with a principal diagnosis code for a rib fracture listed in the table above from MDC 4, these cases also group to MS– DRG 981, 982, or 983. Lastly, we confirmed that when one of the six ICD–10–PCS procedure codes describing a rib fracture repair listed in the previous table above from MDC 4 is reported with a principal diagnosis code for a rib fracture with an initial encounter from MDC 4, these cases group to MS–DRG 166, 167, or 168. In response to the request to reassign the procedure codes that describe a rib fracture repair procedure from MS– DRGs 981, 982, and 983 and from MS– DRGs 166, 167, and 168 under MDC 4 to MS–DRGs 515, 516, and 517 under MDC 8, as discussed above, the 10 ICD– 10–PCS procedure codes submitted by the requestor that may be reported to describe a rib fracture repair are already assigned to MS–DRGs 515, 516, and 517 under MDC 8 and 6 of those 10 procedure codes (0PH104Z, 0PH134Z, 0PH144Z, 0PH204Z, 0PH234Z, and 0PH244Z) are also assigned to MS– DRGs 166, 167, and 168 under MDC 4. We analyzed claims data from the September 2017 update of the FY 2017 MedPAR file for cases reporting a principal diagnosis of a rib fracture (initial encounter) from the list of diagnosis codes shown in the table above with one of the six ICD–10–PCS procedure codes describing the insertion of an internal fixation device into the rib (0PH104Z, 0PH134Z, 0PH144Z, 0PH204Z, 0PH234Z, and 0PH244Z) in MS–DRGs 166, 167, and 168 under MDC 4. Our findings are shown in the table below. MS–DRGS FOR OTHER RESPIRATORY SYSTEM O.R. PROCEDURES daltland on DSKBBV9HB2PROD with PROPOSALS2 MS–DRG 166—All cases ............................................................................................................ MS–DRG 166—Cases with principal diagnosis of rib fracture(s) and insertion of internal fixation device for the rib(s) ........................................................................................................... MS–DRG 167—All cases ............................................................................................................ MS–DRG 167—Cases with principal diagnosis of rib fracture(s) and insertion of internal fixation device for the rib(s) ........................................................................................................... MS–DRG 168—All cases ............................................................................................................ MS–DRG 168—Cases with principal diagnosis of rib fracture(s) and insertion of internal fixation device for the rib(s) ........................................................................................................... As shown in this table, there were a total of 22,938 cases in MS–DRG 166, with an average length of stay of 10.2 days and average costs of $24,299. In MS–DRG 166, we found 40 cases reporting a principal diagnosis of a rib fracture(s) with insertion of an internal fixation device for the rib(s), with an average length of stay of 11.4 days and average costs of $43,094. There were a total of 10,815 cases in MS–DRG 167, with an average length of stay of 5.7 days and average costs of $13,252. In MS–DRG 167, we found 10 cases reporting a principal diagnosis of a rib fracture(s) with insertion of an internal fixation device for the rib(s), with an average length of stay of 6.7 days and average costs of $30,617. There were a total of 3,242 cases in MS–DRG 168, with an average length of stay of 3.1 days and average costs of $9,708. In MS–DRG 168, we found 4 cases VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 reporting a principal diagnosis of a rib fracture(s) with insertion of an internal fixation device for the rib(s), with an average length of stay of 2 days and average costs of $21,501. Overall, for MS–DRGs 166, 167, and 168, there were a total of 54 cases reporting a principal diagnosis of a rib fracture(s) with insertion of an internal fixation device for the rib(s), demonstrating that while rib fractures may require treatment, they are not typically corrected surgically. Our clinical advisors agree with the current assignment of procedure codes to MS–DRGs 166, 167, and 168 that may be reported to describe repair of a rib fracture under MDC 4, as well as the current assignment of procedure codes to MS–DRGs 515, 516, and 517 that may be reported to describe repair of a rib fracture under MDC 8. Our clinical advisors noted that initial, acute rib fractures can cause numerous PO 00000 Average length of stay Number of cases MS–DRG Frm 00085 Fmt 4701 Sfmt 4702 Average costs 22,938 10.2 $24,299 40 10,815 11.4 5.7 43,094 13,252 10 3,242 6.7 3.1 30,617 9,708 4 2 21,501 respiratory related issues requiring various treatments and problems with the healing of a rib fracture are considered musculoskeletal issues. We also note that the procedure codes submitted by the requestor may be reported for other indications and they are not restricted to reporting for repair of a rib fracture. Therefore, assignment of these codes to the MDC 4 MS–DRGs and the MDC 8 MS–DRGs is clinically appropriate. To address the cases reporting procedure codes describing the repositioning of a rib(s) that are grouping to MS–DRGs 981, 982, and 983 when reported with a principal diagnosis of a rib fracture (initial encounter), we are proposing to add the following eight ICD–10–PCS procedure codes currently assigned to MDC 8 into MDC 4, in MS–DRGs 166, 167 and 168. E:\FR\FM\07MYP2.SGM 07MYP2 20248 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules ICD–10–PCS code 0PS104Z 0PS10ZZ 0PS134Z 0PS144Z 0PS204Z 0PS20ZZ 0PS234Z 0PS244Z .............. .............. .............. .............. .............. .............. .............. .............. Code description Reposition Reposition Reposition Reposition Reposition Reposition Reposition Reposition 1 1 1 1 3 3 3 3 to 2 ribs with internal fixation device, open approach. to 2 ribs, open approach. to 2 ribs with internal fixation device, percutaneous approach. to 2 ribs with internal fixation device, percutaneous endoscopic approach. or more ribs with internal fixation device, open approach. or more ribs, open approach. or more ribs with internal fixation device, percutaneous approach. or more ribs with internal fixation device, percutaneous endoscopic approach. Our clinical advisors agree with this proposed addition to the classification structure because it is clinically appropriate and consistent with the other related ICD–10–PCS procedure codes that may be reported to describe rib fracture repair procedures with the insertion of an internal fixation device and are classified under MDC 4. By adding the eight ICD–10–PCS procedure codes describing repositioning of the rib(s) that may be reported to describe a rib fracture repair procedure under the classification structure for MDC 4, these cases will no longer result in an MS–DRG assignment to the ‘‘unrelated operating room procedures’’ surgical class when reported with a diagnosis code under MDC 4. We are inviting public comments on our proposals. daltland on DSKBBV9HB2PROD with PROPOSALS2 18. Proposed Changes to the ICD–10– CM and ICD–10–PCS Coding Systems In September 1985, the ICD-9-CM Coordination and Maintenance Committee was formed. This is a Federal interdepartmental committee, co-chaired by the National Center for Health Statistics (NCHS), the Centers for Disease Control and Prevention (CDC), and CMS, charged with maintaining and updating the ICD-9-CM system. The final update to ICD–9–CM codes was made on October 1, 2013. Thereafter, the name of the Committee was changed to the ICD–10 Coordination and Maintenance Committee, effective with the March 19–20, 2014 meeting. The ICD–10 Coordination and Maintenance Committee addresses updates to the ICD–10–CM and ICD–10–PCS coding systems. The Committee is jointly responsible for approving coding changes, and developing errata, addenda, and other modifications to the coding systems to reflect newly developed procedures and technologies and newly identified diseases. The Committee is also responsible for promoting the use of Federal and non-Federal educational programs and other communication techniques with a view toward standardizing coding VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 applications and upgrading the quality of the classification system. The official list of ICD–9–CM diagnosis and procedure codes by fiscal year can be found on the CMS website at: https://cms.hhs.gov/Medicare/Coding/ ICD9ProviderDiagnosticCodes/ codes.html. The official list of ICD–10– CM and ICD–10–PCS codes can be found on the CMS website at: https:// www.cms.gov/Medicare/Coding/ICD10/ index.html. The NCHS has lead responsibility for the ICD–10–CM and ICD–9–CM diagnosis codes included in the Tabular List and Alphabetic Index for Diseases, while CMS has lead responsibility for the ICD–10–PCS and ICD–9–CM procedure codes included in the Tabular List and Alphabetic Index for Procedures. The Committee encourages participation in the previously mentioned process by health-related organizations. In this regard, the Committee holds public meetings for discussion of educational issues and proposed coding changes. These meetings provide an opportunity for representatives of recognized organizations in the coding field, such as the American Health Information Management Association (AHIMA), the American Hospital Association (AHA), and various physician specialty groups, as well as individual physicians, health information management professionals, and other members of the public, to contribute ideas on coding matters. After considering the opinions expressed at the public meetings and in writing, the Committee formulates recommendations, which then must be approved by the agencies. The Committee presented proposals for coding changes for implementation in FY 2019 at a public meeting held on September 12–13, 2017, and finalized the coding changes after consideration of comments received at the meetings and in writing by November 13, 2017. The Committee held its 2018 meeting on March 6–7, 2018. The deadline for submitting comments on these code proposals is scheduled for April 6, 2018. It was announced at this meeting that PO 00000 Frm 00086 Fmt 4701 Sfmt 4702 any new ICD–10–CM/PCS codes for which there was consensus of public support and for which complete tabular and indexing changes would be made by May 2018 would be included in the October 1, 2018 update to ICD–10–CM/ ICD–10–PCS. As discussed in earlier sections of the preamble of the proposed rule, there are new, revised, and deleted ICD–10–CM diagnosis codes and ICD– 10–PCS procedure codes that are captured in Table 6A.—New Diagnosis Codes, Table 6B.—New Procedure Codes, Table 6C.—Invalid Diagnosis Codes, Table 6D.—Invalid Procedure Codes, Table 6E.—Revised Diagnosis Code Titles, and Table 6F.—Revised Procedure Code Titles for this proposed rule, which are available via the Internet on the CMS website at: https:// www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ AcuteInpatientPPS/. The code titles are adopted as part of the ICD–10 (previously ICD–9–CM) Coordination and Maintenance Committee process. Therefore, although we make the code titles available for the IPPS proposed rule, they are not subject to comment in the proposed rule. We are inviting public comments on the MDC and MS–DRG assignments for the new diagnosis and procedure codes as set forth in Table 6A—New Diagnosis Codes and Table 6B.—New Procedure Codes. In addition, we are inviting public comments on the proposed severity level designations for the new diagnosis codes as set forth in Table 6A. and the proposed O.R. status for the new procedure codes as set forth in Table 6B. Because of the length of these tables, they are not published in the Addendum to this proposed rule. Rather, they are available via the Internet as discussed in section VI. of the Addendum to this proposed rule. Live Webcast recordings of the discussions of procedure codes at the Committee’s September 12–13, 2017 meeting and March 6–7, 2018 meeting can be obtained from the CMS website at: https://cms.hhs.gov/Medicare/Coding/ ICD9ProviderDiagnosticCodes/ index.html?redirect=/ icd9ProviderDiagnosticCodes/ E:\FR\FM\07MYP2.SGM 07MYP2 20249 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 03_meetings.asp. The minutes of the discussions of diagnosis codes at the September 12–13, 2017 meeting and March 6–7, 2018 meeting can be found at: https://www.cdc.gov/nchs/icd/ icd10cm_maintenance.html. These websites also provide detailed information about the Committee, including information on requesting a new code, attending a Committee meeting, and timeline requirements and meeting dates. We encourage commenters to address suggestions on coding issues involving diagnosis codes to: Donna Pickett, Co-Chairperson, ICD–10 Coordination and Maintenance Committee, NCHS, Room 2402, 3311 Toledo Road, Hyattsville, MD 20782. Comments may be sent by E-mail to: nchsicd10cm@ cdc.gov. Questions and comments concerning the procedure codes should be submitted via E-mail to: ICDProcedureCodeRequest@ cms.hhs.gov. In the September 7, 2001 final rule implementing the IPPS new technology add-on payments (66 FR 46906), we indicated we would attempt to include proposals for procedure codes that would describe new technology discussed and approved at the Spring meeting as part of the code revisions effective the following October. Section 503(a) of Public Law 108-173 included a requirement for updating diagnosis and procedure codes twice a year instead of a single update on October 1 of each year. This requirement was included as part of the amendments to the Act relating to recognition of new technology under the IPPS. Section 503(a) amended section 1886(d)(5)(K) of the Act by adding a clause (vii) which states that the Secretary shall provide for the addition of new diagnosis and procedure codes on April 1 of each year, but the addition of such codes shall not require the Secretary to adjust the payment (or diagnosis-related group classification) until the fiscal year that begins after such date. This requirement improves the recognition of new technologies under the IPPS by providing information on these new technologies at an earlier date. Data will be available 6 months earlier than would be possible with updates occurring only once a year on October 1. While section 1886(d)(5)(K)(vii) of the Act states that the addition of new diagnosis and procedure codes on April 1 of each year shall not require the Secretary to adjust the payment, or DRG classification, under section 1886(d) of the Act until the fiscal year that begins after such date, we have to update the VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 DRG software and other systems in order to recognize and accept the new codes. We also publicize the code changes and the need for a mid-year systems update by providers to identify the new codes. Hospitals also have to obtain the new code books and encoder updates, and make other system changes in order to identify and report the new codes. The ICD–10 (previously the ICD–9– CM) Coordination and Maintenance Committee holds its meetings in the spring and fall in order to update the codes and the applicable payment and reporting systems by October 1 of each year. Items are placed on the agenda for the Committee meeting if the request is received at least 2 months prior to the meeting. This requirement allows time for staff to review and research the coding issues and prepare material for discussion at the meeting. It also allows time for the topic to be publicized in meeting announcements in the Federal Register as well as on the CMS website. Final decisions on code title revisions are currently made by March 1 so that these titles can be included in the IPPS proposed rule. A complete addendum describing details of all diagnosis and procedure coding changes, both tabular and index, is published on the CMS and NCHS websites in June of each year. Publishers of coding books and software use this information to modify their products that are used by health care providers. This 5-month time period has proved to be necessary for hospitals and other providers to update their systems. A discussion of this timeline and the need for changes are included in the December 4–5, 2005 ICD–9–CM Coordination and Maintenance Committee Meeting minutes. The public agreed that there was a need to hold the fall meetings earlier, in September or October, in order to meet the new implementation dates. The public provided comment that additional time would be needed to update hospital systems and obtain new code books and coding software. There was considerable concern expressed about the impact this April update would have on providers. In the FY 2005 IPPS final rule, we implemented section 1886(d)(5)(K)(vii) of the Act, as added by section 503(a) of Public Law 108–173, by developing a mechanism for approving, in time for the April update, diagnosis and procedure code revisions needed to describe new technologies and medical services for purposes of the new technology add-on payment process. We also established the following process for making these determinations. Topics considered during the Fall ICD–10 (previously ICD–9–CM) Coordination PO 00000 Frm 00087 Fmt 4701 Sfmt 4702 and Maintenance Committee meeting are considered for an April 1 update if a strong and convincing case is made by the requester at the Committee’s public meeting. The request must identify the reason why a new code is needed in April for purposes of the new technology process. The participants at the meeting and those reviewing the Committee meeting summary report are provided the opportunity to comment on this expedited request. All other topics are considered for the October 1 update. Participants at the Committee meeting are encouraged to comment on all such requests. There were not any requests approved for an expedited April l, 2018 implementation of a code at the September 12–13, 2017 Committee meeting. Therefore, there are not any new codes for implementation on April 1, 2018. ICD–9–CM addendum and code title information is published on the CMS website at: https://www.cms.hhs.gov/ Medicare/Coding/ ICD9ProviderDiagnosticCodes/ index.html?redirect=/ icd9ProviderDiagnosticCodes/ 01overview.asp#TopofPage. ICD–10–CM and ICD–10–PCS addendum and code title information is published on the CMS website at: https://www.cms.gov/ Medicare/Coding/ICD10/. CMS also sends copies of all ICD–10– CM and ICD–10–PCS coding changes to its Medicare contractors for use in updating their systems and providing education to providers. Information on ICD–10–CM diagnosis codes, along with the Official ICD–10– CM Coding Guidelines, can also be found on the CDC website at: https:// www.cdc.gov/nchs/icd/icd10.htm. Additionally, information on new, revised, and deleted ICD–10–CM/ICD– 10–PCS codes is provided to the AHA for publication in the Coding Clinic for ICD–10. AHA also distributes coding update information to publishers and software vendors. The following chart shows the number of ICD–10–CM and ICD–10–PCS codes and code changes since FY 2016 when ICD–10 was implemented. TOTAL NUMBER OF CODES AND CHANGES IN TOTAL NUMBER OF CODES PER FISCAL YEAR ICD–10– CM AND ICD–10–PCS CODES Fiscal year FY 2016: ICD–10–CM .............. ICD–10–PCS ............. FY 2017: ICD–10–CM .............. ICD–10–PCS ............. E:\FR\FM\07MYP2.SGM 07MYP2 Number Change 69,823 71,974 .............. .............. 71,486 75,789 +1,663 +3,815 20250 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules TOTAL NUMBER OF CODES AND CHANGES IN TOTAL NUMBER OF CODES PER FISCAL YEAR ICD–10– CM AND ICD–10–PCS CODES— Continued Fiscal year Number FY 2018: ICD–10–CM .............. ICD–10–PCS ............. Proposed FY 2019: ICD–10–CM .............. ICD–10–PCS ............. Change 71,704 78,705 +218 +2,916 71,902 78,533 +198 ¥172 As mentioned previously, the public is provided the opportunity to comment on any requests for new diagnosis or procedure codes discussed at the ICD– 10 Coordination and Maintenance Committee meeting. At the September 12–13, 2017 and March 6–7, 2018 Committee meetings, we discussed any requests we had received for new ICD–10–CM diagnosis codes and ICD–10–PCS procedure codes that were to be implemented on October 1, 2018. We invited public comments on any code requests discussed at the September 12–13, 2017 and March 6–7, MDC daltland on DSKBBV9HB2PROD with PROPOSALS2 19. Proposed Replaced Devices Offered Without Cost or With a Credit a. Background In the FY 2008 IPPS final rule with comment period (72 FR 47246 through 47251), we discussed the topic of Medicare payment for devices that are replaced without cost or where credit for a replaced device is furnished to the hospital. We implemented a policy to reduce a hospital’s IPPS payment for certain MS–DRGs where the implantation of a device that subsequently failed or was recalled determined the base MS–DRG assignment. At that time, we specified that we will reduce a hospital’s IPPS payment for those MS–DRGs where the MS–DRG 001 002 023 1 1 1 1 1 1 1 3 3 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 024 025 026 027 040 041 042 129 130 215 216 217 218 219 220 221 222 223 224 225 226 227 242 243 244 245 258 259 260 261 262 265 266 267 268 269 270 ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ 20:30 May 04, 2018 hospital received a credit for a replaced device equal to 50 percent or more of the cost of the device. In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51556 through 51557), we clarified this policy to state that the policy applies if the hospital received a credit equal to 50 percent or more of the cost of the replacement device and issued instructions to hospitals accordingly. b. Proposed Changes for FY 2019 In this FY 2019 IPPS/LTCH PPS proposed rule, for FY 2019, we are not proposing to add any MS–DRGs to the policy for replaced devices offered without cost or with a credit. We are proposing to continue to include the existing MS–DRGs currently subject to the policy as displayed in the table below. We are soliciting public comments on our proposal to continue to include the existing MS–DRGs currently subject to the policy for replaced devices offered without cost or with credit and to not add any additional MS–DRGs to the policy. MS–DRG title Pre-MDC ........... Pre-MDC ........... 1 ........................ VerDate Sep<11>2014 2018 Committee meetings for implementation as part of the October 1, 2018 update. The deadline for commenting on code proposals discussed at the September 12–13, 2017 Committee meeting was November 13, 2017. The deadline for commenting on code proposals discussed at the March 6–7, 2018 Committee meeting was April 6, 2018. Heart Transplant or Implant of Heart Assist System with MCC. Heart Transplant or Implant of Heart Assist System without MCC. Craniotomy with Major Device Implant or Acute Complex CNS Principal Diagnosis with MCC or Chemotherapy Implant or Epilepsy with Neurostimulator. Craniotomy with Major Device Implant or Acute Complex CNS Principal Diagnosis without MCC. Craniotomy & Endovascular Intracranial Procedures with MCC. Craniotomy & Endovascular Intracranial Procedures with CC. Craniotomy & Endovascular Intracranial Procedures without CC/MCC. Peripheral, Cranial Nerve & Other Nervous System Procedures with MCC. Peripheral, Cranial Nerve & Other Nervous System Procedures with CC or Peripheral Neurostimulator. Peripheral, Cranial Nerve & Other Nervous System Procedures without CC/MCC. Major Head & Neck Procedures with CC/MCC or Major Device. Major Head & Neck Procedures without CC/MCC. Other Heart Assist System Implant. Cardiac Valve & Other Major Cardiothoracic Procedure with Cardiac Catheterization with MCC. Cardiac Valve & Other Major Cardiothoracic Procedure with Cardiac Catheterization with CC. Cardiac Valve & Other Major Cardiothoracic Procedure with Cardiac Catheterization without CC/MCC. Cardiac Valve & Other Major Cardiothoracic Procedure without Cardiac Catheterization with MCC. Cardiac Valve & Other Major Cardiothoracic Procedure without Cardiac Catheterization with CC. Cardiac Valve & Other Major Cardiothoracic Procedure without Cardiac Catheterization without CC/MCC. Cardiac Defibrillator Implant with Cardiac Catheterization with AMI/Heart Failure/Shock with MCC. Cardiac Defibrillator Implant with Cardiac Catheterization with AMI/Heart Failure/Shock without MCC. Cardiac Defibrillator Implant with Cardiac Catheterization without AMI/Heart Failure/Shock with MCC. Cardiac Defibrillator Implant with Cardiac Catheterization without AMI/Heart Failure/Shock without MCC. Cardiac Defibrillator Implant without Cardiac Catheterization with MCC. Cardiac Defibrillator Implant without Cardiac Catheterization without MCC. Permanent Cardiac Pacemaker Implant with MCC. Permanent Cardiac Pacemaker Implant with CC. Permanent Cardiac Pacemaker Implant without CC/MCC. AICD Generator Procedures. Cardiac Pacemaker Device Replacement with MCC. Cardiac Pacemaker Device Replacement without MCC. Cardiac Pacemaker Revision Except Device Replacement with MCC. Cardiac Pacemaker Revision Except Device Replacement with CC. Cardiac Pacemaker Revision Except Device Replacement without CC/MCC. AICD Lead Procedures. Endovascular Cardiac Valve Replacement with MCC. Endovascular Cardiac Valve Replacement without MCC. Aortic and Heart Assist Procedures Except Pulsation Balloon with MCC. Aortic and Heart Assist Procedures Except Pulsation Balloon without MCC. Other Major Cardiovascular Procedures with MCC. Jkt 244001 PO 00000 Frm 00088 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules MDC 5 5 8 8 8 8 8 8 MS–DRG MS–DRG title ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ 271 272 461 462 466 467 468 469 8 ........................ 470 Other Major Cardiovascular Procedures with CC. Other Major Cardiovascular Procedures without CC/MCC. Bilateral or Multiple Major Joint Procedures of Lower Extremity with MCC. Bilateral or Multiple Major Joint Procedures of Lower Extremity without MCC. Revision of Hip or Knee Replacement with MCC. Revision of Hip or Knee Replacement with CC. Revision of Hip or Knee Replacement without CC/MCC. Major Hip and Knee Joint Replacement or Reattachment of Lower Extremity with MCC or Total Ankle Replacement. Major Hip and Knee Joint Replacement or Reattachment of Lower Extremity without MCC. 20. Other Policy Changes: Other Operating Room (O.R.) and Non-O.R. Issues In this proposed rule, we are addressing requests that we received regarding changing the designation of specific ICD–10–PCS procedure codes from non-O.R. to O.R. procedures, or changing the designation from O.R. procedure to non-O.R. procedure. In cases where we are proposing to change the designation of procedure codes from non-O.R. to O.R. procedures, we also are proposing one or more MS–DRGs with which these procedures are clinically aligned and to which the procedure code would be assigned. We generally examine the MS–DRG assignment for similar procedures, such as the other approaches for that procedure, to determine the most appropriate MS– DRG assignment for procedures newly designated as O.R. procedures. We are inviting public comments on these proposed MS–DRG assignments. We also note that many MS–DRGs require the presence of any O.R. procedure. As a result, cases with a principal diagnosis associated with a particular MS–DRG would, by default, be grouped to that MS–DRG. Therefore, we do not list these MS–DRGs in our discussion below. Instead, we only discuss MS–DRGs that require explicitly adding the relevant procedures codes to the GROUPER logic in order for those procedure codes to affect the MS–DRG assignment as intended. In addition, cases that contain O.R. procedures will map to MS–DRGs 981, 982, or 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) or MS–DRGs 987, 988, or 989 (NonExtensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) when they do not contain a principal daltland on DSKBBV9HB2PROD with PROPOSALS2 ICD–10–PCS procedure code 00B03ZX 00B13ZX 00B23ZX 00B63ZX 00B73ZX 00B83ZX 00B93ZX 00BA3ZX 00BB3ZX 00BC3ZX 00BD3ZX 00B04ZX 00B14ZX 00B24ZX 00B64ZX 00B74ZX 00B84ZX 00B94ZX 00BA4ZX 00BB4ZX 00BC4ZX 00BD4ZX .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. diagnosis that corresponds to one of the MDCs to which that procedure is assigned. These procedures need not be assigned to MS–DRGs 981 through 989 in order for this to occur. Therefore, if requestors included some or all of MS– DRGs 981 through 989 in their request or included MS–DRGs that require the presence of any O.R. procedure, we did not specifically address that aspect in summarizing their request or our response to the request in the section below. a. Percutaneous and Percutaneous Endoscopic Excision of Brain and Cerebral Ventricle One requestor identified 22 ICD–10– PCS procedure codes that describe procedures involving transcranial brain and cerebral ventricle excision that the requestor stated would generally require the resources of an operating room. The 22 procedure codes are listed in the following table. Code description Excision Excision Excision Excision Excision Excision Excision Excision Excision Excision Excision Excision Excision Excision Excision Excision Excision Excision Excision Excision Excision Excision of of of of of of of of of of of of of of of of of of of of of of brain, percutaneous approach, diagnostic. cerebral meninges, percutaneous approach, diagnostic. dura mater, percutaneous approach, diagnostic. cerebral ventricle, percutaneous approach, diagnostic. cerebral hemisphere, percutaneous approach, diagnostic. basal ganglia, percutaneous approach, diagnostic. thalamus, percutaneous approach, diagnostic. hypothalamus, percutaneous approach, diagnostic. pons, percutaneous approach, diagnostic. cerebellum, percutaneous approach, diagnostic. medulla oblongata, percutaneous approach, diagnostic. brain, percutaneous endoscopic approach, diagnostic. cerebral meninges, percutaneous endoscopic approach, diagnostic. dura mater, percutaneous endoscopic approach, diagnostic. cerebral ventricle, percutaneous endoscopic approach, diagnostic. cerebral hemisphere, percutaneous endoscopic approach, diagnostic. basal ganglia, percutaneous endoscopic approach, diagnostic. thalamus, percutaneous endoscopic approach, diagnostic. hypothalamus, percutaneous endoscopic approach, diagnostic. pons, percutaneous endoscopic approach, diagnostic. cerebellum, percutaneous endoscopic approach, diagnostic. medulla oblongata, percutaneous endoscopic approach, diagnostic. The requestor stated that, although percutaneous burr hole biopsies are performed through smaller openings in the skull than open burr hole biopsies, VerDate Sep<11>2014 20251 20:30 May 04, 2018 Jkt 244001 these procedures require drilling or cutting through the skull using sterile technique with anesthesia for pain control. The requestor also noted that PO 00000 Frm 00089 Fmt 4701 Sfmt 4702 similar procedures involving percutaneous drainage of the subdural space are currently classified as O.R. procedures in Version 35 of the ICD–10 E:\FR\FM\07MYP2.SGM 07MYP2 20252 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules MS–DRGs. However, these 22 ICD–10– PCS procedure codes are not recognized as O.R. procedures for purposes of MS– DRG assignment. The requestor recommended that the 22 ICD–10–PCS codes be designated as O.R. procedures and assigned to MS–DRGs 25, 26, and 27 (Craniotomy and Endovascular Intracranial Procedures with MCC, with CC, and without CC/MCC, respectively). We agree with the requestor that these procedures typically require the resources of an operating room. Therefore, we are proposing to add these 22 ICD–10–PCS procedure codes to the FY 2019 ICD–10 MS–DRGs Version 36 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS– DRG Index as O.R. procedures assigned to MS–DRGs 25, 26, and 27 in MDC 1 (Diseases and Disorders of the Nervous System). We are inviting public comments on our proposal. ICD–10–PCS procedure code daltland on DSKBBV9HB2PROD with PROPOSALS2 0JC00ZZ .............. 0JC10ZZ .............. 0JC40ZZ .............. 0JC50ZZ .............. 0JC60ZZ .............. 0JC70ZZ .............. 0JC80ZZ .............. 0JC90ZZ .............. 0JCB0ZZ .............. 0JCC0ZZ .............. 0JCD0ZZ .............. 0JCF0ZZ .............. 0JCG0ZZ .............. 0JCH0ZZ .............. 0JCJ0ZZ ............... 0JCK0ZZ .............. 0JCL0ZZ .............. 0JCM0ZZ ............. 0JCN0ZZ .............. 0JCP0ZZ .............. 0JCQ0ZZ .............. 0JCR0ZZ .............. Extirpation Extirpation Extirpation Extirpation Extirpation Extirpation Extirpation Extirpation Extirpation Extirpation Extirpation Extirpation Extirpation Extirpation Extirpation Extirpation Extirpation Extirpation Extirpation Extirpation Extirpation Extirpation of of of of of of of of of of of of of of of of of of of of of of matter matter matter matter matter matter matter matter matter matter matter matter matter matter matter matter matter matter matter matter matter matter from from from from from from from from from from from from from from from from from from from from from from scalp subcutaneous tissue and fascia, open approach. face subcutaneous tissue and fascia, open approach. right neck subcutaneous tissue and fascia, open approach. left neck subcutaneous tissue and fascia, open approach. chest subcutaneous tissue and fascia, open approach. back subcutaneous tissue and fascia, open approach. abdomen subcutaneous tissue and fascia, open approach. buttock subcutaneous tissue and fascia, open approach. perineum subcutaneous tissue and fascia, open approach. pelvic region subcutaneous tissue and fascia, open approach. right upper arm subcutaneous tissue and fascia, open approach. left upper arm subcutaneous tissue and fascia, open approach. right lower arm subcutaneous tissue and fascia, open approach. left lower arm subcutaneous tissue and fascia, open approach. right hand subcutaneous tissue and fascia, open approach. left hand subcutaneous tissue and fascia, open approach. right upper leg subcutaneous tissue and fascia, open approach. left upper leg subcutaneous tissue and fascia, open approach. right lower leg subcutaneous tissue and fascia, open approach. left lower leg subcutaneous tissue and fascia, open approach. right foot subcutaneous tissue and fascia, open approach. left foot subcutaneous tissue and fascia, open approach. (Other Skin, Subcutaneous Tissue and Breast Procedures with MCC, CC, and without CC/MCC, respectively). We disagree with the requestor that these procedures typically require the resources of an operating room. Our clinical advisors indicated that these open extirpation procedures are minor procedures that can be performed outside of an operating room, such as in a radiology suite with CT or MRI guidance. We disagree that these procedures are similar to open drainage procedures. Therefore, we are proposing to maintain the status of these 22 ICD– 10–PCS procedure codes as non-O.R. procedures. We are inviting public comments on our proposal. c. Open Scrotum and Breast Procedures One requestor identified 13 ICD–10– PCS procedure codes that describe procedures involving open drainage, open extirpation, and open ICD–10–PCS procedure code VerDate Sep<11>2014 One requestor identified 22 ICD–10– PCS procedure codes that describe procedures involving open extirpation of subcutaneous tissue and fascia that the requestor stated would generally require the resources of an operating room. The 22 procedure codes are listed in the following table. Code description The requestor stated that these procedures involve making an open incision deeper than the skin under general anesthesia, and that irrigation and/or excision of devitalized tissue or cavity are often required and are considered inherent to the procedure. The requestor also stated that open drainage of subcutaneous tissue and fascia, open excisional debridement of subcutaneous tissue and fascia, and open nonexcisional debridement/ extraction of subcutaneous tissue and fascia are designated as O.R. procedures, and that these 22 procedures should be designated as O.R. procedures for the same reason. In the ICD–10 MS–DRGs Version 35, these 22 ICD–10–PCS procedure codes are not recognized as O.R. procedures for purposes of MS– DRG assignment. The requestor recommended that the 22 ICD–10–PCS procedure codes listed in the table be assigned to MS–DRGs 579, 580, and 581 0V950ZZ .............. 0VB50ZZ .............. 0VC50ZZ .............. b. Open Extirpation of Subcutaneous Tissue and Fascia debridement/excision of the scrotum and breast. The requestor stated that the 13 procedures listed in the following table involve making an open incision deeper than the skin under general anesthesia, and that irrigation and/or excision of devitalized tissue or cavity are often required and are considered inherent to the procedure. The requestor also stated that open drainage of subcutaneous tissue and fascia, open excisional debridement of subcutaneous tissue and fascia, open non-excisional debridement/extraction of subcutaneous tissue and fascia, and open excision of breast are designated as O.R. procedures, and that these 13 procedures should be designated as O.R. procedures for the same reason. In the ICD–10 MS–DRGs Version 35, these 13 ICD–10–PCS procedure codes are not recognized as O.R. procedures for purposes of MS–DRG assignment. Code description Drainage of scrotum, open approach. Excision of scrotum, open approach. Extirpation of matter from scrotum, open approach. 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00090 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules ICD–10–PCS procedure code 0H9U0ZZ .............. 0H9T0ZZ .............. 0H9V0ZZ .............. 0H9W0ZZ ............. 0H9X0ZZ .............. 0HCT0ZZ ............. 0HCU0ZZ ............. 0HCV0ZZ ............. 0HCW0ZZ ............ 0HCX0ZZ ............. Code description Drainage of left breast, open approach. Drainage of right breast, open approach. Drainage of bilateral breast, open approach. Drainage of right nipple, open approach. Drainage of left nipple, open approach. Extirpation of matter from right breast, open approach. Extirpation of matter from left breast, open approach. Extirpation of matter from bilateral breast, open approach. Extirpation of matter from right nipple, open approach. Extirpation of matter from left nipple, open approach. The requestor recommended that the 3 ICD–10–PCS scrotal procedure codes be assigned to MS–DRGs 717 and 718 (Other Male Reproductive System O.R. Procedures Except Malignancy with CC/ MCC and without CC/MCC, respectively) and the 10 breast procedure codes be assigned to MS– DRGs 584 and 585 (Breast Biopsy, Local Excision and Other Breast Procedures with CC/MCC and without CC/MCC, respectively). We agree with the requestor that these procedures typically require the resources of an operating room due to the nature of breast and scrotal tissue, as well as with the MS–DRG assignments recommended by the requestor. In addition, we believe that the scrotal codes should also be assigned to MS–DRGs 715 and 716 (Other Male Reproductive System O.R. Procedures for Malignancy with CC/ MCC and without CC/MCC, respectively). Therefore, we are proposing to add these 13 ICD–10–PCS procedure codes to the FY 2019 ICD–10 MS–DRGs Version 36 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/ MS–DRG Index as O.R. procedures, assigned to MS–DRGs 715, 716, 717, and 718 in MDC 12 (Diseases and Disorders of the Male Reproductive ICD–10–PCS procedure code daltland on DSKBBV9HB2PROD with PROPOSALS2 0C980ZZ .............. 0C990ZZ .............. 0C9G0ZZ ............. 0C9H0ZZ .............. 0CC80ZZ .............. 0CC90ZZ .............. 0CCG0ZZ ............. 0CCH0ZZ ............. System) for the scrotal procedure codes and assigned to MS–DRGs 584 and 585 in MDC 9 (Diseases and Disorders of the Skin, Subcutaneous Tissue & Breast) for the breast procedure codes. We are inviting public comments on our proposal. d. Open Parotid Gland and Submaxillary Gland Procedures One requestor identified eight ICD– 10–PCS procedure codes that describe procedures involving open drainage and open extirpation of the parotid or submaxillary glands, shown in the following table. Code description Drainage of right parotid gland, open approach. Drainage of left parotid gland, open approach. Drainage of right submaxillary gland, open approach. Drainage of left submaxillary gland, open approach. Extirpation of matter from right parotid gland, open approach. Extirpation of matter from left parotid gland, open approach. Extirpation of matter from right submaxillary gland, open approach. Extirpation of matter from left submaxillary gland, open approach. The requestor stated that these procedures involve making an open incision through subcutaneous tissue, fascia, and potentially muscle, to reach and incise the parotid or submaxillary gland under general anesthesia, and that irrigation and/or excision of devitalized tissue or cavity may be required and are considered inherent to the procedure. The requestor also stated that open drainage of subcutaneous tissue and fascia, open excisional debridement of subcutaneous tissue and fascia, and open non-excisional debridement/ extraction of subcutaneous tissue and fascia are designated as O.R. procedures, and that these eight procedures should be designated as O.R. procedures for the same reason. In the ICD–10 MS–DRGs Version 35, these eight ICD–10–PCS procedure codes are not recognized as VerDate Sep<11>2014 20253 20:30 May 04, 2018 Jkt 244001 O.R. procedures for purposes of MS– DRG assignment. The requestor requested that these procedures be assigned to MS–DRG 139 (Salivary Gland Procedures). We agree with the requestor that these eight procedures typically require the resources of an operating room. Therefore, we are proposing to add these ICD–10–PCS procedure codes to the FY 2019 ICD–10 MS–DRGs Version 36 Definitions Manual in Appendix E— Operating Room Procedures and Procedure Code/MS–DRG Index as O.R. procedures assigned to MS–DRG 139 in MDC 3 (Diseases and Disorders of the Ear, Nose, Mouth and Throat). We are inviting public comments on our proposal. PO 00000 Frm 00091 Fmt 4701 Sfmt 4702 e. Removal and Reinsertion of Spacer; Knee Joint and Hip Joint One requestor identified four sets of ICD–10–PCS procedure code combinations (eight ICD–10–PCS codes) that describe procedures involving open removal and insertion of spacers into the knee or hip joints, shown in the following table. The requestor stated that these are invasive procedures involving removal and reinsertion of devices into major joints and are performed in the operating room under general anesthesia. In the ICD–10 MS– DRGs Version 35, these four ICD–10– PCS procedure code combinations are not recognized as O.R. procedures for purposes of MS–DRG assignment. The requestor recommended that CMS determine the most appropriate surgical DRGs for these procedures. E:\FR\FM\07MYP2.SGM 07MYP2 20254 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules ICD–10–PCS procedure code 0SPC08Z 0SHC08Z 0SPD08Z 0SHD08Z 0SP908Z 0SH908Z 0SPB08Z 0SHB08Z .............. ............. .............. ............. .............. .............. .............. .............. Code description Removal of spacer from right knee joint, open approach. Insertion of spacer into right knee joint, open approach. Removal of spacer from left knee joint, open approach. Insertion of spacer into left knee joint, open approach. Removal of spacer from right hip joint, open approach. Insertion of spacer into right hip joint, open approach. Removal of spacer from left hip joint, open approach. Insertion of spacer into left hip joint, open approach. We agree with the requestor that these procedures typically require the resources of an operating room. However, our clinical advisors indicated that these codes should be designated as O.R. procedures even when reported as stand-alone procedures. Therefore, for the knee procedures, we are proposing to add these four ICD–10–PCS procedure codes to the FY 2019 ICD–10 MS–DRGs Version 36 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/ MS–DRG Index as O.R. procedures assigned to MS–DRGs 485, 486, and 487 (Knee Procedures with Principal Diagnosis of Infection with MCC, with CC, and without CC/MCC, respectively) or MS–DRGs 488 and 489 (Knee Procedures without Principal diagnosis of Infection with CC/MCC and without CC/MCC, respectively), both in MDC 8 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue). For the hip procedures, we are proposing to add these four ICD–10– PCS procedure codes to the FY 2019 ICD–10 MS–DRGs Version 36 Definitions Manual in Appendix E— Operating Room Procedures and Procedure Code/MS–DRG Index as O.R. procedures assigned to MS–DRGs 480, ICD–10–PCS procedure code daltland on DSKBBV9HB2PROD with PROPOSALS2 0T778DZ .............. 0T768DZ .............. 0T788DZ .............. One requestor identified the following three ICD–10–PCS procedure codes that describe procedures involving endoscopic dilation of ureter(s) with intraluminal device. Dilation of left ureter with intraluminal device, via natural or artificial opening endoscopic. Dilation of right ureter with intraluminal device, via natural or artificial opening endoscopic. Dilation of bilateral ureters with intraluminal device, via natural or artificial opening endoscopic. Neoplasm with MCC, with CC, and without CC/MCC, respectively) and MS–DRGs 659, 660, and 661 (Kidney and Ureter Procedures for NonNeoplasm with MCC, with CC, and without CC/MCC, respectively). We agree with the requestor that these procedures typically require the resources of an operating room. In addition to the MS–DRGs recommended by the requestor, we believe that these procedure codes should also be assigned to other MS–DRGs, consistent with the assignment of other dilation of ureter procedures: MS–DRG 907, 908, and 909 (Other O.R. Procedures for Injuries with MCC, with CC, and without CC/MCC, respectively) and MS–DRGs 957, 958, and 959 (Other O.R. Procedures for Multiple Significant Trauma with MCC, with CC, and without CC/MCC, respectively). Therefore, we are proposing to add the three ICD–10–PCS procedure codes identified by the requestor to the FY 2019 ICD–10 MS– ICD–10–PCS procedure code VerDate Sep<11>2014 f. Endoscopic Dilation of Ureter(s) With Intraluminal Device Code description The requestor stated that these procedures involve the use of cystoureteroscopy to view the bladder and ureter and dilation under visualization, which are often followed by placement of a ureteral stent. The requestor also stated that endoscopic extirpation of matter from ureter, endoscopic biopsy of bladder, endoscopic dilation of bladder, endoscopic dilation of renal pelvis, and endoscopic dilation of the ureter without insertion of intraluminal device are all assigned to surgical DRGs, and that these three procedures should be designated as O.R. procedures for the same reason. In the ICD–10 MS–DRGs Version 35, these three ICD–10–PCS procedure codes are not recognized as O.R. procedures for purposes of MS– DRG assignment. The requestor recommended that these procedures be assigned to MS–DRGs 656, 657, and 658 (Kidney and Ureter Procedures for 0W9D4ZZ ............. 0W9D40Z ............. 0W9D4ZX ............. 481, and 482 (Hip and Femur Procedures Except Major Joint with MCC, with CC, and without CC/MCC, respectively) in MDC 8 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue). We are inviting public comments on our proposal. DRGs Version 36 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS– DRG Index as O.R. procedures assigned to MS–DRGs 656, 657, and 658 in MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract), MS–DRGs 659, 660, and 661 in MDC 11, MS–DRGs 907, 908, and 909 in MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs), and MS–DRGs 957, 958, and 959 in MDC 24 (Multiple Significant Trauma). We are inviting public comments on our proposal. g. Thoracoscopic Procedures of Pericardium and Pleura One requestor identified seven ICD– 10–PCS procedure codes that describe procedures involving thoracoscopic drainage of the pericardial cavity or pleural cavity, or extirpation of matter from the pleura, as shown in the following table. Code description Drainage of pericardial cavity, percutaneous endoscopic approach. Drainage of pericardial cavity with drainage device, percutaneous endoscopic approach. Drainage of pericardial cavity, percutaneous endoscopic approach, diagnostic. 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00092 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules ICD–10–PCS procedure code 0W994ZX 0W9B4ZX 0BCP4ZZ 0BCN4ZZ ............. ............. ............. ............. Code description Drainage of right pleural cavity, percutaneous endoscopic approach, diagnostic. Drainage of left pleural cavity, percutaneous endoscopic approach, diagnostic. Extirpation of matter from left pleura, percutaneous endoscopic approach. Extirpation of matter from right pleura, percutaneous endoscopic approach. The requestor stated that these procedures involve making an incision through the chest wall and inserting a thoracoscope for visualization of thoracic structures during the procedure. The requestor also stated that some thoracoscopic procedures are assigned to surgical MS–DRGs, while other procedures are assigned to medical MS–DRGs. In the ICD–10 MS– DRGs Version 35, these seven ICD–10– PCS procedure codes are not recognized as O.R. procedures for purposes of MS– DRG assignment. We agree with the requestor that these procedures typically require the ICD–10–PCS procedure code 0BCP0ZZ ............. 0BCN0ZZ ............. Extirpation of matter from left pleura, open approach. Extirpation of matter from right pleura, open approach. with MCC, with CC, and without CC/ MCC, respectively) in MDC 5 (Diseases and Disorders of the Circulatory System); MS–DRGs 820, 821, and 822 (Lymphoma and Leukemia with Major O.R. Procedure with MCC, with CC, and without CC/MCC, respectively) in MDC 17 (Myeloproliferative Diseases and Disorders, Poorly Differentiated Neoplasms); MS–DRGs 826, 827, and 828 (Myeloproliferative Disorders or Poorly Differentiated Neoplasms with Major O.R. Procedure with MCC, with CC, and without CC/MCC, respectively) in MDC 17; MS–DRGs 907, 908, and 909 (Other O.R. Procedures for Injuries with MCC, with CC, and without CC/MCC, respectively) in MDC 21 (Injuries, daltland on DSKBBV9HB2PROD with PROPOSALS2 ICD–10–PCS procedure code Poisonings and Toxic Effects of Drugs); and MS–DRGs 957, 958, and 959 (Other O.R. Procedures for Multiple Significant Trauma with MCC, with CC, and without CC/MCC, respectively) in MDC 24 (Multiple Significant Trauma). We are inviting public comments on our proposal. h. Open Insertion of Totally Implantable and Tunneled Vascular Access Devices One requestor identified 20 ICD–10– PCS procedure codes that describe procedures involving open insertion of totally implantable and tunneled vascular access devices. The codes are identified in the following table. Code description Insertion Insertion Insertion Insertion Insertion Insertion Insertion Insertion Insertion Insertion Insertion Insertion Insertion Insertion Insertion Insertion Insertion Insertion Insertion Insertion of of of of of of of of of of of of of of of of of of of of totally implantable vascular access device into chest subcutaneous tissue and fascia, open approach. tunneled vascular access device into chest subcutaneous tissue and fascia, open approach. totally implantable vascular access device into abdomen subcutaneous tissue and fascia, open approach. tunneled vascular access device into abdomen subcutaneous tissue and fascia, open approach. totally implantable vascular access device into right upper arm subcutaneous tissue and fascia, open approach. tunneled vascular access device into right upper arm subcutaneous tissue and fascia, open approach. totally implantable vascular access device into left upper arm subcutaneous tissue and fascia, open approach. tunneled vascular access device into left upper arm subcutaneous tissue and fascia, open approach. totally implantable vascular access device into right lower arm subcutaneous tissue and fascia, open approach. tunneled vascular access device into right lower arm subcutaneous tissue and fascia, open approach. totally implantable vascular access device into left lower arm subcutaneous tissue and fascia, open approach. tunneled vascular access device into left lower arm subcutaneous tissue and fascia, open approach. totally implantable vascular access device into right upper leg subcutaneous tissue and fascia, open approach. tunneled vascular access device into right upper leg subcutaneous tissue and fascia, open approach. totally implantable vascular access device into left upper leg subcutaneous tissue and fascia, open approach. tunneled vascular access device into left upper leg subcutaneous tissue and fascia, open approach. totally implantable vascular access device into right lower leg subcutaneous tissue and fascia, open approach. tunneled vascular access device into right lower leg subcutaneous tissue and fascia, open approach. totally implantable vascular access device into left lower leg subcutaneous tissue and fascia, open approach. tunneled vascular access device into left lower leg subcutaneous tissue and fascia, open approach. The requestor stated that open procedures to insert totally implantable VerDate Sep<11>2014 resources of an operating room, as well as significant time and skill. During our review, we noted that the following two related procedures using the open approach also were not currently recognized as O.R. procedures: Code description Therefore, to be consistent with the MS–DRGs to which other approaches for procedures involving drainage or extirpation of matter from the pleura are assigned, we are proposing to add these nine ICD–10–PCS procedure codes to the FY 2019 ICD–10 MS–DRGs Version 36 Definitions Manual in Appendix E— Operating Room Procedures and Procedure Code/MS–DRG Index as O.R. procedures assigned to one of the following MS–DRGs: MS–DRGs 163, 164, and 165 (Major Chest Procedures with MCC, with CC, and without CC/ MCC, respectively) in MDC 4 (Diseases and Disorders of the Respiratory System); MS–DRGs 270, 271, and 272 (Other Major Cardiovascular Procedures 0JH60WZ ............. 0JH60XZ .............. 0JH80WZ ............. 0JH80XZ .............. 0JHD0WZ ............. 0JHD0XZ .............. 0JHF0WZ ............. 0JHF0XZ .............. 0JHG0WZ ............ 0JHG0XZ ............. 0JHH0WZ ............. 0JHH0XZ .............. 0JHL0WZ ............. 0JHL0XZ .............. 0JHM0WZ ............ 0JHM0XZ ............. 0JHN0WZ ............. 0JHN0XZ .............. 0JHP0WZ ............. 0JHP0XZ .............. 20255 20:30 May 04, 2018 Jkt 244001 vascular access devices (VAD) involve implantation of a port by open PO 00000 Frm 00093 Fmt 4701 Sfmt 4702 approach, cutting through subcutaneous tissue/fascia, placing the device, and E:\FR\FM\07MYP2.SGM 07MYP2 20256 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules then closing tissues so that none of the device is exposed. The requestor explained that open procedures to insert tunneled VADs involve insertion of the catheter into central vasculature, and then open incision of subcutaneous tissue and fascia through which the device is tunneled. The requestor also indicated that these procedures require two ICD–10–PCS codes: One for the insertion of the VAD or port within the subcutaneous tissue; and one for percutaneous insertion of the central venous catheter that is connected to the device. The requestor further noted that, in MDC 11, cases with these procedure codes are assigned to surgical MS–DRGs and that insertion of infusion pumps by open approach groups to surgical MS– DRGs. The requestor recommended that these procedures be assigned to surgical MS–DRGs in MDC 09 as well. We examined the O.R. designations for this group of procedures and determined that they currently are designated as non-O.R. procedures for MDC 09 and MDC 11. We agree with the requestor that procedures involving open insertion of totally implantable VAD procedures typically require the resources of an operating room. However, we disagree that the tunneled VAD procedures typically require the resources of an operating room. Therefore, we are proposing to update the FY 2019 ICD– 10 MS–DRGs Version 36 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/ MS–DRG Index to designate the 10 ICD– 10–PCS procedure codes describing the totally implantable VAD procedures as O.R. procedures, which will continue to be assigned to MS–DRGs 579, 580, and 581 (Other Skin, Subcutaneous Tissue and Breast Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 9 (Diseases and Disorders of the ICD–10–PCS procedure code 0SS034Z .............. 0SS334Z .............. 0SS534Z .............. 0SS634Z .............. 0SS734Z .............. 0SS834Z .............. 0SS934Z .............. 0SSB34Z .............. 0SSC34Z .............. 0SSD34Z .............. 0SSF34Z .............. 0SSG34Z ............. 0SSH34Z .............. 0SSJ34Z .............. 0SSK34Z .............. 0SSL34Z .............. 0SSM34Z ............. 0SSN34Z .............. 0SSP34Z .............. 0SSQ34Z ............. Reposition Reposition Reposition Reposition Reposition Reposition Reposition Reposition Reposition Reposition Reposition Reposition Reposition Reposition Reposition Reposition Reposition Reposition Reposition Reposition daltland on DSKBBV9HB2PROD with PROPOSALS2 VerDate Sep<11>2014 One requestor identified 20 ICD–10– PCS procedure codes that describe procedures involving percutaneous joint reposition with internal fixation device, shown in the following table. lumbar vertebral joint with internal fixation device, percutaneous approach. lumbosacral joint with internal fixation device, percutaneous approach. sacrococcygeal joint with internal fixation device, percutaneous approach. coccygeal joint with internal fixation device, percutaneous approach. right sacroiliac joint with internal fixation device, percutaneous approach. left sacroiliac joint with internal fixation device, percutaneous approach. right hip joint with internal fixation device, percutaneous approach. left hip joint with internal fixation device, percutaneous approach. right knee joint with internal fixation device, percutaneous approach. left knee joint with internal fixation device, percutaneous approach. right ankle joint with internal fixation device, percutaneous approach. left ankle joint with internal fixation device, percutaneous approach. right tarsal joint with internal fixation device, percutaneous approach. left tarsal joint with internal fixation device, percutaneous approach. right tarsometatarsal joint with internal fixation device, percutaneous approach. left tarsometatarsal joint with internal fixation device, percutaneous approach. right metatarsal-phalangeal joint with internal fixation device, percutaneous approach. left metatarsal-phalangeal joint with internal fixation device, percutaneous approach. right toe phalangeal joint with internal fixation device, percutaneous approach. left toe phalangeal joint with internal fixation device, percutaneous approach. recognized as O.R. procedures for purposes of MS–DRG assignment. We disagree with the requestor that these procedures typically require the resources of an operating room, as these procedures are not as invasive as the bone reposition procedures referenced by the requestor. Our clinical advisors advised that these procedures are typically performed in a radiology suite. Therefore, we are proposing to maintain ICD–10–PCS procedure code .............. .............. .............. .............. i. Percutaneous Joint Reposition With Internal Fixation Device Code description The requestor stated that reposition of the sacrum, femur, tibia, fibula, and other fractures of bone with internal fixation device by percutaneous approach are assigned to surgical DRGs, and that reposition of sacroiliac, hip, knee, and other joint locations with internal fixation should therefore also be assigned to surgical DRGs. In the ICD–10 MS–DRGs Version 35, these 20 ICD–10–PCS procedure codes are not 0D5A8ZZ 0D5B8ZZ 0D5C8ZZ 0D588ZZ Skin, Subcutaneous Tissue and Breast) and MS–DRGs 673, 674, and 675 (Other Kidney and Urinary Tract Procedures, with CC, with MCC, and without CC/ MCC, respectively) in MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract). We note that these procedures already affect MS–DRG assignment to these MS–DRGs. However, if the procedure is unrelated to the principal diagnosis, it will be assigned to MS–DRGs 981, 982, and 983 instead of a medical MS-DRG. We are inviting public comments on our proposal. the status of these 20 ICD–10–PCS procedure codes as non-O.R. procedures. We are inviting public comments on our proposal. j. Endoscopic Destruction of Intestine One requestor identified four ICD–10– PCS procedure codes that describe procedures involving endoscopic destruction of the intestine, as shown in the following table. Code description Destruction Destruction Destruction Destruction 20:30 May 04, 2018 of of of of jejunum, via natural or artificial opening endoscopic. ileum, via natural or artificial opening endoscopic. ileocecal valve, via natural or artificial opening endoscopic. small intestine, via natural or artificial opening endoscopic. Jkt 244001 PO 00000 Frm 00094 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules The requestor stated that these procedures are rarely performed in the operating room. In the ICD–10 MS– DRGs Version 35, these 20 ICD–10–PCS procedure codes are currently recognized as O.R. procedures for purposes of MS–DRG assignment. We agree with the requestor that these procedures do not typically require the resources of an operating room. Therefore, we are proposing to remove these four procedure codes from the FY 2019 ICD–10 MS–DRGs Version 36 Definitions Manual in Appendix E— Operating Room Procedures and Procedure Code/MS–DRG Index as O.R. procedures. We are inviting public comments on our proposal. ICD–10–PCS procedure code 0B9J8ZX .............. 0B9F8ZX .............. We agree with the requestor that these procedures do not require the resources of an operating room. In addition, while we were reviewing this comment, we identified three additional related codes: Code description Drainage of right middle lung lobe, via natural or artificial opening endoscopic, diagnostic. Drainage of right upper lung lobe, via natural or artificial opening endoscopic, diagnostic. Drainage of left upper lung lobe, via natural or artificial opening endoscopic, diagnostic. In the ICD–10 MS–DRGs Version 35, these ICD–10–PCS procedure codes are currently recognized as O.R. procedures for purposes of MS–DRG assignment. We are proposing to remove ICD–10– PCS procedure codes 0B9J8ZX, 0B9F8ZX, 0B9D8ZX, 0B9C8ZX, and 0B9G8ZX from the FY 2019 ICD–10 MS–DRGs Version 36 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/ MS–DRG Index as O.R. procedures. We are inviting public comments on our proposal. G. Recalibration of the Proposed FY 2019 MS–DRG Relative Weights 1. Data Sources for Developing the Proposed Relative Weights daltland on DSKBBV9HB2PROD with PROPOSALS2 One requestor identified the following ICD–10–PCS procedure codes that describe procedures involving endoscopic drainage of the lung via natural or artificial opening for diagnostic purposes. Drainage of left lower lung lobe, via natural or artificial opening endoscopic, diagnostic. Drainage of right lower lung lobe, via natural or artificial opening endoscopic, diagnostic. ICD–10–PCS procedure code In developing the proposed FY 2019 system of weights, we are proposing to use two data sources: Claims data and cost report data. As in previous years, the claims data source is the MedPAR file. This file is based on fully coded diagnostic and procedure data for all Medicare inpatient hospital bills. The FY 2017 MedPAR data used in this proposed rule include discharges occurring on October 1, 2016, through September 30, 2017, based on bills received by CMS through December 31, 2017, from all hospitals subject to the IPPS and short-term, acute care hospitals in Maryland (which at that time were under a waiver from the IPPS). The FY 2017 MedPAR file used in calculating the proposed relative weights includes data for approximately VerDate Sep<11>2014 k. Drainage of Lower Lung Via Natural or Artificial Opening Endoscopic, Diagnostic Code description The requestor stated that these procedures are rarely performed in the operating room. 0B9D8ZX .............. 0B9C8ZX .............. 0B9G8ZX ............. 20257 20:30 May 04, 2018 Jkt 244001 9,652,400 Medicare discharges from IPPS providers. Discharges for Medicare beneficiaries enrolled in a Medicare Advantage managed care plan are excluded from this analysis. These discharges are excluded when the MedPAR ‘‘GHO Paid’’ indicator field on the claim record is equal to ‘‘1’’ or when the MedPAR DRG payment field, which represents the total payment for the claim, is equal to the MedPAR ‘‘Indirect Medical Education (IME)’’ payment field, indicating that the claim was an ‘‘IME only’’ claim submitted by a teaching hospital on behalf of a beneficiary enrolled in a Medicare Advantage managed care plan. In addition, the December 31, 2017 update of the FY 2017 MedPAR file complies with version 5010 of the X12 HIPAA Transaction and Code Set Standards, and includes a variable called ‘‘claim type.’’ Claim type ‘‘60’’ indicates that the claim was an inpatient claim paid as fee-for-service. Claim types ‘‘61,’’ ‘‘62,’’ ‘‘63,’’ and ‘‘64’’ relate to encounter claims, Medicare Advantage IME claims, and HMO no-pay claims. Therefore, the calculation of the proposed relative weights for FY 2019 also excludes claims with claim type values not equal to ‘‘60.’’ The data exclude CAHs, including hospitals that subsequently became CAHs after the period from which the data were taken. We note that the proposed FY 2019 relative weights are based on the ICD-10-CM diagnoses and ICD–10–PCS procedure codes from the FY 2017 MedPAR claims data, grouped through PO 00000 Frm 00095 Fmt 4701 Sfmt 4702 the ICD-10 version of the proposed FY 2019 GROUPER (Version 36). The second data source used in the cost-based relative weighting methodology is the Medicare cost report data files from the HCRIS. Normally, we use the HCRIS dataset that is 3 years prior to the IPPS fiscal year. Specifically, we used cost report data from the December 31, 2017 update of the FY 2016 HCRIS for calculating the proposed FY 2019 cost-based relative weights. 2. Methodology for Calculation of the Proposed Relative Weights As we explain in section II.E.2. of the preamble of this proposed rule, we calculated the proposed FY 2019 relative weights based on 19 CCRs, as we did for FY 2018. The methodology we are proposing to use to calculate the FY 2019 MS–DRG cost-based relative weights based on claims data in the FY 2017 MedPAR file and data from the FY 2016 Medicare cost reports is as follows: • To the extent possible, all the claims were regrouped using the proposed FY 2019 MS-DRG classifications discussed in sections II.B. and II.F. of the preamble of this proposed rule. • The transplant cases that were used to establish the proposed relative weights for heart and heart-lung, liver and/or intestinal, and lung transplants (MS–DRGs 001, 002, 005, 006, and 007, respectively) were limited to those Medicare-approved transplant centers that have cases in the FY 2017 MedPAR E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20258 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules file. (Medicare coverage for heart, heart-lung, liver and/or intestinal, and lung transplants is limited to those facilities that have received approval from CMS as transplant centers.) • Organ acquisition costs for kidney, heart, heart-lung, liver, lung, pancreas, and intestinal (or multivisceral organs) transplants continue to be paid on a reasonable cost basis. Because these acquisition costs are paid separately from the prospective payment rate, it is necessary to subtract the acquisition charges from the total charges on each transplant bill that showed acquisition charges before computing the average cost for each MS–DRG and before eliminating statistical outliers. • Claims with total charges or total lengths of stay less than or equal to zero were deleted. Claims that had an amount in the total charge field that differed by more than $30.00 from the sum of the routine day charges, intensive care charges, pharmacy charges, implantable devices charges, supplies and equipment charges, therapy services charges, operating room charges, cardiology charges, laboratory charges, radiology charges, other service charges, labor and delivery charges, inhalation therapy charges, emergency room charges, blood and blood products charges, anesthesia charges, cardiac catheterization charges, CT scan charges, and MRI charges were also deleted. • At least 92.5 percent of the providers in the MedPAR file had charges for 14 of the 19 cost centers. All claims of providers that did not have charges greater than zero for at least 14 of the 19 cost centers were deleted. In other words, a provider must have no more than five blank cost centers. If a provider did not have charges greater than zero in more than five cost centers, the claims for the provider were deleted. • Statistical outliers were eliminated by removing all cases that were beyond 3.0 standard deviations from the geometric mean of the log distribution of both the total charges per case and the total charges per day for each MS– DRG. • Effective October 1, 2008, because hospital inpatient claims include a POA indicator field for each diagnosis present on the claim, only for purposes of relative weight-setting, the POA indicator field was reset to ‘‘Y’’ for ‘‘Yes’’ for all claims that otherwise have an ‘‘N’’ (No) or a ‘‘U’’ (documentation insufficient to determine if the condition was present at the time of inpatient admission) in the POA field. Under current payment policy, the presence of specific HAC codes, as indicated by the POA field values, can VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 generate a lower payment for the claim. Specifically, if the particular condition is present on admission (that is, a ‘‘Y’’ indicator is associated with the diagnosis on the claim), it is not a HAC, and the hospital is paid for the higher severity (and, therefore, the higher weighted MS–DRG). If the particular condition is not present on admission (that is, an ‘‘N’’ indicator is associated with the diagnosis on the claim) and there are no other complicating conditions, the DRG GROUPER assigns the claim to a lower severity (and, therefore, the lower weighted MS–DRG) as a penalty for allowing a Medicare inpatient to contract a HAC. While the POA reporting meets policy goals of encouraging quality care and generates program savings, it presents an issue for the relative weight-setting process. Because cases identified as HACs are likely to be more complex than similar cases that are not identified as HACs, the charges associated with HAC cases are likely to be higher as well. Therefore, if the higher charges of these HAC claims are grouped into lower severity MS–DRGs prior to the relative weight-setting process, the relative weights of these particular MS–DRGs would become artificially inflated, potentially skewing the relative weights. In addition, we want to protect the integrity of the budget neutrality process by ensuring that, in estimating payments, no increase to the standardized amount occurs as a result of lower overall payments in a previous year that stem from using weights and case-mix that are based on lower severity MS–DRG assignments. If this would occur, the anticipated cost savings from the HAC policy would be lost. To avoid these problems, we reset the POA indicator field to ‘‘Y’’ only for relative weight-setting purposes for all claims that otherwise have an ‘‘N’’ or a ‘‘U’’ in the POA field. This resetting ‘‘forced’’ the more costly HAC claims into the higher severity MS-DRGs as appropriate, and the relative weights calculated for each MS–DRG more closely reflect the true costs of those cases. In addition, in the FY 2013 IPPS/ LTCH PPS final rule, for FY 2013 and subsequent fiscal years, we finalized a policy to treat hospitals that participate in the Bundled Payments for Care Improvement (BPCI) initiative the same as prior fiscal years for the IPPS payment modeling and ratesetting process without regard to hospitals’ participation within these bundled payment models (77 FR 53341 through 53343). Specifically, because acute care hospitals participating in the BPCI PO 00000 Frm 00096 Fmt 4701 Sfmt 4702 initiative still receive IPPS payments under section 1886(d) of the Act, we include all applicable data from these subsection (d) hospitals in our IPPS payment modeling and ratesetting calculations as if they were not participating in those models under the BPCI initiative. We refer readers to the FY 2013 IPPS/LTCH PPS final rule for a complete discussion on our final policy for the treatment of hospitals participating in the BPCI Initiative in our ratesetting process. The participation of hospitals in the BPCI initiative is set to conclude on September 30, 2018. The participation of hospitals in the Bundled Payments for Care Improvement (BPCI) Advanced model is set to start on October 1, 2018. The BPCI Advanced model, tested under the authority of section 3021 of the Affordable Care Act (codified at section 1115A of the Act), is comprised of a single payment and risk track, which bundles payments for multiple services beneficiaries receive during a Clinical Episode. Acute care hospitals may participate in BPCI Advanced in one of two capacities: As a model Participant or as a downstream Episode Initiator. Regardless of the capacity in which they participate in the BPCI Advanced model, participating acute care hospitals will continue to receive IPPS payments under section 1886(d) of the Act. Acute care hospitals that are Participants also assume financial and quality performance accountability for Clinical Episodes in the form of a reconciliation payment. For additional information on the BPCI Advanced model, we refer readers to the BPCI Advanced webpage on the CMS Center for Medicare and Medicaid Innovation’s website at: https://innovation.cms.gov/ initiatives/bpci-advanced/. For FY 2019, consistent with how we have treated hospitals that participated in the BPCI Initiative, we believe it is appropriate to include all applicable data from the subsection (d) hospitals participating in the BPCI Advanced model in our IPPS payment modeling and ratesetting calculations because, as noted above, these hospitals are still receiving IPPS payments under section 1886(d) of the Act. The charges for each of the proposed 19 cost groups for each claim were standardized to remove the effects of differences in proposed area wage levels, IME and DSH payments, and for hospitals located in Alaska and Hawaii, the applicable proposed cost-of-living adjustment. Because hospital charges include charges for both operating and capital costs, we standardized total charges to remove the effects of differences in proposed geographic E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 adjustment factors, cost-of-living adjustments, and DSH payments under the capital IPPS as well. Charges were then summed by MS–DRG for each of the proposed 19 cost groups so that each MS–DRG had 19 standardized charge totals. Statistical outliers were then removed. These charges were then adjusted to cost by applying the proposed national average CCRs VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 developed from the FY 2016 cost report data. The 19 cost centers that we used in the proposed relative weight calculation are shown in the following table. The table shows the lines on the cost report and the corresponding revenue codes that we used to create the proposed 19 national cost center CCRs. If stakeholders have comments about the PO 00000 Frm 00097 Fmt 4701 Sfmt 4702 20259 groupings in this table, we may consider those comments as we finalize our policy. We are inviting public comments on our proposals related to recalibration of the proposed FY 2019 relative weights and the changes in relative weights from FY 2018. BILLING CODE 4120–01–P E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20260 VerDate Sep<11>2014 Jkt 244001 Revenue Codes PO 00000 Cost Center I Frm 00098 MedPAR Char e Field Fmt 4701 011X and 014X Routine Da s Sfmt 4725 Semi-Private Room Charges Pediatrics (General Routine Care Charges from HCRIS (Worksheet C, Part 1, Column 6 & 7 and line number) Form CMS2552-10 Medicare Charges from HCRIS (Worksheet D-3, Column & line number) Form CMS2552-10 C 1 C5 30 C 1 C6 30 D3 HOS C2 30 I 012X, 013X and 016X E:\FR\FM\07MYP2.SGM 07MYP2 EP07MY18.002</GPH> Intensive Care Charges I 020X C 1 C5 31 I C 1 C6 31 I D3 HOS C2 31 Coronary Care Charges I 021 X Intensive Davs C 1 C5 32 I C 1 C6 32 I D3 HOS C2 32 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20:30 May 04, 2018 Cost from HCRIS (Worksheet C, Part 1, Column 5 and line number) Form CMS2552-10 daltland on DSKBBV9HB2PROD with PROPOSALS2 VerDate Sep<11>2014 Jkt 244001 PO 00000 I MedPAR Charge Field Cost Report Line Descriotion Charges from HCRIS (Worksheet C, Part 1, Column 6 & 7 and line number) Form CMS2552-10 Medicare Charges from HCRIS (Worksheet D-3, Column & line number) Form CMS2552-10 Frm 00099 Fmt 4701 C 1 C5 33 I C 1 C6 33 I D3 HOS C2 33 Sfmt 4725 E:\FR\FM\07MYP2.SGM Surgical Intensive Care Unit I C 1 C5 34 I C 1 C6 34 I D3 HOS C2 34 07MYP2 Drugs I Charges I and 063X I !i~'i Therapy IC 1 C5 64 IC 1 C6 64 I D3 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20:30 May 04, 2018 Cost Center Revenue Codes contained in MedPAR Chame Field Cost from HCRIS (Worksheet C, Part 1, Column 5 and line number) Form CMS2552-10 HOS C2 64 20261 EP07MY18.003</GPH> daltland on DSKBBV9HB2PROD with PROPOSALS2 20262 VerDate Sep<11>2014 Jkt 244001 PO 00000 I Frm 00100 MedPAR Char e Field Revenue Codes contained in MedPAR Charges from HCRIS (Worksheet C, Part 1, Column 6 & 7 and line number) Form CMS2552-10 Fmt 4701 C 1 C7 64 Sfmt 4725 c E:\FR\FM\07MYP2.SGM 07MYP2 Supplies and Eauioment Medical/Surgical Supply Charges 0270, 0271, 0272, 0273, 0274, 0277, 0279,and 0621, 0622, 0623 Medical Supplies Charged to Patients 1 C5 73 C 1 C5 71 Ic 1 C6 73 C 1 C6 71 C 1 C7 71 EP07MY18.004</GPH> Medicare Charges from HCRIS (Worksheet D-3, Column & line number) Form CMS2552-10 I D3 HOS cz 73 D3 HOS C2 71 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20:30 May 04, 2018 Cost Center Cost from HCRIS (Worksheet C, Part 1, Column 5 and line number) Form CMS2552-10 daltland on DSKBBV9HB2PROD with PROPOSALS2 VerDate Sep<11>2014 Jkt 244001 PO 00000 Frm 00101 Fmt 4701 MedPAR Charge Field Durable Medical Equipment Charges 0290, 0291, 0292 and 0294-0299 Medicare Charges from HCRIS (Worksheet D-3, Column & line number) Form CMS2552-10 DME-Rented I Cost Report Line Description Charges from HCRIS (Worksheet C, Part 1, Column 6 & 7 and line number) Form CMS2552-10 C 1 C5 96 C 1 C6 96 D3 HOS C2 96 ',' : 1.' Sfmt 4725 C 1 C7 96 E:\FR\FM\07MYP2.SGM Used Durable Medical Charges 0293 DME-Sold C 1 C5 97 ~! 07MYP2 Implantable Devices 0275, 0276, 0278,0624 ~\ Implantable Devices Charged to ~,U Patients C 1 C6 97 D3 HOS C2 97 C 1 C7 97 C 1 C5 72 C 1 C6 72 D3 HOS C2 72 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20:30 May 04, 2018 Cost Center Group Name (19 total) Revenue Codes contained in MedPAR Charge Field Cost from HCRIS (Worksheet C, Part 1, Column 5 and line number) Form CMS2552-10 C 1 C7 72 20263 EP07MY18.005</GPH> daltland on DSKBBV9HB2PROD with PROPOSALS2 20264 VerDate Sep<11>2014 Jkt 244001 PO 00000 I MedPAR Cost Report Line Frm 00102 Fmt 4701 Sfmt 4725 Therapy Services Charges 042X ~~r\, Therapy Medicare Charges from HCRIS (Worksheet D-3, Column & line number) Form CMS2552-10 C 1 C5 66 C 1 C6 66 D3 HOS C2 66 ~~~' E:\FR\FM\07MYP2.SGM C 1 C7 66 Occupational Therapy Char es 043X C 1 C5 67 C 1 C6 67 07MYP2 C 1 C7 67 Speech Pathology Char es 044X and 047X C 1 C5 68 C 1 C6 68 C 1 C7 68 EP07MY18.006</GPH> D3 HOS C2 67 D3 HOS C2 68 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20:30 May 04, 2018 Cost Center Revenue Codes I contained in MedPAR Cost from HCRIS (Worksheet C, Part 1, Column 5 and line number) Form CMS2552-10 Charges from HCRIS (Worksheet C, Part 1, Column 6 & 7 and line number) Form CMS2552-10 daltland on DSKBBV9HB2PROD with PROPOSALS2 VerDate Sep<11>2014 Jkt 244001 PO 00000 I MedPAR Cost Report Line Frm 00103 Charges from HCRIS (Worksheet C, Part 1, Column 6 & 7 and line number) Form CMS2552-10 Medicare Charges from HCRIS (Worksheet D-3, Column & line number) Form CMS2552-10 Fmt 4701 Sfmt 4725 E:\FR\FM\07MYP2.SGM 07MYP2 Inhalation Thera 041X and 046X C 1 C5 65 I C 1 C6 65 I D3 HOS C2 65 Operating Room 036X C 1 C5 50 I C 1 C6 50 I D3 HOS C2 50 C 1 C7 50 071X Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20:30 May 04, 2018 Cost Center Revenue Codes I contained in MedPAR Cost from HCRIS (Worksheet C, Part 1, Column 5 and line number) Form CMS2552-10 C 1 C5 51 I C 1 C6 51 I D3 HOS C2 51 20265 EP07MY18.007</GPH> daltland on DSKBBV9HB2PROD with PROPOSALS2 20266 VerDate Sep<11>2014 Jkt 244001 PO 00000 I MedPAR Charge Field Cost Report Line Descriotion Charges from HCRIS (Worksheet C, Part 1, Column 6 & 7 and line number) Form CMS2552-10 Medicare Charges from HCRIS (Worksheet D-3, Column & line number) Form CMS2552-10 Frm 00104 Fmt 4701 Sfmt 4725 Labor & Delive C 1 C5 52 I C 1 C6 52 I D3 HOS C2 52 E:\FR\FM\07MYP2.SGM 07MYP2 EP07MY18.008</GPH> C 1 C5 53 I C 1 C6 53 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20:30 May 04, 2018 Cost Center Revenue Codes contained in MedPAR Chame Field Cost from HCRIS (Worksheet C, Part 1, Column 5 and line number) Form CMS2552-10 daltland on DSKBBV9HB2PROD with PROPOSALS2 VerDate Sep<11>2014 Jkt 244001 PO 00000 I MedPAR Char e Field Frm 00105 Cardiolo 073X Medicare Charges from HCRIS (Worksheet D-3, Column & line number) Form CMS2552-10 C 1 C5 69 Cost Report Line Descriotion Charges from HCRIS (Worksheet C, Part 1, Column 6 & 7 and line number) Form CMS2552-10 C 1 C6 69 D3 HOS C2 69 Fmt 4701 C 1 C7 69 Sfmt 4725 Cardiac Catheterization I I o4s1 Catheterization I C 1 C5 59 I C 1 C6 59 I D3 HOS C2 59 E:\FR\FM\07MYP2.SGM 07MYP2 Lab orato C 1 C5 60 I C 1 C6 60 I D3 HOS C2 60 C 1 C7 60 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20:30 May 04, 2018 Cost Center Revenue Codes contained in MedPAR Chame Field Cost from HCRIS (Worksheet C, Part 1, Column 5 and line number) Form CMS2552-10 C 1 C5 61 I C 1 C6 61 I D3 HOS C2 61 20267 EP07MY18.009</GPH> daltland on DSKBBV9HB2PROD with PROPOSALS2 20268 VerDate Sep<11>2014 Jkt 244001 PO 00000 I MedPAR Charge Field Cost Report Line Descriotion Charges from HCRIS (Worksheet C, Part 1, Column 6 & 7 and line number) Form CMS2552-10 Medicare Charges from HCRIS (Worksheet D-3, Column & line number) Form CMS2552-10 Frm 00106 Fmt 4701 C 1 C7 61 Sfmt 4725 074X, 086X ElectroEncephalograp hv I C 1 C5 70 I C 1 C6 70 I D3 HOS C2 70 E:\FR\FM\07MYP2.SGM 07MYP2 C 1 C5 54 I C 1 C6 54 I D3 HOS C2 54 Radiolo C 1 C7 54 028x, 0331, 0332, 0333, EP07MY18.010</GPH> C 1 C5 55 I C 1 C6 55 I D3 HOS C2 55 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20:30 May 04, 2018 Cost Center Revenue Codes contained in MedPAR Chame Field Cost from HCRIS (Worksheet C, Part 1, Column 5 and line number) Form CMS2552-10 daltland on DSKBBV9HB2PROD with PROPOSALS2 VerDate Sep<11>2014 Jkt 244001 PO 00000 Frm 00107 Fmt 4701 I ~~ Radioisotope Charges from HCRIS (Worksheet C, Part 1, Column 6 & 7 and line number) Form CMS2552-10 Medicare Charges from HCRIS (Worksheet D-3, Column & line number) Form CMS2552-10 C 1 C5 56 C 1 C6 56 D3 HOS C2 56 ~~~ Sfmt 4725 C 1 C7 56 ..~· E:\FR\FM\07MYP2.SGM Computed Tomography (CT) Scan CT Scan Charges Computed ;, Tomography (CT) Scan 035X C 1 C5 57 C 1 C6 57 D3 HOS C2 57 ; C 1 C7 57 07MYP2 Magnetic Resonance Imaging (MRI) MRI Charges 061X Magnetic Resonance Imaging (MRI) C 1 C5 58 C 1 C6 58 D3 HOS C2 58 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20:30 May 04, 2018 MedPAR Charge Field Cost Report Line Description 0343 and 344 Cost Center Group Name (19 total) Revenue Codes contained in MedPAR Charge Field 0335, 0339, 0342 Cost from HCRIS (Worksheet C, Part 1, Column 5 and line number) Form CMS2552-10 C 1 C7 58 20269 EP07MY18.011</GPH> daltland on DSKBBV9HB2PROD with PROPOSALS2 20270 VerDate Sep<11>2014 Jkt 244001 PO 00000 I MedPAR Cost Report Line Frm 00108 Fmt 4701 Sfmt 4725 Emergency Room E:\FR\FM\07MYP2.SGM 07MYP2 Products Emergency Room Charges Blood Charges Whole Blood ~:;~: & Packed Red 1:·~{ Blood Cells ~~,,~ C 1 C5 62 C 1 C6 62 D3 HOS C2 62 l;i~~'~ C 1 C7 62 Blood Storage I Processing EP07MY18.012</GPH> C 1 C5 91 I C 1 C6 91 I D3 HOS C2 91 045x 038x Medicare Charges from HCRIS (Worksheet D-3, Column & line number) Form CMS2552-10 039x Blood Storing, Processing, & Transfusing I C 1 C5 63 I C 1 C6 63 I D3 HOS C2 63 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20:30 May 04, 2018 Cost Center Revenue Codes I contained in MedPAR Cost from HCRIS (Worksheet C, Part 1, Column 5 and line number) Form CMS2552-10 Charges from HCRIS (Worksheet C, Part 1, Column 6 & 7 and line number) Form CMS2552-10 daltland on DSKBBV9HB2PROD with PROPOSALS2 VerDate Sep<11>2014 Jkt 244001 PO 00000 I MedPAR Charge Field Cost Report Line Descriotion Charges from HCRIS (Worksheet C, Part 1, Column 6 & 7 and line number) Form CMS2552-10 Medicare Charges from HCRIS (Worksheet D-3, Column & line number) Form CMS2552-10 Frm 00109 Fmt 4701 Sfmt 4725 E:\FR\FM\07MYP2.SGM Other Services Other Service Char e 07MYP2 Renal Dialysis ESRD Revenue Setting Charges 0002-0099, 022X, 023X, 024X,052X, 053X 055X-060X, 064X-070X, 076X-078X, 090X-095X and 099X I 0800X l§;[~il Renal Dialysis IC I 080X and 082X-088X I 1 C5 74 IC 1 C6 74 I D3 HOS C2 74 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20:30 May 04, 2018 Cost Center Revenue Codes contained in MedPAR Chame Field Cost from HCRIS (Worksheet C, Part 1, Column 5 and line number) Form CMS2552-10 I C_1_C7_74 20271 EP07MY18.013</GPH> daltland on DSKBBV9HB2PROD with PROPOSALS2 20272 VerDate Sep<11>2014 ~ Jkt 244001 PO 00000 Cost Center Group Name (19 total) MedPAR Charge Field ,, '* Revenue Codes contained in Cost Report MedPAR Line Charge Field iol\' Description I~ Frm 00110 Home Program Dialysis Charges from HCRIS (Worksheet C, Part 1, Column 6 & 7 and line number) Form CMS2552-10 Medicare Charges from HCRIS (Worksheet D-3, Column & line number) Form CMS2552-10 C 1 C5 94 C 1 C6 94 D3 HOS C2 94 Fmt 4701 C 1 C7 94 Sfmt 4725 E:\FR\FM\07MYP2.SGM Outpatient Service Charges 049X Lithotripsy Charge 079X ASC (Non Distinct Part) C 1 C6 75 D3 HOS C2 75 C 1 C7 75 ~!\ Other Ancillary C 1 C5 76 07MYP2 ~(~ Clinic Visit Charges C 1 C6 76 D3 HOS C2 76 C 1 C7 76 ;): 051X ~'i crllllC . \i~ ~~ EP07MY18.014</GPH> C 1 C5 75 C 1 C5 90 C 1 C6 90 C-1 C7- 90 - D3 HOS C2 90 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20:30 May 04, 2018 ~ Cost from HCRIS (Worksheet C, Part 1, Column 5 and line number) Form CMS2552-10 daltland on DSKBBV9HB2PROD with PROPOSALS2 VerDate Sep<11>2014 '* Revenue Codes contained in Cost Report MedPAR Line Charge Field iol\' Description Charges from HCRIS (Worksheet C, Part 1, Column 6 & 7 and line number) Form CMS2552-10 Medicare Charges from HCRIS (Worksheet D-3, Column & line number) Form CMS2552-10 Observation beds C-1 C5 - 92. 01 C-1 C6- 92. 01 D3 - HOS - C2- 92 .01 ~ Jkt 244001 PO 00000 Cost Center Group Name (19 total) MedPAR Charge Field ,, I~ Frm 00111 Fmt 4701 C-1 C7- 92. 01 Sfmt 4725 Professional Fees Charges Other Outpatient Services 096X, 097X, and 098X C 1 C5 93 C 1 C6 93 D3 HOS C2 93 E:\FR\FM\07MYP2.SGM C 1 C7 93 Ambulance Charges ~.!:'·( 054X ;~' Ambulance C 1 C5 95 07MYP2 ~(~ C 1 C6 95 D3 HOS C2 95 C 1 C7 95 ~~ Rural Health 1 ;::~ ~~ Clinic C 1 C5 88 C 1 C6 88 D3 HOS C2 88 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20:30 May 04, 2018 ~ Cost from HCRIS (Worksheet C, Part 1, Column 5 and line number) Form CMS2552-10 C-1 C7- 88 20273 EP07MY18.015</GPH> daltland on DSKBBV9HB2PROD with PROPOSALS2 20274 Jkt 244001 PO 00000 FQHC C 1 C5 89 C 1 C6 89 D3 HOS C2 89 Frm 00112 Medicare Charges from HCRIS (Worksheet D-3, Column & line number) Form CMS2552-10 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 EP07MY18.016</GPH> Cost Center Group Name (19 total) MedPAR Charge Field Revenue Codes contained in MedPAR Charge Field I ~~~ ~~ C 1 C7 89 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20:30 May 04, 2018 BILLING CODE 4120–01–C VerDate Sep<11>2014 Cost Report Line Description Cost from HCRIS (Worksheet C, Part 1, Column 5 and line number) Form CMS2552-10 Charges from HCRIS (Worksheet C, Part 1, Column 6 & 7 and line number) Form CMS2552-10 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20275 corresponding national average CCR, we summed the 19 ‘‘costs’’ across each proposed MS–DRG to produce a total standardized cost for the proposed MS– DRG. The average standardized cost for each proposed MS–DRG was then computed as the total standardized cost for the proposed MS–DRG divided by the transfer-adjusted case count for the proposed MS–DRG. We calculated the transfer-adjusted discharges for use in the calculation of the Version 36 MS– DRG relative weights using the statutory expansion of the postacute care transfer policy to include discharges to hospice care by a hospice program discussed in section IV.A.2.b. of the preamble of this proposed rule. For the purposes of calculating the normalization factor, we used the transfer-adjusted discharges with the expanded postacute care transfer policy for Version 35 as well. (When we calculate the normalization factor, we calculate the transfer-adjusted case count for the prior GROUPER version (in this case Version 35) and multiply by the weights of that GROUPER. We then compare that pool to the transfer-adjusted case count using the new GROUPER version.) The average cost for each proposed MS–DRG was then divided by the national average standardized cost per case to determine the proposed relative weight. The proposed FY 2019 cost-based relative weights were then normalized by a proposed adjustment factor of 1.760698 so that the average case weight after recalibration was equal to the average case weight before recalibration. The proposed normalization adjustment is intended to ensure that recalibration by itself neither increases nor decreases total payments under the IPPS, as required by section 1886(d)(4)(C)(iii) of the Act. The proposed 19 national average CCRs for FY 2019 are as follows: CCR 3. Development of Proposed National Average CCRs We developed the proposed national average CCRs as follows: Using the FY 2016 cost report data, we removed CAHs, Indian Health Service hospitals, all-inclusive rate hospitals, and cost reports that represented time periods of less than 1 year (365 days). We included hospitals located in Maryland because we include their charges in our claims database. We then created CCRs for each provider for each cost center (see prior table for line items used in the calculations) and removed any CCRs that were greater than 10 or less than 0.01. We normalized the departmental CCRs by dividing the CCR for each department by the total CCR for the hospital for the purpose of trimming the data. We then took the logs of the normalized cost center CCRs and removed any cost center CCRs where the log of the cost center CCR was greater or less than the mean log plus/minus 3 times the standard deviation for the log of that cost center CCR. Once the cost report data were trimmed, we calculated a Medicare-specific CCR. The Medicare-specific CCR was determined by taking the Medicare charges for each line item from Worksheet D–3 and deriving the Medicare-specific costs by applying the hospital-specific departmental CCRs to the Medicare-specific charges for each line item from Worksheet D–3. Once each hospital’s Medicare-specific costs were established, we summed the total Medicare-specific costs and divided by the sum of the total Medicare-specific charges to produce national average, charge-weighted CCRs. After we multiplied the total charges for each MS–DRG in each of the proposed 19 cost centers by the Low-volume MS–DRG MS–DRG title 789 ..................... 791 ..................... Neonates, Died or Transferred to Another Acute Care Facility. Extreme Immaturity or Respiratory Distress Syndrome, Neonate. Prematurity with Major Problems ............ 792 ..................... Prematurity without Major Problems ....... 793 ..................... Full-Term Neonate with Major Problems 794 ..................... Neonate with Other Significant Problems 795 ..................... Normal Newborn ..................................... daltland on DSKBBV9HB2PROD with PROPOSALS2 790 ..................... VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Group Routine Days .................................... Intensive Days .................................. Drugs ................................................ Supplies & Equipment ...................... Implantable Devices ......................... Therapy Services .............................. Laboratory ......................................... Operating Room ............................... Cardiology ......................................... Cardiac Catheterization .................... Radiology .......................................... MRIs ................................................. CT Scans .......................................... Emergency Room ............................. Blood and Blood Products ................ Other Services .................................. Labor & Delivery ............................... Inhalation Therapy ............................ Anesthesia ........................................ 0.451 0.373 0.196 0.299 0.321 0.312 0.116 0.185 0.107 0.115 0.149 0.076 0.037 0.165 0.306 0.355 0.363 0.163 0.081 Since FY 2009, the relative weights have been based on 100 percent cost weights based on our MS–DRG grouping system. When we recalibrated the DRG weights for previous years, we set a threshold of 10 cases as the minimum number of cases required to compute a reasonable weight. We are proposing to use that same case threshold in recalibrating the proposed MS–DRG relative weights for FY 2019. Using data from the FY 2017 MedPAR file, there were 7 MS–DRGs that contain fewer than 10 cases. For FY 2019, because we do not have sufficient MedPAR data to set accurate and stable cost relative weights for these low-volume MS– DRGs, we are proposing to compute relative weights for the proposed lowvolume MS–DRGs by adjusting their final FY 2018 relative weights by the percentage change in the average weight of the cases in other MS–DRGs. The crosswalk table is shown: Crosswalk to MS–DRG Frm 00113 Final FY 2018 relative weight (adjusted the cases in other MS–DRGs). Final FY 2018 relative weight (adjusted the cases in other MS–DRGs). Final FY 2018 relative weight (adjusted the cases in other MS–DRGs). Final FY 2018 relative weight (adjusted the cases in other MS–DRGs). Final FY 2018 relative weight (adjusted the cases in other MS–DRGs). Final FY 2018 relative weight (adjusted the cases in other MS–DRGs). Final FY 2018 relative weight (adjusted the cases in other MS–DRGs). Fmt 4701 Sfmt 4702 by percent change in average weight of by percent change in average weight of by percent change in average weight of by percent change in average weight of by percent change in average weight of by percent change in average weight of by percent change in average weight of E:\FR\FM\07MYP2.SGM 07MYP2 20276 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules We are inviting public comments on our proposals. daltland on DSKBBV9HB2PROD with PROPOSALS2 H. Proposed Add-On Payments for New Services and Technologies for FY 2019 1. Background Sections 1886(d)(5)(K) and (L) of the Act establish a process of identifying and ensuring adequate payment for new medical services and technologies (sometimes collectively referred to in this section as ‘‘new technologies’’) under the IPPS. Section 1886(d)(5)(K)(vi) of the Act specifies that a medical service or technology will be considered new if it meets criteria established by the Secretary after notice and opportunity for public comment. Section 1886(d)(5)(K)(ii)(I) of the Act specifies that a new medical service or technology may be considered for new technology add-on payment if, based on the estimated costs incurred with respect to discharges involving such service or technology, the DRG prospective payment rate otherwise applicable to such discharges under this subsection is inadequate. We note that, beginning with discharges occurring in FY 2008, CMS transitioned from CMS– DRGs to MS–DRGs. The regulations at 42 CFR 412.87 implement these provisions and specify three criteria for a new medical service or technology to receive the additional payment: (1) The medical service or technology must be new; (2) the medical service or technology must be costly such that the DRG rate otherwise applicable to discharges involving the medical service or technology is determined to be inadequate; and (3) the service or technology must demonstrate a substantial clinical improvement over existing services or technologies. Below we highlight some of the major statutory and regulatory provisions relevant to the new technology add-on payment criteria, as well as other information. For a complete discussion on the new technology add-on payment criteria, we refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51572 through 51574). Under the first criterion, as reflected in § 412.87(b)(2), a specific medical service or technology will be considered ‘‘new’’ for purposes of new medical service or technology add-on payments until such time as Medicare data are available to fully reflect the cost of the technology in the MS–DRG weights through recalibration. We note that we do not consider a service or technology to be new if it is substantially similar to one or more existing technologies. That is, even if a technology receives a new FDA approval or clearance, it may not VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 necessarily be considered ‘‘new’’ for purposes of new technology add-on payments if it is ‘‘substantially similar’’ to a technology that was approved or cleared by FDA and has been on the market for more than 2 to 3 years. In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43813 through 43814), we established criteria for evaluating whether a new technology is substantially similar to an existing technology, specifically: (1) Whether a product uses the same or a similar mechanism of action to achieve a therapeutic outcome; (2) whether a product is assigned to the same or a different MS–DRG; and (3) whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population. If a technology meets all three of these criteria, it would be considered substantially similar to an existing technology and would not be considered ‘‘new’’ for purposes of new technology add-on payments. For a detailed discussion of the criteria for substantial similarity, we refer readers to the FY 2006 IPPS final rule (70 FR 47351 through 47352), and the FY 2010 IPPS/LTCH PPS final rule (74 FR 43813 through 43814). Under the second criterion, § 412.87(b)(3) further provides that, to be eligible for the add-on payment for new medical services or technologies, the MS–DRG prospective payment rate otherwise applicable to discharges involving the new medical service or technology must be assessed for adequacy. Under the cost criterion, consistent with the formula specified in section 1886(d)(5)(K)(ii)(I) of the Act, to assess the adequacy of payment for a new technology paid under the applicable MS–DRG prospective payment rate, we evaluate whether the charges for cases involving the new technology exceed certain threshold amounts. Table 10 that was released with the FY 2018 IPPS/LTCH PPS final rule contains the final thresholds that we used to evaluate applications for new medical service or technology addon payments for FY 2019. We refer readers to the CMS website at: https:// www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ AcuteInpatientPPS/FY2018-IPPS-FinalRule-Home-Page-Items/FY2018-IPPSFinal-Rule-Tables.html to download and view Table 10. As previously stated, Table 10 that is released with each proposed and final rule contains the thresholds that we use to evaluate applications for new medical service and technology add-on payments for the fiscal year that follows the fiscal year that is otherwise the PO 00000 Frm 00114 Fmt 4701 Sfmt 4702 subject of the rulemaking. For example, the thresholds in Table 10 released with the FY 2018 IPPS/LTCH PPS final rule are applicable to FY 2019 new technology applications. Beginning with the thresholds for FY 2020 and future years, we are proposing to provide the thresholds that we previously included in Table 10 as one of our data files posted via the Internet on the CMS website at: https://www.cms.hhs.gov/ Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/ index.html, which is the same URL where the impact data files associated with the rulemaking for the applicable fiscal year are posted. We believe that this proposed change in the presentation of this information, specifically in the data files rather than in a Table 10, will clarify for the public that the listed thresholds will be used for new technology add-on payment applications for the next fiscal year (in this case, for FY 2020) rather than for the fiscal year that is otherwise the subject of the rulemaking (in this case, for FY 2019), while continuing to furnish the same information on the new technology add-on payment thresholds for applications for the next fiscal year as has been provided in previous fiscal years. Accordingly, we would no longer include Table 10 as one of our IPPS tables, but would instead include the thresholds applicable to the next fiscal year (beginning with FY 2020) in the data files associated with the prior fiscal year (in this case, FY 2019). In the September 7, 2001 final rule that established the new technology add-on payment regulations (66 FR 46917), we discussed the issue of whether the Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule at 45 CFR parts 160 and 164 applies to claims information that providers submit with applications for new medical service or technology add-on payments. We refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51573) for complete information on this issue. Under the third criterion, § 412.87(b)(1) of our existing regulations provides that a new technology is an appropriate candidate for an additional payment when it represents an advance that substantially improves, relative to technologies previously available, the diagnosis or treatment of Medicare beneficiaries. For example, a new technology represents a substantial clinical improvement when it reduces mortality, decreases the number of hospitalizations or physician visits, or reduces recovery time compared to the technologies previously available. (We E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules refer readers to the September 7, 2001 final rule for a more detailed discussion of this criterion (66 FR 46902).) The new medical service or technology add-on payment policy under the IPPS provides additional payments for cases with relatively high costs involving eligible new medical services or technologies, while preserving some of the incentives inherent under an average-based prospective payment system. The payment mechanism is based on the cost to hospitals for the new medical service or technology. Under § 412.88, if the costs of the discharge (determined by applying cost-to-charge ratios (CCRs) as described in § 412.84(h)) exceed the full DRG payment (including payments for IME and DSH, but excluding outlier payments), Medicare will make an addon payment equal to the lesser of: (1) 50 percent of the estimated costs of the new technology or medical service (if the estimated costs for the case including the new technology or medical service exceed Medicare’s payment); or (2) 50 percent of the difference between the full DRG payment and the hospital’s estimated cost for the case. Unless the discharge qualifies for an outlier payment, the additional Medicare payment is limited to the full MS–DRG payment plus 50 percent of the estimated costs of the new technology or medical service. Section 503(d)(2) of Public Law 108– 173 provides that there shall be no reduction or adjustment in aggregate payments under the IPPS due to add-on payments for new medical services and technologies. Therefore, in accordance with section 503(d)(2) of Public Law 108–173, add-on payments for new medical services or technologies for FY 2005 and later years have not been subjected to budget neutrality. In the FY 2009 IPPS final rule (73 FR 48561 through 48563), we modified our regulations at § 412.87 to codify our longstanding practice of how CMS evaluates the eligibility criteria for new medical service or technology add-on payment applications. That is, we first determine whether a medical service or technology meets the newness criterion, and only if so, do we then make a determination as to whether the technology meets the cost threshold and represents a substantial clinical improvement over existing medical services or technologies. We amended § 412.87(c) to specify that all applicants for new technology add-on payments must have FDA approval or clearance for their new medical service or technology by July 1 of the year prior to the beginning of the fiscal year that the application is being considered. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 The Council on Technology and Innovation (CTI) at CMS oversees the agency’s cross-cutting priority on coordinating coverage, coding and payment processes for Medicare with respect to new technologies and procedures, including new drug therapies, as well as promoting the exchange of information on new technologies and medical services between CMS and other entities. The CTI, composed of senior CMS staff and clinicians, was established under section 942(a) of Public Law 108–173. The Council is co-chaired by the Director of the Center for Clinical Standards and Quality (CCSQ) and the Director of the Center for Medicare (CM), who is also designated as the CTI’s Executive Coordinator. The specific processes for coverage, coding, and payment are implemented by CM, CCSQ, and the local Medicare Administrative Contractors (MACs) (in the case of local coverage and payment decisions). The CTI supplements, rather than replaces, these processes by working to assure that all of these activities reflect the agency-wide priority to promote high-quality, innovative care. At the same time, the CTI also works to streamline, accelerate, and improve coordination of these processes to ensure that they remain up to date as new issues arise. To achieve its goals, the CTI works to streamline and create a more transparent coding and payment process, improve the quality of medical decisions, and speed patient access to effective new treatments. It is also dedicated to supporting better decisions by patients and doctors in using Medicare-covered services through the promotion of better evidence development, which is critical for improving the quality of care for Medicare beneficiaries. To improve the understanding of CMS’ processes for coverage, coding, and payment and how to access them, the CTI has developed an ‘‘Innovator’s Guide’’ to these processes. The intent is to consolidate this information, much of which is already available in a variety of CMS documents and in various places on the CMS website, in a user friendly format. This guide was published in 2010 and is available on the CMS website at: https:// www.cms.gov/Medicare/Coverage/ CouncilonTechInnov/Downloads/ Innovators-Guide-Master-7-23-15.pdf. As we indicated in the FY 2009 IPPS final rule (73 FR 48554), we invite any product developers or manufacturers of new medical services or technologies to contact the agency early in the process of product development if they have questions or concerns about the PO 00000 Frm 00115 Fmt 4701 Sfmt 4702 20277 evidence that would be needed later in the development process for the agency’s coverage decisions for Medicare. The CTI aims to provide useful information on its activities and initiatives to stakeholders, including Medicare beneficiaries, advocates, medical product manufacturers, providers, and health policy experts. Stakeholders with further questions about Medicare’s coverage, coding, and payment processes, or who want further guidance about how they can navigate these processes, can contact the CTI at CTI@cms.hhs.gov. We note that applicants for add-on payments for new medical services or technologies for FY 2020 must submit a formal request, including a full description of the clinical applications of the medical service or technology and the results of any clinical evaluations demonstrating that the new medical service or technology represents a substantial clinical improvement, along with a significant sample of data to demonstrate that the medical service or technology meets the high-cost threshold. Complete application information, along with final deadlines for submitting a full application, will be posted as it becomes available on the CMS website at: https://www.cms.gov/ Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/ newtech.html. To allow interested parties to identify the new medical services or technologies under review before the publication of the proposed rule for FY 2020, the CMS website also will post the tracking forms completed by each applicant. We note that the burden associated with this information collection requirement is the time and effort required to collect and submit the data in the formal request for add-on payments for new medical services and technologies to CMS. The aforementioned burden is subject to the PRA; it is currently approved under OMB control number 0938–1347, which expires on December 31, 2020. 2. Public Input Before Publication of a Notice of Proposed Rulemaking on AddOn Payments Section 1886(d)(5)(K)(viii) of the Act, as amended by section 503(b)(2) of Public Law 108–173, provides for a mechanism for public input before publication of a notice of proposed rulemaking regarding whether a medical service or technology represents a substantial clinical improvement or advancement. The process for evaluating new medical service and technology applications requires the Secretary to— E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20278 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules • Provide, before publication of a proposed rule, for public input regarding whether a new service or technology represents an advance in medical technology that substantially improves the diagnosis or treatment of Medicare beneficiaries; • Make public and periodically update a list of the services and technologies for which applications for add-on payments are pending; • Accept comments, recommendations, and data from the public regarding whether a service or technology represents a substantial clinical improvement; and • Provide, before publication of a proposed rule, for a meeting at which organizations representing hospitals, physicians, manufacturers, and any other interested party may present comments, recommendations, and data regarding whether a new medical service or technology represents a substantial clinical improvement to the clinical staff of CMS. In order to provide an opportunity for public input regarding add-on payments for new medical services and technologies for FY 2019 prior to publication of this FY 2019 IPPS/LTCH PPS proposed rule, we published a notice in the Federal Register on December 4, 2017 (82 FR 57275), and held a town hall meeting at the CMS Headquarters Office in Baltimore, MD, on February 13, 2018. In the announcement notice for the meeting, we stated that the opinions and presentations provided during the meeting would assist us in our evaluations of applications by allowing public discussion of the substantial clinical improvement criterion for each of the FY 2019 new medical service and technology add-on payment applications before the publication of this FY 2019 IPPS/LTCH PPS proposed rule. Approximately 150 individuals registered to attend the town hall meeting in person, while additional individuals listened over an open telephone line. We also live-streamed the town hall meeting and posted the town hall on the CMS YouTube web page at: https://www.youtube.com/ watch?v=9niqfxXe4oA&t=217s. We considered each applicant’s presentation made at the town hall meeting, as well as written comments submitted on the applications that were received by the due date of February 23, 2018, in our evaluation of the new technology add-on payment applications for FY 2019 in this FY 2019 IPPS/LTCH PPS proposed rule. In response to the published notice and the February 13, 2018 New VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Technology Town Hall meeting, we received written comments regarding the applications for FY 2019 new technology add-on payments. We note that we do not summarize comments that are unrelated to the ‘‘substantial clinical improvement’’ criterion. As explained earlier and in the Federal Register notice announcing the New Technology Town Hall meeting (82 FR 57275 through 57277), the purpose of the meeting was specifically to discuss the substantial clinical improvement criterion in regard to pending new technology add-on payment applications for FY 2019. Therefore, we are not summarizing those written comments in this proposed rule. In section II.H.5. of the preamble of this proposed rule, we are summarizing comments regarding individual applications, or, if applicable, indicating that there were no comments received in response to the New Technology Town Hall meeting notice, at the end of each discussion of the individual applications. Comment: One commenter recommended that the specific criteria that CMS uses in making substantial clinical improvement determinations be codified in the regulations to more explicitly clarify that the new medical service or technology will meet the substantial clinical improvement criterion if it: (a) Results in a reduction of the length of a hospital stay; (b) improves patient quality of life; (c) creates long-term clinical efficiencies in treatment; (d) addresses patientcentered objectives as defined by the Secretary; or (e) meets such other criteria as the Secretary may specify. The commenter stated that criteria similar to these were defined in the September 2001 New Technology Final Rule (66 FR 46913 through 46914). The commenter also recommended that final decisions on new technology add-on payment applications should explicitly discuss how a technology or treatment meets or fails to meet these specific criteria. Response: We appreciate the commenter’s recommendation. However, in the September 2001 New Technology Final Rule (66 FR 46913 through 46914), we explained how we evaluate if a new medical service or technology would meet the substantial clinical improvement criterion. Specifically, we stated that we evaluate a request for new technology payments against the following criteria to determine if the new medical service or technology would represent a substantial clinical improvement over existing technologies: PO 00000 Frm 00116 Fmt 4701 Sfmt 4702 • The device offers a treatment option for a patient population unresponsive to, or ineligible for, currently available treatments. • The device offers the ability to diagnose a medical condition in a patient population where that medical condition is currently undetectable or offers the ability to diagnose a medical condition earlier in a patient population than allowed by currently available methods. There must also be evidence that use of the device to make a diagnosis affects the management of the patient. • Use of the device significantly improves clinical outcomes for a patient population as compared to currently available treatments. We typically require the applicant to submit evidence that the technology meets one or more of these standards. Regarding whether the use of the device significantly improves clinical outcomes for a patient population as compared to currently available treatments, we provided examples of improved clinical outcomes. In response to the commenter’s recommendation that final decisions on new technology add-on applications explicitly discuss how a technology or treatment meets or fails to meet these specific standards, we believe that we provide this explanation when approving or denying an application for new technology add-on payments in the final rule. Comment: One commenter stated that the United States Food and Drug Administration Modernization Act (FDAMA) of 1997 established a category of medical devices and diagnostics that are eligible for priority FDA review. The commenter explained that, to qualify, products must be designated by the FDA as offering the potential for significant improvements in the diagnosis or treatment of the most serious illnesses, including those that are life-threatening or irreversibly debilitating. The commenter indicated that the processes by which products meeting the statutory standard for priority treatment are considered by the FDA are spelled out in greater detail in FDA’s Expedited Access Program (EAP), and in the 21st Century Cures Act. The commenter believed that the criteria for priority FDA review are very similar to the substantial clinical improvement criteria and, therefore, devices used in the inpatient setting determined to be eligible for expedited review and approved by the FDA should automatically be considered as meeting the substantial clinical improvement criterion, without further consideration by CMS. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules Another commenter stated that CMS historically has noted that a new technology is an appropriate candidate for an additional payment ‘‘when it represents an advance that substantially improves, relative to technologies previously available, the diagnosis or treatment of Medicare beneficiaries.’’ The commenter believed that this standard was created for medical devices because they dominated new technology of the time. The commenter recommended that this standard not be applied to regenerative medicine therapies because it believed these criteria are likely outside Congressional intent and inconsistent with some of the congressionally-created FDA approval rules related to expedited approval programs. The commenter explained that the FDA defines congressionallycreated ‘‘breakthrough therapy’’ and designates a therapy as such if it ‘‘may demonstrate substantial improvement over existing therapies.’’ In addition, the commenter stated that the Regenerative Medicine Advanced Therapy (RMAT) designation is granted to products that are intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition, and if clinical evidence shows that it has the potential to meet an unmet medical need. Response: The FDA provides a number of different types of approvals and designations for devices, drugs, and other medical products. As required by section 1886(d)(5)(K)(viii) of the Act, CMS provides a mechanism for public input, before the publication of the proposed rule, regarding whether a new service or technology represents an advance in medical technology that substantially improves the diagnosis or treatment of individuals entitled to benefits under Medicare Part A. We believe that the criteria explained in the September 2001 New Technology Final Rule (66 FR 46914) are consistent with the statutory requirements for evaluating new medical services and technologies and continue to be relevant to determining whether a new medical service or technology represents a substantial clinical improvement over existing technologies. If the technology has a status designated by the FDA that is similar to the standards and conditions required to demonstrate substantial clinical improvement under the new technology add-on payment criterion, or is designated as a breakthrough therapy, the technology should be able to demonstrate with evidence that it meets the new technology add-on payment substantial clinical improvement criterion. Finally, we do take FDA approvals into VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 consideration in our evaluation and determination of approvals and denials of new technology add-on payment applications. Comment: One commenter stated that, for technologies without a special FDA designation, the substantial clinical improvement standard is an inappropriate clinical standard for the family of regenerative therapies because it creates a threshold that is too high and unrealistic to meet. The commenter believed that requiring a vague standard such as ‘‘substantial clinical improvement’’ ignores that innovation is achieved incrementally. The commenter asserted that by only approving new technologies that can achieve this standard for new technology add-on payments, CMS’ policy is at cross-purposes with promoting innovation because many worthy technologies will not be approved by CMS, which denies the general population the opportunity of having the chance to learn and otherwise benefit from those technologies. The commenter also stated that CMS has questioned how substantial clinical improvement can be measured and achieved via small clinical trials with FDA approval. The commenter stated that it is concerned that this view sets a dangerous precedent by significantly undervaluing new transformative therapies. The commenter added that the FDA often only requires single-arm trials with small numbers of patients for these products because it is often not feasible for product developers to provide data on a large number of patients, especially those working in rare diseases as many regenerative and advanced therapeutic developers are. The commenter stated that, given the transformative nature of the products, this should not be a reason for CMS to deny a new medical service or technology add-on payment. Response: We believe that the September 2001 New Technology Final Rule (66 FR 46914) clearly defines the criteria that CMS uses to evaluate and determine if a new medical service or technology represents a substantial clinical improvement. In addition, we accept different types of data (for example, peer-reviewed articles, study results, or letters from major associations, among others) that demonstrate and support the substantial clinical improvement associated with the new medical service or technology’s use. In addition to clinical data, we will consider any evidence that would support the conclusion of a substantial clinical improvement associated with a new medical service or technology. PO 00000 Frm 00117 Fmt 4701 Sfmt 4702 20279 Therefore, we believe that we consider an appropriate range of evidence. Comment: One commenter stated that CMS should consider FDA approval and the associated evidence base leading to such an approval as a standard for meeting the substantial clinical improvement criterion. The commenter believed that additional factors such as improvements in patient quality of life, creation of long-term clinical efficiencies in care, reductions in the use of other healthcare services, or other such criteria should be incorporated into the CMS determination process for whether a new medical service or technology demonstrates or represents a substantial clinical improvement over existing technologies. The commenter believed that, by including these additional factors, CMS would align payment rates such that patients would have access to the highest standard of treatment for all transformative therapies representing a substantial clinical improvement for the patient populations they serve, and it would be recognized as such by the receipt of new technology add-on payments. Response: As stated earlier, one of the standards we use to determine whether a new medical service or technology represents a substantial clinical improvement over existing technologies is to evaluate whether the use of the device, drug, service, or technology significantly improves clinical outcomes for a patient population as compared to currently available treatments, and we provided examples of improved clinical outcomes in the September 2001 New Technology Final Rule (66 FR 46913 through 46914). Comment: One commenter encouraged CMS to ensure appropriate implementation of the substantial clinical improvement criterion under the applicable Medicare statutory provisions and regulations, as applied to radiopharmaceuticals and other nuclear medicine technologies that can lead to significant benefits and advances in the diagnosis and treatment of many diseases. The commenter recommended that CMS apply an appropriately flexible standard for purposes of assessing whether a technology represents a substantial clinical improvement over other existing, available therapies. The commenter asserted that a flexible standard for this purpose must include new products and new formulations of products that increase the safety or efficacy, or both, relative to current treatments. The commenter believed that failing to recognize a technology that enhances the safety and/or efficacy of existing options as both ‘‘new’’ and a E:\FR\FM\07MYP2.SGM 07MYP2 20280 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules ‘‘substantial clinical improvement’’ over existing options would be a disservice to Medicare beneficiaries and to the mission of the Medicare program. The commenter encouraged CMS to give consideration to the importance of technologies that make radiotherapies safer, as well as those that lead to increased efficacy. The commenter explained that minimizing a patient’s exposure to radiation, while also maximizing the effectiveness of the radiotherapy dose results in highly significant clinical improvements for patients, including in specific areas that CMS has expressly identified as relevant to the substantial clinical improvement criterion. Response: As stated earlier, we believe that the criteria explained in the September 2001 New Technology Final Rule (66 FR 46914) are consistent with the statutory requirements for evaluating new medical services and technologies and continue to be relevant to determining whether a new medical service or technology represents a substantial clinical improvement over existing technologies. We believe that it is important to maintain an open dialogue regarding the IPPS new technology add-on payment process, and we appreciate all of the commenters’ input and recommendations. daltland on DSKBBV9HB2PROD with PROPOSALS2 3. ICD–10–PCS Section ‘‘X’’ Codes for Certain New Medical Services and Technologies As discussed in the FY 2016 IPPS/ LTCH final rule (80 FR 49434), the ICD– 10–PCS includes a new section containing the new Section ‘‘X’’ codes, which began being used with discharges occurring on or after October 1, 2015. Decisions regarding changes to ICD–10– PCS Section ‘‘X’’ codes will be handled in the same manner as the decisions for all of the other ICD–10–PCS code changes. That is, proposals to create, delete, or revise Section ‘‘X’’ codes under the ICD–10–PCS structure will be referred to the ICD–10 Coordination and Maintenance Committee. In addition, several of the new medical services and technologies that have been, or may be, approved for new technology add-on payments may now, and in the future, be assigned a Section ‘‘X’’ code within the structure of the ICD–10–PCS. We posted ICD–10–PCS Guidelines on the CMS website at: https://www.cms.gov/ Medicare/Coding/ICD10/2016-ICD-10PCS-and-GEMs.html, including guidelines for ICD–10–PCS Section ‘‘X’’ codes. We encourage providers to view the material provided on ICD–10–PCS Section ‘‘X’’ codes. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 4. Proposed FY 2019 Status of Technologies Approved for FY 2018 Add-On Payments a. Defitelio® (Defibrotide) Jazz Pharmaceuticals submitted an application for new technology add-on payments for FY 2017 for defibrotide (Defitelio®), a treatment for patients diagnosed with hepatic veno-occlusive disease (VOD) with evidence of multiorgan dysfunction. VOD, also known as sinusoidal obstruction syndrome (SOS), is a potentially lifethreatening complication of hematopoietic stem cell transplantation (HSCT), with an incidence rate of 8 percent to 15 percent. Diagnoses of VOD range in severity from what has been classically defined as a disease limited to the liver (mild) and reversible, to a severe syndrome associated with multiorgan dysfunction or failure and death. Patients treated with HSCT who develop VOD with multi-organ failure face an immediate risk of death, with a mortality rate of more than 80 percent when only supportive care is used. The applicant asserted that Defitelio® improves the survival rate of patients diagnosed with VOD with multi-organ failure by 23 percent. Defitelio® received Orphan Drug Designation for the treatment of VOD in 2003 and for the prevention of VOD in 2007. It has been available to patients as an investigational drug through an expanded access program since 2006. The applicant’s New Drug Application (NDA) for Defitelio® received FDA approval on March 30, 2016. The applicant confirmed that Defitelio® was not available on the U.S. market as of the FDA NDA approval date of March 30, 2016. According to the applicant, commercial packaging could not be completed until the label for Defitelio® was finalized with FDA approval, and that commercial shipments of Defitelio® to hospitals and treatment centers began on April 4, 2016. Therefore, we agreed that, based on this information, the newness period for Defitelio® begins on April 4, 2016, the date of its first commercial availability. The applicant received approval to use unique ICD–10–PCS procedure codes to describe the use of Defitelio®, with an effective date of October 1, 2016. The approved ICD–10PCS procedure codes are: XW03392 (Introduction of defibrotide sodium anticoagulant into peripheral vein, percutaneous approach); and XW04392 (Introduction of defibrotide sodium anticoagulant into central vein, percutaneous approach). After evaluation of the newness, costs, and substantial clinical improvement PO 00000 Frm 00118 Fmt 4701 Sfmt 4702 criteria for new technology add-on payments for Defitelio® and consideration of the public comments we received in response to the FY 2017 IPPS/LTCH PPS proposed rule, we approved Defitelio® for new technology add-on payments for FY 2017 (81 FR 56906). With the new technology addon payment application, the applicant estimated that the average Medicare beneficiary would require a dosage of 25 mg/kg/day for a minimum of 21 days of treatment. The recommended dose is 6.25 mg/kg given as a 2-hour intravenous infusion every 6 hours. Dosing should be based on a patient’s baseline body weight, which is assumed to be 70 kg for an average adult patient. All vials contain 200 mg at a cost of $825 per vial. Therefore, we determined that cases involving the use of the Defitelio® technology would incur an average cost per case of $151,800 (70 kg adult × 25 mg/kg/day × 21 days = 36,750 mg per patient/200 mg vial = 184 vials per patient × $825 per vial = $151,800). Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 50 percent of the average cost of the technology or 50 percent of the costs in excess of the MS–DRG payment for the case. As a result, the maximum new technology add-on payment amount for a case involving the use of Defitelio® is $75,900. Our policy is that a medical service or technology may continue to be considered ‘‘new’’ for purposes of new technology add-on payments within 2 or 3 years after the point at which data begin to become available reflecting the inpatient hospital code assigned to the new service or technology. Our practice has been to begin and end new technology add-on payments on the basis of a fiscal year, and we have generally followed a guideline that uses a 6-month window before and after the start of the fiscal year to determine whether to extend the new technology add-on payment for an additional fiscal year. In general, we extend new technology add-on payments for an additional year only if the 3-year anniversary date of the product’s entry onto the U.S. market occurs in the latter half of the fiscal year (70 FR 47362). With regard to the newness criterion for Defitelio®, we considered the beginning of the newness period to commence on the first day Defitelio® was commercially available (April 4, 2016). Because the 3-year anniversary date of the entry of the Defitelio® onto the U.S. market (April 4, 2019) will occur in the latter half of FY 2019, we are proposing to continue new technology add-on payments for this technology for FY 2019. We are E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 proposing that the maximum payment for a case involving Defitelio® would remain at $75,900 for FY 2019. We are inviting public comments on our proposal to continue new technology add-on payments for Defitelio® for FY 2019. b. EDWARDS INTUITY EliteTM Valve System (INTUITY) and LivaNova Perceval Valve (Perceval) Two manufacturers, Edwards Lifesciences and LivaNova, submitted applications for new technology add-on payments for FY 2018 for the INTUITY EliteTM Valve System (INTUITY) and the Perceval Valve (Perceval), respectively. Both of these technologies are prosthetic aortic valves inserted using surgical aortic valve replacement (AVR). Aortic valvular disease is relatively common, primarily manifested by aortic stenosis. Most aortic stenosis is due to calcification of the valve, either on a normal tri-leaflet valve or on a congenitally bicuspid valve. The resistance to outflow of blood is progressive over time, and as the size of the aortic orifice narrows, the heart must generate increasingly elevated pressures to maintain blood flow. Symptoms such as angina, heart failure, and syncope eventually develop, and portend a very serious prognosis. There is no effective medical therapy for aortic stenosis, so the diseased valve must be replaced or, less commonly, repaired. According to both applicants, the INTUITY valve and the Perceval valve are the first sutureless, rapid deployment aortic valves that can be used for the treatment of patients who are candidates for surgical AVR. Because potential cases representing patients who are eligible for treatment using the INTUITY and the Perceval aortic valve devices would group to the same MS–DRGs, and we believe that these devices are intended to treat the same or similar disease in the same or similar patient population, and are purposed to achieve the same therapeutic outcome using the same or similar mechanism of action, we determined these two devices are substantially similar to each other and that it was appropriate to evaluate both technologies as one application for new technology add-on payments under the IPPS. With respect to the newness criterion, the INTUITY valve received FDA approval on August 12, 2016, and was commercially available on the U.S. market on August 19, 2016. The Perceval valve received FDA approval on January 8, 2016, and was commercially available on the U.S. market on February 29, 2016. In VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 accordance with our policy, we stated in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38120) that we believe it is appropriate to use the earliest market availability date submitted as the beginning of the newness period. Accordingly, for both devices, we stated that the beginning of the newness period is February 29, 2016, when the Perceval valve became commercially available. The ICD–10–PCS code approved to identify procedures involving the use of both devices when surgically implanted is ICD–10–PCS code X2RF032 (Replacement of aortic valve using zooplastic tissue, rapid deployment technique, open approach, new technology group 2). After evaluation of the newness, costs, and substantial clinical improvement criteria for new technology add-on payments for the INTUITY and Perceval valves and consideration of the public comments we received in response to the FY 2018 IPPS/LTCH PPS proposed rule, we approved the INTUITY and Perceval valves for new technology addon payments for FY 2018 (82 FR 38125). We stated that we believed that the use of a weighted-average of the cost of the standard valves based on the projected number of cases involving each technology to determine the maximum new technology add-on payment was most appropriate. To compute the weighted-cost average, we summed the total number of projected cases for each of the applicants, which equaled 2,429 cases (1,750 plus 679). We then divided the number of projected cases for each of the applicants by the total number of cases, which resulted in the following case-weighted percentages: 72 percent for the INTUITY and 28 percent for the Perceval valve. We then multiplied the cost per case for the manufacturer specific valve by the case-weighted percentage (0.72 * $12,500 = $9,005.76 for INTUITY and 0.28 * $11,500 = $3,214.70 for the Perceval valve). This resulted in a case-weighted average cost of $12,220.46 for the valves. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 50 percent of the average cost of the device or 50 percent of the costs in excess of the MS–DRG payment for the case. As a result, the maximum new technology add-on payment for a case involving the INTUITY or Perceval valves is $6,110.23 for FY 2018. With regard to the newness criterion for the INTUITY and Perceval valves, we considered the newness period for the INTUITY and Perceval valves to begin February 29, 2016. As discussed previously in this section, in general, we extend new technology add-on payments for an additional year only if PO 00000 Frm 00119 Fmt 4701 Sfmt 4702 20281 the 3-year anniversary date of the product’s entry onto the U.S. market occurs in the latter half of the upcoming fiscal year. Because the 3-year anniversary date of the entry of the technology onto the U.S. market (February 29, 2019) will occur in the first half of FY 2019, we are proposing to discontinue new technology add-on payments for the INTUITY and Perceval valves for FY 2019. We are inviting public comments on our proposal to discontinue new technology add-on payments for the INTUITY and Perceval valves. c. GORE® EXCLUDER® Iliac Branch Endoprosthesis (Gore IBE Device) W. L. Gore and Associates, Inc. submitted an application for new technology add-on payments for the GORE® EXCLUDER® Iliac Branch Endoprosthesis (GORE IBE device) for FY 2017. The device consists of two components: The Iliac Branch Component (IBC) and the Internal Iliac Component (IIC). The applicant indicated that each endoprosthesis is pre-mounted on a customized delivery and deployment system allowing for controlled endovascular delivery via bilateral femoral access. According to the applicant, the device is designed to be used in conjunction with the GORE® EXCLUDER® AAA Endoprosthesis for the treatment of patients requiring repair of common iliac or aortoiliac aneurysms. When deployed, the GORE IBE device excludes the common iliac aneurysm from systemic blood flow, while preserving blood flow in the external and internal iliac arteries. With regard to the newness criterion, the applicant received pre-market FDA approval of the GORE IBE device on February 29, 2016. The following procedure codes describe the use of this technology: 04VC0EZ (Restriction of right common iliac artery with branched or fenestrated intraluminal device, one or two arteries, open approach); 04VC3EZ (Restriction of right common iliac artery with branched or fenestrated intraluminal device, one or two arteries, percutaneous approach); 04VC4EZ (Restriction of right common iliac artery with branched or fenestrated intraluminal device, one or two arteries, percutaneous approach); 04VD0EZ (Restriction of left common iliac artery with branched or fenestrated intraluminal device, one or two arteries, open approach); 04VD3EZ (Restriction of left common iliac artery with branched or fenestrated intraluminal device, one or two arteries, percutaneous approach); 04VD4EZ (Restriction of left common iliac artery with branched or fenestrated E:\FR\FM\07MYP2.SGM 07MYP2 20282 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 intraluminal device, one or two arteries, percutaneous endoscopic approach). After evaluation of the newness, costs, and substantial clinical improvement criteria for new technology add-on payments for the GORE IBE device and consideration of the public comments we received in response to the FY 2017 IPPS/LTCH PPS proposed rule, we approved the GORE IBE device for new technology add-on payments for FY 2017 (81 FR 56909). With the new technology add-on payment application, the applicant indicated that the total operating cost of the GORE IBE device is $10,500. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 50 percent of the average cost of the device or 50 percent of the costs in excess of the MS–DRG payment for the case. As a result, the maximum new technology add-on payment for a case involving the GORE IBE device is $5,250. With regard to the newness criterion for the GORE IBE device, we considered the beginning of the newness period to commence when the GORE IBE device received FDA approval on February 29, 2016. As discussed previously in this section, in general, we extend new technology add-on payments for an additional year only if the 3-year anniversary date of the product’s entry onto the U.S. market occurs in the latter half of the upcoming fiscal year. Because the 3-year anniversary date of the entry of the GORE IBE device onto the U.S. market (February 28, 2019) will occur in the first half of FY 2019, we are proposing to discontinue new technology add-on payments for this technology for FY 2019. We are inviting public comments on our proposal to discontinue new technology add-on payments for the GORE IBE device. d. Idarucizumab Boehringer Ingelheim Pharmaceuticals, Inc. submitted an application for new technology add-on payments for FY 2017 for Idarucizumab, a product developed as an antidote to reverse the effects of PRADAXAR (Dabigatran), which is also manufactured by Boehringer Ingelheim Pharmaceuticals, Inc. Dabigatran is an oral direct thrombin inhibitor currently indicated: (1) To reduce the risk of stroke and systemic embolism in patients who have been diagnosed with nonvalvular atrial fibrillation (NVAF); (2) for the treatment of deep venous thrombosis (DVT) and pulmonary embolism (PE) in patients who have been administered a parenteral anticoagulant for 5 to 10 days; (3) to reduce the risk of recurrence of DVT and PE in patients who have VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 been previously treated; and (4) for the prophylaxis of DVT and PE in patients who have undergone hip replacement surgery. Currently, unlike the anticoagulant Warfarin, there is no specific way to reverse the anticoagulant effect of Dabigatran in the event of a major bleeding episode. Idarucizumab is a humanized fragment antigen binding (Fab) molecule, which specifically binds to Dabigatran to deactivate the anticoagulant effect, thereby allowing thrombin to act in blood clot formation. The applicant stated that Idarucizumab represents a new pharmacologic approach to neutralizing the specific anticoagulant effect of Dabigatran in emergency situations. Idarucizumab was approved by the FDA on October 16, 2015. Idarucizumab is indicated for the use in the treatment of patients who have been administered Pradaxa when reversal of the anticoagulant effects of dabigatran is needed for emergency surgery or urgent medical procedures or in lifethreatening or uncontrolled bleeding. The applicant was granted approval to use unique ICD–10–PCS procedure codes that became effective October 1, 2016, to describe the use of this technology. The approved ICD–10–PCS procedure codes are: XW03331 (Introduction of Idarucizumab, Dabigatran reversal agent into peripheral vein, percutaneous approach, new technology group 1); and XW04331 (Introduction of Idarucizumab, Dabigatran reversal agent into central vein, percutaneous approach, new technology group 1). After evaluation of the newness, costs, and substantial clinical improvement criteria for new technology add-on payments for Idarucizumab and consideration of the public comments we received in response to the FY 2017 IPPS/LTCH PPS proposed rule, we approved Idarucizumab for new technology add-on payments for FY 2017 (81 FR 56897). With the new technology add-on payment application, the applicant indicated that the total operating cost of Idarucizumab is $3,500. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 50 percent of the average cost of the technology or 50 percent of the costs in excess of the MS–DRG payment for the case. As a result, the maximum new technology add-on payment for a case involving Idarucizumab is $1,750. With regard to the newness criterion for Idarucizumab, we considered the beginning of the newness period to commence when Idarucizumab was approved by the FDA on October 16, 2015. As discussed previously in this section, in general, we extend new PO 00000 Frm 00120 Fmt 4701 Sfmt 4702 technology add-on payments for an additional year only if the 3-year anniversary date of the product’s entry onto the U.S. market occurs in the latter half of the upcoming fiscal year. Because the 3-year anniversary date of the entry of Idarucizumab onto the U.S. market will occur in the first half of FY 2019 (October 15, 2018), we are proposing to discontinue new technology add-on payments for this technology for FY 2019. We are inviting public comments on our proposal to discontinue new technology add-on payments for Idarucizumab. e. Ustekinumab (Stelara®) Janssen Biotech submitted an application for new technology add-on payments for the Stelara® induction therapy for FY 2018. Stelara® received FDA approval as an intravenous (IV) infusion treatment of Crohn’s disease (CD) on September 23, 2016, which added a new indication for the use of Stelara® and route of administration for this monoclonal antibody. IV infusion of Stelara® is indicated for the treatment of adult patients (18 years and older) diagnosed with moderately to severely active CD who have: (1) Failed or were intolerant to treatment using immunomodulators or corticosteroids, but never failed a tumor necrosis factor (TNF) blocker; or (2) failed or were intolerant to treatment using one or more TNF blockers. Stelara® for IV infusion has only one purpose, induction therapy. Stelara® must be administered intravenously by a health care professional in either an inpatient hospital setting or an outpatient hospital setting. Stelara® for IV infusion is packaged in single 130 mg vials. Induction therapy consists of a single IV infusion dose using the following weight-based dosing regimen: Patients weighing less than (<)55 kg are administered 260 mg of Stelara® (2 vials); patients weighing more than (>)55 kg, but less than (<)85 kg are administered 390 mg of Stelara® (3 vials); and patients weighing more than (>)85 kg are administered 520 mg of Stelara® (4 vials). An average dose of Stelara® administered through IV infusion is 390 mg (3 vials). Maintenance doses of Stelara® are administered at 90 mg, subcutaneously, at 8-week intervals and may occur in the outpatient hospital setting. CD is an inflammatory bowel disease of unknown etiology, characterized by transmural inflammation of the gastrointestinal (GI) tract. Symptoms of CD may include fatigue, prolonged diarrhea with or without bleeding, abdominal pain, weight loss and fever. CD can affect any part of the GI tract E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules including the mouth, esophagus, stomach, small intestine, and large intestine. Conventional pharmacologic treatments of CD include antibiotics, mesalamines, corticosteroids, immunomodulators, tumor necrosis alpha (TNFa) inhibitors, and antiintegrin agents. Surgery may be necessary for some patients diagnosed with CD in which conventional therapies have failed. After evaluation of the newness, costs, and substantial clinical improvement criteria for new technology add-on payments for Stelara® and consideration of the public comments we received in response to the FY 2018 IPPS/LTCH PPS proposed rule, we approved Stelara® for new technology add-on payments for FY 2018 (82 FR 38129). Cases involving Stelara® that are eligible for new technology add-on payments are identified by ICD–10–PCS procedure code XW033F3 (Introduction of other New Technology therapeutic substance into peripheral vein, percutaneous approach, new technology group 3). With the new technology addon payment application, the applicant estimated that the average Medicare beneficiary would require a dosage of 390 mg (3 vials) at a hospital acquisition cost of $1,600 per vial (for a total of $4,800). Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 50 percent of the average cost of the technology or 50 percent of the costs in excess of the MS–DRG payment for the case. As a result, the maximum new technology add-on payment amount for a case involving the use of Stelara® is $2,400. With regard to the newness criterion for Stelara®, we considered the beginning of the newness period to commence when Stelara® received FDA approval as an IV infusion treatment of Crohn’s disease (CD) on September 23, 2016. Because the 3-year anniversary date of the entry of Stelara® onto the U.S. market (September 23, 2019) will occur after FY 2019, we are proposing to continue new technology add-on payments for this technology for FY 2019. We are proposing that the maximum payment for a case involving Stelara® would remain at $2,400 for FY 2019. We are inviting public comments on our proposal to continue new technology add-on payments for Stelara® for FY 2019. f. VistogardTM (Uridine Triacetate) BTG International Inc. submitted an application for new technology add-on payments for the VistogardTM for FY 2017. VistogardTM was developed as an emergency treatment for Fluorouracil toxicity. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Chemotherapeutic agent 5fluorouracil (5–FU) is used to treat specific solid tumors. It acts upon deoxyribonucleic acid (DNA) and ribonucleic acid (RNA) in the body, as uracil is a naturally occurring building block for genetic material. Fluorouracil is a fluorinated pyrimidine. As a chemotherapy agent, Fluorouracil is absorbed by cells and causes the cell to metabolize into byproducts that are toxic and used to destroy cancerous cells. According to the applicant, the byproducts fluorodoxyuridine monophosphate (F–dUMP) and floxuridine triphosphate (FUTP) are believed to do the following: (1) Reduce DNA synthesis; (2) lead to DNA fragmentation; and (3) disrupt RNA synthesis. Fluorouracil is used to treat a variety of solid tumors such as colorectal, head and neck, breast, and ovarian cancer. With different tumor treatments, different dosages, and different dosing schedules, there is a risk for toxicity in these patients. Patients may suffer from fluorouracil toxicity/death if 5–FU is delivered in slight excess or at faster infusion rates than prescribed. The cause of overdose can happen for a variety of reasons including: Pump malfunction, incorrect pump programming or miscalculated doses, and accidental or intentional ingestion. VistogardTM is an antidote to Fluorouracil toxicity and is a prodrug of uridine. Once the drug is metabolized into uridine, it competes with the toxic byproduct FUTP in binding to RNA, thereby reducing the impact FUTP has on cell death. With regard to the newness criterion, VistogardTM received FDA approval on December 11, 2015. However, as discussed in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56910), due to the delay in VistogardTM’s commercial availability, we considered the newness period to begin March 2, 2016, instead of December 11, 2015. The applicant noted that the VistogardTM is the first FDA-approved antidote used to reverse fluorouracil toxicity. The applicant submitted a request for a unique ICD– 10–PCS procedure code and was granted approval for the following procedure code: XW0DX82 (Introduction of Uridine Triacetate into Mouth and Pharynx, External Approach, new technology group 2). The new code became effective on October 1, 2016. After evaluation of the newness, costs, and substantial clinical improvement criteria for new technology add-on payments for VistogardTM and consideration of the public comments we received in response to the FY 2017 IPPS/LTCH PPS proposed rule, we PO 00000 Frm 00121 Fmt 4701 Sfmt 4702 20283 approved VistogardTM for new technology add-on payments for FY 2017 (81 FR 56912). With the new technology add-on payment application, the applicant stated that the total operating cost of VistogardTM is $75,000. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 50 percent of the average cost of the technology or 50 percent of the costs in excess of the MS–DRG payment for the case. As a result, the maximum new technology add-on payment for a case involving VistogardTM is $37,500. With regard to the newness criterion for the VistogardTM, we considered the beginning of the newness period to commence upon the entry of VistogardTM onto the U.S. market on March 2, 2016. As discussed previously in this section, in general, we extend new technology add-on payments for an additional year only if the 3-year anniversary date of the product’s entry onto the U.S. market occurs in the latter half of the upcoming fiscal year. Because the 3-year anniversary date of the entry of the VistogardTM onto the U.S. market (March 2, 2019) will occur in the first half of FY 2019, we are proposing to discontinue new technology add-on payments for this technology for FY 2019. We are inviting public comments on our proposal to discontinue new technology add-on payments for the VistogardTM. g. Bezlotoxumab (ZINPLAVATM) Merck & Co., Inc. submitted an application for new technology add-on payments for ZINPLAVATM for FY 2018. ZINPLAVATM is indicated to reduce recurrence of Clostridium difficile infection (CDI) in adult patients who are receiving antibacterial drug treatment for a diagnosis of CDI who are at high risk for CDI recurrence. ZINPLAVATM is not indicated for the treatment of the presenting episode of CDI and is not an antibacterial drug. Clostridium difficile (C-diff) is a disease-causing anaerobic, spore forming bacteria that can affect the gastrointestinal (GI) tract. Some people carry the C-diff bacterium in their intestines, but never develop symptoms of an infection. The difference between asymptomatic colonization and pathogenicity is caused primarily by the production of an enterotoxin (Toxin A) and/or a cytotoxin (Toxin B). The presence of either or both toxins can lead to symptomatic CDI, which is defined as the acute onset of diarrhea with a documented infection with toxigenic C-diff, or the presence of either toxin A or B. The GI tract contains millions of bacteria, commonly referred to as ‘‘normal flora’’ or ‘‘good E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20284 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules bacteria,’’ which play a role in protecting the body from infection. Antibiotics can kill these good bacteria and allow the C-diff bacteria to multiply and release toxins that damage the cells lining the intestinal wall, resulting in a CDI. CDI is a leading cause of hospitalassociated gastrointestinal illnesses. Persons at increased risk for CDI include people who are treated with current or recent antibiotic use, people who have encountered current or recent hospitalization, people who are older than 65 years, immunocompromised patients, and people who have recently had a diagnosis of CDI. CDI symptoms include, but are not limited to, diarrhea, abdominal pain, and fever. CDI symptoms range in severity from mild (abdominal discomfort, loose stools) to severe (profuse, watery diarrhea, severe pain, and high fevers). Severe CDI can be life-threatening and, in rare cases, can cause bowel rupture, sepsis and organ failure. CDI is responsible for 14,000 deaths per year in the United States. C-diff produces two virulent, proinflammatory toxins, Toxin A and Toxin B, which target host colonocytes (that is, large intestine endothelial cells) by binding to endothelial cell surface receptors via combined repetitive oligopeptide (CROP) domains. These toxins cause the release of inflammatory cytokines leading to intestinal fluid secretion and intestinal inflammation. The applicant asserted that ZINPLAVATM targets Toxin B sites within the CROP domain rather than the C-diff organism itself. According to the applicant, by targeting C-diff Toxin B, ZINPLAVATM neutralizes Toxin B, prevents large intestine endothelial cell inflammation, symptoms associated with CDI, and reduces the recurrence of CDI. ZINPLAVATM received FDA approval on October 21, 2016, for reduction of recurrence of CDI in patients receiving antibacterial drug treatment for CDI and who are at high risk of CDI recurrence. ZINPLAVATM became commercially available on February 10, 2017. Therefore, the newness period for ZINPLAVATM began on February 10, 2017. The applicant submitted a request for a unique ICD–10–PCS procedure code and was granted approval for the following procedure codes: XW033A3 (Introduction of bezlotoxumab monoclonal antibody, into peripheral vein, percutaneous approach, new technology group 3) and XW043A3 (Introduction of bezlotoxumab VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 monoclonal antibody, into central vein, percutaneous approach, new technology group 3). After evaluation of the newness, costs, and substantial clinical improvement criteria for new technology add-on payments for ZINPLAVATM and consideration of the public comments we received in response to the FY 2018 IPPS/LTCH PPS proposed rule, we approved ZINPLAVATM for new technology add-on payments for FY 2018 (82 FR 38119). With the new technology add-on payment application, the applicant estimated that the average Medicare beneficiary would require a dosage of 10 mg/kg of ZINPLAVATM administered as an IV infusion over 60 minutes as a single dose. According to the applicant, the WAC for one dose is $3,800. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 50 percent of the average cost of the technology or 50 percent of the costs in excess of the MS–DRG payment for the case. As a result, the maximum new technology add-on payment amount for a case involving the use of ZINPLAVATM is $1,900. With regard to the newness criterion for ZINPLAVATM, we considered the beginning of the newness period to commence on February 10, 2017. Because the 3-year anniversary date of the entry of ZINPLAVATM onto the U.S. market (February 10, 2020) will occur after FY 2019, we are proposing to continue new technology add-on payments for this technology for FY 2019. We are proposing that the maximum payment for a case involving ZINPLAVATM would remain at $1,900 for FY 2019. We are inviting public comments on our proposal to continue new technology add-on payments for ZINPLAVATM for FY 2019. 5. FY 2019 Applications for New Technology Add-On Payments We received 15 applications for new technology add-on payments for FY 2019. In accordance with the regulations under § 412.87(c), applicants for new technology add-on payments must have FDA approval or clearance by July 1 of the year prior to the beginning of the fiscal year that the application is being considered. A discussion of the 15 applications is presented below. a. KYMRIAHTM (Tisagenlecleucel) and YESCARTATM (Axicabtagene Ciloleucel) Two manufacturers, Novartis Pharmaceuticals Corporation and Kite PO 00000 Frm 00122 Fmt 4701 Sfmt 4702 Pharma, Inc. submitted separate applications for new technology add-on payments for FY 2019 for KYMRIAHTM (tisagenlecleucel) and YESCARTATM (axicabtagene ciloleucel), respectively. Both of these technologies are CD–19directed T-cell immunotherapies used for the purposes of treating patients with aggressive variants of non-Hodgkin lymphoma (NHL). We note that KYMRIAHTM was approved by the FDA on August 30, 2017, for use in the treatment of patients up to 25 years of age with B-cell precursor acute lymphoblastic leukemia (ALL) that is refractory or in second or later relapse, which is a different indication and patient population than the new indication and targeted patient population for which the applicant submitted a request for approval of new technology add-on payments for FY 2019. Specifically, and as summarized in the following table, the new indication for which Novartis Pharmaceuticals Corporation is requesting approval for new technology add-on payments for KYMRIAHTM is as an autologous T-cell immune therapy indicated for use in the treatment of patients with relapsed/refractory (R/R) Diffuse Large B-Cell Lymphoma (DLBCL) not eligible for autologous stem cell transplant (ASCT). As of the time of the development of this proposed rule, Novartis Pharmaceuticals Corporation has been granted a Breakthrough Therapy designation by the FDA, and is awaiting FDA approval for the use of KYMRIAHTM under this new indication. We also note that Kite Pharma, Inc. previously submitted an application for approval for new technology add-on payments for FY 2018 for KTE–C19 for use as an autologous T-cell immune therapy in the treatment of adult patients with R/R aggressive B-cell NHL who are ineligible for ASCT. However, Kite Pharma, Inc. withdrew its application for KTE–C19 prior to publication of the FY 2018 IPPS/LTCH PPS final rule. Kite Pharma, Inc. has resubmitted an application for approval for new technology add-on payments for FY 2019 for KTE–C19 under a new name, YESCARTATM, for the same indication. Kite Pharma, Inc. received FDA approval for this original indication and treatment use of YESCARTATM on October 18, 2017. (We refer readers to the following table for a comparison of the indications and FDA approvals for KYMRIAHTM and YESCARTATM.) E:\FR\FM\07MYP2.SGM 07MYP2 20285 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules COMPARISON OF INDICATION AND FDA APPROVAL FOR KYMRIAHTM AND YESCARTATM FY 2019 applicant technology name Description of indication for which new technology add-on payments are being requested FDA approval status KYMRIAHTM (Novartis Pharmaceuticals Corporation). YESCARTATM (Kite Pharma, Inc.). KYMRIAHTM: Autologous T-cell immune therapy indicated for use in the treatment of patients with relapsed/refractory (R/R) Diffuse Large B Cell Lymphoma (DLBCL) not eligible for autologous stem cell transplant (ASCT). YESCARTATM: Autologous T-cell immune therapy indicated for use in the treatment of adult patients with R/R large B-cell lymphoma after two or more lines of systemic therapy, including DLBCL not otherwise specified, primary mediastinal large B-cell, high grade B-cell lymphoma, and DLBCL arising from follicular lymphoma. Breakthrough Therapy designation granted by FDA; FDA approval pending. FDA approval received 10/18/2017. Technology approved for other indications Description of other indication FDA approval of other indication KYMRIAHTM (Novartis Pharmaceuticals Corporation). KYMRIAHTM: CD–19-directed T-cell immunotherapy indicated for the use in the treatment of patients up to 25 years of age with B-cell precursor ALL that is refractory or in second or later relapse. None ............................................................................................................................. daltland on DSKBBV9HB2PROD with PROPOSALS2 YESCARTATM (Kite Pharma, Inc.). We note that procedures involving the KYMRIAHTM and YESCARTATM therapies are both reported using the following ICD–10–PCS procedure codes: XW033C3 (Introduction of engineered autologous chimeric antigen receptor tcell immunotherapy into peripheral vein, percutaneous approach, new technology group 3); and XW043C3 (Introduction of engineered autologous chimeric antigen receptor t-cell immunotherapy into central vein, percutaneous approach, new technology group 3). We further note that, in section II.F.2.d. of the preamble of this proposed rule, we are proposing to assign cases reporting these ICD–10– PCS procedure codes to Pre-MDC MS– DRG 016 (Autologous Bone Marrow Transplant with CC/MCC) for FY 2019. We refer readers to section II.F.2.d. of this proposed rule for a complete discussion of the proposed assignment of cases reporting these procedure codes to Pre-MDC MS–DRG 016, which also includes a proposal to revise the title of MS–DRG 016 to reflect the proposed assignments. According to the applicants, patients with NHL represent a heterogeneous group of B-cell malignancies with varying patterns of behavior and response to treatment. B-cell NHL can be classified as either an aggressive, or indolent disease, with aggressive variants including DLBCL; primary mediastinal large B-cell lymphoma (PMBCL); and transformed follicular lymphoma (TFL). Within diagnoses of NHL, DLBCL is the most common subtype of NHL, accounting for approximately 30 percent of patients who have been diagnosed with NHL, VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 and survival without treatment is measured in months.4 Despite improved therapies, only 50 to 70 percent of newly diagnosed patients are cured by standard first-line therapy alone. Furthermore, R/R disease continues to carry a poor prognosis because only 50 percent of patients are eligible for autologous stem cell transplantation (ASCT) due to advanced age, poor functional status, comorbidities, inadequate social support for recovery after ASCT, and provider or patient choice.5 6 7 8 Of the roughly 50 percent of patients that are eligible for ASCT, nearly 50 percent fail to respond to prerequisite salvage chemotherapy and cannot undergo ASCT.9 10 11 12 Second4 Chaganti, S., et al., ‘‘Guidelines for the management of diffuse large B-cell lymphoma,’’ BJH Guideline, 2016. Available at: www.bit.do/bshguidelines. 5 Matasar, M., et al., ‘‘Ofatumumab in combination with ICE or DHAP chemotherapy in relapsed or refractory intermediate grade B-cell lymphoma,’’ Blood, 25 July 2013, vol. 122, No 4. 6 Hitz, F., et al., ‘‘Outcome of patients with chemotherapy refractory and early progressive diffuse large B cell lymphoma after R–CHOP treatment,’’ Blood (American Society of Hematology (ASH) annual meeting abstracts, poster session), 2010, pp. 116 (abstract #1751). 7 Telio, D., et al., ‘‘Salvage chemotherapy and autologous stem cell transplant in primary refractory diffuse large B-cell lymphoma: outcomes and prognostic factors,’’ Leukemia & Lymphoma, 2012, vol. 53(5), pp. 836–41. 8 Moskowitz, C.H., et al., ‘‘Ifosfamide, carboplatin, and etoposide: a highly effective cytoreduction and peripheral-blood progenitor-cell mobilization regimen for transplant-eligible patients with nonHodgkin’s lymphoma,’’ Journal of Clinical Oncology, 1999, vol. 17(12), pp. 3776–85. 9 Crump, M., et al., ‘‘Outcomes in patients with refractory aggressive diffuse large B-cell lymphoma (DLBCL): results from the international scholar-1 study,’’ Abstract and poster presented at Pan Pacific Lymphoma Conference (PPLC), July 2016. PO 00000 Frm 00123 Fmt 4701 Sfmt 4702 FDA approval received 8/30/2017. N/A. line chemotherapy regimens studied to date include rituximab, ifosfamide, carboplatin and etoposide (R–ICE), and rituximab, dexamethasone, cytarabine, and cisplatin (R–DHAP), followed by consolidative high-dose therapy (HDT)/ ASCT. Both regimens offer similar overall response rates (ORR) of 51 percent with 1 in 4 patients achieving long-term complete response (CR) at the expense of increased toxicity.13 Secondline treatment with dexamethasone, high-dose cytarabine, and cisplatin (DHAP) is considered a standard chemotherapy regimen, but is associated with substantial treatment-related toxicity.14 For patients who experience disease progression during or after primary treatment, the combination of HDT/ASCT remains the only curative option.15 According to the applicants, 10 Gisselbrecht, C., et al., ‘‘Results from SCHOLAR–1: outcomes in patients with refractory aggressive diffuse large B-cell lymphoma (DLBCL),’’ Oral presentation at European Hematology Association conference, July 2016. 11 Iams, W., Reddy, N., ‘‘Consolidative autologous hematopoietic stem-cell transplantation in first remission for non-Hodgkin lymphoma: current indications and future perspective,’’ Ther Adv Hematol, 2014, vol. 5(5), pp. 153–67. 12 Kantoff, P.W., et al., ‘‘Sipuleucel-T immunotherapy for castration-resistant prostate cancer,’’ N Engl J Med, 2010, vol. 363, pp. 411–422. 13 Rovira, J., Valera, A., Colomo, L., et al., ‘‘Prognosis of patients with diffuse large B cell lymphoma not reaching complete response or relapsing after frontline chemotherapy or immunochemotherapy,’’ Ann Hematol, 2015, vol. 94(5), pp. 803–812. 14 Swerdlow, S.H., Campo, E., Pileri, S.A., et al., ‘‘The 2016 revision of the World Health Organization classification of lymphoid neoplasms,’’ Blood, 2016, vol. 127(20), pp. 2375– 2390. 15 Koristka, S., Cartellieri, M., Arndt, C., et al., ‘‘Tregs activated by bispecific antibodies: killers or E:\FR\FM\07MYP2.SGM Continued 07MYP2 20286 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 given the modest response to second-line therapy and/or HDT/ASCT, the population of patients with the highest unmet need is those with chemorefractory disease, which include DLBCL, PMBCL, and TFL. These patients are defined as either progressive disease (PD) as best response to chemotherapy, stable disease as best response following greater than or equal to 4 cycles of firstline or 2 cycles of later-line therapy, or relapse within less than or equal to 12 months of ASCT.16 Based on these definitions and available data from a multi-center retrospective study (SCHOLAR–1), chemorefractory disease treated with current and historical standards of care has consistently poor outcomes with an ORR of 26 percent and median overall survival (OS) of 6.3 months.17 According to Novartis Pharmaceuticals Corporation, upon FDA approval of the additional indication, KYMRIAHTM will also be used for the treatment of patients with R/R DLBCL who are not eligible for ASCT. Novartis Pharmaceuticals Corporation describes KYMRIAHTM as a CD-19-directed genetically modified autologous T-cell immunotherapy which utilizes peripheral blood T-cells, which have been reprogrammed with a transgene encoding, a chimeric antigen receptor (CAR), to identify and eliminate CD–19expressing malignant and normal cells. Upon binding to CD–19-expressing cells, the CAR transmits a signal to promote T-cell expansion, activation, target cell elimination, and persistence of KYMRIAHTM cells. The transduced T-cells expand in vivo to engage and eliminate CD–19-expressing cells and may exhibit immunological endurance to help support long-lasting remission. 18 19 20 21 According to the applicant, no other agent currently used in the treatment of patients with R/R DLBCL suppressors?,’’ OncoImmunology, 2015, vol. (3):e994441, DOI: 10.4161/2162402X.2014.994441. 16 Crump, M., Neelapu, S.S., Farooq, U., et al., ‘‘Outcomes in refractory diffuse large B-cell lymphoma: results from the international SCHOLAR–1 study,’’ Blood, Published online: August 3, 2017, doi: 10.1182/blood-2017-03-69620. 17 Ibid. 18 KYMRIAHTM [prescribing information], East Hanover, NJ: Novartis Pharmaceuticals Corp, 2017. 19 Kalos, M., Levine, B.L., Porter, D.L., et al., ‘‘T-cells with chimeric antigen receptors have potent antitumor effects and can establish memory in patients with advanced leukemia,’’ Sci Transl Med, 2011, vol. 3(95), pp, 95ra73. 20 FDA Briefing Document. Available at: https:// www.fda.gov/downloads/AdvisoryCommittees/ CommitteesMeetingMaterials/Drugs/ OncologicDrugsAdvisoryCommittee/ UCM566168.pdf. 21 Wang, X., Riviere, I., ‘‘Clinical manufacturing of CART cells: foundation of a promising therapy,’’ Mol Ther Oncolytics, 2016, vol. 3, pp. 16015. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 employs gene modified autologous cells to target and eliminate malignant cells. According to Kite Pharma, Inc., YESCARTATM is indicated for the use in the treatment of adult patients with R/R large B-cell lymphoma after two or more lines of systemic therapy, including DLBCL not otherwise specified, PMBCL, high grade B-cell lymphoma, and DLBCL arising from follicular lymphoma. YESCARTA is not indicated for the treatment of patients with primary central nervous system lymphoma. The applicant for YESCARTATM described the technology as a CD–19-directed genetically modified autologous T-cell immunotherapy that binds to CD–19expressing cancer cells and normal B-cells. These normal B-cells are considered to be non-essential tissue, as they are not required for patient survival. According to the applicant, studies demonstrated that following anti-CD–19 CAR T-cell engagement with CD–19-expressing target cells, the CD– 28 and CD–3-zeta co-stimulatory domains activate downstream signaling cascades that lead to T-cell activation, proliferation, acquisition of effector functions and secretion of inflammatory cytokines and chemokines. This sequence of events leads to the elimination of CD–19-expressing tumor cells. Both applicants expressed that their technology is the first treatment of its kind for the targeted adult population. In addition, both applicants asserted that their technology is new and does not use a substantially similar mechanism of action or involve the same treatment indication as any other currently FDA-approved technology. We note that, at the time each applicant submitted its new technology add-on payment application, neither technology had received FDA approval for the indication for which the applicant requested approval for the new technology add-on payment; KYMRIAHTM has been granted Breakthrough Therapy designation for the use in the treatment of patients for the additional indication that is the subject of its new technology add-on application and, as of the time of the development of this proposed rule, is awaiting FDA approval. However, as stated earlier, YESCARTATM received FDA approval for use in the treatment of patients and the indication stated in its application on October 18, 2017, after each applicant submitted its new technology add-on payment application. As noted, according to both applicants, KYMRIAHTM and YESCARTATM are the first CAR T immunotherapies of their kind. Because PO 00000 Frm 00124 Fmt 4701 Sfmt 4702 potential cases representing patients who may be eligible for treatment using KYMRIAHTM and YESCARTATM would group to the same MS–DRGs (because the same ICD–10–CM diagnosis codes and ICD–10–PCS procedures codes are used to report treatment using either KYMRIAHTM or YESCARTATM), and we believe that these technologies are intended to treat the same or similar disease in the same or similar patient population, and are purposed to achieve the same therapeutic outcome using the same or similar mechanism of action, we disagree with the applicants and believe these two technologies are substantially similar to each other and that it is appropriate to evaluate both technologies as one application for new technology add-on payments under the IPPS. For these reasons, and as discussed further below, we would intend to make one determination regarding approval for new technology add-on payments that would apply to both applications, and in accordance with our policy, would use the earliest market availability date submitted as the beginning of the newness period for both KYMRIAHTM and YESCARTATM. We are inviting public comments on whether KYMRIAHTM and YESCARTATM are substantially similar. With respect to the newness criterion, as previously stated, YESCARTATM received FDA approval on October 18, 2017. According to the applicant, prior to FDA approval, YESCARTATM had been available in the U.S. only on an investigational basis under an investigational new drug (IND) application. For the same IND patient population, and until commercial availability, YESCARTATM was available under an Expanded Access Program (EAP) which started on May 17, 2017. The applicant stated that it did not recover any costs associated with the EAP. According to the applicant, the first commercial shipment of YESCARTATM was received by a certified treatment center on November 22, 2017. As previously indicated, KYMRIAHTM is not currently approved by the FDA for use in the treatment of patients with R/R DLBCL that are not eligible for ASCT; the technology has been granted Breakthrough Therapy designation by the FDA. The applicant anticipates receipt of FDA approval to occur in the second quarter of 2018. We believe that, in accordance with our policy, if these technologies are substantially similar to each other, it is appropriate to use the earliest market availability date submitted as the beginning of the newness period for both technologies. Therefore, based on E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules our policy, with regard to both technologies, if the technologies are approved for new technology add-on payments, we believe that the beginning of the newness period would be November 22, 2017. We previously stated that, because we believe these two technologies are substantially similar to each other, we believe it is appropriate to evaluate both technologies as one application for new technology add-on payments under the IPPS. The applicants submitted separate cost and clinical data, and we reviewed and discuss each set of data separately. However, we would intend to make one determination regarding new technology add-on payments that would apply to both applications. We believe that this is consistent with our policy statements in the past regarding substantial similarity. Specifically, we have noted that approval of new technology add-on payments would extend to all technologies that are substantially similar (66 FR 46915), and we believe that continuing our current practice of extending new technology add-on payments without a further application from the manufacturer of the competing product, or a specific finding on cost and clinical improvement if we make a finding of substantial similarity among two products is the better policy because we avoid— • Creating manufacturer-specific codes for substantially similar products; • Requiring different manufacturers of substantially similar products to submit separate new technology add-on payment applications; • Having to compare the merits of competing technologies on the basis of substantial clinical improvement; and • Bestowing an advantage to the first applicant representing a particular new technology to receive approval (70 FR 47351). If substantially similar technologies are submitted for review in different (and subsequent) years, rather than the same year, we would evaluate and make a determination on the first application and apply that same determination to the second application. However, because the technologies have been submitted for review in the same year, and because we believe they are substantially similar to each other, we believe that it is appropriate to consider both sets of cost data and clinical data in making a determination, and we do not believe that it is possible to choose one set of data over another set of data in an objective manner. We are inviting public comments on our proposal to evaluate KYMRIAHTM and YESCARTATM as one application for VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 new technology add-on payments under the IPPS. As stated earlier, we believe that KYMRIAHTM and YESCARTATM are substantially similar to each other for purposes of analyzing these two applications as one application. We also need to determine whether KYMRIAHTM and YESCARTATM are substantially similar to existing technologies prior to their approval by the FDA and their release onto the U.S. market. As discussed earlier, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and would not be considered ‘‘new’’ for purposes of new technology add-on payments. With respect to the first criterion, whether a product uses the same or a similar mechanism of action to achieve a therapeutic outcome, the applicant for KYMRIAHTM asserted that its unique design, which utilizes features that were not previously included in traditional cytotoxic chemotherapeutic or immunotherapeutic agents, constitutes a new mechanism of action. The deployment mechanism allows for identification and elimination of CD–19expressing malignant and nonmalignant cells, as well as possible immunological endurance to help support long-lasting remission.22 23 24 25 The applicant provided context regarding how KYMRIAHTM’s unique design contributes to a new mechanism of action by explaining that peripheral blood T-cells, which have been reprogrammed with a transgene encoding, a CAR, identify and eliminate CD-19-expressing malignant and nonmalignant cells. As explained by the applicant, upon binding to CD–19expressing cells, the CAR transmits a signal to promote T-cell expansion, activation, target cell elimination, and persistence of KYMRIAHTM cells.26 27 28 22 KYMRIAH [prescribing information]. East Hanover, NJ: Novartis Pharmaceuticals Corp; 2017. 23 Kalos, M., Levine, B.L., Porter, D.L., et al., ‘‘T cells with chimeric antigen receptors have potent antitumor effects and can establish memory in patients with advanced leukemia,’’ Sci Transl Med, 2011, vol. 3(95), pp. 95ra73. 24 FDA Briefing Document. Available at: https:// www.fda.gov/downloads/AdvisoryCommittees/ CommitteesMeetingMaterials/Drugs/ OncologicDrugsAdvisoryCommittee/ UCM566168.pdf. 25 Maude, S.L., Frey, N., Shaw, P.A., et al., ‘‘Chimeric antigen receptor T cells for sustained remissions in leukemia,’’ N Engl J Med, 2014, vol. 371(16), pp. 1507–1517. 26 KYMRIAHTM [prescribing information], East Hanover, NJ: Novartis Pharmaceuticals Corp, 2017. 27 Kalos, M., Levine, B.L., Porter, D.L., et al., ‘‘T-cells with chimeric antigen receptors have potent antitumor effects and can establish memory in patients with advanced leukemia,’’ Sci Transl Med, 2011, 3(95), pp, 95ra73. PO 00000 Frm 00125 Fmt 4701 Sfmt 4702 20287 According to the applicant, transduced T-cells expand in vivo to engage and eliminate CD–19-expressing cells and may exhibit immunological endurance to help support long-lasting remission.29 30 31 The applicant for YESCARTATM stated that YESCARTATM is the first engineered autologous cellular immunotherapy comprised of CAR T-cells that recognizes CD–19 express cancer cells and normal B-cells with efficacy in patients with R/R large B-cell lymphoma after two or more lines of systemic therapy, including DLBCL not otherwise specified, PMBCL, high grade B-cell lymphoma, and DLBCL arising from follicular lymphoma as demonstrated in a multi-centered clinical trial. Therefore, the applicant believed that YESCARTATM’s mechanism of action is distinct and unique from any other cancer drug or biologic that is currently approved for use in the treatment of patients who have been diagnosed with aggressive Bcell NHL, namely single-agent or combination chemotherapy regimens. The applicant also pointed out that YESCARTATM is the only available therapy that has been granted FDA approval for the treatment of adult patients with R/R large B-cell lymphoma after two or more lines of systemic therapy, including DLBCL not otherwise specified, PMBCL, high grade B-cell lymphoma, and DLBCL arising from follicular lymphoma. With respect to the second and third criteria, whether a product is assigned to the same or a different MS–DRG and whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population, the applicant for KYMRIAHTM indicated that the technology is used in the treatment of the same patient population, and potential cases representing patients that may be eligible for treatment using KYMRIAHTM would be assigned to the same MS–DRGs as cases involving 28 FDA Briefing Document. Available at: https:// www.fda.gov/downloads/AdvisoryCommittees/ CommitteesMeetingMaterials/Drugs/ OncologicDrugsAdvisoryCommittee/ UCM566168.pdf. 29 Kalos, M., Levine, B.L., Porter, D.L., et al., ‘‘T cells with chimeric antigen receptors have potent antitumor effects and can establish memory in patients with advanced leukemia,’’ Sci Transl Med, 2011, vol. 3(95), pp. 95rs73. 30 FDA Briefing Document. Available at: https:// www.fda.gov/downloads/AdvisoryCommittees/ CommitteesMeetingMaterials/Drugs/ OncologicDrugsAdvisoryCommittee/ UCM566168.pdf. 31 Maude, S.L., Frey, N., Shaw, P.A., et al., ‘‘Chimeric antigen receptor T-cells for sustained remissions in leukemia,’’ N Engl J Med, 2014, vol. 371(16), pp. 1507–1517. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20288 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules patients with a DLBCL diagnosis. Potential cases representing patients that may be eligible for treatment using KYMRIAHTM map to 437 separate MS– DRGs, with the top 20 MS–DRGs covering approximately 68 percent of all patients who have been diagnosed with DLBCL. For patients with DLBCL and who have received chemotherapy during their hospital stay, the target population mapped to 8 separate MS– DRGs, with the top 2 MS–DRGs covering over 95 percent of this population: MS–DRGs 847 (Chemotherapy without Acute Leukemia as Secondary Diagnosis with CC), and 846 (Chemotherapy without Acute Leukemia as Secondary Diagnosis with MCC). The applicant for YESCARTATM submitted findings that potential cases representing patients that may be eligible for treatment using YESCARTATM span 15 unique MS– DRGs, 8 of which contain more than 10 cases. The most common MS–DRGs were: MS–DRGs 840 (Lymphoma and Non-Acute Leukemia with MCC), 841 (Lymphoma and Non-Acute Leukemia with CC), and 823 (Lymphoma and NonAcute Leukemia with other O.R. Procedures with MCC). These 3 MS– DRGs accounted for 628 (76 percent) of the 827 cases. While the applicants for KYMRIAHTM and YESCARTATM submitted different findings regarding the most common MS–DRGs to which potential cases representing patients who may be eligible for treatment involving their technology would map, we believe that, under the current MS– DRGs (FY 2018), potential cases representing patients who may be eligible for treatment involving either KYMRIAHTM or YESCARTATM would map to the same MS–DRGs because the same ICD–10–CM diagnosis codes and ICD–10–PCS procedures codes would be used to report cases for patients who may be eligible for treatment involving KYMRIAHTM and YESCARTATM. Furthermore, as noted above, we are proposing that cases reporting these ICD–10–PCS procedure codes would be assigned to MS–DRG 016 for FY 2019. Therefore, under this proposal, for FY 2019, cases involving the utilization of KYMRIAHTM and YESCARTATM would continue to map to the same MS–DRGs. The applicant for YESCARTATM also addressed the concern expressed by CMS in the FY 2018 IPPS/LTCH PPS proposed rule regarding Kite Pharma Inc.’s FY 2018 new technology add-on payment application for the KTE–C19 technology (82 FR 19888). At the time, CMS expressed concern that KTE–C19 may use the same or similar mechanism of action as the Bi-Specific T-Cell VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 engagers (BiTE) technology. The applicant for YESCARTATM explained that YESCARTATM has a unique and distinct mechanism of action that is substantially different from BiTE’s or any other drug or biologic currently assigned to any MS–DRG in the FY 2016 MedPAR Hospital Limited Data Set. In providing more detail regarding how YESCARTATM is different from the BiTE technology, the applicant explained that the BiTE technology is not an engineered autologous T-cell immunotherapy derived from a patient’s own T-cells. Instead, it is a bi-specific T-cell engager that recognizes CD–19 and CD–3 cancer cells. Unlike engineered T-cell therapy, BiTE does not have the ability to enhance the proliferative and cytolytic capacity of Tcells through ex-vivo engineering. Further, BiTE is approved for the treatment of patients who have been diagnosed with Philadelphia chromosome-negative relapsed or refractory B-cell precursor acute lymphoblastic leukemia (ALL) and is not approved for patients with relapsed or refractory large B-cell lymphoma, whereas YESCARTATM is indicated for use in the treatment of adult patients with R/R aggressive B-cell NHL who are ineligible for ASCT. The applicant for YESCARTATM also indicated that its mechanism of action is not the same or similar to the mechanism of action used by KYMRIAHTM’s currently available FDA-approved CD–19-directed genetically modified autologous T-cell immunotherapy indicated for use in the treatment of patients up to 25 years of age with B-cell precursor acute lymphoblastic leukemia (ALL) that is refractory or in second or later relapse.32 The applicant for YESCARTATM stated that the mechanism of action is different from KYMRIAHTM’s FDA-approved therapy because the spacer, transmembrane and co-stimulatory domains of YESCARTATM are different from those of KYMRIAHTM. The applicant explained that YESCARTATM is comprised of a CD–28 co-stimulatory domain and KYMRIAHTM has 4–1BB costimulatory domain. Further, the applicant stated the manufacturing processes of the two immunotherapies are also different, which may result in cell composition differences leading to possible efficacy and safety differences. While the applicant for YESCARTATM stated how its technology is different from KYMRIAHTM, because both technologies are CD–19-directed T-cell immunotherapies used for the purpose 32 Food and Drug Administration. Available at: www.accessdata.fda.gov/scripts/opdlisting/oopd/. PO 00000 Frm 00126 Fmt 4701 Sfmt 4702 of treating patients with aggressive variants of NHL, we believe that YESCARTATM and KYMRIAHTM are substantially similar treatment options. Furthermore, we also are concerned that there may be an age overlap (18 to 25) between the two different patient populations for the currently approved KYMRIAHTM technology and YESCARTATM technology. The currently approved KYMRIAHTM technology is indicated for use in the treatment of patients who are up to 25 years of age and YESCARTATM technology is indicated for use in the treatment of adult patients. As noted earlier, the applicant has asserted that YESCARTATM is not substantially similar to KYMRIAHTM. Under this scenario, if both YESCARTATM and KYMRIAHTM meet all of the new technology add-on payment criteria and are approved for new technology add-on payments for FY 2019, for purposes of making the new technology add-on payment, because procedures utilizing either YESCARTATM or KYMRIAHTM CAR Tcell therapy drugs are reported using the same ICD–10–PCS procedure codes, in order to accurately pay the new technology add-on payment to hospitals that perform procedures utilizing either technology, it may be necessary to use alternative coding mechanisms to make the new technology add-on payments. CMS is inviting comments on alternative coding mechanisms to make the new technology add-on payments, if necessary. We are inviting public comments on whether KYMRIAHTM and YESCARTATM are substantially similar to existing technologies and whether the technologies meet the newness criterion. As we stated above, each applicant submitted separate analysis regarding the cost criterion for each of their products, and both applicants maintained that their product meets the cost criterion. We summarize each analysis below. With regard to the cost criterion, the applicant for KYMRIAHTM searched the FY 2016 MedPAR claims data file to identify potential cases representing patients who may be eligible for treatment using KYMRIAHTM. The applicant identified claims that reported an ICD–10–CM diagnosis code of: C83.30 (DLBCL, unspecified site); C83.31 (DLBCL, lymph nodes of head, face and neck); C83.32 (DLBCL, intrathoracic lymph nodes); C83.33 (DLBCL, intra-abdominal lymph nodes); C83.34 (DLBCL, lymph nodes of axilla and upper limb); C83.35 (DLBCL, lymph nodes of inquinal region and lower E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules limb); C83.36 (DLBCL, intrapelvic lymph nodes); C83.37 (DLBCL, spleen); C83.38 (DLBCL, lymph nodes of multiple sites); or C83.39 (DLBCL, extranodal and solid organ sites). The applicant also identified potential cases where patients received chemotherapy using two encounter codes, Z51.11 (Antineoplastic chemotherapy) and Z51.12 (Antineoplastic immunotherapy), in conjunction with DLBCL diagnosis codes. Applying the parameters above, the applicant for KYMRIAHTM identified a total of 22,589 DLBCL potential cases that mapped to 437 MS–DRGs. The applicant chose the top 20 MS–DRGs which made up a total of 15,451 potential cases at 68 percent of total cases. Of the 22,589 total DLBCL potential cases, the applicant also provided a breakdown of DLBCL potential cases where chemotherapy was used, and DLBCL potential cases where chemotherapy was not used. Of the 6,501 DLBCL potential cases where chemotherapy was used, MS–DRGs 846 and 847 accounted for 6,181 (95 percent) of the 6,501 cases. Of the 16,088 DLBCL potential cases where chemotherapy was not used, the applicant chose the top 20 MS–DRGs which made up a total of 9,333 potential cases at 58 percent of total cases. The applicant believed the distribution of patients that may be eligible for treatment using KYMRIAHTM will include a wide variety of MS–DRGs. As such, the applicant conducted an analysis of three scenarios: Potential DLBCL cases, potential DLBCL cases with chemotherapy, and potential DLBCL cases without chemotherapy. The applicant removed reported historic charges that would be avoided through the use of KYMRIAHTM. Next, the applicant removed 50 percent of the chemotherapy pharmacy charges that would not be required for patients that may be eligible to receive treatment using KYMRIAHTM. The applicant standardized the charges and then applied an inflation factor of 1.09357, which is the 2-year inflation factor in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38527), to update the charges from FY 2016 to FY 2018. The applicant did not add charges for KYMRIAHTM to its analysis. However, the applicant provided a cost analysis related to the three categories of claims data it previously researched (that is, potential DLBCL cases, potential DLBCL cases with chemotherapy, and potential DLBCL cases without chemotherapy). The applicant’s analysis showed the inflated average case-weighted standardized charge per case for potential DLBCL cases, potential DLBCL VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 cases with chemotherapy, and potential DLBCL cases without chemotherapy was $63,271, $39,723, and $72,781, respectively. The average case-weighted threshold amount for potential DLBCL cases, potential DLBCL cases with chemotherapy, and potential DLBCL cases without chemotherapy was $58,278, $48,190, and $62,355 respectively. While the inflated average case-weighted standardized charge per case ($39,723) is lower than the average case-weighted threshold amount ($48,190) for potential DLBCL cases with chemotherapy, the applicant expects the cost of KYMRIAHTM to be higher than the new technology add-on payment threshold amount for all three cohorts. Therefore, the applicant maintained that it meets the cost criterion. We note that, as discussed earlier, in section II.F.2.d. of the preamble of this proposed rule, we are proposing to assign the ICD–10–PCS procedure codes that describe procedures involving the utilization of these CAR T-cell therapy drugs and cases representing patients receiving treatment involving CAR T-cell therapy procedures to Pre-MDC MS–DRG 016 for FY 2019. Therefore, in addition to the analysis above, we compared the inflated average case-weighted standardized charge per case from all three cohorts above to the average case-weighted threshold amount for MS–DRG 016. The average caseweighted threshold amount for MS– DRG 016 from Table 10 in the FY 2018 IPPS/LTCH PPS final rule is $161,058. Although the inflated average caseweighted standardized charge per case for all three cohorts ($63,271, $39,723, and $72,781) is lower than the average case-weighted threshold amount for MS–DRG 016, similar to above, the applicant expects the cost of KYMRIAHTM to be higher than the new technology add-on payment threshold amount for MS–DRG 016. Therefore, it appears that KYMRIAHTM would meet the cost criterion under this scenario as well. We appreciate the applicant’s analysis. However, we note that the applicant did not provide information regarding which specific historic charges were removed in conducting its cost analysis. Nonetheless, we believe that even if historic charges were identified and removed, the applicant would meet the cost criterion because, as indicated, the applicant expects the cost of KYMRIAHTM to be higher than the new technology add-on payment threshold amounts listed earlier. We are inviting public comments on whether KYMRIAHTM meets the cost criterion. PO 00000 Frm 00127 Fmt 4701 Sfmt 4702 20289 With regard to the cost criterion in reference to YESCARTATM, the applicant conducted the following analysis. The applicant examined FY 2016 MedPAR claims data restricted to patients discharged in FY 2016. The applicant included potential cases reporting an ICD–10 diagnosis code of C83.38. Noting that only MS–DRGs 820 (Lymphoma and Leukemia with Major O.R. Procedure with MCC), 821 (Lymphoma and Leukemia with Major O.R. Procedure with CC), 823 and 824 (Lymphoma and Non-Acute Leukemia with Other O.R. Procedure with MCC, with CC, respectively), 825 (Lymphoma and Non Acute Leukemia with Other O.R Procedure without CC/MCC), and 840, 841 and 842 (Lymphoma and NonAcute Leukemia with MCC, with CC and without CC/MCC, respectively) consisted of 10 or more cases, the applicant limited its analysis to these 8 MS–DRGs. The applicant identified 827 potential cases across these MS–DRGs. The average case-weighted unstandardized charge per case was $126,978. The applicant standardized charges using FY 2016 standardization factors and applied an inflation factor of 1.09357 from the FY 2018 IPPS/LTCH PPS final rule (82 FR 38527). The applicant for YESCARTATM did not include the cost of its technology in its analysis. Included in the average case-weighted standardized charge per case were charges for the current treatment components. Therefore, the applicant for YESCARTATM removed 20 percent of radiology charges to account for chemotherapy, and calculated the adjusted average case-weighted standardized charge per case by subtracting these charges from the standardized charge per case. Based on the distribution of potential cases within the eight MS–DRGs, the applicant case-weighted the final inflated average case-weighted standardized charge per case. This resulted in an inflated average caseweighted standardized charge per case of $118,575. Using the FY 2018 IPPS Table 10 thresholds, the average caseweighted threshold amount was $72,858. Even without considering the cost of its technology, the applicant maintained that because the inflated average case-weighted standardized charge per case exceeds the average case-weighted threshold amount, the technology meets the cost criterion. We note that, as discussed earlier, in section II.F.2.d. of the preamble of this proposed rule, we are proposing to assign the ICD–10–PCS procedure codes that describe procedures involving the utilization of these CAR T-cell therapy E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20290 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules drugs and cases representing patients receiving treatment involving CAR T-cell therapy procedures to Pre-MDC MS–DRG 016 for FY 2019. Therefore, in addition to the analysis above, we compared the inflated average caseweighted standardized charge per case ($118,575) to the average case-weighted threshold amount for MS–DRG 016. The average case-weighted threshold amount for MS–DRG 016 from Table 10 in the FY 2018 IPPS/LTCH PPS final rule is $161,058. Although the inflated average case-weighted standardized charge per case is lower than the average caseweighted threshold amount for MS– DRG 016, the applicant expects the cost of YESCARTATM to be higher than the new technology add-on payment threshold amount for MS–DRG 016. Therefore, it appears that YESCARTATM would meet the cost criterion under this scenario as well. We are inviting public comments on whether YESCARTATM technology meets the cost criterion. With regard to substantial clinical improvement for KYMRIAHTM, the applicant asserted that several aspects of the treatment represent a substantial clinical improvement over existing technologies. The applicant believed that KYMRIAHTM allows access for a treatment option for those patients who are unable to receive standard of care treatment. The applicant stated in its application that there are no currently FDA-approved treatment options for patients with R/R DLBCL who are ineligible for or who have failed ASCT. Additionally, the applicant maintained that KYMRIAHTM significantly improves clinical outcomes, including ORR, CR, OS, and durability of response, and allows for a manageable safety profile. The applicant asserted that, when compared to the historical control data (SCHOLAR–1) and the currently available treatment options, it is clear that KYMRIAHTM significantly improves clinical outcomes for patients with R/R DLBCL who are not eligible for ASCT. The applicant conveyed that, given that the patient population has no other available treatment options and an expected very short lifespan without therapy, there are no randomized controlled trials of the use of KYMRIAHTM in patients with R/R DLBCL and, therefore, efficacy assessments must be made in comparison to historical control data. The SCHOLAR–1 study is the most comprehensive evaluation of the outcome of patients with refractory DLBCL. SCHOLAR–1 includes patients from two large randomized controlled trials (Lymphoma Academic Research Organization-CORAL and Canadian VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Cancer Trials Group LY.12) and two clinical databases (MD Anderson Cancer Center and University of Iowa/Mayo Clinic Lymphoma Specialized Program of Research Excellence).33 The applicant for KYMRIAHTM conveyed that the PARMA study established high-dose chemotherapy and ASCT as the standard treatment for patients with R/R DLBCL.34 However, according to the applicant, many patients with R/R DLBCL are ineligible for ASCT because of medical frailty. Patients who are ineligible for ASCT because of medical frailty would also be adversely affected by high-dose chemotherapy regimens.35 Lowering the toxicity of chemotherapy regimens becomes the only treatment option, leaving patients with little potential for therapeutic outcomes. According to the applicant, the lack of efficacy of these aforementioned salvage regimens was demonstrated in nine studies evaluating combined chemotherapeutic regimens in patients who were either refractory to first-line or first salvage. Chemotherapy response rates ranged from 0 percent to 23 percent with OS less than 10 months in all studies.36 For patients who do not respond to combined therapy regimens, the National Comprehensive Cancer Network (NCCN) offers only clinical trials or palliative care as therapeutic options.37 According to the applicant for KYMRIAHTM, the immunomodulatory agent Lenalidomide was only able to show an ORR of 30 percent, a CR rate of 8 percent, and a 4.6-month median duration of response.38 M-tor inhibitors 33 Crump, M., Neelapu, S.S., Farooq, U., et al., ‘‘Outcomes in refractory diffuse large B-cell lymphoma: results from the international SCHOLAR–1 study,’’ Blood, Published online: August 3, 2017, doi: 10.1182/blood-2017-03769620. 34 Philip, T., Guglielmi, C., Hagenbeek, A., et al., ‘‘Autologous bone marrow transplantation as compared with salvage chemotherapy in relapses of chemotherapy-sensitive non-Hodgkin’s lymphoma,’’ N Engl J Med, 1995, vol. 333(23), pp. 1540–1545. 35 Friedberg, J.W., ‘‘Relapsed/refractory diffuse large B-cell lymphoma,’’ Hematology AM Soc Hematol Educ Program, 2011, vol. (1), pp. 498–505. 36 Crump, M., Neelapu, S.S., Farooq, U., et al., ‘‘Outcomes in refractory diffuse large B-cell lymphoma: results from the international SCHOLAR–1 study,’’ Blood, Published online: August 3, 2017, doi: 10.1182/blood-2017-03769620. 37 National Comprehensive Cancer Network, NCCN Clinical Practice Guidelines in Oncology (NCCN GuidelinesR), ‘‘B-cell lymphomas: Diffuse large b-cell lymphoma and follicular lymphoma (Version 3.2017),’’ May 25, 2017. Available at: https://www.nccn.org/professionals/physician_gls/ pdf/b-cell_blocks.pdf. 38 Klyuchnikov, E., Bacher, U., Kroll, T., et al., ‘‘Allogeneic hematopoietic cell transplantation for diffuse large B cell lymphoma: who, when and how?,’’ Bone Marrow Transplant, 2014, vol. 49(1), pp. 1–7. PO 00000 Frm 00128 Fmt 4701 Sfmt 4702 such as Everolimus and Temserolimus have been studied as single agents, or in combination with Rituximab, as have newer monoclonal antibodies Dacetuzumab, Ofatumomab and Obinutuzumab. However, none induced a CR rate higher than 20 percent or showed a median duration of response longer than 1 year.39 According to the applicant, although controversial, allogeneic stem cell transplantation (allo-SCT) has been proposed for patients who have been diagnosed with R/R disease. It is hypothesized that the malignant cell will be less able to escape the immune targeting of allogenic T-cells—known as the graft-vs-lymphoma effect.40 41 The use of allo-SCT is limited in patients who are not eligible for ASCT because of the high rate of morbidity and mortality. This medically frail population is generally excluded from participation. The population most impacted by this is the elderly, who are often excluded based on age alone. In seven studies evaluating allo-SCT in patients with R/R DLBCL, the median age at transplant was 43 years old to 52 years old, considerably lower than the median age of patients with DLBCL of 64 years old. Only two studies included any patients over 66 years old. In these studies, allo-SCT provided OS rates ranging from 18 percent to 52 percent at 3 to 5 years, but was accompanied by treatment-related mortality rates ranging from 23 percent to 56 percent.42 According to the applicant, this toxicity and efficacy profile of allo-SCT substantially limits its use, especially in patients 65 years old and older. Given the high unmet medical need, the applicant maintained that KYMRIAHTM represents a substantial clinical improvement by offering a treatment option for a patient population unresponsive to, or ineligible for, currently available treatments. To express how KYMRIAHTM has improved clinical outcomes, including ORR, CR rate, OS, and durability of response, the applicant referenced clinical trials in which KYMRIAHTM was tested. Study 1 was a single-arm, open-label, multi-site, global Phase II study to determine the safety and efficacy of tisagenlecleucel in patients 39 Ibid. 40 Ibid. 41 Maude, S.L., Teachey, D.T., Porter, D.L., Grupp, S.A., ‘‘CD19-targeted chimeric antigen receptor Tcell therapy for acute lymphoblastic leukemia,’’ Blood, 2015, vol. 125(26), pp. 4017–4023. 42 Klyuchnikov, E., Bacher, U., Kroll, T., et al., ‘‘Allogeneic hematopoietic cell transplantation for diffuse large B cell lymphoma: who, when and how?,’’ Bone Marrow Transplant, 2014, vol. 49(1), pp. 1–7. E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 with R/R DLBCL (CCTL019C2201/ CT02445248/‘JULIET’ study).43 44 45 Key inclusion criteria included patients who were 18 years old and older, patients with refractory to at least two lines of chemotherapy and either relapsed post ASCT or who were ineligible for ASCT, measurable disease at the time of infusion, and adequate organ and bone marrow function. The study was conducted in three phases. In the screening phase patient eligibility was assessed and patient cells collected for product manufacture. Patients were also able to receive bridging, cytotoxic chemotherapy during this time. In the pre-treatment phase patients underwent a restaging of disease followed by lymphodepleting chemotherapy with fludarabine 25mg/m2 x3 and cyclophosphamide 250mg/m2/d x3 or bendamustine 90mg/m2/d x2 days. The treatment and follow-up phase began 2 to 14 days after lymphodepleting chemotherapy, when the patient received a single infusion of tisagenlecleucel with a target dose of 5x108 CTL019 transduced viable cells. The primary objective was to assess the efficacy of tisagenlecleucel, as measured by the best overall response (BOR), which was defined as CR or partial response (PR). It was assessed on the Chesson 2007 response criteria amended by Novartis Pharmaceutical Corporation as confirmed by an Independent Review Committee (IRC). One hundred forty-seven patients were enrolled, and 99 of them were infused with tisagenlecleucel. Forty-three patients discontinued prior to infusion (9 due to inability to manufacture and 34 due to patient-related issues).46 The median age of treated patients was 56 years old with a range of 24 to 75; 20 percent were older than 65 years old. Patients had received 2 to 7 prior lines of therapy, with 60 percent receiving 3 43 Data on file, Oncology clinical trial protocol CCTL019C2201: ‘‘A Phase II, single-arm, multi-center trial to determine the efficacy and safety of CTL019 in adult patients with relapsed or refractory diffuse large Bcell lymphoma (DLBCL),’’ Novartis Pharmaceutical Corp, 2015. 44 Schuster, S.J., Bishop, M.R., Tam, C., et al., ‘‘Global trial of the efficacy and safety of CTL019 in adult patients with relapsed or refractory diffuse large B-cell lymphoma: an interim analysis,’’ Presented at: 22nd Congress of the European Hematology Association, June 22–25, 2017, Madrid, Spain. 45 ClinicalTrials.gov, ‘‘Study of efficacy and safety of CTL019 in adult DLBCL patients (JULIET).’’ Available at: https://clinicaltrials.gov/ct2/show/ NCT02445248. 46 Schuster, S.J., Bishop, M.R., Tam, C., et al., ‘‘Global trial of the efficacy and safety of CTL019 in adult patients with relapsed or refractory diffuse large B-cell lymphoma: an interim analysis,’’ Presented at: 22nd Congress of the European Hematology Association, June 22–25, 2017, Madrid, Spain. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 or more therapies, and 51 percent having previously undergone ASCT. A primary analysis was performed on 81 patients infused and followed for more than or at least 3 months. In this primary analysis, the BOR was 53 percent; the study met its primary objective based on statistical analysis (that is, testing whether BOR was greater than 20 percent, a clinically relevant threshold chosen based on the response to chemotherapy in a patient with R/R DLBCL). Forty-three percent (43 percent) of evaluated patients reached a CR, and 14 percent reached a PR. ORR evaluated at 3 months was 38 percent with a distribution of 32 percent CR and 6 percent PR. All patients in CR at 3 months continued to be in CR. ORR was similar across subgroups including 64.7 percent response in patients who were older than 65 years old, 61.1 percent response in patients with Grade III/IV disease at the time of enrollment, 58.3 percent response in patients with Activated B-cell, 52.4 percent response in patients with Germinal Center B-cell subtype, and 60 percent response in patients with double and triple hit lymphoma. Durability of response was assessed based on relapse free survival (RFS), which was estimated at 74 percent at 6 months. The applicant for KYMRIAHTM reported that Study 2 was a supportive Phase IIa single institution study of adults who were diagnosed with advanced CD19+ NHL conducted at the University of Pennsylvania.47 48 Tisagenlecleucel cells were produced at the University of Pennsylvania using the same genetic construct and a similar manufacturing technique as employed in Study 1. Key inclusion criteria included patients who were at least 18 years old, patients with CD19+ lymphoma with no available curative options, and measurable disease at the time of enrollment. Tisagenlecleucel was delivered in a single infusion 1 to 4 days after restaging and lymphodepleting chemotherapy. The median tisagenlecleucel cell dose was 5.0 × 108 transduced cells. The study enrolled 38 patients; of these, 21 were diagnosed with DLBCL and 13 received treatment involving KYMRIAHTM. 47 ClinicalTrials.gov, ‘‘Phase IIa study of redirected autologous T-cells engineered to contain anti-CD19 attached to TCRz and 4-signaling domains in patients with chemotherapy relapsed or refractory CD19+ lymphomas,’’ Available at: https://clinicaltrials.gov/ct2/show/NCT02030834. 48 Schuster, S.J., Svoboda, J., Nasta, S.D., et al., ‘‘Sustained remissions following chimeric antigen receptor modified T-cells directed against CD–19 (CTL019) in patients with relapsed or refractory CD19+ lymphomas,’’ Presented at: 57th Annual Meeting of the American Society of Hematology, December 6, 2015, Orlando, FL. PO 00000 Frm 00129 Fmt 4701 Sfmt 4702 20291 Patients ranged in age from 25 to 77 years old, and had a median of 4 prior therapies. Thirty-seven percent had undergone ASCT and 63 percent were diagnosed with Grade III/IV disease. ORR at 3 months was 54 percent. Progression free survival was 43 percent at a median follow-up of 11.7 months. Safety and efficacy results are similar to those of the multi-center study. The applicant for KYMRIAHTM reported that Study 3 was a supportive, patient-level meta-analysis of historical outcomes in patients who were diagnosed with refractory DLBCL (SCHOLAR–1).49 This study included a pooled data analysis of two Phase III clinical trials (Lymphoma Academic Research Organization-CORAL and Canadian Cancer Trials Group LY.12) and two observational cohorts (MD Anderson Cancer Center and University of Iowa/Mayo Clinic Lymphoma Specialized Program of Research Excellence). Refractory disease was defined as progressive disease or stable disease as best response to chemotherapy (received more than or at least 4 cycles of first-line therapy or 2 cycles of later-line therapy, respectively) or relapse in less than or at 12 months post-ASCT. Of 861 abstracted records, 636 were included based on these criteria. All patients from each data source who met criteria for diagnosis of refractory DLBCL, including TFL and PMBCL, who went on to receive subsequent therapy were considered for analysis. Patients who were diagnosed with TFL and PMBCL were included because they are histologically similar and clinically treated as large cell lymphoma. Response rates were similar across the 4 datasets, ranging from 20 percent to 31 percent, with a pooled response rate of 26 percent. CR rates ranged from 2 percent to 15 percent, with a pooled CR rate of 7 percent. Subgroup analyses including patients with primary refractory, refractory to second or later-line therapy, and relapse in less than 12 months post-ASCT revealed response rates similar to the pooled analysis, with worst outcomes in the primary refractory group (20 percent). OS from the commencement of therapy was 6.3 months and was similar across subgroup analyses. Achieving a CR after last salvage chemotherapy predicted a longer OS of 14.9 months compared to 4.6 months in nonresponders. Patients who had not undergone ASCT had an OS of 5.1 49 Crump, M., Neelapu, S.S., Farooq, U., et al., ‘‘Outcomes in refractory diffuse large B-cell lymphoma: results from the international SCHOLAR–1 study,’’ Blood, Published online: August 3, 2017, doi: 10.1182/blood-2017-03769620. E:\FR\FM\07MYP2.SGM 07MYP2 20292 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 months with a 2 year OS rate of 11 percent. The applicant asserted that KYMRIAHTM provides a manageable safety profile when treatment is performed by trained medical personnel and, as opposed to ASCT, KYMRIAHTM mitigates the need for high-dose chemotherapy to induce response prior to infusion. Adverse events were most common in the 8 weeks following infusion and were manageable by a trained staff. Cytokine Relapse Syndrome (CRS) occurred in 58 percent of patients with 23 percent having Grade III or IV events as graded on the University of Pennsylvania grading system.50 51 Median time to onset of CRS was 3 days and median duration was 7 days with a range of 2 to 30 days. Twenty-four percent of the patients required ICU admission. CRS was managed with supportive care in most patients. However, 16 percent required anti-cytokine therapy including tocilizumab (15 percent) and corticosteroids (11 percent). Other adverse events of special interest include infection in 34 percent (20 percent Grade III or IV) of patients, cytopenias not resolved by day 28 in 36 percent (27 percent Grade III or IV) of patients, neurologic events in 21 percent (12 percent Grade III or IV) of patients, febrile neutropenia in 13 percent (13 percent Grade III or IV) of patients, and tumor lysis syndrome 1 percent (1 percent Grade III). No deaths were attributed to tisagenlecleucel including no fatal cases of CRS or neurologic events. No cerebral edema was observed.52 Study 2 safety results were consistent to those of Study 1.53 After reviewing the studies provided by the applicant, we are concerned that the applicant included patients who were diagnosed with TFL and PMBCL in the SCHOLAR–1 data results for their comparison analysis, possibly skewing results. Furthermore, the discontinue rate of the JULIET trial was high. Of 147 patients enrolled for infusion involving KYMRIAHTM, 43 discontinued prior to infusion (9 discontinued due to inability to manufacture, and 34 discontinued due to patient-related issues). Finally, the rate of patients who experienced a diagnosis of CRS was high, 58 percent.54 The applicant for YESCARTATM stated that YESCARTATM represents a substantial clinical improvement over existing technologies when used in the treatment of patients with aggressive B-cell NHL. The applicant asserted that YESCARTATM can benefit the patient population with the highest unmet need, patients with R/R disease after failure of first-line or second-line therapy, and patients who have failed or who are ineligible for ASCT. These patients, otherwise, have adverse outcomes as demonstrated by historical control data. Regarding clinical data for YESCARTATM, the applicant stated that historical control data was the only ethical and feasible comparison information for these patients with chemorefractory, aggressive NHL who have no other available treatment options and who are expected to have a very short lifespan without therapy. According to the applicant, based on meta-analysis of outcomes in patients with chemorefractory DLBCL, there are no curative options for patients with aggressive B-cell NHL, regardless of refractory subgroup, line of therapy, and disease stage with their median OS being 6.6 months.55 In the applicant’s FY 2018 new technology add-on payment application for the KTE–C19 technology, which was discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19889), the applicant cited ongoing clinical trials. The applicant provided updated data related to these ongoing clinical trials as part of its FY 2019 application for YESCARTATM.56 57 58 The updated 50 ClinicalTrials.gov, ‘‘Phase IIa study of redirected autologous T-cells engineered to contain anti-CD19 attached to TCRz and 4-signaling domains in patients with chemotherapy relapsed or refractory CD19+ lymphomas.’’ Available at: https://clinicaltrials.gov/ct2/show/NCT02030834. 51 Schuster, S.J., Svoboda, J., Nasta, S.D., et al., ‘‘Sustained remissions following chimeric antigen receptor modified T-cells directed against CD–19 (CTL019) in patients with relapsed or refractory CD19+ lymphomas,’’ Presented at: 57th Annual Meeting of the American Society of Hematology, December 6, 2015, Orlando, FL. 52 Schuster, S.J., Bishop, M.R., Tam, C., et al., ‘‘Global trial of the efficacy and safety of CTL019 in adult patients with relapsed or refractory diffuse large B-cell lymphoma: an interim analysis,’’ Presented at: 22nd Congress of the European Hematology Association, June 22–25, 2017, Madrid, Spain. 53 Ibid. 54 Schuster, S.J., Bishop, M.R., Tam, C., et al., ‘‘Global trial of the efficacy and safety of CTL019 in adult patients with relapsed or refractory diffuse large B-cell lymphoma: an interim analysis,’’ Presented at: 22nd Congress of the European Hematology Association, June 22–25, 2017, Madrid, Spain. 55 Seshardi, T., et al., ‘‘Salvage therapy for relapsed/refractory diffuse large B-cell lymphoma,’’ Biol Blood Marrow Transplant, 2008 Mar, vol. 14(3), pp. 259–67. 56 Locke, F.L., et al., ‘‘Ongoing complete remissions in Phase 1 of ZUMA–1: A phase I–II multicenter study evaluating the safety and efficacy of KTE–C19 (anti-CD19 CAR T cells) in patients with refractory aggressive B-cell non-Hodgkin lymphoma (NHL),’’ Oral presentation (abstract 10480) presented at European Society for Medical Oncology (ESMO), October 2016. 57 Locke, F.L., et al., ‘‘Primary results from ZUMA–1: A pivotal trial of axicabtagene VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00130 Fmt 4701 Sfmt 4702 analysis of the pivotal Study 1 (ZUMA– 1, KTE–C19–101), Phase I and II occurred when patients had been followed for 12 months after infusion of YESCARTATM. Study 1 is a Phase I–II multi-center, open-label study evaluating the safety and efficacy of the use of YESCARTATM in patients with aggressive refractory NHL. The trial consists of two distinct phases designed as Phase I (n=7) and Phase II (n=101). Phase II is a multi-cohort open-label study evaluating the efficacy of YESCARTATM.59 The applicant noted that, as of the analysis cutoff date for the interim analysis, the results of Study 1 demonstrated rapid and substantial improvement in objective, or ORR. After 6 and 12 months, the ORR was 82 and 83 percent, respectively. Consistent response rates were observed in both Study 1, Cohort 1 (DLBCL; n=77) and Cohort 2 (PMBCL or TFL; n=24) and across covariates including disease stage, age, IPI scores, CD–19 status, and refractory disease subset. In the updated analysis, results were consistent across age groups. In this analysis, 39 percent of patients younger than 65 years old were in ongoing response, and 50 percent of patients at least 65 years old or older were in ongoing response. Similarly, the survival rate at 12 months was 57 percent among patients younger than 65 years old and 71 percent among patients at least 65 years old or older versus historical control of 26 percent. The applicant further stated that evidence of substantial clinical improvement regarding the efficacy of YESCARTATM for the treatment of patients with chemorefractory, aggressive B-cell NHL is supported by the CR of YESCARTATM in Study 1, Phase II (54 percent) versus the historical control (7 percent).60 61 62 63 ciloretroleucel (axi-cel; KTE–C19) in patients with refractory aggressive non-Hodgkins lymphoma (NHL),’’ Oral presentation, American Association of Cancer Research (AACR). 58 Locke, F.L., et al., ‘‘Phase I results of ZUMA– 1: A multicenter study of KTE–C19 anti-CD19 CAR T cell therapy in refractory aggressive lymphoma,’’ Mol Ther, vol. 25, No 1, January 2017. 59 Neelapu, S.S., Locke, F.L., et al., 2016, ‘‘KTE– C19 (anti-CD19 CAR T cells) induces complete remissions in patients with refractory diffuse large B-cell lymphoma (DLBCL): Results from the pivotal Phase II ZUMA–1,’’ Abstract presented at American Society of Hematology (ASH) 58th Annual Meeting, December 2016. 60 Locke, F.L., et al., ‘‘Ongoing complete remissions in Phase I of ZUMA–1: a phase I–II multicenter study evaluating the safety and efficacy of KTE–C19 (anti-CD19 CAR T cells) in patients with refractory aggressive B-cell non-Hodgkin lymphoma (NHL),’’ Oral presentation (abstract 10480) presented at European Society for Medical Oncology (ESMO), October 2016. 61 Locke, F.L., et al., ‘‘Primary results from ZUMA–1: a pivotal trial of axicabtagene ciloretroleucel (axi-cel; KTE–C19) in patients with E:\FR\FM\07MYP2.SGM 07MYP2 20293 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules The applicant noted that CR rates were observed in both Study 1, Cohort 1. The applicant reported that, in the updated analysis, results were in ongoing response (46 percent of patients at least 65 years old or older were in ongoing response). Similarly, the survival rate at 12 months was 57 percent among patients younger than 65 years old and 71 percent among patients at least 65 years old or older.64 65 66 67 The applicant also provided the following tables to depict data to support substantial clinical improvement (we refer readers to the two tables below). OVERALL RESPONSE RATES ACROSS ALL YESCARTATM STUDIES VS. SCHOLAR–1 Study 1, Phase I n=7 % Overall Response Rate (%) ........................................................................................ Month 6 (%) ................................................................................................................. Ongoing with >15 Months of follow-up (%) ................................................................ Ongoing with >18 Months of follow-up (%) ................................................................ Study 1, Phase II n=101 71 43 43 43 Scholar-1 n=529 83 ................................... 41 ................................... 42 ................................... Follow-up ongoing ......... 26 ........................ ........................ ........................ RESULTS FOR YESCARTATM STUDY 1, PHASE II: COMPLETE RESPONSE Study 1, Phase II n=101 Complete Response (%) (95 Percent Confidence Interval) .................................................................................................... Duration of Response, median (range in months) .................................................................................................................. Ongoing Responses, CR (%); Median 8.7 months follow-up; median overall survival has not been reached ..................... Ongoing Responses, CR (%); Median 15.3 months follow-up; median overall survival has not been reached ................... 54 (44,64). not reached. 39. 40. daltland on DSKBBV9HB2PROD with PROPOSALS2 According to the applicant, the 6month and 12-month survival rates (95 percent CI) for patients enrolled in the SCHOLAR–1 study were 53 percent (49 percent, 57 percent) and 28 percent (25 percent, 32 percent).68 In contrast, the 6-month and 12–month survival rates (95 percent CI) in the Study 1 updated analysis were 79 percent (70 percent, 86 percent) and 60 percent (50 percent, 69 percent).69 70 71 The applicant also cited safety results from the pivotal Study 1, Phase II. According to the applicant, the clinical trial protocol stipulated that patients were infused with YESCARTATM in the hospital inpatient setting and were monitored in the inpatient setting for at least 7 days for early identification and treatment involving YESCARTATMrelated toxicities, which primarily included CRS diagnoses and neurotoxicities. The applicant noted that the interim analysis showed the length of stay following infusion of YESCARTATM was a median of 15 days. Ninety-three percent of patients experienced CRS diagnoses, 13 percent of whom experienced Grade III or higher (severe, life threatening or fatal) CRS diagnoses. The median time to onset of CRS diagnosis was 2 days (range 1 to 12 days) and the median time to resolution was 8 days. Ninety-eight percent of patients recovered from CRS diagnosis. Neurologic events occurred in 64 percent of patients, 28 percent of whom experienced Grade III or higher (severe or life threatening) events. The median time to onset of neurologic events was 5 days (range 1 to 17 days). The median time to resolution was 17 days. Nearly all patients recovered from neurologic events. The medications most often used to treat these complications included growth factors, blood products, anti-infectives, steroids, tocilizumab, and vasopressors. Two patients died from YESCARTATMrelated adverse events (hemophagocytic lymphohistiocytosis and cardiac arrest in the hospital setting as a result of CRS diagnoses). According to the applicant, there were no clinically important differences in adverse event rates across age groups (younger than 65 years old; 65 years old or older), including CRS diagnoses and neurotoxicity.72 73 The applicant for YESCARTATM provided information regarding a safety expansion cohort, Study 1 Phase II Safety Expansion Cohort 3 that was created and carried out in 2017. refractory aggressive non-Hodgkins lymphoma (NHL),’’ Oral presentation, American Association of Cancer Research (AACR). 62 Locke, F.L., et al., ‘‘Phase I results of ZUMA– 1: A multicenter study of KTE–C19 anti-CD19 CAR T cell therapy in refractory aggressive lymphoma,’’ Mol Ther, vol. 25, No 1, January 2017. 63 Crump, et al., 2017, ‘‘Outcomes in refractory diffuse large B-cell lymphoma: Results from the international SCHOLAR–1 study,’’ Blood, vol. 0, 2017, pp. blood-2017-03-769620v1. 64 Locke, F.L., et al., ‘‘Ongoing complete remissions in Phase I of ZUMA–1: A phase I–II multicenter study evaluating the safety and efficacy of KTE–C19 (anti-CD19 CAR T cells) in patients with refractory aggressive B-cell non-Hodgkin lymphoma (NHL),’’ Oral presentation (abstract 10480) presented at European Society for Medical Oncology (ESMO), October 2016. 65 Locke, F.L., et al., ‘‘Primary results from ZUMA–1: A pivotal trial of axicabtagene ciloretroleucel (axi-cel; KTE–C19) in patients with refractory aggressive non-Hodgkins lymphoma (NHL),’’ Oral presentation, American Association of Cancer Research (AACR). 66 Locke, F.L., et al., ‘‘Phase I results of ZUMA– 1: A multicenter study of KTE–C19 anti-CD19 CAR T cell therapy in refractory aggressive lymphoma,’’ Mol Ther, vol. 25, No 1, January 2017. 67 Crump, et al., ‘‘Outcomes in refractory diffuse large B-cell lymphoma: Results from the international SCHOLAR–1 study,’’ Blood, vol. 0, 2017, pp. blood-2017-03-769620v1. 68 Crump, et al., ‘‘Outcomes in refractory diffuse large B-cell lymphoma: results from the international SCHOLAR–1 study,’’ Blood, vol. 0, 2017, pp. blood-2017-03-769620v1. 69 Locke, F.L., et al., ‘‘Ongoing complete remissions in Phase I of ZUMA–1: a phase I–II multicenter study evaluating the safety and efficacy of KTE–C19 (anti-CD19 CAR T cells) in patients with refractory aggressive B-cell non-Hodgkin lymphoma (NHL),’’ Oral presentation (abstract 10480) presented at European Society for Medical Oncology (ESMO), October 2016. 70 Locke, F.L., et al., ‘‘Primary results from ZUMA–1: a pivotal trial of axicabtagene ciloretroleucel (axi-cel; KTE–C19) in patients with refractory aggressive non-Hodgkins lymphoma (NHL),’’ Oral presentation, American Association of Cancer Research (AACR). 71 Locke, F.L., et al., ‘‘Phase I results of ZUMA– 1: a multicenter study of KTE–C19 anti-CD19 CAR T cell therapy in refractory aggressive lymphoma,’’ Mol Ther, vol. 25, No 1, January 2017. 72 Locke, F.L., et al., ‘‘Ongoing complete remissions in Phase I of ZUMA–1: a phase I–II multicenter study evaluating the safety and efficacy of KTE–C19 (anti-CD19 CAR T cells) in patients with refractory aggressive B-cell non-Hodgkin lymphoma (NHL),’’ Oral presentation (abstract 10480) presented at European Society for Medical Oncology (ESMO), October 2016. 73 Locke, F.L., et al., ‘‘Primary results from ZUMA–1: a pivotal trial of axicabtagene ciloretroleucel (axi-cel; KTE–C19) in patients with refractory aggressive non-Hodgkins lymphoma (NHL),’’ Oral presentation, American Association of Cancer Research (AACR). VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00131 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 20294 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 According to the applicant, this Safety Expansion Cohort investigated measures to mitigate the incidence and/or severity of anti-CD–19 CAR T therapy and evaluated an adverse event mitigation strategy by prophylactically using levetiracetam (Keppra), an anticonvulsant, and tocilizumab, an IL–6 receptor inhibitor. Of the 30 patients treated, 2 patients experienced Grade III CRS diagnoses; 1 of the 2 patients recovered. In late April 2017, the other patient also experienced multi-organ failure and a neurologic event that subsequently progressed to a fatal Grade V cerebral edema that was deemed related to YESCARTATM treatment. This case of cerebral edema was observed in a 21 year-old male with refractory, rapidly progressive, symptomatic, stage IVB PMBCL. Analysis of the baseline serum and cerebrospinal fluid (CSF) obtained prior to any study treatment demonstrated high cytokine and chemokine levels. According to the applicant, this suggests a significant preexisting underlying inflammatory process, both systemically and within the central nervous system. Rapidly progressing disease, recent mediastinal XRT (external beam radiation therapy) and/or CMV (cytomegalovirus) reactivation may have contributed to the pre-existing state. There were no prior cases of cerebral edema in the 200 patients who have been treated with YESCARTATM in the ZUMA clinical development program. The single patient event from the Study 1 Phase II Safety Expansion Cohort 3 was the first Grade V cerebral edema event.74 75 After reviewing the information submitted by the applicant as part of its FY 2019 new technology add-on payment application for YESCARTATM, we are concerned that it does not appear to include patient mortality data that was included as part of the applicant’s FY2018 new technology add-on payment application for the KTE–C19 technology. In that application, as discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19890), the applicant provided that by an earlier cutoff date for the interim analysis of 74 Locke, F.L., et al., ‘‘Ongoing complete remissions in Phase I of ZUMA–1: a phase I–II multicenter study evaluating the safety and efficacy of KTE–C19 (anti-CD19 CAR T cells) in patients with refractory aggressive B-cell non-Hodgkin lymphoma (NHL),’’ Oral presentation (abstract 10480) presented at European Society for Medical Oncology (ESMO), October 2016. 75 Locke, F.L., et al., ‘‘Primary results from ZUMA–1: a pivotal trial of axicabtagene ciloretroleucel (aci-cel; KTE–C19) in patients with refractory aggressive non-Hodgkins lymphoma (NHL),’’ Oral presentation, American Association of Cancer Research (AACR). VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Study 1, among all KTE–C19 treated patients, 12 patients in Study 1, Phase II, including 10 from Cohort 1, and 2 from Cohort 2, died. Eight of these deaths were due to disease progression. One patient had disease progression after receiving KTE–C19 treatment and subsequently had ASCT. After ASCT, the patient died due to sepsis. Two patients (3 percent) died due to KTE– C19-related adverse events (Grade V hemophagocytic lymphohistiocytosis event and Grade V anoxic brain injury), and one died due to an adverse event deemed unrelated to treatment involving KTE–C19 (Grade V pulmonary embolism), without disease progression. We believe it would be relevant to include this information because it is related to the same treatment that is the subject of the applicant’s FY 2019 new technology add-on payment application. We also are concerned that there are few published results showing any survival benefits from the use of this treatment. In addition, we are concerned with the limited number of patients (n=108) that were studied after infusion involving YESCARTATM T-cell immunotherapy. Finally, we are concerned about the data related to the percentage of patients who experience complications or toxicities related to YESCARTATM treatment. According to the applicant, of the patients who participated in YESCARTATM clinical trials, 93 percent developed CRS diagnoses and 64 percent experienced neurological adverse events. We are inviting public comments on whether KYMRIAHTM and YESCARTATM meet the substantial clinical improvement criterion. Finally, we believe that in the context of these pending new technology add-on payment applications, there may also be merit in the suggestions from the public to create a new MS–DRG for the assignment of procedures involving the utilization of CAR T-cell therapy drugs and cases representing patients who receive treatment involving CAR T-cell therapy as an alternative to our proposed MS–DRG assignment to MS– DRG 016 for FY 2019, or the suggestions to allow hospitals to utilize a CCR specific to procedures involving the utilization of KYMRIAHTM and YESCARTATM CAR T-cell therapy drugs for FY 2019 as part of the determination of the cost of a case for purposes of calculating outlier payments for individual FY 2019 cases, new technology add-on payments, if approved, for individual FY 2019 cases, and payments to IPPS-excluded cancer hospitals beginning in FY 2019. If as discussed in section II.F.2.d. of the preamble of this proposed rule a new PO 00000 Frm 00132 Fmt 4701 Sfmt 4702 MS–DRG were to be created, then consistent with section 1886(d)(5)(K)(ix) of the Act there may no longer be a need for a new technology add-on payment under section 1886(d)(5)(K)(ii)(III) of the Act. With respect to an alternative considered for the use of a CCR specific to procedures involving the utilization of KYMRIAHTM and YESCARTATM CAR T-cell therapy drugs for FY 2019 as part of the determination of the cost of a case for purposes of calculating outlier payments for individual FY 2019 cases, new technology add-on payments, if approved, for individual FY 2019 cases, and payments to IPPS-excluded cancer hospitals beginning in FY 2019, we refer readers to the discussion in section II.A.4.g.2. of the Addendum to this proposed rule. We are inviting public comments regarding the most appropriate mechanism to provide payment to hospitals for new technologies such as CAR T-cell therapy drugs, including through the use of new technology add-on payments. We also are inviting public comments on how these payment alternatives would affect access to care, as well as how they affect incentives to encourage lower drug prices, which is a high priority for this Administration. In addition, we are considering alternative approaches and authorities to encourage value-based care and lower drug prices. We solicit comments on how the payment methodology alternatives may intersect and affect future participation in any such alternative approaches. We did not receive any written public comments in response to the New Technology Town Hall meeting notice published in the Federal Register regarding the application of KYMRIAHTM for new technology addon payments for FY 2019. Below we summarize and respond to a written public comment we received during the open comment period regarding YESCARTATM in response to the New Technology Town Hall meeting notice published in the Federal Register. Comment: The applicant commented that the use of YESCARTATM as a treatment option has resulted in unprecedented and consistent treatment for patients with refractory large B-cell lymphoma who previously did not have a curative option. In addition, the applicant summarized the substantial clinical improvement differences between YESCARTATM and the results of KYMRIAHTM’s SCHOLAR–1 study. The applicant noted that, for the patients enrolled in the SCHOLAR–1 study, the median overall survival was 6 months and complete remission was E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 7 percent. Conversely, the applicant conveyed that, for the patients enrolled in YESCARTATM’s Study 1, at median 15.4 months follow-up, responses were ongoing in 42 percent of the patients and 40 percent of the patients were in complete remission. Response: We appreciate the applicant’s input. We will take these comments into consideration when deciding whether to approve new technology add-on payments for YESCARTATM for FY 2019. We note that the applicant also provided comments that were unrelated to the substantial clinical improvement criterion. As stated earlier, the purpose of the new technology town hall meeting is specifically to discuss the substantial clinical improvement criterion in regard to pending new technology add-on payment applications for FY 2019. Therefore, we are not summarizing these additional comments in this proposed rule. However, the applicant may resubmit its comments in response to proposals presented in this proposed rule. b. VYXEOSTM (Cytarabine and Daunorubicin Liposome for Injection) Jazz Pharmaceuticals, Inc. submitted an application for new technology addon payments for the VYXEOSTM technology for FY 2019. (We note that Celator Pharmaceuticals, Inc. submitted an application for new technology add-on payments for VYXEOSTM for FY 2018. However, Celator Pharmaceuticals did not receive FDA approval by the July 1, 2017 deadline for applications for FY 2018.) VYXEOSTM was approved by FDA on August 3, 2017, for the treatment of adults with newly diagnosed therapy-related acute myeloid leukemia (t-AML) or AML with myelodysplasia-related changes (AML– MRC). AML is a type of cancer in which the bone marrow makes abnormal myeloblasts (immature bone marrow white blood cells), red blood cells, and platelets. If left untreated, AML progresses rapidly. Normally, the bone marrow makes blood stem cells that develop into mature blood cells over time. Stem cells have the potential to develop into many different cell types in the body. Stem cells can act as an internal repair system, dividing, essentially without limit, to replenish other cells. When a stem cell divides, each new cell has the potential to either remain a stem cell or become a specialized cell, such as a muscle cell, a red blood cell, or a brain cell, among others. A blood stem cell may become a myeloid stem cell or a lymphoid stem cell. Lymphoid stem cells become white VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 blood cells. A myeloid stem cell becomes one of three types of mature blood cells: (1) Red blood cells that carry oxygen and other substances to body tissues; (2) white blood cells that fight infection; or (3) platelets that form blood clots and help to control bleeding. In patients diagnosed with AML, the myeloid stem cells usually become a type of myeloblast. The myeloblasts in patients diagnosed with AML are abnormal and do not become healthy white blood cells. Sometimes in patients diagnosed with AML, too many stem cells become abnormal red blood cells or platelets. These abnormal cells are called leukemia cells or blasts. AML is defined by the World Health Organization (WHO) as greater than 20 percent blasts in the bone marrow or blood. AML can also be diagnosed if the blasts are found to have a chromosome change that occurs only in a specific type of AML diagnosis, even if the blast percentage does not reach 20 percent. Leukemia cells can build up in the bone marrow and blood, resulting in less room for healthy white blood cells, red blood cells, and platelets. When this occurs, infection, anemia, or increased risk for bleeding may result. Leukemia cells can spread outside the blood to other parts of the body, including the central nervous system (CNS), skin, and gums. Treatment of AML diagnoses usually consists of two phases; remission induction and post-remission therapy. Phase one, remission induction, is aimed at eliminating as many myeloblasts as possible. The most common used remission induction regimens for AML diagnoses are the ‘‘7+3’’ regimens using an antineoplastic and an anthracycline. Cytarabine and daunorubicin are two commonly used drugs for ‘‘7+3’’ remission induction therapy. Cytarabine is continuously administered intravenously over the course of 7 days, while daunorubicin is intermittently administered intravenously for the first 3 days. The ‘‘7+3’’ regimen typically achieves a 70 to 80 percent complete remission (CR) rate in most patients under 60 years of age. High rates of CR are not generally seen in older patients for a number of reasons, such as different leukemia biology, much higher incidence of adverse cytogenetic abnormalities, higher rate of multidrug resistant leukemic cells, and comparatively lower patient performance status (the standard criteria for measuring how the disease impacts a patient’s daily living abilities). Intensive induction therapy has worse outcomes in this patient PO 00000 Frm 00133 Fmt 4701 Sfmt 4702 20295 population.76 The applicant asserted that many older adults diagnosed with AML have a poor performance status 77 at presentation and multiple medical comorbidities that make the use of intensive induction therapy quite difficult or contraindicated altogether. Moreover, the CR rates of poor-risk patients diagnosed with AML are substantially lower in patients over 60 years of age; owing to a higher proportion of secondary AML, disease developing in the setting of a prior myeloid disorder, or prior cytotoxic chemotherapy. Therefore, less than half of older adults diagnosed with AML achieve CR with combination induction regimens.78 According to the applicant, the combination of cytarabine and an anthracycline, either as ‘‘7+3’’ regimens or as part of a different regimen incorporating other cytotoxic agents, may be used as so-called ‘‘salvage’’ induction therapy in the treatment of adults diagnosed with AML who experience relapse in an attempt to achieve CR. According to the applicant, while CR rates of success vary widely depending on underlying disease biology and host factors, there is a lower success rate overall in achievement of CR with ‘‘7+3’’ regimens compared to VYXEOSTM therapy. According to the applicant, ‘‘7+3’’ regimens produce a CR rate of approximately 50 percent in younger adult patients who have relapsed, but were in CR for at least 1 year.79 VYXEOSTM is a nano-scale liposomal formulation containing a fixed combination of cytarabine and daunorubicin in a 5:1 molar ratio. This formulation was developed by the applicant using a proprietary system known as CombiPlex. According to the applicant, CombiPlex addresses several fundamental shortcomings of conventional combination regimens, specifically the conventional ‘‘7+3’’ free drug dosing, as well as the challenges inherent in combination drug development, by identifying the most effective synergistic molar ratio of the 76 Juliusson, G., Lazarevic, V., Horstedt, A.S., Hagberg, O., Hoglund, M., ‘‘Acute myeloid leukemia in the real world: why population-based registries are needed’’, Blood, 2012 Apr 26; vol. 119(17), pp. 3890–9. 77 Stone, R.M., et al., (2004), ‘‘Acute myeloid leukemia. Hematology’’, Am Soc Hematol Educ Program, 2004, pp. 98–117. 78 Appelbaum, F.R., Gundacker, H., Head, D.R., ‘‘Age and acute myeloid leukemia’’, Blood 2006, vol. 107, pp. 3481–3485. 79 Kantarjian, H., Rayandi, F., O’Brien, S., et al., ‘‘Intensive chemotherapy does not benefit most older patients (age 70 years and older) with acute myeloid leukemia,’’ Blood, 2010, vol. 116(22), pp. 4422. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20296 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules drugs being combined in vitro, and fixing this ratio in a nano-scale drug delivery complex to maintain the optimized combination after administration and ensuring exposure of this ratio to the tumor. Cytarabine and daunorubicin are coencapsulated inside the VYXEOSTM liposome at a fixed ratiometrically, optimized 5:1 cytarabine:daunorubicin molar ratio. According to the applicant, encapsulation maintains the synergistic ratios, reduces degradation, and minimizes the impact of drug transporters and the effect of known resistant mechanisms. The applicant stated that the 5:1 molar ratio has been shown, in vitro, to maximize synergistic antitumor activity across multiple leukemic and solid tumor cell lines, including AML, and in animal model studies to be optimally efficacious compared to other cytarabine:daunorubicin ratios. In addition, the applicant stated that in clinical studies, the use of VYXEOSTM has demonstrated consistently more efficacious results than the conventional ‘‘7+3’’ free drug dosing. VYXEOSTM is intended for intravenous administration after reconstitution with 19 mL sterile water for injection. VYXEOSTM is administered as a 90-minute intravenous infusion on days 1, 3, and 5 (induction therapy), as compared to the ‘‘7+3’’ free drug dosing, which consists of two individual drugs administered on different days, including 7 days of continuous infusion. With regard to the newness criterion, as discussed earlier, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and would not be considered ‘‘new’’ for purposes of new technology add-on payments. With regard to the first criterion, whether a product uses the same or a similar mechanism of action to achieve a therapeutic outcome, the applicant asserted that VYXEOSTM does not use the same or similar mechanism of action to achieve a therapeutic outcome as any other drug assigned to the same or a different MS–DRG. The applicant stated that no other AML treatment is designed, nor is able, to deliver a fixed, ratiometrically optimized and synergistic drug:drug ratio of 5:1 cytarabine to daunorubicin, and selectively target and accumulate at the site of malignancy, while minimizing unwanted exposure, which the applicant based on the data results of preclinical and clinical studies of the use of VYXEOSTM. The applicant indicated that VYXEOSTM is a nanoscale liposomal formulation of a fixed VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 combination of cytarabine and daunorubicin. Further, the applicant stated that the rationale for the development of VYXEOSTM is based on prolonged delivery of synergistic drug ratios utilizing the applicant’s proprietary, ratiometric CombiPlex technology. According to the applicant, conventional ‘‘7+3’’ free drug dosing has no delivery complex, and these individual drugs are administered without regard to their ratio dependent interaction. According to the applicant, enzymatic inactivation and imbalanced drug efflux and transporter expression reduce drug levels in the cell. Further, decreased cytotoxicity leads to cell survival, emergence of drug resistant cells, and decreased overall survival. The applicant provided the results of clinical studies to demonstrate that the CombiPlex technology and the ratiometric dosing of VYXEOSTM represent a shift in anticancer agent delivery, whereby the fixed, optimized dosing provides less drug to achieve improved efficacy, while maintaining a favorable risk-benefit profile. The results of this ratiometric dosing approach are in contrast to the typical combination chemotherapy development that establishes the recommended dose of one agent and then adds subsequent drugs to the combination at increasing concentrations until the aggregate effects of toxicity are considered to be limiting (the ‘‘7+3’’ drug regimen). According to the applicant, this current approach to combination chemotherapy development assumes that maximum therapeutic activity will be achieved with maximum dose intensity for all drugs in the combination, and ignores the possibility that more subtle concentration-dependent drug interactions could result in frankly synergistic outcomes. The applicant maintained that, while VYXEOSTM contains no novel active agents, its innovative drug delivery mechanism appears to be a superior way to deliver the two active compounds in an effort to optimize their efficacy in killing leukemic blasts. However, we are concerned it is possible that VYXEOSTM may use a similar mechanism of action compared to currently available treatment options because both the current treatment regimen and VYXEOSTM are used in the treatment of AML by intravenous administration of cytarabine and daunorubicin. We are concerned that the mechanism of action of the ratiometrically fixed liposomal formulation of VYXEOSTM is the same or similar to that of the current intravenous administration of cytarabine and daunorubicin. PO 00000 Frm 00134 Fmt 4701 Sfmt 4702 With respect to the second criterion, whether a product is assigned to the same or a different MS–DRG, we believe that potential cases representing patients who may be eligible for treatment involving VYXEOSTM would be assigned to the same MS-DRGs as cases representing patients who receive treatment for diagnoses of AML. With respect to the third criterion, whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population, the applicant asserted that VYXEOSTM is indicated for use in the treatment of patients who have been diagnosed with high-risk AML. The applicant also asserted that VYXEOSTM is the first and only approved fixed combination of cytarabine and daunorubicin and is designed to uniquely control the exposure using a nano-scale drug delivery vehicle leading to statistically significant improvements in survival in patients who have been diagnosed with high-risk AML compared to the conventional ‘‘7+3’’ free drug dosing. We believe that VYXEOSTM involves the treatment of the same patient population as other AML treatment therapies. The following unique ICD–10–PCS codes were created to describe the administration of VYXEOSTM: XW033B3 (Introduction of cytarabine and caunorubicin liposome antineoplastic into peripheral vein, percutaneous approach, new technology group 3) and XW043B3 (Introduction of cytarabine and daunorubicin liposome antineoplastic into central vein, percutaneous approach, new technology group 3). We are inviting public comments on whether VYXEOSTM is substantially similar to existing technology, including whether the mechanism of action of VYXEOSTM differs from the mechanism of action of the currently available treatment regimen. We also are inviting public comments on whether VYXEOSTM meets the newness criterion. With regard to the cost criterion, the applicant conducted the following analysis. The applicant used the FY 2016 MedPAR Hospital Limited Data Set (LDS) to assess the MS–DRGs to which cases representing potential patient hospitalizations that may be eligible for treatment involving VYXEOSTM would most likely be assigned. These potential cases representing patients who may be VYXEOSTM candidates were identified if they: (1) Were diagnosed with acute myeloid leukemia (AML); and (2) received chemotherapy during their E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules hospital stay. The cohort was further limited by excluding patients who had received bone marrow transplants. The cohort used in the analysis is referred to in this discussion as the primary cohort. According to the applicant, the primary cohort of cases spans 131 unique MS–DRGs, 16 of which contained more than 10 cases. The most common MS–DRGs are MS–DRG 837, 834, 838, and 839. These 4 MS–DRGs account for 4,457 (81 percent) of the 5,483 potential cases in the cohort. The case-weighted unstandardized charge per case is approximately $185,844. The applicant then removed charges related to other chemotherapy agents because VYXEOSTM would replace the need for the use of current chemotherapy agents. The applicant explained that charges for chemotherapy drugs are grouped with charges for oncology, diagnostic radiology, therapeutic radiology, nuclear medicine, CT scans, and other imaging services in the ‘‘Radiology Charge Amount.’’ According to the applicant, removing 100 percent of the ‘‘Radiology Charge Amount’’ would understate the cost of care for treatment involving VYXEOSTM for patients who may be eligible because treatment involving VYXEOSTM would be unlikely to replace many of the services captured in the ‘‘Radiology Charge Amount’’ category. The applicant found that chemotherapy charges represent less than 20 percent of the charges associated with revenue centers grouped into the ‘‘Radiology Charge Amount’’ and removed 20 percent of the radiology charge amount in order to capture the effect of removing chemotherapy pharmacy charges. The applicant noted that regardless of the type of induction chemotherapy, patients being treated for AML have AML-related complications, such as bleeding or infection that require supportive care drug therapy. For this reason, it is expected that eligible patients receiving treatment involving VXYEOSTM will continue to incur other pharmacy and IV therapy charges for AML-related complications. After removing the charges for the prior technology, the applicant standardized the charges. The applicant then applied an inflation factor of 1.09357, the value used in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38527) to update the charges from FY 2016 to FY 2018. According to the applicant, for the primary new technology add-on payment cohort, the cost criterion was met without consideration of VYXEOSTM charges. The average caseweighted standardized charge was $170,458, which exceeds the average case-weighted Table 10 MS–DRG VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 threshold amount of $82,561 by $87,897. The applicant provided additional analyses with the inclusion of VYXEOSTM charges under 3-vial, 4-vial, 6-vial, and 10-vial treatment scenarios. According to the applicant, the cost criterion was satisfied in each of these scenarios, with charges in excess of the average case-weighted threshold amount. Finally, the applicant also provided the following sensitivity analyses (that did not include charges for VYXEOSTM) using the methodology above: • Sensitivity Analysis 1—limits the cohort to patients who have been diagnosed with AML without remission (C92.00 or C92.50) who received chemotherapy and did not receive bone marrow transplant. • Sensitivity Analysis 2—the modified cohort was limited to patients who have been diagnosed with relapsed AML who received chemotherapy and did not receive bone marrow transplant. • Sensitivity Analysis 3—the modified cohort was limited to patients who have been diagnosed with AML and who did not receive bone marrow transplant. • Sensitivity Analysis 4—the primary cohort was maintained, but 100 percent of the charges for revenue centers grouped into the ‘‘Pharmacy Charge Amount’’ were excluded. • Sensitivity Analysis 5—identifies patients who have been diagnosed with AML in remission. The applicant noted that, in all of the sensitivity analysis scenarios, the average case-weighted standardized charge per case exceeded the average case-weighted Table 10 MS–DRG threshold amount. Based on all of the analyses above, the applicant maintained that VYXEOSTM meets the cost criterion. We are inviting public comments on whether VYXEOSTM meets the cost criterion. With regard to substantial clinical improvement, according to the applicant, clinical data results have shown that the use of VYXEOSTM represents a substantial clinical improvement for the treatment of AML in newly diagnosed high-risk, older (60 years of age and older) patients, marked by statistically significant improvements in overall survival, event free survival and response rates, and in relapsed patients age 18 to 65 years of age, where a statistically significant improvement in overall survival has been documented for the poor-risk subset of patients as defined by the European Prognostic Index. In both groups of patients, the applicant stated that there was significant improvement in survival for PO 00000 Frm 00135 Fmt 4701 Sfmt 4702 20297 the high-risk patient group. The applicant provided the following specific clinical data results. • The applicant stated that clinical data results show that treatment with VYXEOSTM for older patients (60 years of age and older) who have been diagnosed with untreated, high-risk AML will result in superior survival rates, as compared to patients treated with conventional ‘‘7+3’’ free drug dosing. The applicant provided a summary of the pivotal Phase III Study 301 in which 309 patients were enrolled, with 153 patients randomized to the VYXEOSTM treatment arm and 156 to the ‘‘7+3’’ free drug dosing treatment arm. Among patients who were 60 to 69 years old, there were 96 patients in the VYXEOSTM treatment arm and 102 in the ‘‘7+3’’ free drug dosing treatment arm. For patients who were 70 to 75 years old, there were 57 and 54 patients in each treatment arm, respectively. The applicant noted that the data results from the Phase III Study 301 demonstrated that first-line treatment of patients diagnosed with high-risk AML in the VYXEOSTM treatment arm resulted in substantially greater median overall survival of 9.56 months versus 5.95 months in the ‘‘7+3’’ free drug dosing treatment arm (hazard ratio of 0.69; p =0.005). • The applicant further asserted that high-risk, older patients (60 years old and older) previously untreated for diagnoses of AML will have a lower risk of early death when treated with VYXEOSTM than those treated with the conventional ‘‘7+3’’ free drug dosing. The applicant cited Medeiros, et al.,80 which reported a large observational study of Medicare beneficiaries and noted the following: The data result of the study showed that 50 to 60 percent of elderly patients diagnosed with AML remain untreated following diagnosis; treated patients were more likely younger, male, and married, and less likely to have secondary diagnoses of AML, poor performance indicators, and poor comorbidity scores compared to untreated patients; and in multivariate survival analyses, treated patients exhibited a significant 33 percent lower risk of death compared to untreated patients. Based on data from the Phase III Study 301,81 the applicant cited the 80 Medeiros, B., et al., ‘‘Big data analysis of treatment patterns and outcomes among elderly acute myeloid leukemia patients in the United States’’, Ann Hematol, 2015, vol. 94(7), pp. 1127– 1138. 81 Lancet, J., et al., ‘‘Final results of a Phase III randomized trial of VYXEOS (CPX–351) versus 7+3 in older patients with newly diagnosed, high-risk E:\FR\FM\07MYP2.SGM Continued 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20298 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules following results: The rate of 60-day mortality was less in the VYXEOSTM treatment arm (13.7 percent) versus the ‘‘7+3’’ free drug dosing treatment arm (21.2 percent); the reduction in early mortality was due to fewer deaths from refractory AML (3.3 percent versus 11.3 percent), with very similar rates of 60day mortality due to adverse events (10.4 percent versus 9.9 percent); there were fewer deaths in the VYXEOSTM treatment arm versus the ‘‘7+3’’ free drug dosing treatment arm during the treatment phase (7.8 percent versus 11.3 percent); and there were fewer deaths in the VYXEOSTM treatment arm during the follow-up phase than in the ‘‘7+3’’ free drug dosing treatment arm (59.5 percent versus 71.5 percent). • The applicant asserted that highrisk, older patients (60 years old and older) previously untreated for a diagnosis of AML exhibited statistically significant improvements in response rates after treatment with VYXEOSTM versus treatment with the conventional ‘‘7+3’’ free drug chemotherapy dosing, suggesting that the use of VYXEOSTM is a superior pre-transplant induction treatment versus ‘‘7+3’’ free drug dosing. Restoration of normal hematopoiesis is the ultimate goal of any therapy for AML diagnoses. The first phase of treatment consists of induction chemotherapy, in which the goal is to ‘‘empty’’ the bone marrow of all hematopoietic elements (both benign and malignant), and to allow repopulation of the marrow with normal cells, thereby yielding remission. According to the applicant, postinduction response rates were significantly higher following the use of VYXEOSTM, which elicited a 47.7 percent total response rate and a 37.3 percent rate for CR, whereas the total response and CR rates for the ‘‘7+3’’ free drug dosing arm were 33.3 percent and 25.6 percent, respectively. The CR + CRi rates for patients who were 60 to 69 years of age were 50.0 percent in the VYXEOSTM treatment arm and 36.3 percent in the ‘‘7+3’’ free drug dosing treatment arm, with an odds ratio of 1.76 (95 percent CI, 1.00–3.10). For patients who were 70 to 75 years old, the rates of CR + CRi were 43.9 percent in the VYXEOSTM treatment arm and 27.8 percent in the ‘‘7+3’’ free drug dosing treatment arm. • The applicant asserted that VYXEOSTM treatment will enable high-risk, older patients (60 years old and older) to bridge to allogeneic transplant, and VYXEOSTM treated (secondary) AML’’. Abstract and oral presentation at American Society of Clinical Oncology (ASCO), June 2016. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 responding patients will have markedly better outcomes following transplant. The applicant stated that diagnoses of secondary AML are considered incurable with standard chemotherapy approaches and, as with other high-risk hematological malignancies, transplantation is a useful treatment alternative. The applicant further stated that autologous HSCT has limited effectiveness and at this time, only allogeneic HSCT with full intensity conditioning has been reported to produce long-term remissions. However, the applicant stated that the clinical study by Medeiros, et al. reported that, while the use of allogeneic HSCT is considered a potential cure for AML, its use is limited in older patients because of significant baseline comorbidities and increased transplant-related morbidity and mortality. Patients in either treatment arm of the Phase III Study 301 responding to induction with a CR or CR+CRi (n=125) were considered for allogeneic hematopoietic cell transplant (HCT) when possible. In total, 91 patients were transplanted: 52 (34 percent) from the VYXEOSTM treatment arm and 39 (25 percent) from the ‘‘7+3’’ free drug dosing treatment arm. Patient and AML characteristics were similar according to randomized arm, including percentage of patients in each treatment arm that underwent transplant in CR+CRi status. However, the applicant noted that the VYXEOSTM treatment arm contained a higher percentage of older patients (70 years old or older) who were transplanted (VYXEOSTM, 31 percent; ‘‘7+3’’ free drug dosing, 15 percent).82 According to the applicant, patient outcome following transplant strongly favored patients in the VYXEOSTM treatment arm. The Kaplan-Meier analysis of the 91 transplanted patients landmarked at the time of HCT showed that patients in the VYXEOSTM treatment arm had markedly better overall survival (hazard ratio 0.46; p=0.0046). The time-dependent Adjustment Model (Cox proportional hazard ratio) was used to evaluate the contribution of VYXEOSTM treatment to overall survival rate after adjustment for transplant and showed that VYXEOSTM treatment remained a significant contributor, even after adjusting for transplant. The time-dependent Cox hazard ratio for overall survival rates in the VYXEOSTM treatment arm versus the ‘‘7+3’’ free drug dosing treatment arm was 0.51 (95 percent CI, 0.35–0.75; p=.0007). 82 Stone Hematology 2004; Gordon AACR 2016; NCI. Available at: www.cancer.gov. PO 00000 Frm 00136 Fmt 4701 Sfmt 4702 • The applicant asserted that VYXEOSTM treatment of previously untreated older patients (60 years old and older) diagnosed with high-risk AML increases the response rate and improves survival compared to conventional ‘‘7+3’’ free drug dosing treatment in patients diagnosed with FLT3 mutation. The applicant noted the following: Approximately 20 to 30 percent of AML patients harbor some form of FLT3 mutation, AML patients with a FLT3 mutation have a higher relapse rate and poorer prognosis than the overall population diagnosed with AML, and the most common type of mutation is internal tandem duplication (ITD) mutation localized to a membrane region of the receptor. The applicant cited Gordon, et al., 2016,83 which reported on the significant anti-leukemic activity of VYXEOSTM treatment in AML blasts exhibiting high-risk characteristics, including FLT3–ITD, that are typically associated with poor outcomes when treated with conventional ‘‘7+3’’ free drug dosing treatment. To determine whether the improved complete remission and overall survival rates of treatment using VYXEOSTM as compared to conventional ‘‘7+3’’ free drug dosing treatment are attributable to liposome-mediated altered drug PK or direct cellular interactions with specific AML blast samples, the authors evaluated cytotoxicity in 53 AML patient specimens. Cytotoxicity results were correlated with patient characteristics, as well as VYXEOSTM treatment cellular uptake and molecular phenotype status including FLT3–ITD, which is a predictor of poor patient outcomes to conventional ‘‘7+3’’ free drug dosing treatment. The applicant stated that a notable result from this research was the observation that AML blasts exhibiting the FLT3–ITD phenotype exhibited some of the lowest IC50 (the 50 percent inhibitory concentration) values and, as a group, were five-fold more sensitive to the VYXEOSTM treatment than those with wild type FLT3. In addition, there was evidence that increased sensitivity to VYXEOSTM treatment was associated with increased uptake of the drug-laden liposomes by the patient-derived AML blasts. The applicant noted that Gordon, et al. 2016, concluded taken together, the data are consistent with clinical observations where VYXEOSTM treatment retains significant anti83 Gordon, M., Tardi, P., Lawrence, M.D., et al., ‘‘CPX–351 cytotoxicity against fresh AML blasts increased for FLT3–ITD+ cells and correlates with drug uptake and clinical outcomes,’’ Abstract 287 and poster presented at AACR (American Association for Cancer Research), April 2016. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules leukemic activity in AML patients exhibiting high-risk characteristics. The applicant also noted that a subanalysis of Phase III Study 301 identified 22 patients who had been diagnosed with FLT3 mutation in the VYXEOSTM treatment arm and 20 in the ‘‘7+3’’ free drug dosing treatment arm, which resulted in the following response rates of FLT3 mutated patients, which were higher with VYXEOSTM treatments (15 of 22, 68.2 percent) versus ‘‘7+3’’ free drug dosing treatments (5 of 20, 25.0 percent); and the Kaplan-Meier analysis of the 42 FLT3 mutated patients showed that patients in the VYXEOSTM treatment arm had a trend towards better overall survival rates (hazard ratio 0.57; p=0.093). • The applicant asserted that younger patients (18 to 65 years old) with poor risk first relapse AML have shown higher response rates with VYXEOSTM treatment versus conventional ‘‘salvage’’ chemotherapy. Overall, the applicant stated that the use of VYXEOSTM had an acceptable safety profile in this patient population based on 60-day mortality data. Study 205 84 was a randomized study comparing VYXEOSTM treatment against the investigator’s choice of first ‘‘salvage’’ chemotherapy in patients who had been diagnosed with relapsed AML after a first remission lasting greater than 1 month (VYXEOSTM treatment arm, n=81 and ‘‘7+3’’ free drug dosing treatment arm, n=44; 18 to 65 years old). Investigator’s choice was almost always based on cytarabine + anthracycline, usually with the addition of one or two new agents. According to the applicant, treatment involving VYXEOSTM demonstrated a higher rate of morphological leukemia clearance among all patients, 43.2 percent versus 40.0 percent, and the advantage was most apparent in poor-risk patients, 78.7 percent versus 44.4 percent, as defined by the European Prognostic Index (EPI). In the subset analysis of this EPI poor-risk patient subset, the applicant stated there was a significant improvement in survival rate (6.6 versus 4.2 months median, hazard ratio=0.55, p=0.02) and improved response rate (39.3 percent versus 27 percent). The applicant also noted the following: the safety profile for the use of VYXEOSTM was qualitatively similar to that of control ‘‘salvage’’ therapy, with nearly identical 60-day mortality rates (14.8 percent versus 15.9 percent); among VYXEOSTM treated patients, those with no history of prior HSCT (n=59) had higher response rates (54.2 percent versus 37.8 percent) and lower 60-day mortality (10.2 percent versus 16.2 percent); overall, the use of VYXEOSTM had acceptable safety based on 60-day mortality data, with somewhat higher frequency of neutropenia and thrombocytopenia-related grade III–IV adverse events. Even though these patients are younger (18 to 65 years old) than the population studied in Phase III Study 301 (60 years old and older), Study 205 patients were at a later stage of the disease and almost all had responded to first-line therapy (cytarabine + anthracycline) and had relapsed. The applicant also cited Cortes, et al. 2015,85 which reported that patients who have been diagnosed with first relapse AML have limited likelihood of response and short expected survival following ‘‘salvage’’ treatment with the results from literature showing that: • Mitoxantrone, etoposide, and cytarabine induced response in 23 percent of patients, with median overall survival of only 2 months. • Modulation of deoxycitidine kinase by fludarabine led to the combination of fludarabine and cytarabine, resulting in a 36 percent CR rate with median remission duration of 39 weeks. • First salvage gemtuzumab ozogamicin induced CR+CRp (or CR+CRi) response in 30 percent of patients with CD33+ AML and, for patients with short first CR durations, appeared to be superior to cytarabinebased therapy. The applicant noted that Study 205 results showed the use of VYXEOSTM retained greater anti-leukemic efficacy in patients who have been diagnosed with poor-risk first relapse AML, and produced higher morphological leukemia clearance rates (78.7 percent) compared to conventional ‘‘salvage’’ therapy (44 percent). The applicant further noted that, overall, the use of VYXEOSTM had acceptable safety profile in this patient population based on 60-day mortality data. Based on all of the data presented above, the applicant concluded that VYXEOSTM represents a substantial clinical improvement over existing technologies. However, we are concerned that, although there was an improvement in a number of outcomes in Phase III Study 301, specifically overall survival rate, lower risk of early death, improved response rates, better 84 Cortes, J., et al., ‘‘Significance of prior HSCT on the outcome of salvage therapy with CPX–351 or conventional chemotherapy among first relapse AML patients.’’ Abstract and poster presented at ASH 2011. 85 Cortes, J., et al., (2015), ‘‘Phase II, multicenter, randomized trial of CPX–351 (cytarabine:daunorubicin) liposome injection versus intensive salvage therapy in adults with first relapse AML,’’ Cancer, January 2015, pp. 234–42. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00137 Fmt 4701 Sfmt 4702 20299 outcomes following transplant, increased response rate and overall survival in patients diagnosed with FLT3 mutation, and higher response rates versus conventional ‘‘salvage’’ chemotherapy in younger patients diagnosed with poor-risk first relapse, the improved outcomes may not be statistically significant. Furthermore, we are concerned that the overall improvement in survival from 5.95 months to 9.56 months may not represent a substantial clinical improvement. In addition, the rate of adverse events in both treatment arms of Study 205, given the theoretical benefit of reduced toxicity with the liposomal formulation, was similar for both the VYXEOSTM and ‘‘7+3’’ free drug treatment groups. Therefore, we also are concerned that there is a similar rate of adverse events, such as febrile neutropenia (68 percent versus 71 percent), pneumonia (20 percent versus 15 percent), and hypoxia (13 percent versus 15 percent), with the use of VYXEOSTM as compared with the conventional ‘‘7+3’’ free drug regimen. We are inviting public comments on whether VYXEOSTM meets the substantial clinical improvement criterion. Below we summarize and respond to a written public comment we received regarding the VYXEOSTM during the open comment period in response to the New Technology Town Hall meeting notice published in the Federal Register. Comment: The applicant provided a written comment to provide notification of the addition of VYXEOSTM to the Category 1 Clinical Practice Guidelines in Oncology recommendation by the National Comprehensive Cancer Network. The applicant reported that the resources made available by NCCN are the NCCN Clinical Practice Guidelines in Oncology (NCCN Guidelines®). The intent of the guidelines is to assist in the decisionmaking process of individuals involved in cancer treatment and care. According to the NCCN Guidelines®, Category 1 clinical practices are based upon high-level evidence, and there is uniform NCCN consensus that the intervention is appropriate. The February 7, 2018 NCCN Guidelines® for Acute Myeloid Leukemia include a recommendation for cytarabine and daunorubicin for the treatment of adult patients 60 years of age or older who have been newly diagnosed with therapy-related AML (t-AML) or AML with myelodysplasia-related changes E:\FR\FM\07MYP2.SGM 07MYP2 20300 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules (AML–RMC) to be included as a Category 1 clinical practice.86 Response: We appreciate the applicant’s submission of additional information. We will take these comments into consideration when deciding whether to approve new technology add-on payments for VYXEOSTM for FY 2019. c. VABOMERETM (MeropenemVaborbactam) daltland on DSKBBV9HB2PROD with PROPOSALS2 Melinta Therapeutics, Inc., submitted an application for new technology addon payments for VABOMERETM for FY 2019. VABOMERETM is indicated for use in the treatment of adult patients who have been diagnosed with complicated urinary tract infections (cUTIs), including pyelonephritis, caused by specific bacteria. VABOMERETM received FDA approval on August 29, 2017. Complicated urinary tract infections (cUTIs) are defined as chills, rigors, or fever (temperature of greater than or equal to 38.0°C); elevated white blood cell count (greater than 10,000/mm3), or left shift (greater than 15 percent immature PMNs); nausea or vomiting; dysuria, increased urinary frequency, or urinary urgency; lower abdominal pain or pelvic pain. Acute pyelonephritis is defined as chills, rigors, or fever (temperature of greater than or equal to 38.0°C); elevated white blood cell count (greater than 10,000/mm3), or left shift (greater than 15 percent immature PMNs); nausea or vomiting; dysuria, increased urinary frequency, or urinary urgency; flank pain; costo-vertebral angle tenderness on physical examination. Risk factors for infection with drug-resistant organisms do not, on their own, indicate a cUTI.87 The increasing incidence of multidrugresistant gram-negative bacteria, such as carbapenem-resistant Enterobacteriacea (CRE), has resulted in a critical need for new antimicrobials. The applicant reported that it has developed a beta-lactamase combination antibiotic, VABOMERETM, to treat cUTIs, including those caused by certain carbapenem-resistant organisms. By combining the carbapenem class antibiotic meropenem with vaborbactam, VABOMERETM protects 86 NCCN Clinical Practice Guidelines in Oncology (NCCN Guidelines®), Acute Myeloid Leukemia, Version I—2018, February 7, 2018, https:// www.nccn.org/professionals/physician_gls/pdf/ aml.pdf. 87 Hooton, T. and Kalpana, G., 2018, ‘‘Acute complicated urinary tract infection (including pyelonephritis) in adults,’’ In A. Bloom (Ed.), UpToDate. Available at: https://www.uptodate.com/ contents/acute-complicated-urinary-tract-infectionincluding-pyelonephritis-in-adults. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 meropenem from degradation by certain CRE strains. The applicant stated that meropenem, a carbapenem, is a broad spectrum beta-lactam antibiotic that works by inhibiting cell wall synthesis of both gram-positive and gram-negative bacteria through binding of penicillinbinding proteins (PBP). Carbapenemase producing strains of bacteria have become more resistant to beta-lactam antibiotics, such as meropenem. However, meropenem in combination with vaborbactam, inhibits the carbapenemase activity, thereby allowing the meropenem to bind PBP and kill the bacteria. According to the applicant, vaborbactam, a boronic acid inhibitor, is a first-in class beta-lactamase inhibitor. Vaborbactam blocks the breakdown of carbapenems, such as meropenem, by bacteria containing carbapenemases. Although vaborbactam has no antibacterial properties, it allows for the treatment of resistant infections by increasing bacterial sensitivity to meropenem. New carbapenemase producing strains of bacteria have become more resistant to beta-lactam antibiotics. However, meropenem in combination with vaborbactam, can inhibit the carbapenemase enzyme, thereby allowing the meropenem to bind PBP and kill the bacteria. The applicant stated that the vaborbactem component of VABOMERETM helps to protect the meropenem from degradation by certain beta-lactamases, such as Klebsiella pneumonia carbapenemase (KPC). According to the applicant, VABOMERETM is the first of a novel class of beta-lactamase inhibitors. The applicant asserted that VABOMERETM’s use of vaborbactam to restore the efficacy of meropenem is a novel approach to fighting antimicrobial resistance. The applicant stated that VABOMERETM is indicated for use in the treatment of adult patients 18 years old and older who have been diagnosed with cUTIs, including pyelonephritis. The recommended dosage of VABOMERETM is 4 grams (2 grams of meropenem and 2 grams of vaborbactam) administered every 8 hours by intravenous (IV) infusion over 3 hours with an estimated glomerular filtration rate (eGFR) greater than or equal to 50 mL/min/1.73 m2. The recommended dosage of VABOMERETM for patients with varying degrees of renal function is included in the prescribing information. The duration of treatment is for up to 14 days. As discussed earlier, if a technology meets all three of the substantial similarity criteria, it would be PO 00000 Frm 00138 Fmt 4701 Sfmt 4702 considered substantially similar to an existing technology and would not be considered ‘‘new’’ for purposes of new technology add-on payments. With regard to the first criterion, whether a product uses the same or a similar mechanism of action to achieve a therapeutic outcome, according to the applicant, VABOMERETM is designed primarily for the treatment of gramnegative bacteria that are resistant to other current antibiotic therapies. The applicant stated that VABOMERETM does not use the same or similar mechanism of action to achieve a therapeutic outcome. The applicant asserted that the vaborbactam component of VABOMERETM is a new class of beta-lactamase inhibitor that protects meropenem from degradation by certain enzymes such as carbapenamases. The applicant indicated that the structure of vaborbactam is distinctly optimized for inhibition of serine carbapenamases and for combination with a carbapenem antibiotic. Beta-lactamase inhibitors are agents that inhibit bacterial enzymes— enzymes that destroy beta-lactam antibiotics and result in resistance to first-line as well as ‘‘last defense’’ antimicrobials used in hospitals. According to the applicant, in order for carbapenems to be effective these enzymes must be inhibited. The applicant stated that the addition of vaborbactam as a potent inhibitor against Class A and C serine betalactamases, particularly KPC, represents a new mechanism of action. According to the applicant, VABOMERETM’s use of vaborbactam to restore the efficacy of meropenem is a novel approach and that the FDA’s approval of VABOMERETM for the treatment of cUTIs represents a significant label expansion because mereopenem alone (without the addition of vaborbactam) is not indicated for the treatment of patients with cUTI infections. Therefore, the applicant maintained that this technology and resistance-fighting mechanism involved in the therapeutic effect achieved by VABOMERETM is distinct from any other existing product. The applicant noted that VABOMERETM was designated as a qualified infectious disease product (QIDP) in January 2014. This designation is given to antibacterial products that treat serious or life-threatening infections under the Generating Antibiotic Incentives Now (GAIN) title of the FDA Safety and Innovation Act. We believe that, although the molecular structure of the vaborbactam component of VABOMERETM is unique, the bactericidal action of VABOMERETM is the same as meropenem alone. In E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules addition, we note that there are other similar beta-lactam/beta-lactamase inhibitor combination therapies currently available as treatment options. We are inviting public comments on whether VABOMERETM’s mechanism of action is similar to other existing technologies. With respect to the second criterion, whether a product is assigned to the same or a different MS–DRG, the applicant asserted that patients who may be eligible to receive treatment involving VABOMERETM include hospitalized patients who have been diagnosed with a cUTI. These potential cases can be identified by a variety of ICD–10–CM diagnosis codes. Therefore, potential cases representing patients who have been diagnosed with a cUTI who may be eligible for treatment involving VABOMERETM can be mapped to multiple MS–DRGs. The following are the most commonly used MS–DRGs for patients who have been diagnosed with a cUTI: MS–DRG 690 (Kidney and Urinary Tract Infections without MCC); MS–DRG 853 (Infectious and Parasitic Diseases with O.R. Procedure with MCC); MS–DRG 870 (Septicemia or Sever Sepsis with Mechanical Ventilation 96+ Hours); MS–DRG 871 (Septicemia or Severe Sepsis without Mechanical Ventilation 96+ Hours with MCC); and MS–DRG 872 (Septicemia or Severe Sepsis without Mechanical Ventilation 96+ Hours without MCC). Potential cases representing patients who may be eligible for treatment with VABOMERETM would be assigned to the same MS–DRGs as cases representing hospitalized patients who have been diagnosed with a cUTI. With respect to the third criterion, whether the use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population, the applicant asserted that the use of VABOMERETM would treat a different patient population than existing and currently available treatment options. According to the applicant, VABOMERETM’s use of vaborbactam to restore the efficacy of meropenem is a novel approach to fighting the global and national public health crisis of antimicrobial resistance, and as such, the use of VABOMERETM reaches different and expanded patient populations. The applicant further asserted that future patient populations are saved as well because the growth of resistant infections is slowed. The applicant believed that, because of the threat posed by gram-negative bacterial infections and the limited number of available treatments currently on the market or in development, the VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 combination structure and development of VABOMERETM and its potential expanded use is new. While the applicant believes that VABOMERETM treats a different patient population, we note that VABOMERETM is only approved for use in the treatment of adult patients who have been diagnosed with cUTIs. Therefore, it appears that VABOMERETM treats the same population (adult patients with a cUTI) and there are already other treatment options available for diagnoses of cUTIs. We are concerned that VABOMERETM may be substantially similar to existing beta-lactam/beta-lactamase inhibitor combination therapies. As noted above, we are concerned that VABOMERETM may have a similar mechanism of action, treats the same population (patients with a cUTI) and would be assigned to the same MS–DRGs (similar to existing beta-lactam/beta-lactamase inhibitor combination therapies currently available as treatment options). We are inviting public comments on whether VABOMERETM meets the substantial similarity criteria and the newness criterion. With regard to the cost criterion, the applicant conducted the following analysis to demonstrate that the technology meets the cost criterion. In order to identify the range of MS–DRGs to which cases representing potential patients who may be eligible for treatment using VABOMERETM may map, the applicant used the Premier Research Database from 2nd Quarter 2015 to 4th Quarter 2016. According to the applicant, Premier is an electronic laboratory, pharmacy, and billing data repository that collects data from over 600 hospitals and captures nearly 20 percent of U.S. hospitalizations. The applicant’s list of most common MS– DRGs is based on data regarding CRE from the Premier Research Database. According to the applicant, approximately 175 member hospitals also submit microbiology data, which allowed the applicant to identify specific pathogens such as CRE infections. Using the Premier Research Database, the applicant identified over 350 MS–DRGs containing data for 2,076 cases representing patients who had been hospitalized for CRE infections. The applicant used the top five most common MS–DRGs: MS–DRG 871 (Septicemia or Severe Sepsis without Mechanical Ventilation >96 Hours with MCC), MS–DRG 853 (Infectious and Parasitic Disease with O.R. Procedure with MCC), MS–DRG 870 (Septicemia or Severe Sepsis with Mechanical Ventilation >96 Hours), MS–DRG 872 (Septicemia or Severe Sepsis without Mechanical Ventilation >96 Hours PO 00000 Frm 00139 Fmt 4701 Sfmt 4702 20301 without MCC), and MS–DRG 690 (Kidney and Urinary Tract Infections without MCC), to which 627 cases representing potential patients who may be eligible for treatment involving VABOMERETM, or approximately 30.2 percent of the total cases identified, mapped. The applicant reported that the resulting 627 cases from the identified top 5 MS–DRGs have an average caseweighted unstandardized charge per case of $74,815. We note that, instead of using actual charges from the Premier Research Database, the applicant computed this amount based on the average case-weighted threshold amounts in Table 10 from the FY 2018 IPPS/LTCH PPS final rule. For the rest of the analysis, the applicant adjusted the average case-weighted threshold amounts (referred to above as the average case-weighted unstandardized charge per case) rather than the actual average case-weighted unstandardized charge per case from the Premier Research Database. According to the applicant, based on the Premier data, $1,999 is the mean antibiotic costs of treating patients hospitalized with CRE infections with current therapies. The applicant explained that it identified 69 different regimens that ranged from 1 to 4 drugs from a study conducted to understand the current management of patients diagnosed with CRE infections. Accordingly, the applicant estimated the removal of charges for a prior technology of $1,999. The applicant then standardized the charges. The applicant applied an inflation factor of 9.357 percent from the FY 2018 IPPS/ LTCH PPS final rule (82 FR 38527) to inflate the charges. The applicant noted that it does not yet have sufficient charge data from hospitals and will work to supplement its application with the information once it is available. However, for purposes of calculating charges, the applicant used the average charge as the wholesale acquisition cost (WAC) price for a treatment duration of 14 days and added this amount to the average charge per case. Using this estimate, the applicant calculated the final inflated case-weighted standardized charge per case as $91,304, which exceeds the average case-weighted threshold amount of $74,815. Therefore, the applicant asserted that VABOMERETM meets the cost criterion. We are concerned that, as noted earlier, instead of using actual charges from the Premier Research Database, the applicant computed the average case-weighted unstandardized charge per case based on the average caseweighted threshold amounts in Table 10 E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20302 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules from the FY 2018 IPPS/LTCH PPS final rule. Because the applicant did not demonstrate that the average caseweighted standardized charge per case for VABOMERETM (using actual charges from the Premier Research Database) would exceed the average case-weighted threshold amounts in Table 10, we are unable to determine if the applicant meets the cost criterion. We are inviting public comments on whether VABOMERETM meets the cost criterion, including with respect to the concern regarding the applicant’s analysis. With regard to the substantial clinical improvement criterion, the applicant believed that the results from the VABOMERETM clinical trials clearly establish that VABOMERETM represents a substantial clinical improvement for treatment of deadly, antibiotic resistant infections. Specifically, the applicant asserted that VABOMERETM offers a treatment option for a patient population unresponsive to, or ineligible for, currently available treatments, and the use of VABOMERETM significantly improves clinical outcomes for a patient population as compared to currently available treatments. The applicant provided the results of the Targeting Antibiotic Non-sensitive Gram-Negative Organisms (TANGO) I and II clinical trials to support its assertion. TANGO-I 88 was a prospective, randomized, double-blinded trial of VABOMERETM versus piperacillintazobactam in patients with cUTIs and acute pyelonephritis (A/P). TANGO-I is also a noninferiority (NI) trial powered to evaluate the efficacy, safety, and tolerability of VABOMERETM compared to piperacillin-tazobactam in the treatment of cUTI, including AP, in adult patients. There were two primary endpoints for this study, one for the FDA, which was cure or improvement and microbiologic outcome of eradication at the end-of-treatment (EOT) (day 5 to 14) in the proportion of patients in the Microbiologic Evaluable Modified Intent-to-Treat (m-MITT) population who achieved overall success (clinical cure or improvement and eradication of baseline pathogen to <104 CFU/mL), and one for the European Medicines Agency (EMA), which was the proportion of patients in the co-primary m-MITT and Microbiologic Evaluable (ME) populations who achieve a microbiologic outcome of eradication (eradication of baseline pathogen to 88 Vabomere Prescribing Information, Clinical Studies (August 2017), available at: https:// www.accessdata.fda.gov/drugsatfda_docs/label/ 2017/209776lbl.pdf. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 <103 CFU/mL) at the test-of-cure (TOC) visit (day 15 to 23). The trial enrolled 550 adult patients who were randomized 1:1 to receive VABOMERETM as a 3-hour IV infusion every 8 hours, or piperacillin 4gtazobactam 500mg as a 30 minute IV infusion every 8 hours, for at least 5 days for the treatment of a cUTI. Therapy was set at a minimum of 5 days to fully assess the efficacy and safety of VABOMERETM. After a minimum of 5 days of IV therapy, patients could be switched to oral levofloxacin (500 mg once every 24 hours) to complete a total of 10-day treatment course (IV + oral), if they met pre-specified criteria. Treatment was allowed for up to 14 days, if clinically indicated. Patient demographic and baseline characteristics were balanced between treatment groups in the m-MITT population. • Approximately 93 percent of patients were Caucasian and 66 percent were females in both treatment groups. • The mean age was 54 years old with 32 percent and 42 percent of the patients 65 years old and older in the VABOMERETM and piperacillin/ tazobactam treatment groups, respectively. • Mean body mass index was approximately 26.5 kg/m2 in both treatment groups. • Concomitant bacteremia was identified in 12 (6 percent) and 15 (8 percent) of the patients at baseline in the VABOMERETM and piperacillin/ tazobactam treatment groups, respectively. • The proportion of patients who were diagnosed with diabetes mellitus at baseline was 17 percent and 19 percent in the VABOMERETM and piperacillin/tazobactam treatment groups, respectively. • The majority of the patients (approximately 90 percent) were enrolled from Europe, and approximately 2 percent of the patients were enrolled from North America. Overall, in both treatment groups, 59 percent of the patients had pyelonephritis and 40 percent had a cUTI, with 21 percent and 19 percent of the patients having a non-removable and removable source of infection, respectively. Mean duration of IV treatment in both treatment groups was 8 days and mean total treatment duration (IV and oral) was 10 days; patients with baseline bacteremia could receive up to 14 days of therapy (IV and oral). Approximately 10 percent of the patients in each treatment group in the m-MITT population had a levofloxacin-resistant pathogen at baseline and received PO 00000 Frm 00140 Fmt 4701 Sfmt 4702 levofloxacin as the oral switch therapy. According to the applicant, this protocol violation may have impacted the assessment of the outcomes at the TOC visit. These patients were not excluded from the analysis of adverse reactions (headache, phlebitis, nausea, diarrhea, and others) occurring in 1 percent or more of the patients receiving VABOMERETM, as the decision to switch to oral levofloxacin was based on post-randomization factors. Regarding the FDA primary endpoint, the applicant stated the following: • Overall success rate at the end of IV treatment (day 5 to 14) was 98.4 percent and 94 percent for the VABOMERETM and piperacillin/tazobactam treatment groups, respectively. • The TOC—7 days post IV therapy was 76.5 percent (124 of 162 patients) for the VABOMERETM group and 73.2 percent (112 of 153 patients) for the piperacillin/tazobactam group. • Despite being an NI trial, TANGO– I showed a statistically significant difference favoring VABOMERETM in the primary efficacy endpoint over piperacillin/tazobactam (a commonly used agent for gram-negative infections in U.S. hospitals). • VABOMERETM demonstrated statistical superiority over piperacillintazobactam with overall success of 98.4 percent of patients treated with VABOMERETM in the TANGO–I clinical trial compared to 94.0 percent for patients treated with piperacillin/ tazobactam, with a treatment difference of 4.5 percent and 95 percent CI of (0.7 percent, 9.1 percent). • Because the lower limit of the 95 percent CI is also greater than 0 percent, VABOMERETM was statistically superior to piperacillin/tazobactam. • Because non-inferiority was demonstrated, then superiority was tested. Further, the applicant asserted that a noninferiority design may have a ‘‘superiority’’ hypothesis imbedded within the study design that is appropriately tested using a non-inferiority design and statistical analysis. As such, according to the applicant, superiority trials concerning antibiotics are impractical and even unethical in many cases because one cannot randomize patients to receive inactive therapies. The applicant stated that it would be unethical to leave a patient with a severe infection without any treatment. • The EMA endpoint of eradication rates at TOC were higher in the VABOMERETM group compared to the piperacillin/tazobactam group in both the m-MITT (66.7 percent versus 57.7 percent) and ME (66.3 percent and 60.4 percent) populations; however, it was E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 not a statistically significant improvement. We note that the eradication rates of the EMA endpoint were not statistically significant. We are inviting public comments with respect to our concern as to whether the FDA endpoints demonstrating noninferiority are statistically sufficient data to support that VABOMERETM is a substantial clinical improvement in the treatment of patients with a cUTI. In TANGO–I the applicant offers data comparing VABOMERETM to piperacillin–tazobactam EOT/TOC rates in the setting of cUTIs/AP, but does not offer a comparison to other antibiotic treatments of cUTIs known to be effective against gram–negative uropathogens, specifically other carbapenems.89 We also note that the study population is largely European (98 percent), and given the variable geographic distribution of antibiotic resistance we are concerned that the use of piperacillin/tazobactam as the comparator may have skewed the eradication rates in favor of VABOMERETM, or that the favorable results would not be applicable to patients in the United States. We are inviting public comments regarding the lack of a comparison to other antibiotic treatments of cUTIs known to be effective against gram–negative uropathogens, whether the comparator the applicant used in its trial studies may have skewed the eradication rates in favor of VABOMERETM, and if the favorable results would be applicable to patients in the United States to allow for sufficient information in evaluating substantial clinical improvement. The applicant asserted that the TANGO-II study 90 of monotherapy with VABOMERETM compared to best available therapy (BAT) (salvage care of cocktails of toxic/poorly efficacious last resort agents) for the treatment of CRE infections showed important differences in clinical outcomes, including reduced mortality, higher clinical cure at EOT and TOC, benefit in important patient subgroups of HABP/VABP, bacteremia, renal impairment, and immunocompromised and reduced AEs, particularly lower nephrotoxicity in the study group. TANGO-II is a multi-center, randomized, Phase III, 89 Golan, Y., 2015, ‘‘Empiric therapy for hospitalacquired, Gram-negative complicated intraabdominal infection and complicated urinary tract infections: a systematic literature review of current and emerging treatment options,’’ BMC Infectious Diseases, vol. 15, pp. 313. https://doi.org/10.1186/ s12879-015-1054-1. 90 Alexander, et al., ‘‘CRE Infections: Results From a Retrospective Series and Implications for the Design of Prospective Clinical Trials,’’ Open Forum Infectious Diseases. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 open-label trial of patients with infections due to known or suspected CRE, including cUTI, AP, HABP/VABP, bacteremia, or complicated intraabdominal infection (cIAI). Eligible patients were randomized 2:1 to monotherapy with VABOMERETM or BAT for 7 to 14 days. There were no consensus BAT regimes, it could include (alone or in combination) a carbapenem, aminoglycoside, polymyxin B, colistin, tigecycline or ceftazidime-avibactam. A total of 72 patients were enrolled in the TANGO-II trial. Of these, 50 of the patients (69.4 percent) had a gramnegative baseline organism (m-MITT population), and 43 of the patients (59.7 percent) had a baseline CRE (mCRE– MITT population). Within the mCRE– MITT population, 20 of the patients had bacteremia, 15 of the patients had a cUTI/AP, 5 of the patients had HABP/ VABP, and 3 of the patients had a cIAI. The most common baseline CRE pathogens were K. pneumoniae (86 percent) and Escherichia coli (7 percent). Cure rates of the mCRE–MITT population at EOT for VABOMERETM and BAT groups were 64.3 percent and 40 percent, respectively, TOC, 7 days after EOT, were 57.1 percent and 26.7 percent, respectively, 28-day mortality was 17.9 percent (5 of 28 patients) and 33.3 percent (5 of 15 patients), respectively. The applicant asserted that with further sensitivity analysis, taking into account prior antibiotic failures among the VABOMERETM study arm, the 28-day all-cause mortality rates were even lower among VABOMERETM versus BAT patients (5.3 percent (1 of 19 patients) versus 33.3 percent (5 of 15 patients)). Additionally, in July 2017, randomization in the trial was stopped early following a recommendation by the TANGO-II Data Safety Monitoring Board (DSMB) based on risk-benefit considerations that randomization of additional patients to the BAT comparator arm should not continue. According to the applicant, subgroup analyses of the TANGO-II studies include an analysis of adverse events in which VABOMERETM compared to BAT demonstrated the following: • VABOMERETM was associated with less severe treatment emergent adverse events of 13.3 percent versus 28 percent. • VABOMERETM was less likely to be associated with a significant increase in creatinine 3 percent versus 26 percent. • Efficacy results of the TANGO-II trial cUTI/AP subgroup demonstrated VABOMERETM was associated with an overall success rate at EOT for the mCRE–MITT populations of 72 percent (8 of 11 patients) versus 50 percent (2 of 4 patients) and an overall success rate PO 00000 Frm 00141 Fmt 4701 Sfmt 4702 20303 at TOC of 27.3 percent (3 of 7 patients) versus 50 percent (2 of 4 patients). We note that many of the TANGO-II trial outcomes showing improvements in the use of VABOMERETM over BAT are not statistically significant. We also note that the TANGO-II study included a small number of patients; the study population in the mCRE-MITT only included 43 patients. Additionally, the cUTI/AP subgroup analysis only included a total of 15 patients and did not show an increased overall success rate at TOC (27.3 percent versus 50 percent) over the BAT group. We are inviting public comments with respect to our concern as to whether the lack of statistically significant outcomes and the small number of study participants allows for enough information to evaluate substantial clinical improvement. We are inviting public comments on whether the VABOMERETM technology meets the substantial clinical improvement criterion, including with respect to the specific concerns we have raised. Below we summarize and respond to written public comments we received regarding VABOMERETM during the open comment period in response to the New Technology Town Hall meeting notice published in the Federal Register. Comment: The applicant submitted information regarding the comparison of VABOMERETM to other antibiotic treatments for a cUTI known to be effective against gram-negative uropathogens. The applicant asserted that doripenem is a carbapenem antibiotic and, therefore, is subject to degradation and inactivation by carbapenemases, including the Klebsiella pneumoniae carbapenemase (KPC). The applicant stated that doripenem has been shown to have poor activity in vitro against CRE and VABOMERETM, in contrast, takes a novel, first in class beta-lactamase inhibitor, vaborbactam, and combines it with the carbapenem drug meropenem in a manner that—because of the unique, novel, and new properties of vaborbactam when combined with meropenem to create VABOMERETM— to effectively restore the effectiveness of meropenem (a carbapenem) in fighting against carbapenem-resistant bacteria. The applicant indicated that extensive in vitro studies have been conducted and show that carbapenems such as doripenem have poor activity in vitro against KPC-producing CRE. Because the in vitro data show that doripenem has poor activity against KPC-producing CRE, the applicant stated that no comparative clinical efficacy data E:\FR\FM\07MYP2.SGM 07MYP2 20304 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules between doripenem and VABOMERETM exists. Response: We appreciate the applicant’s comments. However, we believe that because the study population for VABOMERETM is patients with cUTIs and not UTIs with KPCs, we are concerned that the applicant does not offer comparison data to other antibiotic treatments of cUTIs known to be effective against gram-negative uropathogens. As noted, we are inviting public comments on whether the VABOMERETM technology meets the substantial clinical improvement criterion, including with respect to the specific concerns we have raised. daltland on DSKBBV9HB2PROD with PROPOSALS2 d. DURAGRAFT® Vascular Conduit Solution Somahlution, Inc. submitted an application for new technology add-on payments for DURAGRAFT® for FY 2019. DURAGRAFT® is designed to protect the endothelium of the vein graft following harvesting and prior to grafting to prevent vascular graft disease (VGD) and vein graft failure (VGF), and to reduce the clinical complications associated with graft failure. These complications include myocardial infarction and repeat revascularization. DURAGRAFT® is formulated into a solution that is used during standard graft handling, flushing, and bathing steps. VGD is the principal cause of both early (within 30 days) and intermediate/ late (months to years) VGF. The principal mediator of VGD following grafting in bypass surgeries is damage that occurs during intra-operative vascular graft harvesting and handling.91 92 Endothelium can be destroyed or damaged intraoperatively through the acute physical stress of harvesting, storage, and handling, and through more insidious processes such as those associated with ischemic injury, metabolic stress and oxidative damage. According to the applicant, more recently, it has been demonstrated that damage associated with graft storage solution has the highest correlation with the development of 12month VGF.93 94 This is likely due not 91 Harskamp, Ralf E., MD, Alexander, John H., MD, MHS, Schulte, Phillip J., Phd, et al., ‘‘Vein Graft Preservation Solutions, Patency, and Outcomes After Coronary Artery Bypass Graft Surgery: follow-up from the PREVENT IV randomized clinical trial’’, Jama Surg, 2014, vol. 149(8), pp. 798–805. 92 Testa, L., Bedogni, F., ‘‘Treatment of Saphenous Vein Graft Disease: ‘Never Ending Story’ of the Eternal Return,’’ Res Cardiovasc Med, 2014, vol. 3(3), pp. e21092. 93 Ibid. 94 Ibid. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 only to the active tissue damage associated with commonly used storage solutions, but also to their inability to protect against ischemic injury.95 96 97 VGD encompasses the pathophysiological changes that occur in damaged vein grafts following their use in surgical grafting. These changes, apparent within minutes to hours of grafting, are manifested as endothelial dysfunction, death and/or denudation and include pro-inflammatory, prothrombogenic and proliferative changes within the graft. These initial responses to damage cause even more damage in a domino-like effect, thereby perpetuating the response-damage cycle that is the basis of VGD progression. The applicant further noted that endothelial dysfunction and inflammation also result in the diminished ability of the graft to respond appropriately to new blood flow patterns and adaptive positive remodeling may be thwarted. This is because proper remodeling is dependent upon a functional endothelial response to shear stress that involves the production of remodeling factors by the endothelium including nitro vasodilators, prostaglandins, lipoxyoxygenases, hyperpolarizing factors and other growth factors. Therefore, damaged, missing and/or dysfunctional endothelial cells prevent, to varying extents, graft adaption which makes the graft susceptible to shearmediated endothelial damage. The collective damage results in intimal hyperplasia or graft wall thickening that is the basis for atheroma development and subsequent lumen narrowing and graft failure, which is the end state of VGD. The applicant pointed to several references to highlight pathologic changes leading to VGD, occlusion and loss of vasomotor function.98 99 100 101 102 103 104 105 The 95 Weiss, D.R., Juchem, G., Kemkes, B.M., et al., ‘‘Extensive deendothelialization and thrombogenicity in routinely prepared vein grafts for coronary bypass operations: facts and remedy,’’ Century Publishing Corporation, International Journal of Clinical Experimental Medicine, 2009 May 28, vol. 2(2), pp. 95–113. 96 Wilbring, M., Tugtekin, S.M., Zatschler, B., et al., ‘‘Even short-time storage in physiological saline solution impairs endothelial vascular function of saphenous vein grafts,’’ Elsevier Science Inc., European Journal of Cardio-Thoracic Surgery, 2011 Oct, vol. 40(4), pp. 811–815. 97 Thatte, H.S., Biswas, K.S., Najjar, S.F., et al., ‘‘Multi-photon microscopic evaluation of saphenous vein endothelium and its preservation with a new solution,’’ GALA, Elsevier Science Inc., Ann Thorac Surg, 2003 Apr, vol. 75(4), pp. 1145– 1152. 98 Verrier, E.D., Boyle, E.M., ‘‘Endothelial cell injury in cardiovascular surgery: an overview,’’ Ann Thorac Surg, 1997, vol. 64, pp. S2–S8. 99 Harskamp, R.E., Lopes, R.D., Baisden, C.E., et al., ‘‘Saphenous vein graft failure after coronary PO 00000 Frm 00142 Fmt 4701 Sfmt 4702 applicant summarized, that when the damaged luminal surface of a vein graft is presented to the bloodstream at time of reperfusion, a domino-effect of further damage is triggered through inflammatory, thrombogenic and aberrant hyper-proliferative processes that lead to both early and late VGF. Presenting an intact functional endothelial layer at the time of grafting is, therefore, tantamount to protecting the graft and its associated endothelium from damage that occurs post-grafting, in turn conferring protection against graft failure. Given the low success rate of failed graft intervention, addressing graft endothelial protection at the time of surgery is critical.106 With respect to the newness criterion, DURAGRAFT® has not received FDA approval at the time of the development of this proposed rule. The applicant indicated that it anticipates FDA approval of its premarket application by the second quarter of 2018. The applicant also indicated that ICD–10– PCS code XY0VX83 (Extracorporeal introduction of endothelial damage inhibitor to vein graft, new technology group 3) would identify procedures involving the use of the DURAGRAFT® technology. As discussed earlier, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and would not be considered ‘‘new’’ for purposes of new technology add-on payments. With regard to the first criterion, whether a product uses the same or similar mechanism of action to achieve a therapeutic outcome, according to the applicant, there are currently no other treatment options available with the artery bypass surgery: pathophysiology, management, and future directions,’’ Ann Thorac Surg., 2013 May, vol. 257(5), pp. 824–33. 100 Hess, C.N., Lopes, R.D., Gibson, C.M., et al., ‘‘Saphenous vein graft failure after coronary artery bypass surgery: insights from PREVENT IV,’’ Circulation 2014 Oct 21, vol. 130(17), pp. 1445–51. 101 Sellke, F.W., Boyle, E.M., Verrier, E.D., ‘‘The pathophysiology of vasomotor dysfunction,’’ Ann Thorac Surg, 1997, vol. 64, pp. S9–S15. 102 Motwani, J.G., Topol, E.J., ‘‘Aortocoronary saphenous vein graft disease: pathogenesis, predisposition and prevention,’’ Circulation 1998, vol. 97(9), pp. 916–31. 103 Mills, N.L., Everson, C.T., ‘‘Vein graft failure,’’ Curr Opin Cardiol, 1995, vol. 10, pp. 562–8. 104 Davies, M.G., Hagen, P.O., ‘‘Pathophysiology of vein graft failure: a review,’’ Eur J Vasc Endovasc Surg, 1995, vol. 9, pp. 7–18. 105 Edmunds, L.H., ‘‘Techniques of myocardial revascularization. In: Edmunds LH, ed. Cardiac surgery in the adult,’’ New York: McGraw-Hill, 1997, pp. 481–534. 106 Kim, F.Y., Marhefka, G., Ruggiero, N.J., et al., ‘‘Saphenous vein graft disease: review of pathophysiology, prevention, and treatment,’’ Cardiol, Rev 2013, vol. 21(2), pp. 101–9. E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules same mechanism of action as that of DURAGRAFT®. Moreover, the applicant conveyed there are currently no commercial solutions approved for treating arteries or veins intended for bypass surgery. The applicant explained that the DURAGRAFT® treatment has been formulated into a solution so that it can be used to treat grafts during handling, flushing, and bathing steps without changing surgical practice to perform the treatment. According to the applicant, DURAGRAFT® is specifically designed to inhibit endothelial cell damage and death, as well as prevent damage to other cells of the vascular conduit, which achieves a superior clinical outcome in coronary artery bypass grafting (CABG). The applicant did not directly address within its application the second and third criteria; whether a product is assigned to the same or a different MS– DRG and whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population. However, the applicant stated, as previously indicated, that there are currently no other treatment options available that utilize the same mechanism of action as that of the DURAGRAFT®. Based on the applicant’s statements presented above, we are concerned that the mechanism of action of the DURAGRAFT® may be the same or similar to other vein graft storage solutions. We also are concerned with the lack of information regarding how the technology meets the substantial similarity criteria. Specifically, we understand that there are other vein graft storage solutions available, such as various saline, blood, and electrolyte solutions. We believe that additional information would be helpful regarding whether the use of the technology treats the same or similar patient population or type of disease, and whether the ICD–10–PCS procedure code 021009W .............. 02100AW ............. 021049W .............. 02104AW. ............ 021109W .............. 02110AW ............. 021149W .............. 02114AW ............. 021209W .............. 02120AW ............. 021249W .............. 02124AW ............. 021309W .............. 02130AW ............. 021349W .............. 02134AW ............. 20305 product is assigned to the same or different MS–DRG as compared to the other storage solutions. We are inviting public comments on whether DURAGRAFT® meets the substantial similarity criteria and the newness criterion. With regard to the cost criterion, the applicant conducted the following analysis to demonstrate that the technology meets the cost criterion. In order to identify the range of MS–DRGs that cases representing potential patients who may be eligible for treatment using DURAGRAFT® may map to, the applicant identified all MS– DRGs for patients who underwent coronary artery bypass grafting (CABG). Specifically, the applicant searched the FY 2016 MedPAR file for claims that included IPPS patients and identified potential cases by the following ICD– 10–PCS procedure codes: Code title Bypass coronary artery, one artery from aorta with autologous venous tissue, open approach. Bypass coronary artery, one artery from aorta with autologous arterial tissue, open approach. Drainage of intracranial subdural space, percutaneous approach Bypass cerebral ventricle to cerebral cisterns, percutaneous approach. Bypass coronary artery, two arteries from aorta with autologous venous tissue, open approach. Bypass coronary artery, two arteries from aorta with autologous arterial tissue, open approach. Bypass coronary artery, two arteries from aorta with autologous venous tissue, percutaneous endoscopic approach. Bypass coronary artery, two arteries from aorta with autologous arterial tissue, percutaneous endoscopic approach. Bypass coronary artery, three arteries from aorta with autologous venous tissue, open approach. Bypass coronary artery, three arteries from aorta with autologous arterial tissue, open approach. Bypass coronary artery, three arteries from aorta with autologous venous tissue, percutaneous endoscopic approach. Bypass coronary artery, three arteries from aorta with autologous arterial tissue, percutaneous endoscopic approach. Bypass coronary artery, four or more arteries from aorta with autologous venous tissue, open approach. Bypass coronary artery, four or more arteries from aorta with autologous arterial tissue, open approach. Bypass coronary artery, four or more arteries from aorta with autologous venous tissue, percutaneous endoscopic approach. Bypass coronary artery, four or more arteries from aorta with autologous arterial tissue, percutaneous endoscopic approach. This resulted in potential cases spanning 98 MS–DRGs, with approximately 93 percent of all potential cases, 59,139, mapping to the following 10 MS–DRGs: MS–DRG title MS–DRG 3 ....... daltland on DSKBBV9HB2PROD with PROPOSALS2 MS–DRG Extracorporeal Membrane Oxygenation (ECMO) or Tracheostomy with Mechanical Ventilation 96+ Hours or Principal Diagnosis Except Face, Mouth & Neck with Major Operating Room. Cardiac Valve and Other Major Cardiothoracic Procedure with Cardiac Catheterization with MCC. Cardiac Valve and Other Major Cardiothoracic Procedure without Cardiac Catheterization with MCC. Cardiac Valve and Other Major Cardiothoracic Procedure without Cardiac Catheterization with CC. Other Cardiothoracic Procedures with MCC. Other Cardiothoracic Procedures without CC. Coronary Bypass with Cardiac Catheterization with MCC. Coronary Bypass with Cardiac Catheterization without MCC. Coronary Bypass without Cardiac Catheterization with MCC. Coronary Bypass without Cardiac Catheterization without MCC. MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG MS–DRG 216 219 220 228 229 233 234 235 236 ... ... ... ... ... ... ... ... ... Using the 59,139 identified cases, the average case-weighted unstandardized VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 charge per case was $200,886. The applicant then standardized the charges. PO 00000 Frm 00143 Fmt 4701 Sfmt 4702 The applicant did not remove charges for any current treatment because, as E:\FR\FM\07MYP2.SGM 07MYP2 20306 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 discussed above, the applicant indicated there are no other current treatment options available. The applicant noted that it did not provide an inflation factor to project future charges. The applicant added charges for the DURAGRAFT® technology. This charge was created by applying the national average CCR for implantable devices of 0.332 from the FY 2018 IPPS/LTCH PPS final rule (82 FR 38103) to the cost of the device. According to the applicant, no further charges or related charges were added. Based on the FY 2018 IPPS/LTCH PPS Table 10 thresholds, the average caseweighted threshold amount was $164,620. The final average caseweighted standardized charge per case was $185,575. Because the final average case-weighted standardized charge per case exceeds the average case-weighted threshold amount, the applicant maintained that the technology meets the cost criterion. We are inviting public comments on whether DURAGRAFT® meets the cost criterion. With respect to the substantial clinical improvement criterion, the applicant asserted that the substitutional use of DURAGRAFT® significantly reduces clinical complications associated with VGF following CABG surgery. According to the applicant, DURAGRAFT® provides a benefit by protecting vascular grafts and their fragile luminal endothelial layer from the point of harvest until the point of grafting; an intra-operative ischemic interval lasting from about 10 minutes to 3 hours depending on the complexity of the surgery. According to the applicant, there are currently no products available to protect vascular grafts during this time interval. The current standard practice is to place grafts in heparinized saline or heparinized autologous blood to keep them wet; a practice which has been shown to cause significant damage to the graft within minutes, and which has been shown to clinically and statistically correlate with the development of 12-month VGF.107 108 109 110 Therefore, neglecting to 107 Harskamp, Ralf E., MD, Alexander, John H., MD, MHS, Schulte, Phillip J., Phd, et al., ‘‘Vein Graft Preservation Solutions, Patency, and Outcomes After Coronary Artery Bypass Graft Surgery: follow-up from the PREVENT IV randomized clinical trial’’, Jama Surg, 2014, vol. 149(8), pp. 798–805. 108 Weiss, D.R., Juchem, G., Kemkes, B.M., et al., ‘‘Extensive deendothelialization and thrombogenicity in routinely prepared vein grafts for coronary bypass operations: facts and remedy,’’ Century Publishing Corporation, International Journal of Clinical Experimental Medicine, 2009 May 28, vol. 2(2), pp. 95–113. 109 Wilbring, M., Tugtekin, S.M., Zatschler, B., et al., ‘‘Even short-time storage in physiological saline VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 protect the endothelial layer prior to implantation can have long-term consequences. When a damaged luminal surface (endothelium) of a vascular graft is presented to the bloodstream at the time of reperfusion, a domino-effect of further damage is triggered in vivo through inflammatory, thrombogenic, and aberrant adaptive responses including hyper-proliferative processes that lead to VGF. These pathophysiologic responses occur within minutes of reperfusion of a graft that has received sub-optimal treatment/ handling initiating a cascade of exacerbating damage that can continue for years later. Presenting an intact functional endothelial layer at the time of grafting is, therefore, tantamount to protecting the graft from damage that occurs post-grafting, in turn conferring protection against graft failure. Given the low success rate of failed graft intervention addressing the graft, endothelial protection at the time of surgery is critical.111 The combined PREVENT IV subanalyses of Hess and Harskamp demonstrate that from dozens of factors evaluated for impact on the development of 12-month VGF, exposure to solutions used for intra-operative graft wetting and storage have the largest correlation with the development of VGF.112, 113 Short-term exposure of free vascular grafts to these solutions is routine in CABG operations, where 10 minutes to 3 hours may elapse between the vein harvest and reperfusion.114, 115 According to the applicant, standard of care solutions are solution impairs endothelial vascular function of saphenous vein grafts,’’ Elsevier Science Inc., European Journal of Cardio-Thoracic Surgery, 2011 Oct, vol. 40(4), pp. 811–815. 110 Thatte, H.S., Biswas, K.S., Najjar, S.F., et al., ‘‘Multi-photon microscopic evaluation of saphenous vein endothelium and its preservation with a new solution,’’ GALA, Elsevier Science Inc., Ann Thorac Surg, 2003 Apr, vol. 75(4), pp. 1145– 1152. 111 Kim, F.Y., Marhefka, G., Ruggiero, N.J., et al., ‘‘Saphenous vein graft disease: review of pathophysiology, prevention, and treatment,’’ Cardiol Rev 2013, vol. 21(2), pp. 101–9. 112 Harskamp, Ralf E., MD, Alexander, John H., MD, MHS, Schulte, Phillip J., Phd, et al., ‘‘Vein Graft Preservation Solutions, Patency, and Outcomes After Coronary Artery Bypass Graft Surgery: follow-up from the PREVENT IV randomized clinical trial’’, Jama Surg, 2014, vol. 149(8), pp. 798–805. 113 Testa, L., Bedogni, F., ‘‘Treatment of Saphenous Vein Graft Disease: ‘Never Ending Story’ of the Eternal Return,’’ Res Cardiovasc Med, 2014, vol. 3(3), pp. e21092. 114 Motwani, J.G., Topol, E.J., ‘‘Aortocoronary saphenous vein graft disease: pathogenesis, predisposition and prevention,’’ Circulation 1998, vol. 97(9), pp. 916–31. 115 Mills, N.L., Everson, C.T., ‘‘Vein graft failure,’’ Curr Opin Cardiol, 1995, vol. 10, pp. 562–8. PO 00000 Frm 00144 Fmt 4701 Sfmt 4702 heparinized saline and heparinized autologous blood, which were never designed to protect vascular grafts and have also demonstrated an inability to protect against ischemic injury, actively harming the graft endothelium as well.116 117 118 119 According to the applicant, given the criticality of presenting an intact functional endothelium at the time of reperfusion, it should not be surprising that the use of these solutions is so highly associated with 12-month VGF. Based on these data, DURAGRAFT® treatment has been designed to be a fully protective solution. DURAGRAFT® is formulated into a flushing, wetting, and storage solution replacing solutions traditionally used for this purpose and, therefore, does not change surgical practice. The applicant noted that retrospective studies designed to assess clinical effectiveness and safety were conducted based on the readily available databases already in existence as a result of the use of DURAGRAFT® treatment in two hospitals that had noncommercial access to the product through hospital pharmacies. These studies evaluated the effect of DURAGRAFT® use during CABG surgery on post-CABG clinical complications associated with VGF, including myocardial infarction (MI) and repeat revascularization. The applicant conveyed that because of the time, resources and funding required for randomized studies evaluating clinical outcomes following CABG surgery, conducting such a study was not a viable approach for a small company such as Somahlution. The first retrospective study (Protocol 001), an unpublished, independent Physician Investigator (PI), singlecenter, multi-surgeon retrospective, 116 Harskamp, Ralf E., MD, Alexander, John H., MD, MHS, Schulte, Phillip J., Phd, et al., ‘‘Vein Graft Preservation Solutions, Patency, and Outcomes After Coronary Artery Bypass Graft Surgery: follow-up from the PREVENT IV randomized clinical trial,’’ Jama Surg, 2014, vol. 149(8), pp. 798–805. 117 Weiss, D.R., Juchem, G., Kemkes, B.M., et al., ‘‘Extensive deendothelialization and thrombogenicity in routinely prepared vein grafts for coronary bypass operations: facts and remedy,’’ Century Publishing Corporation, International Journal of Clinical Experimental Medicine, 2009 May 28, vol. 2(2), pp. 95–113. 118 Wilbring, M., Tugtekin, S.M., Zatschler, B., et al., ‘‘Even short-time storage in physiological saline solution impairs endothelial vascular function of saphenous vein grafts,’’ Elsevier Science Inc., European Journal of Cardio-Thoracic Surgery, 2011 Oct, vol. 40(4), pp. 811–815. 119 Thatte, H.S., Biswas, K.S., Najjar, S.F., et al., ‘‘Multi-photon microscopic evaluation of saphenous vein endothelium and its preservation with a new solution,’’ GALA, Elsevier Science Inc., Ann Thorac Surg, 2003 Apr, vol. 75(4), pp. 1145– 1152. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules comparative study (DURAGRAFT® vs. Saline or Blood Solutions), was a pilot study conducted at the University of CHU in Angers France, which followed patients for 5 years post-CABG surgery. This pilot study was conducted to assess the safety and effect of DURAGRAFT® treatment on both short and long-term clinical outcomes. This study also served as the basis for the design of a larger retrospective study conducted at the U.S. Department of Veterans Affairs (VA) Medical Centers, discussed later. The objective of this single-center clinical study in CABG patients was to evaluate the potential benefits of DURAGRAFT® treatment as compared to a no-treatment control group (saline). The investigator who prepared the analysis remained blinded to individual patient data. Eligibility criteria included patients with first-time CABG surgery in which at least one vein graft was used. Patients with in-situ internal mammary artery (IMA) graft(s) only (no saphenous vein or free arterial grafts) and concomitant valve surgery and/or aortic aneurysm repair were excluded. The institutional review board of the University Health Alliance (UHA) approved the protocol, and patients gave written informed consent for their follow-up. A total of 630 patients who underwent elective and isolated CABG surgery with at least one saphenous vein graft at a single-center in Europe between January 2002 and December 2008 were included. The notreatment control group (saline) included 375 patients who underwent CABG surgery from January 2002 to May 2005 and the DURAGRAFT® treatment group included 255 patients who underwent CABG surgery from June 2005 to December 2008. At long-term follow-up (greater than 30 days and up to 5 years), 5 patients were lost to follow-up (10 died before the 30-day follow-up). Therefore, a total of 247 patients from the DURAGRAFT® treatment group (97 percent) and 368 patients from the no-treatment control group (saline) (98 percent) were available for the long-term analysis. Patients undergoing CABG surgery whose vascular grafts were treated intraoperatively with DURAGRAFT® demonstrated no statistically significant differences in major adverse cardiac events (MACE) within the first 30 days following CABG surgery. According to the applicant, these data suggest that DURAGRAFT® treatment is at least as safe as the standard of care used in CABG surgeries in that long-term outcomes between the two groups were not statistically different. However, also according to the applicant, a consistent VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 numerical trend toward improved clinical effectiveness outcomes for the DURAGRAFT® treatment group compared to the no-treatment control (saline) group was clearly identified. Although statistically insignificant, there was a consistent reduction observed in the rates for multiple endpoints such as all-cause death, MI, MACE, and revascularization. This study found reductions in DURAGRAFT®-treated grafts relative to saline for revascularization (57 percent), MI (70 percent), MACE (37 percent) and all-cause death (23 percent) compared to standard of care (heparinized saline/ blood) through 5 years follow-up. Based on the small sample-size for this evaluation of only 630 patients, and the known frequencies of these events following CABG surgeries, statistical differences were not expected. A subsequent post-hoc analysis also was performed by the researchers at CHUAngers to evaluate whether any longterm clinical variables (such as dual antiplatelet therapy, beta-blockers, angiotensin receptor-blockers, statins, diabetes, lifestyle and other factors) had any impact on the study endpoints. The conclusions of the post-hoc analyses were that the assessed clinical variables did not impact the clinical study findings and so any differences between groups were likely due to ‘‘test article’’ effect. According to the applicant, importantly, the data collected from this feasibility study are consistent with data collected in the statistically-powered VA study in which statistically significant reductions of MI, repeat revascularization, and MACE were observed in the DURAGRAFT® treatment group, lending confidence that the observed trends in this study, as well as the VA study, represent real differences associated with DURAGRAFT® use. The second study, the U.S. VA Hospital Study (Protocol 002), was an unpublished, independent PI initiated, single-center, multi-surgeon, retrospective, comparative (DURAGRAFT® vs. Saline) clinical trial, which was conducted to assess the safety and impact of DURAGRAFT® treatment on both short and long-term clinical outcomes in patients who underwent isolated CABG surgery with saphenous vein grafts (SVGs) at the Boston (West Roxbury) VA Medical Center between 1996 and 2004. The time interval from 1996 through 1999 represents a time period when DURAGRAFT® treatment was not available and heparinized saline was routinely used to wet and store grafts, while 2001 through 2004 represents a PO 00000 Frm 00145 Fmt 4701 Sfmt 4702 20307 time period after the center began exclusively using DURAGRAFT®, which was prepared by the hospital’s pharmacy. The year 2000 was omitted from this analysis by the PI due to the transition of the implementation of DURAGRAFT® treatment into the clinic and the uncertainty of its use in CABG patients during the transition period. Data were extracted from a total of 2,436 patients who underwent a CABG procedure with at least one SVG from 1996 through 1999 (Control n=1,400 pts.) and 2001 through 2004 (DURAGRAFT® treatment n=1,036 pts.). The median age was 66 years old for the control treatment group and 67 years old for the DURAGRAFT® treatment group. Patients were excluded from the study if they had a prior history of CABG procedures, had no use of SVG, or underwent additional procedures during the CABG surgery. Mean follow-up in the DURAGRAFT® treatment group was 8.5±4.2 years and 9.9±5.6 years in the control treatment group. According to the applicant, this study supports not only safety, but also improved long-term clinical outcomes in DURAGRAFT®-treated CABG patients. Thirty-day MI also was significantly reduced in this study. The VA study found statistically significant reductions in DURAGRAFT®-treated grafts relative to saline for revascularization (35 percent), MI (45 percent), and MACE (19 percent) from the follow-up period of 1,000 days to 15 years post-surgery. According to the applicant, in addition to the retrospective studies, a multi-center, within-patient randomized, prospective study utilizing multidetector computed tomography (MDCT) angiography was conducted to assess safety and the effect of the use of DURAGRAFT® on the graft by assessing early anatomic markers of VGD such as graft wall thickening and early stenotic events. The study was based on an ‘‘inpatient control’’ design in which both the control saline exposed vascular graft and a DURAGRAFT®-treated graft were grafted within the same patient to reduce patient bias and allow a paired analysis of the grafts. The study was conducted under two protocols. The first study protocol evaluated patients up to 3 months post-CABG and included 1- and 3-month protocol driven MDCT scans in 125 patients (250 grafts). The second study, a longer-term safety and efficacy study of 97 patients, included a 12-month protocol driven angiogram. The 3 month (full data set) and 12 month (interim data set) data demonstrate that safety and efficacy appear to be equivalent for E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20308 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules DURAGRAFT® and standard of care (SoC) at 3 months, but between 3 months and 9 months a separation between DURAGRAFT® and SoC begins to emerge and by 12 months DURAGRAFT® use is associated with a numerical trend towards improved safety relative to SoC. Furthermore by 12 months, the interim analysis demonstrated that differences in markers of early graft disease were able to be discerned between DURAGRAFT®-treated grafts and SoC. Reductions in both wall thickness and degree of stenosis were observed in DURAGRAFT®-treated grafts relative to SoC grafts. These reductions were observed when the entire graft was assessed and were more profound when the proximal region of the graft was specifically evaluated. According to the applicant, this is of note because the proximal region of the graft is the region in which early graft disease has been shown to more frequently manifest in many grafting indications, including CABG, peripheral bypass, aortic grafting, and AV fistula grafting indications, and is thought to be due to hemodynamic perturbations that occur in this region where arterial flow is just entering the venous environment. While there are no notable differences at 3 months in either safety or efficacy, there are trends towards better safety at 12 months in patients in the DURAGRAFT® treatment group compared to the control group.120 The efficacy results of the prospective study were presented at the October 2017 meeting of the TCT Congress in Denver. The retrospective studies demonstrated an association of reduced risk of non-fatal myocardial infarction, repeat revascularization, and MACE with DURAGRAFT® treatment. However, we have a number of concerns relating to these studies. In addition to the studies being unpublished, we are concerned that they leave too many variables unaccounted for that could affect vein integrity such as method of vein harvest, vein distention pressure, and post-operative care (including use of anti-platelet and anti-lipid treatments). Also, control groups underwent CABG procedures many years earlier than the DURAGRAFT® treatment groups in both studies. Over the years, with advances in medical management and surgical techniques, long-term survival and risk of cardiac events are expected to improve. Finally, 120 Perrault, L., ‘‘SOMVC001 (DuraGraft) Vascular Graft Treatment in Patients Undergoing Coronary Artery Bypass Grafting,’’ American Heart Association, Inc, Circulation, 2016, vol. 134, pp. A23242, originally published November 11, 2016. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 it may be helpful to gain more insight from data that will be available upon completion and results of the multicenter, prospective, randomized, double-blind, comparative, within-person (DURAGRAFT® vs. Saline) control trial that is currently ongoing. We are inviting public comments on whether DURAGRAFT® meets the substantial clinical improvement criterion. Below we summarize and respond to written public comments we received regarding the DURAGRAFT® during the open comment period in response to the New Technology Town Hall meeting notice published in the Federal Register. Comment: One commenter, a cardiothoracic surgeon, stated that after practicing cardiac surgery for over 30 years, authoring peer-reviewed publications in Cardiac Surgery, and participating in several clinical studies, it supported the approval of new technology add-on payments for the DURAGRAFT® technology. The commenter indicated that one of the reasons why vein grafts get occluded could be because of poor handling during and after harvest. The commenter expressed that there are currently no other solutions used in treatment options available that protect vascular conduits once they are harvested aside from the standard practice of storing them in saline or blood-based solutions until they are ready for implantation. The commenter stated that saline and blood-based solutions are very damaging to vein segments, and the damage that occurs is linked to poor clinical outcomes including increased risk of myocardial infarction (MI) and increased rates of repeat revascularization. The commenter indicated that it had many years of first-hand experience with the use of DURAGRAFT® because the commenter served as the Principal Investigator for a retrospective clinical study that evaluated the DURAGRAFT®’s effect on clinical outcomes compared to standard-of-care treatment options. The commenter conveyed that the results of the retrospective clinical study included statistically significant reductions in MI and repeat revascularization rates. The commenter also pointed out its awareness of a prospective clinical study the DURAGRAFT®’s manufacturer has conducted evaluating radiologic assessments to analyze graft disease, which precedes loss of patency. According to the commenter, the study demonstrated increased wall thickness and increased stenosis in grafts stored in PO 00000 Frm 00146 Fmt 4701 Sfmt 4702 saline compared to grafts stored using the DURAGRAFT®. The commenter stated that this finding from the prospective clinical study is very consistent with the clinical results of the retrospective study. The commenter concluded by stating that it supported the commercial availability and use of the DURAGRAFT®, including use in the treatment of its own patients. Response: We appreciate the commenter’s input. We will take these comments into consideration when deciding whether to approve new technology add-on payment for the DURAGRAFT® for FY 2019. Comment: Another commenter, a cardiovascular and thoracic surgeon with clinical expertise in coronary artery bypass grafting surgery (CABG) who has been involved in endothelial dysfunction as a primary field of study and the Principal Investigator for the multi-center, within-patient, randomized, prospective study that Somahlution submitted to the FDA in support of U.S. product clearance, supported the approval of new technology add-on payments for the DURAGRAFT®. The commenter indicated that as an author and coauthor of more than 250 articles in peerreviewed publications, a senior author of more than 75 papers and writer of several book chapters, and having delivered over 40 conference presentations worldwide, the study results, specifically of the 12-month multidector computed tomography (MDCT) imaging showing less lumen narrowing or stenosis, and less wall thickening as a resulting outcome of the DURAGRAFT®-treated veins compared to heparinized-saline, are critically important from a clinical perspective. According to the commenter, the primary mechanism of the DURAGRAFT® technology is to protect the endothelial cells in the vein graft and this has been repeatedly demonstrated in pre-clinical studies. The commenter explained that the findings of the clinical anatomic changes in the graft demonstrated in the prospective study are consistent with the pre-clinical findings and the literature that has clearly pointed to damaged endothelium of the graft as the starting insult for later development of poor patient outcomes from graft disease and failure. Finally, the commenter noted that surgeons in all countries currently use a variety of graft storage and preservation solutions during a CABG procedure because there has been no other available solution used in treatment options, aside from the DURAGRAFT®, with systematic evaluation demonstrating a clear safety E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 profile and benefit to patient outcomes. The commenter encouraged CMS to approve new technology add-on payments for the DURAGRAFT® technology to provide additional support for this new preservation solution to become available to surgeons in the United States. Response: We appreciate the commenter’s input. We will take these comments into consideration when deciding whether to approve new technology add-on payments for DURAGRAFT® for FY 2019. ¯ e. remede® System Respicardia, Inc. submitted an application for new technology add-on ¯ payments for the remede® System for FY 2019. According to the applicant, the ¯ remede® System is indicated for use as a transvenous phrenic nerve stimulator in the treatment of adult patients who have been diagnosed with moderate to severe central sleep apnea. The ¯ remede® System consists of an implantable pulse generator, and a stimulation and sensing lead. The pulse generator is placed under the skin, in either the right or left side of the chest, and it functions to monitor the patient’s respiratory signals. A transvenous lead for unilateral stimulation of the phrenic nerve is placed either in the left pericardiophrenic vein or the right brachiocephalic vein, and a second lead to sense respiration is placed in the azygos vein. Both leads, in combination with the pulse generator, function to sense respiration and, when appropriate, generate an electrical stimulation to the left or right phrenic nerve to restore regular breathing patterns. The applicant’s application describes central sleep apnea (CSA) as a chronic respiratory disorder characterized by fluctuations in respiratory drive, resulting in the cessation of respiratory muscle activity and airflow during sleep.121 The applicant reported that CSA, as a primary disease, has a low prevalence in the United States population; and it is more likely to occur in those individuals who have cardiovascular disease, heart failure, atrial fibrillation, stroke, or chronic opioid usage. The apneic episodes which occur in patients with CSA cause hypoxia, increased blood pressure, increased preload and afterload, and promotes myocardial ischemia and arrhythmias. In addition, CSA 121 Jagielski, D., Ponikowski, P., Augostini, R., Kolodziej, A., Khayat, R., Abraham, W.T., 2016, ‘‘Transvenous Stimulation of the Phrenic Nerve for the Treatment of Central Sleep Apnoea: 12 months’ experience with the remede®system,’’ European Journal of Heart Failure, pp. 1–8. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 ‘‘enhances oxidative stress, causing endothelial dysfunction, inflammation, and activation of neurohormonal systems, which contribute to progression of underlying diseases.’’ 122 According to the applicant, prior to ¯ the introduction of the remede® System, typical treatments for CSA took the form of positive airway pressure devices. Positive airway pressure devices, such as continuous positive airway pressure (CPAP), have previously been used to treat patients diagnosed with obstructive sleep apnea. Positive airway devices deliver constant pressurized air via a mask worn over the mouth and nose, or nose alone. For this reason, positive airway devices may only function when the patient wears the necessary mask. Similar to CPAP, adaptive servo-ventilation (ASV) provides noninvasive respiratory assistance with expiratory positive airway pressure. However, ASV adds servo-controlled inspiratory pressure, as well, in an effort to maintain airway patency.123 ¯ On October 6, 2017, the remede® System was approved by the FDA as an implantable phrenic nerve stimulator indicated for the use in the treatment of adult patients who have been diagnosed with moderate to severe CSA. The device was available commercially upon FDA approval. Therefore, the newness ¯ period for the remede® System is considered to begin on October 6, 2017. The applicant has indicated that the device also is designed to restore regular breathing patterns in the treatment of CSA in patients who also have been diagnosed with heart failure. The applicant was approved for two unique ICD–10–PCS procedure codes for the placement of the leads: 05H33MZ (Insertion of neurostimulator lead into right innominate (brachiocephalic) vein) and 05H03MZ (Insertion of neurostimulator lead into azygos vein), effective 10/01/2016. The applicant indicated that implantation of the pulse generator is currently reported using ICD–10–PCS procedure code 0JH60DZ (Insertion of multiple array stimulator generator into chest subcutaneous tissue). As discussed above, if a technology meets all three of the substantial similarity criteria, it would be 122 Costanzo, M.R., Ponikowski, P., Javaheri, S., Augostini, R., Goldberg, L., Holcomb, R., Abraham, W.T., ‘‘Transvenous Neurostimulation for Centra Sleep Apnoea: A randomised controlled trial,’’ Lancet, 2016, vol. 388, pp. 974–982. 123 Cowie, M.R., Woehrle, H., Wegscheider, K., Andergmann, C., d’Ortho, M.P., Erdmann, E., Teschler, H., ‘‘Adaptive Servo-Ventilation for Central Sleep Apneain Systolic Heart Failure,’’ N Eng Jour of Med, 2015, pp. 1–11. PO 00000 Frm 00147 Fmt 4701 Sfmt 4702 20309 considered substantially similar to an existing technology and would not be considered ‘‘new’’ for the purposes of new technology add-on payments. With regard to the first criterion, whether a product uses the same or a similar mechanism of action to achieve a therapeutic outcome, according to the ¯ applicant, the remede® System provides stimulation to nerves to stimulate breathing. Typical treatments for hyperventilation CSA include supplemental oxygen and CPAP. Mechanical ventilation also has been used to maintain a patent airway. The ¯ applicant asserted that the remede® System is a neurostimulation device resulting in negative airway pressure, whereas devices such as CPAP and ASV utilize positive airway pressure. With respect to the second criterion, whether a product is assigned to the same or a different MS–DRG, the ¯ applicant stated that the remede® System is assigned to MS–DRGs 040 (Peripheral, Cranial Nerve and Other Nervous System Procedures with MCC), 041 (Peripheral, Cranial Nerve and Other Nervous System Procedures with CC or Peripheral Neurostimulator), and 042 (Peripheral, Cranial Nerve and Other Nervous System Procedures without CC/MCC). The current procedures for the treatment options of CPAP and ASV are not assigned to these MS–DRGs. With respect to the third criterion, whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population, according to ¯ the applicant, the remede® System is indicated for the use as a transvenous unilateral phrenic nerve stimulator in the treatment of adult patients who have been diagnosed with moderate to severe CSA. The applicant stated that the ¯ remede® System reduces the negative symptoms associated with CSA, particularly among patients who have been diagnosed with heart failure. The applicant asserted that patients who have been diagnosed with heart failure are particularly negatively affected by CSA and currently available CSA treatment options of CPAP and ASV. According to the applicant, the currently available treatment options, CPAP and ASV, have been found to have worsened mortality and morbidity outcomes for patients who have been diagnosed with both CSA and heart failure. Specifically, ASV is currently contraindicated in the treatment of CSA in patients who have been diagnosed with heart failure. The applicant also suggested that the ¯ remede® System is particularly suited for the treatment of CSA in patients who E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20310 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules also have been diagnosed with heart failure. We are concerned that, while ¯ the remede® System may be beneficial to patients who have been diagnosed with both CSA and heart failure, the FDA approved indication is for use in the treatment of adult patients who have been diagnosed with moderate to severe CSA. We note that the applicant’s clinical analyses and data results related to patients who specifically were diagnosed with CSA and heart failure. We are inviting public comments on ¯ whether the remede® System meets the newness criterion. With regard to the cost criterion, the applicant provided the following analysis to demonstrate that the technology meets the cost criterion. The applicant identified cases representing potential patients who may be eligible ¯ for treatment involving the remede® System within MS–DRGs 040, 041, and 042. Using the Standard Analytical File (SAF) Limited Data Set (MedPAR) for FY 2015, the applicant included all claims for the previously stated MS– DRGs for its cost threshold calculation. The applicant stated that typically claims are selected based on specific ICD–10–PCS parameters, however this is a new technology for which no ICD– 10–PCS procedure code and ICD–10– CM diagnosis code combination exists. Therefore, all claims for the selected MS–DRGs were included in the cost threshold analysis. This process resulted in 4,462 cases representing potential patients who may be eligible ¯ for treatment involving the remede® System assigned to MS–DRG 040; 5,309 cases representing potential patients who may be eligible for treatment ¯ involving the remede® System assigned to MS–DRG 041; and 2,178 cases representing potential patients who may be eligible for treatment involving the ¯ remede® System assigned to MS–DRG 042, for a total of 11,949 cases. Using the 11,949 identified cases, the applicant determined that the average unstandardized case-weighted charge per case was $85,357. Using the FY 2015 MedPAR dataset to identify the total mean charges for revenue code 0278, the applicant removed charges associated with the current treatment options for each MS–DRG as follows: $9,153.83 for MS–DRG 040; $12,762.31 for MS–DRG 041; and $21,547.73 for MS–DRG 042. The applicant anticipated that no other related charges would be eliminated or replaced. The applicant then standardized the charges and applied a 2-year inflation factor of 1.104055 obtained from the FY 2018 IPPS/LTCH PPS final rule (82 FR 38524). The applicant then added charges for the new technology to the VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 inflated average case-weighted standardized charges per case. No other related charges were added to the cases. The applicant calculated a final inflated average case-weighted standardized charge per case of $175,329 and a Table 10 average case-weighted threshold amount of $78,399. Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount, the applicant maintained that the technology meets the cost criterion. With regard to the analysis above, we are concerned that all cases in MS– DRGs 040, 041, and 042 were used in the analysis. We are unsure if all of these cases represent patients that may be truly eligible for treatment involving ¯ the remede® System. We are inviting public comments on whether the ¯ remede® System meets the cost criterion. With respect to the substantial clinical improvement criterion, the ¯ applicant asserted that the remede® System meets the substantial clinical improvement criterion. The applicant ¯ stated that the remede® System offers a treatment option for a patient population unresponsive to, or ineligible for, treatment involving currently available options. According to the applicant, patients who have been diagnosed with CSA have no other available treatment options than the ¯ remede System. The applicant stated that published studies on both CPAP and ASV have proven that primary endpoints have not been met for treating patients who have been diagnosed with CSA. In addition, according to the ASV study, there was an increase in cardiovascular mortality. According to the applicant, the ¯ remede® System will prove to be a better treatment for the negative effects associated with CSA in patients who have been diagnosed with heart failure, such as cardiovascular insults resulting from sympathetic nervous system activation, pulmonary hypertension, and arrhythmias, which ultimately contribute to the downward cycle of heart failure,124 when compared to the currently available treatment options. The applicant also indicated that prior studies have assessed CPAP and ASV as options for the treatment of diagnoses of CSA primarily in patients who have been diagnosed with heart failure. The applicant shared the results from two studies concerning the effects of 124 Abraham, W., Jagielski, D., Oldenburg, O., Augostini, R., Kreuger, S., Kolodziej, A., Ponikowski, P., ‘‘Phrenic Nerve Stimulation for the Treatment of Central Sleep Apnea,’’ JACC: Heart Failure, 2015, vol. 3(5), pp. 360–369. PO 00000 Frm 00148 Fmt 4701 Sfmt 4702 positive airway pressure ventilation treatment: • The Canadian Continuous Positive Airway Pressure for Patients with Central Sleep Apnea and Heart Failure trial found that, while CPAP managed the negative symptoms of CSA, such as improved nocturnal oxygenation, increased ejection fraction, lower norepinephrine levels, and increased walking distance, it did not affect overall patient survival; 125 and • In a randomized trial of 1,325 patients who had been diagnosed with heart failure who received treatment with ASV plus standard treatment or standard treatment alone, ASV was found to increase all-cause and cardiovascular mortality as compared to the control treatment.126 The applicant also stated that published literature indicates that currently available treatment options do not meet primary endpoints with concern to the treatment of CSA; patients treated with ASV experienced an increased likelihood of mortality,127 and patients treated with CPAP experienced alleviation of symptoms, but no change in survival.128 The applicant provided further research, which suggested that a primary drawback of CPAP in the treatment of diagnoses of CSA is a lack of patient adherence to therapy.129 The applicant also stated that the ¯ remede System represents a substantial clinical improvement over existing technologies because of the reduction in the number of future hospitalizations, few device-related complications, and improvement in CSA symptoms and quality of life. Specifically, the applicant stated that the clinical data has shown a statistically significant reduction in Apnea-hypopnea index (AHI), improvement in quality of life, and significantly improved Minnesota Living with Heart Failure Questionnaire score. In addition, the applicant 125 Bradley, T.D., Logan, A.G., Kimoff, R.J., Series, F., Morrison, D., Ferguson, K., Phil, D., 2005, ‘‘Continous Positive Airway Pressure for Central Sleep Apnea and Heart Failure,’’ N Eng Jour of Med, vol. 353(19), pp. 2025–2033. 126 Cowie, M.R., Woehrle, H., Wegscheider, K., Andergmann, C., d’Ortho, M.-P., Erdmann, E., Teschler, H., ‘‘Adaptive Servo-Ventilation for Central Sleep Apneain Systolic Heart Failure,’’ N Eng Jour of Med, 2015, pp. 1–11. 127 Ibid. 128 Bradley, T.D., Logan, A.G., Kimoff, R.J., Series, F., Morrison, D., Ferguson, K., Phil, D., 2005, ‘‘Continous Positive Airway Pressure for Central Sleep Apnea and Heart Failure,’’ N Engl Jour of Med, vol. 353(19), pp. 2025–2033. 129 Ponikowski, P., Javaheri, S., Michalkiewicz, D., Bart, B.A., Czarnecka, D., Jastrzebski, M., Abraham, W.T., ‘‘Transvenous Phrenic Nerve Stimulation for the Treatment of Central Sleep Apnoea in Heart Failure,’’ European Heart Journal, 2012, vol. 33, pp. 889–894. E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 indicated that study results showed the ¯ remede System demonstrated an acceptable safety profile, and there was a trend toward fewer heart failure hospitalizations. The applicant provided six published articles as evidence. All six articles were prospective studies. In three of the six studies, the majority of patients studied had been diagnosed with CSA with a heart failure comorbidity, while the remaining three studies only studied patients who had been diagnosed with CSA with a heart failure comorbidity. The first study 130 assessed the treatment of patients who had been diagnosed with CSA in addition to heart failure. According to the applicant, as referenced in the results of the published study, Ponikowski, et al., assessed the treatment effects of 16 of 31 enrolled patients with evidence of CSA within 6 months prior to enrollment who met inclusion criteria (apneahypopnea index of greater than or equal to 15 and a central apnea index of greater than or equal to 5) and who did not meet exclusion criteria (a baseline oxygen saturation of less than 90 percent, being on supplemental oxygen, having evidence of phrenic nerve palsy, having had severe chronic obstructive pulmonary disease (COPD), having hard angina or a myocardial infarction in the past 3 months, being pacemaker dependent, or having inadequate capture of the phrenic nerve during neurostimulation). Of the 16 patients whose treatment was assessed, all had various classifications of heart failure diagnoses: 3 (18.8 percent) were classified as class I on the New York Heart Association classification scale (No limitation of physical activity. Ordinary physical activity does not cause undue fatigue, palpitation, dyspnea (shortness of breath)); 8 (50 percent) were classified as a class II (Slight limitation of physical activity. Comfortable at rest. Ordinary physical activity results in fatigue, palpitation, dyspnea (shortness of breath)); and 5 (31.3 percent) were classified as class III (Marked limitation of physical activity. Comfortable at rest. Less than ordinary activity causes fatigue, palpitation, or dyspnea).131 After successful surgical implantation of a temporary 130 Ponikowski, P., Javaheri, S., Michalkiewicz, D., Bart, B.A., Czarnecka, D., Jastrzebski, M., Abraham, W.T., ‘‘Transvenous Phrenic Nerve Stimulation for the Treatment of Central Sleep Apnoea in Heart Failure,’’ European Heart Journal, 2012, vol. 33, pp. 889–894. 131 ‘‘Classes of Heart Failure,’’ 2017, May 8, Retrieved from American Heart Association: Available at: https://www.heart.org/HEARTORG/ Conditions/HeartFailure/AboutHeartFailure/ Classes-of-Heart-Failure_UCM_306328_ Article.jsp#.WmE2rlWnGUk. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 transvenous lead for unilateral phrenic nerve stimulation, patients underwent a control night without nerve stimulation and a therapy night with stimulation, while undergoing polysomnographic (PSG) testing. Comparison of both nights was performed. According to the applicant, some improvements of CSA symptoms were identified in statistical analyses. Sleep time and efficacy were not statistically significantly different for control night and therapy night, with median sleep times of 236 minutes and 245 minutes and sleep efficacy of 78 percent and 71 percent, respectively. There were no statistical differences across categorical time spent in each sleep stage (for example, N1, N2, N3, and REM) between control and therapy nights. The average respiratory rate and hypopnea index did not differ statistically across nights. Marginal positive statistical differences occurred between control and therapy nights for the baseline oxygen saturation median values (95 and 96 respectively) and obstructive apnea index (OAI) (1 and 4, respectively). Beneficial statistically significant differences occurred from control to therapy nights for the average heart rate (71 to 70, respectively), arousal index events per hour (32 to 12, respectively), apnea-hypopnea index (AHI) (45 to 23, respectively), central apnea index (CAI) (27 to 1, respectively), and oxygen desaturation index of 4 percent (ODI = 4 percent) (31 to 14, respectively). Two adverse events were noted: (1) Lead tip thrombus noted when lead was removed; the patient was anticoagulated without central nervous system sequelae; and (2) an episode of ventricular tachycardia upon lead placement and before stimulation was initiated. The episode was successfully treated by defibrillation of the patient’s implanted ICD. Neither adverse event was directly related to the phrenic nerve stimulation therapy. The second study 132 was a prospective, multi-center, nonrandomized study that followed patients diagnosed with CSA and other underlying comorbidities. According to the applicant, as referenced in the results of the published study, Abraham, et al., 49 of the 57 enrolled patients who were followed indicated a primary endpoint of a reduction of AHI with secondary endpoints of feasibility and safety of the therapy. Patients were included if they had an AHI of 20 or greater and apneic events that were 132 Abraham, W., Jagielski, D., Oldenburg, O., Augostini, R., Kreuger, S., Kolodziej, A., Ponikowski, P., ‘‘Phrenic Nerve Stimulation for the Treatment of Central Sleep Apnea,’’ JACC: Heart Failure, 2015, vol. 3(5), pp. 360–369. PO 00000 Frm 00149 Fmt 4701 Sfmt 4702 20311 related to CSA. Among the study patient population, 79 percent had diagnoses of heart failure, 2 percent had diagnoses of atrial fibrillation, 13 percent had other cardiac etiology diagnoses, and the remainder of patients had other cardiac unrelated etiology diagnoses. Exclusion criteria were similar to the previous study (that is, (Ponikowski P., 2012)), with the addition of a creatinine of greater than 2.5 mg/dl. After ¯ implantation of the remede® System, patients were assessed at baseline, 3 months (n=47) and 6 months (n=44) on relevant measures. At 3 months, statistically nonsignificant results occurred for the OAI and hypopnea index (HI) measures. The remainder of the measures showed statistically significant differences from baseline to 3 months: AHI with a ¥27.1 episodes per hour of sleep difference; CAI with a ¥23.4 episodes per hour of sleep difference; MAI with a ¥3 episodes per hour of sleep difference; ODI = 4 percent with a ¥23.7 difference; arousal index with ¥12.5 episodes per hour of sleep difference; sleep efficiency with a 8.4 percent increase; and REM sleep with a 4.5 percent increase. Similarly, among those assessed at 6 months, statistically significant improvements on all measures were achieved, including OAI and HI. Regarding safety, a data safety monitoring board (DSMB) adjudicated and found the following 3 of 47 patients (6 percent) as having serious adverse events (SAE) related to the device, implantation procedure or therapy. None of the DSMB adjudicated SAEs was due to lead dislodgement. Two SAEs of hematoma or headache were related to the implantation procedure and occurred as single events in two patients. A single patient experienced atypical chest discomfort during the first night of stimulation, but on reinitiation of therapy on the second night no further discomfort occurred. The third study 133 assessed the safety and feasibility of phrenic nerve stimulation for 6 monthly follow-ups of 8 patients diagnosed with heart failure with CSA. Of the eight patients assessed, one was lost to follow-up and one died from pneumonia. According to the applicant, as referenced in the results in the published study, Zheng, et al. (2015), no unanticipated serious adverse events were found to be related to the therapy; in one patient, a lead became dislodged and subsequently successfully repositioned. Three 133 Zhang, X., Ding, N., Ni, B., Yang, B., Wang, H., & Zhang, S.J., 2015, ‘‘Satefy and Feasibility of Chronic Transvenous Phrenic Nerve Stimulation for Treatment of Central Sleep Apnea in Heart Failure Patients,’’ The Clinical Respiratory Journal, pp. 1–9. E:\FR\FM\07MYP2.SGM 07MYP2 20312 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 patients reported improved sleep quality, and all patients reported increased energy. A reduction in sleep apneic events and decreases in AHI and CAI were related to application of the treatment. Gradual increases to the 6minute walking time occurred through the study. The fourth study 134 extended the previous Phase I study 135 from 6 months to 12 months, and included only 41 of the original 49 patients continuing in the study. Of the 57 patients enrolled at the time of the Phase I study, 41 were evaluated at the 12-month follow-up. Of the 41 patients examined at 12 months, 78 percent had diagnoses of CSA related to heart failure, 2 percent had diagnoses of atrial fibrillation with related CSA, 12 percent had diagnoses of CSA related to other cardiac etiology diagnoses, and the remainder of patients had diagnoses of CSA related to other noncardiac etiology diagnoses. At 12 months, 6 sleep parameters remained statistically different and 3 were no longer statistically significant. The HI, OAI, and arousal indexes were no longer statistically significantly different from baseline values. A new parameter, time spent with peripheral capillary oxygen saturation (SpO2) below 90 percent was not statistically different at 12 months (31.4 minutes) compared to baseline (38.2 minutes). The remaining 6 parameters showed maintenance of improvements at the 12-month time point as compared to the baseline: AHI from 49.9 to 27.5 events per hour; CAI from 28.2 to 6.0 events per hour; MAI from 3.0 to 0.5 events per hour; ODI = 4 percent from 46.1 to 26.9 events per hour; sleep efficiency from 69.3 percent to 75.6 percent; and REM sleep from 11.4 percent to 17.1 percent. At the 3month, 6-month, and 12-month time points, patient quality of life was assessed to be 70.8 percent, 75.6 percent, and 83.0 percent, respectively, indicating that patients experienced mild, moderate, or marked improvement. Seventeen patients were followed at 18 months with statistical differences from baseline for AHI and CAI. Three patients died over the 12month follow-up period: 2 died of endstage heart failure and 1 died from sudden cardiac death. All three deaths 134 Jagielski, D., Ponikowski, P., Augostini, R., Kolodziej, A., Khayat, R., & Abraham, W.T., 2016, ‘‘Transvenous Stimulation of the Phrenic Nerve for the Treatment of Central Sleep Apnoea: 12 months’ experience with the remede®system,’’ European Journal of Heart Failure, 2016, pp. 1–8. 135 Abraham, W., Jagielski, D., Oldenburg, O., Augostini, R., Kreuger, S., Kolodziej, A., Ponikowski, P., 2015, ‘‘Phrenic Nerve Stimulation for the Treatment of Central Sleep Apnea,’’ JACC: Heart Failure, 2015, vol. 3(5), pp. 360–369. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 were adjudicated by the DSMB and none were related to the procedure or to phrenic nerve stimulation therapy. Five patients were found to have related serious adverse events over the 12month study time. Three events were previously described in the results referenced in the published study, Abraham, et al., and an additional 2 SAEs occurred during the 12-month follow-up. One patient experienced impending pocket perforation resulting in pocket revision, and another patient experienced lead failure. The fifth study 136 was a randomized control trial with a primary outcome of achieving a reduction in AHI of 50 percent or greater from baseline to 6 months enrolling 151 patients with the neurostimulation treatment (n=73) and no stimulation control (n=78). Of the total sample, 96 (64 percent) of the patients had been diagnosed with heart failure; 48 (66 percent) of the treated patients had been diagnosed with heart failure, and 48 (62 percent) of the control patients had been diagnosed with heart failure. Sixty-four (42 percent) of all of the patients included in the study had been diagnosed with atrial fibrillation and 84 (56 percent) had been diagnosed with coronary artery disease. All of the patients had ¯ been treated with the remede® System device implanted; the system was activated in the treatment group during the first month. ‘‘Over about 12 weeks, stimulation was gradually increased in the treatment group until diaphragmatic capture was consistently achieved without disrupting sleep.’’ 137 While patients and physicians were unblinded, the polysomnography core laboratory remained blinded. The perprotocol population from which statistical comparisons were made is 58 ¯ patients treated with the remede® System and 73 patients in the control group. The authors appropriately controlled for Type I errors (false positives), which arise from performing multiple tests. Thirty-five treated patients and 8 control patients met the primary end point, the number of patients with a 50 percent or greater reduction in AHI from baseline; the difference of 41 percent is statistically significant. All seven of the secondary endpoints were assessed and found to have statistically significant difference in change from baseline between groups at the 6-month follow-up after controlling for multiple comparisons: 136 Costanzo, M.R., Ponikowski, P., Javaheri, S., Augostini, R., Goldberg, L., Holcomb, R., Abraham, W.T.,’’Transvenous Neurostimulation for Centra Sleep Apnoea: A randomised controlled trial,’’ Lancet, 2016, vol. 388, pp. 974–982. 137 Ibid. PO 00000 Frm 00150 Fmt 4701 Sfmt 4702 CAI of ¥22.8 events per hour lower for the treatment group; AHI (continuous) of ¥25.0 events per hour lower for the treatment group; arousal events per hour of ¥15.2 lower for the treatment group; percent of sleep in REM of 2.4 percent higher for the treatment group; patients with marked or moderate improvement in patient global assessment was 55 percent higher in the treatment group; ODI = 4 percent was ¥22.7 events per hour lower for the treatment group; and the Epworth sleepiness scale was ¥3.7 lower for the treatment group. At 12 months, 138 (91 percent) of the patients were free from device, implant, and therapy related adverse events. The final study data was from the pivotal study with limited information in the form of an abstract 138 and an executive summary.139 The executive summary detailed an exploratory analysis of the 141 patients enrolled in the pivotal trial which were patients diagnosed with CSA. The abstract indicated that the 141 patients from the pivotal trial were randomized to either the treatment arm (68 patients) in which initiation of treatment began 1 month ¯ after implantation of the remede® System device with a 6-month follow-up period, or to the control group arm (73 patients) in which the initiation ¯ of treatment with the remede® System device was delayed for 6 months after implantation. Randomization efficacy was compared across baseline polysomnography and associated respiratory indices in which four of the five measures showed no statistical differences between those treated and controls; treated patients had an average MAI score of 3.1 as compared to control patients with an average MAI score of 2.2 (p=0.029). Patients included in the trial must have been medically stable, at least 18 years old, have had an electroencephalogram within 40 days of scheduled implantation, had an apnoeahypopnoea index (AHI) of 20 events per hour or greater, a central apnoea index at least 50 percent of all apneas, and an obstructive apnea index less than or equal to 20 percent.140 Primary exclusion criteria were CSA caused by pain medication, heart failure of state D from the American Heart Association, a 138 Goldberg, L., Ponikowski, P., Javaheri, S., Augostini, R., McKane, S., Holcomb, R., Costanzo, M.R., ‘‘In Heart Failure Patients with Central Sleep Apnea, Transvenous Stimulation of the Phrenic Nerve Improves Sleep and Quality of Life,’’ Heart Failure Society of America, 21st annual meeting. 2017. 139 Respicardia, Inc. (n.d.). Remede System Pivotal Trial. https://clinicaltrials.gov/ct2/show/ NCT01816776. 140 Respicardia, Inc. (n.d.). Remede System Pivotal Trial. https://clinicaltrials.gov/ct2/show/ NCT01816776. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules new implantable cardioverter defibrillator, pacemaker dependent subjects without any physiologic escape rhythm, evidence of phrenic nerve palsy, documented history of psychosis or severe bipolar disorder, a cerebrovascular accident within 12 months of baseline testing, limited pulmonary function, baseline oxygen saturation less than 92 percent while awake and on room air, active infection, need for renal dialysis, or poor liver function.141 Patients included in this trial were primarily male (89 percent), white (95 percent), with at least one comorbidity with cardiovascular conditions being most prevalent (heart failure at 64 percent), with a concomitant implantable cardiovascular stimulation device in 42 percent of patients at baseline. The applicant stated that, after randomization, there were no statistically significant differences between the treatment and control groups, with the exception of the treated group having a statistically higher rate of events per hour on the mixed apnea index (MAI) at baseline than the control group. The applicant asserted that the results from the pivotal trial 142 allow for the comparison of heart failure status in patients; we note that patients with American Heart Association objective assessment Class D (Objective evidence of severe cardiovascular disease. Severe limitations. Experiences symptoms even while at rest) were excluded from this pivotal trial. The primary endpoint in the pivotal trial was the proportion of patients with an AHI reduction greater than or equal to 50 percent at 6 months. When controlling for heart failure status, both treated groups experienced a statistically greater proportion of patients with AHI reductions than the controls at 6 months (58 percent more of treated patients with diagnoses of heart failure and 35 percent more of treated patients without diagnoses of heart failure as compared to their respective controls). The secondary endpoints assessed were the CAI average events per hour, AHI average events per hour, arousal index (ArI) average events per hour, percent of sleep in REM, and oxygen desaturation index 4 percent (ODI = 4 percent) average events per hour. Excluding the percent of sleep in REM, the treatment groups for both patients with diagnoses of heart failure and non-heart failure conditions experienced statistically greater improvements at 6 months on all 141 Ibid. 142 Respicardia, Inc. (n.d.). Remede System Pivotal Trial. https://clinicaltrials.gov/ct2/show/ NCT01816776. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 secondary endpoints as compared to their respective controls. Lastly, quality of life secondary endpoints were assessed by the Epworth sleepiness scale (ESS) average scores and the patient global assessment (PGA). For both the ESS and PGA assessments, both treatment groups of patients with diagnoses of heart failure and non-heart failure conditions had statistically beneficial changes between baseline and 6 months as compared to their respective control groups. The applicant provided analyses from the above report focusing on the primary and secondary polysomnography endpoints, specifically, across patients who had been diagnosed with CSA with heart failure and non-heart failure. Eighty patients included in the study from the executive summary report had comorbid heart failure, while 51 patients did not. Of those patients with heart failure, 35 were treated while 45 patients were controls. Of those patients without heart failure, 23 were treated and 28 patients were controls. The applicant did not provide baseline descriptive statistical comparisons between treated and control groups controlling for heart failure status. Across all primary and secondary endpoints, the patient group who were diagnosed with CSA and comorbid heart failure experienced statistically significant improvements. Excepting percent of sleep in REM, the patient group who were diagnosed with CSA without comorbid heart failure experienced statistically significant improvements in all primary and secondary endpoints. We are inviting public comments on whether this current study design is sufficient to support substantial clinical ¯ improvement of the remede® System with respect to all patient populations, particularly the non-heart failure population. As previously noted, the applicant also contends that the technology offers a treatment option for a patient population unresponsive to, or ineligible for, currently available treatment options. Specifically, the ¯ applicant stated that the remede® System is the only treatment option for patients who have been diagnosed with moderate to severe CSA; published studies on positive pressure treatments like CPAP and ASV have not met primary endpoints; and there was an increase in cardiovascular mortality according to the ASV study. According to the applicant, approximately 40 percent of patients who have been diagnosed with CSA have heart failure. The applicant asserted that the use of ¯ the remede System not only treats and PO 00000 Frm 00151 Fmt 4701 Sfmt 4702 20313 improves the symptoms of CSA, but there is evidence of reverse remodeling in patients with reduced left ventricular ejection fraction (LVEF). ¯ We are concerned that the remede® System is not directly compared to the CPAP or ASV treatment options, which, to our understanding, are the current treatment options available for patients who have been diagnosed with CSA without heart failure. We note that the FDA indication for the implantation of ¯ the remede® System is for use in the treatment of adult patients who have been diagnosed with CSA. We also note that the applicant’s supporting studies were directed primarily at patients who ¯ had been treated with the remede® System who also had been diagnosed with heart failure. The applicant asserted that it would not be appropriate to use CPAP and ASV treatment options when comparing CPAP and ASV to the ¯ remede® System in the patient population of heart failure diagnoses because these treatment options have been found to increase mortality outcomes in this population. In light of the limited length of time in which the ¯ remede® System has been studied, we are concerned that any claims on mortality as they relate to treatment ¯ involving the use of the remede® System may be limited. Therefore, we are concerned as to whether there is sufficient data to determine that the technology represents a substantial clinical improvement with respect to patients who have been diagnosed with CSA without heart failure. The applicant has shown that, among the subpopulation of patients who have been diagnosed with CSA and heart ¯ failure, the remede® System decreases morbidity outcomes as compared to the CPAP and ASV treatment options. We understand that not all patients evaluated in the applicant’s supporting clinical trials had been diagnosed with CSA with a comorbidity of heart failure. However, in all of the supporting studies for this application, the vast majority of study patients did have this specific comorbidity of CSA and heart failure. Of the three studies which enrolled both patients diagnosed with CSA with and without heart failure,143 144 145 146 only two studies 143 Respicardia, Inc. (n.d.). Remede System Pivotal Trial. https://clinicaltrials.gov/ct2/show/ NCT01816776. 144 Costanzo, M.R., Ponikowski, P., Javaheri, S., Augostini, R., Goldberg, L., Holcomb, R., Abraham, W.T., ‘‘Transvenous Neurostimulation for Centra Sleep Apnoea: A randomised controlled trial,’’ Lancet, 2016, vol. 388, pp. 974–982. 145 Respicardia, Inc. (n.d.). Remede System Pivotal Trial. https://clinicaltrials.gov/ct2/show/ NCT01816776. E:\FR\FM\07MYP2.SGM Continued 07MYP2 20314 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 performed analyses controlling for heart failure status.147 148 The data from these two studies, the Costanzo, et al. (2016) and the Respicardia, Inc. executive report, are analyses based on the same pivotal trial data and, therefore, do not provide results from two separate samples. Descriptive comparisons are made in the executive summary of the pivotal trial 149 between all treated and control patients. However, we are unable to determine the similarities and differences between patients with heart failure and non-heart failure treated versus controlled groups. Because randomization resulted in one difference between the overall treated and control groups (MAI events per hour), it is possible that further failures of randomization may have occurred when controlling for heart failure status in unmeasured variables. Finally, the sample size analyzed and the subsample sizes of the heart failure patients (80) and non-heart failure patients (51) are particularly small. It is possible that these results are not representative of the larger population of patients who have been diagnosed with CSA. Therefore, we are concerned that differences in morbidity and mortality outcomes between CPAP, ASV, and the ¯ remede® System in the general CSA patient population have not adequately been tested or compared. Specifically, the two patient populations, those who have been diagnosed with heart failure and CSA versus those who have been diagnosed with CSA alone, may experience different symptoms and outcomes associated with their disease processes. Patients who have been diagnosed with CSA alone present with excessive sleepiness, poor sleep quality, insomnia, poor concentration, and inattention.150 Conversely, patients who have been diagnosed with the comorbid conditions of CSA as a result of heart 146 Jagielski, D., Ponikowski, P., Augostini, R., Kolodziej, A., Khayat, R., & Abraham, W.T., ‘‘Transvenous Stimulation of the Phrenic Nerve for the Treatment of Central Sleep Apnoea: 12 months’ experience with the remede®system,’’ European Journal of Heart Failure, 2016, pp. 1–8. 147 Respicardia, Inc. (n.d.). Remede System Pivotal Trial. https://clinicaltrials.gov/ct2/show/ NCT01816776. 148 Costanzo, M.R., Ponikowski, P., Javaheri, S., Augostini, R., Goldberg, L., Holcomb, R., Abraham, W.T., ‘‘Transvenous Neurostimulation for Centra Sleep Apnoea: A randomised controlled trial,’’ Lacet, 2016, vol. 388, pp. 974–982. 149 Respicardia, Inc. (n.d.). Remede System Pivotal Trial. https://clinicaltrials.gov/ct2/show/ NCT01816776. 150 Badr, M.S., 2017, Dec 11, ‘‘Central sleep apnea: Risk factors, clinical presentation, and diagnosis,’’ Available at: https:// www.uptodate.com/contents/central-sleep-apnearisk-factors-clinical-presentation-anddiagnosis?csi=d3a535e6–1cca-4cd5-ab5e50e9847bda6c&source=contentShare. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 failure experience significant cardiovascular insults resulting from sympathetic nervous system activation, pulmonary hypertension, and arrhythmias, which ultimately contribute to the downward cycle of heart failure.151 We also note that the clinical study had a small patient population (n=151), with follow-up for 6 months. We are interested in longer follow-up data that would further validate the points made by the applicant regarding the beneficial outcomes seen in patients who have been diagnosed with CSA who have ¯ been treated using the remede® System. We also are interested in additional information regarding the possibility of electrical stimulation of unintended targets and devices combined with the possibility of interference from outside devices. Furthermore, we are unsure with regard to the longevity of the implanted device, batteries, and leads because it appears that the technology is meant to remain in use for the remainder of a patient’s life. We are inviting public comments on whether ¯ the remede® System represents a substantial clinical improvement over existing technologies. We did not receive any public comments in response to the published notice in the Federal Register regarding the substantial clinical improvement ¯ criterion for the remede® System or at the New Technology Town Hall Meeting. f. Titan Spine nanoLOCK® (Titan Spine nanoLOCK® Interbody Device) Titan Spine submitted an application for new technology add-on payments for the Titan Spine nanoLOCK® Interbody Device (the Titan Spine nanoLOCK®) for FY 2019. (We note that the applicant previously submitted an application for new technology add-on payments for this device for FY 2017.) The Titan Spine nanoLOCK® is a nanotechnologybased interbody medical device with a dual acid-etched titanium interbody system used to treat patients diagnosed with degenerative disc disease (DDD). One of the key distinguishing features of the device is the surface manufacturing technique and materials, which produce macro, micro, and nano-surface textures. According to the applicant, the combination of surface topographies enables initial implant fixation, mimics an osteoclastic pit for bone growth, and produces the nano-scale features that interface with the integrins on the 151 Abraham, W., Jagielski, D., Oldenburg, O., Augostini, R., Kreuger, S., Kolodziej, A., Ponikowski, P., ‘‘Phrenic Nerve Stimulation for the Treatment of Central Sleep Apnea,’’ JACC: Heart Failure, 2015, vol. 3(5), pp. 360–369. PO 00000 Frm 00152 Fmt 4701 Sfmt 4702 outside of the cellular membrane. Further, the applicant noted that these features generate better osteogenic and angiogenic responses that enhance bone growth, fusion, and stability. The applicant asserted that the Titan Spine nanoLOCK®’s clinical features also reduce pain, improve recovery time, and produce lower rates of device complications such as debris and inflammation. On October 27, 2014, the Titan Spine nanoLOCK® received FDA clearance for the use of five lumbar interbody devices and one cervical interbody device: The nanoLOCK® TA—Sterile Packaged Lumbar ALIF Interbody Fusion Device with nanoLOCK® surface, available in multiple sizes to accommodate anatomy; the nanoLOCK® TAS—Sterile Packaged Lumbar ALIF Stand Alone Interbody Fusion Device with nanoLOCK® surface, available in multiple sizes to accommodate anatomy; the nanoLOCK® TL—Sterile Packaged Lumbar Lateral Approach Interbody Fusion Device with nanoLOCK® surface, available in multiple sizes to accommodate anatomy; the nanoLOCK® TO—Sterile Packaged Lumbar Oblique/PLIF Approach Interbody Fusion Device with nanoLOCK® surface, available in multiple sizes to accommodate anatomy; the nanoLOCK® TT—Sterile Packaged Lumbar TLIF Interbody Fusion Device with nanoLOCK® surface, available in multiple sizes to accommodate anatomy; and the nanoLOCK® TC—Sterile Packaged Cervical Interbody Fusion Device with nanoLOCK® surface, available in multiple sizes to accommodate anatomy. The applicant received FDA clearance on December 14, 2015, for the nanoLOCK® TCS— Sterile Package Cervical Stand Alone Interbody Fusion Device with nanoLOCK® surface, available in multiple sizes to accommodate anatomy. According to the applicant, July 8, 2016 was the first date that the nanotechnology production facility completed validations and clearances needed to manufacture the nanoLOCK® interbody fusion devices. Once validations and clearances were completed, the technology was available on the U.S. market on October 1, 2016. Therefore, the applicant believes that the newness period for nanoLOCK® would begin on October 1, 2016. Procedures involving the Titan Spine nanoLOCK® technology can be identified by the following ICD– 10–PCS Section ‘‘X’’ New Technology codes: • XRG0092 (Fusion of occipitalcervical joint using nanotextured E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules surface interbody fusion device, open approach); • XRG1092 (Fusion of cervical vertebral joint using nanotextured surface interbody fusion device, open approach); • XRG2092 (Fusion of 2 or more cervical vertebral joints using nanotextured surface interbody fusion device, open approach); • XRG4092 (Fusion of cervicothoracic vertebral joint using nanotextured surface interbody fusion device, open approach); • XRG6092 (Fusion of thoracic vertebral joint using nanotextured surface interbody fusion device, open approach); • XRG7092 (Fusion of 2 to 7 thoracic vertebral joints using nanotextured surface interbody fusion device, open approach); • XRG8092 (Fusion of 8 or more thoracic vertebral joints using nanotextured surface interbody fusion device, open approach); • XRGA092 (Fusion of thoracolumbar vertebral joint using nanotextured surface interbody fusion device, open approach); • XRGB092 (Fusion of lumbar vertebral joint using nanotextured surface interbody fusion device, open approach); • XRGC092 (Fusion of 2 or more lumbar vertebral joints using nanotextured surface interbody fusion device, open approach); and • XRGD092 (Fusion of lumbosacral joint using nanotextured surface interbody fusion device, open approach). We note that the applicant expressed concern that interbody fusion devices that have failed to gain or apply for FDA clearance with nanoscale features could confuse health care providers with marketing and advertising using terms related to nanotechnology and ultimately adversely affect patient outcomes. Therefore, the applicant believed that there is a need for additional clarity to the current ICD–10– PCS Section ‘‘X’’ codes previously identified for health care providers regarding interbody fusion nanotextured surface devices. The applicant submitted a request for code revisions at the March 2018 ICD–10 Coordination and Maintenance Meeting regarding the ICD–10–PCS Section ‘‘X’’ New Technology codes used to identify procedures involving the Titan Spine nanoLOCK® technology. As discussed previously, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and would not be VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 considered ‘‘new’’ for the purposes of new technology add-on payments. We note that the substantial similarity discussion is applicable to both the lumbar and the cervical interbody devices because all of the devices use the Titan Spine nanoLOCK® technology. With regard to the first criterion, whether a product uses the same or a similar mechanism of action to achieve a therapeutic outcome, the applicant stated that, for both interbody devices (the lumbar and the cervical interbody device), the Titan Spine nanoLOCK®’s surface stimulates osteogenic cellular response to assist in bone formation during fusion. According to the applicant, the mechanism of action exhibited by the Titan Spine’s nanoLOCK® surface technology involves the ability to create surface features that are meaningful to cellular regeneration at the nano-scale level. During the manufacturing process, the surface produces macro, micro, and nano-surface textures. The applicant believes that this unique combination and use of these surface topographies represents a new approach to stimulating osteogenic cellular response. The applicant further asserted that the macro-scale textured features are important for initial implant fixation; the micro-scale textured features mimic an osteoclastic pit for supporting bone growth; and the nanoscale textured features interface with the integrins on the outside of the cellular membrane, which generates the osteogenic and angiogenic (mRNA) responses necessary to promote healthy bone growth and fusion. The applicant stated that when correctly manufactured, an interbody fusion device includes a hierarchy of complex surface features, visible at different levels of magnification, that work collectively to impact cellular response through mechanical, cellular, and biochemical properties. The applicant stated that Titan Spine’s proprietary and unique surface technology, the Titan Spine nanoLOCK® interbody devices, contain optimized nano-surface characteristics, which generate the distinct cellular responses necessary for improved bone growth, fusion, and stability. The applicant further stated that the Titan Spine nanoLOCK®’s surface engages with the strongest portion of the vertebral endplate, which enables better resistance to subsidence because a unique dual acid-etched titanium surface promotes earlier bone in-growth. According to the applicant, the Titan Spine nanoLOCK®’s surface is created by using a reductive process of PO 00000 Frm 00153 Fmt 4701 Sfmt 4702 20315 the titanium itself. The applicant asserted that use of the Titan Spine nanoLOCK® significantly reduces the potential for debris generated during impaction when compared to treatments using Polyetheretherketone (PEEK)based implants coated with titanium. According to the results of an in vitro study 152 (provided by the applicant), which examined factors produced by human mesenchymal stem cells on spine implant materials that compared angiogenic factor production using PEEK-based versus titanium alloy surfaces, osteogenic production levels were greater with the use of rough titanium alloy surfaces than the levels produced using smooth titanium alloy surfaces. Human mesenchymal stem cells were cultured on tissue culture polystyrene, PEEK, smooth TiAlV, or macro-/micro-/nanotextured rough TiAlV (mmnTiAlV) disks. Osteoblastic differentiation and secreted inflammatory interleukins were assessed after 7 days. The results of an additional study 153 provided by the applicant examined whether inflammatory microenvironment generated by cells as a result of use of titanium aluminum-vanadium (Ti-alloy, TiAlV) surfaces is effected by surface micro-texture, and whether it differs from the effects generated by PEEKbased substrates. This in vitro study compared angiogenic factor production and integrin gene expression of human osteoblast-like MG63 cells cultured on PEEK or titanium-aluminum vanadium (titanium alloy). Based on these study results, the applicant asserted that the use of micro-textured surfaces has demonstrated greater promotion of osteoblast differentiation when compared to use of PEEK-based surfaces. The applicant maintains that the nanoLOCK® was the first, and remains the only, device in spinal fusion, to apply for and successfully obtain a clearance for nanotechnology from the FDA. According to the applicant, in order for a medical device to receive a nanotechnology FDA clearance, the burden of proof includes each of the following to be present on the medical device in question: (1) Proof of specific nano scale features, (2) proof of capability to manufacture nano-scale features with repeatability and documented frequency across an entire 152 Olivares-Navarrete, R., Hyzy, S., Gittens, R., ‘‘Rough Titanium Alloys Regulate Osteoblast Production of Angiogenic Factors,’’ The Spine Journal, 2013, vol. 13(11), pp. 1563–1570. 153 Olivares-Navarrete, R., Hyzy, S., Slosar, P., et al., ‘‘Implant Materials Generate Different Periimplant Inflammatory Factors,’’ SPINE, 2015, vol. 40(6), pp. 339–404. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20316 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules device, and (3) proof that those nanoscale features provide a scientific benefit, not found on devices where the surface features are not present. The applicant further stated that many of the commercially available interbody fusion devices are created using additive manufacturing processes to mold or build surface from the ground up. Conversely, Titan Spine applied a subtractive surface manufacturing to remove pieces of a surface. The surface features that remain after this subtractive process generate features visible at magnifications that additive manufacturing has not been able to produce. According to the applicant, this subtractive process has been validated by the White House Office of Science and Technology, the National Nanotechnology Initiative, and the FDA that provide clearances to products that exhibit unique and repeatable features at predictive frequency due to a manufacturing technique. With regard to the second criterion, whether a product is assigned to the same or a different MS–DRG, cases representing patients that may be eligible for treatment involving the Titan Spine nanoLOCK® technology would map to the same MS–DRGs as other (lumbar and cervical) interbody devices currently available to Medicare beneficiaries and also are used for the treatment of patients who have been diagnosed with DDD (lumbar or cervical). With regard to the third criterion, whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population, the applicant stated that the Titan Spine nanoLOCK® can be used in the treatment of patients who have been diagnosed with similar types of diseases, such as DDD, and for a similar patient population receiving treatment involving both lumbar and cervical interbody devices. In summary, the applicant maintained that the Titan Spine nanoLOCK® technology has a different mechanism of action when compared to other spinal fusion devices. Therefore, the applicant did not believe that the Titan Spine nanoLOCK® technology is substantially similar to existing technologies. We are concerned that the Titan Spine nanoLOCK® interbody devices may be substantially similar to currently available titanium interbody devices because other roughened-surface interbody devices also stimulate bone growth. While there is a uniqueness to the nanotechnology used by the applicant, other devices also stimulate bone growth such as PEEK-based surfaces and, therefore, we remain VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 concerned that the Titan Spine nanoLOCK® interbody devices use the same or similar mechanism of action as other devices. We are inviting public comments on whether the Titan Spine nanoLOCK® interbody devices are substantially similar to existing technologies and whether these devices meet the newness criterion. The applicant provided three analyses of claims data from the FY 2016 MedPAR file to demonstrate that the Titan Spine nanoLOCK® interbody devices meet the cost criterion. We note that cases reporting procedures involving lumbar and cervical interbody devices would map to different MS– DRGs. As discussed in the Inpatient New Technology Add-On Payment Final Rule (66 FR 46915), two separate reviews and evaluations of the technologies are necessary in this instance because cases representing patients receiving treatment for diagnoses associated with lumbar procedures that may be eligible for use of the technology under the first indication would not be expected to be assigned to the same MS–DRGs as cases representing patients receiving treatment for diagnoses associated with cervical procedures that may be eligible for use of the technology under the second indication. Specifically, cases representing patients who have been diagnosed with lumbar DDD and who have received treatment that involved implanting a lumbar interbody device would map to MS–DRG 028 (Spinal Procedures with MCC), MS–DRG 029 (Spinal Procedures with CC or Spinal Neurostimulators), MS–DRG 030 (Spinal Procedures without CC/MCC), MS–DRG 453 (Combined Anterior/Posterior Spinal Fusion with MCC), MS–DRG 454 (Combined Anterior/Posterior Spinal Fusion with CC), MS–DRG 455 (Combined Anterior/Posterior Spinal Fusion without CC/MCC), MS–DRG 456 (Spinal Fusion Except Cervical with Spinal Curvature or Malignancy or Infection or Extensive Fusions with MCC), MS–DRG 457 (Spinal Fusion Except Cervical with Spinal Curvature or Malignancy or Infection or Extensive Fusion without MCC), MS–DRG 458 (Spinal Fusion Except Cervical with Spinal Curvature or Malignancy or Infection or Extensive Fusions without CC/MCC), MS–DRG 459 (Spinal Fusion Except Cervical with MCC), and MS– DRG 460 (Spinal Fusion Except Cervical without MCC). Cases representing patients who have been diagnosed with cervical DDD and who have received treatment that involved implanting a cervical interbody device would map to MS–DRG 471 (Cervical Spinal Fusion PO 00000 Frm 00154 Fmt 4701 Sfmt 4702 with MCC), MS–DRG 472 (Cervical Spinal Fusion with CC), and MS–DRG 473 (Cervical Spinal Fusion without CC/ MCC). Procedures involving the implantation of lumbar and cervical interbody devices are assigned to separate MS–DRGs. Therefore, the devices categorized as lumbar interbody devices and the devices categorized as cervical interbody devices must distinctively (each category) meet the cost criterion and the substantial clinical improvement criterion in order to be eligible for new technology add-on payments beginning in FY 2019. The first analysis searched for any of the ICD–10–PCS procedure codes within the code series Lumbar—0SG [body parts 0 1 3] [open approach only 0] [device A only] [anterior column only 0, J], which typically are assigned to MS–DRGs 028, 029, 030, and 453 through 460. The average case-weighted unstandardized charge per case was $153,005. The applicant then removed charges related to the predicate technology and then standardized the charges. The applicant then applied an inflation factor of 1.09357, the value used in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38527) to update the charges from FY 2016 to FY 2018. The applicant added charges related to the Titan Spine nanoLOCK® lumbar interbody devices. This resulted in a final inflated average case-weighted standardized charge per case of $174,688, which exceeds the average case-weighted Table 10 MS–DRG threshold amount of $83,543. The second analysis searched for any of the ICD–10–PCS procedure codes within the code series Cervical—0RG [body parts 0—A] [open approach only 0] [device A only] [anterior column only 0, J], which typically are assigned to MS–DRGs 028, 029, 030, 453 through 455, and 471 through 473. The average case-weighted unstandardized charge per case was $88,034. The methodology used in the first analysis was used for the second analysis, which resulted in a final inflated average case-weighted standardized charge per case of $101,953, which exceeds the average case-weighted Table 10 MS–DRG threshold amount of $83,543. The third analysis was a combination of the first and second analyses described earlier that searched for any of the ICD–10–PCS procedure codes within the Lumbar and Cervical code series listed above that are assigned to the MS–DRGs in the analyses above. The average case-weighted unstandardized charge per case was $127,736. The methodology used for the first and second analysis was used for the third analysis, which resulted in a E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules final inflated average case-weighted standardized charge per case of $149,915, which exceeds the average case-weighted Table 10 MS–DRG threshold amount of $104,094. Because the final inflated average case-weighted standardized charge per case exceeds the average case-weighted threshold amount in all of the applicant’s analyses, the applicant maintained that the technology meets the cost criterion. We are inviting public comments on whether the Titan Spine nanoLOCK® meets the cost criterion. With regard to the substantial clinical improvement criterion for the Titan Spine nanoLOCK® Interbody Lumbar and Cervical Devices, the applicant submitted the results of two clinical evaluations. The first clinical evaluation was a case series and the second was a case control study. Regarding the case series, 4 physicians submitted clinical information on 146 patients. The 146 patients resulted from 2 surgery groups: a cervical group of 73 patients and a lumbar group of 73 patients. The division into cervical and lumbar groups was due to differences in surgical procedure and expected recovery time. Subsequently, the collection and analyses of data were presented for lumbar and cervical nanoLOCK® device implants. Data was collected using medical record review. Patient baseline characteristics, the reason for cervical and lumbar surgical intervention, inclusion and exclusion criteria, details on the types of pain medications and the pattern of usage preoperatively and postoperatively were not provided. We note that the applicant did not provide an explanation of why the outcomes studied in the case series were chosen for review. However, the applicant noted that the case series data were restricted to patients treated with the Titan Spine nanoLOCK® device, with both retrospective and prospective data collection. These data appeared to be clinically related and included: (1) Pain medication usage; (2) extremity and back pain (assessed using the Numeric Pain Rating Scale (NPRS)); and (3) function (assessed using the Oswestry Disability Index (ODI)). Clinical data collection began with time points defined as ‘‘Baseline (preoperation), Month 1 (0–4 weeks), Month 2 (5–8 weeks), Month 3 (9–12 weeks), Month 4 (13–16 weeks), Month 5 (17– 20 weeks) and Month 6+ (>20 weeks)’’. The n, mean, and standard deviation were presented for continuous variables (NPRS extremity pain, back pain, and ODI scores), and the n and percentage were presented for categorical variables (subjects taking pain medications). All VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 analyses compared the time point (for example, Month 1) to the baseline. Pain scores for extremities (leg and arm) were assessed using the NPRS, an 11-category ordinal scale where 0 is the lowest value and 10 is the highest value and, therefore, higher scores indicate more severe pain. Of the 73 patients in the lumbar group, the applicant presented data on 18 cases for leg or arm pain at baseline that had a mean score of 6.4, standard deviation (SD) 2.3. Between Month 1 and Month 6+ the number of lumbar patients for which data was submitted for leg or arm pain ranged from 3 patients (Month 5, mean score 3.7, SD 3.5) to 15 patients (Month 6+, mean score 2.5, SD 2.4), with varying numbers of patients for each of the other defined time points of Month 1 through Month 4. None of the defined time points of Month 1 through Month 4 had more than 14 patients or less than 3 patients that were assessed. Of the 73 patients in the cervical group, 7 were assessed for leg or arm pain at baseline and had a mean score of 5.1, SD 3.5. Between Month 1 and Month 6+ the number of cervical patients assessed for leg or arm pain ranged from 0 patients (Month 5, no scores) to 5 patients (Month 1, mean score 4.2, SD 2.6), with varying numbers of patients for each of the other defined time points of Month 1 through Month 4. None of the defined time points of Month 1 through Month 4 had more than 5 patients or less than 2 patients that were assessed. Back pain scores were also assessed using the NPRS, where 0 is the lowest value and 10 is the highest value and, therefore, higher scores indicate more severe pain. Of the 73 patients in the lumbar group, 66 were assessed for back pain at baseline and had a mean score of 7.9, SD 1.8. Between Month 1 and Month 6+ the number of lumbar patients assessed for back pain ranged from 4 patients (Month 5, mean score 4.0, SD 2.7) to 43 patients (Month 1, mean score 4.5, SD 2.7), with varying numbers of patients for each defined time point. Of the 73 patients in the cervical group, 71 were assessed for back pain at baseline and had a mean score of 7.5, SD 2.3. Between Month 1 and Month 6+ the number of cervical patients assessed for back pain ranged from 2 patients (Month 5, mean score 7.0, SD 2.8) to 47 patients (Month 1, mean score 4.4, SD 2.9), with varying numbers of patients for each defined time point. Function was assessed using the ODI, which ranges from 0 to 100, with higher scores indicating increased disability/ impairment. Of the 73 patients in the lumbar group, 59 were assessed for ODI PO 00000 Frm 00155 Fmt 4701 Sfmt 4702 20317 scores at baseline and had a mean score of 52.5, SD 18.7. Between Month 1 and Month 6+ the number of lumbar patients assessed for ODI scores ranged from 3 patients (Month 5, mean score 33.3, SD 19.8) to 38 patients (Month 1, mean score 48.1, SD 19.7), with varying numbers of patients for each defined time point. Of the 73 patients in the cervical group, 56 were assessed for ODI scores at baseline and had a mean score of 53.6, SD 18.2. Between Month 1 and Month 6+ the number of cervical patients assessed for ODI score ranged from 1 patient (Month 5, mean score 80, no SD noted) to 41 patients (Month 1, mean score 48.6, SD 20.5), with varying numbers of patients for each defined time point. The percentages of patients not taking pain medicines per day for the lumbar and cervical groups over time were assessed. Of the 73 patients in the lumbar group, 69 were assessed at baseline and 27.5 percent of the 69 patients were not taking pain medication. Between Month 1 and Month 6+ the number of lumbar patients assessed for not taking pain medicines ranged from 5 patients (Month 5, 80 percent were not taking pain medicines) to 46 patients (Month 1, 54.3 percent were not taking pain medicines), with varying numbers of patients for each defined time point. Of the 73 patients in the cervical group, 72 were assessed and 22.2 percent of the 72 patients were not taking pain medicines at baseline. Between Month 1 and Month 6+ the number of cervical patients assessed for not taking pain medicines ranged from 2 patients (Month 5, 100 percent were not taking pain medicines) to 50 patients (Month 1, 70 percent were not taking pain medicines), with varying numbers of patients for each defined time point. According to the applicant, both the lumbar and cervical groups showed a trend of improvement in all four clinical outcomes over time for which they collected data in their case series. However, the applicant also indicated that the trend was difficult to assess due to the relatively limited number of subjects with available assessments more than 4 months post-implant. The applicant shared that it had missing values for over 80 percent of the subjects in the study after the 4th postoperative month. According to the applicant and its results of the clinical evaluation, which was based on data from less than 20 percent of subjects, there was a statistically significant reduction in back pain for nanoLOCK® patients from ‘‘Baseline,’’ based on improvement at earlier than standard time points. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20318 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules We are concerned that the small sample size of patients assessed at each timed follow-up point for each of the clinical outcomes evaluated in the case series limits our ability to draw meaningful conclusions from these results. The applicant provided t-test results for the lumbar and cervical groups assessed for pain (back, leg, and arm). We are concerned that the t-test resulting from small sample sizes (for example, 2 of 73 patients in Month 5, and 5 of 73 patients in Month 6+) does not indicate a statistically meaningful improvement in pain scores. Based on the results of the case series provided by the applicant, we are unable to determine whether the findings regarding extremity and back pain, ODI scores, and percentage of subjects not taking pain medication for patients who received treatment involving the Titan Spine nanoLOCK® devices represent a substantial clinical improvement due to the inconsistent sample size over time across both treatment arms in all evaluated outcome measures. The quantity of missing data in this case series, along with the lack of explanation for the missing data, raises concerns for the interpretation of these results. We also are unable to determine based on this case series whether there were improvements in extremity pain and back pain, ODI scores, and percentage of subjects not taking pain medicines for patients who received treatment involving the Titan Spine nanoLOCK® devices versus conventional and other intervertebral body fusion devices, as there were no comparisons to current therapies. As noted above, the applicant did not provide an explanation of why the outcomes studied in the case series were chosen for review. Therefore, we believe that we may have insufficient information to determine if the outcomes studied in the case series are validated proxies for evidence that the nanoLOCK®’s surface promotes greater osteoblast differentiation when compared to use of PEEK-based surfaces. We are inviting public comments regarding our concerns, including with respect to why the outcomes studied in the case series were chosen for review. The applicant’s second clinical evaluation was a case-control study with a 1:5 case control ratio. The applicant used deterministically linked, de-identified, individual-level health care claims, electronic medical records (EMR), and other data sources to identify 70 cases and 350 controls for a total sample size of 420 patients. The applicant also identified OM1TM data source and noted that the OM1TM data VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 source reflects data from all U.S. States and territories and is representative of the U.S. national population. The applicant used OM1TM data between January 2016 and June 2017, and specifically indicated that these data contain medical and pharmacy claims information, laboratory data, vital signs, problem lists, and other clinical details. The applicant indicated that cases were selected using the ICD–10–PCS Section ‘‘X’’ New Technology codes listed above and controls were chosen from fusion spine procedures (Fusion Spine Anterior Cervical, Fusion Spine Anterior Cervical and Discectomy, Fusion Spine Anterior Posterior Cervical, Fusion Spine Transforaminal Interbody Lumbar, Fusion Spine Cervical Thoracic, Fusion Spine Transforaminal Interbody Lumbar with Navigation, and Fusion Spine Transforaminal Interbody Lumber Robot-Assisted). Further, the applicant stated that cases and controls were matched by age (within 5 years), year of surgery, Charlson Comorbidity Index, and gender. According to the applicant, regarding clinical outcomes studied, unlike the case series, the case-control study captured Charlson Comorbidity Index, the average length of stay (ALOS), and 30-day unplanned readmissions; like the case series, this case-control study captured the use of pain medications by assessing the cumulative post-surgical opioid use. The mean age for all patients in the study was 55 years old, and 47 percent were male. For the clinical length of stay outcome, the applicant noted that the mean length of stay was slightly longer among control patients, 3.9 days (SD = 5.4) versus 3.2 days (SD = 2.9) for cases, and a larger proportion of patients in the control group had lengths of stay equal to or longer than 5 days (21 percent versus 17 percent). Three control patients (0.8 percent) were readmitted within 30 days compared to zero readmissions among case patients. A slightly lower proportion of case patients were on opioids 3 months postsurgery compared to control patients (15 percent versus 16 percent). We are concerned that there may be significant outliers not identified in the case and control arms because for the mean length of stay outcome, the standard deviation for control patients (5.4 days) is larger than the point estimate (3.9 days). Based on the results of this clinical evaluation provided by the applicant, we are unable to determine whether the findings regarding lengths of stay and cumulative post-surgical opioid use for patients who received treatment involving the nanoLOCK® devices versus PO 00000 Frm 00156 Fmt 4701 Sfmt 4702 conventional intervertebral body fusion devices represent a substantial clinical improvement. Without further information on selection of controls and whether there were adjustments in the statistical analyses controlling for confounding factors (for example, cause of back pain, level of experience of the surgeon, BMI and length of pain), we are concerned that the interpretation of the results may be limited. Finally, we are concerned that the current data does not adequately support a strong association between the outcome measures of length of stay, readmission rates, and use of opioids and the use of nano-surface textures in the manufacturing of the Titan Spine nanoLOCK® device. For these reasons, we are concerned that the current data do not support a substantial clinical improvement over the currently available devices used for lumbar and cervical DDD treatment. We note that the applicant indicated its intent to submit the results of additional ongoing studies to support the evidence of substantial clinical improvement over existing technologies for patients who receive treatment involving the nanoLOCK® devices versus patients receiving treatment involving other interbody fusion devices. We are inviting public comments on whether the Titan Spine nanoLOCK® meets the substantial clinical improvement criterion. Below we summarize and respond to written public comments received regarding the nanoLOCK® during the open comment period in response to the New Technology Town Hall meeting notice published in the Federal Register. Comment: One commenter focused on two items related to the substantial clinical improvement and the lack of real-world evidence and published studies regarding the nanoLOCK® technologies. The first item referenced by the commenter related to CMS’ concern presented in the FY 2017 IPPS/ LTCH PPS final rule that the results of the in vitro studies that the applicant for the nanoLOCK® technology relied upon in its application may not have necessarily correlated with the clinical results specified by the applicant. Specifically, because at that time the applicant had only conducted in vitro studies, without obtaining any clinical data from live patients during a specific clinical trial, CMS stated that it was unable to substantiate the clinical results that the applicant believed the technology achieved from a clinical standpoint based on the results of the studies provided. As a result, CMS stated that it was concerned that the results of the studies provided by the E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules applicant did not demonstrate that the Titan Spine nanoLOCK® technologies met the substantial clinical improvement criterion. The commenter also indicated that it believed the applicant has yet to publish data that would satisfy the concerns CMS noted in the FY 2017 IPPS/LTCH PPS final rule. In addition, the commenter noted that the applicant suggested that the health care community has started to move away from randomized controlled trials toward real-world evidence, and then presented claims analyses that attempted to link any assumed substantial clinical improvement in patient outcomes from fusion surgery to the nanoLOCK® technology. In response to this assertion, the commenter stated that without a randomized controlled study of this technology as compared to the standard of care or, as CMS noted in FY 2017, clinical data from live patients during a specific clinical trial, these links cannot be scientifically substantiated. The commenter also noted that none of the studies presented during the February 13, 2018 New Technology Town Hall meeting appear to be published at this time, which would subject them to a rigorous peer-reviewed process. The commenter continued to support CMS’ concern previously expressed in the FY 2017 IPPS/LTCH PPS final rule regarding whether substantial clinical improvement has been demonstrated. The second item of focus referenced by the commenter was also presented by CMS in the FY 2017 IPPS/LTCH PPS final rule. The commenter noted that there are other titanium surfaced devices currently available on the U.S. market. In the FY 2017 IPPS/LTCH PPS final rule, CMS stated that, while these devices do not use the Titan Spine nanoLOCK® technology, their surfaces also are made of titanium. Therefore, CMS believed that the Titan Spine nanoLOCK® interbody devices may be substantially similar to currently available titanium interbody devices. The commenter stated that it agreed with the statements CMS made in the FY 2017 IPPS/LTCH PPS final rule and also believed that the Titan Spine nanoLOCK® technology is not only substantially similar to other currently available titanium interbody devices, but also is similar to other technologies with microscopic, roughened surfaces with nano-scale features. The commenter indicated that the verification of these surfaces and visualization of nano-scale features in other orthopedic and spinal implants have been confirmed in consensus standards, as well as in electron VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 microscopy techniques, including atomic force microscopy. In addition, the commenter stated that the success of these devices at an in vitro level has been reported in the peer-reviewed literature, similar to that published on the nanoLOCK®. Despite verification of the applicant’s claims regarding these surfaces, visualization of nano-scale features, and success of these devices at an in vitro level being reported in peerreviewed literature, the commenter believed that, at this time, there is not enough scientifically-validated evidence of improvement in patient outcomes to substantiate approval of new technology add-on payments for any device manufactured with nano-scale features, including the Titan Spine nanoLOCK® technology. Response: We appreciate the commenter’s input. We will take these comments into consideration when deciding whether to approve new technology add-on payments for the Titan Spine nanoLock® for FY 2019. Comment: One commenter supported the approval of new technology add-on payments for the Titan Spine nanoLock® technology. The commenter stated that Titan Spine is the only company that has received FDA approval for the use of ‘‘nanotechnology’’ in its indication for treatment use and has published substantial research on the cellular impact of its unique topographic, nanotextured surface. (We note, as described above, this technology is currently FDA cleared (not FDA approved) and the technology was available on the U.S. market once validations and clearances were completed.) The commenter asserted that, for these reasons, the nanoLOCK® represents an emerging technology that should not be considered substantially similar to other spinal technologies on the market. The commenter further asserted that the real-world evidence gathered from multiple, independent data sources (including actual electronic medical records (EMR) and healthcare claims) on nanoLOCK® usage in the treatment of patients consistently shows patient improvement in terms of clinically and economically relevant outcomes—faster recovery times, reduced length of hospital stays, and reductions in downstream medical costs such as opiate utilization, among others. The commenter stated that impressive patient outcomes by use of the nanoLOCK® are unmatched by other competing devices, improving patient outcomes of Medicare beneficiaries with serious spinal pathologies. Response: We appreciate the commenters’ input. We will take these PO 00000 Frm 00157 Fmt 4701 Sfmt 4702 20319 comments into consideration when deciding whether to approve new technology add-on payments for the Titan Spine nanoLock® for FY 2019. g. Plazomicin Achaogen, Inc. submitted an application for new technology add-on payments for Plazomicin for FY 2019. According to the applicant, Plazomicin is a next-generation aminoglycoside antibiotic, which has been found in vitro to have enhanced activity against many multi-drug resistant (MDR) gramnegative bacteria. The proposed indication for the use of Plazomicin, which had not received FDA approval as of the time of the development of this proposed rule, is for the treatment of adult patients who have been diagnosed with the following infections caused by designated susceptible microorganisms: (1) Complicated urinary tract infection (cUTI), including pyelonephritis; and (2) bloodstream infections (BSIs). The applicant stated that it expects that Plazomicin would be reserved for use in the treatment of patients who have been diagnosed with these types of infections who have limited or no alternative treatment options, and would be used only to treat infections that are proven or strongly suspected to be caused by susceptible microorganisms. The applicant stated that there is a strong need for antibiotics that can treat infections caused by MDR Enterobacteriaceae, specifically carbapenem resistant Enterobacteriaceae (CRE). Life-threatening infections caused by MDR bacteria have increased over the past decade, and the patient population diagnosed with infections caused by CRE is projected to double within the next 5 years, according to the Centers for Disease Control and Prevention (CDC). Infections caused by CRE are often associated with poor patient outcomes due to limited treatment options. Patients who have been diagnosed with BSIs due to CRE face mortality rates of up to 50 percent. Patients most at risk for CRE infections are those with CRE colonization, recent hospitalization or stay in a long-term care or skilled-nursing facility, an extensive history of antibacterial use, and whose care requires invasive devices like urinary catheters, intravenous (IV) catheters, or ventilators. The applicant estimated, using data from the Center for Disease Dynamics, Economics & Policy (CDDEP), that the Medicare population that has been diagnosed with antibioticresistant cUTI numbers approximately 207,000 and approximately 7,000 for BSIs/sepsis due to CRE. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20320 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules The applicant noted that due to the public health concern of increasing antibiotic resistance and the need for new antibiotics to effectively treat MDR infections, Plazomicin has received the following FDA designations: Breakthrough Therapy; Qualified Infectious Disease product, Priority Review; and Fast Track. The applicant noted that Breakthrough Therapy designation was granted on May 17, 2017, for the treatment of bloodstream infections (BSIs) caused by certain Enterobacteriaceae in patients who have been diagnosed with these types of infections who have limited or no alternative treatment options. The applicant noted that Plazomicin is the first antibacterial agent to receive this designation. The applicant noted that on December 18, 2014, the FDA designated Plazomicin as a Qualified Infectious Disease Product (QIDP) for the indications of hospital-acquired bacterial pneumonia (HAPB), ventilatorassociated bacterial pneumonia (VABP), and complicated urinary tract infection (cUTI), including pyelonephritis and catheter-related blood stream infections (CRBSI). The applicant noted that Fast Track designation was granted by the FDA on August 12, 2012, for the Plazomicin development program for the treatment of serious and lifethreatening infections due to CRE. Plazomicin had not received approval from the FDA as of the time of the development of this proposed rule. However, the applicant indicated that it anticipates receiving approval from the FDA by July 1, 2018. The applicant has submitted a request for approval for a unique ICD–10–PCS procedure code for the use of Plazomicin, beginning with FY 2019. As discussed earlier, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and would not be considered ‘‘new’’ for purposes of new technology add-on payments. With regard to the first criterion, whether a product uses the same or a similar mechanism of action to achieve a therapeutic outcome, the applicant asserted that Plazomicin does not use the same or similar mechanism of action to achieve a therapeutic outcome as any other drug assigned to the same or a different MS–DRG. The applicant stated that Plazomicin has a unique chemical structure designed to improve activity against aminoglycoside-resistant bacteria, which also are often resistant to other key classes of antibiotics, including beta-lactams and carbapenems. Bacterial resistance to aminoglycosides usually occurs through VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 enzymatic modification by aminoglycoside modifying enzymes (AMEs) to compromise binding the target bacterial site. According to the applicant, AMEs were found in 98.6 percent of aminoglycoside nonsusceptible E. coli, Klebsiella spp, Enterobacter spp, and Proteus spp collected in 2016 U.S. surveillance studies. Genes encoding AMEs are typically located on elements that also carry other causes of antibiotic resistance like B-lactamase and/or carbapenemase genes. Therefore, extended spectrum beta-lactamases (ESBL) producing Enterobacteriaceae and CRE are commonly resistant to currently available aminoglycosides. According to the applicant, Plazomicin contains unique structural modifications at key positions in the molecule to overcome antibiotic resistance, specifically at the 6 and N1 positions. These side chain substituents shield Plazomicin from inactivation by AMEs, such that Plazomicin is not inactivated by any known AMEs, with the exception of N-acetyltransferase (AAC) 2’-Ia, -Ib, and -Ic, which is only found in Providencia species. According to the applicant, as an aminoglycoside, Plazomicin also is not hydrolyzed by Blactamase enzymes like ESBLs and carbapenamases. Therefore, the applicant asserted that Plazomicin is a potent therapeutic agent for treating MDR Enterobacteriaceae, including aminoglycoside-resistant isolates, CRE strains, and ESBL-producers. The applicant asserted that the mechanism of action is new due to the unique chemical structure. With regard to the general mechanism of action against bacteria, we are concerned that the mechanism of action of Plazomicin appears to be similar to other aminoglycoside antibiotics. As with other aminoglycosides, Plazomicin is bactericidal through inhibition of bacterial protein synthesis. The applicant maintained that the structural changes to the antibiotic constitute a new mechanism of action because it allows the antibiotic to remain active despite AMEs. Additionally, the applicant stated that Plazomicin would be the first, new aminoglycoside brought to market in over 40 years. We are inviting public comments on whether Plazomicin’s mechanism of action is new, including comments in response to our concern that its mechanism of action to eradicate bacteria (inhibition of bacterial protein synthesis) may be similar to that of other aminoglycosides, even if improvements to its structure may allow Plazomicin to be active even in the presence of common AMEs that PO 00000 Frm 00158 Fmt 4701 Sfmt 4702 inactivate currently marketed aminoglycosides. With respect to the second criterion, whether a product is assigned to the same or a different MS–DRG, we believe that potential cases representing patients who may be eligible for treatment involving Plazomicin would be assigned to the same MS–DRGs as cases representing patients who receive treatment for UTI or bacteremia. With respect to the third criterion, whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population, the applicant asserted that Plazomicin is intended for use in the treatment of patients who have been diagnosed with cUTI, including pyelonephritis, and bloodstream infections, who have limited or no alternative treatment options. Because the applicant anticipates that Plazomicin will be reserved for use in the treatment of patients who have limited or no alternative treatment options, the applicant believed that Plazomicin may be indicated to treat a new patient population for which no other technologies are available. However, it is possible that existing antimicrobials could also be used to treat those same bacteria Plazomicin is intended to treat. Specifically, the applicant is seeking FDA approval for use in the treatment of patients who have been diagnosed with cUTI, including pyelonephritis, caused by the following susceptible microorganisms: Escherichia coli (including cases with concurrent bacteremia), Klebsiella pneumoniae, Proteus spp (including P. mirabilis and P. vulgaris), and Enterobactercloacae, and for use in the treatment of patients who have been diagnosed with BSIs caused by the following susceptible microorganisms: Klebsiella pneumonia and Escherichia coli. Because the susceptible organisms for which Plazomicin is proposed to be indicated include nonresistant strains that existing antibiotics may effectively treat, we are concerned that Plazomicin may not treat a new patient population. Therefore, we are inviting public comments on whether Plazomicin treats a new type of disease or a new patient population. We also are inviting public comments on whether Plazomicin is substantially similar to any existing technologies and whether it meets the newness criterion. With regard to the cost criterion, the applicant conducted the following analysis to demonstrate that the technology meets the cost criterion. In order to identify the range of MS–DRGs that potential cases representing E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules patients who have been diagnosed with the specific types of infections for which the technology has been proposed to be indicated for use in the treatment of and who may be potentially eligible for treatment involving Plazomicin may map to, the applicant identified all MS–DRGs in claims that included cases representing patients who have been diagnosed with UTI or Septicemia. The applicant searched the FY 2016 MedPAR data for claims reporting 16 ICD–10–CM diagnosis codes for UTI and 45 ICD–10–CM diagnosis codes for Septicemia and identified a total of 2,046,275 cases assigned to 702 MS–DRGs. The applicant also performed a similar analysis based on 75 percent of identified claims, which spanned 43 MS–DRGs. MS–DRG 871 (Septicemia or Severe Sepsis without Mechanical Ventilation 96+ hours with MCC) accounted for roughly 25 percent of all cases in the first analysis of the 702 MS– DRGs identified, and almost 35 percent of the cases in the second analysis of the 43 MS–DRGs identified. Other MS– DRGs with a high volume of cases based on mapping the ICD–10–CM diagnosis codes, in order of number of discharges, were: MS–DRG 872 (Septicemia or Severe Sepsis without Mechanical Ventilation 96+ hours without MCC); MS–DRG 690 (Kidney and Urinary Tract Infections without MCC); MS–DRG 689 (Kidney and Urinary Tract Infections with MCC); MS–DRG 853 (Infectious and Parasitic Diseases with O.R. Procedure with MCC); and MS–DRG 683 (Renal Failure with CC). The applicant calculated an average unstandardized case-weighted charge per case using 2,046,275 identified cases (100 percent of all cases) and using 1,533,449 identified cases (75 percent of all cases) of $69,414 and $63,126, respectively. The applicant removed 50 percent of the charges associated with other drugs (associated with revenue codes 025x, 026x, and 063x) from the MedPAR data because the applicant anticipates that the use of Plazomicin would reduce the charges associated with the use of some of the other drugs, noting that this was a conservative estimate because other drugs would still be required for these patients during their hospital stay. The applicant then standardized the charges and applied the 2-year inflation factor of 9.357 percent from the FY 2018 IPPS/LTCH PPS final rule (82 FR 38527) to inflate the charges from FY 2016 to FY 2018. No charges for Plazomicin were added in the analysis because the applicant explained that the anticipated price for Plazomicin has yet to be determined. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Based on the FY 2018 IPPS/LTCH PPS Table 10 thresholds, the average caseweighted threshold amount was $56,996 in the first scenario utilizing 100 percent of all cases, and $55,363 in the second scenario utilizing 75 percent of all cases. The inflated average caseweighted standardized charge per case was $62,511 in the first scenario and $57,054 in the second analysis. Because the inflated average case-weighted standardized charge per case exceeds the average case-weighted threshold amount in both scenarios, the applicant maintained that the technology meets the cost criterion. The applicant noted that the case-weighted threshold amount is met before including the average per patient cost of the technology in both analyses. As such, the applicant anticipated that the inclusion of the cost of Plazomicin, at any price point, would further increase charges above the average case-weighted threshold amount. The applicant also supplied additional cost analyses, directing attention at each of the two proposed indications individually; the cost analyses considered potential cases representing patients who have been diagnosed with cUTI who may be eligible for treatment involving Plazomicin separately from potential cases representing patients who have been diagnosed with BSI/Bacteremia who may be eligible for treatment involving Plazomicin, with the cost analysis for each considering 100 percent and 75 percent of identified cases using the FY 2016 MedPAR data and the FY 2018 GROUPER Version 36. The applicant reported that, for potential cases representing patients who have been diagnosed with Bacteremia and who may be eligible for treatment involving Plazomicin, 100 percent of identified cases spanned 539 MS–DRGs, with 75 percent of the cases mapping to the following 4 MS–DRGs: 871 (Septicemia or Severe Sepsis without Mechanical Ventilation 96+ hours with MCC), 872 (Septicemia or Severe Sepsis without Mechanical Ventilation 96+ hours without MCC), 853 (Infectious and Parasitic Diseases with O.R. Procedure with MCC), and 870 (Septicemia or Severe Sepsis with Mechanical Ventilation 96+ hours). According to the applicant, for potential cases representing patients who have been diagnosed with cUTI and who may be eligible for treatment involving Plazomicin, 100 percent of identified cases mapped to 702 MS– DRGs, with 75 percent of the cases mapping to 56 MS–DRGs. Potential cases representing patients who have been diagnosed with cUTIs and who PO 00000 Frm 00159 Fmt 4701 Sfmt 4702 20321 may be eligible for treatment involving Plazomicin assigned to MS–DRG 871 (Septicemia or Severe Sepsis without Mechanical Ventilation 96+ hours with MCC) accounted for approximately 18 percent of all of the cases assigned to any of the identified 56 MS–DRGs (75 percent of cases sensitivity analysis), followed by MS–DRG 690 (Kidney and Urinary Tract Infections without MCC), which comprised almost 13 percent of all of the cases assigned to any of the identified 56 MS–DRGs. Two other common MS–DRGs containing potential cases representing potential patients who may be eligible for treatment involving Plazomicin who have been diagnosed with the specific type of indicated infections for which the technology is intended to be used, using the applicant’s analysis approach for UTI based on mapping the ICD–10–CM diagnosis codes were: MS–DRG 872 (Septicemia or Severe Sepsis without Mechanical Ventilation 96+ hours without MCC) and MS–DRG 689 (Kidney and Urinary Tract Infections with MCC). For potential cases representing patients who have been diagnosed with BSI and who may be eligible for treatment involving Plazomicin, the applicant calculated the average unstandardized case-weighted charge per case using 1,013,597 identified cases (100 percent of all cases) and using 760,332 identified cases (75 percent of all cases) of $87,144 and $67,648, respectively. The applicant applied the same methodology as the combined analysis above. Based on the FY 2018 IPPS/LTCH PPS final rule Table 10 thresholds, the average case-weighted threshold amount for potential cases representing patients who have been diagnosed with BSI assigned to the MS– DRGs identified in the sensitivity analysis was $66,568 in the first scenario utilizing 100 percent of all cases, and $61,087 in the second scenario utilizing 75 percent of all cases. The inflated average case-weighted standardized charge per case was $77,004 in the first scenario and $60,758 in the second scenario; in the 100 percent of Bacteremia cases sensitivity analysis, the final inflated caseweighted standardized charge per case exceeded the average case-weighted threshold amount for potential cases representing patients who have been diagnosed with BSI and who may be eligible for treatment involving Plazomicin assigned to the MS–DRGs identified in the sensitivity analysis by $10,436 before including costs of Plazomicin. In the 75 percent of all cases sensitivity analysis scenario, the E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20322 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules final inflated case-weighted standardized charge per case did not exceed the average case-weighted threshold amount for potential cases representing patients who have been diagnosed with BSI assigned to the MS– DRGs identified in the sensitivity analysis, at $329 less than the average case-weighted threshold amount. Because the applicant has not yet determined pricing for Plazomicin, however, it is possible that Plazomicin may also exceed the average caseweighted threshold amount for potential cases representing patients who have been diagnosed with BSI and who may be eligible for treatment involving Plazomicin assigned to the MS–DRGs identified in the 75 percent cases sensitivity analysis. For potential cases representing patients who have been diagnosed with cUTI and who may be eligible for treatment involving Plazomicin, the applicant calculated the average unstandardized case-weighted charge per case using 100 percent of all cases and 75 percent of all cases of $59,908 and $48,907, respectively. The applicant applied the same methodology as the combined analysis above. Based on the FY 2018 IPPS/LTCH PPS final rule Table 10 thresholds, the average caseweighted threshold amount for potential cases representing patients who have been diagnosed with cUTI and who may be eligible for treatment involving Plazomicin assigned to the MS–DRGs identified in the first scenario utilizing 100 percent of all cases was $51,308, and $46,252 in the second scenario utilizing 75 percent of all cases. The inflated average case-weighted standardized charge per case was $53,868 in the first scenario and $45,185 in the second scenario. In the 100 percent of cUTI cases sensitivity analysis, the final inflated case-weighted standardized charge per case exceeded the average caseweighted threshold amount for potential cases representing patients who have been diagnosed with cUTI and who may be eligible for treatment involving Plazomicin assigned to the MS–DRGs identified in the 100 percent of all cases sensitivity analysis by $2,560 before including costs of Plazomicin. In the 75 percent of all cases scenario, the final inflated case-weighted standardized charge per case did not exceed the average case-weighted threshold amount for potential cases representing patients who have been diagnosed with cUTI and who may be eligible for treatment involving Plazomicin assigned to the MS–DRGs identified in the 75 percent sensitivity analysis, at $1,067 less than VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 the average case-weighted threshold amount. Because the applicant has not yet determined pricing for Plazomicin, however, it is possible that Plazomicin may also exceed the average case-weighted threshold amount for potential cases representing patients who have been diagnosed with cUTI and who may be eligible for treatment involving Plazomicin assigned to the MS–DRGs identified in the 75 percent of all cases sensitivity analysis if charges for Plazomicin are more than $1,067. We are inviting public comments on whether Plazomicin meets the cost criterion. With respect to the substantial clinical improvement criterion, the applicant asserted that Plazomicin is a next generation aminoglycoside that offers a treatment option for a patient population who have limited or no alternative treatment options. Patients who have been diagnosed with BSI or cUTI caused by MDR Enterobacteria, particularly CRE, are difficult to treat because carbapenem resistance is often accompanied by resistance to additional antibiotic classes. For example, CRE may be extensively drug resistant (XDR) or even pandrug resistant (PDR). CRE are resistant to most antibiotics, and sometimes the only treatment option available to health care providers is a last-line antibiotic (such as colistin and tigecycline) with higher toxicity. According to the applicant, Plazomicin would give the clinician an alternative treatment option for patients who have been diagnosed with MDR bacteria like CRE because it has demonstrated activity against clinical isolates that possess a broad range of resistance mechanisms, including ESBLs, carbapenemases, and aminoglycoside modifying enzymes that limit the utility of different classes of antibiotics. Plazomicin also can be used to treat patients who have been diagnosed with BSI caused by resistant pathogens, such as ESBL-producing Enterobacteriaceae, CRE, and aminoglycoside-resistant Enterobacteriaceae. The applicant maintained that Plazomicin is a substantial clinical improvement because it offers a treatment option for patients who have been diagnosed with serious bacterial infections that are resistant to current antibiotics. We note that Plazomicin is not indicated exclusively for resistant bacteria, but rather for certain susceptible organisms of gram-negative bacteria, including resistant and nonresistant strains for which existing antibiotics may be effective. We are concerned that the applicant focused solely on Plazomicin’s activity for resistant PO 00000 Frm 00160 Fmt 4701 Sfmt 4702 bacteria and did not supply information demonstrating substantial clinical improvement in treating nonresistant strains in the bacteria families for which Plazomicin is indicated. The applicant stated that Plazomicin also meets the substantial clinical improvement criterion because it significantly improves clinical outcomes for a patient population compared to currently available treatment options. Specifically, the applicant asserted that Plazomicin has: (1) A mortality benefit and improved safety profile in treating patients who have been diagnosed with BSI due to CRE; and (2) statistically better outcomes at test-of-cure in patients who have been diagnosed with cUTI, including higher eradication rates for ESBL-producing pathogens, and lower rate of subsequent clinical relapses. The applicant conducted two Phase III studies, CARE and EPIC. The CARE trial compared Plazomicin to colistin, a last-line antibiotic that is a standard of care agent for patients who have been diagnosed with BSI when caused by CRE. The EPIC trial compared Plazomicin to meropenem for the treatment of patients who have been diagnosed with cUTI/acute polynephritis. The CARE clinical trial was a randomized, open label, multi-center Phase III study comparing the efficacy of Plazomicin against colistin in the treatment of patients who have been diagnosed with BSIs or hospital-acquired bacterial pneumonia (HABP)/ventilator-acquired bacterial pneumonia (VABP) due to CRE. Due to the small number of enrolled patients with HAPB/VABP, however, results were only analyzed for patients who had been diagnosed with BSI due to CRE. The primary endpoint was day 28 all-cause mortality or significant disease complications. Patients were randomized to receive 7 to 14 days of IV Plazomicin or colistin, along with an adjunctive therapy of meropenem or tigecycline. All-cause mortality and significant disease complications were consistent regardless of adjunctive antibiotics received, suggesting that the difference in outcomes was driven by Plazomicin and colistin, with little impact from meropenem and tigecycline. Follow-up was done at test-of-cure (TOC; 7 days after last dose of IV study drug), end of study (EOS; day 28), and long-term follow-up (LFU; day 60). Safety analysis included all patients; microbiological modified intent-to-treat (mMITT) analysis included 17/18 Plazomicin and 20/21 colisitin patients. Baseline characteristics like age, gender, APACHE II score, infection type, E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules baseline pathogens, creatinine clearance, and adjunctive therapy with either meropenem or tigecycline were comparable in the Plazomicin and colistin groups. According to the applicant, the following results demonstrate a reduced mortality benefit in the patients who had been diagnosed with BSI subset. All-cause mortality at day 28 in the Plazomicin group was more than 5 times less than in the colistin group and all-cause mortality or significant complications at day 28 was reduced by 39 percent in the Plazomicin group compared to the colistin group. There was a large sustained 60-day survival benefit in the patients who had been diagnosed with BSI subset, with survival approximately 70 percent in the Plazomicin group compared to 40 percent in the colistin group. Additionally, according to the applicant, faster median time to clearance of CRE bacteremia of 1.5 versus 6 days for Plazomicin versus colistin and higher rate of documented clearance by day 5 (86 percent versus 46 percent) supported the reduced mortality benefit due to faster and more sustained clearance of bacteremia and also demonstrated clinical improvement in terms of more rapid beneficial resolution of the disease. The applicant maintained that Plazomicin also represents a substantial clinical improvement in improved safety outcomes. Patients treated with Plazomicin had a lower incidence of renal events (10 percent versus 41.7 percent when compared to colistin), fewer Treatment Emergent Adverse Events (TEAEs), specifically blood creatinine increases and acute kidney injury, and approximately 30 percent fewer serious adverse events were in the Plazomicin group. According to the applicant, other substantial clinical improvements demonstrated by the CARE study for use of Plazomicin in patients who had been diagnosed with BSI included lower rate of superinfections or new infections, occurring in half as many patients treated with Plazomicin versus colistin (28.6 percent versus 66.7 percent). According to the applicant, the CARE study demonstrates decreased all-cause mortality and significantly reduced disease complications at day 28 (EOS) and day 60 for patients who had been diagnosed with BSI, in addition to a superior safety profile to colistin. However, the applicant stated that, with the achieved enrollment, this study was not powered to support formal hypothesis testing and p-values and 90 percent confidence intervals are provided for descriptive purposes. The VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 total number of patients who had been diagnosed with BSI was 29, with 14 receiving Plazomicin and 15 receiving colistin. While we understand the difficulty enrolling a large number of patients who have been diagnosed with BSI caused by CRE due to severity of the illness and the need for administering treatment promptly, we are concerned that results indicating reduced mortality and treatment advantages over existing standard of care for patients who have been diagnosed with BSI due to CRE are not statistically significant due to the small sample size. Therefore, we are concerned that the results from the CARE study cannot be used to support substantial clinical improvement. The EPIC clinical trial was a randomized, multi-center, multi-national, double-blind study evaluating the efficacy and safety of Plazomicin compared with meropenem in the treatment of patients who have been diagnosed with cUTI based on composite cure endpoint (achieving both microbiological eradication and clinical cure) in the microbiological modified intent-to-treat (mMITT) population. Patients received between 4 to 7 days of IV therapy, followed by optional oral therapy like levofloxacin (or any other approved oral therapy) as step down therapy for a total of 7 to 10 days of therapy. Test-of-cure (TOC) was done 15 to 19 days and late follow-up (LFU) 24 to 32 days after the first dose of IV therapy. Six hundred nine patients fulfilled inclusion criteria, and were randomized to receive either Plazomicin or meropenem, with 306 patients receiving Plazomicin and 303 patients receiving meropenem. Safety analysis included 303 (99 percent) Plazomicin patients and 301 (99.3 percent) meropenem patients. mMITT analysis included 191 (62.4 percent) Plazomicin patients and 197 (65 percent) meropenem patients; exclusion from mMITT analysis was due to lack of study-qualifying uropathogen, which were pathogens susceptible to both Plazomicin and meropenem. In the mMITT population, both groups were comparable in terms of gender, age, percentage of patients who had been diagnosed with cUTI/acute pyelonephritis (AP)/urosepsis/ bacteremia/moderate renal impairment at baseline. According to the applicant, Plazomicin successfully achieved the primary efficacy endpoint of composite cure (combined microbiological eradication and clinical cure). At the TOC visit, 81.7 percent of Plazomicin patients versus 70.1 percent of meropenem patients achieved composite cure; this was statistically PO 00000 Frm 00161 Fmt 4701 Sfmt 4702 20323 significant with a 95 percent confidence interval. Plazomicin also demonstrated higher eradication rates for key resistant pathogens than meropenem at both TOC (89.4 percent versus 75.5 percent) and LFU (77 percent versus 60.4 percent), suggesting that the Plazomicin treatment benefit observed at TOC was sustained. Specifically, Plazomicin demonstrated higher eradication rates, defined as baseline uropathogen reduced to less than 104, against the most common gram-negative uropathogens, including ESBL producing (82.4 percent Plazomicin versus 75.0 percent meropenem) and aminoglycoside resistant (78.8 percent Plazomicin versus 68.6 percent meropenem) pathogens. This was statistically significant, although of note, as total numbers of Enterobacteriaceae exceeded population of mMITT (191 Plazomicin, 197 meropenem) this presumably included patients who were otherwise excluded from the mMITT population. According to the applicant, importantly, higher microbiological eradication rates at the TOC and LFU visits were associated with a lower rate of clinical relapse at LFU for Plazomicin treated patients (3 versus 14, or 1.8 percent Plazomicin versus 7.9 percent meropenem), with majority of the meropenem failures having had asymptomatic bacteriuria; that is, positive urine cultures without clinical symptoms, at TOC (21.1 percent), suggesting that the higher microbiological eradication rate at the TOC visit in Plazomicin-treated patients decreased the risk of subsequent clinical relapse. Plazomicin decreased recurrent infection by four-fold compared to meropenem, suggesting improved patient outcomes, such as reduced need for additional therapy and rehospitalization for patients who have been diagnosed with cUTI. The safety profile of Plazomicin compared to meropenem was similar. The applicant noted that higher bacteria eradication results for Plazomicin were not due to meropenem resistance, as only patients with isolates susceptible to both drugs were included in the study. According to the applicant, the EPIC clinical trial results demonstrate clear differentiation of Plazomicin from meropenem, an agent considered by some as a goldstandard for treatment of patients who have been diagnosed with cUTI in cases due to resistant pathogens. While the EPIC clinical trial was a non-inferiority study, the applicant contended that statistically significant improved outcomes and lower clinical relapse rates for patients treated with Plazomicin demonstrate that Plazomicin meets the substantial clinical E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20324 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules improvement criterion for the cUTI indication. Specifically, according to the applicant, the efficacy results for Plazomicin combined with a generally favorable safety profile provide a compelling benefit-risk profile for patients who have been diagnosed with cUTI, and particularly those with infections due to resistant pathogens. Most patients enrolled in the EPIC clinical trial were from Eastern Europe. It is unclear how generalizable these results would be to patients in the United States as the susceptibilities of bacteria vary greatly by location. The applicant maintains that this is consistent with prior studies and is unlikely to have affected the results of the study because the pharmacokinetics of Plazomicin and meropenem are not expected to be affected by race or ethnicity. However, bacterial resistance can vary regionally and we are interested in how this data can be extrapolated to a majority of the U.S. population. It is also unknown how quickly resistance to Plazomicin might develop. Additionally, the microbiological breakdown of the bacteria is unknown without the full published results, and patients outside of the mMITT population were included when the applicant reported the statistically superior microbiological eradication rates of Enterobacteriaceae at TOC. We are concerned whether there is still statistical superiority of Plazomicin in the intended bacterial targets in the mMITT. Finally, because both Plazomicin and meropenem were also utilized in conjunction with levofloxacin, it is unclear to us whether combined antibiotic therapy will continue to be required in clinical practice, and how levofloxacin activity or resistance might affect the clinical outcome in both patient groups. We are inviting public comments on whether Plazomicin meets the substantial clinical improvement criterion for patients who have been diagnosed with BSI and cUTI, including with respect to whether Plazomicin constitutes a substantial clinical improvement for the treatment of patients who have been diagnosed with BSI who have limited or no alternative treatment options, and whether statistically better outcomes at test-ofcure visit, including higher eradication rates for ESBL-producing pathogens, and lower rate of subsequent clinical relapses constitute a substantial clinical improvement for patients who have been diagnosed with cUTI. We did not receive any public comments in response to the published notice in the Federal Register regarding the substantial clinical improvement VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 criterion for Plazomicin or at the New Technology Town Hall meeting. h. GIAPREZATM The La Jolla Pharmaceutical Company submitted an application for new technology add-on payments for GIAPREZATM for FY 2019. GIAPREZATM, a synthetic human angiotensin II, is administered through intravenous infusion to raise blood pressure in adult patients who have been diagnosed with septic or other distributive shock. The applicant stated that shock is a life-threatening critical condition characterized by the inability to maintain blood flow to vital tissues due to dangerously low blood pressure (hypotension). Shock can result in organ failure and imminent death, such that mortality is measured in hours and days rather than months or years. Standard therapy for shock currently uses fluid and vasopressors to raise the mean arterial pressure (MAP). The two classes of standard of care (SOC) vasopressors are catecholamines and vasopressins. Patients do not always respond to existing standard of care therapies. Therefore, a diagnosis of shock can be a difficult and costly condition to treat. According to the applicant, 35 percent of patients who are diagnosed with shock fail to respond to standard of care treatment options using catecholamines and go on to second-line treatment, which is typically vasopressin. Eighty percent of patients on vasopressin fail to respond and have no other alternative treatment options. The applicant estimated that CMS covered charges to treat patients who are diagnosed with vasodilatory shock who fail to respond to standard of care therapy are approximately 2 to 3 times greater than the costs of other conditions, such as acute myocardial infarction, heart failure, and pneumonia. According to the applicant, one-third of patients in the intensive care unit are affected by vasodilatory shock, with 745,000 patients who have been diagnosed with shock being treated annually, of whom approximately 80 percent are septic. With respect to the newness criterion, according to the applicant, the expanded access program (EAP), or FDA authorization for the ‘‘compassionate use’’ of an investigational drug outside of a clinical trial, was initiated August 8, 2017. GIAPREZATM was granted Priority Review status and received FDA approval on December 21, 2017, for the use in the treatment of adults who have been diagnosed with septic or other distributive shock as an intravenous infusion to increase blood pressure. We note that the applicant has submitted a PO 00000 Frm 00162 Fmt 4701 Sfmt 4702 request for approval for a unique ICD-10-PCS code for the administration of GIAPREZATM beginning in FY 2019. Currently, there are no ICD–10–PCS procedure codes to uniquely identify procedures involving GIAPREZATM. As discussed above, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and would not be considered ‘‘new’’ for purposes of new technology add-on payments. With regard to the first criterion, whether a product uses the same or a similar mechanism of action to achieve a therapeutic outcome, according to the applicant, GIAPREZATM is the first synthetic formulation of human angiotensin II, a naturally occurring peptide hormone in the human body. Angiotensin II is one of the major bioactive components of the reninangiotensin-aldosterone system (RAAS), which serves as one of the body’s central regulators of blood pressure. Angiotensin II increases blood pressure through vasoconstriction, increased aldosterone release, and renal control of fluid and electrolyte balance. Current therapies for the treatment of patients who have been diagnosed with shock do not leverage the RAAS. The applicant asserted that GIAPREZATM is a novel treatment with a unique mechanism of action relative to SOC treatments for patients who have been diagnosed with shock, which is adequate fluid resuscitation and vasopressors. Specifically, the two classes of SOC vasopressors are catecholamines like Norepinephrine, epinephrine, dopamine, and phenylephrine IV solutions, and vasopressins like Vasostrict® and vasopressin-sodium chloride IV solutions. Catecholamines leverage the sympathetic nervous system and vasopressin leverages the arginine-vasopressin system to regulate blood pressure. However, the third system that works to regulate blood pressure, the RAAS, is not currently leveraged by any available therapies to raise mean arterial pressure in the treatment of patients who have been diagnosed with shock. The applicant maintained that GIAPREZATM is the first synthetic human angiotensin II approved by the FDA and the only FDAapproved vasopressor that leverages the RAAS and, therefore, GIAPREZATM utilizes a different mechanism of action than currently available treatment options. The applicant explained that GIAPREZATM leverages the RAAS, which is a body system not used by existing vasopressors to raise blood pressure through inducing E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules vasoconstriction. We are concerned that GIAPREZATM’s general mechanism of action, increasing blood pressure by inducing vasoconstriction through binding to certain G-protein receptors to stimulate smooth muscle contraction, may be similar to that of norepinephrine, albeit leveraging a different body system. We are inviting public comments on whether GIAPREZATM uses a different mechanism of action to achieve a therapeutic outcome with respect to currently available treatment options, including comments or additional information regarding whether the mechanism of action used by GIAPREZATM is different from that of other treatment methods of stimulating vasoconstriction. With respect to the second criterion, whether a product is assigned to the same or a different MS–DRG, we believe that potential cases representing patients who may be eligible for treatment involving GIAPREZATM would be assigned to the same MS– DRGs as cases representing patients who receive SOC treatment for a diagnosis of shock. As explained below in the discussion of the cost criterion, the applicant believed that potential cases representing patients who may be eligible for treatment involving GIAPREZATM would be assigned to MS– DRGs that contain cases representing patients who have failed to respond to administration of fluid and vasopressor therapies. With respect to the third criterion, whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population, according to the applicant, once patients have failed treatment using catecholamines, treatment options for patients who have been diagnosed with severe septic or other distributive shock are limited. Agents that were previously available are each associated with their own adverse events (AEs). The applicant noted that primary options that have been investigated include vasopressin, corticosteroids, methylene blue, and blood purification techniques. Of these options, the applicant stated that only vasopressin has a recommendation as add on vasopressor therapy in current treatment guidelines, but the recommendations are listed as weak with moderate quality of evidence. According to the applicant, there is uncertainty regarding vasopressin’s effect on mortality due to mixed clinical trial results, and higher doses of vasopressin have been associated with cardiac, digital, and splanchnic ischemia. Therefore, the applicant VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 asserted that there is a significant unmet medical need for treatments for patients who have been diagnosed with septic or distributive shock who remain hypotensive, despite adequate fluid and vasopressor therapy and for medications that can provide catecholamine-sparing effects. The applicant also noted that there is currently no standard of care for addressing the clinical state of septic or other distributive shock experienced by patients who fail to respond to fluid and available vasopressor therapy. Additionally, no clinical evidence or consensus for treatments is available. Based on the applicant’s statements as summarized above, it appears that the applicant is asserting that GIAPREZATM provides a new therapeutic treatment option for critically-ill patients who have been diagnosed with shock who have limited options and worsening prognosis. However, we are concerned that GIAPREZATM may not offer a treatment option to a new patient population, specifically because the FDA approval for GIAPREZATM does not reserve the use of GIAPREZATM only as a last-line drug or adjunctive therapy for a subset of the patient population who have been diagnosed with shock who have failed to respond to standard of care treatment options. According to the FDA labeling, GIAPREZATM is a vasoconstrictor to increase blood pressure in adult patients who have been diagnosed with septic or other distributive shock. Patients who have been diagnosed with septic or other distributive shock are not a new patient population. Therefore, it appears that GIAPREZATM is used to treat the same or similar type of disease (a diagnosis of shock) and a similar patient population receiving SOC therapy for the treatment of shock. We are inviting public comments on whether GIAPREZATM meets the substantial similarity criteria and the newness criterion. With regard to the cost criterion, the applicant conducted an analysis for a narrower indication, patients who have been diagnosed with refractory shock who have failed to respond to standard of care vasopressors, and an analysis for a broader indication of all patients who have been diagnosed with septic or other distributive shock. We believe that only this broader analysis, which reflects the patient population for which the applicant’s technology is approved by the FDA, is relevant to demonstrate that the technology meets the cost criterion and, therefore, we are only summarizing this broader analysis below. In order to identify the range of MS–DRGs that potential cases PO 00000 Frm 00163 Fmt 4701 Sfmt 4702 20325 representing potential patients who may be eligible for treatment using GIAPREZATM may map to, the applicant used two separate analyses to identify the MS–DRGs for patients who have been diagnosed with shock or related diagnoses. The applicant also performed three sensitivity analyses on the MS– DRGs for each of the two selections: 100 Percent of the MS–DRGs, 80 percent of the MS–DRGs, and 25 percent of the MS–DRGs. Therefore, a total of six scenarios were included in the cost analysis. The first analysis (Scenario 1) selected the MS–DRGs most representative of the potential patient cases where treatment involving GIAPREZATM would have the greatest clinical impact and outcomes of improvement over present treatment options. The applicant searched for 28 different ICD–9–CM codes under this scenario. The second analysis (Scenario 2) used the 80 most relevant ICD–9–CM diagnosis codes based on the inclusion criteria of the GIAPREZATM Phase III clinical trial, ATHOS–3, and an additional 8 ICD–9–CM diagnosis codes for clinical presentation associated with vasodilatory or distributive shock patients failing fluid and standard of care therapy to capture any additional potential cases that may be applicable based on clinical presentations associated with this patient population. Among only the top quartile of potential patient cases, the single MS– DRG representative of most potential patient cases was MS–DRG 871 (Septicemia or Severe Sepsis without Mechanical Ventilation >96 Hours with MCC) for both ICD–9–CM diagnosis code selection scenarios, and in both selections, it accounted for a potential patient case percentage surpassing 25 percent. Because GIAPREZATM is not reserved exclusively as a last-line drug based on the FDA indication, the applicant removed 50 percent of drug charges for prior technologies or other charges associated with prior technologies from the unstandardized charges before standardization in order to account for other drugs that may be replaced by the use of GIAPREZATM. The applicant has not yet supplied CMS with pricing for GIAPREZATM and did not include charges for the new technology when conducting this analysis. For all analyses’ scenarios, the applicant standardized charges using the FY 2015 impact file and then inflated the charges to FY 2019 using an inflation factor of 15.4181 percent (or 1.154181) by multiplying the inflation factor of 1.098446 in the FY 2017 IPPS/ LTCH PPS final rule (81 FR 57286) by the inflation factor of 1.05074 in the FY 2018 IPPS/LTCH PPS final rule (82 FR E:\FR\FM\07MYP2.SGM 07MYP2 20326 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 38524). The final inflated average case-weighted standardized charge per case was calculated for each scenario and compared with the average caseweighted threshold amount for each group of MS–DRGs based on the thresholds in Table 10. Results of the analyses for each of the two code selection scenarios, each with three sensitivity analyses for a total of Number of MS–DRGs assessed Number of Medicare cases Cost Analysis Based on ICD–9–CM ICD–9–CM Diagnosis Code Selection (28 Codes): 100 Percent .................................................................. 80 Percent .................................................................... 25 Percent .................................................................... daltland on DSKBBV9HB2PROD with PROPOSALS2 ICD–9–CM Diagnosis Code Selection (88 Codes): 100 Percent .................................................................. 80 Percent .................................................................... 25 Percent .................................................................... The applicant maintained that, based on the Table 10 thresholds, the inflated average case-weighted standardized charge per case in the analyses exceeded the average case-weighted threshold amount. The applicant noted that the inflated average case-weighted standardized charge per case exceeds the average case-weighted threshold amount by at least $18,189, without the average per patient cost of the technology. As such, the applicant anticipated that the inclusion of the cost of GIAPREZATM, at any price point, would further increase charges above the average case-weighted threshold amount. Therefore, the applicant stated that the technology meets the cost criterion. We note that we are unsure whether the selection in both scenarios fully captures the broader indication for which the FDA approved the use of GIAPREZATM. We are inviting public comments on whether GIAPREZATM meets the cost criterion, including with respect to the concern we have raised. With respect to the substantial clinical improvement criterion, the applicant summarized that it believes that GIAPREZATM represents a substantial clinical improvement because it: (1) Addresses an unmet medical need for patients who have been diagnosed with septic or distributive shock that, despite standard of care vasopressors, are unable to maintain adequate mean arterial pressure; (2) is the only agent shown in randomized clinical trial to rapidly and sustainably achieve or maintain target blood pressure in patients who do not respond adequately to fluid and vasopressor therapy; (3) although not VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 120,966 96,102 66,980 466 52 1 164,892 131,690 67,016 154 Khanna, A., English, S.W., Wang, X.S., et al., ‘‘Angiotensin II for the treatment of vasodilatory shock,’’ [supplementary appendix] [published online ahead of print May 21, 2017], N Engl J Med., 2017, doi: 10.1056/NEJMoa1704154. Frm 00164 Fmt 4701 Final average inflated standardized charge per case Amount exceeded threshold $77,427 77,641 53,499 $77,427 100,167 71,951 $34,095 22,526 18,452 112,174 108,396 71,688 33,499 28,664 18,189 Diagnosis Code Scenario 2 powered for mortality, the ATHOS–3 trial demonstrated a strong trend to reduce the risk of death in adults from septic or distributive shock who remain hypotensive despite fluid therapy and vasopressor therapy, a severe, lifethreatening condition, for which there are no other therapies; (4) provides a catecholamine-sparing effect; and (5) is generally safe and well-tolerated, with no significant differences in the percentages of patients with any grade adverse events or serious adverse events when compared to placebo. With regard to expanding on the statements above, the applicant believes that the use of GIAPREZATM offers clinicians a significant new tool to manage and treat severe hypotension in all adult patients who have been diagnosed with septic or other distributive shock who are unresponsive to existing vasopressor therapies. The applicant also stated that the use of GIAPREZATM provides a new therapeutic option for critically-ill adult patients who have been diagnosed with septic or other distributive shock who have limited options and worsening prognoses. The applicant maintained that GIAPREZATM was shown to be an effective treatment option for critically-ill patients who have been diagnosed with refractory shock. The applicant reported that a randomized, double-blind placebo controlled trial called ATHOS–3 154 examined the PO 00000 Caseweighted new technology add-on payment threshold Diagnosis Code Scenario 1 439 10 1 Cost Analysis Based on ICD–9–CM six analyses, are summarized in the tables below: Sfmt 4702 78,675 79,732 53,499 ability of GIAPREZATM to increase mean arterial pressure (MAP), with the primary endpoint being achievement of a MAP of greater than or equal to 75 mmHg (the research-backed guideline set by the Surviving Sepsis Campaign) or a 10 mmHg increase in baseline MAP. Significantly more patients in the treatment arm met the primary endpoint (69.9 percent versus 23.4 percent, P<0.001). The applicant asserted that this MAP improvement constitutes a significant substantial clinical improvement because patients treated with GIAPREZATM were three times more likely to achieve acceptable blood pressure than patients receiving the placebo. The MAP significantly and rapidly increased in patients treated with GIAPREZATM and was sustained over 48 hours consistent across subgroups and the treatment effect of GIAPREZATM was confirmed using multivariate analysis. The group treated with GIAPREZATM also experienced a greater mean increase in MAP; the MAP increased by a mean of 12.5 mmHg for the GIAPREZATM group compared to a mean of 2.9 mmHg for the placebo group. Second, the applicant maintained that GIAPREZATM demonstrated potential improvement in organ function by lowering the cardiovascular sequential organ failure assessment (SOFA) scores of patients at 48 hours (¥1.75 GIAPREZATM group versus ¥1.28 placebo group). However, we are concerned that lower cardiovascular SOFA scores may not demonstrate substantial clinical improvement because there was no difference in the improvement of other components of E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules the SOFA score or the overall SOFA score. Third, the applicant asserted that GIAPREZATM represents a substantial clinical improvement because the use of GIAPREZATM reduced the need to increase overall doses of catecholamine vasopressors. The applicant stated that patients receiving higher doses of catecholamine vasopressors suffer from cardiac toxicity, organ dysfunction, and other metabolic complications that are associated with higher mortality. By decreasing the overall dosage of catecholamine vasopressors, GIAPREZATM potentially reduces the adverse effects of vasopressors. The mean change in catecholamine vasopressors in patients receiving GIAPREZATM versus patients receiving the placebo at 3 hours was ¥0.03 versus 0.03 (P<0.001), showing that GIAPREZATM allowed for catecholamines to be titrated down, while patients not receiving GIAPREZATM required additional catecholamine doses. The vasopressor mean doses were consistently lower in the GIAPREZATM group, and at 48 hours, vasopressors had been discontinued in 28.5 percent of patients in the placebo group versus 40.5 percent of the GIAPREZATM group. We note that, while GIAPREZATM may potentially reduce certain adverse effects associated with SOC treatments, the FDA labeling cautions that the use of GIAPREZATM can cause dangerous blood clots with serious consequences (clots in arteries and veins, including deep venous thrombosis); according to the FDA label, prophylactic treatment for blood clots should be used. The applicant stated that while the study was not powered to detect mortality effects, there was a nonsignificant trend toward longer survival in the GIAPREZATM group. Overall mortality rates at 7 days and 8 days in the modified intent to treat (MITT) population were 22 percent less in the GIAPREZATM group than in the placebo group. At 28 days, the mortality rate in the placebo group was 54 percent versus 46 percent in the GIAPREZATM group. However, the p-values for the decrease in mortality with GIAPREZATM at 7 days, 8 days, and 28 days did not demonstrate statistical significance. The applicant concluded that GIAPREZATM is the first commercial product to increase blood pressure in adults who have been diagnosed with septic or other distributive shock that leverages the renin-angiotensinaldosterone system. The applicant stated that the results of the ATHOS–3 study provide support for a welltolerated new therapeutic agent that VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 demonstrates significant improvements in mean arterial pressure. Additionally, the applicant noted that hypotension in adults who have been diagnosed with septic or other distributive shock is a prevalent life-threatening condition where therapeutic options are limited and a high unmet medical need exists. The applicant stated that the use of GIAPREZATM will represent a safe and effective new therapy that not only leverages a system that current therapies are not utilizing, but also offers a viable alternative where one does not exist. We understand that, in this heterogeneous and difficult to treat patient population, studies assessing mortality as a primary endpoint are difficult, and as such, surrogate endpoints (that is, achieving baseline MAP) have been explored to assess the efficacy of treatments. While the outcomes presented by the applicant, such as achieving target MAP, lower SOFA scores, and reduced catecholamine usage, could be surrogates for clinical outcomes in these patients, there is not a strong pool of evidence connecting these single data points directly with morbidity and mortality. Therefore, we are unsure whether achieving target MAP, lower SOFA scores, and reduced catecholamine usage represents a substantial clinical improvement or instead short-term, temporary improvements without a change in overall patient prognosis. In response to this concern about MAP constituting a meaningful measure for substantial clinical improvement, the applicant supplied additional information from the current Surviving Sepsis guidelines, which recommend an initial target MAP of 65 mmHg. The applicant explained that as MAP falls below a critical threshold, inadequate tissue perfusion occurs, potentially resulting in multiple organ dysfunction and death. Therefore, early and adequate hemodynamic support and treatment of hypotension is critical to restore adequate organ perfusion and prevent worsening organ dysfunction and failure. In diagnoses of septic or distributive shock, the goal of treatment is to increase and maintain a threshold MAP in order to improve tissue perfusion. According to the applicant, tissue perfusion becomes linearly dependent on arterial pressure below a threshold MAP. In patients who have been diagnosed with septic shock requiring vasopressors, the current Surviving Sepsis guidelines are based on available evidence that demonstrates that adequate MAP is important to clinical outcomes and that prolonged decreases in MAP below 65 mmHg is PO 00000 Frm 00165 Fmt 4701 Sfmt 4702 20327 associated with poor outcome. According to information supplied by the applicant, even short durations like less than 5 minutes of low MAP have been associated with severe outcomes, such as myocardial infarction, stroke, and acute kidney injury. The applicant stated that a retrospective study 155 found that MAP was independently related to ICU and hospital mortality in patients with severe sepsis or septic shock. Finally, we are concerned that the study results may demonstrate substantial clinical improvement only for patients who are unresponsive to the administration of fluids and vasopressors because patients were only included in the ATHOS–3 study if they failed fluids and vasopressors, rather than for the broader patient population of adult patients who have been diagnosed with septic or other distributive shock for which GIAPREZATM was approved by the FDA for use as an available treatment option. The applicant continues to maintain that the use of GIAPREZATM has significant efficacy in improving blood pressure for patients who have been diagnosed with distributive shock, while decreasing adrenergic vasopressor usage, thereby, providing another avenue for therapy in this difficult to treat patient population. However, we are still concerned that the results from the clinical trial may be too narrow to accurately represent the entire patient population that has been diagnosed with septic or other distributive shock and, therefore, we are concerned that the clinical trial’s results may not adequately demonstrate that GIAPREZATM is a substantial clinical improvement over existing therapies for all the patients for whom the treatment option is indicated. We are inviting public comments on whether GIAPREZATM meets the substantial clinical improvement criterion. We did not receive any public comments in response to the published notice in the Federal Register regarding the substantial clinical improvement criterion for GIAPREZATM or at the New Technology Town Hall meeting. i. GammaTileTM Isoray Medical, Inc. and GT Medical Technologies, Inc. submitted an application for new technology add-on payments for FY 2019 for the GammaTileTM. (We note that Isoray 155 Walsh, M., Devereaux, P.J., Garg, A.X., et al., ‘‘Relationship between Intraoperative Mean Arterial Pressure and Clinical Outcomes after Noncardiac Surgery Toward an Empirical Definition of Hypotension,’’ Anesthesiology, 2013, vol. 119(3), pp. 507–515. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20328 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules Medical, Inc. and GammaTile, LLC previously submitted an application for new technology add-on payments for GammaTileTM for FY 2018, which was withdrawn prior to the issuance of the FY 2018 IPPS/LTCH PPS final rule.) The GammaTileTM is a brachytherapy technology for use in the treatment of patients who have been diagnosed with brain tumors, which uses cesium-131 radioactive sources embedded in a collagen matrix. GammaTileTM is designed to provide adjuvant radiation therapy to eliminate remaining tumor cells in patients who required surgical resection of brain tumors. According to the applicant, the GammaTileTM technology is a new vehicle of delivery for and inclusive of cesium-131 brachytherapy sources embedded within the product. The applicant stated that the technology has been manufactured for use in the setting of a craniotomy resection site where there is a high chance of local recurrence of a CNS or dual-based tumor. The applicant asserted that the use of the GammaTileTM technology provides a new, unique modality for treating patients who require radiation therapy to augment surgical resection of malignancies of the brain. By offsetting the radiation sources with a 3 mm gap of a collagen matrix, the applicant asserted that the use of the GammaTileTM technology resolves issues with ‘‘hot’’ and ‘‘cold’’ spots associated with brachytherapy, improves safety, and potentially offers a treatment option for patients with limited, or no other, available options. The GammaTileTM is biocompatible and bioabsorbable, and is left in the body permanently without need for future surgical removal. The applicant asserted that the commercial manufacturing of the product will significantly improve on the process of constructing customized implants with greater speed, efficiency, and accuracy than is currently available, and requires less surgical expertise in placement of the radioactive sources, allowing a greater number of surgeons to utilize brachytherapy techniques in a wider variety of hospital settings. The applicant for the GammaTileTM technology anticipates FDA clearance by the spring of 2018. In its application, the applicant indicated that it anticipated that the product would be cleared by the FDA for use in both the primary and salvage treatment of radiosensitive malignances of the brain. However, in discussions with the applicant, the applicant indicated that it is only anticipating FDA clearance for use in the salvage treatment of recurrent VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 radiosensitive malignances of the brain. The applicant submitted a request for approval for a unique ICD–10–PCS code for the use of the GammaTileTM technology, which was approved effective October 1, 2017 (FY 2018). The ICD–10–PCS code used to identify procedures involving the use of the GammaTileTM technology is 00H004Z (Insertion of radioactive element, cesium-131 collagen implant into brain, open approach). As discussed earlier, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and would not be considered ‘‘new’’ for purposes of new technology add-on payments. With regard to the first criterion, whether a product uses the same or a similar mechanism of action to achieve a therapeutic outcome, the applicant stated that when compared to treatment using external beam radiation therapy, GammaTileTM uses a new and unique mechanism of action to achieve a therapeutic outcome. The applicant explained that the GammaTileTM technology is fundamentally different in structure, function, and safety from all external beam radiation therapies, and delivers treatment through a different mechanism of action. In contrast to external beam radiation modalities, the applicant further explained that the GammaTileTM is a form of internal radiation termed brachytherapy. Brachytherapy treatments are performed using radiation sources positioned very close to the area requiring radiation treatment and only deliver radiation to the tissues that are immediately adjacent to the margin of the surgical resection. For this reason, brachytherapy is a current standard of care treatment for many non-central nervous system tumors, including breast, cervical, and prostate cancers. Due to the custom positioning of the radiological sources and the use of the cesium-131 isotope, the applicant noted that the GammaTileTM technology focuses therapeutic levels of radiation on an extremely small area of the brain. Unlike all external beam techniques, the applicant stated that this radiation does not pass externally inward through the skull and healthy areas of the brain to reach the targeted tissue and, therefore, may limit neurocognitive deficits seen with the use of external beam techniques. Because of the rapid reduction in radiation intensity that is characteristic of cesium-131, the applicant asserted that the GammaTileTM technology can target the margin of the excision with greater precision than any alternative treatment PO 00000 Frm 00166 Fmt 4701 Sfmt 4702 option, while sparing healthy brain tissue from unnecessary and potentially damaging radiation exposure. The applicant also stated that, when compared to other types of brain brachytherapy, GammaTileTM uses a new and unique mechanism of action to achieve a therapeutic outcome. The applicant explained that cancerous cells at the margins of a tumor resection cavity can also be irradiated with the placement of brachytherapy sources in the tumor cavity. However, the applicant asserted that the GammaTileTM technology is a pioneering form of brachytherapy for the treatment of brain tumors that uses the isotope cesium-131 embedded in a collagen implant that is customized to the geometry of the brain cavity. According to the applicant, use of cesium-131 and the custom distribution of seeds in a three-dimensional collagen device result in a unique and highly effective delivery of radiation therapy to brain tissue. With regard to the second criterion, whether a product is assigned to the same or a different MS–DRG, the GammaTileTM technology is a treatment option for patients who have been diagnosed with brain tumors that progress locally after initial treatment with external beam radiation therapy, and potential cases representing patients that may be eligible for treatment involving this technology are assigned to the same MS–DRG (MS– DRG 23 (Craniotomy with Major Device Implant/Acute Complex CNS PDX with MCC or Chemotherapy Implant)) as other current treatment forms of brachytherapy and external beam radiation therapy. With regard to the third criterion, whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population, the applicant stated that the GammaTileTM technology offers a treatment option for a patient population with limited, or no other, available treatment options. The applicant explained that treatment options for patients who have been diagnosed with brain tumors that progress locally after initial treatment with external beam radiation therapy are limited, and there is no current standard of care in this setting. According to the applicant, surgery alone for recurrent tumors may provide symptom relief, but does not remove all of the cancer cells. The applicant further stated that repeating external beam radiation therapy for adjuvant treatment is hampered by an increasing risk of brain injury because additional external beam radiation therapy will increase the E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules total dose of radiation to brain tissue, as well as increase the total volume of irradiated brain tissue. Secondary treatment with external beam radiation therapy is often performed with a reduced and, therefore, less effective dose. The applicant stated that the technique of implanting cesium-131 seeds in a collagen matrix is currently only available to patients in one location, and requires a high degree of expertise to implant. The manufacturing process of the GammaTileTM will greatly expand the availability of treatment beyond research programs at highly specialized cancer treatment centers. Based on the above, the applicant concluded that the GammaTileTM technology is not substantially similar to other existing technologies and meets the newness criterion. However, we are concerned that the mechanism of action of the GammaTileTM may be the same or similar to current forms or radiation or brachytherapy. Specifically, while the placement of the cesium-131 source (or any radioactive source) in a collagen matrix offset may constitute a new delivery vehicle, we are concerned that this sort of improvement in brachytherapy for the use in the salvage treatment of radiosensitive malignancies of the brain may not represent a new mechanism of action. We are inviting public comments on whether GammaTileTM meets the substantial similarity criteria and the newness criterion. With regard to the cost criterion, the applicant conducted the following analysis. The applicant worked with the Barrow Neurological Institute at St. Joseph’s Hospital and Medical Center (St. Joseph’s) to obtain actual claims from mid-2015 through mid-2016 for craniotomies that did not involve placement of the GammaTileTM technology. The cases were assigned to MS–DRGs 25 through 27 (Craniotomy and Endovascular Intracranial Procedures with MCC, with CC, and without CC/MCC, respectively). For the 460 claims, the average case-weighted unstandardized charge per case was $143,831. The applicant standardized the charges for each case and inflated each case’s charges by applying the FY 2017 IPPS/LTCH PPS final rule outlier charge inflation factor of 1.05074 by the age of each case (that is, the factor was applied to 2015 claims 3 times and 2016 claims 2 times). The applicant then calculated an estimate for ancillary charges associated with placement of the GammaTileTM device, as well as standardized charges for the GammaTileTM device itself. The applicant determined it meets the cost VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 criterion because the final inflated average case-weighted standardized charge per case (including the charges associated with the GammaTileTM device) of $246,310 exceeds the average case-weighted threshold amount of $141,249 for MS–DRG 23, the MS–DRG that would be assigned for cases involving placement of the GammaTileTM device. The applicant also noted that its analysis does not include a reduction in costs due to reduced operating room times. The applicant stated that there is significant time and workload associated with assembling the device, and codes billed for this work are paid at a flat rate. We are inviting public comments on whether the GammaTileTM technology meets the cost criterion. With regard to substantial clinical improvement, the applicant stated that the GammaTileTM technology offers a treatment option for a patient population unresponsive to, or ineligible for, currently available treatments for recurrent CNS malignancies and significantly improves clinical outcomes when compared to currently available treatment options. The applicant explained that therapeutic options for patients who have been diagnosed with large or recurrent brain metastases are limited. However, according to the applicant, the GammaTileTM technology provides a treatment option for patients who have been diagnosed with radiosensitive recurrent brain tumors that are not eligible for treatment with any other currently available treatment option. Specifically, the applicant stated that the GammaTileTM device may provide the only radiation treatment option for patients who have been diagnosed with tumors located close to sensitive vital brain sites (for example, brain stem) and patients who have been diagnosed with recurrent brain tumors who may not be eligible for additional treatment involving the use of external beam radiation therapy. There is a lifetime limit for the amount of radiation therapy a specific area of the body can receive. Patients whose previous treatment includes external beam radiation therapy may be precluded from receiving high doses of radiation associated with subsequent external beam radiation therapy, and the GammaTileTM technology can also be used to treat tumors that are too large for treatment with external beam radiation therapy. Patients who have been diagnosed with these large tumors are not eligible for treatment with external beam radiation therapy because the PO 00000 Frm 00167 Fmt 4701 Sfmt 4702 20329 radiation dose to healthy brain tissue would be too high. The applicant described how the GammaTileTM technology improves clinical outcomes compared to existing treatment options, including external beam radiation therapy and other forms of brain brachytherapy. To demonstrate that the GammaTileTM technology represents a substantial clinical improvement over existing technologies, the applicant submitted data from three abstracts (described below), with one associated paper demonstrating feasibility or superior progression-free survival compared to the patient’s own historical control rate. In a presentation at the Society for Neuro-Oncology in November 2014 (Dardis, Christopher; Surgery and permanent intraoperative brachytherapy improves time to progression of recurrent intracranial neoplasms), the outcomes of 20 patients who were diagnosed with 27 tumors covering a variety of histological types treated with the GammaTileTM prototype were presented. The applicant noted the following with regard to the patients: (1) All tumors were intracranial, supratentorial masses and included low and high-grade meningiomas, metastases from various primary cancers, high-grade gliomas, and others; (2) all treated masses were recurrent following treatment with surgery and/or radiation and the group averaged two prior craniotomies and two prior courses of external beam radiation treatment; and (3) following surgical excision, the prototype GammaTileTM were placed in the resection cavity to deliver a dose of 60 Gray to a depth of 5 mm of tissue; and all patients had previously experienced re-growth of their tumors at the site of treatment and the local control rate of patients entering the study was 0 percent. With regard to outcomes, the applicant stated that, after their initial treatment, patients had a median progression-free survival time of 5.8 months; post treatment with the prototype GammaTileTM, at the time of this analysis, only 1 patient had progressed at the treatment site, for a local control rate of 96 percent; and median progression-free survival time, a measure of how long a patient lives without recurrence of the treated tumor, has not been reached (as this value can only be calculated when more than 50 percent of treated patients have failed the prescribed treatment). A second set of outcomes on the prototype GammaTileTM was presented at the Society for Neuro-Oncology Conference on Meningioma in June 2016 (Brachman, David; Surgery and E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20330 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules permanent intraoperative brachytherapy improves time to progress of recurrent intracranial neoplasms). This study enrolled 16 patients with 20 recurrent grade 2 or 3 meningiomas, who had undergone prior surgical excision external beam radiation therapy. These patients underwent surgical excision of the tumor, followed by adjuvant radiation therapy with the prototype GammaTileTM. The applicant noted the following outcomes: (1) Of the 20 treated tumors, 19 showed no evidence of radiographic progression at last follow-up, yielding a local control rate of 95 percent; 2 of the 20 patients exhibited radiation necrosis (1 symptomatic, 1 asymptomatic); and (2) the median time to failure from the prior treatment with external beam radiation therapy was 10.3 months and after treatment with the prototype GammaTileTM only 1 patient failed at 18.2 months. Therefore, the median treatment site progression-free survival time after the prototype GammaTileTM treatment has not yet been reached (average follow-up of 16.7 months, range 1 to 37 months). A third prospective study was accepted for presentation at the November 2016 Society for NeuroOncology annual meeting (Youssef, Emad; Cs131 implants for salvage therapy of recurrent high grade gliomas). In this study, 13 patients who were diagnosed with recurrent high-grade gliomas (9 with glioblastoma and 4 with grade 3 astrocytoma) were treated in an identical manner to the cases described above. Previously, all patients had failed the international standard treatment for high-grade glioma, a combination of surgery, radiation therapy, and chemotherapy referred to as the ‘‘Stupp regimen.’’ For the prior therapy, the median time to failure was 9.2 months (range 1 to 40 months). After therapy with a prototype GammaTileTM, the applicant noted the following: (1) The median time to same site local failure has not been reached and 1 failure was seen at 18 months (local control 92 percent); and (2) with a median follow-up time of 8.1 months (range 1 to 23 months) 1 symptomatic patient (8 percent) and 2 asymptomatic patients (15 percent) had radiationrelated MRI changes. However, no patients required re-operation for radiation necrosis or wound breakdown. Dr. Youssef was accepted to present at the 2017 Society for Neuro-Oncology annual meeting, where he provided an update of 58 tumors treated with the GammaTileTM technology. At a median whole group follow-up of 10.8 months, 12 patients (20 percent) had a local VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 recurrence at an average of 11.33 months after implant. Six and 18 month recurrence free survival was 90 percent and 65 percent, respectively. Five patients had complications, at a rate that was equal to or lower than rates previously published for patients without access to the GammaTileTM technology. The applicant also included discussion of a presentation by D.S. Pinnaduwage, Ph.D., at the August 2017 annual meeting of the American Association of Physicists in Medicine. Dr. Pinnaduwage compared the brain radiation dose of the GammaTileTM technology with other radioactive seed sources. Iodine-125 and palladium-103 were substituted in place of the cesium131 seeds. The study reported findings that other radioactive sources reported higher rates of radiation necrosis and that ‘‘hot spots’’ increased with larger tumor size, further limiting the use of these isotopes. The study concluded that the larger high-dose volume with palladium-103 and iodine-125 potentially increases the risk for radiation necrosis, and the inhomogeneity becomes more pronounced with increasing target volume. The applicant asserted that, when considered in total, the data reported in these three studies support the conclusion that a significant therapeutic effect results from the addition of GammaTileTM radiation therapy to the site of surgical removal. According to the applicant, the fact that these patients had failed prior best available treatments (aggressive surgical and adjuvant radiation management) presents the unusual scenario of a salvage therapy outperforming the current standard-of-care. The applicant noted that follow-up data continues to accrue on these patients. The applicant stated that the use of the GammaTileTM technology reduces rates of mortality compared to alternative treatment options. The applicant explained that studies on the GammaTileTM technology have shown improved local control of tumor recurrence. According to the applicant, the results of these studies showed local control rates of 92 percent to 96 percent for tumor sites that had local control rates of 0 percent from previous treatment. The applicant noted that these studies also have not reached median progression-free survival time with follow-up times ranging from 1 to 37 months. Previous treatment at these same sites resulted in median progression-free survival times of 5.8 to 10.3 months. PO 00000 Frm 00168 Fmt 4701 Sfmt 4702 The applicant further stated that the use of the GammaTileTM technology reduces rates of radiation necrosis compared to alternative treatment options. The applicant explained that the rate of symptomatic radiation necrosis in the GammaTileTM clinical studies of 5 to 8 percent is substantially lower than the 26 percent to 57 percent rate of symptomatic radiation necrosis requiring re-operation historically associated with brain brachytherapy, and lower than the rates reported for initial treatment of similar tumors with modern external beam and stereotactic radiation techniques. The applicant indicated that this is consistent with the customized and ideal distribution of radiation therapy provided by the GammaTileTM technology. The applicant also asserted that the use of GammaTileTM technology reduces the need for re-operation compared to alternative treatment options. The applicant explained that patients receiving a craniotomy, followed by external beam radiation therapy or brachytherapy, could require reoperation in the following three scenarios: • Tumor recurrence at the excision site could require additional surgical removal; • Symptomatic radiation necrosis could require excision of the affected tissue; and • Certain forms of brain brachytherapy require the removal of brachytherapy sources after a given period of time. However, according to the applicant, because of the high local control rates, low rates of symptomatic radiation necrosis, and short half-life of cesium131, the GammaTileTM technology will reduce the need for re-operation compared to external beam radiation therapy and other forms of brain brachytherapy. Additionally, the applicant stated that the use of GammaTileTM technology reduces the need for additional hospital visits and procedures compared to alternative treatment options. The applicant noted that the GammaTileTM technology is placed during surgery, and does not require any additional visits or procedures. The applicant contrasted this improvement with external beam radiation therapy, which is often delivered in multiple fractions that must be administered over multiple days. The applicant provided an example where whole brain radiotherapy (WBRT) is delivered over 2 to 3 weeks, while the placement of the GammaTileTM technology occurs during the craniotomy and does not add any time to a patient’s recovery. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules The applicant further summarized how the GammaTileTM technology is a substantial clinical improvement over existing treatment options as: (1) Providing a treatment option for patients with no other available treatment options; (2) reducing rate of mortality compared to alternative treatment options; (3) reducing rate of radiation necrosis; (4) reducing the need for re-operation; (5) reducing the need for additional hospital visits and procedures; and (6) providing more rapid beneficial resolution of the disease process treatment. Based on consideration of all of the data presented above, the applicant believed that the use of the GammaTileTM technology represents a substantial clinical improvement over existing technologies. The studies were limited to patients who have been diagnosed with recurrent tumors after previous surgical resection. As previously discussed, the applicant explained that it is anticipating FDA clearance for the use of the GammaTileTM only in the treatment of recurrent malignancies. We are concerned with the limited nature of the clinical efficacy and safety data provided by the applicant. The findings presented appear to be derived from relatively small case-studies. While the applicant described increases in median time to disease recurrence in support of improvement, we are concerned with regard to the lack of analysis, meta-analysis, or statistical tests that indicated that seeded brachytherapy procedures represented a statistically significant improvement over alternative treatments, as limited as they may be. We also are concerned with the lack of studies involving the actual manufactured device. In addition, we are concerned that the applicant referenced various findings in its application, but did not include relevant reference materials to substantiate those findings. For instance, the applicant made statements regarding the low complication rates with the use of GammaTileTM prototypes, without any discussion of average rates with comparison to other alternative treatments. We are inviting public comments on whether GammaTileTM meets the substantial clinical improvement criterion. We did not receive any public comments on the GammaTileTM technology in response to the published notice in the Federal Register or at the New Technology Town Hall Meeting. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 j. Supersaturated Oxygen (SSO2) Therapy (DownStream® System) TherOx, Inc. submitted an application for new technology add-on payments for the Supersaturated Oxygen (SSO2) Therapy (the DownStream® System) for FY 2019. The DownStream® System is an adjunctive therapy designed to ameliorate progressive myocardial necrosis by minimizing microvascular damage in patients who have received treatment for a diagnosis of acute myocardial infarction (AMI) following percutaneous intervention (PCI) with coronary artery stent placement. The applicant stated that, while contemporary therapies for patients who have received treatment for a diagnosis of AMI have focused on relieving blockages and improving blood flow to the diseased myocardium, little has been done to provide localized hyperbaric oxygen to ischemic tissue. According to the applicant, patients who have received treatment for a diagnosis of AMI are at high risk for reduced quality of life, heart failure, and higher mortality as a result of the extent of necrosis or infarct size experienced in the myocardium during the infarction. The applicant asserted that the net effect of the SSO2 Therapy is to reduce the infarct size and, therefore, preserve heart muscle. The SSO2 Therapy consists of three main components: the DownStream® System; the DownStream cartridge; and the SSO2 delivery catheter. The DownStream® System and cartridge function together to create an oxygenenriched saline solution called SSO2 solution from hospital-supplied oxygen and physiologic saline. A small amount of the patient’s blood is then mixed with the SSO2 solution, producing oxygenenriched hyperoxemic blood, which is then delivered to the left main coronary artery (LMCA) via the delivery catheter at a flow rate of 100 ml/min. The duration of the SSO2 Therapy is 60 minutes and the infusion is performed in the catheterization laboratory. The oxygen partial pressure (pO2) of the infusion is elevated to ∼1,000 mmHg, therefore providing oxygen locally to the myocardium at a hyperbaric level for 1 hour. After the 60-minute SSO2 infusion is complete, the cartridge is unhooked from the patient and discarded per standard practice. Coronary angiography is performed as a final step before removing the delivery catheter and transferring the patient to the intensive care unit (ICU). According to the applicant, the SSO2 Therapy has been designated as a Class III medical device (high risk) by the FDA. The applicant indicated that it PO 00000 Frm 00169 Fmt 4701 Sfmt 4702 20331 expects to receive pre-market approval from the FDA in the first quarter of 2018. The applicant asserted that use of the SSO2 Therapy can be identified by the ICD–10–PCS procedure codes 5A0512C (Extracorporeal supersaturated oxygenation, intermittent) and 5A0522C (Extracorporeal supersaturated oxygenation, continuous). As discussed earlier, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and would not be considered ‘‘new’’ for purposes of new technology add-on payments. According to the applicant, the SSO2 Therapy is administered adjunctively immediately following completion of successful PCI. The applicant maintained that currently available treatment options for patients who have been diagnosed and begun initial treatment for AMI involve the revascularization of the blocked coronary artery by means of either thrombolytic therapy or PCI with stent placement accompanied by the administration of adjunctive pharmacologic agents such as glycoprotein IIb/IIIa inhibitors, or via coronary artery bypass graft (CABG) surgery. The applicant asserted that because there are no other approved therapies for patients who have been diagnosed with AMI post-PCI, the SSO2 Therapy meets the newness criterion. Below we evaluate the applicant’s assertions with respect to whether the SSO2 Therapy meets each of the three substantial similarity criteria. With regard to the first criterion, whether a product uses the same or a similar mechanism of action to achieve a therapeutic outcome, according to the applicant, the SSO2 Therapy employs two mechanisms of action: (1) First, the increased oxygen levels re-open the microcirculatory system within the infarct zone, which has experienced ischemia during the occlusion period; and (2) second, once reopened, the blood flow contains additional oxygen to restart the metabolic processes within the stunned myocardium. The applicant asserted that these mechanisms have been studied in preclinical investigations sponsored by the applicant, where controlled studies were performed in both porcine and canine AMI models to determine the safety, effectiveness, and mechanism of action of the SSO2 Therapy. According to the applicant, the findings of these studies demonstrated improved left ventricular function, infarct size reduction, a microvascular mechanism of action, and that the SSO2 Therapy is nontoxic. Based on the information provided by the applicant, current E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20332 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules treatment options for patients who have been diagnosed and receive treatment for AMI function to restore coronary artery blood flow, which addresses macrovascular disease but not the underlying cellular changes resulting from hypoxia. The applicant maintains that currently available treatment options for patients who have been diagnosed and receive treatment for AMI do not treat hypoxemic damage at the microvascular or microcirculatory level, and that SSO2 Therapy does not use the same or a similar mechanism of action as any existing treatment available for patients who have been diagnosed and receive treatment for a diagnosis of AMI. With respect to the second criterion, whether a product is assigned to the same or a different MS–DRG, we believe that potential cases involving the SSO2 Therapy may be assigned to the same MS–DRG(s) as other cases involving PCI with stent placement also used to treat patients who have been diagnosed with AMI. With respect to the third criterion, whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population, the applicant asserted that, in spite of many advances and refinements in PCI for reopening the blocked coronary artery, patients who have been diagnosed and receiving treatment for AMI are at high risk for reduced quality of life, heart failure, and higher mortality, as a result of the extent of necrosis experienced in the myocardium during the infarction. According to the applicant, patients who have been diagnosed with and receiving treatment for AMI continue to experience elevated early and late Major Adverse Cardiac Events (MACE), as well as a higher risk for congestive heart failure (CHF) development. The applicant made the following assertions: The net effect of the SSO2 Therapy is to reduce the infarct size, or extent of necrosis, in the myocardium post-AMI and, therefore, improve left ventricular function, leading to improved patient outcomes; there are no other approved therapies for patients who have been diagnosed with and receive treatment for AMI post-PCI and submitted data evaluating the SSO2 Therapy directly as compared to the currently available standard of care, PCI with stenting alone; and SSO2 Therapy’s emphasis is on treating patients who have been diagnosed with AMI at the microvascular level instead of reopening the blocked coronary artery at the macrovascular level as with other treatments and that it, therefore, treats a different type of disease than currently VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 available treatment options for patients who have been diagnosed with and receive treatment for AMI. We are inviting public comments on whether the SSO2 Therapy is substantially similar to existing technologies and whether it meets the newness criterion. With regard to the cost criterion, the applicant conducted the following analysis to demonstrate that the technology meets the cost criterion. In order to identify the range of MS–DRGs to which potential cases representing potential patients who may be eligible for treatment involving the SSO2 Therapy may map, the applicant identified all MS–DRGs for cases of patients who have been diagnosed with anterior STEMI as a principal diagnosis. Specifically, the applicant searched the FY 2016 MedPAR file for claims reporting diagnoses of anterior STEMI by ICD–10–CM diagnosis codes I21.0 (ST elevation myocardial infarction of anterior wall), I21.01 (ST elevation (STEMI) myocardial infarction involving left main coronary artery), I21.02 (ST elevation (STEMI) myocardial infarction involving left anterior descending coronary artery), or I21.09 (ST elevation (STEMI) myocardial infarction involving other coronary artery of anterior wall) as a primary diagnosis. The applicant identified 11,030 potential cases across 4 MS–DRGs, with approximately 86 percent of all potential cases mapping to the following 2 MS–DRGs: MS–DRG 246 (Percutaneous Cardiovascular Procedures with Drug-Eluting Stent with MCC or 4+ Vessels/Stents) and MS–DRG 247 (Percutaneous Cardiovascular Procedures with DrugEluting Stent without MCC). The remaining 14 percent of potential cases mapped to MS–DRG 248 (Percutaneous Cardiovascular Procedures with NonDrug Eluting Stent with MCC or 4+ Vessels/Stents) and MS–DRG 249 (Percutaneous Cardiovascular Procedures with Non-Drug-Eluting Stent without MCC). Using the 11,030 identified cases, the applicant determined that the average unstandardized case-weighted charge per case was $94,290. The applicant then standardized the charges. The applicant did not remove charges for the current treatment because, as discussed above, the SSO2 Therapy will be used as an adjunctive treatment option following successful PCI with stent placement. The applicant then applied the inflation factor of 1.05074 from the FY 2018 IPPS/LTCH PPS final rule (82 FR 38524) 3 times to inflate the charges from FY 2016 to FY 2019. The applicant added charges related to the new PO 00000 Frm 00170 Fmt 4701 Sfmt 4702 technology, which accounts for the use of 1 cartridge per patient, as well as the 60 minutes of procedure time, to the average charges per case. Based on the FY 2018 IPPS/LTCH PPS final rule Table 10 threshold amounts, the average case-weighted threshold amount was $91,064. The inflated average caseweighted standardized charge per case was $146,974. Because the inflated average case-weighted standardized charge per case exceeds the average case-weighted threshold amount, the applicant maintained that the technology meets the cost criterion. We are inviting comments on whether or not the SSO2 Therapy meets the cost criterion. With regard to the substantial clinical improvement criterion, according to the applicant, the preferred standard of care for the treatment of patients who have been diagnosed with AMI involves the revascularization of the blocked coronary artery by means of PCI with stent placement, accompanied by the administration of adjunctive pharmacologic agents such as antiplatelet drugs, including glycoprotein IIb/IIIa inhibitors. The applicant stated that the clinical unmet need for these patients, particularly patients who have been diagnosed with anterior wall STEMI with the greatest potential impact to their ventricle, is to provide incremental therapeutic benefit beyond PCI with stenting to reduce the damage to their myocardium. The applicant believed that SSO2 Therapy fulfills this unmet clinical need in the treatment of patients who have been diagnosed with ST-elevation AMI by reducing infarct size as compared to the standard of care, PCI with stenting alone. The applicant asserted that, as an adjunctive treatment, the SSO2 Therapy has demonstrated superiority over PCI with stenting alone in reducing the infarct size for high-risk patients diagnosed with anterior AMI treated within 6 hours of symptom onset. The applicant also noted that the SSO2 Therapy has been shown to preserve left ventricular integrity as compared to patients who receive treatment involving PCI with stenting alone, utilizing direct measurements of left ventricular volume over the 30-day post-procedure period. The applicant noted that the quantification of the extent of necrosis or infarction in the muscle is the best physical measure of the consequences of AMI for patients in post-intervention, as the infarct size is the quantification of the extent of scarring of the left ventricle post-AMI and, therefore, provides a direct measure of the health of the E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules myocardium and indirectly on the heart’s structure and function. A large infarct means the muscle cannot contract normally, leading to left ventricular enlargement, reduced ejection fraction, clinical heart failure, and death. The applicant highlighted the importance of the SSO2 Therapy’s mechanism of action, which treats hypoxemic damage at the microvascular or microcirculatory level, by noting that the degree to which microvascular impairment in the myocardium is irreversible and unaffected by therapeutic intervention leads to a greater extent of infarction. Furthermore, the applicant noted that compromised microvascular flow remains a serious problem in STEMI care and leads to microvascular obstruction (MVO), which a recent study has shown to be an important independent predictor of mortality and heart failure (HF) hospitalization at 1 year. The applicant asserted that MVO is closely tied to the resultant damage or infarct size in patients diagnosed with acute STEMI and is of critical importance to address mechanistically in any treatment administered in conjunction to PCI, to effect an improved outcome in primary care. The applicant performed controlled studies in both porcine and canine AMI models to determine the safety, effectiveness, and mechanism of action of the SSO2 Therapy. The key summary points from these animal studies are: • The SSO2 Therapy administration post-AMI acutely improves heart function as measured by left ventricular ejection fraction (LVEF) and regional wall motion as compared with nontreated control subjects. • The SSO2 Therapy administration post-AMI results in tissue salvage, as determined by post-sacrifice histological measurements of the infarct size. Control animals exhibit larger infarcts than the SSO2-treated animals. • The SSO2 Therapy has been shown to be non-toxic to the coronary arteries, myocardium, and end organs in randomized, controlled swine studies with or without induced acute myocardial infarction. • The SSO2 Therapy administration post-AMI has exhibited regional myocardial blood flow improvement in treated animals as compared to controls. • A significant reduction in myeloperoxidase (MPO) levels was observed in the SSO2-treated animals versus controls, which indicate improvement in underlying myocardial hypoxia. • Transmission electron microscopy (TEM) photographs have shown amelioration of endothelial cell edema VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 and restoration of capillary patency in ischemic zone cross-sectional histological examination of the SSO2treated animals, while nontreated controls exhibit significant edema and vessel constriction at the microvascular level. The applicant also submitted results from five clinical studies that it asserted demonstrate the substantial clinical benefit associated with the SSO2 Therapy. These studies include the Phase I/IA feasibility trial, the European OYSTER–AMI study, the AMIHOT I and AMIHOT II randomized trials, and the IC–HOT clinical study. The Phase I/IA and OYSTER–AMI studies demonstrated that the SSO2 Therapy held promise in improving left ventricular function, especially in the infarct zone, for patients who have been diagnosed with and receiving treatment for AMI. Specifically, an IDE-sanctioned Phase I pilot study was conducted in the United States and Italy involving 29 patients who had been diagnosed with and receiving treatment involving the SSO2 Therapy for anterior AMI and found significant LV functional improvement over time as noted in the 2–D echocardiography analysis of the combined Phase I/IA data. Baseline measurements of ejection fraction (EF) and wall motion score index (WMSI) were taken immediately post-PCI prior to SSO2 Therapy administration. An improving trend in EF and significant improvement in WMSI were observed at 24-hours after SSO2 Therapy administration, and further improvement in ventricular function was demonstrated at 1 and 3 months compared to baseline. The analysis demonstrated that these improvements in global LV functional measures were due to recovery of ventricular function in the infarct zone; regional WMSI assessments showed no change in the noninfarct zone. Similar results were found in the European OYSTER–AMI trial, which assessed supersaturated oxygen in reperfused ST-elevation AMI, directing attention to 41 patients receiving treatment involving the SSO2 Therapy versus untreated controls. The study showed that the supersaturated oxygen treatment group had a significantly faster cardiac enzyme and ST segment elevation reduction, therefore suggesting an improvement in microvascular reperfusion. The SSO2 Therapy treatment group also showed a significantly better improvement in left ventricular wall motion and ejection fraction,156 which a number of studies 156 Bartorelli, A.L., ‘‘Hyperoxemic Perfusion for Treatment of Reperfusion Microvascular Ischemia PO 00000 Frm 00171 Fmt 4701 Sfmt 4702 20333 have shown to be directly related to mortality.157 The OYSTER–AMI study further suggested that the SSO2 Therapy reduces the infarct size, as demonstrated in reduced cardiac enzyme CK and CK– MB release. The AMIHOT I clinical trial was designed as a prospective, randomized evaluation of patients who had been diagnosed with and receiving treatment for AMI presenting within 24 hours of symptom onset, including both anterior and inferior patients diagnosed with AMI. The AMIHOT I trial was conducted with IDE approval from FDA. The study included 269 randomized patients, with 3 independent biomarkers (infarction size reduction, regional wall motion score improvement at 3 months, and reduction in ST segment elevation) designated as co-primary endpoints to evaluate the effectiveness of the SSO2 Therapy. The study was designed to demonstrate superiority of the SSO2 Therapy group as compared to controls for each of these endpoints, and to demonstrate non-inferiority of the SSO2 Therapy group as compared to control with respect to 30-day MACE. The study population was comprised of qualifying patients who had been diagnosed with AMI and receiving treatment with either PCI alone or with the SSO2 Therapy as an adjunct to successful PCI within 24 hours of symptom onset. According to the applicant, results for the control/ SSO2 Therapy group comparisons for the three co-primary effectiveness endpoints demonstrated a nominal improvement in the test group, although this nominal improvement did not achieve clinical and statistical significance in the entire population. A pre-specified analysis of the SSO2 Therapy patients who were revascularized within 6 hours of AMI symptom onset and who had anterior wall infarction showed a marked improvement in all three co-primary endpoints as compared to the control group. Key safety data revealed no statistically significant differences in the composite primary endpoint of 1-month (30 days) Major Adverse Cardiac Event (MACE) rates between the SSO2 Therapy and control groups. MACE includes the combined incidence of death, reinfarction, target vessel revascularization, and stroke. In total, 9/ 134 (6.7 percent) patients in the SSO2 Therapy group and 7/135 (5.2 percent) patients in the control group experienced 30-day MACE (p=0.62). in Patients with Myocardial Infarction,’’ Am J Cardivasc Drugs, 2003, vol. 3(4), pp. 253–6. 157 Stone, G.W., et al., ‘‘Relationship between infarct size and outcomes following primary PCI: Patient-level analysis from 10 randomized trials,’’ J Am Coll Cardio, vol. 67.14, 2016, pp. 1674–1683. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20334 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules Another pivotal trial in the evaluation of the SSO2 Therapy, the AMIHOT II trial, randomized 301 patients who had been diagnosed with and receiving treatment for anterior AMI with either PCI plus the SSO2 therapy or PCI alone. The AMIHOT II trial had a Bayesian statistical design that allows for the informed borrowing of data from the previously completed AMIHOT I trial. The primary efficacy endpoint of the study required proving superiority of the infarct size reduction with the SSO2 Therapy as compared to patients who were receiving treatment involving PCI with stenting alone. The primary safety endpoint for the AMIHOT II trial required a determination of noninferiority in the 30-day MACE rate, comparing the SSO2 Therapy group with the control group, within a safety delta of 6.0 percent. Endpoint evaluation was performed using a Bayesian hierarchical model that evaluated the AMIHOT II result conditionally in consideration of the AMIHOT I 30-day MACE data. According to the applicant, the results of the AMIHOT II trial showed that the SSO2 therapy, together with PCI and stenting, demonstrated a relative reduction of 26 percent in the left ventricular infarct size and absolute reduction of 6.5 percent compared to PCI and stenting alone. We are interested in information regarding at what timeframe in the study was the reduction of infarct size measured. In addition, the applicant stated that the finding of device effectiveness was supported by additional analyses that showed a 53 percent increased likelihood of having a small infarct among the SSO2 therapy patients.158 In assessing 30-day Major Adverse Cardiac Events (MACE), while higher in the SSO2 Therapy group, the rates were statistically noninferior (5.4 percent versus 3.8 percent). However, given the higher 30-day MACE outcome among the SSO2 Therapy patients in both the AMIHOT I and AMIHOT II trials, we are concerned about the lack of long-term data on improvement in patient clinical outcomes, despite the lack of statistical significance. The applicant also submitted the IC– HOT clinical trial, which was designed to confirm the safety and efficacy of the use of the SSO2 Therapy in those individuals presenting with a diagnosis of anterior AMI who have undergone successful PCI with stenting of the 158 Stone, G.W., Martin, J.L., Boer, M.J., et al., ‘‘Effect of Supersaturated Oxygen Deliver on Infarct Size After Percutaneous Coromary Intervention in Acute Myocardial Infarction,’’ Cir Cardiovasc Interv, 2009, vol. 2, pp. 366–75. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 proximal and/or mid left anterior descending artery within 6 hours of experiencing AMI symptoms. It is an IDE, nonrandomized, single arm study. The study was primarily focused on safety, utilizing a composite endpoint of 30-day Net Adverse Clinical Events (NACE). A maximum observed event rate of 10.7 percent was established based on a contemporary PCI trial of comparable patients who had been diagnosed with anterior wall STEMI. The IC–HOT trial exhibited a 7.1 percent observed NACE rate, meeting the study endpoint. Notably, no 30-day mortalities were observed, and the type and frequency of 30-day adverse events occurred at similar or lower rates than in contemporary STEMI studies of PCItreated patients who had been diagnosed with anterior AMI. Furthermore, according to the applicant, the IC–HOT study supported the conclusions of effectiveness established in AMIHOT II with a measured 30-day median infarct size = 19.4 percent (as compared to the AMIHOT II SSO2 Therapy group infarct size = 20.0 percent). Notable measures include 4-day microvascular obstruction (MVO), which has been shown to be an independent predictor of outcomes, 4-day and 30-day left ventricular end diastolic and end systolic volumes, and 30-day infarct size. The IC–HOT study results exhibited a favorable MVO as compared to contemporary trial data, and decreasing left ventricular volumes at 30 days, compared to contemporary PCI populations that exhibit increasing left ventricular size. The applicant asserted that the IC–HOT clinical trial data continue to demonstrate substantial clinical benefit of the SSO2 Therapy as compared to the standard of care, PCI with stenting alone. We are inviting public comments on whether the SSO2 Therapy meets the substantial clinical improvement criterion. Below we summarize and respond to written public comments we received regarding the DownStream® System during the open comment period in response to the New Technology Town Hall meeting notice published in the Federal Register. Comment: A number of commenters supported the approval of new technology add-on payments for the DownStream® System (SSO2 Therapy) for the treatment of patients diagnosed with AMI. The commenters asserted that SSO2 Therapy is effective at significantly reducing infarct size in patients diagnosed with anterior wall myocardial infarction who have been treated with primary percutaneous intervention. The commenters reiterated PO 00000 Frm 00172 Fmt 4701 Sfmt 4702 the results of the AMIHOT II randomized trial which demonstrated that treatment with SSO2 Therapy following successful PCI in patients diagnosed with an anterior wall myocardial infarction resulted in a 6.5 percent absolute reduction and a 26 percent relative reduction in infarct size, compared to treatment with PCI alone (the percentages above are based on a 26.5 percent median infarct size in the control PCI group versus 20 percent infarct size in the SSO2 Therapy group). One commenter stated that the infarct size reduction of 6.5 percent documented in the AMIHOT II trial results is substantial when it comes to patient care. In addition, other commenters believed that SSO2 Therapy is a safe treatment option because there was no significant difference in Major Adverse Cardiac Events (MACE) between the treatment and control groups. The commenters also referenced the results from the IC–HOT confirmatory study. The commenters believed that the results of this study demonstrated stabilization of the left ventricular size with no dilatation at 30 days, which confirmed the efficacy and safety of SSO2 Therapy. The commenters stated that, in a sample patient population of 98 patients diagnosed with anterior wall myocardial infarction, to achieve a result in infarct size of 19.4 percent of the left ventricular following use of SSO2 Therapy is similar to the results achieved in the patients enrolled in the treatment group of the AMIHOT II trial and is also substantial to patient care. The commenters emphasized that patients diagnosed with anterior wall myocardial infarction are high-risk patients with a high mortality rate, and patients who survive experiences with large infarct size and left ventricular dysfunction eventually suffer congestive heart failure, ultimately requiring a defibrillator and have poor quality of life. The commenters also noted that the MRI results documented from the IC– HOT trial have shown a reduction in left ventricular volumes, suggesting the left ventricular cavity did not dilate and the ventricle remained stable, which is consistent with the experience of many of the commenters that treated patients using SSO2 Therapy as part of the trial. Another commenter noted that 25 percent of the patients in the IC-HOT trial had a normal ejection fraction at follow-up MRI scan. The commenters believed that SSO2 Therapy should be a standard-of-care, given the low number of adverse events and the low instances of new heart failure admissions in their E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 experience with the use of SSO2 Therapy. Another commenter provided additional clinical studies in response to a question presented at the New Technology Town Hall meeting regarding the relationship between myocardial infarct size and clinical outcomes. The commenter stated that these clinical studies would provide further context to the research regarding the relationship between myocardial infarct size and clinical outcomes and emphasized that this relationship is not dependent on the type of treatment administered. The commenter opined that as long as infarct size is reduced, long-term clinical benefit follows. The commenter maintained that the strong correlation between the scarring of the left ventricle as a consequence of diagnoses of AMI and important longterm clinical outcomes has been well documented in large-scale thrombolytic therapy trials, one of which showed that a 5 percent reduction in medium infarct size was associated with improved clinical outcomes and established the superiority of primary PCI over thrombolysis as the standard-of-care for the treatment of AMI.159 The commenter indicated that, based on the results of the additional clinical studies, recognizing the significance of the relationship between infarct size and clinical outcomes, additional trials were performed to evaluate the effect of continued infarct size reduction, such as a pooled patient-level analysis to evaluate myocardial infarct size measured within 30 days of STEMI and its relationship to mortality as well as hospitalization for heart failure during and up to 1-year follow up. The commenter stated that one trial demonstrated a highly significant relationship for mortality and hospitalization for heart failure, where every 5 percent increase in infarct size was associated with a 19 percent increase in mortality at 1 year.160 The commenter further stated that the results of this trial indicated that this relationship was independent of other high-risk clinical and angiographic features in patients with a large infarction, including age, sex, diabetes, hypertension, hyperlipidemia, current 159 Schomig, A., Kastrati, A., Dirschinger, J., et al., ¨ ‘‘Coronary stenting plus platelet glycoprotein IIb/ IIIa blockade compared with tissue plasminogen activator in acute myocardial infarction. Stent versus Thrombolysis for Occluded Coronary Arteries in Patients with Acute Myocardial Infarction Study Investigators,’’ New England Journal of Medicine, 2000, vol. 343(6), pp. 385–91. 160 Stone, G.W., Selker, H.P., Thiele, H., et al., ‘‘Relationship between infarct size and outcomes following primary PCI,’’ JACC, 2016, vol. 67(14), pp. 1674–83. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 smoking, and symptom-to-first device time.161 The commenter believed that, given this established relationship, the 6.5 percent absolute reduction in median infarct size demonstrated with the use of SSO2 Therapy in the AMIHOT II trial is clinically meaningful. The commenter concluded that SSO2 Therapy is the only therapy to date that has demonstrated a significant and clinically meaningful reduction in infarct size beyond that achieved with PCI alone. Response: We appreciate all of the commenters’ input. However, we are concerned whether the additional clinical studies presented regarding the relationship between myocardial infarct size and clinical outcomes can be applied to SSO2 Therapy and whether the applicant has provided enough information to demonstrate that the reduction of infarct size with use of SSO2 Therapy is a substantial clinical improvement. We are inviting public comments regarding these concerns. k. Cerebral Protection System (Sentinel® Cerebral Protection System) Claret Medical, Inc. submitted an application for new technology add-on payments for the Cerebral Protection System (Sentinel® Cerebral Protection System) for FY 2019. According to the applicant, the Sentinel Cerebral Protection System is indicated for the use as an embolic protection (EP) device to capture and remove thrombus and debris while performing transcatheter aortic valve replacement (TAVR) procedures. The device is percutaneously delivered via the right radial artery and is removed upon completion of the TAVR procedure. The De Novo request for the Sentinel® Cerebral Protection System was granted on June 1, 2017 (DEN160043). Aortic stenosis (AS) is a narrowing of the aortic valve opening. AS restricts blood flow from the left ventricle to the aorta and may also affect the pressure in the left atrium. The most common presenting symptoms of AS include dyspnea on exertion or decreased exercise tolerance, exertional dizziness (presyncope) or syncope and exertional angina. Symptoms experienced by patients who have been diagnosed with AS and normal left ventricular systolic function rarely occur until stenosis is severe (defined as valve area is less than 1.0 cm2, the jet velocity is over 4.0 m/ sec, and/or the mean transvalvular gradient is greater than or equal to 40 mmHg).162 AS is a common valvular 161 Ibid. 162 Otto, C., Gaasch, W., ‘‘Clinical manifestations and diagnosis of aortic stenosis in adults,’’ In S. PO 00000 Frm 00173 Fmt 4701 Sfmt 4702 20335 disorder in elderly patients. The prevalence of AS increases with age, and some degree of valvular calcification is present in 75 percent of patients who are 85 to 86 years old.163 TAVR procedures are the standard of care treatment for patients who have been diagnosed with severe AS. Patients undergoing TAVR procedures are often older, frail, and may be affected by multiple comorbidities, implying a significant risk for thromboembolic cerebrovascular events.164 Embolic ischemic strokes can occur in patients undergoing surgical and interventional cardiovascular procedures, such as stenting (carotid, coronary, peripheral), catheter ablation for atrial fibrillation, endovascular stent grafting, left atrial appendage closure (LAAO), patent formal ovale (PFO) closure, balloon aortic valvuloplasty, surgical valve replacement (SAVR), and TAVR. Clinically overt stroke, or silent ischemic cerebral infarctions, associated with the TAVR procedure, may result from a variety of causes, including mechanical manipulation of instruments or other interventional devices used during the procedure. These mechanical manipulations are caused by, but not limited to, the placement of a relatively large bore delivery catheter in the aortic arch, balloon valvuloplasty, valve positioning, valve re-positioning, valve expansion, and corrective catheter manipulation, as well as use of guidewires and guiding or diagnostic catheters required for proper positioning of the TAVR device. The magnitude and timing of embolic activity resulting from these manipulations was studied by Szeto, et al.,165 using a transcranial Doppler, and it was found that embolic material is liberated throughout the TAVR procedure with some of the emboli reaching the central nervous system leading to cerebral ischemic infarctions. Some of the cerebral ischemic infarctions lead to neurologic injury and clinically apparent stroke. Szeto, et al., also noted that the rate of Yeon (Ed.), 2016, Available at: https:// www.uptodate.com/contents/clinicalmanifestations-and-diagnosis-of-aortic-stenosis-inadults. 163 Lindroos, M., et al., ‘‘Prevalence of aortic valve abnormalities in the elderly: An echocardiographic study of a random population sample,’’ J Am Coll Cardio, 1993, vol. 21(5), pp. 1220–1225. 164 Giustino, G., et al., ‘‘Neurological Outcomes With Embolic Protection Devices in Patients Undergoing Transcatheter Aortic Valve Replacement,’’ J Am Coll Cardio, CARDIOVASCULAR INTERVENTIONS, 2016, vol. 9(20). 165 Szeto, W.Y., et al., ‘‘Cerebral Embolic Exposure During Transfemoral and Transapical Transcatheter Aortic Valve Replacement,’’ J Card Surg, 2011, vol. 26, pp. 348–354. E:\FR\FM\07MYP2.SGM 07MYP2 20336 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 silent ischemic cerebral infarctions following TAVR procedures is estimated to be between 68 and 91 percent.166 167 The TAVR procedure is a minimally invasive procedure that does not involve open heart surgery. During a TAVR procedure the prosthetic aortic valve is placed within the diseased native valve. The prosthetic valve then becomes the functioning aortic valve. As previously outlined, stroke is one of the risks associated with TAVR procedures. According to the applicant, the risk of stroke is highest in the early post-procedure period and, as previously outlined, is likely due to mechanical factors occurring during the TAVR procedure.168 Emboli can be generated as wire-guided devices are manipulated within atherosclerotic vessels, or when calcified valve leaflets are traversed and then crushed during valvuloplasty and subsequent valve deployment.169 Stroke rates in patients evaluated 30 days after TAVR procedures range from 1.0 percent to 9.6 percent,170 and have been associated with increased mortality. Additionally, new ‘‘silent infarcts,’’ assessed via diffusion-weighted magnetic resonance imaging (DW–MRI), have been found in a majority of patients after TAVR procedures.171 As stated earlier, the De Novo request for the Sentinel® Cerebral Protection System was granted on June 1, 2017. The FDA concluded that this device should be classified into Class II (moderate risk). Effective October 1, 2016, ICD–10–PCS Section ‘‘X’’ code X2A5312 (Cerebral embolic filtration, dual filter in innominate artery and left common carotid artery, percutaneous approach) was approved to identify cases involving TAVR procedures using 166 Gupta, A., Giambrone, A.E., Gialdini, G., et al., ‘‘Silent brain infarction and risk of future stroke: A systematic review and meta-analysis,’’ Stroke, 2016, vol. 47, pp. 719–25. 167 Mokin, M., Zivadinov, R., Dwyer, M.G., Lazar, R.M., Hopkins, L.N., Siddiqui, A.H., ‘‘Transcatheter aortic valve replacement: perioperative stroke and beyond,’’ Expert Rev Neurother, 2017, vol. 17, pp. 327–34. 168 Nombela-Franco, L., et al., ‘‘Timing, predictive factors, and prognostic value of cerebrovascular events in a large cohort of patients undergoing transcatheter aortic valve implantation,’’ Circulation, 2012, vol. 126(25), pp. 3041–53. 169 Freeman, M., et al., ‘‘Cerebral events and protection during transcatheter aortic valve replacement,’’ Catheterization and Cardiovascular Interventions, 2014, vol. 84(6), pp. 885–896. 170 Haussig, S., Linke, A., ‘‘Transcatheter aortic valve replacement indications should be expanded to lower-risk and younger patients,’’ Circulation, 2014. vol. 130(25), pp. 2321–31. 171 Kahlert, P., et al., ‘‘Silent and apparent cerebral ischemia after percutaneous transfemoral aortic valve implantation: a diffusion-weighted magnetic resonance imaging study,’’ Circulation, 2010, vol. 121(7), pp. 870–8. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 the Sentinel® Cerebral Protection System. As discussed earlier, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and would not be considered ‘‘new’’ for purposes of new technology add-on payments. With regard to the first criterion, whether a product uses the same or a similar mechanism of action to achieve a therapeutic outcome, according to the applicant, the Sentinel® Cerebral Protection System device is inserted at the beginning of the TAVR procedure, via a small tube inserted through a puncture in the right wrist. Next, using a minimally invasive catheter, two small filters are placed in the brachiocephalic and left common carotid arteries. The filters collect debris, preventing it from becoming emboli, which can travel to the brain. These emboli, if left uncaptured, can cause cerebral ischemic lesions, often referred to as silent ischemic cerebral infarctions, potentially leading to cognitive decline or clinically overt stroke. At the completion of the TAVR procedure, the filters, along with the collected debris, are removed. The applicant stated that there are no other similar products for commercial sale available in the United States for cerebral protection during TAVR procedures. Two neuroprotection devices, the TriguardTM Cerebral Protection Device (Keystone Heart, Herzliya Pituach, Israel) and the Embrella Embolic DeflectorTM System (Edwards Lifesciences, Irvine, CA) are used in Europe. These devices work by deflecting embolic debris distally, rather than capturing and removing debris with filters. With respect to the second criterion, whether a product is assigned to the same or a different MS–DRG, as stated earlier, the Sentinel® Cerebral Protection System is an EP device used to capture and remove thrombus and debris while performing TAVR procedures. Therefore, potential cases representing patients who may be eligible for treatment involving this device would map to the same MS– DRGs as cases involving TAVR procedures. With respect to the third criterion, whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population, according to the applicant, this technology will be used to treat patients who have been diagnosed with severe aortic valve stenosis who are eligible for a TAVR procedure. The applicant asserted that there are currently no approved PO 00000 Frm 00174 Fmt 4701 Sfmt 4702 alternative treatment options for cerebral protection during TAVR procedures, and the Sentinel® Cerebral Protection System is the first and only embolic protection device for use during TAVR procedures and, therefore, meets the newness criterion. The applicant also asserted that the device meets the newness criterion, as evidenced by the FDA’s granting of the De Novo request and there was no predicate device. Based on the above, it appears that the Sentinel® Cerebral Protection System is not substantially similar to other existing technologies. We are inviting public comments on whether the Sentinel® Cerebral Protection System is substantially similar to any existing technology and whether it meets the newness criterion. The applicant conducted the following analysis to demonstrate that the technology meets the cost criterion. The applicant searched the FY 2016 MedPAR file for cases with the following ICD–10–CM procedure codes to identify cases involving TAVR procedures, which are potential cases representing patients who may be eligible for treatment involving use of the Sentinel® Cerebral Protection System: 02RF37Z (Replacement of aortic valve with autologous tissue substitute, percutaneous approach); 02RF38Z (Replacement of aortic valve with zooplastic tissue, percutaneous approach); 02RF3JZ (Replacement of aortic valve with synthetic substitute, percutaneous approach); 02RF3KZ (Replacement of aortic valve with nonautologous tissue substitute, percutaneous approach); 02RF37H (Replacement of aortic valve with autologous tissue substitute, transapical, percutaneous approach ); 02RF38H (Replacement of aortic valve with zooplastic tissue, transapical, percutaneous approach); 02RF3JH (Replacement of aortic valve with synthetic substitute, transapical, percutaneous approach); and 02RF3KH (Replacement of aortic valve with nonautologous tissue substitute, transapical, percutaneous approach). This process resulted in 26,012 potential cases. The applicant limited its search to MS–DRG 266 (Endovascular Cardiac Valve Replacement with MCC) and MS–DRG 267 (Endovascular Cardiac Valve Replacement without MCC) because these two MS–DRGs accounted for 97.4 percent of the total cases identified. Using the 26,012 identified cases, the applicant determined that the average unstandardized case-weighted charge per case was $211,261. No charges were removed for the prior technology because the device is used to capture E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 and remove thrombus and debris while performing TAVR procedures. The applicant then standardized the charges, but did not inflate the charges. The applicant then added charges for the new technology to the average caseweighted standardized charges per case by taking the cost of the device and dividing the amount by the CCR of 0.332 for implantable devices from the FY 2018 IPPS/LTCH PPS final rule (82 FR 38103). The applicant calculated a final inflated average case-weighted standardized charge per case of $187,707 and a Table 10 average case-weighted threshold amount of $170,503. Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount, the applicant maintained that the technology meets the cost criterion. We are inviting public comments on whether the Sentinel® Cerebral Protection System meets the cost criterion. With regard to the substantial clinical improvement criterion, the applicant asserted that the Sentinel® Cerebral Protection System represents a substantial clinical improvement over existing technologies because it is the first and only cerebral embolic protection device commercially available in the United States for use during TAVR procedures. The applicant stated that the data below shows that the Sentinel® Cerebral Protection System effectively captures brain bound embolic debris and significantly improves clinical outcomes (that is, stroke) beyond the current standard of care, that is, TAVR procedures with no embolic protection. The applicant provided the results of four key studies: (1) The SENTINEL® study 172 conducted by Claret Medical, Inc.; (2) the CLEAN-TAVI trial; 173 (3) the Ulm real-world registry; 174 and (4) the MISTRAL–C study.175 The applicant reported that the SENTINEL® study was a prospective, 172 Kapadia, S., Kodali, S., Makkar, R., et al., ‘‘Protection against cerebral embolism during transcatheter aortic valve replacement,’’ JACC, 2017, vol. 69(4), pp. 367–377. 173 Haussig, S., Mangner, N., Dwyer, M.G., et al., ‘‘Effect of a Cerebral Protection Device on Brain Lesions Following Transcatheter Aortic Valve Implantation in Patients With Severe Aortic Stenosis: The CLEAN–TAVI Randomized Clinical Trial,’’ JAMA, 2016, vol. 316, pp. 592–601. 174 Seeger, J., et al., ‘‘Cerebral Embolic Protection During Transfemoral Aortic Valve Replacement Significantly Reduces Death and Stroke Compared With Unprotected Procedures,’’ JACC Cardiovasc Interv, 2017, in press. 175 Mieghem, Van, et al., ‘‘Filter-based cerebral embolic protection with transcatheter aortic valve implantation: the randomized MISTRAL–C trial,’’ Eurointervention, 2016, vol. 12(4), pp. 499–507. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 single blind, multi-center, randomized study using the Sentinel® Cerebral Protection System which enrolled patients who had been diagnosed with severe symptomatic calcified native aortic valve stenosis indicated for a TAVR procedure. A total of 363 patients at 19 centers in the United States and Germany were randomized across 3 arms (Safety, Test, and Control) in a 1:1:1 fashion. According to the applicant, evaluations performed for patients in each arm were as follows: • Safety Arm patients who underwent a TAVR procedure involving the Sentinel® Cerebral Protection System— Patients enrolled in this arm of the study received safety follow-up at discharge, at 30 days and 90 days postprocedure; and neurological evaluation at baseline, discharge, 30 days and 90 days (only in the case of a stroke experienced less than or equal to 30 days) post-procedure. The Safety Arm patients did not undergo MRI or neurocognitive assessments. • Test Arm patients who underwent a TAVR procedure involving the Sentinel® Cerebral Protection System— Patients enrolled in this arm of the study underwent safety follow-up at discharge, at 30 days and 90 days postprocedure; MRI assessment for efficacy at baseline, 2 to 7 days and 30 days post-procedure; neurological evaluation at baseline, discharge, 30 days and 90 days (only in the case of a stroke experienced less than or equal to 30 days) post-procedure; neurocognitive evaluation at baseline, 2 to 7 days (optional), 30 days and 90 days postprocedure; Quality of Life assessment at baseline, 30 days and 90 days; and histopathological evaluation of debris captured in the Sentinel® Cerebral Protection System’s device filters. • Control Arm patients who underwent a TAVR procedure only— Patients enrolled in this arm of the study underwent safety follow-up at discharge, at 30 days and 90 days postprocedure; MRI assessment for efficacy at baseline, 2 to 7 days and 30 days post-procedure; neurological evaluation at baseline, discharge, 30 days and 90 days (only in the case of a stroke experienced less than or equal to 30 days) post-procedure; neurocognitive evaluation at baseline, 2 to 7 days (optional), 30 days and 90 days post-procedure; and Quality of Life assessment at baseline, 30 days and 90 days. The primary safety endpoint was occurrence of major adverse cardiac and cerebrovascular events (MACCE) at 30 days compared with a historical performance goal. MACCE was defined as follows: All causes of death; all PO 00000 Frm 00175 Fmt 4701 Sfmt 4702 20337 strokes (disabling and nondisabling, Valve Academic Research Consortium-2 (VARC–2)); and acute kidney injury (stage 3, VARC–2). The point estimate for the historical performance goal for the primary safety endpoint at 30 days post-TAVR procedure was derived from a review of published reports of 30-day TAVR procedure outcomes. The VARC– 2 established an independent collaboration between academic research organizations and specialty societies (cardiology and cardiac surgery) in the United States and Europe to create consistent endpoint definitions and consensus recommendations for implementation in TAVR procedure clinical research.176 The applicant reported that results of the SENTINEL® study demonstrated the following: • The rate of MACCE was numerically lower than the control arm, 7.3 percent versus 9.9 percent, but was not statistically significant from that of the control group (p = 0.41). • New lesion volume was 178.0 mm3 in control patients and 102.8 mm3 in the Sentinel® Cerebral Protection System device arm (p = 0.33). A post-hoc multi-variable analysis identified preexisting lesion volume and valve type as predictors of new lesion volume. • Strokes experienced at 30 days were 9.1 percent in control patients and 5.6 percent in patients treated with the Sentinel® Cerebral Protection System devices (p = 0.25). Neurocognitive function was similar in control patients and patients treated with the Sentinel® Cerebral Protection System devices, but there was a correlation between lesion volume and neurocognitive decline (p = 0.0022). • Debris was found within filters in 99 percent of patients and included thrombus, calcification, valve tissue, artery wall, and foreign material. • The applicant also noted that the post-hoc analysis of this data demonstrated that there was a 63 percent reduction in 72-hour stroke rate (compared to control), p = 0.05. According to the applicant, the CLEAN–TAVI (Claret Embolic Protection and TAVI) trial, was a small, randomized, double-blind, controlled trial. The trial consisted of 100 patients assigned to either EP (n = 50) with the Claret Medical, Inc. device (the Sentinel® Cerebral Protection System) or to no EP (n = 50). Patients were all 176 Leon, M.B., Piazza, N., Nikolsky, E., et al., ‘‘Standardized endpoint definitions for transcatheter aortic valve implantation clinical trials: a consensus report from the Valve Academic Research Consortium,’’ European Heart Journal, 2011, vol. 32(2), pp. 205–217, doi:10.1093/ eurheartj/ehq406. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20338 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules treated with femoral access and selfexpandable (SE) devices. The study endpoint was the number of brain lesions at 2 days post-procedure versus baseline. Patients were evaluated with DW-MRI at 2 and 7 days post-TAVR procedure. The mean age of patients was 80 years old; 43 percent were male. The study results showed that patients treated with the Sentinel® Cerebral Protection System had a lower number of new lesions (4.00) than patients in the control group (10.0); (p<0.001). According to the applicant, the singlecenter Ulm study, a large propensity matched trial, with 802 consecutive patients, occurred at the University of Ulm between 2014 and 2016. The first 522 patients (65.1 percent of patients) underwent a TAVR procedure without EPs, and the subsequent 280 patients (34.9 percent of patients) underwent a TAVR procedure with EP involving the Sentinel® Cerebral Protection System. For both arms of the study, a TAVR procedure was performed in identical settings except without cerebral EP, and neurological follow-up was performed within 7 days post-procedure. The primary endpoint was a composite of all-cause mortality or all-stroke according to the VARC–2 criteria within 7 days. The authors who documented the study noted the following: • Patient baseline characteristics and aortic valve parameters were similar between groups, that both filters of the device were successfully positioned in 280 patients, all neurological follow-up was completed by the 7th postprocedure date, and that propensity score matching was performed to account for possible confounders. • Results indicated a decreased rate of disabling and nondisabling stroke at 7 days post-procedure was seen in those patients who were treated with the Sentinel® Cerebral Protection System device versus control patients (1.6 percent versus 4.6 percent, p = 0.03). • At 48 hours, stroke rates were lower with patients treated with the Sentinel® Cerebral Protection System device versus control patients (1.1 percent versus 3.6 percent, p = 0.03). • In multi-variate analysis, TAVR procedures performed without the use of a EP device was found to be an independent predictor of stroke within 7 days (p = 0.04). The aim of the MISTRAL–C study was to determine if the Sentinel® Cerebral Protection System affects new brain lesions and neurocognitive performance after TAVR procedures. The study was designed as a multi-center, doubleblind, randomized trial enrolling patients who were diagnosed with symptomatic severe aortic stenosis and VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 1:1 randomization to TAVI patients treated with or without the Sentinel® Cerebral Protection System. From January 2013 to August 2015, 65 patients were enrolled in the study. Patients ranged in age from 77 years old to 86 years old, 15 (47 percent) were female and 17 (53 percent) were male patients randomized to the Sentinel® Cerebral Protection System group and 16 (49 percent) were female and 17 (51 percent) were male patients randomized to the control group. There were 3 mortalities between 5 days and 6 months post-procedure for the Sentinel® Cerebral Protection System group. There were no strokes reported for the Sentinel® Cerebral Protection System group. There were 7 mortalities between 5 days and 6 months post-procedure for the control group. There were 2 strokes reported for the control group. Patients underwent DW– MRI and neurological examination, including neurocognitive testing 1 day before and 5 to 7 days after TAVI. Follow-up DW–MRI and neurocognitive testing was completed in 57 percent of TAVI patients treated with the Sentinel® Cerebral Protection System and 80 percent for the group of TAVI patients treated without the Sentinel® Cerebral Protection System. New brain lesions were found in 78 percent of the patients with follow-up MRI. According to the applicant, patients treated with the Sentinel® Cerebral Protection System had numerically fewer new lesions and a smaller total lesion volume (95 mm3 versus 197 mm3). Overall, 27 percent of the patients treated with the Sentinel® Cerebral Protection System and 13 percent of the patients treated in the control group had no new lesions. Ten or more new brain lesions were found only in the patients treated in the control group (20 percent in the control group versus 0 percent in the Sentinel® Cerebral Protection System group, p = 0.03). Neurocognitive deterioration was present in 4 percent of the patients treated with the Sentinel® Cerebral Protection System versus 27 percent of the patients treated without (p=0.017). The filters captured debris in all of the patients treated with Sentinel® Cerebral Protection System device. In the Ulm study, the primary outcome was a composite of all-cause mortality or stroke at 7 days, and occurred in 2.1 percent of the Sentinel® Cerebral Protection System group versus 6.8 percent of the control group (p = 0.01, number needed to treat (NNT) = 21). Use of the Sentinel® Cerebral Protection System device was associated with a 2.2 percent absolute risk PO 00000 Frm 00176 Fmt 4701 Sfmt 4702 reduction in mortality with NNT 45. Composite endpoint of major adverse cardiac and cerebrovascular events (MACCE) was found in 2.1 percent of those patients undergoing a TAVR procedure with the use of the Sentinel® Cerebral Protection System device versus 7.9 percent in the control group (p = 0.01). Similar but statistically nonsignificant trends were found in the SENTINEL® study, with rate of MACCE of 7.3 percent in the Sentinel® Cerebral Protection System group versus 9.9 percent in the control group (p = 0.41). The applicant reported that the four studies discussed above that evaluated the Sentinel® Cerebral Protection System device have limitations because they are either small, nonrandomized and/or had significant loss to follow-up. A meta-analysis of EP device studies, the majority of which included use of the Sentinel® Cerebral Protection System device, found that use of cerebral EP devices was associated with a nonsignificant reduction in stroke and death.177 We are concerned that the use of cerebral protection devices may not be associated with a significant reduction in stroke and death. We note that the SENTINEL® study, although a randomized study, did not meet its primary endpoint, as illustrated by nonstatistically significant reduction in new lesion volume on MRI or nondisabling strokes within 30 days (5.6 percent stroke rate in the Sentinel® Cerebral Protection System device group versus a 9.1 percent stroke rate in the control group at 30 days; p = 0.25). We also note that only with a post-hoc analysis of the SENTINEL® study data were promising trends noted, where the device use was associated with a 63 percent reduction in stroke events at 72 hours (p = 0.05). Additionally, although there was a statistically significant difference between the patients treated with and without cerebral embolic protection in the composite of all-cause mortality or stroke at 7 days, the Ulm study was a nonrandomized study and propensity matching was performed during analyses. We are concerned that studies involving the Sentinel® Cerebral Protection System may be inconclusive regarding whether the device represents a substantial clinical improvement for patients undergoing TAVR procedures. We also are concerned that the SENTINEL® studies did not show a substantial decrease in neurological 177 Giustino, G., et al., ‘‘Neurological Outcomes With Embolic Protection Devices in Patients Undergoing Transcatheter Aortic Valve Replacement,’’ Journal of the American College of Cardiology: Cardiovascular Interventions, 2016, vol. 9(20), pp. 2124–2133. E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules complications for patients undergoing TAVR procedures. We are inviting public comments on whether the Sentinel® Cerebral Protection System meets the substantial clinical improvement criterion. Below we summarize and respond to a written public comment we received regarding the Sentinel® Cerebral Protection System during the open comment period in response to the New Technology Town Hall meeting notice published in the Federal Register. Comment: One commenter noted that the TriGUARD device, a similar device to the Sentinel® Cerebral Protection System device, has been commercially available throughout Europe and its member countries, including the United Kingdom since June 29, 2013. The commenter indicated that the TriGUARD device received its Israel Medical Device Registration and Approval (AMAR) on November 5, 2015. The commenter asserted that because the Sentinel® Cerebral Protection System is the first and only cerebral EP device commercially available in the United States for use during TAVR procedures it represents a substantial clinical improvement over currently available and existing technologies. Response: We appreciate the information provided by the commenter. We will take this information into consideration when deciding whether to approve new technology add-on payments for the Sentinel® Cerebral Protection System for FY 2019. daltland on DSKBBV9HB2PROD with PROPOSALS2 l. AZEDRA® (Ultratrace® Iobenguane Iodine-131) Solution Progenics Pharmaceuticals, Inc. submitted an application for new technology add-on payments for AZEDRA® (Ultratrace® iobenguane Iodine-131) for FY 2019. AZEDRA® is a drug solution formulated for intravenous (IV) use in the treatment of patients who have been diagnosed with obenguane avid malignant and/or recurrent and/or unresectable pheochromocytoma and paraganglioma. AZEDRA® contains a small molecule ligand consisting of metaiodobenzylguanidine (MIBG) and 131Iodine (131I) (hereafter referred to as ‘‘131I–MIBG’’). The applicant noted that iobenguane Iodine-131 is also known as 131I–MIBG). The applicant reported in its application that pheochromocytomas and paragangliomas are rare tumors with an incidence of approximately 2 to VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 8 people per million per year.178 179 Both tumors are catecholamine-secreting neuroendocrine tumors, with pheochromocytomas being the more common of the two and comprising 80 to 85 percent of cases. While 10 percent of pheochromocytomas are malignant, whereby ‘‘malignant’’ is defined by the World Health Organization (WHO) as ‘‘the presence of distant metastases,’’ paragangliomas have a malignancy frequency of 25 percent.180 181 Approximately one-half of malignant tumors are pronounced at diagnosis, while other malignant tumors develop slowly within 5 years.182 Pheochromocytomas and paragangliomas tend to be indistinguishable at the cellular level and frequently at the clinical level. For example catecholamine-secreting paragangliomas often present clinically like pheochromocytomas with hypertension, episodic headache, sweating, tremor, and forceful palpitations.183 Although pheochromocytomas and paragangliomas can share overlapping histopathology, epidemiology, and molecular pathobiology characteristics, there are differences between these two neuroendocrine tumors in clinical behavior, aggressiveness and metastatic potential, biochemical findings and association with inherited genetic syndrome differences, highlighting the importance of distinguishing between the presence of malignant pheochromocytoma and the presence of malignant paraganglioma. At this time, there is no curative treatment for malignant pheochromocytomas and paragangliomas. Successful management of these malignancies requires a multidisciplinary approach of decreasing tumor burden, controlling 178 Beard, C.M., Sheps, S.G., Kurland, L.T., Carney, J.A., Lie, J.T., ‘‘Occurrence of pheochromocytoma in Rochester, Minnesota’’, pp. 1950–1979. 179 Stenstrom, G., Svardsudd, K., ¨ ¨ ‘‘Pheochromocytoma in Sweden 1958–1981. An analysis of the National Cancer Registry Data,’’ Acta Medica Scandinavica, 1986, vol. 220(3), pp. 225– 232. 180 Fishbein, Lauren, ‘‘Pheochromocytoma and Paraganglioma,’’ Hematology/Oncology Clinics 30, no. 1, 2016, pp. 135–150. 181 Lloyd, R.V., Osamura, R.Y., Kloppel, G., & ¨ Rosai, J. (2017). World Health Organization (WHO) Classification of Tumours of Endocrine Organs. Lyon, France: International Agency for Research on Center (IARC). 182 Kantorovich, Vitaly, and Karel Pacak. ‘‘Pheochromocytoma and paraganglioma.’’ Progress in Brain Research., 2010, vol. 182, pp. 343–373. 183 Carty, S.E., Young, W.F., Elfky, A., ‘‘Paraganglioma and pheochromocytoma: Management of malignant disease,’’ UpToDate. Available at: https://www.uptodate.com/contents/ paraganglioma-and-pheochromocytomamanagement-of-malignant-disease. PO 00000 Frm 00177 Fmt 4701 Sfmt 4702 20339 endocrine activity, and treating debilitating symptoms. According to the applicant, decreasing metastatic tumor burden would address the leading cause of mortality in this patient population, where the 5-year survival rate is 50 percent for patients with untreated malignant pheochromocytomas and paragangliomas.184 The applicant stated that controlling catecholamine hypersecretion (for example, severe paroxysmal or sustained hypertension, palpitations and arrhythmias) would also mean decreasing morbidity associated with hypertension (for example, risk of stroke, myocardial infarction and renal failure), and begin to address the 30-percent cardiovascular mortality rate associated with malignant pheochromocytomas and paragangliomas. The applicant reported that, at this time, controlling catecholamine activity in pheochromocytomas and paragangliomas is medically achieved with administration of combined alpha and beta-adrenergic blockade, and surgically with tumor tissue reduction. Because there is no curative treatment for malignant pheochromocytomas and paragangliomas, resecting both primary and metastatic lesions whenever possible to decrease tumor burden 185 provides a methodology for controlling catecholamine activity and lowering cardiovascular mortality risk. Besides surgical removal of tumor tissue for lowering tumor burden, there are other treatment options that depend upon tumor type (that is, pheochromocytoma tumors versus paraganglioma tumors), anatomic location, and the number and size of the metastatic tumors. Currently, these treatment options include: (1) Radiation therapy; (2) nonsurgical local ablative therapy with radiofrequency ablation, cryoablation, and percutaneous ethanol injection; (3) transarterial chemoembolization for liver metastases; and (4) radionuclide therapy using metaiodobenzylguanidine (MIBG) or somatostatin. Regardless of the method to reduce local tumor burden, periprocedural medical care is needed to prevent massive catecholamine secretion and hypertensive crisis.186 184 Kantorovich, Vitaly, and Karel Pacak. ‘‘Pheochromocytoma and paraganglioma.’’ Progress in Brain Research., 2010, vol. 182, pp. 343–373. 185 Noda, T., Nagano, H., Miyamoto, A., et al., ‘‘Successful outcome after resection of liver metastasis arising from an extraadrenal retroperitoneal paraganglioma that appeared 9 years after surgical excision of the primary lesion,’’ Int J Clin Oncol, 2009, vol. 14, pp. 473. 186 Carty, S.E., Young, W.F., Elfky, A., ‘‘Paraganglioma and pheochromocytoma: Management of malignant disease,’’ UpToDate. E:\FR\FM\07MYP2.SGM Continued 07MYP2 20340 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 The applicant stated that AZEDRA® specifically targets neuroendocrine tumors arising from chromaffin cells of the adrenal medulla (in the case of pheochromocytomas) and from neuroendocrine cells of the extraadrenal autonomic paraganglia (in the case of paraganglioms).187 According to the applicant, AZEDRA® is a more consistent form of 131I-MIBG compared to compounded formulations of 131IMIBG that are not currently approved by the FDA. If approved by the FDA, the applicant asserted that AZEDRA® would be the only drug indicated for use in the treatment of patients, who if left untreated, experience debilitating clinical symptoms and high mortality rates from iobenguane avid malignant and/or recurrent and/or unresectable pheochromocytoma and paraganglioma tumors. Among local tumor tissue reduction options, use of external beam radiation therapy (ERBT) at doses greater than 40 Gy can provide local pheochromocytoma and paraganglioma tumor control and relief of symptoms for tumors at a variety of sites, including the soft tissues of the skull base and neck, abdomen, and thorax, as well as painful bone metastases.188 However, the applicant stated that ERBT irradiated tissues are unresponsive to subsequent treatment with 131I-MIBG radionuclide.189 MIBG was initially used for the imaging of paragangliomas and pheochromocytomas because of its similarity to noradrenaline, which is taken up by chromaffin cells. Conventional MIBG used in imaging expanded to off-label compassionate use in patients who had been diagnosed with malignant pheochromocytomas and paragangliomas. Because 131I-MIBG is sequestered within pheochromocytoma and paraganglioma tumors, subsequent malignant cell death occurs from radioactivity. Approximately 50 percent of tumors are eligible for 131I-MIBG therapy based on having MIBG uptake with diagnostic imaging. According to the applicant, despite uptake by tumors, studies have also found that 131I-MIBG therapy has been limited by total radiation dose, hematologic side effects, and hypertension. While the Available at: https://www.uptodate.com/contents/ paraganglioma-and-pheochromocytomamanagement-of-malignant-disease. 187 Ibid. 188 Ibid. 189 Fitzgerald, P.A., Goldsby, R.E., Huberty, J.P., et al., ‘‘Malignant pheochromocytomas and paragangliomas: a phase II study of therapy with high-dose 131I-metaiodobenzylguanidine (131IMIBG),’’ Ann N Y Acad Sci, 2006, vol. 1073, pp. 465. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 pathophysiology of total radiation dose and hematologic side effects are more readily understandable, hypertension is believed to be precipitated by large quantities of non-iodinated MIBG or ‘‘cold’’ MIBG being introduced along with radioactive 131I-MIBG therapy.190 The ‘‘cold’’ MIBG blocks synaptic reuptake of norepinephrine, which can lead to tachycardia and paroxysmal hypertension within the first 24 hours, the majority of which occur within 30 minutes of administration and can be dose-limiting.191 The applicant asserted that its new proprietary manufacturing process called Ultratrace® allows AZEDRA® to be manufactured without the inclusion of unlabeled or ‘‘cold’’ MIBG in the final formulation. The applicant also noted that targeted radionuclide MIBG therapy to reduce tumor burden is one of two treatments that have been studied the most. The other treatment is cytotoxic chemotherapy and, specifically, Carboplatin, Vincristine, and Dacarbazine (CVD). The applicant stated that cytotoxic chemotherapy is an option for patients who experience symptoms with rapidly progressive, non-resectable, high tumor burden, or that cytoxic chemotherapy is another option for a large number of metatstatic bone lesions.192 According to the applicant, CVD was believed to have an effect on malignant pheochromocytomas and paragangliomas due to the embryonic origin being similar to neuroblastomas. The response rates to CVD have been variable between 25 percent and 50 percent.193 194 These patients experience side effects consistent with chemotherapeutic 190 Loh, K.C., Fitzgerald, P.A., Matthay, K.K., Yeo, P.P., Price, D.C., ‘‘The treatment of malignant pheochromocytoma with iodine-131 metaiodobenzylguanidine (131I-MIBG): a comprehensive review of 116 reported patients,’’ J Endocrinol Invest, 1997, vol. 20(11), pp. 648–658. 191 Gonias, S, et al., ‘‘Phase II Study of High-Dose [131I]Metaiodobenzylguanidine Therapy for Patients With Metastatic Pheochromocytoma and Paraganglioma,’’ J of Clin Onc, July 27, 2009. 192 Carty, S.E., Young, W.F., Elfky, A., ‘‘Paraganglioma and pheochromocytoma: Management of malignant disease,’’ UpToDate. Available at: https://www.uptodate.com/contents/ paraganglioma-and-pheochromocytomamanagement-of-malignant-disease. 193 Niemeijer, N.D., Alblas, G., Hulsteijn, L.T., Dekkers, O.M. and Corssmit, E.P.M., ‘‘Chemotherapy with cyclophosphamide, vincristine and dacarbazine for malignant paraganglioma and pheochromocytoma: systematic review and meta-analysis,’’ Clinical endocrinology, 2014, vol 81(5), pp. 642–651. 194 Ayala-Ramirez, Montserrat, et al., ‘‘Clinical Benefits of Systemic Chemotherapy for Patients with Metastatic Pheochromocytomas or Sympathetic Extra-Adrenal Paragangliomas: Insights from the Largest Single Institutional Experience,’’ Cancer, 2012, vol. 118(11), pp. 2804– 2812. PO 00000 Frm 00178 Fmt 4701 Sfmt 4702 treatment with CVD, with the added concern of the precipitation of hormonal complications such as hypertensive crisis, thereby requiring close monitoring during cytotoxic chemotherapy.195 According to the applicant, use of CVD relative to other tumor burden reduction options is not an ideal treatment because of nearly 100 percent recurrence rates, and the need for chemotherapy cycles to be continually readministered at the risk of increased systemic toxicities and eventual development of resistance. Finally, there is a subgroup of patients that are asymptomatic and have slower progressing tumors where frequent follow-up is an option for care.196 Therefore, the applicant believed that AZEDRA® offers cytotoxic radioactive therapy for the anticipated indicated population that avoids harmful side effects that typically result from use of low-specific activity products. The applicant reported that the anticipated and recommended AZEDRA® dosage and frequency for patients receiving treatment involving 131I-MIBG therapy for a diagnosis of avid malignant and/or recurrent and/or unresectable pheochromocytoma and paraganglioma tumors is: • Dosimetric Dosing—5 to 6 micro curies (mCi) (185 to 222 MBq) for a patient weighing more than or equal to 50 kg, and 0.1 mCi/kg (3.7 MBq/kg) for patients weighing less than 50 kg. Each recommended dosimetric dose is administered as an IV injection. • Therapeutic Dosing—500 mCi (18.5 GBq) for patients weighing more than 62.5 kg, and 8 mCi/kg (296 MBq/kg) for patients weighing less than or equal to 62.5 kg. Therapeutic doses are administered by IV infusion, in ∼50 mL over a period of ∼30 minutes (100 mL/ hour), administered approximately 90 days apart. With respect to the newness criterion, the applicant indicated that FDA granted Orphan Drug designation for AZEDRA® on January 18, 2006, followed by Fast Track designation on March 8, 2006, and Breakthrough Therapy designation on July 26, 2015. The applicant’s New Drug Application (NDA) proceeded on a rolling basis, and was completed on November 2, 2017. 195 Wu, L.T., Dicpinigaitis, P., Bruckner, H., et al., ‘‘Hypertensive crises induced by treatment of malignant pheochromocytoma with a combination of cyclophosphamide, vincristine, and dacarbazine,’’ Med Pediatr Oncol, 1994, vol. 22(6), pp. 389–392. 196 Carty, S.E., Young, W.F., Elfky, A., ‘‘Paraganglioma and pheochromocytoma: Management of malignant disease,’’ UpToDate. Available at: https://www.uptodate.com/contents/ paraganglioma-and-pheochromocytomamanagement-of-malignant-disease. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules However, at the time of the development of this proposed rule, the applicant indicated that it had not yet received FDA approval for the indicated use of AZEDRA®. The applicant stated that it anticipates FDA approval by June 30, 2018. Currently, there are no approved ICD–10–PCS procedure codes to uniquely identify procedures involving the administration of AZEDRA®. As discussed earlier, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and would not be considered ‘‘new’’ for purposes of new technology add-on payments. With regard to the first criterion, whether a product uses the same or similar mechanism of action, the applicant stated that while AZEDRA® and low-specific activity conventional I131 MIBG both target the same transporter sites on the tumor cell surface, the therapies’ safety and efficacy outcomes are different. These differences in outcomes are because AZEDRA® is manufactured using the proprietary Ultratrace® technology, which maximizes the molecules that carry the tumoricidal component (I-131 MIBG, the warhead) and minimizes the extraneous unlabeled component (MIBG, free ligands), which could cause cardiovascular side effects. Therefore, according to the applicant, AZEDRA® is designed to increase efficacy and decrease safety risks, whereas conventional I-131 MIBG uses existing technologies and results in a product that overwhelms the normal reuptake system with excess free ligands, which leads to safety issues as well as decreasing the probability of the warhead binding to the tumor cells. With regard to the second criterion, whether a product is assigned to the same or a different DRG, the applicant noted that there are no specific MS– DRGs for the assignment of cases involving the treatment of patients who have been diagnosed with pheochromocytoma and paraganglioma. We believe that potential cases representing patients who may be eligible for treatment involving the administration of AZEDRA® would be assigned to the same MS–DRGs as cases representing patients who receive treatment for obenguane avid malignant and/or recurrent and/or unresectable pheochromocytoma and paraganglioma. We also refer readers to the cost criterion discussion below, which includes the applicant’s list of the MS– DRGs that potential cases involving treatment with the administration of AZEDRA® most likely would map. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 With regard to the third criterion, whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population, if approved, AZEDRA® would be the only FDAapproved drug indicated for use in the treatment of patients who have been diagnosed with malignant pheochromocytoma and paraganglioma tumors that avidly take up 131I-MIBG and are recurrent and/or unresectable. The applicant stated that these patients face serious mortality and morbidity risks if left untreated, as well as potentially suffer from side effects if treated by available off-label therapies. The applicant also contended that AZEDRA® can be distinguished from other currently available treatments because it potentially provides the following advantages: • AZEDRA® will have a very limited impact on normal norepinephrine reuptake due to the negligible amount of unlabeled MIBG present in the dose. Therefore, AZEDRA® is expected to pose a much lower risk of acute druginduced hypertension. • There is minimal unlabeled MIBG to compete for the norepinephrine transporter binding sites in the tumor, resulting in more effective delivery of radioactivity. • Current off-label therapeutic use of 131I is compounded by individual pharmacies with varied quality and conformance standards. • Because of its higher specific activity (the activity of a given radioisotope per unit mass), AZEDRA® infusion times are significantly shorter than conventional 131I administrations. Therefore, with these potential advantages, the applicant maintained that AZEDRA® represents an effective option for the treatment of patients who have been diagnosed with malignant and/or recurrent and/or unresectable pheochromocytoma and paraganglioma tumors, where there is a clear, unmet medical need. For the reasons cited earlier, the applicant believed that AZEDRA® is not substantially similar to other currently available therapies and/or technologies and meets the ‘‘newness’’ criterion. We are inviting public comments on whether AZEDRA® is substantially similar to other currently available therapies and/or technologies and meets the ‘‘newness’’ criterion. The applicant reported that it conducted an analysis using FY 2015 MedPAR data to demonstrate that AZEDRA® meets the cost criterion. The applicant searched for potential cases representing patients who may be eligible for treatment involving PO 00000 Frm 00179 Fmt 4701 Sfmt 4702 20341 AZEDRA® that had one of the following ICD–9–CM diagnosis codes (which the applicant believed is indicative of diagnosis appropriate for treatment involving AZEDRA®): 194.0 (Malignant neoplasm of adrenal gland), 194.6 (Malignant neoplasm of aortic body and other paraganglia), 209.29 (Malignant carcinoid tumor of other sites), 209.30 (Malignant poorly differentiated neuroendocrine carcinoma, any site), 227.0 (Benign neoplasm of adrenal gland), 237.3 (Neoplasm of uncertain behavior of paraganglia)—in combination with one of the following ICD–9–CM procedure codes describing the administration of a radiopharmaceutical: 00.15 (High-dose infusion interleukin-2); 92.20 (Infusion of liquid brachytherapy radioisotope); 92.23 (Radioisotopic teleradiotherapy); 92.27 (Implantation or insertion of radioactive elements); 92.28 (Injection or instillation of radioisotopes). The applicant stated that the combination of these diagnosis and procedure codes in this process was intended to identify potential cases representing patients who had been diagnosed with a correlating condition relating to AZEDRA®’s intended treatment use and who had received subsequent treatment with a predecessor radiopharmaceutical therapy (such as, for example, a potential off-label use of conventional I131 MIBG therapy) for malignant and/or recurrent pheochromocytoma and paraganglioma tumors. The applicant reported that the potential cases used for the cost analysis mapped to MS– DRGs 054 and 055 (Nervous System Neoplasms with and without MCC, respectively), MS–DRG 271 (Other Major Cardiovascular Procedures with CC), MS–DRG 436 (Malignancy of Hepatobiliary System or Pancreas with CC), MS–DRG 827 (Myeloproliferated Disorder or Poorly Differentiated Neoplasm with Major O.R. Procedure with CC), and MS–DRG 843 (Other Myeloproliferated Disorder or Poorly Differentiated Neoplasm Diagnosis with MCC). Due to patient privacy concerns, the applicant stated that the MedPAR data did not identify the exact number of cases assigned to the six identified MS–DRGs. For purposes of its analysis, the applicant assumed an equal distribution between these six MS– DRGs. The applicant noted in its application that potential cases that may be eligible for treatment involving the administration of AZEDRA® would typically map to other MS–DRGs such as MS–DRGs 643, 644, and 645 (Endocrine Disorders with MCC, with CC, and without CC/MCC, respectively), and MS–DRG 849 (Radiotherapy). E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20342 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules However, because data were not available for these MS–DRGs they were not included in the analysis. Using the identified cases, the applicant determined that the average unstandardized case-weighted charge per case was $95,472. The applicant used a 3-year inflation factor of 1.14359 (a yearly inflation factor of 1.04574 applied over 3 years), based on the FY 2018 IPPS/LTCH PPS final rule (82 FR 38527), to inflate the charges from FY 2015 to FY 2018. The applicant determined an inflated average caseweighted standardized charge per case of $103,833. Because the price of AZEDRA® has yet to be determined, the applicant did not include the price of the drug in its analysis, nor did the applicant remove any charges associated with any predecessor radiopharmaceutical therapy use of MIBG agents. Based on the FY 2018 IPPS/LTCH PPS Table 10 thresholds, the average case-weighted threshold amount was $58,352. The applicant contended that AZEDRA® meets the cost criterion because the inflated average case-weighted standardized charge per case exceeds the average case-weighted threshold amount before including the average per patient cost for the product. We are concerned with the limited number of cases the applicant analyzed, and the applicant’s inability to determine the exact number of cases representing patients that potentially may be eligible for treatment involving AZEDRA® for each MS–DRG. We also are concerned that the MS–DRGs identified by the applicant’s search of the FY 2015 MedPAR data do not match the MS–DRGs that the applicant noted that potential cases that may be eligible for treatment involving the administration of AZEDRA® would typically map (MS–DRGs 643, 644, and 645, and MS–DRG 849). However, we acknowledge the difficulty in obtaining cost data for such a rare condition. We also note that, for the six identified MS– DRGs, the applicant’s inflated average case-weighted standardized charge per case of $103,833 exceeded all individual Table 10 average case-weighted threshold amounts ($97,188 for MS– DRG 271 being the greatest). We are inviting public comments on whether the AZEDRA® technology meets the cost criterion. With regard to substantial clinical improvement, the applicant maintained that the use of AZEDRA® has been shown to reduce the use of antihypertensive medications, reduce tumor size, improve blood pressure control, reduce secretion of tumor biomarkers, and demonstrate strong VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 evidence of overall survival rates. In addition, the applicant asserted that AZEDRA® provides a treatment option for those outlined in its anticipated indication patient population. The applicant asserted that AZEDRA® meets the substantial clinical improvement criterion based on the results from two clinical studies: (1) MIP–IB12 (IB12): A Phase I Study of Iobenguane (MIBG) I– 131 in Patients With Malignant Pheochromocytoma/Paraganglioma; 197 and (2) MIP–IB12B (IB12B): A Study Evaluating Ultratrace® Iobenguane I– 131 in Patients With Malignant Relapsed/Refractory Pheochromocytoma/Paraganglioma. The applicant explained that the IB12B study is similar to the IB12 study in that both studies evaluated two open-label, single-arm studies. The applicant reported that both studies included patients who had been diagnosed with malignant and/or recurrent and/or unresectable pheochromocytoma and Paraganglioma tumors, and both studies assessed objective tumor response, biochemical tumor response, overall survival rates, occurrence of hypertensive crisis, and the long-term benefit of AZEDRA® treatment relative to the need for antihypertensives. According to the applicant, the study designs, however, differed in dose regimens (1 dose administered to patients in the IB12 study, and 2 doses administered to patients in the IB12B study) and primary study endpoints. Differences in the designs of the studies prevented direct comparison of study endpoints and pooling of the data. However, the applicant stated that results from safety data from the IB12 study and the IB12B study were pooled and used to support substantial clinical improvement assertions. We note that the results from neither the IB12 study nor the IB12B study compared the effects of AZEDRA® to any of the other treatment options to decrease tumor burden (for example, cytotoxic chemotherapy, radiation therapy, and surgical debulking). Regarding the data results from the IB12 study, the applicant asserted that, based on the reported safety and tolerability, and primary endpoint of radiological response at 12 months, high-specific-activity I–131 MIBG may be an effective alternative therapeutic option for patients who have been diagnosed with iobenguane-avid, metastatic and/or recurrent pheochromocytoma and paraganglioma tumors for whom there are no approved therapies and for those patients who have failed available treatment options. In addition, the applicant used the exploratory finding of decreased or discontinuation of antihypertensive medications relative to baseline medications as evidence that AZEDRA® has clinical benefit and positive impact on the long-term effects of hypertension induced norepinephrine producing malignant pheochromocytoma and paraganlioma tumors. We understand that the applicant used antihypertensive medications as a proxy to assess the long-term effects of hypertension such as renal, myocardial, and cerebral end organ damage. The applicant reported that it studied 15 of the original IB12 study’s 21-patient cohort, and found 33 percent (n=5) had decreased or discontinuation of antihypertensive medications during the 12 months of follow-up. The applicant did not provide additional data on the incidence of renal insufficiency/failure, myocardial ischemic/infarction events, or transient ischemic attacks or strokes. It was unclear to us if these five patients also had decreased urine metanephrines, changed their diet, lost significant weight, or if other underlying comorbidities that influence hypertension were resolved, making it difficult to understand the significance of this exploratory finding. Regarding the applicant’s assertion that the use of AZEDRA® is safer and more effective than alternative therapies, we note that the IB12 study was a dose-escalating study and did not compare current therapies with AZEDRA®. We also note the following: (1) The average age of the 21 enrolled patients in the IB12 study was 50.4 years old (a range of 30 to 72 years old); (2) the gender distribution was 61.9 percent (n=13) male and 38.1 percent (n=8) female; and (3) 76.2 percent (n=16) were white, 14.3 percent (n=3) were black or African American, and 9.5 percent (n=2) were Asian. We agree with the study’s conductor 198 that the size of the study is a limitation, and with a younger, predominately white, male patient population, generalization of study results to a more diverse population may be difficult. The applicant reported that one other aspect of the patient population indicated that all 21 patients received prior anti-cancer therapy for treatment of malignant 197 Noto, Richard B., et al., ‘‘Phase 1 Study of High-Specific-Activity I–131 MIBG for Metastatic and/or Recurrent Pheochromocytoma or Paraganglioma (IB12 Phase 1 Study),’’ J Clin Endocrinol Metab, vol. 103(1), pp. 213–220. 198 Noto, Richard B., et. al., ‘‘Phase 1 Study of High-Specific-Activity I–131 MIBG for Metastatic and/or Recurrent Pheochromocytoma or Paraganglioma (IB12 Phase 1 Study),’’ J Clin Endocrinol Metab, vol. 103(1), pp. 213–220. PO 00000 Frm 00180 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules pheochromocytoma and paraganglioma tumors, which included the following: 57.1 Percent (n=12) received radiation therapy including external beam radiation and conventional MIBG; 28.6 percent (n=6) received cytotoxic chemotherapy (for example, CVD and other chemotherapeutic agents); and 14.3 percent (n=3) received Octreotide.199 Although this population illustrates a population that has failed some of the currently available therapy options, which may potentially support a finding of substantial clinical improvement for those with no other treatment options, we are unclear which patients benefited from treatment involving AZEDRA®, especially in view of the finding of a Fitzgerald et al. study cited earlier 200 that tissues previously irradiated by ERBT were found to be unresponsive to subsequent treatment with 131I–MIBG radionuclide. It was not clear in the application how previously ERBT-treated patients who failed ERBT fared with the RECIST scores, biotumor marker results, and reduction in antihypertensive medications. We also lacked information to draw the same correlation between previously CVD-treated patients and their RECIST scores, biotumor marker results, and reduction in antihypertensive medications. The applicant asserted that the use of AZEDRA® reduces tumor size and reduces the secretion of tumor biomarkers, thereby providing important clinical benefits to patients. The IB12 study assessed the overall best tumor response based on Response Evaluation Criteria in Solid Tumors (RECIST).201 Tumor biomarker response was assessed as complete or partial response for serum chromogranin A and total metanephrines in 80 percent and 64 percent of patients, respectively, and the applicant noted that both the overall best tumor response based on RECIST and tumor biomarker response favorable results are at doses higher than 500 mCi. We noticed that tumor burden improvement, as measured by RECIST criteria, showed that none of the 21 patients achieved a complete response. In addition, although 4 patients showed daltland on DSKBBV9HB2PROD with PROPOSALS2 199 Ibid. 200 Fitzgerald, P.A., Goldsby, R.E., Huberty, J.P., et al., ‘‘Malignant pheochromocytomas and paragangliomas: a phase II study of therapy with high-dose 131I-metaiodobenzylguanidine (131I– MIBG).’’ Ann N Y Acad Sci, 2006, vol. 1073, pp. 465. 201 Therasse, P., Arbuck, S.G., Eisenhauer, J.W., Kaplan, R.S., Rubinsten, L., Verweij, J., Van Blabbeke, M., Van Oosterom, A.T., Christian, M.D., and Gwyther, S.G., ‘‘New guidelines to evaluate the response to treatment in solid tumors,’’ J Natl Cancer Inst, 2000, vol. 92(3), pp. 205–16. Available at: https://www.eortc.be/Services/Doc/RECIST.pdf. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 partial response, these 4 patients also experienced dose-limiting toxicity with hematological events, and that all 4 patients received administered doses greater than 18.5 GBq (500 mCi). We also note that, regardless of total administered activity (for example, greater than or less than 18.5 GBq (500 mCi)), 61.9 percent (n=13) of the 21 patients enrolled in the study had stable disease and 14.3 percent (n=2) of the 14 patients who received greater than administered doses of 18.5 GBq (500 mCi) had progressive disease. Finally, we also noticed that, for most tumor markers, there were no dose relationship trends. While we recognize that there is no FDA-approved therapy for patients who have been diagnosed with 131I–MIBG avid malignant and/or recurrent and/or unresectable pheochromocytoma and paraganglioma tumors, we have questions as to whether the overall tumor best response and overall best tumor marker data results from the IB12 study support a finding that the AZEDRA® technology represents a substantial clinical improvement. Finally, regarding the applicant’s assertion that, based on the IB12 study data, AZEDRA® provides a safe alternative therapy for those patients who have failed other currently available treatment therapies, we note that none of the patients experienced hypertensive crisis, and that 76 percent (n=16) of the 21 patients enrolled in the study experienced Grade III or IV adverse events. Although the applicant indicated the adverse events were related to the study drug, the applicant also noted that there was no statistically significant difference between the greater than or less than 18.5 GBq administered doses; both groups had adverse events rates greater than 75 percent. Specifically, 5 of 7 patients (76 percent) who received less than or equal to 18.5 GBq administered doses, and 11 of 14 patients (79 percent) who received greater than 18.5 GBq administered doses experienced Grade III or IV adverse advents. The most common (greater than or equal to 10 percent) Grade III and IV adverse events were neutropenia, leukopenia, thrombocytopenia, nausea, and vomiting. We also note that: (1) There were 5 deaths during the study that occurred from approximately 2.5 months up to 22 months after treatment and there was no detailed data regarding the 5 deaths, especially related to the total activity received during the study; (2) there was no information about which patients received prior radiation therapy with EBRT and/or conventional PO 00000 Frm 00181 Fmt 4701 Sfmt 4702 20343 MIBG relative to those who experienced Grade III or IV adverse events; and (3) the total lifetime radiation dose was not provided by the applicant. We are inviting public comments on whether the safety data profile from the IB12 study supports a finding that AZEDRA® represents a substantial clinical improvement for patients who received treatment with 131I–MIBG for a diagnosis of avid malignant and/or recurrent and/or unresectable pheochromocytoma and paraganglioma tumors, given the risks for Grade III or IV adverse events. The applicant provided study data results from the IB12B study (MIP– IB12B), an open-label, prospective 5-year follow-up, single-arm, multi-center, Phase II pivotal study to evaluate the safety and efficacy of the use of AZEDRA® for the treatment of patients who have been diagnosed with malignant and/or recurrent pheochromocytoma and paraganglioma tumors to support substantial clinical improvement. The applicant reported that IB12B’s primary endpoint is the proportion of patients with a reduction (including discontinuation) of all antihypertensive medication by at least 50 percent for at least 6 months. Seventy-four patients who received at least 1 dosimetric dose of AZEDRA® were evaluated for safety and 68 patients who received at least 1 therapeutic dose of AZEDRA®, each at 500 mCi (or 8 mCi/kg for patients weighing less than or equal to 62.5 kg), were assessed for specific clinical outcomes. The applicant asserted that results from this prospective study met the primary endpoint (reduction or discontinuation of anti-hypertensive medications), as well as demonstrated strong supportive evidence from key secondary endpoints (overall tumor response, tumor biomarker response, and overall survival rates) that confers important clinical relevance to patients who have been diagnosed with malignant pheochromocytoma and paraganlioma tumors. The applicant also indicated that the use of AZEDRA® was shown to be generally well tolerated at doses administered at 8 mCi/kg. We note that the data results from the IB12B study did not have a comparator arm, making it difficult to interpret the clinical outcome data relative to other currently available therapies. As discussed for the IB12 study, the applicant reported that antihypertension treatment was a proxy for effectiveness of AZEDRA® on norepinephrine induced hypertension producing tumors. In the IB12B study, 25 percent (17/68) of patients met the primary E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20344 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules endpoint of having a greater than 50 percent reduction in antihypertensive agents for at least 6 months. The applicant further indicated that an additional 16 patients showed a greater than 50 percent reduction in antihypertensive agents for less than 6 months, and pooling data results from these 33 patients, the applicant concluded that 49 percent (33/68) achieved a greater than 50 percent reduction at any time during the study 12-month follow-up period. The applicant further compared its data results from the IB12B study regarding antihypertension medication and the frequency of post-infusion hypertension with published studies on MIBG and CVD therapy. The applicant noted a retrospective analysis of CVD therapy of 52 patients who had been diagnosed with metastatic pheochromocytoma and paraganliom tumors that found only 15 percent of CVD-treated patients achieved a 50-percent reduction in antihypertensive agents. The applicant also compared its results for postinfusion hypertension with literature reporting on MIBG and found 14 and 19 percent (depending on the study) of patients receiving MIBG experience hypertension within 24 hours of infusion. Comparatively, the applicant stated that the use of AZEDRA® had no acute events of hypertension following infusion. We are inviting public comments on whether these data results regarding hypertension support a finding that the AZEDRA® technology represents a substantial clinical improvement, and if antihypertensive medication reduction is an adequate proxy for improvement in renal, cerebral, and myocardial end organ damage. Regarding reduction in tumor burden (as defined by RECIST scores), the applicant indicated that at the conclusion of the IB12B 12-month follow-up period, 23.4 percent (n=15) of the 68 patients showed a partial response (PR), 68.8 percent (n=44) of the 68 patients achieved stable disease (SD), and 4.7 percent (n=3) of the 68 patients showed progressive disease. None of the patients showed completed response (CR). The applicant maintained that achieving SD is important for patients who have been treated for malignant pheochromocytoma and paraganglioma tumors because this is a progressive disease without a cure at this time. The applicant also indicated that literature shows that SD is maintained in approximately 47 percent of treatment ¨ naıve patients who have been diagnosed with metastatic pheochromocytoma and paraganglioma tumors at 1 year due to VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 the indolent nature of the disease.202 In the IB12B study, the data results equated to 23 percent of patients achieving partial response and 69 percent of patients achieving stable disease. According to the applicant, this compares favorably to treatment with both conventional radiolabeled MIBG and CVD chemotherapy. The applicant stated that the data results demonstrated effective tumor response rates. The applicant reported that the IB12 and IB12B study data showed overall tumor response rates of 80 percent and 92 percent, respectively. In addition, the applicant contended that the study data across both trials show that patients demonstrated improved blood pressure control, reductions in tumor biomarker secretion, and strong evidence in overall survival rates. The overall median time to death from the first dose was 36.7 months in all treated patients. Patients who received 2 therapeutic doses had an overall median survival rate of 48.7 months, compared to 17.5 months for patients who only received a single dose. The applicant indicated that comparison of IB12B study data regarding overall survival rate with historical data is difficult due to the differences in the retrospective and heterogeneous nature of the published clinical studies and patient characteristics, especially when overall survival is calculated from the time of initial diagnosis. We agree with the applicant regarding the difficulties in comparing the results of the published clinical studies, and also believe that the differences in these studies may make it more difficult to evaluate whether the use of the AZEDRA® technology improves overall survival rates relative to other therapies. We acknowledge the challenges with constructing robust clinical studies due to the extremely rare occurrence of patients who have been diagnosed with pheochromocytoma and paraganglioma tumors. However, we are concerned that because the data for both of these studies is mainly based upon retrospective studies and small, heterogeneous patient cohorts, it is difficult to draw strong conclusions regarding efficacy. Only very limited nonpublished data from two, single-arm, noncomparative studies are available to evaluate the safety and 202 Hescot, S., Leboulleux, S., Amar, L., Vezzosi, D., Borget, I., Bournaud-Salinas, C., de la ´ Fouchardiere, C., Libe, R., Do Cao, C., Niccoli, P., Tabarin, A., ‘‘One-year progression-free survival of therapy-naive patients with malignant pheochromocytoma and paraganglioma,’’ The J Clin Endocrinol Metab, 2013, vol. 98(10), pp. 4006–4012. PO 00000 Frm 00182 Fmt 4701 Sfmt 4702 effectiveness of Ultratrace® I–131 MIBG, leading to a comparison of outcomes with historical controls. We are inviting public comments on whether the use of the AZEDRA® technology meets the substantial clinical improvement criterion, including with respect to the specific concerns we have raised. Below we summarize and respond to two written public comments we received during the open comment period in response to the published notice in the Federal Register announcing the New Technology Town Hall Meeting regarding the substantial clinical improvement criterion aspect of AZEDRA®’s application for new technology add-on payments for FY 2019 below. Comment: One commenter supported the approval of the application of AZEDRA® for new technology add-on payments for FY 2019 and its substantial clinical improvement in the treatment options available for Medicare beneficiaries. The commenter believed that AZEDRA® demonstrates a substantial clinical improvement over other available therapies (as described previously) and meets a current unmet need for the treatment of patients who have been diagnosed with pheochromocytoma and paraganglioma. The commenter stated that AZEDRA®’s structure is unlike the structure of any existing treatment option, given the use of the Ultratrace® technology which has demonstrated resulting occurrences of reduced serious cardiovascular side effects and increased efficacy due to its unique ‘‘carrier-free’’ structure. Another commenter also supported the approval of new technology add-on payments for AZEDRA® and its substantial clinical improvement in the treatment options available for Medicare beneficiaries. This commenter stated that AZEDRA® is much simpler to administer than low-specific activity I– 131 MIBG, offers quicker and simpler infusions, and provides a rational, personalized, and effective therapy with promising and highly significant clinical benefits for patients who have been diagnosed with advanced pheochromocytoma and paraganglioma. Response: We appreciate the commenters’ input. We will take these comments into consideration when deciding whether to approve new technology add-on payments for AZEDRA® for FY 2019. m. The AquaBeam System (Aquablation) PROCEPT BioRobotics Corporation submitted an application for new technology add-on payments for the E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 AquaBeam System (Aquablation) for FY 2019. According to the applicant, the AquaBeam System is indicated for the use in the treatment of patients experiencing lower urinary tract symptoms caused by a diagnosis of benign prostatic hyperplasia (BPH). The AquaBeam System consists of three main components: A console with two high-pressure pumps, a conformal surgical planning unit with trans-rectal ultrasound imaging, and a single-use robotic hand-piece. The applicant reported that The AquaBeam System provides the operating surgeon a multi-dimensional view, using both ultrasound image guidance and endoscopic visualization, to clearly identify the prostatic adenoma and plan the surgical resection area. Based on the planning inputs from the surgeon, the system’s robot delivers Aquablation, an autonomous waterjet ablation therapy that enables targeted, controlled, heat-free and immediate removal of prostate tissue used for the purpose of treating lower urinary tract symptoms caused by a diagnosis of BPH. The combination of surgical mapping and robotically-controlled resection of the prostate is designed to offer predictable and reproducible outcomes, independent of prostate size, prostate shape or surgeon experience. In its application, the applicant indicated that benign prostatic hyperplasia (BPH) is one of the most commonly diagnosed conditions of the male genitourinary tract 203 and is defined as the ‘‘. . . enlargement of the prostate due to benign growth of glandular tissue . . .’’ in older men.204 BPH is estimated to affect 30 percent of males that are older than 50 years old.205 206 BPH may compress the urethral canal possibly obstructing the 203 Bachmann, A., Tubaro, A., Barber, N., d’Ancona, F., Muir, G., Witzsch, U., Thomas, J., ‘‘180–W XPS GreenLight Laser Vaporisation Versus Transurethral Resection of the Prostate for the Treatment of Benign Prostatic Obstruction: 6-month safety and efficacy results of a european multicentre randomised trial—the GOLIATH study,’’ European Association of Urology, 2014, vol. 65, pp. 931–942. 204 Gilling, P., Anderson, P., and Tan, A., ‘‘Aquablation of the Prostate for Symptomatic Benign Prostatic Hyperplasia: 1-Year results,’’ The Journal of Urology, 2017, vol. 197, pp. 156–1572. 205 Roehrborn, C., Gange, S., Shore, N., Giddens, J., Bolton, D., Cowan, B., Rukstalist, D., ‘‘The Prostatic Urethral Lift for the Treatmentof Lower Urinary Tract Symptoms Associated with Prostate Enlargement Due to Benign Prostatic Hyperplasia: The LIFT study,’’ The Journal of Urology, 2013, vol. 190, pp. 2161–2167. 206 Sonksen, J., Barber, N., Speakman, M., Berges, R., Wetterauer, U., Greene, D., Gratzke, C., ‘‘Prospective, Randomized, Multinational Study of Prostatic Urethral Lift Versus Transurethral Resection of the Prostate: 12-month results from the BPH6 study,’’ European Association of Urology, 2015, vol. 68, pp. 643–652. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 urethra, which may cause symptoms that effect the lower urinary tract, such as difficulty urinating (dysuria), hesitancy, and frequent urination.207 208 209 The initial treatment for a patient who has been diagnosed with BPH is watchful waiting and medications.210 Symptom severity, as measured by one test, the International Prostate Symptom Score (IPSS), is the primary measure by which surgery necessity is decided.211 Many techniques exist for the surgical treatment of patients who have been diagnosed with BPH, and these surgical treatments differ primarily by the method of resection: Electrocautery in the case of Transurethral Resection of the Prostate (TURP), laser enucleation, plasma vaporization, photoselective vaporization, radiofrequency ablation, microwave thermotherapy, and transurethral incision 212 are among the primary methods. TURP is the primary reference treatment for patients who have been diagnosed with BPH.213 214 215 216 217 207 Roehrborn, C., Gange, S., Shore, N., Giddens, J., Bolton, D., Cowan, B., Rukstalist, D., ‘‘The Prostatic Urethral Lift for the Treatmentof Lower Urinary Tract Symptoms Associated with Prostate Enlargement Due to Benign Prostatic Hyperplasia: The LIFT study,’’ The Journal of Urology, 2013, vol. 190, pp. 2161–2167. 208 Sonksen, J., Barber, N., Speakman, M., Berges, R., Wetterauer, U., Greene, D., Gratzke, C., ‘‘Prospective, Randomized, Multinational Study of Prostatic Urethral Lift Versus Transurethral Resection of the Prostate: 12-month results from the BPH6 study,’’ European Association of Urology, 2015, vol. 68, pp. 643–652. 209 Roehrborn, C., Gilling, P., Cher, D., andTemplin, B., ‘‘The WATER Study (Waterjet Ablation Therapy for Ednoscopic Resection of prostate tissue),’’ Redwood City: PROCEPT BioRobotics Corporation, 2017. 210 Ibid. 211 Cunningham, G. R., Kadmon, D., 2017, ‘‘Clinical manifestations and diagnostic evaluation of benign prostatic hyperplasia,’’ 2017. Available at: https://www.uptodate.com/contents/clinicalmanifestations-and-diagnostic-evaluation-ofbenign-prostatic-hyperplasia?search=cunningham %20kadmon%202017%20benign %20prostatic&source=search_result&selectedTitle= 2∼150&usage_type=default&display_rank=2. 212 Ibid. 213 Bachmann, A., Tubaro, A., Barber, N., d’Ancona, F., Muir, G., Witzsch, U., Thomas, J., ‘‘180–W XPS GreenLight Laser Vaporisation Versus Transurethral Resection of the Prostate for the Treatment of Benign Prostatic Obstruction: 6-month safety and efficacy results of a european multicentre randomised trial—the GOLIATH study,’’ European Association of Urology, 2014, vol. 65, pp. 931–942. 214 Cunningham, G. R., Kadmon, D., ‘‘Clinical manifestations and diagnostic evaluation of benign prostatic hyperplasia,’’ 2017. Available at: https:// www.uptodate.com/contents/clinicalmanifestations-and-diagnostic-evaluation-ofbenign-prostatic-hyperplasia?search=cunningham %20kadmon%202017%20benign %20prostatic&source=search_result&selectedTitle= 2∼150&usage_type=default&display_rank=2. 215 Mamoulakis, C., Efthimiou, I., Kazoulis, S., Christoulakis, I., and Sofras, F., ‘‘The Modified Clavien Classification System: A standardized PO 00000 Frm 00183 Fmt 4701 Sfmt 4702 20345 According to the applicant, while the TURP procedure achieves alleviation of the symptoms that affect the lower urinary tract associated with a diagnosis of BPH, morbidity rates caused by adverse events are high following the procedure. The TURP procedure has a well-documented history of associated adverse effects, such as hematuria, clot retention, bladder wall injury, hyponatremia, bladder neck contracture, urinary incontinence, and retrograde ejaculation.218 219 220 221 222 The likelihood of both adverse events and long-term morbidity related to the TURP procedure increase with the size of the prostate.223 The applicant asserted that the AquaBeam System provides superior safety outcomes as compared to the platform for reporting complications in transurethral resection of the prostate,’’ World Journal of Urology, 2011, vol. 29, pp. 205–210. 216 Roehrborn, C., Gange, S., Shore, N., Giddens, J., Bolton, D., Cowan, B., Rukstalist, D., ‘‘The Prostatic Urethral Lift for the Treatmentof Lower Urinary Tract Symptoms Associated with Prostate Enlargement Due to Benign Prostatic Hyperplasia: The LIFT study,’’ The Journal of Urology, 2013, vol. 190, pp. 2161–2167. 217 Sonksen, J., Barber, N., Speakman, M., Berges, R., Wetterauer, U., Greene, D., Gratzke, C., ‘‘Prospective, Randomized, Multinational Study of Prostatic Urethral Lift Versus Transurethral Resection of the Prostate: 12-month results from the BPH6 study,’’ European Association of Urology, 2015, vol. 68, pp. 643–652. 218 Roehrborn, C., Gilling, P., Cher, D., and Templin, B., ‘‘The WATER Study (Waterjet Ablation Therapy for Ednoscopic Resection of prostate tissue),’’ Redwood City: PROCEPT BioRobotics Corporation, 2017. 219 Cunningham, G. R., & Kadmon, D., 2017, ‘‘Clinical manifestations and diagnostic evaluation of benign prostatic hyperplasia,’’ 2017. Available at: https://www.uptodate.com/contents/clinicalmanifestations-and-diagnostic-evaluation-ofbenign-prostatic-hyperplasia?search=cunningham %20kadmon%202017%20benign %20prostatic&source=search_result&selectedTitle= 2∼150&usage_type=default&display_rank=2. 220 Mamoulakis, C., Efthimiou, I., Kazoulis, S., Christoulakis, I., Sofras, F., ‘‘The Modified Clavien Classification System: A standardized platform for reporting complications in transurethral resection of the prostate,’’ World Journal of Urology, 2011, vol. 29, pp. 205–210. 221 Roehrborn, C., Gange, S., Shore, N., Giddens, J., Bolton, D., Cowan, B., Rukstalist, D., ‘‘The Prostatic Urethral Lift for the Treatmentof Lower Urinary Tract Symptoms Associated with Prostate Enlargement Due to Benign Prostatic Hyperplasia: The LIFT study,’’ The Journal of Urology, 2013, vol. 190, pp. 2161–2167. 222 Sonksen, J., Barber, N., Speakman, M., Berges, R., Wetterauer, U., Greene, D., Gratzke, C., ‘‘Prospective, Randomized, Multinational Study of Prostatic Urethral Lift Versus Transurethral Resection of the prostate: 12-month results from the BPH6 study,’’ European Association of Urology, 2015, vol. 68, pp. 643–652. 223 Bachmann, A., Tubaro, A., Barber, N., d’Ancona, F., Muir, G., Witzsch, U., Thomas, J., ‘‘180–W XPS GreenLight Laser Vaporisation Versus Transurethral Resection of the Prostate for the Treatment of Benign Prostatic Obstruction: 6-month safety and efficacy results of a european multicentre randomised trial—the GOLIATH study,’’ European Association of Urology, 2014, vol. 65, pp. 931–942. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20346 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules TURP procedure, while providing noninferior efficacy in treating the symptoms that affect the lower urinary tract associated with a diagnosis of BPH. The applicant further stated that the AquaBeam System yields consistent and predictable procedure and resection times regardless of the size and shape of the prostate and the surgeon’s experience. Lastly, according to the applicant, the AquaBeam System provides increased efficacy and safety for larger prostates as compared to the TURP procedure. With respect to the newness criterion, FDA granted the applicant’s De Novo request on December 21, 2017, for use in the resection and removal of prostate tissue in males suffering from lower urinary tract symptoms (LUTS) due to benign prostatic hyperplasia. The applicant stated that the AquaBeam System was made available on the U.S. market immediately after the FDA granted the De Novo request. Therefore, if approved for new technology add-on payments, the newness period is considered to begin on December 21, 2017. There are currently no existing ICD–10–PCS procedure codes to specifically identify procedures involving the Aquablation method or technique for the treatment of symptoms that affect the lower urinary tract in patients who have been diagnosed with BPH. The applicant stated that it applied for approval for a distinct ICD-10–PCS procedure code to uniquely identify procedures involving the AquaBeam System at the ICD–10 Maintenance and Coordination Committee March 2018 meeting. As discussed earlier, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and would not be considered ‘‘new’’ for the purposes of new technology add-on payments. With regard to the first criterion, whether a product uses the same or a similar mechanism of action to achieve a therapeutic outcome, the applicant stated that the AquaBeam System is the first technology to deliver treatment to patients who have been diagnosed with BPH for the symptoms that effect the lower urinary tract caused by BPH via Aquablation therapy. The AquaBeam System utilizes intra-operative image guidance for surgical planning and then Aquablation therapy to robotically resect tissue utilizing a high-velocity waterjet. According to the applicant, all other BPH treatment procedures only utilize cystoscopic visualization, whereas the AquaBeam System utilizes Aquablation therapy, a combination of cystoscopic visualization and VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 intra-operative image guidance. According to the applicant, the AquaBeam System’s use of Aquablation therapy qualifies it as the only technology to utilize a high-velocity room temperature waterjet for tissue resection, while most other BPH surgical procedures utilize thermal energy to resect prostatic tissue, or require the implantation of clips to pull back prostatic tissue blocking the urethra. Lastly, according to the applicant, all other surgical modalities are executed by the operating surgeon, while the AquaBeam System allows planning by the surgeon and utilization of Aquablation therapy ensures accurate and efficient tissue resection is autonomously executed by the robot. With respect to the second criterion, whether a product is assigned to the same or a different MS–DRG, the applicant stated that potential cases representing potential patients who may be eligible for treatment involving the AquaBeam System’s Aquablation therapy technique will ultimately map to the same MS–DRGs as cases for existing BPH treatment options. With respect to the third criterion, whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population, the applicant stated that the AquaBeam System’s Aquablation therapy will ultimately treat the same patient population as other available BPH treatment options. The applicant asserted that the AquaBeam System’s Aquablation therapy has been shown to be more effective and safer than the TURP procedure for patients with larger prostate sizes. The applicant stated that prostates 80 ml or greater in size are not appropriate for the TURP procedure and, therefore, more intensive procedures such as surgery are required. Furthermore, the applicant claimed that the AquaBeam System’s Aquablation therapy is particularly appropriate for smaller prostate sizes, ∼30 ml, due to increased accuracy provided by both the computer assistance and ultrasound visualization. We have the following concerns regarding whether the AquaBeam System meets the newness criterion. Currently, there are many treatment options that utilize varying forms of ablation, such as mono and bipolar TURP procedures, laser, microwave, and radiofrequency, to treat the symptoms associated with a diagnosis of BPH. We are concerned that, while this device utilizes water to perform any tissue removal, its mechanism of action may not be different from that of other forms of treatment for patients who have PO 00000 Frm 00184 Fmt 4701 Sfmt 4702 been diagnosed with BPH. Further, the use of water to perform tissue removal in the treatment of associated symptoms in patients who have been diagnosed with BPH has existed in other areas of surgical treatment prior to the introduction of this product (for example, endometrial ablation and wound debridement). In addition, the standard operative treatment, such as with the TURP procedure, for patients who have been diagnosed with BPH is to widen the urethra compressed by an enlarged prostate in an effort to alleviate the negative effects of an enlarged prostate. Like other existing methods, the AquaBeam System’s Aquablation therapy also ablates tissue to enlarge compression of the urethra. Additionally, while the robotic arm and computer programing may result in different outcomes for patients, we are uncertain that the use of the robotic hand and computer programming result in a new mechanism of action. We are inviting public comments on this issue. We also are inviting public comments on whether the AquaBeam System’s Aquablation therapy is substantially similar to existing technologies and whether it meets the newness criterion. With regard to the cost criterion, the applicant conducted the following analysis to demonstrate that the technology meets the cost criterion. Given that the AquaBeam System’s Aquablation therapy procedure does not currently have a unique ICD–10–PCS procedure code, the applicant searched the FY 2016 MedPAR data file for cases with the following current ICD–10–PCS codes describing other BPH minimally invasive procedures to identify potential cases representing potential patients who may be eligible for treatment involving the AquaBeam System’s Aquablation therapy: 0V507ZZ (Destruction of prostate, via natural or artificial opening), 0V508ZZ (Destruction of prostate, via natural or artificial opening endoscopic), 0VT07ZZ (Resection of prostate, via natural or artificial opening), and 0VT08ZZ (Resection of prostate, via natural or artificial opening endoscopic). The applicant identified a total of 133 MS– DRGs using these ICD–10–PCS codes. In order to calculate the standardized charges per case, the applicant conducted two analyses, based on 100 percent and 75 percent of identified claims in the FY 2016 MedPAR data file. The applicant based its analysis on 100 percent of claims mapping to 133 MS–DRGs, and 75 percent of claims mapping to 6 MS–DRGs. The cases identified in the 75 percent analysis mapped to MS–DRGs 665 (Prostatectomy with MCC), 666 E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules (Prostatectomy with CC), 667 (Prostatectomy without CC/MCC), 713 (Transurethral Prostatectomy with CC/ MCC), 714 (Transurethral Prostatectomy without CC/MCC), and 988 (NonExtensive O.R. Procedures Unrelated to Principal Diagnosis with CC). In situations in which there were fewer than 11 cases for individual MS–DRGs in the MedPAR data file, a value of 11 was imputed to ensure confidentiality for patients. When evaluating 100 percent of the cases identified, the applicant included low–volume MS–DRGs that had equal to or less than 11 total cases to represent potential patients who may be eligible for treatment involving the AquaBeam System’s Aquablation therapy in order to calculate the average case–weighted unstandardized and standardized charge amounts. The 75 percent analysis removed those MS–DRGs with 11 cases or less representing potential patients who may be eligible for treatment involving the AquaBeam System’s Aquablation therapy, resulting in only 6 of the 133 MS–DRGs remaining for analysis. A total of 8,449 cases were included in the 100 percent analysis and 6,285 cases were included in the 75 percent analysis. Using the 100 percent and 75 percent samples, the applicant determined that the average case-weighted unstandardized charge per case was $69,662 and $47,475, respectively. The applicant removed 100 percent of total charges associated with the service category ‘‘Medical/Surgical Supply Charge Amount’’ (which includes revenue centers 027x and 062x) because the applicant believed that it was the most conservative choice, as this amount varies by MS–DRG. The applicant stated that the financial impact of utilizing the AquaBeam System’s Aquablation therapy on hospital resources other than on ‘‘Medical Supplies’’ is unknown at this time. Therefore, a value of $0 was used for charges related to the prior technology. The applicant standardized the charges, and inflated the charges using an inflation factor of 1.09357, from the FY 2018 IPPS/LTCH PPS final rule (82 FR 38524). The applicant then added the charges for the new technology. The applicant computed a final inflated average case-weighted standardized charge per case of $69,588 for the 100 percent sample, and $51,022 for the 75 percent sample. The average caseweighted threshold amount was $59,242 for the 100 percent sample, and $48,893 for the 75 percent sample. Because the final inflated average case-weighted standardized charge per case exceeds VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 the average case-weighted threshold amount for both analyses, the applicant maintained that the technology meets the cost criterion. We are inviting public comment regarding whether the technology meets the cost criterion. With respect to the substantial clinical improvement criterion, the applicant asserted that the Aquablation therapy provided by the AquaBeam System represents a substantial clinical improvement over existing treatment options for symptoms associated with the lower urinary tract for patients who have been diagnosed with BPH. Specifically, the applicant stated that the AquaBeam System’s Aquablation therapy provides superior safety outcomes compared to the TURP procedure, while providing noninferior efficacy in treating the symptoms that effect the lower urinary tract associated with a diagnosis of BPH; the AquaBeam System’s delivery of Aquablation therapy yields consistent and predictable procedure and resection times regardless of the size and shape of the prostate or the surgeon’s experience; and the AquaBeam System’s Aquablation therapy demonstrated superior efficacy and safety for larger prostates (that is, prostates sized 50 to 80 mL) as compared to the TURP procedure. The applicant provided the results of one Phase I and one Phase II trial published articles, the WATER Study Clinical Study Report, and a metaanalysis of current treatments with its application as evidence for the substantial clinical improvement criterion. According to the applicant, the first study 224 enrolled 15 nonrandomized patients with a prostate volume between 25 to 80 ml in a Phase I trial testing the safety and feasibility of the AquaBeam System’s Aquablation therapy; all patients received the AquaBeam System’s Aquablation therapy. This study, a prospective, nonrandomized study, enrolled men who were 50 to 80 years old who were affected by moderate to severe lower urinary tract symptoms, who did not respond to standard medical therapy.225 Follow-up assessments were conducted at 1, 3, and 6 months and included information on adverse events, serum PSA level, uroflowmetry, PVR, quality of life, and the International Prostate Symptom Score (IPSS) and International Index of 224 Gilling P., Reuther, R., Kahokehr, A., Fraundorfer, M., ‘‘Aquablation—Image-guided Robot-assisted Waterjet Ablation of the Prostate: Initial clinical experience,’’ British Journal of Urology International, 2016, vol. 117, pp. 923–929. 225 Ibid. PO 00000 Frm 00185 Fmt 4701 Sfmt 4702 20347 Erectile Function (IIEF) scores. The primary outcome was the assessment of safety as measured by adverse event reporting; secondary endpoints focused on alleviation of BPH symptoms.226 The applicant indicated that 8 of the 15 patients who were enrolled in the trial had at least 1 procedure-related adverse event (for example, catheterization, hematuria, dysuria, pelvic pain, bladder spasms), which the authors reported to be consistent with outcomes from minimally-invasive transurethral procedures.227 There were no occurrences of incontinence, retrograde ejaculation, or erectile dysfunction at 30 days.228 Statistically significant improvement on all outcomes occurred over the 6-month period. Average IPSS scores showed a negative slope with scores of 23.1, 11.8, 9.1, and 8.6 for baseline, 1 month, 3 months, and 6 months (p<0.01 in all cases). Average quality of life scores, which range from 1 to 5, where 1 is better and 5 is worse, decreased from 5.0 at baseline to 2.6 at 1 month, 2.2 at 3 months, and 2.5 at 6 months. Average maximum urinary flow rate increased steadily across time points from 8.6 ml/s at baseline to 18.6 ml/s at 6 months. Lastly, average post-void residual urine volume decreased from 91 ml at baseline to 38 ml at 1 month, 60 ml at 3 months, and 30 ml at 6 months.229 The second study 230 presents results from a Phase II trial involving 21 men with a prostate volume between 30 to 102 ml who received treatment involving the AquaBeam System’s Aquablation therapy with follow-up at 1 year. This prospective study enrolled men between the ages of 50 and 80 years old who were effected by moderate to severe symptomatic BPH.231 The primary end point was the rate of adverse events; the secondary end points measured alleviation of symptoms associated with a diagnosis of BPH. Data was collected at baseline and at 1 month, 3 months, 6 months, and 12 months; 1 patient withdrew at 3 months. The authors asserted that the occurrence of post-operative adverse events (urinary retention, dysuria, hematuria, urinary tract infection, bladder spasm, meatal stenosis) were consistent with other minimally-invasive transurethral 226 Ibid. 227 Gilling, P., Anderson, P., and Tan, A., ‘‘Aquablation of the Prostate for Symptomatic Benign Prostatic Hyperplasia: 1-Year results,’’ The Journal of Urology, 2017, vol. 197, pp. 156–1572. 228 Ibid. 229 Ibid. 230 Ibid. 231 Ibid. E:\FR\FM\07MYP2.SGM 07MYP2 20348 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 procedures; 232 6 patients had at least 1 adverse event, including temporary urinary symptoms and medically-treated urinary tract infections.233 The mean IPSS scores decreased from the baseline of 22.8 with 11.5 at 1 month, 7 at 3 months, 7.1 at 6 months, and 6.8 at 12 months and were statistically significantly different. Similarly, quality of life decreased from a mean score of 5 at baseline to 1.7 at 12 months, all time points were statistically significantly different from the baseline. The third document provided by the applicant is the Clinical Study Report: WATER Study,234 a prospective multi-center, randomized, blinded study. The WATER Study compared the AquaBeam System’s Aquablation therapy to the TURP procedure for the treatment of lower urinary tract symptoms associated with a diagnosis of BPH. One hundred eighty one (181) patients with prostate volumes between 30 and 80 ml were randomized, 65 patients to the TURP procedure group and the other 116 to the AquaBeam System’s Aquablation therapy group, with 176 (97 percent of patients) continuing at 3 and 6 month follow-up, where 2 missing patients received treatment involving the AquaBeam System’s Aquablation therapy and 3 received treatment involving the TURP procedure; randomization efficacy was assessed and confirmed with findings of no statistical differences between cases and controls among all characteristics measures, specifically prostate volume. Two primary endpoints were identified: (1) The safety endpoint was the proportion of patients with adverse events rates as ‘‘probably or definitely related to the study procedure’’ also classified as the Clavien-Dindo (CD) Grade 2 or higher or any Grade 1 resulting in persistent disability; and (2) the primary efficacy endpoint was a change in the IPSS score from baseline to 6 months. Three secondary endpoints were based on perioperative data and were: Length of hospital stay, length of operative time, and length of resection time. The occurrences of three secondary endpoints during the 6-month follow-up were: (1) Reoperation or reintervention within 6 months; (2) evaluation of proportion of 232 Gilling, P., Anderson, P., and Tan, A., ‘‘Aquablation of the Prostate for Symptomatic Benign Prostatic Hyperplasia: 1-Year results,’’ The Journal of Urology, 2017, vol. 197, pp. 156–1572. 233 Ibid. 234 Roehrborn, C., Gilling, P., Cher, D., Templin, B., ‘‘The WATER Study (Waterjet Ablation Therapy for Ednoscopic Resection of prostate tissue),’’ Redwood City: PROCEPT BioRobotics Corporation, 2017. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 sexually active patients; and (3) evaluation of proportion of patients with major adverse urologic events. At 3 months, 25 percent of the patients in the AquaBeam System’s Aquablation therapy group and 40 percent of the patients in the TURP group had an adverse event. The difference of ¥15 percent has a 95 percent confidence interval of ¥29.2 and ¥1.0 percent. At 6 months, 25.9 percent of the patients in the AquaBeam System’s Aquablation therapy group and 43.1 percent of the patients in the TURP group had an adverse event. The difference of ¥17 percent has a 95 percent confidence interval of ¥31.5 to ¥3.0 percent. An analysis of safety events classified with the CD system as possibly, probably or definitely related to the procedure resulted in a CD Grade 1 persistent event difference between ¥17.7 percent (favoring the AquaBeam System’s Aquablation therapy) with 95 percent confidence interval of ¥30.1 to ¥7.2 percent and a CD Grade 2 or higher event difference of ¥3.3 percent with 95 percent confidence interval of ¥16.5 to 8.7 percent. The applicant indicated that the primary efficacy endpoint was assessed by a change in IPSS score over time. While change in score and change in percentages are generally higher for the AquaBeam System’s Aquablation therapy, no statistically significant differences occurred between the AquaBeam System’s Aquablation therapy and the TURP procedure over time. For example, the AquaBeam System’s Aquablation therapy group experienced changes in IPSS mean score by visit of 0, ¥3.8, ¥12.5, ¥16.0, and ¥16.9 at baseline, 1 week, 1 month, 3 months, and 6 months, respectively, while the TURP group had mean scores of 0, ¥3.6, ¥11.1, ¥14.6, and ¥15.1 at baseline, 1 week, 1 month, 3 months, and 6 months, respectively. Lastly, the applicant indicated that secondary endpoints were assessed. A mean length of stay for both the AquaBeam System’s Aquablation therapy and the TURP procedure groups of 1.4 was achieved. While the mean operative times were similar, the hand piece in and out time was statistically significantly shorter for the AquaBeam System’s Aquablation therapy group at 23.3 minutes as compared to 34.2 in the TURP procedure group. The mean resection time was 23 minutes shorter for the AquaBeam System’s Aquablation therapy group at 3.9 minutes. No statistically significant difference was seen between the AquaBeam System’s Aquablation therapy and the TURP procedure groups on the outcomes of reintervention and worsening sexual PO 00000 Frm 00186 Fmt 4701 Sfmt 4702 function; 32.9 percent of the AquaBeam System’s Aquablation therapy group had worsening sexual function as compared to 52.8 percent of the TURP procedure group. While statistically significant differences occurred across groups for change in ejaculatory function, the difference no longer remained at 6 months. While a greater proportion of the TURP procedure group patients experienced a negative change in erectile function as compared to the AquaBeam System’s Aquablation therapy group patients (10 percent versus 6.2 percent at 6 months), no statistically significant differences occurred. No statistically significant differences between groups occurred for major adverse urologic events. The applicant provided a metaanalysis of landmark studies regarding typical treatments for patients who have been diagnosed with BPH in order to provide supporting evidence for the assertion of superior outcomes achieved with the use of the AquaBeam System’s Aquablation therapy. The applicant cited four ‘‘landmark clinical trials,’’ which report on the AquaBeam System’s Aquablation therapy,235 the TURP procedure, Green light laser versus the TURP procedure,236 and Urolift.237 Comparisons are made between performance outcomes on three separate treatments for patients who have been diagnosed with BPH: The AquaBeam System’s Aquablation therapy, the TURP procedure, and Urolift. The applicant stated that all three clinical trials included men with average IPSS baseline scores of 21 to 23 points. The applicant stated that, while total procedure times are similar across all three treatment options, the AquaBeam System’s Aquablation therapy has dramatically less time and variability associated with the tissue treatment. The applicant further stated that the differences between treatment options were not assessed for statistical significance. The applicant indicated 235 Roehrborn, C., Gilling, P., Cher, D., Templin, B., ‘‘The WATER Study (Waterjet Ablation Therapy for Ednoscopic Resection of prostate tissue),’’ Redwood City: PROCEPT BioRobotics Corporation, 2017. 236 Bachmann, A., Tubaro, A., Barber, N., d’Ancona, F., Muir, G., Witzsch, U., Thomas, J., ‘‘180–W XPS GreenLight Laser Vaporisation Versus Transurethral Resection of the Prostate for the Treatment of Benign Prostatic Obstruction: 6-month safety and efficacy results of a european multicentre randomised trial—the GOLIATH study,’’ European Association of Urology, 2014, vol. 65, pp. 931–942. 237 Sonksen, J., Barber, N., Speakman, M., Berges, R., Wetterauer, U., Greene, D., Gratzke, C., ‘‘Prospective, Randomized, Multinational Study of Prostatic Urethral Lift Versus Transurethral Resection of the Prostate: 12-month results from the BPH6 study,’’ European Association of Urology, 2015, vol. 68, pp. 643–652. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules that the AquaBeam System’s Aquablation therapy, with an approximate score of 17, had the largest improvement in IPSS scores at 6 months as compared to 16 for the TURP procedure and 11 for Urolift. Compared to 46 percent in the TURP group, the applicant found that the AquaBeam System’s Aquablation therapy and Urolift had much lower percentages, 4 percent and 0 percent, respectively, of an ejaculation-related consequence in patients. Lastly, the applicant stated that safety events, as measured by the percentage of CD Grade 2 or higher events, were lower in the AquaBeam System’s Aquablation therapy (19 percent) and Urolift (14 percent) than in TURP (29 percent). We have several concerns related to the substantial clinical improvement criterion. The applicant performed a meta-analysis comparing results from three separate studies, which tested the effects of three separate treatment options. According to the applicant, the results provided consistently show the AquaBeam System’s Aquablation therapy and Urolift as being superior to the standard treatment of the TURP procedure. We have concerns with the interpretation of these results that the applicant provided. The comparison of multiple clinical studies is a difficult issue. It is not clear if the applicant took into account the varying study designs, sample techniques, and other study specific issues, such as physician skill and patient health status. For instance, the applicant stated that a comparison of Urolift and the AquaBeam System’s Aquablation therapy may not be appropriate due to the differing indications of the procedures; the applicant indicated that Urolift is primarily used for the treatment of patients who have been diagnosed with BPH who have smaller prostate volumes, whereas the AquaBeam System’s Aquablation therapy procedure may be used in all prostate sizes. Similarly, the applicant stated that the TURP procedure is generally not utilized in patients with prostates larger than 80ml, whereas such patients may be eligible for treatment involving the AquaBeam System’s Aquablation therapy. We note that the applicant submitted a meta-analysis in an effort to compare currently available therapies to the AquaBeam System’s Aquablation therapy. The possibility of the heterogeneity of samples and methods across studies leads to the possible introduction of bias, which results in the difficulty or inability to distinguish between bias and actual outcomes. We VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 are inviting public comments on the applicability of this meta-analysis. Additionally, the differences between the AquaBeam System’s Aquablation therapy and standard treatment options may not be as impactful and confined to safety aspects. It appears that the data on efficacy supported the equivalence of the AquaBeam System’s Aquablation therapy and the TURP procedure based upon noninferiority analysis. We agree that the safety data were reported as showing superiority of the AquaBeam System’s Aquablation therapy over the TURP procedure, although the data were difficult to track because adverse consequences were combined into categories; the AquaBeam System’s Aquablation therapy was reportedly better in terms of ejaculatory function. It was noted in the application that, while the AquaBeam System’s Aquablation therapy was statistically superior to the TURP procedure in the CD Grade 1 + adverse events, it was not statistically different in the CD Grade 2 or greater category. The applicant stated that regardless of the method, the urethra is typically used as the means for performing the BPH treatment procedure, which necessarily increases the likelihood of CD Grade 2 adverse events in all transurethral procedures. In addition, the applicant noted that the treatment option may depend on the size of the prostate. The applicant stated that the AquaBeam System’s Aquablation therapy is appropriate for small and large prostate sizes as a BPH treatment procedure. The AquaBeam System’s Aquablation therapy has been shown to have limited positive outcomes as compared to the TURP procedure for prostates sized greater than 50 grams to 80 grams in each of the studies provided by the applicant. However, the applicant noted that the TURP procedure would not be used for prostates larger than 80 grams in size. Therefore, we believe that another proper comparator for the AquaBeam System’s Aquablation therapy may be laser or radical/open surgical procedures given their respective indication for small and large prostate sizes. Lastly, the applicant compared AquaBeam System’s Aquablation therapy and the standard of care TURP procedure to support a finding of improved safety. There are other treatment modalities available that may have a similar safety profile as the AquaBeam System’s Aquablation therapy and we are interested in information that compares the AquaBeam System’s Aquablation therapy to other treatment modalities. PO 00000 Frm 00187 Fmt 4701 Sfmt 4702 20349 We are inviting public comments on whether the AquaBeam System’s Aquablation therapy meets the substantial clinical improvement criterion. We did not receive any public comments in response to the published notice in the Federal Register regarding the AquaBeam System’s Aquablation therapy or at the New Technology Town Hall Meeting. n. AndexXaTM (Andexanet alfa) Portola Pharmaceuticals, Inc. (Portola) submitted an application for new technology add-on payments for FY 2019 for the use of AndexXaTM (Andexanet alfa). (We note that the applicant previously submitted applications for new technology add-on payments for FY 2017 and FY 2018 for Andexanet alfa, which were withdrawn.) AndexXaTM is an antidote used to treat patients who are receiving treatment with an oral Factor Xa inhibitor who suffer a major bleeding episode and require urgent reversal of direct and indirect Factor Xa anticoagulation. Patients at high risk for thrombosis, including those who have been diagnosed with atrial fibrillation (AF) and venous thrombosis (VTE), typically receive treatment using longterm oral anticoagulation agents. Factor Xa inhibitors are included in a new class of anticoagulants. Factor Xa inhibitors are oral anticoagulants used to prevent stroke and systemic embolism in patients who have been diagnosed with AF. These oral anticoagulants are also used to treat patients who have been diagnosed with deep-vein thrombosis (DVT) and its complications, pulmonary embolism (PE), and patients who have undergone knee, hip, or abdominal surgery. Rivarobaxan (Xarelto®), apixaban (Eliqis®), betrixaban (Bevyxxa®), and edoxaban (Savaysa®) also are included in the new class of Factor Xa inhibitors, and are often referred to as ‘‘novel oral anticoagulants’’ (NOACs) or ‘‘nonvitamin K antagonist oral anticoagulants.’’ Although these anticoagulants have been commercially available since 2011, there is no FDAapproved therapy used for the urgent reversal of any Factor Xa inhibitor as a result of serious bleeding episodes. AndexXaTM has not received FDA approval as of the time of the development of this proposed rule. The applicant indicated that it anticipates receipt of FDA approval for the use of the technology during the first quarter of 2018. The applicant received approval for two unique ICD–10–PCS procedure codes that became effective October 1, E:\FR\FM\07MYP2.SGM 07MYP2 20350 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 2016 (FY 2017). The approved ICD–10– PCS procedure codes are: XW03372 (Introduction of Andexanet alfa, Factor Xa inhibitor reversal agent into peripheral vein, percutaneous approach, new technology group 2); and XW04372 (Introduction of Andexanet alfa, Factor Xa inhibitor reversal agent into central vein, percutaneous approach, new technology group 2). With regard to the ‘‘newness’’ criterion, as discussed earlier, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and would not be considered ‘‘new’’ for purposes of new technology add-on payments. The applicant asserted that, if approved, AndexXaTM would be the first and the only antidote available used to treat patients who are receiving treatment with an oral Factor Xa inhibitor who suffer a major bleeding episode and require urgent reversal of direct and indirect Factor Xa anticoagulation. Therefore, the applicant asserted that the technology is not substantially similar to any other currently approved and available treatment options for Medicare beneficiaries. Below we discuss the applicant’s assertion in the context of the three substantial similarity criteria. With regard to the first criterion, whether a product uses the same or a similar mechanism of action to achieve a therapeutic outcome, according to the applicant, AndexXaTM, if approved, would be the first anticoagulant reversal agent that binds to direct Factor Xa inhibitors with high affinity, thereby sequestering the inhibitors and consequently rapidly reducing free plasma concentration of Factor Xa inhibitors, and neutralizing the inhibitors’ anticoagulant effect, which allows for the restoration of normal hemostasis. AndexXaTM also binds to and sequesters antithrombin III molecules that are complexed with indirect inhibitor molecules, which disrupts the capacity of the antithrombin complex to bind to native Factor Xa inhibitors. According to the applicant, AndexXaTM represents a significant therapeutic advance because it provides rapid reversal of anticoagulation therapy in the event of a serious bleeding episode. Other anticoagulant reversal agents, such as KcentraTM and Idarucizumab, do not reverse the effects of Factor Xa inhibitors. With regard to the second criterion, whether a product is assigned to the same or a different MS–DRG, AndexXaTM would be the first FDA-approved anticoagulant reversal agent for Factor Xa inhibitors. Therefore, the MS–DRGs do not contain cases that represent patients who have been treated with any anticoagulant reversal agents for Factor Xa inhibitors. With regard to the third criterion, whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population, the applicant stated that AndexXaTM, if approved, daltland on DSKBBV9HB2PROD with PROPOSALS2 ICD–9–CM codes applicable V12.50 .................. V12.51 .................. V12.52 .................. V12.54 .................. V12.55 .................. V12.59 .................. V43.64 .................. V43.65 .................. V58.43 .................. V58.49 .................. V58.73 .................. V58.75 .................. V58.61 .................. E934.2 .................. 99.00 .................... 99.01 .................... 99.02 .................... 99.03 .................... 99.04 .................... 99.05 .................... 99.06 .................... 99.07 .................... Applicable ICD–9–CM code description Personal history of unspecified circulatory disease. Personal history of venous thrombosis and embolism. Personal history of thrombophlebitis. Personal history of transient ischemic attack (TIA), and cerebral infarction without residual deficits. Personal history of pulmonary embolism. Personal history of other diseases of circulatory system. Hip joint replacement. Knee joint replacement. Aftercare following surgery for injury and trauma. Other specified aftercare following surgery. Aftercare following surgery of the circulatory system, NEC. Aftercare following surgery of the teeth, oral cavity and digestive system, NEC. Long-term (current) use of anticoagulants. Anticoagulants causing adverse effects in therapeutic use. Perioperative autologous transfusion of whole blood or blood components. Exchange transfusion. Transfusion of previously collected autologous blood. Other transfusion of whole blood. Transfusion of packed cells. Transfusion of platelets. Transfusion of coagulation factors. Transfusion of other serum. The applicant identified a total of 51,605 potential cases that mapped to VerDate Sep<11>2014 would be the only anticoagulant reversal agent available for treating patients who are receiving direct or indirect Factor Xa therapy who experience serious, uncontrolled bleeding events or who require emergency surgery. Therefore, the applicant believed that AndexXaTM would be the first type of treatment option available to this patient population. As a result, we believe that it appears that AndexXaTM is not substantially similar to any existing technologies. We are inviting public comments on whether AndexXaTM meets the substantial similarity criteria, and whether AndexXaTM meets the newness criterion. With regard to the cost criterion, the applicant researched the FY 2015 MedPAR claims data file for potential cases representing patients who may be eligible for treatment using AndexXaTM. The applicant used three sets of ICD–9– CM codes to identify these cases: (1) Codes identifying potential cases representing patients who were treated with an anticoagulant and, therefore, who are at risk of bleeding; (2) codes identifying potential cases representing patients with a history of conditions that were treated with Factor Xa inhibitors; and (3) codes identifying potential cases representing patients who experienced bleeding episodes as the reason for the current admission. The applicant included with its application the following table displaying a complete list of ICD–9–CM codes that met its selection criteria. 20:30 May 04, 2018 Jkt 244001 683 MS–DRGs, resulting in an average case-weighted charge per case of PO 00000 Frm 00188 Fmt 4701 Sfmt 4702 $72,291. The applicant also provided an analysis that was limited to cases E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules representing 80 percent of all potential cases identified (41,255 cases) that mapped to the top 151 MS–DRGs. Under this analysis, the average caseweighted charge per case was $69,020. The applicant provided a third analysis that was limited to cases representing 25 percent of all potential cases identified (12,873 cases) that mapped to the top 9 MS–DRGs. This third analysis resulted in an average case-weighted charge per case of $46,974. Under each of these analyses, the applicant also provided sensitivity analyses based on variables representing two areas of uncertainty: (1) Whether to remove 40 percent or 60 percent of blood and blood administration charges; and (2) whether to remove pharmacy charges based on the ceiling price of factor eight inhibitor bypass activity (FEIBA), a branded anti-inhibitor coagulant complex, or on the pharmacy indicator 5 (PI5) in the MedPAR data file, which correlates to potential cases utilizing generic coagulation factors. Overall, the applicant conducted twelve sensitivity analyses, and provided the following rationales: • The applicant chose to remove 40 percent and 60 percent of blood and blood administration charges because potential patients who may be eligible for treatment using AndexXaTM for Factor Xa reversal may still require blood and blood products to treat other conditions. Therefore, the applicant believed that it would be inappropriate to remove all of the charges associated with blood and blood administration because all of the charges cannot be attributed to Factor Xa reversal. The applicant maintained that the amounts of blood and blood products required for treatment vary according to the severity of the bleeding. Therefore, the applicant stated that the use of AndexXaTM may replace 60 percent of blood and blood product administration charges for potential cases with less severity of bleeding, but only 40 percent of charges for potential cases with more severe bleeding. • The applicant maintained that FEIBA is the highest priced clotting factor used for Factor Xa inhibitor reversal, and it is unlikely that pharmacy charges for Factor Xa reversal would exceed the FEIBA ceiling price of $2,642. Therefore, the applicant capped the charges to be removed at $2,642 to exclude charges unrelated to the reversal of Factor Xa anticoagulation. The applicant also considered an alternative scenario in which charges associated with pharmacy indicator 5 (PI5) were removed from the costs of potential cases that included this indicator in the MedPAR data. On average, charges removed from the costs of potential cases utilizing generic coagulation factors were much lower than the total pharmacy charges. The applicant noted that, in all 12 scenarios, the average case-weighted standardized charge per case for potential cases representing patients who may be eligible for treatment using AndexXaTM would exceed the average case-weighted threshold amounts in Table 10 of the FY 2018 IPPS/LTCH PPS final rule by more than $855. The applicant’s order of operations used for each analysis is as follows: (1) Removing 60 percent or 40 percent of blood and blood product administration charges and up to 100 percent of pharmacy charges for PI5 or FEIBA from the average case-weighted unstandardized charge per case; and (2) standardizing the charges per cases using the Impact File published with the FY 2015 IPPS/LTCH PPS final rule. After removing the charges for the prior technology and standardizing charges, the applicant applied an inflation factor of 1.154181, which is a combination of 9.8446 percent, the value used in the FY 2017 IPPS final rule as the 2-year outlier threshold inflation factor, and 5.074 percent, the value used in the FY 2018 IPPS final rule as the 1-year outlier threshold inflation factor, to update the charges from FY 2015 to FY 2018. The applicant did not add charges for AndexXaTM as the price had not been set at the time of conducting this analysis. Under each scenario, the applicant stated that the inflated average case-weighted standardized charge per case exceeded the average caseweighted threshold amount (based on the FY 2018 IPPS Table 10 thresholds). Below we provide a table for all 12 scenarios that the applicant indicated demonstrate that the technology meets the cost criterion. Inflated average standardized caseweighted charge per case Scenario daltland on DSKBBV9HB2PROD with PROPOSALS2 100 Percent of Cases, FEIBA, 60 Percent Removal of Blood and Blood Product Administration Costs .............. 100 Percent of Cases, PI5, 60 Percent Removal of Blood and Blood Product Administration Costs ................... 100 Percent of Cases, FEIBA, 40 Percent Removal of Blood and Blood Product Administration Costs .............. 100 Percent of Cases, PI5, 40 Percent Removal of Blood and Blood Product Administration Costs ................... 80 Percent of Cases, FEIBA, 60 Percent Removal of Blood and Blood Product Administration Costs ................ 80 Percent of Cases, PI5, 60 Percent Removal of Blood and Blood Product Administration Costs ..................... 80 Percent of Cases, FEIBA, 40 Percent Removal of Blood and Blood Product Administration Costs ................ 80 Percent of Cases, PI5, 40 Percent Removal of Blood and Blood Product Administration Costs ..................... 25 Percent of Cases, FEIBA, 60 Percent Removal of Blood and Blood Product Administration Costs ................ 25 Percent of Cases, PI5, 60 Percent Removal of Blood and Blood Product Administration Costs ..................... 25 Percent of Cases, FEIBA, 40 Percent Removal of Blood and Blood Product Administration Costs ................ 25 Percent of Cases, PI5, 40 Percent Removal of Blood and Blood Product Administration Costs ..................... We are inviting public comments on whether AndexXaTM meets the cost criterion. With regard to the substantial clinical improvement criterion, the applicant asserted that AndexXaTM represents a substantial clinical improvement for the treatment of patients who are receiving VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 direct or indirect Factor Xa therapy who experience serious, uncontrolled bleeding events or who require emergency surgery because the technology addresses an unmet medical need for a universal antidote to direct and indirect Factor Xa inhibitors; if approved, would be the only agent PO 00000 Frm 00189 Fmt 4701 Sfmt 4702 20351 $71,305 73,108 72,172 73,740 68,400 70,184 69,279 70,826 46,127 47,730 47,089 48,403 Average caseweighted threshold amount $60,209 60,209 60,209 60,209 58,817 58,817 58,817 58,817 45,272 45,272 45,272 45,272 shown in prospective clinical trials to rapidly (within 2 to 5 minutes) and sustainably reverse the anticoagulation activity of Factor Xa inhibitors; is potentially nonthrombogenic, as no serious adverse effects of thrombosis were observed in clinical trials; and could supplant currently available E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20352 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules treatments for bleeding from anti-Factor Xa therapy, which have not been shown to be effective in the treatment of all patients. With regard to addressing an unmet need for a universal antidote to direct and indirect Factor Xa inhibitors, the applicant asserted that the use of any anticoagulant is associated with an increased risk of bleeding, and bleeding complications can be life-threatening. Bleeding is especially concerning for patients treated with Factor Xa inhibitors because there are currently no antidotes to Factor Xa inhibitors available. As a result, when a patient anticoagulated with an oral direct Factor Xa inhibitor presents with lifethreatening bleeding, clinicians often resort to using preparations of vitamin K dependent clotting factors, such as 4factor prothrombin complex concentrates (PCCs). Despite the lack of any large, prospective, randomized study examining the efficacy and safety of these agents in this patient population, administration of 4-factor PCCs as a means to ‘‘reverse’’ the anticoagulant effect of Factor Xa inhibitors is commonplace in many hospitals due to the lack of any alternative in the setting of a serious or life-threatening bleed. The applicant stated that AndexXaTM has a unique mechanism of action and represents a new biological approach to the treatment of patients who have been diagnosed with acute severe bleeding who require immediate reversal of the Factor Xa inhibitor therapy. The applicant explained that although AndexXaTM is structurally very similar to native Factor Xa inhibitors, the technology has undergone several modifications that restrict its biological activity to reversing the effects of Factor Xa inhibitors by binding with and sequestering direct or indirect Factor Xa inhibitors, which allows native Factor Xa inhibitors to dictate the normal coagulation and hemostasis process. As a result, the applicant maintained that AndexXaTM represents a safe and effective therapy for the management of severe bleeding in a fragile patient population and a substantial clinical improvement over existing technologies and reversal strategies. The applicant noted the following: (1) On average, patients with a bleeding complication were hospitalized for 6.3 to 8.5 days, and (2) the most common therapies currently used to manage severe bleeding events in patients undergoing anticoagulant treatment are blood and blood product transfusions, most frequently with packed red blood cells (RBC) or fresh frozen plasma VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 (FFP).238 According to the applicant, the blood products that are currently being employed as reversal agents carry significant risks. For instance, no clinical studies have evaluated the safety and efficacy of FFP transfusions to treat bleeding associated with Factor Xa inhibitors.239 240 Furthermore, transfusions with packed RBCs carry a risk (1 to 4 per 50,000 transfusions) of acute hemolytic reactions, in which the recipient’s antibodies attack the transfused red blood cells, which is associated with clinically significant anemia, kidney failure, and death.241 The applicant asserted that a RBC transfusion in trauma patients with major bleeding is associated with an increased risk of nonfatal vascular events and death.242 The applicant noted that, although patients who are treated with AndexXaTM would receive RBC transfusions if their hemoglobin is low enough to warrant it, AndexXaTM reduces the need for RBC transfusion. The applicant asserted that laboratory studies have failed to provide consistent evidence of ‘‘reversal’’ of the anticoagulant effect of Factor Xa inhibitors across a range of different PCC products and concentrations. Results of thrombin generation assays have varied depending on the format of the assay. Despite years of experience with low molecular weight heparins and pentasaccharide anticoagulants, neither PCCs nor factor eight inhibitor bypassing activity are recognized as safe and effective reversal agents for these Factor Xa inhibitors.243 Unlike patients taking vitamin K antagonists, patients receiving treatment with oral Factor Xa inhibitor drugs have normal levels of clotting factors. Therefore, a strategy based on ‘‘repleting’’ factor levels is of uncertain foundation and could result 238 Truven, ‘‘2016 Truven Medicare Projected Bleeding Events’’, MARKETSCAN® Medicare Supplemental Database, January 1, 2016 to December 31, 2016 Data pull, Data on File, Supplemental file. 239 Siegal, D.M., ‘‘Managing target-specific oral anticoagulant associated bleeding including an update on pharmacological reversal agents,’’ J Thromb Thrombolysis, 2015 Apr, vol. 39(3), pp. 395–402. 240 Kalus, J.S., ‘‘Pharmacologic interventions for reversing the effects of oral anticoagulants,’’ Am J Health Syst Pharm, 2013, vol. 70(10 Suppl 1), pp. S12–21. 241 Sharma, S., Sharma, P., Tyler, L.N., ‘‘Transfusion of Blood and Blood Products: Indications and Complications,’’ Am Fam Physician, 2011, vol. 83(6), pp. 719–24. 242 Perel, P., Clayton, T., Altman, D.G., et al., ‘‘Red blood cell transfusion and mortality in trauma patients: risk-stratified analysis of an observational study,’’ PLoS Med, 2014, vol. 11(6), pp. e1001664. 243 Sarich, T.C., Seltzer, J.H., Berkowitz, S.D., et al., ‘‘Novel oral anticoagulants and reversal agents: Considerations for clinical development,’’ Am Heart J, 2015, vol. 169(6), pp. 751–7. PO 00000 Frm 00190 Fmt 4701 Sfmt 4702 in supra-normal levels of coagulation factors after rapid metabolism and clearance of the oral anticoagulant.244 The applicant provided results from two randomized, double-blind, placebocontrolled Phase III studies,245 246 the ANNEXA–A (reversal of apixaban) and ANNEXA-R (reversal of rivaroxaban) trials. The primary endpoint in both these studies was the percent change in anti-Factor Xa activity. Secondary endpoints included proportion of participants with an 80 percent or greater reduction in anti-Factor Xa activity, change in unbound Factor Xa inhibitor concentration, and change in endogenous thrombin potential (ETP). A total of 145 participants were enrolled in the study, with 101 participants randomized to AndexXaTM and 44 participants randomized to placebo. The mean age of participants was 58 years old, and 39 percent were women. There was a mean of greater than 90 percent reduction in anti-Factor Xa activity in both parts of both studies in subjects receiving AndexXaTM. The studies also demonstrated the following: (1) Rapid and sustainable reversal of anticoagulation; (2) reduced Factor Xa inhibitor free plasma levels by at least 80 percent below a calculated no-effect level; and (3) reduced anti-Factor Xa activity to the lowest level of detection within 2 to 5 minutes of infusion. The applicant noted that decreased Factor Xa inhibitor levels have been shown to correspond to decreased bleeding complications, reconstitution of activity of coagulation factors, and correction of coagulation.247 248 249 The applicant stated that the results from the two Phase III studies and previous proof-of-concept Phase II dosefinding studies showed that use of 244 Siegal, D.M., ‘‘Managing target-specific oral anticoagulant associated bleeding including an update on pharmacological reversal agents,’’ J Thromb Thrombolysis, 2015 Apr, vol. 39(3), pp. 395–402. 245 Conners, J.M., ‘‘Antidote for Factor Xa Anticoagulants,’’ N Engl J Med, 2015 Nov 13. 246 Siegal, D.M., Curnutte, J.T., Connolly, S.J., et al., ‘‘Andexanet Alfa for the Reversal of Factor Xa Inhibitor Activity,’’ N Engl J Med, 2015 Nov 11. 247 Lu, G., DeGuzman, F., Hollenbach, S., et al., ‘‘Reversal of low molecular weight heparin and fondaparinux by a recombinant antidote,’’ (rAntidote, PRT064445), Circulation, 2010, vol. 122, pp. A12420. 248 Rose, M., Beasley, B., ‘‘Apixaban clinical review addendum,’’ Silver Spring, MD: Center for Drug Evaluation and Research, 2012. Available at: https://www.accessdata.fda.gov/drugsatfda_docs/ nda/2012/202155Orig1s000MedR.pdf. 249 Beasley, N., Dunnmon, P., Rose, M., ‘‘Rivaroxaban clinical review: FDA draft briefing document for the Cardiovascular and Renal Drugs Advisory Committee,’’ 2011. Available at: https:// www.fda.gov/downloads/AdvisoryCommittees/ CommitteesMeetingMaterials/drugs/ CardiovascularandRenalDrugsAdvisoryCommittee/ ucm270796.pdf. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules AndexXaTM can rapidly reverse anticoagulation activity of Factor Xa inhibitors and sustain that reversal. Therefore, the applicant asserted that the use of AndexXaTM has the potential to successfully treat patients who only need short-duration reversal of the Factor Xa inhibitor anticoagulant, as well as patients who require longer duration reversal, such as patients experiencing a severe intracranial hemorrhage or requiring emergency surgery. Furthermore, the applicant noted that its technology’s duration of action allows for a gradual return of Factor Xa inhibitor concentrations to placebo control levels within 2 hours following the end of infusion. With regard to AndexXaTM’s nonthrombogenic nature, the applicant provided clinical trial data which revealed participants in Phase II and Phase III trials had no thrombotic events and there were no serious or severe adverse events reported. Results also showed that use of AndexXaTM has a much lower risk of thrombosis than typical procoagulants because the technology lacks the region responsible for inducing coagulation. Furthermore, the applicant asserted that the use of AndexXaTM is not associated with the known complications seen with RBC transfusions. The applicant asserted that, while the Phase II and Phase III trials and studies measured physiological hallmarks of reversal of NOACs, it is expected that the availability of a safe and reliable Factor Xa reversal will result in an overall better prognosis for patients— potentially leading to a reduction in length of hospital stay, fewer complications, and decreased mortality associated with unexpected bleeding episodes. The applicant also stated that use of AndexXaTM can supplant currently available treatments used for reversing severe bleeding from anti-Factor Xa therapy, which have not been shown to be effective in the treatment of all patients. With regard to PCCs and FFPs, the applicant stated that there is a lack of clinical evidence available for patients taking Factor Xa inhibitors that experience severe bleeding events. The applicant noted that the case reports provide a snapshot of emergent treatment of these often medically complex anti-Factor Xa-treated patients with major bleeds. However, the applicant stated that these analyses reveal the inconsistent approach in assessing the degree of anticoagulation in the patient and the variability in treatment strategy. The applicant explained that little or no assessment of efficacy in restoring coagulation in the VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 patients was performed, and the major outcomes measures were bleeding cessation or mortality. The applicant concluded that overall, there is very little evidence for the efficacy suggested in some guidelines, and the evidence is insufficient to draw any conclusions. The applicant submitted interim data purporting to show substantial clinical improvement within its target patient population as part of an ongoing Phase IIIb/IV open-label ANNEXA–4 study. The ANNEXA–4 study is a multi-center, prospective, open-label, single group study that evaluated 67 patients who had acute, major bleeding within 18 hours of receipt of a Factor Xa inhibitor (32 patients receiving rivarobaxan, 31 receiving apixaban, and 4 receiving enoxaparin). The population in the study was reflective of a real-world population, with mean age of 77 years old, most patients with cardiovascular disease, and the majority of bleeds being intracranial or gastrointestinal. According to the applicant, the results of the ANNEXA–4 study demonstrate safe, reliable, and rapid reversal of Factor Xa levels in patients experiencing acute bleeding and are consistent with the results seen in the Phase II and Phase III trials, based on interim data. However, we are concerned that this interim data also indicate 18 percent of patients experienced a thrombotic event and 15 percent of patients died following reversal during the 30-day follow-up period in the ANNEXA–4 study. For this reason, we are concerned that there is insufficient data to determine substantial clinical improvement over existing technologies. We are inviting public comments on whether AndexXaTM meets the substantial clinical improvement criterion. We did not receive any public comments on the AndexXaTM technology in response to the published notice in the Federal Register or at the New Technology Town Hall Meeting. III. Proposed Changes to the Hospital Wage Index for Acute Care Hospitals A. Background 1. Legislative Authority Section 1886(d)(3)(E) of the Act requires that, as part of the methodology for determining prospective payments to hospitals, the Secretary adjust the standardized amounts for area differences in hospital wage levels by a factor (established by the Secretary) reflecting the relative hospital wage level in the geographic area of the hospital compared to the national average hospital wage level. We PO 00000 Frm 00191 Fmt 4701 Sfmt 4702 20353 currently define hospital labor market areas based on the delineations of statistical areas established by the Office of Management and Budget (OMB). A discussion of the proposed FY 2019 hospital wage index based on the statistical areas appears under section III.A.2. of the preamble of this proposed rule. Section 1886(d)(3)(E) of the Act requires the Secretary to update the wage index annually and to base the update on a survey of wages and wagerelated costs of short-term, acute care hospitals. (CMS collects these data on the Medicare cost report, CMS Form 2552–10, Worksheet S–3, Parts II, III, and IV. The OMB control number for approved collection of this information is 0938–0050.) This provision also requires that any updates or adjustments to the wage index be made in a manner that ensures that aggregate payments to hospitals are not affected by the change in the wage index. The proposed adjustment for FY 2019 is discussed in section II.B. of the Addendum to this proposed rule. As discussed in section III.I. of the preamble of this proposed rule, we also take into account the geographic reclassification of hospitals in accordance with sections 1886(d)(8)(B) and 1886(d)(10) of the Act when calculating IPPS payment amounts. Under section 1886(d)(8)(D) of the Act, the Secretary is required to adjust the standardized amounts so as to ensure that aggregate payments under the IPPS after implementation of the provisions of sections 1886(d)(8)(B), 1886(d)(8)(C), and 1886(d)(10) of the Act are equal to the aggregate prospective payments that would have been made absent these provisions. The proposed budget neutrality adjustment for FY 2019 is discussed in section II.A.4.b. of the Addendum to this proposed rule. Section 1886(d)(3)(E) of the Act also provides for the collection of data every 3 years on the occupational mix of employees for short-term, acute care hospitals participating in the Medicare program, in order to construct an occupational mix adjustment to the wage index. A discussion of the occupational mix adjustment that we are proposing to apply to the FY 2019 wage index appears under sections III.E.3. and F. of the preamble of this proposed rule. 2. Core-Based Statistical Areas (CBSAs) for the Proposed FY 2019 Hospital Wage Index The wage index is calculated and assigned to hospitals on the basis of the labor market area in which the hospital is located. Under section 1886(d)(3)(E) E:\FR\FM\07MYP2.SGM 07MYP2 20354 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules of the Act, beginning with FY 2005, we delineate hospital labor market areas based on OMB-established Core-Based Statistical Areas (CBSAs). The current statistical areas (which were implemented beginning with FY 2015) are based on revised OMB delineations issued on February 28, 2013, in OMB Bulletin No. 13–01. OMB Bulletin No. 13–01 established revised delineations for Metropolitan Statistical Areas, Micropolitan Statistical Areas, and Combined Statistical Areas in the United States and Puerto Rico based on the 2010 Census, and provided guidance on the use of the delineations of these statistical areas using standards published on June 28, 2010 in the Federal Register (75 FR 37246 through 37252). We refer readers to the FY 2015 IPPS/LTCH PPS final rule (79 FR 49951 through 49963) for a full discussion of our implementation of the OMB labor market area delineations beginning with the FY 2015 wage index. Generally, OMB issues major revisions to statistical areas every 10 years, based on the results of the decennial census. However, OMB occasionally issues minor updates and revisions to statistical areas in the years between the decennial censuses through OMB Bulletins. On July 15, 2015, OMB issued OMB Bulletin No. 15–01, which provided updates to and superseded OMB Bulletin No. 13–01 that was issued on February 28, 2013. The attachment to OMB Bulletin No. 15–01 provided detailed information on the update to statistical areas since February 28, 2013. The updates provided in OMB Bulletin No. 15–01 were based on the application of the 2010 Standards for Delineating Metropolitan and Micropolitan Statistical Areas to Census Bureau population estimates for July 1, 2012 and July 1, 2013. In the FY 2017 IPPS/LTCH PPS final rule (81 FR 56913), we adopted the updates set forth in OMB Bulletin No. 15–01 effective October 1, 2016, beginning with the FY 2017 wage index. For a complete discussion of the adoption of the updates set forth in OMB Bulletin No. 15–01, we refer readers to the FY 2017 IPPS/LTCH PPS final rule. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38130), we continued to use the OMB delineations that were adopted beginning with FY 2015 to calculate the area wage indexes, with updates as reflected in OMB Bulletin No. 15–01 specified in the FY 2017 IPPS/LTCH PPS final rule. On August 15, 2017, OMB issued OMB Bulletin No. 17–01, which provided updates to and superseded OMB Bulletin No. 15–01 that was issued on July 15, 2015. The attachments to OMB Bulletin No. 17–01 provide detailed information on the update to statistical areas since July 15, 2015, and are based on the application of the 2010 Standards for Delineating Metropolitan and Micropolitan Statistical Areas to Census Bureau population estimates for July 1, 2014 and July 1, 2015. In OMB Bulletin No. 17–01, OMB announced that one Micropolitan Statistical Area now qualifies as a Metropolitan Statistical Area. The new urban CBSA is as follows: • Twin Falls, Idaho (CBSA 46300). This CBSA is comprised of the principal city of Twin Falls, Idaho in Jerome County, Idaho and Twin Falls County, Idaho. The OMB bulletin is available on the OMB Web site at https:// www.whitehouse.gov/sites/ whitehouse.gov/files/omb/bulletins/ 2017/b-17-01.pdf. We note that we did not have sufficient time to include this change in the computation of the proposed FY 2019 wage index, ratesetting, and Tables 2 and 3 associated with this proposed rule. This new CBSA may affect the budget neutrality factors and wage indexes, depending on whether the area is eligible for the rural floor and the impact of the overall payments of the hospital located in this new CBSA. We are providing below an estimate of this new area’s wage index based on the average hourly wages for new CBSA 46300 and the national average hourly wages from the wage data for the proposed FY 2019 wage index (described below in section III.B. of the preamble of this proposed rule). Currently, provider 130002 is the only hospital located in Twin Falls County, Idaho, and there are no hospitals located in Jerome County, Idaho. Thus, the proposed wage index for CBSA 46300 is calculated using the average hourly wage data for one provider (provider 130002). Below in sections III.D. and E.2. of the preamble of this proposed rule, we provide the proposed FY 2019 unadjusted and occupational mix adjusted national average hourly wages. Taking the estimated average hourly wage of new CBSA 46300 and dividing by the proposed national average hourly wage results in the estimated wage indexes shown in the table below. Estimated unadjusted wage index for new CBSA 46300 daltland on DSKBBV9HB2PROD with PROPOSALS2 Proposed National Average Hourly Wage .............................................................................................................. Estimated CBSA Average Hourly Wage ................................................................................................................. Estimated Wage Index ............................................................................................................................................ For FY 2019, we are using the OMB delineations that were adopted beginning with FY 2015 to calculate the area wage indexes, with updates as reflected in OMB Bulletin Nos. 13–01, 15–01, and 17–01. In the final rule, we will incorporate this change into the final FY 2019 wage index, ratesetting, and tables. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 3. Codes for Constituent Counties in CBSAs CBSAs are made up of one or more constituent counties. Each CBSA and constituent county has its own unique identifying codes. There are two different lists of codes associated with counties: Social Security Administration (SSA) codes and Federal Information Processing Standard (FIPS) codes. Historically, CMS has listed and used SSA and FIPS county codes to PO 00000 Frm 00192 Fmt 4701 Sfmt 4702 Estimated occupational mix adjusted wage index for new CBSA 46300 42.990625267 35.833564813 0.8335 42.948428861 38.127590025 0.8878 identify and crosswalk counties to CBSA codes for purposes of the hospital wage index. As we discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38129 through 38130), we have learned that SSA county codes are no longer being maintained and updated. However, the FIPS codes continue to be maintained by the U.S. Census Bureau. We believe that using the latest FIPS codes will allow us to maintain a more accurate and up-to-date payment system E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules that reflects the reality of population shifts and labor market conditions. The Census Bureau’s most current statistical area information is derived from ongoing census data received since 2010; the most recent data are from 2015. The Census Bureau maintains a complete list of changes to counties or county equivalent entities on the website at: https://www.census.gov/geo/ reference/county-changes.html. We believe that it is important to use the latest counties or county equivalent entities in order to properly crosswalk hospitals from a county to a CBSA for purposes of the hospital wage index used under the IPPS. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38129 through 38130) we adopted a policy to discontinue the use of the SSA county codes and began using only the FIPS county codes for purposes of crosswalking counties to CBSAs. In addition, in the same rule, we implemented the latest FIPS code updates which were effective October 1, 2017, beginning with the FY 2018 wage indexes. The updated changes were used to calculate the wage indexes in a manner generally consistent with the CBSA-based methodologies finalized in the FY 2005 IPPS final rule and the FY 2015 IPPS/LTCH PPS final rule. For FY 2019, we are continuing to use only the FIPS county codes for purposes of crosswalking counties to CBSAs. For FY 2019, Tables 2 and 3 associated with this proposed rule and the County to CBSA Crosswalk File and Urban CBSAs and Constituent Counties for Acute Care Hospitals File posted on the CMS website reflect these county changes. daltland on DSKBBV9HB2PROD with PROPOSALS2 B. Worksheet S–3 Wage Data for the Proposed FY 2019 Wage Index The proposed FY 2019 wage index values are based on the data collected from the Medicare cost reports submitted by hospitals for cost reporting periods beginning in FY 2015 (the FY 2018 wage indexes were based on data from cost reporting periods beginning during FY 2014). 1. Included Categories of Costs The proposed FY 2019 wage index includes all of the following categories of data associated with costs paid under the IPPS (as well as outpatient costs): • Salaries and hours from short-term, acute care hospitals (including paid lunch hours and hours associated with military leave and jury duty); • Home office costs and hours; • Certain contract labor costs and hours, which include direct patient care, certain top management, pharmacy, laboratory, and nonteaching physician Part A services, and certain VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 contract indirect patient care services (as discussed in the FY 2008 final rule with comment period (72 FR 47315 through 47317)); and • Wage-related costs, including pension costs (based on policies adopted in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51586 through 51590)) and other deferred compensation costs. 2. Excluded Categories of Costs Consistent with the wage index methodology for FY 2018, the proposed wage index for FY 2019 also excludes the direct and overhead salaries and hours for services not subject to IPPS payment, such as skilled nursing facility (SNF) services, home health services, costs related to GME (teaching physicians and residents) and certified registered nurse anesthetists (CRNAs), and other subprovider components that are not paid under the IPPS. The proposed FY 2019 wage index also excludes the salaries, hours, and wage-related costs of hospital-based rural health clinics (RHCs), and Federally qualified health centers (FQHCs) because Medicare pays for these costs outside of the IPPS (68 FR 45395). In addition, salaries, hours, and wage-related costs of CAHs are excluded from the wage index for the reasons explained in the FY 2004 IPPS final rule (68 FR 45397 through 45398). 3. Use of Wage Index Data by Suppliers and Providers Other Than Acute Care Hospitals Under the IPPS Data collected for the IPPS wage index also are currently used to calculate wage indexes applicable to suppliers and other providers, such as SNFs, home health agencies (HHAs), ambulatory surgical centers (ASCs), and hospices. In addition, they are used for prospective payments to IRFs, IPFs, and LTCHs, and for hospital outpatient services. We note that, in the IPPS rules, we do not address comments pertaining to the wage indexes of any supplier or provider except IPPS providers and LTCHs. Such comments should be made in response to separate proposed rules for those suppliers and providers. C. Verification of Worksheet S–3 Wage Data The wage data for the proposed FY 2019 wage index were obtained from Worksheet S–3, Parts II and III of the Medicare cost report (Form CMS–2552– 10, OMB Control Number 0938–0050) for cost reporting periods beginning on or after October 1, 2014, and before October 1, 2015. For wage index purposes, we refer to cost reports during this period as the ‘‘FY 2015 cost report,’’ the ‘‘FY 2015 wage data,’’ or the ‘‘FY PO 00000 Frm 00193 Fmt 4701 Sfmt 4702 20355 2015 data.’’ Instructions for completing the wage index sections of Worksheet S-3 are included in the Provider Reimbursement Manual (PRM), Part 2 (Pub. No. 15–2), Chapter 40, Sections 4005.2 through 4005.4. The data file used to construct the proposed FY 2019 wage index includes FY 2015 data submitted to us as of February 6, 2018. As in past years, we performed an extensive review of the wage data, mostly through the use of edits designed to identify aberrant data. We asked our MACs to revise or verify data elements that result in specific edit failures. For the proposed FY 2019 wage index, we identified and excluded 80 providers with aberrant data that should not be included in the wage index, although if data elements for some of these providers are corrected, we intend to include data from those providers in the final FY 2019 wage index. We also adjusted certain aberrant data and included these data in the proposed wage index. For example, in situations where a hospital did not have documentable salaries, wages, and hours for housekeeping and dietary services, we imputed estimates, in accordance with policies established in the FY 2015 IPPS/LTCH PPS final rule (79 FR 49965 through 49967). We instructed MACs to complete their data verification of questionable data elements and to transmit any changes to the wage data no later than March 23, 2018. In addition, as a result of the April and May appeals processes, and posting of the April 27, 2018 PUF, we may make additional revisions to the FY 2019 wage data, as described further below. The revised data would be reflected in the FY 2019 IPPS/LTCH PPS final rule. In constructing the proposed FY 2019 wage index, we included the wage data for facilities that were IPPS hospitals in FY 2015, inclusive of those facilities that have since terminated their participation in the program as hospitals, as long as those data did not fail any of our edits for reasonableness. We believed that including the wage data for these hospitals is, in general, appropriate to reflect the economic conditions in the various labor market areas during the relevant past period and to ensure that the current wage index represents the labor market area’s current wages as compared to the national average of wages. However, we excluded the wage data for CAHs as discussed in the FY 2004 IPPS final rule (68 FR 45397 through 45398; that is, any hospital that is designated as a CAH by 7 days prior to the publication of the preliminary wage index public use file (PUF) is excluded from the calculation of the wage index). For this proposed E:\FR\FM\07MYP2.SGM 07MYP2 20356 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules rule, we removed 8 hospitals that converted to CAH status on or after January 23, 2017, the cut-off date for CAH exclusion from the FY 2018 wage index, and through and including January 26, 2018, the cut-off date for CAH exclusion from the FY 2019 wage index. After excluding CAHs and hospitals with aberrant data, we calculated the proposed wage index using the Worksheet S–3, Parts II and III wage data of 3,260 hospitals. For the proposed FY 2019 wage index, we allotted the wages and hours data for a multicampus hospital among the different labor market areas where its campuses are located in the same manner that we allotted such hospitals’ data in the FY 2018 wage index (82 FR 38131 through 38132); that is, using campus full-time equivalent (FTE) percentages as originally finalized in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51591). Table 2, which contains the proposed FY 2019 wage index associated with this proposed rule (available via the internet on the CMS website), includes separate wage data for the campuses of 16 multicampus hospitals. The following chart lists the multicampus hospitals by CSA certification number (CCN) and the FTE percentages on which the wages and hours of each campus were allotted to their respective labor market areas: daltland on DSKBBV9HB2PROD with PROPOSALS2 CSA certification number (CCN) of multicampus hospital Full-time equivalent (FTE) percentages 050121 ....................... 05B121 ...................... 070022 ....................... 07B022 ...................... 070033 ....................... 07B033 ...................... 100029 ....................... 10B029 ...................... 100167 ....................... 10B167 ...................... 140010 ....................... 14B010 ...................... 220074 ....................... 22B074 ...................... 330234 ....................... 33B234 ...................... 360019 ....................... 36B019 ...................... 360020 ....................... 36B020 ...................... 390006 ....................... 39B006 ...................... 390115 ....................... 39B115 ...................... 390142 ....................... 39B142 ...................... 460051 ....................... 46B051 ...................... 510022 ....................... 51B022 ...................... 670062 ....................... 67B062 ...................... VerDate Sep<11>2014 20:30 May 04, 2018 0.81 0.19 0.99 0.01 0.92 0.08 0.54 0.46 0.37 0.63 0.82 0.18 0.89 0.11 0.72 0.28 0.95 0.05 0.99 0.01 0.95 0.05 0.86 0.14 0.83 0.17 0.97 0.03 0.95 0.05 0.55 0.45 Jkt 244001 We note that, in past years, in Table 2, we have placed a ‘‘B’’ to designate the subordinate campus in the fourth position of the hospital CCN. However, for this proposed rule and future rulemaking, we have moved the ‘‘B’’ to the third position of the CCN. Because all IPPS hospitals have a ‘‘0’’ in the third position of the CCN, we believe that placement of the ‘‘B’’ in this third position, instead of the ‘‘0’’ for the subordinate campus, is the most efficient method of identification and interferes the least with the other, variable, digits in the CCN. D. Method for Computing the Proposed FY 2019 Unadjusted Wage Index 1. Proposed Methodology for FY 2019 The method used to compute the proposed FY 2019 wage index without an occupational mix adjustment follows the same methodology that we used to compute the proposed wage indexes without an occupational mix adjustment since FY 2012 (76 FR 51591 through 51593). As discussed in the FY 2012 IPPS/ LTCH PPS final rule, in ‘‘Step 5,’’ for each hospital, we adjust the total salaries plus wage-related costs to a common period to determine total adjusted salaries plus wage-related costs. To make the wage adjustment, we estimate the percentage change in the employment cost index (ECI) for compensation for each 30-day increment from October 14, 2014, through April 15, 2016, for private industry hospital workers from the BLS’ Compensation and Working Conditions. We have consistently used the ECI as the data source for our wages and salaries and other price proxies in the IPPS market basket, and we are not proposing any changes to the usage of the ECI for FY 2019. The factors used to adjust the hospital’s data were based on the midpoint of the cost reporting period, as indicated in the following table. MIDPOINT OF COST REPORTING PERIOD After Before Adjustment factor 10/14/2014 11/14/2014 12/14/2014 01/14/2015 02/14/2015 03/14/2015 04/14/2015 05/14/2015 06/14/2015 07/14/2015 08/14/2015 09/14/2015 11/15/2014 12/15/2014 01/15/2015 02/15/2015 03/15/2015 04/15/2015 05/15/2015 06/15/2015 07/15/2015 08/15/2015 09/15/2015 10/15/2015 1.02567 1.02413 1.02257 1.02100 1.01941 1.01784 1.01627 1.01471 1.01316 1.01161 1.01007 1.00849 PO 00000 Frm 00194 Fmt 4701 Sfmt 4702 MIDPOINT OF COST REPORTING PERIOD—Continued After Before Adjustment factor 10/14/2015 11/14/2015 12/14/2015 01/14/2016 02/14/2016 03/14/2016 11/15/2015 12/15/2015 01/15/2016 02/15/2016 03/15/2016 04/15/2016 1.00685 1.00516 1.00343 1.00171 1.00000 0.99824 For example, the midpoint of a cost reporting period beginning January 1, 2015, and ending December 31, 2015, is June 30, 2015. An adjustment factor of 1.01316 would be applied to the wages of a hospital with such a cost reporting period. Using the data as previously described, the proposed FY 2019 national average hourly wage (unadjusted for occupational mix) is $42.990625267. Previously, we also would provide a Puerto Rico overall average hourly wage. As discussed in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56915), prior to January 1, 2016, Puerto Rico hospitals were paid based on 75 percent of the national standardized amount and 25 percent of the Puerto Rico-specific standardized amount. As a result, we calculated a Puerto Ricospecific wage index that was applied to the labor share of the Puerto Rico-specific standardized amount. Section 601 of the Consolidated Appropriations Act, 2016 (Pub. L. 114-113) amended section 1886(d)(9)(E) of the Act to specify that the payment calculation with respect to operating costs of inpatient hospital services of a subsection (d) Puerto Rico hospital for inpatient hospital discharges on or after January 1, 2016, shall use 100 percent of the national standardized amount. As we stated in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56915 through 56916), because Puerto Rico hospitals are no longer paid with a Puerto Ricospecific standardized amount as of January 1, 2016, under section 1886(d)(9)(E) of the Act, as amended by section 601 of the Consolidated Appropriations Act, 2016, there is no longer a need to calculate a Puerto Ricospecific average hourly wage and wage index. Hospitals in Puerto Rico are now paid 100 percent of the national standardized amount and, therefore, are subject to the national average hourly wage (unadjusted for occupational mix) (which is $42.990625267 for this FY 2019 proposed rule) and the national wage index, which is applied to the national labor share of the national standardized amount. For FY 2019, we E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules are not proposing a Puerto Rico-specific overall average hourly wage or wage index. daltland on DSKBBV9HB2PROD with PROPOSALS2 2. Proposed Update of Policies Related to Other Wage-Related Costs, Clarification of the Calculation of Other Wage-Related Costs, and Proposals for FY 2020 and Subsequent Years Section 1886(d)(3)(E) of the Act requires the Secretary to update the wage index based on a survey of hospitals’ costs that are attributable to wages and wage-related costs. In the September 1, 1994 IPPS final rule (59 FR 45356), we developed a list of ‘‘core’’ wage-related costs that hospitals may report on Worksheet S–3, Part II of the Medicare hospital cost report in order to include those costs in the wage index. Core wage-related costs include categories of retirement cost, plan administrative costs, health and insurance costs, taxes, and other specified costs such as tuition reimbursement. In addition to these categories of core wage-related costs, we allow hospitals to report wage-related costs other than those on the core list if the other wagerelated costs meet certain criteria. The criteria for including other wage-related costs in the wage index are discussed in the September 1, 1994 IPPS final rule (59 FR 45357) and clarified in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38132 through 38136). In addition, the criteria for including other wage-related costs in the wage index are listed in the Provider Reimbursement Manual (PRM), Part II, Chapter 40, Sections 4005.2 through 4005.4, Line 18 on W/S S–3 Part II and Line 25 and its subscripts on W/S S–3 Part IV of the Medicare cost report (Form CMS–2552–10, OMB control number 0938–0050). In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38132 through 38136), we clarified that a hospital may be able to report a wage-related cost (defined as the value of the benefit) that does not appear on the core list if it meets all of the following criteria: • The wage-related cost is provided at a significant financial cost to the employer. To meet this test, the individual wage-related cost must be greater than 1 percent of total salaries after the direct excluded salaries are removed (the sum of Worksheet S–3, Part II, Lines 11, 12, 13, 14, Column 4, and Worksheet S–3, Part III, Line 3, Column 4). • The wage-related cost is a fringe benefit as described by the IRS and is reported to the IRS on an employee’s or contractor’s W–2 or 1099 form as taxable income. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 • The wage-related cost is not furnished for the convenience of the provider or otherwise excludable from income as a fringe benefit (such as a working condition fringe). We noted that those wage-related costs reported as salaries on Line 1 (for example, loan forgiveness and sick pay accruals) should not be included as other wage-related costs on Line 18. The above instructions for calculating the 1-percent test inadvertently omitted Line 15 for Home Office Part A Administrator on Worksheet S–3, Part II from the denominator. Line 15 should be included in the denominator because Home Office Part A Administrator is added to Line 1 in the wage index calculation. Therefore, in this proposed rule, we are correcting the inadvertent omission of Line 15 from the denominator, and we are clarifying that, for calculating the 1-percent test, each individual category of the other wagerelated cost (that is, the numerator) should be divided by the sum of Worksheet S–3, Part III, Lines 3 and 4, Column 4 (that is, the denominator). Line 4 sums the following lines from Worksheet S–3, Part II: Lines 11, 12, 13, 14, 14.01, 14.02, and 15. We also direct readers to instructions for calculating the 1-percent test in the Provider Reimbursement Manual (PRM), Part II, Chapter 40, Section 4005.4, Line 25 and its subscripts on Worksheet S–3, Part IV of the Medicare cost report (Form CMS– 2552–10, OMB control number 0938– 0050), which state: ‘‘Calculate the 1percent test by dividing each individual category of the other wage-related cost (that is, the numerator) by the sum of Worksheet S–3, Part III, Lines 3 and 4, Column 4, (that is, the denominator).’’ In addition to our discussion about calculating the 1-percent test and other criteria for including other-wage related costs in the wage index, we stated in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38133 through 38166) that we would consider proposing to remove other wage-related costs from the wage index entirely. In the FY 2018 IPPS/LTCH PPS proposed and final rules (82 FR 19901 and 82 FR 38133, respectively), we stated that we originally allowed for the inclusion of wage-related costs other than those on the core list because we were concerned that individual hospitals might incur unusually large wage-related costs that are not reflected on the core list but that may represent a significant wage-related cost. However, we stated in the FY 2018 IPPS/LTCH PPS proposed and final rules (82 FR 19901 and 82 FR 38133, respectively) that we were reconsidering allowing other wage-related costs to be PO 00000 Frm 00195 Fmt 4701 Sfmt 4702 20357 included in the wage index because internal reviews of the FY 2018 wage data showed that only a small minority of hospitals were reporting other wagerelated costs that meet the 1-percent test described earlier. This year, as part of the wage index desk review process for FY 2019, internal reviews showed that only 8 hospitals out of the more than 3,000 IPPS hospitals in the wage index had other wage-related costs that were correctly reported for inclusion in the wage index. Given the extremely limited number of hospitals nationally using Worksheet S–3, Part IV, Line 25 and subscripts, and Worksheet S–3, Part II, Line 18, to correctly report other wagerelated costs in accordance with the criteria to be included in the wage index, we continue to believe that other wage-related costs do not constitute an appropriate and significant portion of wage costs in a particular labor market area. In other words, while other wagerelated costs may represent costs that may have an impact on an individual hospital’s average hourly wage, we do not believe that costs reported by only a very small minority of hospitals (less than 0.003 percent) accurately reflect the economic conditions of the labor market area as a whole in which such an individual hospital is located. The fact that only 8 hospitals out of more than 3,000 IPPS hospitals included in the FY 2019 IPPS proposed wage index reported other wage-related costs correctly in accordance with the 1percent test and related criteria indicates that, in fact, other wagerelated costs are not a relative measure of the labor costs to be included in the IPPS wage index. Therefore, we believe that inclusion of other wage-related costs in the wage index in such a limited manner may distort the average hourly wage of a particular labor market area so that its wage index does not accurately represent that labor market area’s current wages relative to national wages. Furthermore, the open-ended nature of the types of other wage-related costs that may be included on Line 25 and its subscripts of Worksheet S–3 Part IV and Line 18 of Worksheet S–3 Part II, in contrast to the concrete list of core wage-related costs, may hinder consistent and proper reporting of fringe benefits. Our internal reviews indicate widely divergent types of costs that hospitals are reporting as other wagerelated costs on these lines. We are concerned that inconsistent reporting of other wage-related costs further compromises the accuracy of the wage index as a representation of the relative average hourly wage for each labor E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20358 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules market area. Our intent in creating a core list of wage-related costs in the September 1, 1994 IPPS final rule was to promote consistent reporting of fringe benefits, and we are increasingly concerned that inconsistent reporting of wage-related costs undermines this effort. Specifically, we expressed in the September 1, 1994 IPPS final rule that, since we began including fringe benefits in the wage index, we have been concerned with the inconsistent reporting of fringe benefits, whether because of a lack of provider proficiency in identifying fringe benefit costs or varying interpretations across fiscal intermediaries of the definition for fringe benefits in PRM–I, Section 2144.1 (59 FR 45356). We believe that the limited and inconsistent use of Line 25 and its subscripts of Worksheet S–3 Part IV and Line 18 of Worksheet S–3 Part II for reporting wage-related costs other than the core list indicate that including other wage-related costs in the wage index compromises the accuracy of the wage index as a relative measure of wages in a given labor market area. Therefore, for the reasons discussed earlier, for the FY 2020 wage index and subsequent years, we are proposing to only include the wage-related costs on the core list in the calculation of the wage index and not to include any other wage-related costs in the calculation of the wage index. Under our proposal, we would no longer consider any other wage-related costs beginning with the FY 2020 wage index. Considering the extremely limited number of hospitals reporting other wage-related costs and the inconsistency in types of other wage-related costs being reported, we believe this proposal will help ensure a more consistent and more accurate wage index representative of the relative average hourly wage for each labor market area. In addition, we believe that this proposal to no longer include other wage-related costs in the wage index calculation benefits the vast majority of hospitals because most hospitals do not report other wage-related costs. Because the wage index is budget neutral, hospitals in an area without other wagerelated costs included in the wage index have their wage indexes reduced when other areas’ wage indexes are raised by including other wage-related costs in their wage index calculation. We also note that this proposal to exclude other wage-related costs from the wage index, starting with the FY 2020 wage index, contributes to agency efforts to simplify hospital paperwork burden because it would eliminate the need for Line 18 on Worksheet S–3, Part II and Line 25 and its subscripts on Worksheet S–3, Part IV VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 of the Medicare cost report (Form CMS– 2552–10, OMB control number 0938– 0050). We note that we would include in the FY 2019 wage index the other wage-related costs of the eight hospitals that accurately reported those costs in accordance with the current criteria. In summary, we are clarifying that our current policy for calculating the 1percent test includes Line 15 for Home Office Part A Administrator on Worksheet S–3, Part II in the denominator. In addition, we are proposing to eliminate other wagerelated costs from the calculation of the wage index for the FY 2020 wage index and subsequent years, as discussed earlier. We are inviting public comments on this proposal. 3. Proposals To Codify Policies Regarding Multicampus Hospitals We have received an increasing number of inquiries regarding the treatment of multicampus hospitals as the number of multicampus hospitals has grown in recent years. While the regulations at § 412.230(d)(2)(iii) and (v) for geographic reclassification under the MGCRB include criteria for how multicampus hospitals may be reclassified, the regulations at § 412.92 for sole community hospitals (SCHs), § 412.96 for rural referral centers (RRC), § 412.103 for rural reclassification, and § 412.108 for Medicare-dependent, small rural hospitals (MDHs) do not directly address multicampus hospitals. Thus, in this proposed rule, we are proposing to codify in these regulations the policies for multicampus hospitals that we have developed in response to recent questions regarding CMS’ treatment of multicampus hospitals for purposes other than geographic reclassification under the MGCRB. The proposals below apply to hospitals with a main campus and one or more remote locations under a single provider agreement where services are provided and billed under the IPPS and that meet the provider-based criteria at § 413.65 as a main campus and a remote location of a hospital, also referred to as multicampus hospitals or hospitals with remote locations. We are proposing that a main campus of a hospital cannot obtain an SCH, RRC, or MDH status or rural reclassification independently or separately from its remote location(s), and vice versa. Rather, if the criteria are met in the regulations at § 412.92 for SCHs, § 412.96 for RRCs, § 412.103 for rural reclassification, or § 412.108 for MDHs (as discussed later in this section), the hospital (that is, the main campus and its remote location(s)) would be granted the special treatment PO 00000 Frm 00196 Fmt 4701 Sfmt 4702 or rural reclassification afforded by the aforementioned regulations. We believe this is an appropriate policy for two reasons. First, each remote location of a hospital is included on the main campus’s cost report and shares the same provider number. That is, the main campus and remote location(s) would share the same status or rural reclassification because the hospital is a single entity with one provider agreement. Second, it would not be administratively feasible for CMS and the MACs to track every hospital with remote locations within the same CBSA and to assign different statuses or rural reclassifications exclusively to the main campus or to its remote location. We note that, for wage index purposes only, CMS tracks multicampus remote locations located in different CBSAs in order to comply with the statutory requirement to adjust for geographic differences in hospital wage levels (section 1886(d)(3)(E) of the Act). However, for purposes of rural reclassification under § 412.103, we do not believe it would be appropriate for a main campus and remote location(s) (whether located in the same or separate CBSAs) to be reclassified independently or separately from each other because, unlike MGCRB reclassifications which are used only for wage index purposes, § 412.103 rural reclassifications have payment effects other than wage index (for example, payments to disproportionate share hospitals (DSHs), and non-Medicare payment provisions, such as the 340B Drug Pricing Program administered by HRSA). To qualify for rural reclassification or SCH, RRC, or MDH status, we are proposing that a hospital with remote locations must demonstrate that both the main campus and its remote location(s) satisfy the relevant qualifying criteria. A hospital with remote locations submits a joint cost report that includes data from its main campus and remote location(s), and its MedPAR data also combine data from the main campus and remote location(s). We believe that it would not be feasible to separate data by location, nor would it be appropriate, because we consider a main campus and remote location(s) to be one hospital. Therefore, where the regulations at § 412.92, § 412.96, § 412.103, and § 412.108 require data, such as bed count, number of discharges, or case-mix index, for example, to demonstrate that the hospital meets the qualifying criteria, we are proposing to codify in our regulations that the combined data from the main campus and its remote location(s) are to be used. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules For example, if a hospital with a main campus with 200 beds and a remote location with 75 beds applies for RRC status, the combined count of 275 beds would be considered the hospital’s bed count, and the main campus and its remote location would be granted RRC status if the hospital applies during the last quarter of its cost reporting period and both the main campus and the remote location are located in a rural area as defined in 42 CFR part 412, subpart D. This is consistent with the regulation at § 412.96(b)(1), which states, in part, that the number of beds is determined under the provisions of § 412.105(b). For § 412.105(b), beds are counted from the main campus and remote location(s) of a hospital. We believe this is also consistent with § 412.96(b)(1)(ii), which sets forth the criteria that the hospital is located in a rural area and the hospital has a bed count of 275 or more beds during its most recently completed cost reporting period, unless the hospital submits written documentation with its application that its bed count has changed since the close of its most recently completed cost reporting period for one or more of several reasons, including the merger of two or more hospitals. Similarly, combined data would be used for demonstrating the hospital meets criteria at § 412.92 for SCH status. For example, the patient origin data, which are typically MedPAR data used to document the boundaries of the hospital’s service area as required in § 412.92(b)(1)(ii) and (iii), would be used from both locations. We reiterate that we believe this is the appropriate policy because the main campus and remote location are considered one hospital and that it is the only administratively feasible policy because there is currently no way to split the MedPAR data for each location. For § 412.103 rural reclassification, a hospital with remote location(s) seeking to qualify under § 412.103(a)(3), which requires that the hospital would qualify as an RRC or SCH if the hospital were located in a rural area, would similarly demonstrate that it meets the criteria at § 412.92 or at § 412.96, such as bed count, by using combined data from the main campus and its remote location(s) (with the exception of certain criteria discussed below related to location, mileage, travel time, and distance requirements). We refer readers to the portions of our discussion that explain how hospitals with remote locations would meet criteria for RRC or SCH status. A hospital seeking MDH status would also use combined data for bed count VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 and discharges to demonstrate that it meets the criteria at § 412.108(a)(1). For example, if the main campus of a hospital has 75 beds and its remote location has 30 beds, the bed count exceeds 100 beds and the hospital would not satisfy the criteria at § 412.108(a)(1)(i) (which is proposed to be redesignated as 412.108(a)(1)(ii)). We are reminding readers that, under § 412.108(b)(4) and § 412.92(b)(3)(i), an approved MDH or SCH status determination remains in effect unless there is a change in the circumstances under which the status was approved. While we believe that this proposal is consistent with the policies for multicampus hospitals that we have developed in response to recent questions, current MDHs and SCHs should make sure that this proposal does not create a change in circumstance (such as an increase in the number of beds to more than 100 for MDHs or to more than 50 for SCHs), which an MDH or SCH is required to report to the MAC within 30 days of the event, in accordance with § 412.108(b)(4)(ii) and (iii) and § 412.92(b)(3)(ii) and (iii). With regard to other qualifying criteria set forth in the regulations at §§ 412.92, 412.96, 412.103, and 412.108 that do not involve data that can be combined, specifically qualifying criteria related to location, mileage, travel time, and distance requirements, a hospital would need to demonstrate that the main campus and its remote location(s) each independently satisfy those requirements in order for the entire hospital, including its remote location(s), to be reclassified or obtain a special status. To qualify for SCH status, for example, it would be insufficient for only the main campus, and not the remote location, to meet distance criteria. Rather, the main campus and its remote location(s) would each need to meet at least one of the criteria at § 412.92(a). Specifically, the main campus and its remote location must each be located more than 35 miles from other like hospitals, or if in a rural area (as defined in § 412.64), be located between 25 and 35 miles from other like hospitals if meeting one of the criteria at § 412.92(a)(1) (and each meet the criterion at § 412.92(a)(1)(iii) if applicable), or between 15 and 25 miles from other like hospitals if the other like hospitals are inaccessible for at least 30 days in each 2 out of 3 years (§ 412.92(a)(2)), or travel time to the nearest like hospital is at least 45 minutes (§ 412.92(a)(3)). We believe that this is necessary to show that the hospital is indeed the sole source of PO 00000 Frm 00197 Fmt 4701 Sfmt 4702 20359 inpatient hospital services reasonably available to individuals in a geographic area who are entitled to benefits under Medicare Part A, as required by section 1886(d)(5)(D)(iii)(II) of the Act. For hospitals with remote locations that apply for SCH classification under § 412.92(a)(1)(i) and (ii), combined data are used to document the boundaries of the hospital’s service area using data from across both locations, as discussed earlier, and all like hospitals within a 35-mile radius of each location are included in the analysis. To be located in a rural area to use the criteria in § 412.92(a)(1), (2), and (3), the main campus and its remote location(s) must each be either geographically located in a rural area, as defined in § 412.64, or reclassified as rural under § 412.103. Similarly, for RRC classification under § 412.96 and MDH classification under § 412.108, the main campus and its remote location(s) must each be either geographically located in a rural area, as defined in 42 CFR part 412, subpart D, or reclassified as rural under § 412.103 to meet the rural requirement portion of the criteria at § 412.96(b)(1), § 412.96(c), or § 412.108(a)(1) (or for MDH, be located in a State with no rural area and satisfy any of the criteria under § 412.103(a)(1) or (a)(3) or under § 412.103(a)(2) as of January 1, 2018). For hospitals with remote locations that apply for RRC classification under § 412.96(b)(2)(ii) or § 412.96(c)(4), 25 miles is calculated from each location (the main campus and its remote location(s)), and combined data from both the main campus and its remote location(s) are used to calculate the percentage of Medicare patients, services furnished to Medicare beneficiaries, and discharges. For hospitals seeking to reclassify as rural by meeting the criteria at § 412.103(a)(1), (a)(2), or (a)(6), we also are proposing to codify in our regulations that it would not be sufficient for only the main campus, and not its remote location(s), to demonstrate that its location meets the aforementioned criteria. Rather, under § 412.103(a)(1) and (2) (which also are incorporated in § 412.103(a)(6)), we are proposing that the main campus and its remote location(s) must each either be located (1) in a rural census tract of an MSA as determined under the most recent version of the Goldsmith Modification, the Rural-Urban Commuting Area codes (§ 412.103(a)(1)), or (2) in an area designated by any law or regulation of the State in which it is located as a rural area, or be designated as a rural hospital by State law or regulation (§ 412.103(a)(2)). For hospitals seeking to reclassify as rural E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20360 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules by meeting the criteria in § 412.103(a)(3), which require that the hospital would qualify as an RRC or a SCH if the hospital were located in a rural area, we refer readers to our discussion presented earlier that explains how hospitals with remote locations would meet criteria for RRC or SCH status. We note that we have also received questions about how a hospital with remote locations that trains residents in approved medical residency training programs would be treated for IME adjustment purposes if it reclassifies as rural under § 412.103. As we noted in the FY 2015 IPPS/LTCH PPS final rule (79 FR 50114), the rural reclassification provision of § 412.103 only applies to IPPS hospitals under section 1886(d) of the Act. Therefore, it applies for IME payment purposes, given that the IME adjustment under section 1886(d)(5)(B) of the Act is an additional payment under IPPS. In contrast, sections 1886(a)(4) and (d)(1)(A) of the Act exclude direct GME costs from operating costs and these costs are not included in the calculation of the IPPS payment rates for inpatient hospital services. Payment for direct GME is separately authorized under section 1886(h) of the Act and, therefore, not subject to § 412.103. Therefore, if a geographically urban teaching hospital reclassifies as rural under § 412.103, such a reclassification would only affect the teaching hospital’s IME adjustment, and not its direct GME payment. Accordingly, we are clarifying that in order for the IME cap adjustment regulations at § 412.105(f)(1)(iv)(A), § 412.105(f)(1)(vii), and § 412.105(f)(1)(xv) to be applicable to a teaching hospital with a main campus and a remote location(s), the main campus and its remote location(s), respectively, must each be either geographically located in a rural area as defined in 42 CFR part 412, subpart D, or reclassified as rural under § 412.103. For direct GME purposes at § 413.79, both the main campus and its remote location(s) are required to be geographically rural because a hospital’s status for any direct GME payments or adjustments is unaffected by a § 412.103 rural reclassification. We are proposing to codify these policies regarding the application of the qualifying criteria for hospitals with remote locations in the regulations at § 412.92 for SCHs, § 412.96 for RRCs, § 412.103 for rural reclassification, or § 412.108 for MDHs. Specifically, we are proposing to revise these regulations as follows: We are proposing to add paragraph (a)(4) to § 412.92 to specify that, for a VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 hospital with a main campus and one or more remote locations under a single provider agreement where services are provided and billed under the IPPS and that meets the provider-based criteria at § 413.65 as a main campus and a remote location of a hospital, combined data from the main campus and its remote location(s) are required to demonstrate that the criteria at § 412.92(a)(1)(i) and (ii) are met. For the mileage and rural location criteria at § 412.92(a) and the mileage, accessibility, and travel time criteria specified at § 412.92(a)(1) through (a)(3), the hospital must demonstrate that the main campus and its remote location(s) each independently satisfy those requirements. In § 412.96, we are proposing to redesignate paragraph (d) as paragraph (e) and add a new paragraph (d) to specify that, for a hospital with a main campus and one or more remote locations under a single provider agreement where services are provided and billed under the IPPS and that meets the provider-based criteria at § 413.65 as a main campus and a remote location of a hospital, combined data from the main campus and its remote location(s) are required to demonstrate that the criteria at § 412.96(b)(1) and (2) and (c)(1) through (c)(5) are met. For purposes of meeting the rural location criteria in § 412.96(b)(1) and (c) and the mileage criteria in § 412.96(b)(2)(ii) and (c)(4), the hospital must demonstrate that the main campus and its remote location(s) each independently satisfy those requirements. We are proposing to add paragraph (a)(7) to § 412.103 to specify that, for a hospital with a main campus and one or more remote locations under a single provider agreement where services are provided and billed under the IPPS and that meets the provider-based criteria at § 413.65 as a main campus and a remote location of a hospital, the hospital must demonstrate that the main campus and its remote location(s) each independently satisfy the location criteria specified in § 412.103(a)(1) and (2) (which criteria also are incorporated in § 412.103(a)(6)). We are proposing to add paragraph (a)(3) to § 412.108 to specify that, for a hospital with a main campus and one or more remote locations under a single provider agreement where services are provided and billed under the IPPS and that meets the provider-based criteria at § 413.65 as a main campus and a remote location of a hospital, combined data from the main campus and its remote location(s) are required to demonstrate that the criteria in § 412.108(a)(1) and (2) are met. For the location requirement PO 00000 Frm 00198 Fmt 4701 Sfmt 4702 specified at proposed amended paragraph (a)(1)(i) of this section, the hospital must demonstrate that the main campus and its remote location(s) each independently satisfy this requirement. We are inviting public comments on our proposals described above. E. Proposed Occupational Mix Adjustment to the FY 2019 Wage Index As stated earlier, section 1886(d)(3)(E) of the Act provides for the collection of data every 3 years on the occupational mix of employees for each short-term, acute care hospital participating in the Medicare program, in order to construct an occupational mix adjustment to the wage index, for application beginning October 1, 2004 (the FY 2005 wage index). The purpose of the occupational mix adjustment is to control for the effect of hospitals’ employment choices on the wage index. For example, hospitals may choose to employ different combinations of registered nurses, licensed practical nurses, nursing aides, and medical assistants for the purpose of providing nursing care to their patients. The varying labor costs associated with these choices reflect hospital management decisions rather than geographic differences in the costs of labor. 1. Use of 2016 Medicare Wage Index Occupational Mix Survey for the Proposed FY 2019 Wage Index Section 304(c) of the Consolidated Appropriations Act, 2001 (Pub. L. 106– 554) amended section 1886(d)(3)(E) of the Act to require CMS to collect data every 3 years on the occupational mix of employees for each short-term, acute care hospital participating in the Medicare program. We collected data in 2013 to compute the occupational mix adjustment for the FY 2016, FY 2017, and FY 2018 wage indexes. As discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19903) and final rule (82 FR 38137), a new measurement of occupational mix is required for FY 2019. The FY 2019 occupational mix adjustment is based on a new calendar year (CY) 2016 survey. Hospitals were required to submit their completed 2016 surveys (Form CMS–10079, OMB number 0938–0907) to their MACs by July 3, 2017. The preliminary, unaudited CY 2016 survey data were posted on the CMS website on July 12, 2017. As with the Worksheet S–3, Parts II and III cost report wage data, as part of the FY 2019 desk review process, the MACs revised or verified data elements in hospitals’ occupational mix surveys that result in certain edit failures. E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 2. Calculation of the Proposed Occupational Mix Adjustment for FY 2019 Proposed unadjusted national average hourly wage For FY 2019, we are proposing to calculate the occupational mix adjustment factor using the same methodology that we have used since the FY 2012 wage index (76 FR 51582 through 51586) and to apply the occupational mix adjustment to 100 percent of the FY 2019 wage index. Similar to the method we use for the calculation of the wage index without occupational mix, salaries and hours for a multicampus hospital are allotted among the different labor market areas where its campuses are located. Table 2 associated with this proposed rule (which is available via the Internet on the CMS website), which contains the proposed FY 2019 occupational mix adjusted wage index, includes separate wage data for the campuses of 16 multicampus hospitals. We refer readers to section III.C. of the preamble of this proposed rule for a chart listing the multicampus hospitals and the FTE percentages used to allot their occupational mix data. Because the statute requires that the Secretary measure the earnings and paid hours of employment by occupational category not less than once every 3 years, all hospitals that are subject to payments under the IPPS, or any hospital that would be subject to the IPPS if not granted a waiver, must complete the occupational mix survey, unless the hospital has no associated cost report wage data that are included in the FY 2019 wage index. For the proposed FY 2019 wage index, we are using the Worksheet S–3, Parts II and III wage data of 3,260 hospitals, and we are using the occupational mix surveys of 3,078 hospitals for which we also have Worksheet S–3 wage data, which represented a ‘‘response’’ rate of 94 percent (3,078/3,260). For the proposed FY 2019 wage index, we are applying proxy data for noncompliant hospitals, new hospitals, or hospitals that submitted erroneous or aberrant data in the same manner that we applied proxy data for such hospitals in the FY 2012 wage index occupational mix adjustment (76 FR 51586). As a result of applying this methodology, the proposed FY 2019 occupational mix adjusted national average hourly wage is $42.948428861. In summary, the proposed FY 2019 unadjusted national average hourly wage and the proposed FY 2019 occupational mix adjusted national average hourly wage is: VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Proposed occupational mix adjusted national average hourly wage $42.990625267 $42.948428861 F. Analysis and Implementation of the Proposed Occupational Mix Adjustment and the Proposed FY 2019 Occupational Mix Adjusted Wage Index As discussed in section III.E. of the preamble of this proposed rule, for FY 2019, we are proposing to apply the occupational mix adjustment to 100 percent of the FY 2019 wage index. We calculated the proposed occupational mix adjustment using data from the 2016 occupational mix survey data, using the methodology described in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51582 through 51586). Using the occupational mix survey data and applying the occupational mix adjustment to 100 percent of the FY 2019 wage index results in a proposed national average hourly wage of $42.948428861. The proposed FY 2019 national average hourly wages for each occupational mix nursing subcategory as calculated in Step 2 of the occupational mix calculation are as follows: Occupational mix nursing subcategory Average hourly wage National RN .......................... National LPN and Surgical Technician ......................... National Nurse Aide, Orderly, and Attendant .................... National Medical Assistant ... National Nurse Category ...... $41.67064907 24.68950438 16.96671421 18.1339666 35.05256013 The proposed national average hourly wage for the entire nurse category as computed in Step 5 of the occupational mix calculation is $35.05256013. Hospitals with a nurse category average hourly wage (as calculated in Step 4) of greater than the national nurse category average hourly wage receive an occupational mix adjustment factor (as calculated in Step 6) of less than 1.0. Hospitals with a nurse category average hourly wage (as calculated in Step 4) of less than the national nurse category average hourly wage receive an occupational mix adjustment factor (as calculated in Step 6) of greater than 1.0. Based on the 2016 occupational mix survey data, we determined (in Step 7 of the occupational mix calculation) that the national percentage of hospital employees in the nurse category is 42.3 percent, and the national percentage of hospital employees in the all other occupations category is 57.7 percent. At PO 00000 Frm 00199 Fmt 4701 Sfmt 4702 20361 the CBSA level, the percentage of hospital employees in the nurse category ranged from a low of 26.6 percent in one CBSA to a high of 82.0 percent in another CBSA. We compared the FY 2019 proposed occupational mix adjusted wage indexes for each CBSA to the proposed unadjusted wage indexes for each CBSA. As a result of applying the proposed occupational mix adjustment to the wage data, the proposed wage index values for 232 (56.9 percent) urban areas and 23 (48.9 percent) rural areas would increase. The proposed wage index values for 113 (27.7 percent) urban areas would increase by greater than or equal to 1 percent but less than 5 percent, and the proposed wage index values for 7 (1.7 percent) urban areas would increase by 5 percent or more. The proposed wage index values for 9 (19.1 percent) rural areas would increase by greater than or equal to 1 percent but less than 5 percent, and 1 rural area’s proposed wage index value would increase by 5 percent or more. However, the proposed wage index values for 175 (42.9 percent) urban areas and 24 (51.1 percent) rural areas would decrease. The proposed wage index values for 81 (19.9 percent) urban areas would decrease by greater than or equal to 1 percent but less than 5 percent, and 1 urban area’s proposed wage index value would decrease by 5 percent or more. The proposed wage index values of 6 (12.8 percent) rural areas would decrease by greater than or equal to 1 percent and less than 5 percent, and no rural areas’ proposed wage index values would decrease by 5 percent or more. The largest proposed positive impacts would be 6.42 percent for an urban area and 5.25 percent for a rural area. The largest proposed negative impacts would be 5.84 percent for an urban area and 1.6 percent for a rural area. One urban area’s proposed wage indexes, but no rural area proposed wage indexes, would remain unchanged by application of the occupational mix adjustment. These results indicate that a larger percentage of urban areas (56.9 percent) would benefit from the occupational mix adjustment than would rural areas (48.9 percent). We also compared the FY 2019 wage data adjusted for occupational mix from the 2016 survey to the FY 2019 wage data adjusted for occupational mix from the 2013 survey. This analysis illustrates the effect on area wage indexes of using the 2016 survey data compared to the 2013 survey data; that is, it shows whether hospitals’ wage indexes would increase or decrease under the 2016 survey data as compared to the prior 2013 survey data. Of the 407 E:\FR\FM\07MYP2.SGM 07MYP2 20362 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules urban CBSAs and 47 rural CBSAs, our analysis shows that the FY 2019 wage index values for 179 (43.9 percent) urban areas and 20 (42.6 percent) rural areas would increase using the 2016 survey data. Ninety-eight (24.0 percent) urban areas would increase by greater than or equal to 1 percent but less than 5 percent, and 27 (6.6 percent) urban areas would increase by 5 percent or more. Nine (19.1 percent) rural areas would increase by greater than or equal to 1 percent but less than 5 percent, and 4 (8.5 percent) rural areas would increase by 5 percent or more. However, the wage index values for 229 (56.1 percent) urban areas and 27 (57.4 percent) rural areas would decrease using the 2016 survey data. One hundred thirty three (32.6 percent) urban areas would decrease by greater than or equal to 1 percent but less than 5 percent, and 24 (5.9 percent) urban areas would decrease by 5 percent or more. Eleven (23.4 percent) rural areas would decrease by greater than or equal to 1 percent but less than 5 percent, and 2 (4.3 percent) rural areas would decrease by 5 percent or more. The largest positive impacts using the 2016 survey data compared to the 2013 survey data are 17.2 percent for an urban area and 13.8 percent for a rural area. The largest negative impacts are 13.0 percent for an urban area and 14.0 percent for rural areas. No urban areas and no rural areas are unaffected. These results indicate that the wage indexes of more CBSAs overall (56.3 percent) would decrease due to application of the 2016 occupational mix survey data as compared to the 2013 occupational mix survey data to the wage index. Further, a slightly larger percentage of urban areas (43.9 percent) would benefit from the use of the 2016 occupational mix survey data as compared to the 2013 occupational mix survey data than would rural areas (42.6 percent). daltland on DSKBBV9HB2PROD with PROPOSALS2 G. Proposed Application of the Rural, Imputed, and Frontier Floors 1. Proposed Rural Floor Section 4410(a) of Public Law 105–33 provides that, for discharges on or after October 1, 1997, the area wage index applicable to any hospital that is located in an urban area of a State may not be less than the area wage index applicable to hospitals located in rural areas in that State. This provision is referred to as the ‘‘rural floor.’’ Section 3141 of Public Law 111–148 also requires that a national budget neutrality adjustment be applied in implementing the rural floor. Based on the proposed FY 2019 wage index associated with this proposed rule (which is available via the Internet on VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 the CMS website), we estimated that 255 hospitals would receive an increase in their FY 2019 proposed wage index due to the application of the rural floor. 2. Proposed Expiration of Imputed Floor Policy In the FY 2005 IPPS final rule (69 FR 49109 through 49111), we adopted the ‘‘imputed floor’’ policy as a temporary 3-year regulatory measure to address concerns from hospitals in all-urban States that have argued that they are disadvantaged by the absence of rural hospitals to set a wage index floor for those States. Since its initial implementation, we have extended the imputed floor policy eight times, the last of which was adopted in the FY 2018 IPPS/LTCH PPS final rule and is set to expire on September 30, 2018. (We refer readers to further discussions of the imputed floor in the IPPS/LTCH PPS final rules from FY 2014 through FY 2018 (78 FR 50589 through 50590, 79 FR 49969 through 49970, 80 FR 49497 through 49498, 81 FR 56921 through 56922, and 82 FR 38138 through 38142, respectively) and to the regulations at 42 CFR 412.64(h)(4).) Currently, there are three all-urban States—Delaware, New Jersey, and Rhode Island—with a range of wage indexes assigned to hospitals in these States, including through reclassification or redesignation. (We refer readers to discussions of geographic reclassifications and redesignations in section III.I. of the preamble of this proposed rule.) In computing the imputed floor for an all-urban State under the original methodology, which was established beginning in FY 2005, we calculated the ratio of the lowest-to-highest CBSA wage index for each all-urban State as well as the average of the ratios of lowest-to-highest CBSA wage indexes of those all-urban States. We then compared the State’s own ratio to the average ratio for all-urban States and whichever is higher is multiplied by the highest CBSA wage index value in the State—the product of which established the imputed floor for the State. As of FY 2012, there were only two all-urban States—New Jersey and Rhode Island— and only New Jersey benefitted under this methodology. Under the previous OMB labor market area delineations, Rhode Island had only one CBSA (Providence-New Bedford-Fall River, RI–MA) and New Jersey had 10 CBSAs. Therefore, under the original methodology, Rhode Island’s own ratio equaled 1.0, and its imputed floor was equal to its original CBSA wage index value. However, because the average ratio of New Jersey and Rhode Island PO 00000 Frm 00200 Fmt 4701 Sfmt 4702 was higher than New Jersey’s own ratio, this methodology provided a benefit for New Jersey, but not for Rhode Island. In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53368 through 53369), we retained the imputed floor calculated under the original methodology as discussed above, and established an alternative methodology for computing the imputed floor wage index to address the concern that the original imputed floor methodology guaranteed a benefit for one all-urban State with multiple wage indexes (New Jersey) but could not benefit the other all-urban State (Rhode Island). The alternative methodology for calculating the imputed floor was established using data from the application of the rural floor policy for FY 2013. Under the alternative methodology, we first determined the average percentage difference between the post-reclassified, pre-floor area wage index and the post-reclassified, rural floor wage index (without rural floor budget neutrality applied) for all CBSAs receiving the rural floor. (Table 4D associated with the FY 2013 IPPS/LTCH PPS final rule (which is available via the Internet on the CMS website) included the CBSAs receiving a State’s rural floor wage index.) The lowest postreclassified wage index assigned to a hospital in an all-urban State having a range of such values then is increased by this factor, the result of which establishes the State’s alternative imputed floor. We amended § 412.64(h)(4) of the regulations to add paragraphs to incorporate the finalized alternative methodology, and to make reference and date changes. In summary, for the FY 2013 wage index, we did not make any changes to the original imputed floor methodology at § 412.64(h)(4) and, therefore, made no changes to the New Jersey imputed floor computation for FY 2013. Instead, for FY 2013, we adopted a second, alternative methodology for use in cases where an all-urban State has a range of wage indexes assigned to its hospitals, but the State cannot benefit under the original methodology. In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50589 through 50590), we extended the imputed floor policy (both the original methodology and the alternative methodology) for 1 additional year, through September 30, 2014, while we continued to explore potential wage index reforms. In the FY 2015 IPPS/LTCH PPS final rule (79 FR 49969 through 49970), for FY 2015, we adopted a policy to extend the imputed floor policy (both the original methodology and alternative methodology) for another year, through September 30, 2015, as we continued to E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules explore potential wage index reforms. In that final rule, we revised the regulations at § 412.64(h)(4) and (h)(4)(vi) to reflect the 1-year extension of the imputed floor. As discussed in section III.B. of the preamble of that FY 2015 final rule, we adopted the new OMB labor market area delineations beginning in FY 2015. Under the new OMB delineations, Delaware became an all-urban State, along with New Jersey and Rhode Island. Under the new OMB delineations, Delaware has three CBSAs, New Jersey has seven CBSAs, and Rhode Island continues to have only one CBSA (Providence-Warwick, RIMA). We refer readers to a detailed discussion of our adoption of the new OMB labor market area delineations in section III.B. of the preamble of the FY 2015 IPPS/LTCH PPS final rule. Therefore, under the adopted new OMB delineations discussed in section III.B. of the preamble of the FY 2015 IPPS/ LTCH PPS final rule, Delaware became an all-urban State and was subject to an imputed floor as well for FY 2015. In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49497 through 49498), for FY 2016, we extended the imputed floor policy (under both the original methodology and the alternative methodology) for 1 additional year, through September 30, 2016. In the FY 2017 IPPS/LTCH PPS final rule (81 FR 56921 through 56922), for FY 2017, we extended the imputed floor policy (under both the original methodology and the alternative methodology) for 1 additional year, through September 30, 2017. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38138 through 38142), for FY 2018, we extended the imputed floor policy (under both the original methodology and the alternative methodology) for 1 additional year, through September 30, 2018. In these three final rules, we revised the regulations at § 412.64(h)(4) and (h)(4)(vi) to reflect the additional 1-year extensions. The imputed floor is set to expire effective October 1, 2018, and in this FY 2019 proposed rule, we are not proposing to extend the imputed floor policy. In the FY 2005 IPPS final rule (69 FR 49110), we adopted the imputed floor policy for all-urban States under the authority of section 1886(d)(3)(E) of the Act, which gives the Secretary broad authority to adjust the proportion (as estimated by the Secretary from time to time) of hospitals’ costs which are attributable to wages and wage-related costs of the DRG prospective payment rates for area differences in hospital wage levels by a factor (established by the Secretary). However, we have expressed reservations about the VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 establishment of an imputed floor, considering that the imputed rural floor methodology creates a disadvantage in the application of the wage index to hospitals in States with rural hospitals but no urban hospitals receiving the rural floor (72 FR 24786 and 72 FR 47322). As we discussed in the FY 2008 IPPS final rule (72 FR 47322), the application of the rural and imputed floors requires transfer of payments from hospitals in States with rural hospitals but where the rural floor is not applied to hospitals in States where the rural or imputed floor is applied. For this reason, in this proposed rule, we are proposing not to apply an imputed floor to wage index calculations and payments for hospitals in all-urban States for FY 2019 and subsequent years. That is, hospitals in New Jersey, Delaware, and Rhode Island (and in any other all-urban State) would receive a wage index that is calculated without applying an imputed floor for FY 2019 and subsequent years. Therefore, only States containing both rural areas and hospitals located in such areas (including any hospital reclassified as rural under the provisions of § 412.103 of the regulations) would benefit from the rural floor, in accordance with section 4410 of Public Law 105–33. In addition, we would no longer include the imputed floor as a factor in the national budget neutrality adjustment. Therefore, the proposed wage index and impact tables associated with this FY 2019 IPPS/LTCH PPS proposed rule (which are available via the Internet on the CMS website) do not reflect the imputed floor policy, and there is no proposed national budget neutrality adjustment for the imputed floor for FY 2019. We are inviting public comments on our proposal not to extend the imputed floor for FY 2019 and subsequent years. 3. Proposed State Frontier Floor for FY 2019 Section 10324 of Public Law 111–148 requires that hospitals in frontier States cannot be assigned a wage index of less than 1.0000. (We refer readers to the regulations at 42 CFR 412.64(m) and to a discussion of the implementation of this provision in the FY 2011 IPPS/ LTCH PPS final rule (75 FR 50160 through 50161).) In this FY 2019 IPPS/ LTCH PPS proposed rule, we are not proposing any changes to the frontier floor policy for FY 2019. In this proposed rule, 50 hospitals would receive the frontier floor value of 1.0000 for their FY 2019 wage index. These hospitals are located in Montana, Nevada, North Dakota, South Dakota, and Wyoming. PO 00000 Frm 00201 Fmt 4701 Sfmt 4702 20363 The areas affected by the proposed rural and frontier floor policies for the proposed FY 2019 wage index are identified in Table 2 associated with this proposed rule, which is available via the Internet on the CMS website. H. Proposed FY 2019 Wage Index Tables In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49498 and 49807 through 49808), we finalized a proposal to streamline and consolidate the wage index tables associated with the IPPS proposed and final rules for FY 2016 and subsequent fiscal years. Prior to FY 2016, the wage index tables had consisted of 12 tables (Tables 2, 3A, 3B, 4A, 4B, 4C, 4D, 4E, 4F, 4J, 9A, and 9C) that were made available via the Internet on the CMS website. Effective beginning FY 2016, with the exception of Table 4E, we streamlined and consolidated 11 tables (Tables 2, 3A, 3B, 4A, 4B, 4C, 4D, 4F, 4J, 9A, and 9C) into 2 tables (Tables 2 and 3). In addition, as discussed in section III.J. of the preamble of this proposed rule, we are adding a Table 4 associated with this proposed rule entitled ‘‘List of Counties Eligible for the Out-Migration Adjustment under Section 1886(d)(13) of the Act—FY 2019’’ (which is available via Internet on the CMS Website) We refer readers to section VI. of the Addendum to this proposed rule for a discussion of the proposed wage index tables for FY 2019. I. Revisions to the Wage Index Based on Hospital Redesignations and Reclassifications 1. General Policies and Effects of Reclassification and Redesignation Under section 1886(d)(10) of the Act, the Medicare Geographic Classification Review Board (MGCRB) considers applications by hospitals for geographic reclassification for purposes of payment under the IPPS. Hospitals must apply to the MGCRB to reclassify not later than 13 months prior to the start of the fiscal year for which reclassification is sought (usually by September 1). Generally, hospitals must be proximate to the labor market area to which they are seeking reclassification and must demonstrate characteristics similar to hospitals located in that area. The MGCRB issues its decisions by the end of February for reclassifications that become effective for the following fiscal year (beginning October 1). The regulations applicable to reclassifications by the MGCRB are located in 42 CFR 412.230 through 412.280. (We refer readers to a discussion in the FY 2002 IPPS final rule (66 FR 39874 and 39875) regarding how the MGCRB defines mileage for E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20364 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules purposes of the proximity requirements.) The general policies for reclassifications and redesignations and the policies for the effects of hospitals’ reclassifications and redesignations on the wage index are discussed in the FY 2012 IPPS/LTCH PPS final rule for the FY 2012 final wage index (76 FR 51595 and 51596). In addition, in the FY 2012 IPPS/LTCH PPS final rule, we discussed the effects on the wage index of urban hospitals reclassifying to rural areas under 42 CFR 412.103. Hospitals that are geographically located in States without any rural areas are ineligible to apply for rural reclassification in accordance with the provisions of 42 CFR 412.103. On April 21, 2016, we published an interim final rule with comment period (IFC) in the Federal Register (81 FR 23428 through 23438) that included provisions amending our regulations to allow hospitals nationwide to have simultaneous § 412.103 and MGCRB reclassifications. For reclassifications effective beginning FY 2018, a hospital may acquire rural status under § 412.103 and subsequently apply for a reclassification under the MGCRB using distance and average hourly wage criteria designated for rural hospitals. In addition, we provided that a hospital that has an active MGCRB reclassification and is then approved for redesignation under § 412.103 will not lose its MGCRB reclassification; such a hospital receives a reclassified urban wage index during the years of its active MGCRB reclassification and is still considered rural under section 1886(d) of the Act and for other purposes. We discussed that when there is both a § 412.103 redesignation and an MGCRB reclassification, the MGCRB reclassification controls for wage index calculation and payment purposes. We exclude hospitals with § 412.103 redesignations from the calculation of the reclassified rural wage index if they also have an active MGCRB reclassification to another area. That is, if an application for urban reclassification through the MGCRB is approved, and is not withdrawn or terminated by the hospital within the established timelines, we consider the hospital’s geographic CBSA and the urban CBSA to which the hospital is reclassified under the MGCRB for the wage index calculation. We refer readers to the April 21, 2016 IFC (81 FR 23428 through 23438) and the FY 2017 IPPS/ LTCH PPS final rule (81 FR 56922 through 56930) for a full discussion of the effect of simultaneous reclassifications under both the § 412.103 and the MGCRB processes on wage index calculations. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 2. MGCRB Reclassification and Redesignation Issues for FY 2019 a. FY 2019 Reclassification Requirements and Approvals As previously stated, under section 1886(d)(10) of the Act, the MGCRB considers applications by hospitals for geographic reclassification for purposes of payment under the IPPS. The specific procedures and rules that apply to the geographic reclassification process are outlined in regulations under 42 CFR 412.230 through 412.280. At the time this proposed rule was constructed, the MGCRB had completed its review of FY 2019 reclassification requests. Based on such reviews, there are 337 hospitals approved for wage index reclassifications by the MGCRB starting in FY 2019. Because MGCRB wage index reclassifications are effective for 3 years, for FY 2019, hospitals reclassified beginning in FY 2017 or FY 2018 are eligible to continue to be reclassified to a particular labor market area based on such prior reclassifications for the remainder of their 3-year period. There were 259 hospitals approved for wage index reclassifications in FY 2017 that will continue for FY 2019, and 345 hospitals approved for wage index reclassifications in FY 2018 that will continue for FY 2019. Of all the hospitals approved for reclassification for FY 2017, FY 2018, and FY 2019, based upon the review at the time of this proposed rule, 941 hospitals are in a MGCRB reclassification status for FY 2019 (with 22 of these hospitals reclassified back to their geographic location). Under the regulations at 42 CFR 412.273, hospitals that have been reclassified by the MGCRB are permitted to withdraw their applications if the request for withdrawal is received by the MGCRB any time before the MGCRB issues a decision on the application, or after the MGCRB issues a decision, provided the request for withdrawal is received by the MGCRB within 45 days of the date that CMS’ annual notice of proposed rulemaking is issued in the Federal Register concerning changes to the inpatient hospital prospective payment system and proposed payment rates for the fiscal year for which the application has been filed. For information about withdrawing, terminating, or canceling a previous withdrawal or termination of a 3-year reclassification for wage index purposes, we refer readers to § 412.273, as well as the FY 2002 IPPS final rule (66 FR 39887 through 39888) and the FY 2003 IPPS final rule (67 FR 50065 through 50066). Additional discussion PO 00000 Frm 00202 Fmt 4701 Sfmt 4702 on withdrawals and terminations, and clarifications regarding reinstating reclassifications and ‘‘fallback’’ reclassifications were included in the FY 2008 IPPS final rule (72 FR 47333) and the FY 2018 IPPS/LTCH PPS final rule (82 FR 38148 through 38150). Changes to the wage index that result from withdrawals of requests for reclassification, terminations, wage index corrections, appeals, and the Administrator’s review process for FY 2019 will be incorporated into the wage index values published in the FY 2019 IPPS/LTCH PPS final rule. These changes affect not only the wage index value for specific geographic areas, but also the wage index value that redesignated/reclassified hospitals receive; that is, whether they receive the wage index that includes the data for both the hospitals already in the area and the redesignated/reclassified hospitals. Further, the wage index value for the area from which the hospitals are redesignated/reclassified may be affected. Applications for FY 2020 reclassifications (OMB control number 0938–0573) are due to the MGCRB by September 4, 2018 (the first working day of September 2018). We note that this is also the deadline for canceling a previous wage index reclassification, withdrawal, or termination under 42 CFR 412.273(d). Applications and other information about MGCRB reclassifications may be obtained, beginning in mid-July 2018, via the Internet on the CMS website at: https:// www.cms.gov/Regulations-andGuidance/Review-Boards/MGCRB/ index.html, or by calling the MGCRB at (410) 786-1174. The mailing address of the MGCRB is: 1508 Woodlawn Drive, Suite 100, Baltimore, MD 21207. Under regulations in effect prior to FY 2018 (42 CFR 412.256(a)(1)), applications for reclassification were required to be mailed or delivered to the MGCRB, with a copy to CMS, and were not allowed to be submitted through the facsimile (FAX) process or by other electronic means. Because we believed this previous policy was outdated and overly restrictive and to promote ease of application for FY 2018 and subsequent years, in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56928), we revised this policy to require applications and supporting documentation to be submitted via the method prescribed in instructions by the MGCRB, with an electronic copy to CMS. Specifically, in the FY 2017 IPPS/LTCH PPS final rule, we revised § 412.256(a)(1) to specify that an application must be submitted to the MGCRB according to the method prescribed by the MGCRB, with an E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 electronic copy of the application sent to CMS. We specified that CMS copies should be sent via email to wageindex@ cms.hhs.gov. In the FY 2017 IPPS/LTCH PPS final rule (81 FR 56928), we reiterated that MGCRB application requirements will be published separately from the rulemaking process, and paper applications will likely still be required. The MGCRB makes all initial determinations for geographic reclassification requests, but CMS requests copies of all applications to assist in verifying a reclassification status during the wage index development process. We stated that we believed that requiring electronic versions would better aid CMS in this process, and would reduce the overall burden upon hospitals. b. Proposed Revision of Reclassification Requirements for a Provider That Is the Sole Hospital in the MSA Section 412.230 of the regulations sets forth criteria for an individual hospital to apply for geographic reclassification to a higher rural or urban wage index area. Specifically, under § 412.230(a)(1)(ii), an individual hospital may be redesignated from an urban area to another urban area, from a rural area to another rural area, or from a rural area to an urban area for the purpose of using the other area’s wage index value. Such a hospital must also meet other criteria. One of these required criteria, under § 412.230(d)(1)(iii)(C), is that the hospital must demonstrate that its own average hourly wage is, in the case of a hospital located in a rural area, at least 106 percent, and in the case of a hospital located in an urban area, at least 108 percent of the average hourly wage of all other hospitals in the area in which the hospital is located. We refer readers to the FY 2009 IPPS/LTCH PPS final rule (73 FR 48568) for further explanation as to how the 108/106 percent average hourly wage standards were determined. In cases in which a hospital wishing to reclassify is the only hospital in its MSA, that hospital is unable to satisfy this criterion because it cannot demonstrate that its average hourly wage is higher than that of the other hospitals in the area in which the hospital is located (because there are no other hospitals in the area). In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51600 through 51601), we implemented a policy change to allow for waiver of the average hourly wage comparison criterion under § 412.230(d)(1)(iii) for a hospital in a single hospital MSA for reclassifications beginning in FY 2013 if the hospital VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 could document that it is the single hospital in its MSA that is paid under 42 CFR part 412, subpart D (§ 412.230(d)(5)). In that final rule, we stated that we agreed that the thencurrent policies for geographic reclassification were disparate for hospitals located in single hospital MSAs compared to hospitals located in multiple hospital MSAs. We also acknowledged commenters’ views that this disparity was sometimes a disadvantage because hospitals in single hospital MSAs had fewer options for qualifying for geographic reclassification. In the years since we implemented this policy change, we have encountered questions and concerns regarding its implementation. Currently, to qualify under § 412.230(d)(5) for the waiver of the average hourly wage criterion under § 412.230(d)(1)(iii)(C), a hospital must document to the MGCRB that it is the only hospital in its geographic wage index area that is paid under 42 CFR part 412, subpart D. To do so, a hospital frequently is required to contact the appropriate CMS Regional Office or MAC for a statement certifying its status as the single hospital in its MSA. Hospitals have indicated that this process may be time-consuming, inconsistent in its application nationally, and poses challenges with respect to accurately reflecting situations where hospitals have recently opened or ceased operations during the application process. In light of these questions and concerns and after reviewing the implementation of this reclassification provision, we believe that a revision of the policy is necessary to reduce unnecessary burden to affected hospitals and enhance consistency while achieving previously stated policy goals. The objective of the 108/106 percent average hourly wage criterion at § 412.230(d)(1)(iii)(C) is to require a reclassifying hospital to document that it has significantly higher average hourly wages than other hospitals in its labor market area. The stated purpose of § 412.230(d)(5) was to provide additional reclassification options for hospitals that, due to their single hospital MSA status, could not mathematically meet the requirements of § 412.230(d)(1)(iii). Therefore, in order to determine whether a hospital is the single hospital in the MSA under § 412.230(d)(5), rather than require the hospital to obtain documentation from the CMS Regional Office or the MAC to prove its single hospital MSA status, we believe it would be appropriate to use the same data used to determine PO 00000 Frm 00203 Fmt 4701 Sfmt 4702 20365 whether the 108/106 percent criterion is met under § 412.230(d)(1)(iii)(C): That is, the annually published 3-year average hourly wage data as provided in § 412.230(d)(2)(ii). Specifically, in this proposed rule, we are proposing that, for reclassification applications for FY 2021 and subsequent fiscal years, a hospital would provide the wage index data from the current year’s IPPS final rule to demonstrate that it is the only hospital in its labor market area with wage data listed within the 3-year period considered by the MGCRB. Accordingly, we are proposing to revise the regulation text at § 412.230(d)(5) to provide that the requirements of § 412.230(d)(1)(iii) would not apply if a hospital is the single hospital in its MSA with published 3-year average hourly wage data included in the current fiscal year inpatient prospective payment system final rule. In proposing this revision, we would remove the language in this regulation requiring that the hospital be the single hospital ‘‘paid under subpart D of this part’’, as we believe the proposed revisions to the regulation above more accurately identify the universe of hospitals this policy was intended to address. That is, to meet the requirements of a single hospital MSA, we are proposing that a hospital applying for reclassification beginning in FY 2021 (application that is due September 1, 2019) must only provide documentation from Table 2 of the Addendum to the FY 2020 IPPS/ LTCH PPS final rule demonstrating it is the only CCN listed within the associated ‘‘Geographic CBSA’’ numbers (currently listed under column H) with a ‘‘3-Year Average Hourly Wage (2018, 2019, 2020)’’ value (currently listed under column G). The purpose of the single hospital MSA provision was to address situations where a hospital essentially had no means of comparing wages to other hospitals in it labor market area. We believe this proposal would allow for a more straightforward and consistent implementation of the single hospital MSA exception and would reduce provider burden. We believe the proposed requirements above for meeting the single hospital MSA exception can be easily verified and validated by the applicant and the MGCRB, and would continue to address the concerns expressed by commenters included in the FY 2012 IPPS/LTCH PPS final rule. We are inviting public comments on this proposal, which, if finalized, would be effective for reclassifications beginning in FY 2021. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20366 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules c. Clarification of Group Reclassification Policies for Multicampus Hospitals Under current policy described in §§ 412.230(d)(2)(v), 412.232(d)(2)(iii), and 412.234(c)(2), and as discussed in the FY 2008 IPPS/LTCH final rule (72 FR 47334 through 47335), remote locations of hospitals in a distinct geographic area from the main hospital campus are eligible to seek wage index reclassification. In Table 2 associated with this proposed rule (which is available via the Internet on the CMS website), such locations are indicated with a ‘‘B’’ in the third digit of the CCN. (As discussed in section III.C. of the preamble of this proposed rule, in past years, the ‘‘B’’ was instead placed in the fourth digit.) When CMS initially includes such a ‘‘B’’ hospital location in Table 2 for a particular fiscal year, it signifies that, for wage index purposes, the hospital indicated the presence of a remote location in a distinct geographic area on Worksheet S–2 of the cost report used to construct that current fiscal year’s wage index, and hours and wages were allocated between the main campus and the remote location. For billing purposes, these ‘‘B’’ locations are assigned their own area wage index value, separate from the main hospital campus. Hospitals are eligible to seek both individual and county group reclassifications for these ‘‘B’’ locations through the MGCRB, using the wage data published for the most recent IPPS final rule for the ‘‘B’’ location. While we are not proposing any change to the multicampus hospital reclassification policy, it has come to our attention that the MGCRB has had difficulty processing certain county group reclassification applications that include multicampus locations that have not yet been assigned a ‘‘B’’ number in Table 2. Typically, this would occur when an inpatient hospital location has recently been opened or acquired, creating a new ‘‘B’’ location. Because the wage index development process utilizes cost reports that end up to 4 years prior to the upcoming IPPS fiscal year, the most recently published wage data for the hospital used to construct the wage index would not reflect the specific wage data for any new ‘‘B’’ location in a different labor market area. However, as specified in §§ 412.232(a)(2) and 412.234(a)(1) of the regulations, for county group reclassification applications, all hospitals in a county must apply for reclassification as a group. Thus, in order for hospitals in a county to obtain reclassification as a group, these new ‘‘B’’ locations are required under these regulations to be a party to any county VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 group reclassification application, despite not having wage data published in Table 2. In a group reclassification involving a new ‘‘B’’ location, the ‘‘B’’ location would not yet have data included in the CMS hospital survey used to construct the wage index and to evaluate reclassification requests, and the most recently published wage data of the main hospital would encompass a time period well before the creation or acquisition of the new remote location. Therefore, the hospital could not submit composite average hourly wage data for the ‘‘B’’ location with the county group reclassification application. Because the county group reclassification application must list all active hospitals located in the county of the hospital group, including any ‘‘B’’ locations, if a ‘‘B’’ number is not listed in Table 2 associated with the IPPS final rule used to evaluate reclassification criteria, we are requesting that the county hospital group submit the application listing the remote location with a ‘‘B’’ in the third digit of the hospital’s CCN to help facilitate the MGCRB’s review. If the county group reclassification is approved by the MGCRB, CMS will include the hospital’s ‘‘B’’ location in Table 2 of the subsequent IPPS final rule, and will instruct the MAC to adjust the payment for that remote location to the appropriate reclassified area. This ‘‘B’’ location designation would be included in subsequent rules, without composite wage data, until a time when the wage data of the new location are included in the cost report used to construct the wage index in effect for IPPS purposes, and a proper allocation can be determined. eligibility for the out-migration adjustment to advise us annually that it prefers to continue being treated as rural and receive the out-migration adjustment. In the FY 2017 IPPS/LTCH PPS final rule (81 FR 56930), we again clarified that such a request to waive Lugar status, received within 45 days of the publication of the proposed rule, is valid for the full 3-year period for which the hospital’s out-migration adjustment is effective. We further clarified that if a hospital wishes to reinstate its urban status for any fiscal year within this 3year period, it must send a request to CMS within 45 days of publication of the proposed rule for that particular fiscal year. We indicated that such reinstatement requests may be sent electronically to wageindex@ cms.hhs.gov. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38147 through 38148), we finalized a policy revision to require a Lugar hospital that qualifies for and accepts the out-migration adjustment, or that no longer wishes to accept the out-migration adjustment and instead elects to return to its deemed urban status, to notify CMS within 45 days from the date of public display of the proposed rule at the Office of the Federal Register. These revised notification timeframes were effective beginning October 1, 2017. In addition, in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38148), we clarified that both requests to waive and to reinstate ‘‘Lugar’’ status may be sent to wageindex@cms.hhs.gov. To ensure proper accounting, we request hospitals to include their CCN, and either ‘‘waive Lugar’’ or ‘‘reinstate Lugar’’, in the subject line of these requests. 3. Redesignations Under Section 1886(d)(8)(B) of the Act In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51599 through 51600), we adopted the policy that, beginning with FY 2012, an eligible hospital that waives its Lugar status in order to receive the out-migration adjustment has effectively waived its deemed urban status and, thus, is rural for all purposes under the IPPS effective for the fiscal year in which the hospital receives the outmigration adjustment. In addition, in that rule, we adopted a minor procedural change that would allow a Lugar hospital that qualifies for and accepts the out-migration adjustment (through written notification to CMS within 45 days from the publication of the proposed rule) to waive its urban status for the full 3-year period for which its out-migration adjustment is effective. By doing so, such a Lugar hospital would no longer be required during the second and third years of J. Proposed Out-Migration Adjustment Based on Commuting Patterns of Hospital Employees In accordance with section 1886(d)(13) of the Act, as added by section 505 of Public Law 108–173, beginning with FY 2005, we established a process to make adjustments to the hospital wage index based on commuting patterns of hospital employees (the ‘‘out-migration’’ adjustment). The process, outlined in the FY 2005 IPPS final rule (69 FR 49061), provides for an increase in the wage index for hospitals located in certain counties that have a relatively high percentage of hospital employees who reside in the county but work in a different county (or counties) with a higher wage index. Section 1886(d)(13)(B) of the Act requires the Secretary to use data the Secretary determines to be appropriate to establish the qualifying counties. When the provision of section PO 00000 Frm 00204 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 1886(d)(13) of the Act was implemented for the FY 2005 wage index, we analyzed commuting data compiled by the U.S. Census Bureau that were derived from a special tabulation of the 2000 Census journey-to-work data for all industries (CMS extracted data applicable to hospitals). These data were compiled from responses to the ‘‘long-form’’ survey, which the Census Bureau used at that time and which contained questions on where residents in each county worked (69 FR 49062). However, the 2010 Census was ‘‘short form’’ only; information on where residents in each county worked was not collected as part of the 2010 Census. The Census Bureau worked with CMS to provide an alternative dataset based on the latest available data on where residents in each county worked in 2010, for use in developing a new outmigration adjustment based on new commuting patterns developed from the 2010 Census data beginning with FY 2016. To determine the out-migration adjustments and applicable counties for FY 2016, we analyzed commuting data compiled by the Census Bureau that were derived from a custom tabulation of the American Community Survey (ACS), an official Census Bureau survey, utilizing 2008 through 2012 (5-year) Microdata. The data were compiled from responses to the ACS questions regarding the county where workers reside and the county to which workers commute. As we discussed in the FYs 2016, 2017, and 2018 IPPS/LTCH PPS final rules (80 FR 49501, 81 FR 56930, and 82 FR 38150, respectively), the same policies, procedures, and computation that were used for the FY 2012 out-migration adjustment were applicable for FY 2016, FY 2017 and FY 2018, and we are proposing to use them again for FY 2019. We have applied the same policies, procedures, and computations since FY 2012, and we believe they continue to be appropriate for FY 2019. We refer readers to the FY 2016 IPPS/LTCH PPS final rule (80 FR 49500 through 49502) for a full explanation of the revised data source. For FY 2019, the out-migration adjustment will continue to be based on the data derived from the custom tabulation of the ACS utilizing 2008 through 2012 (5-year) Microdata. For future fiscal years, we may consider determining out-migration adjustments based on data from the next Census or other available data, as appropriate. For FY 2019, we are not proposing any changes to the methodology or data source that we used for FY 2016 (81 FR 25071). (We refer readers to a full discussion of the out-migration VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 adjustment, including rules on deeming hospitals reclassified under section 1886(d)(8) or section 1886(d)(10) of the Act to have waived the out-migration adjustment, in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51601 through 51602).) Table 2 associated with this proposed rule (which is available via the Internet on the CMS website) includes the proposed out-migration adjustments for the FY 2019 wage index. In addition, we are adding a new Table 4, ‘‘List of Counties Eligible for the Out-Migration Adjustment under Section 1886(d)(13) of the Act—FY 2019,’’associated with this proposed rule. This table consists of the following: a list of counties that would be eligible for the out-migration adjustment for FY 2019 identified by FIPS county code, the proposed FY 2019 out-migration adjustment, and the number of years the adjustment would be in effect. We believe this new table would make this information more transparent and provide the public with easier access to this information. We intend to make the information available annually via Table 4 in the IPPS/LTCH PPS proposed and final rules, and are including it among the tables associated with this FY 2019 IPPS/LTCH PPS proposed rule that are available via the Internet on the CMS website. K. Reclassification From Urban to Rural Under Section 1886(d)(8)(E) of the Act, Implemented at 42 CFR 412.103 and Proposed Change to Lock-In Date Under section 1886(d)(8)(E) of the Act, a qualifying prospective payment hospital located in an urban area may apply for rural status for payment purposes separate from reclassification through the MGCRB. Specifically, section 1886(d)(8)(E) of the Act provides that, not later than 60 days after the receipt of an application (in a form and manner determined by the Secretary) from a subsection (d) hospital that satisfies certain criteria, the Secretary shall treat the hospital as being located in the rural area (as defined in paragraph (2)(D)) of the State in which the hospital is located. We refer readers to the regulations at 42 CFR 412.103 for the general criteria and application requirements for a subsection (d) hospital to reclassify from urban to rural status in accordance with section 1886(d)(8)(E) of the Act. The FY 2012 IPPS/LTCH PPS final rule (76 FR 51595 through 51596) includes our policies regarding the effect of wage data from reclassified or redesignated hospitals. Hospitals must meet the criteria to be reclassified from urban to rural status PO 00000 Frm 00205 Fmt 4701 Sfmt 4702 20367 under § 412.103, as well as fulfill the requirements for the application process. There may be one or more reasons that a hospital applies for the urban to rural reclassification, and the timeframe that a hospital submits an application is often dependent on those reason(s). Because the wage index is part of the methodology for determining the prospective payments to hospitals for each fiscal year, we stated in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56931) that we believed there should be a definitive timeframe within which a hospital should apply for rural status in order for the reclassification to be reflected in the next Federal fiscal year’s wage data used for setting payment rates. Therefore, after notice of proposed rulemaking and consideration of public comments, in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56931 through 56932), we revised § 412.103(b) by adding paragraph (6) to specify that, in order for a hospital to be treated as rural in the wage index and budget neutrality calculations under § 412.64(e)(1)(ii), (e)(2), (e)(4), and (h) for payment rates for the next Federal fiscal year, the hospital’s filing date (the lock-in date) must be no later than 70 days prior to the second Monday in June of the current Federal fiscal year and the application must be approved by the CMS Regional Office in accordance with the requirements of § 412.103. We refer readers to the FY 2017 IPPS/LTCH PPS final rule for a full discussion of this policy. In this FY 2019 IPPS/LTCH PPS proposed rule, we are proposing to change the lock-in date to provide for additional time in the ratesetting process and to match the lock-in date with another existing deadline. As we discussed in the FY 2017 IPPS/LTCH PPS proposed and final rules (81 FR 25071 and 56931, respectively), the IPPS ratesetting process that CMS undergoes each proposed and final rulemaking is complex and laborintensive, and subject to a compressed timeframe in order to issue the final rule each year within the timeframes for publication. Accordingly, CMS must ensure that it receives, in a timely fashion, the necessary data, including, but not limited to, the list of hospitals that are reclassified from urban to rural status under § 412.103, in order to calculate the wage indexes and other IPPS rates. In order to allot more time to the ratesetting process, we are proposing to revise the lock-in date such that a hospital’s application for rural reclassification under § 412.103 must be approved by the CMS Regional Office E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20368 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules no later than 60 days after the public display date of the IPPS notice of proposed rulemaking at the Office of the Federal Register in order for a hospital to be treated as rural in the wage index and budget neutrality calculations under § 412.64(e)(1)(ii), (e)(2), (e)(4), and (h) for payment rates for the next Federal fiscal year. Depending on the public display date of the proposed rule (which may be earlier in future years), this proposed revision to the lock-in date would potentially allow for additional time in the ratesetting process for CMS to incorporate rural reclassification data, which we believe would support efforts to eliminate errors and assist in ensuring a more accurate wage index. Under this proposed revision, there would no longer be a requirement that the hospital file its rural reclassification application by a specified date (which under the current policy is 70 days prior to the second Monday in June). While we stated in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56930 through 56932) that a hospital would need to file its reclassification application with the CMS Regional Office not later than 70 days prior to the second Monday in June, that timeframe was a precautionary measure to ensure that CMS would receive the approval in time to include the reclassified hospitals in the wage index and budget neutrality calculations for the upcoming Federal fiscal year (60 days for the CMS Regional Office to approve an application, in accordance with § 412.103(c), and an additional 10 days to process the approval and notify CMS Central Office). While we still believe that it would be prudent for hospitals to apply approximately 70 days prior to the proposed lock-in date, we believe that requiring hospitals to apply by a set date is unnecessary because the Regional Offices may approve a hospital’s request to reclassify under § 412.103 in less than 60 days, and CMS may be notified in a timeframe shorter than 10 days. Therefore, under our proposal, any hospital with an approved rural reclassification by the lock-in date proposed above (that is, 60 days after the public display date of the IPPS notice of proposed rulemaking at the Office of the Federal Register) would be included in the wage index and budget neutrality calculations for setting payment rates for the next Federal fiscal year, regardless of the date of filing. In addition, we note that CMS generally provides 60 days after the public display date of the IPPS notice of proposed rulemaking at the Office of the Federal Register for submitting public comments regarding the proposed rule VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 for consideration in the final rule. Therefore, we believe that, in addition to providing for more time in the ratesetting process, which helps to ensure a more accurate wage index, this proposed revision would also provide clarity and simplify regulations by synchronizing the lock-in date for § 412.103 redesignations with the usual public comment deadline for the IPPS proposed rule. Accordingly, we are proposing to revise § 412.103(b)(6) to specify that in order for a hospital to be treated as rural in the wage index and budget neutrality calculations under § 412.64(e)(1)(ii), (e)(2), (e)(4), and (h) for payment rates for the next Federal fiscal year, the hospital’s application must be approved by the CMS Regional Office in accordance with the requirements of § 412.103 no later than 60 days after the public display date at the Office of the Federal Register of the IPPS proposed rule for the next Federal fiscal year. We are inviting public comments on this proposal. We are reiterating that the lock-in date does not affect the timing of payment changes occurring at the hospitalspecific level as a result of reclassification from urban to rural under § 412.103. As we discussed in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56931), this lock-in date also does not change the current regulation that allows hospitals that qualify under § 412.103(a) to request, at any time during a cost reporting period, to reclassify from urban to rural. A hospital’s rural status and claims payment reflecting its rural status continue to be effective on the filing date of its reclassification application, which is the date the CMS Regional Office receives the application, in accordance with § 412.103(d). The hospital’s IPPS claims will be paid reflecting its rural status beginning on the filing date (the effective date) of the reclassification, regardless of when the hospital applies. L. Process for Requests for Wage Index Data Corrections 1. Process for Hospitals To Request Wage Index Data Corrections The preliminary, unaudited Worksheet S–3 wage data files for the proposed FY 2019 wage index were made available on May 19, 2017, and the preliminary CY 2016 occupational mix data files were made available on July 12, 2017, through the internet on the CMS website at: https:// www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ AcuteInpatientPPS/Wage-Index-Files- PO 00000 Frm 00206 Fmt 4701 Sfmt 4702 Items-FY-2019-Wage-Index-HomePage.html. On February 2, 2018, we posted a public use file (PUF) at: https:// www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ AcuteInpatientPPS/Wage-Index-FilesItems-FY-2019-Wage-Index-HomePage.html containing FY 2019 wage index data available as of February 1, 2018. This PUF contains a tab with the Worksheet S–3 wage data (which includes Worksheet S–3, Parts II and III wage data from cost reporting periods beginning on or after October l, 2014 through September 30, 2015; that is, FY 2015 wage data), a tab with the occupational mix data (which includes data from the CY 2016 occupational mix survey, Form CMS–10079), a tab containing the Worksheet S–3 wage data of hospitals deleted from the February 2, 2018 wage data PUF, and a tab containing the CY 2016 occupational mix data of the hospitals deleted from the February 2, 2018 occupational mix PUF. In a memorandum dated December 14, 2017, we instructed all MACs to inform the IPPS hospitals that they service of the availability of the February 2, 2018 wage index data PUFs, and the process and timeframe for requesting revisions in accordance with the FY 2019 Wage Index Timetable. In the interest of meeting the data needs of the public, beginning with the proposed FY 2009 wage index, we post an additional PUF on the CMS website that reflects the actual data that are used in computing the proposed wage index. The release of this file does not alter the current wage index process or schedule. We notify the hospital community of the availability of these data as we do with the current public use wage data files through our Hospital Open Door Forum. We encourage hospitals to sign up for automatic notifications of information about hospital issues and about the dates of the Hospital Open Door Forums at the CMS Web site at: https:// www.cms.gov/Outreach-and-Education/ Outreach/OpenDoorForums/. In a memorandum dated April 28, 2017, we instructed all MACs to inform the IPPS hospitals that they service of the availability of the preliminary wage index data files posted on May 19, 2017, and the process and timeframe for requesting revisions. The preliminary CY 2016 occupational mix survey data was posted on CMS’ website on July 12, 2017. If a hospital wished to request a change to its data as shown in the May 19, 2017 preliminary wage data files and the July 12, 2017 preliminary occupational mix data files, the hospital had to submit corrections along with E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules complete, detailed supporting documentation to its MAC by September 1, 2017. Hospitals were notified of this deadline and of all other deadlines and requirements, including the requirement to review and verify their data as posted in the preliminary wage index data files on the internet, through the letters sent to them by their MACs. November 15, 2017 was the deadline for MACs to complete all desk reviews for hospital wage and occupational mix data and transmit revised Worksheet S–3 wage data and occupational mix data to CMS. November 4, 2017 was the date by when MACs notified State hospital associations regarding hospitals that failed to respond to issues raised during the desk reviews. Additional revisions made by the MACs were transmitted to CMS throughout January 2018. CMS published the wage index PUFs that included hospitals’ revised wage index data on February 2, 2018. Hospitals had until February 16, 2018, to submit requests to the MACs to correct errors in the February 2, 2018 PUF due to CMS or MAC mishandling of the wage index data, or to revise desk review adjustments to their wage index data as included in the February 2, 2018 PUF. Hospitals also were required to submit sufficient documentation to support their requests. After reviewing requested changes submitted by hospitals, MACs were required to transmit to CMS any additional revisions resulting from the hospitals’ reconsideration requests by March 23, 2018. Under our current policy as adopted in the FY 2018 IPPS/ LTCH PPS final rule (82 FR 38153), the deadline for a hospital to request CMS intervention in cases where a hospital disagreed with a MAC’s handling of wage data on any basis (including a policy, factual, or other dispute) was April 5, 2018. Data that were incorrect in the preliminary or February 2, 2018 wage index data PUFs, but for which no correction request was received by the February 16, 2018 deadline, are not considered for correction at this stage. In addition, April 5, 2018 is the deadline for hospitals to dispute data corrections made by CMS of which the hospital is notified after the February 2, 2018 PUF and at least 14 calendar days prior to April 5, 2018 (that is, March 22, 2018), that do not arise from a hospital’s request for revisions. We note that, as we did for the FY 2018 wage index, for the proposed FY 2019 wage index, in accordance with the FY 2019 wage index timeline posted on the CMS website at: https://www.cms.gov/ Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/Wage- VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Index-Files-Items-FY-2019-Wage-IndexHome-Page.html, the April appeals have to be sent via mail and email. We refer readers to the wage index timeline for complete details. Hospitals are given the opportunity to examine Table 2 associated with this proposed rule, which is listed in section VI. of the Addendum to this proposed rule and available via the internet on the CMS website at: https://www.cms.gov/ Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS-FY2019IPPS-Proposed-Rule-Home-Page.html. Table 2 contains each hospital’s proposed adjusted average hourly wage used to construct the wage index values for the past 3 years, including the FY 2015 data used to construct the proposed FY 2019 wage index. We note that the proposed hospital average hourly wages shown in Table 2 only reflect changes made to a hospital’s data that were transmitted to CMS by early February 2018. We plan to post the final wage index data PUFs in late April 2018 via the internet on the CMS website at: https:// www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ AcuteInpatientPPS/Wage-Index-FilesItems-FY-2019-Wage-Index-HomePage.html. The April 2018 PUFs are made available solely for the limited purpose of identifying any potential errors made by CMS or the MAC in the entry of the final wage index data that resulted from the correction process previously described (the process for disputing revisions submitted to CMS by the MACs by March 23, 2018, and the process for disputing data corrections made by CMS that did not arise from a hospital’s request for wage data revisions as discussed earlier). After the release of the April 2018 wage index data PUFs, changes to the wage and occupational mix data can only be made in those very limited situations involving an error by the MAC or CMS that the hospital could not have known about before its review of the final wage index data files. Specifically, neither the MAC nor CMS will approve the following types of requests: • Requests for wage index data corrections that were submitted too late to be included in the data transmitted to CMS by the MACs on or before March 23, 2017. • Requests for correction of errors that were not, but could have been, identified during the hospital’s review of the February 2, 2018 wage index PUFs. • Requests to revisit factual determinations or policy interpretations PO 00000 Frm 00207 Fmt 4701 Sfmt 4702 20369 made by the MAC or CMS during the wage index data correction process. If, after reviewing the April 2018 final wage index data PUFs, a hospital believes that its wage or occupational mix data were incorrect due to a MAC or CMS error in the entry or tabulation of the final data, the hospital is given the opportunity to notify both its MAC and CMS regarding why the hospital believes an error exists and provide all supporting information, including relevant dates (for example, when it first became aware of the error). The hospital is required to send its request to CMS and to the MAC no later than May 30, 2018. May 30, 2018 is also the deadline for hospitals to dispute data corrections made by CMS of which the hospital is notified on or after 13 calendar days prior to April 5, 2018 (that is, March 23, 2018), and at least 14 calendar days prior to May 30, 2018 (that is, May 16, 2018), that do not arise from a hospital’s request for revisions. (Data corrections made by CMS of which a hospital is notified on or after 13 calendar days prior to May 30, 2018 (that is, May 17, 2018) may be appealed to the Provider Reimbursement Review Board (PRRB)). Similar to the April appeals, beginning with the FY 2015 wage index, in accordance with the FY 2019 wage index timeline posted on the CMS website at: https://www.cms.gov/ Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/WageIndex-Files-Items-FY-2019-Wage-IndexHome-Page.html, the May appeals must be sent via mail and email to CMS and the MACs. We refer readers to the wage index timeline for complete details. Verified corrections to the wage index data received timely (that is, by May 30, 2018) by CMS and the MACs will be incorporated into the final FY 2019 wage index, which will be effective October 1, 2018. We created the processes previously described to resolve all substantive wage index data correction disputes before we finalize the wage and occupational mix data for the FY 2019 payment rates. Accordingly, hospitals that do not meet the procedural deadlines set forth earlier will not be afforded a later opportunity to submit wage index data corrections or to dispute the MAC’s decision with respect to requested changes. Specifically, our policy is that hospitals that do not meet the procedural deadlines set forth above (requiring requests to MACs by the specified date in February and, where such requests are unsuccessful, requests for intervention by CMS by the specified date in April) will not be permitted to challenge later, before the PRRB, the failure of CMS to make a requested data E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20370 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules revision. We refer readers also to the FY 2000 IPPS final rule (64 FR 41513) for a discussion of the parameters for appeals to the PRRB for wage index data corrections. As finalized in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38154 through 38156), this policy also applies to a hospital disputing corrections made by CMS that do not arise from a hospital’s request for a wage index data revision. That is, a hospital disputing an adjustment made by CMS that did not arise from a hospital’s request for a wage index data revision would be required to request a correction by the first applicable deadline. Hospitals that do not meet the procedural deadlines set forth earlier will not be afforded a later opportunity to submit wage index data corrections or to dispute CMS’ decision with respect to requested changes. Again, we believe the wage index data correction process described earlier provides hospitals with sufficient opportunity to bring errors in their wage and occupational mix data to the MAC’s attention. Moreover, because hospitals have access to the final wage index data PUFs by late April 2018, they have the opportunity to detect any data entry or tabulation errors made by the MAC or CMS before the development and publication of the final FY 2019 wage index by August 2018, and the implementation of the FY 2019 wage index on October 1, 2018. Given these processes, the wage index implemented on October 1 should be accurate. Nevertheless, in the event that errors are identified by hospitals and brought to our attention after May 30, 2018, we retain the right to make midyear changes to the wage index under very limited circumstances. Specifically, in accordance with 42 CFR 412.64(k)(1) of our regulations, we make midyear corrections to the wage index for an area only if a hospital can show that: (1) The MAC or CMS made an error in tabulating its data; and (2) the requesting hospital could not have known about the error or did not have an opportunity to correct the error, before the beginning of the fiscal year. For purposes of this provision, ‘‘before the beginning of the fiscal year’’ means by the May deadline for making corrections to the wage data for the following fiscal year’s wage index (for example, May 30, 2018 for the FY 2019 wage index). This provision is not available to a hospital seeking to revise another hospital’s data that may be affecting the requesting hospital’s wage index for the labor market area. As indicated earlier, because CMS makes the wage index data available to hospitals on the CMS website prior to publishing both the proposed and final VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 IPPS rules, and the MACs notify hospitals directly of any wage index data changes after completing their desk reviews, we do not expect that midyear corrections will be necessary. However, under our current policy, if the correction of a data error changes the wage index value for an area, the revised wage index value will be effective prospectively from the date the correction is made. In the FY 2006 IPPS final rule (70 FR 47385 through 47387 and 47485), we revised 42 CFR 412.64(k)(2) to specify that, effective on October 1, 2005, that is, beginning with the FY 2006 wage index, a change to the wage index can be made retroactive to the beginning of the Federal fiscal year only when CMS determines all of the following: (1) The MAC or CMS made an error in tabulating data used for the wage index calculation; (2) the hospital knew about the error and requested that the MAC and CMS correct the error using the established process and within the established schedule for requesting corrections to the wage index data, before the beginning of the fiscal year for the applicable IPPS update (that is, by the May 30, 2018 deadline for the FY 2019 wage index); and (3) CMS agreed before October 1 that the MAC or CMS made an error in tabulating the hospital’s wage index data and the wage index should be corrected. In those circumstances where a hospital requested a correction to its wage index data before CMS calculated the final wage index (that is, by the May 30, 2018 deadline for the FY 2019 wage index), and CMS acknowledges that the error in the hospital’s wage index data was caused by CMS’ or the MAC’s mishandling of the data, we believe that the hospital should not be penalized by our delay in publishing or implementing the correction. As with our current policy, we indicated that the provision is not available to a hospital seeking to revise another hospital’s data. In addition, the provision cannot be used to correct prior years’ wage index data; and it can only be used for the current Federal fiscal year. In situations where our policies would allow midyear corrections other than those specified in 42 CFR 412.64(k)(2)(ii), we continue to believe that it is appropriate to make prospective-only corrections to the wage index. We note that, as with prospective changes to the wage index, the final retroactive correction will be made irrespective of whether the change increases or decreases a hospital’s payment rate. In addition, we note that the policy of retroactive adjustment will still apply in those instances where a PO 00000 Frm 00208 Fmt 4701 Sfmt 4702 final judicial decision reverses a CMS denial of a hospital’s wage index data revision request. 2. Process for Data Corrections by CMS After the February 2 Public Use File (PUF) The process set forth with the wage index timeline discussed in section III.M.1. of the preamble of this proposed rule allows hospitals to request corrections to their wage index data within prescribed timeframes. In addition to hospitals’ opportunity to request corrections of wage index data errors or MACs’ mishandling of data, CMS has the authority under section 1886(d)(3)(E) of the Act to make corrections to hospital wage index and occupational mix data in order to ensure the accuracy of the wage index. As we explained in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49490 through 49491) and the FY 2017 IPPS/LTCH PPS final rule (81 FR 56914), section 1886(d)(3)(E) of the Act requires the Secretary to adjust the proportion of hospitals’ costs attributable to wages and wage-related costs for area differences reflecting the relative hospital wage level in the geographic areas of the hospital compared to the national average hospital wage level. We believe that, under section 1886(d)(3)(E) of the Act, we have discretion to make corrections to hospitals’ data to help ensure that the costs attributable to wages and wage-related costs in fact accurately reflect the relative hospital wage level in the hospitals’ geographic areas. We have an established multistep, 15month process for the review and correction of the hospital wage data that is used to create the IPPS wage index for the upcoming fiscal year. Since the origin of the IPPS, the wage index has been subject to its own annual review process, first by the MACs, and then by CMS. As a standard practice, after each annual desk review, CMS reviews the results of the MACs’ desk reviews and focuses on items flagged during the desk review, requiring that, if necessary, hospitals provide additional documentation, adjustments, or corrections to the data. This ongoing communication with hospitals about their wage data may result in the discovery by CMS of additional items that were reported incorrectly or other data errors, even after the posting of the February 2 PUF, and throughout the remainder of the wage index development process. In addition, the fact that CMS analyzes the data from a regional and even national level, unlike the review performed by the MACs that review a limited subset of hospitals, can E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules facilitate additional editing of the data that may not be readily apparent to the MACs. In these occasional instances, an error may be of sufficient magnitude that the wage index of an entire CBSA is affected. Accordingly, CMS uses its authority to ensure that the wage index accurately reflects the relative hospital wage level in the geographic area of the hospital compared to the national average hospital wage level, by continuing to make corrections to hospital wage data upon discovering incorrect wage data, distinct from instances in which hospitals request data revisions. We note that CMS corrects errors to hospital wage data as appropriate, regardless of whether that correction will raise or lower a hospital’s average hourly wage. For example, as discussed in section III.D.2. of the preamble of this FY 2019 IPPS/LTCH PPS proposed rule, in the calculation of the proposed FY 2019 wage index, upon discovering that hospitals reported other wage-related costs on Line 18 of Worksheet S-3, despite those other wage-related costs failing to meet the requirement that other wage-related costs must exceed 1 percent of total adjusted salaries net of excluded area salaries, CMS made internal edits to remove those other wage-related costs from Line 18. Conversely, if CMS discovers after conclusion of the desk review, for example, that a MAC inadvertently failed to incorporate positive adjustments resulting from a prior year’s wage index appeal of a hospital’s wagerelated costs such as pension, CMS would correct that data error and the hospital’s average hourly wage would likely increase as a result. While we maintain CMS’ authority to conduct additional review and make resulting corrections at any time during the wage index development process, in accordance with the policy finalized in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38154 through 38156), starting with the FY 2019 wage index, we implemented a process for hospitals to request further review of a correction made by CMS that did not arise from a hospital’s request for a wage index data correction. Instances where CMS makes a correction to a hospital’s data after the February 2 PUF based on a different understanding than the hospital about certain reported costs, for example, could potentially be resolved using this process before the final wage index is calculated. We believe this process and the timeline for requesting such corrections (as described earlier and in the FY 2018 IPPS/LTCH PPS final rule) bring additional transparency to instances where CMS makes data VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 corrections after the February 2 PUF, and provide opportunities for hospitals to request further review of CMS changes in time for the most accurate data to be reflected in the final wage index calculations. These additional appeals opportunities are described earlier and in the FY 2019 Wage Index Development Time Table, as well as in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38154 through 8156). M. Proposed Labor-Related Share for the Proposed FY 2019 Wage Index Section 1886(d)(3)(E) of the Act directs the Secretary to adjust the proportion of the national prospective payment system base payment rates that are attributable to wages and wagerelated costs by a factor that reflects the relative differences in labor costs among geographic areas. It also directs the Secretary to estimate from time to time the proportion of hospital costs that are labor-related and to adjust the proportion (as estimated by the Secretary from time to time) of hospitals’ costs which are attributable to wages and wage-related costs of the DRG prospective payment rates. We refer to the portion of hospital costs attributable to wages and wage-related costs as the labor-related share. The labor-related share of the prospective payment rate is adjusted by an index of relative labor costs, which is referred to as the wage index. Section 403 of Public Law 108–173 amended section 1886(d)(3)(E) of the Act to provide that the Secretary must employ 62 percent as the labor-related share unless this would result in lower payments to a hospital than would otherwise be made. However, this provision of Public Law 108–173 did not change the legal requirement that the Secretary estimate from time to time the proportion of hospitals’ costs that are attributable to wages and wagerelated costs. Thus, hospitals receive payment based on either a 62-percent labor-related share, or the labor-related share estimated from time to time by the Secretary, depending on which laborrelated share resulted in a higher payment. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38158 through 38175), we rebased and revised the hospital market basket. We established a 2014-based IPPS hospital market basket to replace the FY 2010-based IPPS hospital market basket, effective October 1, 2017. Using the 2014-based IPPS market basket, we finalized a labor-related share of 68.3 percent for discharges occurring on or after October 1, 2017. In addition, in FY 2018, we implemented this revised and rebased labor-related share in a budget PO 00000 Frm 00209 Fmt 4701 Sfmt 4702 20371 neutral manner (82 FR 38522). However, consistent with section 1886(d)(3)(E) of the Act, we did not take into account the additional payments that would be made as a result of hospitals with a wage index less than or equal to 1.0000 being paid using a labor-related share lower than the labor-related share of hospitals with a wage index greater than 1.0000. The labor-related share is used to determine the proportion of the national IPPS base payment rate to which the area wage index is applied. We include a cost category in the labor-related share if the costs are labor intensive and vary with the local labor market. In this proposed rule, for FY 2019, we are not proposing to make any further changes to the national average proportion of operating costs that are attributable to wages and salaries, employee benefits, professional fees: Labor-related, administrative and facilities support services, installation, maintenance, and repair services, and all other laborrelated services. Therefore, for FY 2019, we are proposing to continue to use a labor-related share of 68.3 percent for discharges occurring on or after October 1, 2018. As discussed in section IV.B. of the preamble of this proposed rule, prior to January 1, 2016, Puerto Rico hospitals were paid based on 75 percent of the national standardized amount and 25 percent of the Puerto Rico-specific standardized amount. As a result, we applied the Puerto Rico-specific laborrelated share percentage and nonlabor-related share percentage to the Puerto Rico-specific standardized amount. Section 601 of the Consolidated Appropriations Act, 2016 (Pub. L. 114– 113) amended section 1886(d)(9)(E) of the Act to specify that the payment calculation with respect to operating costs of inpatient hospital services of a subsection (d) Puerto Rico hospital for inpatient hospital discharges on or after January 1, 2016, shall use 100 percent of the national standardized amount. Because Puerto Rico hospitals are no longer paid with a Puerto Rico-specific standardized amount as of January 1, 2016, under section 1886(d)(9)(E) of the Act as amended by section 601 of the Consolidated Appropriations Act, 2016, there is no longer a need for us to calculate a Puerto Rico-specific labor-related share percentage and nonlabor-related share percentage for application to the Puerto Rico-specific standardized amount. Hospitals in Puerto Rico are now paid 100 percent of the national standardized amount and, therefore, are subject to the national labor-related share and nonlabor-related share percentages that are applied to the E:\FR\FM\07MYP2.SGM 07MYP2 20372 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 national standardized amount. Accordingly, for FY 2019, we are not proposing a Puerto Rico-specific laborrelated share percentage or a nonlaborrelated share percentage. Tables 1A and 1B, which are published in section VI. of the Addendum to this FY 2019 IPPS/LTCH PPS proposed rule and available via the Internet on the CMS website, reflect the proposed national labor-related share, which is also applicable to Puerto Rico hospitals. For FY 2019, for all IPPS hospitals (including Puerto Rico hospitals) whose wage indexes are less than or equal to 1.0000, we are proposing to apply the wage index to a labor-related share of 62 percent of the national standardized amount. For all IPPS hospitals (including Puerto Rico hospitals) whose wage indexes are greater than 1.000, for FY 2019, we are proposing to apply the wage index to a proposed labor-related share of 68.3 percent of the national standardized amount. We are inviting public comments on our proposals discussed above. N. Request for Public Comments on Wage Index Disparities CMS is committed to transforming the health care delivery system, including the Medicare program, by putting an additional focus on patient-centered care and working with providers, physicians, and patients to improve outcomes. We are seeking to reduce burdens for hospitals, physicians, and patients, improve the quality of care, decrease costs, and ensure that patients and their providers and physicians are making the best health care choices possible. One key to that transformation is ensuring that the Medicare payment rates are as accurate and appropriate as possible, consistent with the law. As described later in this section, there have been numerous studies, analyses, and reports on disparities between the wage index values for individual hospitals and the wage index values among different geographic areas and ways to improve the Medicare wage index. Given that some time has elapsed since these studies were performed, in this proposed rule, we are taking this opportunity to invite the public to submit further comments, suggestions, and recommendations for regulatory and policy changes to the Medicare wage index that address these issues. If practicable, we are requesting the public to submit appropriate supporting data and specific recommendations in their comments. For any suggestions or recommendations presented that involve novel legal questions, we VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 welcome analysis regarding CMS’ authority for our consideration. 1. General Background As we discussed earlier, section 1886(d)(3)(E) of the Act requires that, as part of the methodology for determining prospective payments to hospitals, the Secretary must adjust the standardized amounts for area differences in hospital wage levels by a factor (established by the Secretary) reflecting the relative hospital wage level in the geographic area of the hospital compared to the national average hospital wage level. Section 1886(d)(3)(E) of the Act requires that we update the wage index annually. Furthermore, this section of the Act provides that the Secretary base the update on a survey of wages and wage-related costs of short-term, acute care hospitals. Section 1886(d)(3)(E) of the Act also requires us to make any updates or adjustments to the wage index for a fiscal year in a manner that ensures that aggregate payments to hospitals in a fiscal year are not greater or less than those that would have been made in the year without the wage index adjustment. We also take into account the geographic reclassification of hospitals in accordance with sections 1886(d)(8)(B) and 1886(d)(10) of the Act when calculating IPPS payment amounts. Under section 1886(d)(8)(D) of the Act, the Secretary is required to adjust the standardized amounts so as to ensure that aggregate payments under the IPPS after implementation of the provisions of sections 1886(d)(8)(B) and (C) and 1886(d)(10) of the Act are equal to the aggregate prospective payments that would have been made absent these provisions. Section 1886(d)(3)(E) of the Act also provides for the collection of data every 3 years on the occupational mix of employees for short-term, acute care hospitals participating in the Medicare program, in order to construct an occupational mix adjustment to the wage index. For this purpose, the statute requires the exclusion of data with respect to the wages and wage-related costs incurred in furnishing skilled nursing facility services. The current wage index methodology relies on labor markets that are based on statistical area definitions (CBSAs) established by OMB. Hospitals are grouped by geographic location into either an urban labor market (that is, an MSA or metropolitan division) or a statewide rural labor market (any area of a State that is not defined as urban). The current system also relies on hospital wage data submitted by hospitals to CMS, rather than on data that reflect PO 00000 Frm 00210 Fmt 4701 Sfmt 4702 broader labor market wages such as data from the Bureau of Labor Statistics or data from the American Community Survey. In public comments received on prior rulemaking for FYs 2009, 2010, and 2011, many parties have argued that the current labor market definitions and wage data sources used by CMS, in many instances, are not reflective of the true cost of labor for any given hospital or are inappropriate to use for this purpose, or both. (These public comments (on proposed rules under file numbers CMS–1390–P, CMS–1406–P, and CMS–1498–P) are available via the Internet on the website at: www.regulations.gov.) For responses to public comments received on the FY 2009 IPPS/LTCH PPS proposed rule, we refer readers to the FY 2009 IPPS/LTCH PPS final rule (73 FR 48563 through 48567); for responses to public comments on the FY 2010 IPPS/LTCH PPS proposed rule, we refer readers to the FY 2010 IPPS/LTCH PPS final rule (74 FR 43824 through 43826); and for responses to public comments on the FY 2011 IPPS/LTCH PPS proposed rule, we refer readers to the FY 2011 IPPS/LTCH PPS final rule (75 FR 50157 through 50160).) With respect to the labor market definitions, multiple exceptions and adjustments (for example, provider reclassifications under the MGCRB and the rural floor adjustment) have been put into place in attempts to correct perceived inequities. However, many of these exceptions and adjustments may create or further exacerbate distortions in labor market values. The issue of ‘‘cliffs,’’ or significant differences in wage index values between proximate hospitals, can often be attributed to one hospital benefiting from such an exception and adjustment when another hospital cannot. With respect to the wage data sources, in public comments on prior proposed rulemakings cited earlier, many stakeholders have argued that the use of hospital reported data results in increasing wage index disparities over time between high wage index areas and low wage index areas. (These public comments are available via the Internet on the website at: www.regulations.gov.) 2. Prior Reports, Studies, and Analyses a. MedPAC Report to Congress Section 106(b)(1) of the Medicare Improvements and Extension Act of 2006, Division B of the Tax Relief and Health Care Act of 2006 (MIEA– TRHCA), Public Law 109–432, required MedPAC to submit to Congress, not later than June 30, 2007, a report on the Medicare wage index classification system applied under the Medicare E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules prospective payment systems, including the IPPS under section 1886(d)(3)(E) of the Act. Section 106(b) of MIEA– TRHCA required the report to include any alternatives that MedPAC recommends to the method to compute the wage index under section 1886(d)(3)(E) of the Act. In addition, section 106(b)(2) of the MIEA–TRHCA instructed the Secretary of Health and Human Services, taking into account MedPAC’s recommendations on the Medicare wage index classification system, to include in the FY 2009 IPPS proposed rule one or more proposals to revise the wage index adjustment applied under section 1886(d)(3)(E) of the Act for purposes of the IPPS. The Secretary was also directed to consider each of the following: • Problems associated with the definition of labor markets for the wage index adjustment; • The modification or elimination of geographic reclassifications and other adjustments; • The use of Bureau of Labor of Statistics (BLS) data or other data or methodologies to calculate relative wages for each geographic area; • Minimizing variations in wage index adjustments between and within MSAs and statewide rural areas; • The feasibility of applying all components of CMS’ proposal to other settings; • Methods to minimize the volatility of wage index adjustments while maintaining the principle of budget neutrality; • The effect that the implementation of the proposal would have on health care providers and on each region of the country; • Methods for implementing the proposal(s), including methods to phase in such implementations; and • Issues relating to occupational mix, such as staffing practices, and any evidence on the effect on quality of care and patient safety, including any recommendation for alternative calculations to the occupational mix. In its June 2007 Report to Congress, ‘‘Report to the Congress: Promoting Greater Efficiency in Medicare’’ (Chapter 6 with Appendix), MedPAC made three broad recommendations regarding the wage index: (1) Congress should repeal the existing hospital wage index statute, including reclassifications and exceptions, and give the Secretary authority to establish a new wage index system. (2) The Secretary should establish a hospital compensation index that— VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 • Uses wage data from all employers and industry-specific occupational weights; • Is adjusted for geographic differences in the ratio of benefits to wages; • Is adjusted at the county level and smooths large differences between counties; and • Is implemented so that large changes in wage index values are phased in over a transition period. (3) The Secretary should use the hospital compensation index for the home health and skilled nursing facility prospective payment systems and evaluate its use in the other Medicare fee-for-service prospective payment systems. Following are the highlights of the alternative wage index system recommended by MedPAC: • The MedPAC recommended wage index generally retains the current labor market definitions but supplements the metropolitan areas with county-level adjustments and eliminates single wage index values for rural areas. • In the MedPAC recommended wage index, the county-level adjustments, together with a smoothing process that constrains the magnitude of differences between and within contiguous wage areas, serve as a replacement for geographical reclassifications. • The MedPAC recommended wage index uses BLS data instead of the CMS hospital wage data collected on the Medicare cost report. MedPAC adjusts the BLS data for geographic differences in the ratio of benefits to wages using Medicare cost report data. • The BLS data are collected from a sample of all types of employers, not just hospitals. The MedPAC recommended wage index could be adapted for other providers, such as home health agencies and skilled nursing facilities by replacing hospital occupational weights with occupational weights appropriate for other types of providers. • In the MedPAC recommended wage index, volatility over time is addressed by the use of BLS data, which is based on a 3-year rolling sample design. • MedPAC recommended a phased implementation for its recommended wage index in order to cushion the effect of large wage index changes on individual hospitals. • MedPAC suggested that using BLS data automatically addresses occupational mix differences because the BLS data are specific to health care occupations and national industry-wide occupational weights are applied to all geographic areas. PO 00000 Frm 00211 Fmt 4701 Sfmt 4702 20373 The full June 2007 MedPAC Report to Congress is available at the MedPAC website site: https://medpac.gov/docs/ default-source/reports/Jun07_ EntireReport.pdf. During the FY 2009 IPPS rulemaking process, we received many public comments regarding MedPAC’s recommendations for reforming the wage index (73 FR 48564 through 48566). The public comments varied greatly, and there was no consensus position among the commenters. A complete set of the public comments on the FY 2009 IPPS proposed rule (CMS– 1390–P) is available via the Internet on the website at: www.regulations.gov. In the FY 2009 IPPS final rule (73 FR 48564 through 48567), we also summarized an analysis of MedPAC’s recommendations that was performed by our contractor, Acumen LLC. In that analysis, we used a variety of terminology to refer to the wage indexes recommended by MedPAC, as well as the wage indexes currently used by CMS: • When we referred to MedPAC’s ‘‘hospital compensation index’’ or ‘‘compensation index’’, we were discussing the wage index that MedPAC developed that includes an adjustment to account for differences in the ratio of benefits to wages in different labor market areas. MedPAC developed this ratio of benefits using Medicare cost report data. • When we referred to MedPAC’s recommended ‘‘wage index’’, we were discussing the MedPAC-developed index without any adjustment for nonwage benefits. This wage index was developed using BLS data. • When we referred to CMS’ ‘‘prereclassification wage index’’ or ‘‘prereclassification, pre-floor wage index’’, we were discussing the wage index developed by CMS but without any adjustments for geographic reclassifications or the rural floor. This wage index also does not include any adjustments for outmigration, section 508 reclassifications, Lugar redesignations, section 401 urban-torural reclassifications, or for any special exceptions. • When we referred to CMS’ ‘‘final wage index’’, we were discussing the wage index developed by CMS that is the final wage index received by or to be received by a hospital. Thus, this wage index does account for all geographic reclassifications as well as the rural floor. This final wage index also includes any adjustments as a result of outmigration, section 508 reclassifications, Lugar redesignations, section 401 urban-to-rural E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20374 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules reclassifications, or any other special exceptions. Acumen analyzed and compared all four of the wage indexes cited above. In other words, Acumen compared (A) CMS’ pre-reclassification, pre-floor wage index for FY 2008 (which was provided by CMS and is based on hospital cost reports from FY 2004) and CMS’ final wage index for FY 2008 with (B) both the MedPAC recommended hospital compensation index and wage index for FY 2007. Acumen’s comparisons of the CMS wage index to the MedPAC recommended indexes indicate the effects of various components of the alternative wage indexes. All of the comparisons reflect differences between the CMS and BLS wage data. The comparison of the CMS pre-reclassification index to the MedPAC hospital compensation index reflects the additional impact of MedPAC’s method of using county-level adjustors to smooth differences in index values among the CMS wage areas. The comparison of the CMS prereclassification index to the MedPAC recommended wage index includes the effect of county-level smoothing and indicates the incremental effect of removing the MedPAC adjustment for benefits. The comparison of the CMS final wage index to the MedPAC recommended wage index adds the incremental effect of geographic reclassifications and other wage index exceptions (for example, the rural and imputed floors) to the preceding comparison. Finally, the comparison of the CMS final wage index to the MedPAC recommended compensation index yields the combined effects of all the differences between the two indexes. First, Acumen analyzed the overall impacts of the MedPAC recommended indexes. Acumen conducted the analysis at two levels: The hospital level and the county level. At the hospital level, Acumen analyzed all four comparisons described above. However, at the county level, Acumen did not include comparisons using the CMS final wage index because it includes reclassifications and other changes that are granted to hospitals, not counties. As a result, hospitals in the same county or wage area can have different final wage index values. Acumen’s analysis was based on 3,426 hospitals, for which all four wage index values were available (the CMS pre-reclassification wage index, the CMS final wage index, the MedPAC recommended hospital wage index, and the MedPAC recommended hospital compensation index), and on the 1,595 counties in which these hospitals are located. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Second, Acumen estimated the impact for several subgroups of hospitals and counties. At the hospital level, Acumen assessed the impact by geographic area (for example, urban hospitals and rural hospitals), hospital size (number of beds), geographic region, teaching status, DSH status, SCH status, RRC status, MDH status, type of ownership (government, proprietary, voluntary), and reclassification status. At the county level, Acumen presented results for metropolitan area counties and rural counties. Third, Acumen calculated the change in the wage index that each hospital (or county) could expect to experience from adopting the MedPAC recommendations and reported statistics on these expected differences (mean, median, standard deviation, minimum, and maximum). Acumen did not model changes in Medicare payments that would result from using different wage indexes. Instead, Acumen normalized all four wage indexes by setting their discharge weighted means equal to 1.00. Normalization puts all four wage indexes on the same scale so that differences in wage index values between one index and another index are directly comparable. As a result, the wage index differences reported by Acumen imply payment differences, but do not precisely measure the magnitude of those payment differences. The main findings of Acumen’s impact analysis are summarized as follows: • Adopting the MedPAC recommendations would reduce the differentials between wage index values across geographic areas. Both the MedPAC wage and compensation indexes are less dispersed than either the CMS pre-reclassification wage index or the final wage index. • Under either of the MedPAC recommended indexes, differences between the highest wage index hospitals and the lowest wage index hospitals would be reduced. For example, the range or difference that exists from the highest wage index hospital to the lowest wage index hospital (the ‘‘high-low range’’) under the MedPAC compensation index (0.752 versus 1.499, or a difference of 0.747) is roughly 11 percent less than the highlow range under the CMS final wage index (0.732 versus 1.569, or a difference of 0.837). Using the CMS prereclassification wage index as a comparison (with a high-low range of 0.716 versus 1.600), the MedPAC recommended compensation index is roughly 16 percent less. The minimum value of the MedPAC recommended compensation index (0.752) is roughly 5 PO 00000 Frm 00212 Fmt 4701 Sfmt 4702 percent more than the minimum value of the CMS pre-reclassification wage index (0.716), and the maximum value of the MedPAC recommended compensation index (1.499) is roughly 6 percent less than the maximum value of the CMS pre-reclassification index (1.600). • Adopting the MedPAC recommendations would also lower the wage dispersion among both rural hospitals and urban hospitals (whether classified by geography or payment), among hospitals of all sizes, and among all hospitals categorized by teaching status, DSH status, ownership status, and Medicare utilization status. These findings are generally consistent, regardless of whether the MedPAC recommended compensation index is compared to the CMS final wage index or to the CMS pre-reclassification wage index. • Adopting the MedPAC recommendations would have a differential impact on urban hospitals across geographic regions of the country. In moving from the CMS final wage index to the MedPAC compensation index, the largest reduction in standard deviations would occur for urban hospitals in the New England region (¥19.0 percent), the Middle Atlantic region (¥27.8 percent), and the Pacific region (¥19.0 percent). However, for urban hospitals in the West North Central region, the standard deviation of wage index values would increase by 11.7 percent. • Adopting the MedPAC recommendations would decrease the standard deviation among hospitals with most types of reclassifications. For example, compared to the CMS final wage index, the MedPAC compensation index would reduce the standard deviation by 11.6 percent. • The adoption of the MedPAC recommended indexes would lead a substantial number of hospitals to experience a large change in their index values in the transition. If the MedPAC compensation index is compared to the CMS final wage index, 37 percent of all hospitals would experience either increases or decreases of more than 5 percent. For approximately 34 percent of the reclassified hospitals (or 278 hospitals), wage index values would decrease by more than 5 percent. Reclassified hospitals comprise more than one-half of all hospitals that would likely experience wage index decreases greater than 5 percent in moving from the CMS final wage index to the MedPAC compensation index. • Under a move from the CMS prereclassification wage index to the MedPAC recommended compensation E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 index, counties in rural areas would experience fewer decreases and more increases in their wage index compared to counties in urban areas. (As noted earlier, county-level comparisons were not performed using the CMS final wage index.) The full Acumen analysis of the MedPAC recommendations (Impact Analysis for the 2009 Final Rule: Interim Report—Revision of Medicare Wage Index) is available via the Internet on the website at: https:// www.acumenllc.com/reports/cms. b. Acumen Report on Revision of the Medicare Wage Index In addition to the analysis of the MedPAC recommendation that Acumen performed, in the FY 2010 and FY 2011 IPPS rulemaking (74 FR 43824 through 48325 and 75 FR 50158 through 50159, respectively), we discussed a separate report by Acumen on the wage index and methodology entitled ‘‘Revision of the Medicare Wage Index’’ (available on the CMS website at: https:// www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ AcuteInpatientPPS/Wage-IndexReform.html). The report was divided into two parts. The first part analyzed the strengths and weaknesses of the data sources used to construct the MedPAC and CMS indexes. The second part focused on the methodology of wage index construction and covered issues related to the definition of wage areas and methods of adjusting for differences among neighboring wage areas, as well as reasons for differential impacts of shifting to a new index. Specifically, in the first part of the report, Acumen examined the following issues: • Differences between the BLS data and the CMS wage data—Acumen assessed the strengths and weaknesses of the data used to construct the CMS wage index and the MedPAC compensation index by examining the differences between the BLS and the CMS wage data. Acumen also evaluated the importance of accounting for selfemployed workers, part-time workers, and industry wage differences. • Employee benefit (wage-related) cost—Acumen considered whether benefit costs need to be included in the hospital wage index and discussed the differences between the Medicare cost report Worksheet A benefits data (proposed by MedPAC to use with BLS wage data) and the Medicare cost report Worksheet S–3 benefit data. Acumen also analyzed the possibility of using BLS’ Employer Costs for Employee Compensation (ECEC) series as an alternative to Worksheet A or Worksheet VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 S–3 benefits data that would pose less of a data collection burden for providers. • Impact of the fixed national occupational weights—Acumen assessed MedPAC’s and CMS’ methods for adjusting for occupational mix differences. While the MedPAC recommended compensation index uses fixed weights for occupations representative of the hospital industry nationally, the CMS wage index incorporates an occupational mix adjustment from a separate data collection. • Year-to-year volatility in the CMS and BLS wage data—Acumen calculated the extent of volatility in the CMS and BLS wage indexes using several measures of volatility. Acumen also explored potential causes of volatility, such as the number of hospitals and the annual change in the number of hospitals in a wage area. Finally, Acumen evaluated the impact on annual volatility of using a 2-year rolling average of CMS wage index values. Acumen concluded that MedPAC’s recommended methods for revising the wage index represent an improvement over the existing methods, and that the BLS data should be used so that the MedPAC approach can be implemented. Several commenters during the FY 2010 and FY 2011 IPPS rulemakings (74 FR 43824 and 75 FR 50158, respectively) reiterated their concerns regarding the use of the BLS data for computing the Medicare wage index that they had expressed in public comments on the FY 2009 IPPS final rule (73 FR 48564 through 48565). The commenters stated that they still had significant concerns about the shortcomings of the BLS data, and they urged CMS to move cautiously in considering MedPAC’s and Acumen’s findings. Other commenters expressed support for MedPAC’s and Acumen’s findings and recommendations, although some commenters cautioned that a few refinements may still be needed before adopting these recommendations. The second part of Acumen’s final report focused on the methodology of wage index construction and covered issues related to the definition of wage areas and methods of adjusting for differences among neighboring wage areas, as well as reasons for differential impacts of shifting to a new index. In particular, the second part of the report provides a more in-depth analysis of MedPAC’s recommended method of improving upon the definition of the wage areas used in the current wage index. MedPAC’s method first blends MSA and county-level wages and then PO 00000 Frm 00213 Fmt 4701 Sfmt 4702 20375 implements a ‘‘smoothing’’ step that limits differences in wage index values between adjacent counties to no more than 10 percent. Acumen found MedPAC’s method to be an improvement over the current wage index construction. Acumen recommended further exploration of labor market area definitions using a wage area framework based on hospital-specific characteristics, such as commuting times from hospitals to population centers, to construct a more accurate hospital wage index. Acumen suggested that such an approach offers the greatest potential for replacing or greatly reducing the need for hospital reclassifications and exceptions. We received many public comments regarding the Acumen analysis (75 FR 50158 through 50159). Again, the public comments varied greatly, and there was no consensus position among the commenters. One national hospital association in its comments recommended that CMS consider the following guiding principles as it evaluates options for improving the wage index system: Any new system should— • Be fair and accurately reflect the labor marketplace for hospitals, for example, consider only hospital wage and benefit costs rather than broader labor market costs; • Provide predictable payments; • Be stable; • Be transparent so that the data may be examined and verified; • Minimize the administrative burden on hospitals; • Utilize the most current information possible; • Define boundaries that capture meaningful relationships between labor markets, to reduce the need for exceptions and reclassifications; • Due to the imperfection of any current labor market definition that we are aware of, provide an exception process for hospitals with labor costs atypical for areas to which they have been assigned; • Use consistent definitions, methodologies, rules, and interpretations across the nation for the acquisition and application of data; • Include a transition from the old to the new system that is not disruptive; it should include a phased-in transition period if necessary to protect hospitals from abrupt reductions in payment levels; and • Not let perfection be the enemy of the better. Commenters generally urged CMS to move forward cautiously and ensure a thorough process for evaluating changes to the existing wage index. E:\FR\FM\07MYP2.SGM 07MYP2 20376 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 The complete sets of the public comments on the FY 2010 IPPS/LTCH PPS proposed rule (CMS–1406–P) and the FY 2011 IPPS/LTCH PPS proposed rule (CMS–1498–P) are available via the Internet on the website at: www.regulations.gov. c. Report to Congress—Plan To Reform the Medicare Hospital Wage Index Section 3137(b) of the Affordable Care Act required the Secretary of Health and Human Services to submit to Congress, not later than December 31, 2011, a report that includes a plan to reform the Medicare wage index applied under the Medicare IPPS. In developing the plan, the Secretary had to take into consideration the goals for reforming the wage index that were set forth by MedPAC in its June 2007 report, including establishing a new system that— • Uses BLS data, or other data or methodologies, to calculate relative wages for each geographic area; • Minimizes wage index adjustments between and within MSAs and statewide rural areas; • Includes methods to minimize the volatility of wage index adjustments while maintaining budget neutrality in applying such adjustments; • Takes into account the effect that implementation of the system would have on health care providers and on each region of the country; • Addresses issues related to occupational mix, such as staffing practices and ratios, and any evidence on the effect on quality of care or patient safety as a result of the implementation of the system; and • Provides for a transition. After we consulted with relevant parties during the development of the plan (which included an April 12, 2011 special wage index reform open door forum, along with a review of electronically submitted comments and concerns), the Secretary submitted a Report to Congress—Plan to Reform the Medicare Hospital Wage Index on April 11, 2012 that describes the concept of a Commuting Based Wage Index (CBWI) as one potential replacement for the current Medicare wage index methodology. Acumen again assisted CMS is the analysis for the report. The following is a summary of the highlights of the report: The report included a potential change in the description and definition of labor market areas. The concept, referred to as the CBWI, would use commuting data to define hospital labor market areas. The CBWI is based on data on the number of hospital workers commuting from home to work to define VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 a hospital’s labor market. To derive the CBWI, commuting flows would be used to identify the specific areas (for example, zip code or census tracts) from which a hospital hires its workers and to determine the proportion of its workers hired from each area. A CBWI system could use either current hospital cost report data or other alternative sources, such as the BLS Occupational Employment Survey data, to calculate labor market area average wage values. While the current wage index system aggregates wage data within geographic CBSA-based areas where hospitals are located, the CBWI would aggregate wage data based upon where the hospital workers reside. Once the hiring proportions by area and area wage levels are determined, the hospital’s benchmark wage level would be calculated as the weighted average of these two elements. This value would then be divided by the national average. This calculation would result in a hospital-specific value, which reflects wage levels in the areas from which a hospital hires, accounting for variation in the proportion of workers hired from each area. Using more precisely defined labor markets, the CBWI values can vary for hospitals within the same CBSA or county and, thus, more precisely reflect wage differences within and across CBSA boundaries and address intra-area variation more precisely than the current system. Although the CBWI would allow wage index values to vary within a CBSA, the CBWI is less likely to produce large differences—or ‘‘cliffs’’—between wage index values for nearby hospitals in adjacent CBSAs because nearby hospitals likely hire workers from areas in similar proportions. Acumen found in its analysis that the CBWI system would more closely reflect hospitals’ actual wages than the current CBSA-based system. Acumen suggested the CBWI has the potential to reduce the need for exceptions and adjustments and further manipulation of wage index values to prevent these ‘‘cliffs’’ between labor market areas. The April 12, 2012 Report to Congress detailed several findings relevant to implementation of a CBWI: • Because the CBWI accounts for specific differences in hospitals’ geographic hiring patterns, it would yield wage index values that more closely correlate to actual labor costs than either the current wage index system (with or without geographic reclassification) or a system that attempts to reduce wage index differences across geographic boundaries, such as MedPAC’s PO 00000 Frm 00214 Fmt 4701 Sfmt 4702 proposed wage index based on BLS data for health care industry workers. • While a CBWI could be constructed with the most recent Census commuting data, were the CBWI to be adopted, a more up-to-date reporting system for collecting commuting data from hospitals would potentially have to be established so that the wage index calculations would accurately reflect the commuting patterns of hospital employees. • Concerns about a CBWI leading to hospitals altering hiring patterns and distorting labor markets do not appear to be worse than under the current system and could potentially be mitigated with policy adjustments. • As current statutory provisions governing the Medicare wage index and exceptions to that wage index were designed for the current MSA-based wage index system, their applicability would need to be reviewed if a CBWI were to be adopted. • The Medicare statute has traditionally applied payment changes in a budget neutral manner. If a CBWI were to be adopted in a budget neutral manner, payments to some providers would increase while payments to other providers would decrease. The complete report can be accessed on the CMS website at: https:// www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ AcuteInpatientPPS/Wage-IndexReform.html. We received many public comments regarding the April 2012 Report to Congress as part of the FY 2013 IPPS rulemaking (77 FR 53660 through 53663). Again, the public comments varied greatly, and there was no consensus position among the commenters. The complete set of the public comments on the FY 2013 IPPS/ LTCH PPS proposed rule (CMS–1588–P) is available via the Internet on the website at: www.regulations.gov. d. Institute of Medicine (IOM) Study on Medicare’s Approach to Measuring Geographic Variations in Hospitals’ Wage Costs In addition to submitting the 2012 Report to Congress, in April 2012, the Secretary commissioned the Institute of Medicine (IOM) to evaluate Medicare’s approach for measuring geographic variation in the wage costs faced by hospitals. In the report, IOM’s Committee on Geographic Adjustment Factors in Medicare Payment proposed a set of recommendations for modifying the hospital wage index in both the method used in its construction and the data used in its calculation. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules In constructing the wage index, the IOM recommended altering the current labor market definitions to account for the out-commuting patterns of health care workers who travel to a place of employment in an MSA other than the one in which they live. The IOM’s recommendation is based on its theory that county-to-MSA commuting patterns reveal the degree of integration of labor markets across geographically drawn boundaries (that is, MSAs) and a commuting-based smoothing adjustment to the wage index would more accurately measure the market wage each hospital faces. The IOM model used workers’ out-commuting patterns to smooth wage index values for hospitals in different counties, similar to the out-migration adjustment used in the current wage index system. The IOM also suggested that using out-commuting shares in the smoothing adjustment creates an index based on the wage levels of workers living in that area in which a hospital is located, as opposed to wage levels of workers employed in that area, as in the CBWI model. In calculating its smoothed wage index, the IOM uses the following four steps: • Step 1—Compute a wage index for each MSA, adhering to Medicare’s current approach for calculating the average hourly wage (AHW) paid by all IPPS hospitals located in the MSA (this step replicates the current prereclassification wage index). • Step 2—Compute an area wage for each county equal to a weighted average of MSA-level AHWs, where the weight for each MSA measures the share of all hospital workers living in the county who commute to hospitals located in that MSA. • Step 3—Assign all hospitals located in the county a hospital wage index value equal to the county area wage index. • Step 4—Normalize wage indexes to ensure budget neutrality, similar to the approach currently implemented by Medicare. In addition, the IOM’s wage index model uses hourly wage data from the BLS Occupational Employment Survey rather than from hospital cost reports. The IOM also recommended measuring hourly wages using data for all health care workers, rather than only hospital workers, and using a fuller set of occupations incorporated in the hospital wage index occupational mix adjustment. The IOM suggested that BLS data would reduce administrative burdens placed upon hospitals and, by broadening the array of reported occupations from what is currently covered in the hospital cost report, VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 would achieve more accurate labor market definitions and reduce year-toyear volatility. The IOM encouraged CMS to establish an ongoing agreement with the BLS to use occupational survey data specific to health care workers to calculate average hourly wage values. The IOM suggested, for instance, that the 5-year American Community Survey is a potential source of the necessary commuting information. The findings indicated that the IOM hospital wage index method would result in the reduction in wage index ‘‘cliffs,’’ and would diminish the need to maintain current wage index exceptions and adjustments. The IOM also recommended that the hospital wage values should be applied to other nonhospital health care providers, shifting to a single measurement of geographic variation to be used in multiple Medicare provider payment systems. The IOM’s Phase I report, published in September 2011, is available via the Internet on the website at: https:// nationalacademies.org/hmd/Reports/ 2011/Geographic-Adjustment-inMedicare-Payment-Phase-I-ImprovingAccuracy.aspx. We received many public comments regarding the IOM Report as part of the FY 2013 IPPS rulemaking (77 FR 53660 through 53663). Again, the public comments varied greatly, and there was no consensus position among the commenters. The complete set of the public comments on the FY 2013 IPPS/ LTCH PPS proposed rule (CMS–1588–P) is available via the Internet on the website at: www.regulations.gov. As stated earlier, given that some time has elapsed since the MedPAC, Acumen, CMS, and the IOM examined disparities between the wage index values for individual hospitals and the wage index values among different geographic areas, and ways to improve the Medicare wage index, in this proposed rule, we are taking this opportunity to invite the public to submit further comments, suggestions, and recommendations for regulatory and policy changes to the Medicare wage index. For example, some stakeholders in recent years have expressed the belief that the existing wage index disparities between high and low wage index areas are too great, particularly for rural hospitals and/or financially struggling hospitals. They have suggested additional floors be created for low wage index areas, or that the portion of the IPPS payment adjusted by the wage index be lowered from the current statutory 62 percent for hospitals with a wage index value below 1.0 to a smaller percentage. Some PO 00000 Frm 00215 Fmt 4701 Sfmt 4702 20377 stakeholders also have stated that the reporting lag from when hospitals raise wages and when those increased wages become reflected in the Medicare wage index is a barrier to addressing wage index disparities. Other stakeholders have echoed previous recommendations that the Medicare wage index should be based on a different source of data, such as data from the Bureau of Labor Statistics. If practicable, we are requesting commenters to submit supporting data and specific recommendations in their comments. For any suggestions or recommendations that would involve novel legal questions, we welcome analysis regarding CMS’ authority for our consideration. IV. Other Decisions and Proposed Changes to the IPPS for Operating System A. Proposed Changes to MS–DRGs Subject to Postacute Care Transfer Policy and MS–DRG Special Payments Policies (§ 412.4) 1. Background Existing regulations at 42 CFR 412.4(a) define discharges under the IPPS as situations in which a patient is formally released from an acute care hospital or dies in the hospital. Section 412.4(b) defines acute care transfers, and § 412.4(c) defines postacute care transfers. Our policy set forth in § 412.4(f) provides that when a patient is transferred and his or her length of stay is less than the geometric mean length of stay for the MS–DRG to which the case is assigned, the transferring hospital is generally paid based on a graduated per diem rate for each day of stay, not to exceed the full MS–DRG payment that would have been made if the patient had been discharged without being transferred. The per diem rate paid to a transferring hospital is calculated by dividing the full MS–DRG payment by the geometric mean length of stay for the MS–DRG. Based on an analysis that showed that the first day of hospitalization is the most expensive (60 FR 45804), our policy generally provides for payment that is twice the per diem amount for the first day, with each subsequent day paid at the per diem amount up to the full MS–DRG payment (§ 412.4(f)(1)). Transfer cases also are eligible for outlier payments. In general, the outlier threshold for transfer cases, as described in § 412.80(b), is equal to the fixed-loss outlier threshold for nontransfer cases (adjusted for geographic variations in costs), divided by the geometric mean length of stay for E:\FR\FM\07MYP2.SGM 07MYP2 20378 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules the MS–DRG, and multiplied by the length of stay for the case, plus 1 day. We established the criteria set forth in § 412.4(d) for determining which DRGs qualify for postacute care transfer payments in the FY 2006 IPPS final rule (70 FR 47419 through 47420). The determination of whether a DRG is subject to the postacute care transfer policy was initially based on the Medicare Version 23.0 GROUPER (FY 2006) and data from the FY 2004 MedPAR file. However, if a DRG did not exist in Version 23.0 or a DRG included in Version 23.0 is revised, we use the current version of the Medicare GROUPER and the most recent complete year of MedPAR data to determine if the DRG is subject to the postacute care transfer policy. Specifically, if the MS– DRG’s total number of discharges to postacute care equals or exceeds the 55th percentile for all MS–DRGs and the proportion of short-stay discharges to postacute care to total discharges in the MS–DRG exceeds the 55th percentile for all MS–DRGs, CMS will apply the postacute care transfer policy to that MS–DRG and to any other MS–DRG that shares the same base MS–DRG. The statute directs us to identify MS–DRGs based on a high volume of discharges to postacute care facilities and a disproportionate use of postacute care services. As discussed in the FY 2006 IPPS final rule (70 FR 47416), we determined that the 55th percentile is an appropriate level at which to establish these thresholds. In that same final rule (70 FR 47419), we stated that we will not revise the list of DRGs subject to the postacute care transfer policy annually unless we are making a change to a specific MS–DRG. To account for MS–DRGs subject to the postacute care policy that exhibit exceptionally higher shares of costs very early in the hospital stay, § 412.4(f) also includes a special payment methodology. For these MS–DRGs, hospitals receive 50 percent of the full MS–DRG payment, plus the single per diem payment, for the first day of the stay, as well as a per diem payment for subsequent days (up to the full MS–DRG payment (§ 412.4(f)(6)). For an MS–DRG to qualify for the special payment methodology, the geometric mean length of stay must be greater than 4 days, and the average charges of 1–day discharge cases in the MS–DRG must be at least 50 percent of the average charges for all cases within the MS–DRG. MS– DRGs that are part of an MS–DRG severity level group will qualify under the MS–DRG special payment methodology policy if any one of the MS–DRGs that share that same base MS–DRG qualifies (§ 412.4(f)(6)). 2. Proposed Changes for FY 2019 As discussed in section II.F. of the preamble of this proposed rule, based on our analysis of FY 2017 MedPAR claims data, we are proposing to make changes to a number of MS–DRGs, effective for FY 2019. Specifically, we are proposing to: • Assign CAR–T therapy procedure codes to MS–DRG 016 (proposed revised title: Autologous Bone Marrow Transplant with CC/MCC or T-Cell Immunotherapy); • Delete MS–DRG 685 (Admit for Renal Dialysis) and reassign diagnosis codes from MS–DRG 685 to MS–DRGs 698, 699, and 700 (Other Kidney and Urinary Tract Diagnoses with MCC, with CC, and without CC/MCC, respectively); • Delete 10 MS–DRGs (MS–DRGs 765, 766, 767, 774, 775, 777, 778, 780, 781, and 782) and create 18 new MS– DRGs relating to Pregnancy, Childbirth and the Puerperium (MS–DRGs 783 through 788, 794, 796, 798, 805, 806, 807, 817, 818, 819, and 831 through 833); • Assign two additional diagnosis codes to MS–DRG 023 (Craniotomy with Major Device Implant or Acute Complex Central Nervous System (CNS) Principal Diagnosis (PDX) with MCC or Chemotherapy Implant or Epilepsy with Neurostimulator); • Reassign 12 ICD–10–PCS procedure codes from MS–DRGs 329, 330 and 331 (Major Small and Large Bowel Procedures with MCC, with CC, and without CC/MCC, respectively) to MS– DRGs 344, 345, and 346 (Minor Small and Large Bowel Procedures with MCC, with CC, and without CC/MCC, respectively); and • Reassign ICD–10–CM diagnosis codes R65.10 and R65.11 from MS– DRGs 870, 871, and 872 (Septicemia or Severe Sepsis with and without Mechanical Ventilation 96 Hours with and without MCC, respectively) to MS– DRG 864 (proposed revised title: Fever and Inflammatory Conditions). In light of the proposed changes to these MS–DRGs for FY 2019, according to the regulations under § 412.4(d), we have evaluated these MS–DRGs using the general postacute care transfer policy criteria and data from the FY 2017 MedPAR file. If an MS–DRG qualified for the postacute care transfer policy, we also evaluated that MS–DRG under the special payment methodology criteria according to regulations at § 412.4(f)(6). We continue to believe it is appropriate to reassess MS–DRGs when proposing reassignment of procedure codes or diagnosis codes that would result in material changes to an MS– DRG. MS–DRGs 023, 329, 330, 331, 698, 699, 700, 870, 871, and 872 are currently subject to the postacute care transfer policy. As a result of our review, these MS–DRGs, as proposed to be revised, would continue to qualify to be included on the list of MS–DRGs that are subject to the postacute care transfer policy. Using the March 2018 update of the FY 2017 MedPAR file, we have developed the following chart which sets forth the most recent analysis of the postacute care transfer policy criteria completed for this proposed rule with respect to each of these proposed new or revised MS–DRGs. We note that this analysis does not take into account the proposed change relating to discharges to hospice care, effective October 1, 2018, discussed in section IV.A.3. of the preamble of this proposed rule. For the FY 2019 final rule, we will update this analysis using the most recent available data at that time. daltland on DSKBBV9HB2PROD with PROPOSALS2 LIST OF PROPOSED NEW OR REVISED MS–DRGS SUBJECT TO REVIEW OF POSTACUTE CARE TRANSFER POLICY STATUS FOR FY 2019 Proposed new or revised MS– DRG MS–DRG title 016 ................. VerDate Sep<11>2014 Total cases Autologous Bone Marrow Transplant with CC/MCC or T-Cell Immunotherapy (Proposed Revised). 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00216 Postacute care transfers (55th percentile: 1,372) Short-stay postacute care transfers Percent of short-stay postacute care transfers to all cases (55th percentile: 7.977208%) * 417 126 6.10 2,064 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 Postacute care transfer policy status No. 20379 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules LIST OF PROPOSED NEW OR REVISED MS–DRGS SUBJECT TO REVIEW OF POSTACUTE CARE TRANSFER POLICY STATUS FOR FY 2019—Continued Proposed new or revised MS– DRG MS–DRG title 023 ................. 329 ................. 330 ................. 331 ................. 344 ................. 345 ................. 346 ................. 698 ................. 699 ................. 700 ................. 783 ................. 784 ................. 785 ................. 786 ................. 787 ................. 788 ................. 794 ................. 796 ................. 798 ................. 805 ................. 806 ................. 807 ................. 817 ................. 818 ................. daltland on DSKBBV9HB2PROD with PROPOSALS2 819 ................. 831 ................. 832 ................. 833 ................. VerDate Sep<11>2014 Jkt 244001 PO 00000 Short-stay postacute care transfers Percent of short-stay postacute care transfers to all cases (55th percentile: 7.977208%) 9,436 4,990 1,264 13.40 Yes. 35,361 21,816 7,058 19.96 Yes. 52,702 23,575 6,178 11.72 Yes. 2,9685 6,713 543 * 1.83 Yes.** 1,285 * 675 206 16.03 No. 2,475 * 989 202 8.16 No. 1,274 * 328 71 * 5.58 No. 5,6925 34,672 8,351 14.67 Yes. 33,945 15,263 3,132 9.23 Yes. 4,431 1,589 181 * 4.08 191 *6 0 *0 No. 548 * 19 0 *0 No. 502 *6 0 *0 No. 739 * 34 5 ** 0.7 No. 2,034 * 93 3 * 0.15 No. 1,854 * 41 0 *0 No. 1 *1 0 *0 No. 49 *2 0 *0 No. 162 *1 0 *0 No. 506 * 20 0 *0 No. 2,128 * 72 2 *0 No. 3,809 * 69 6 *0 No. 76 * 12 0 *0 No. 85 *5 1 * 1.18 No. 49 *0 0 *0 No. 857 * 30 1 * 0.12 No. 1,241 * 52 13 * 1.05 No. 659 * 11 0 *0 No. Total cases Craniotomy with Major Device Implant or Acute CNS Principal Diagnosis with MCC or Chemotherapy Implant or Epilepsy with Neurostimulator (Proposed Revised). Major Small and Large Bowel Procedures with MCC (Proposed Revised). Major Small and Large Bowel Procedures with CC (Proposed Revised). Major Small and Large Bowel Procedures without CC/MCC (Proposed Revised). Minor Small and Large Bowel Procedures with MCC (Proposed Revised). Minor Small and Large Bowel Procedures with CC (Proposed Revised). Minor Small and Large Bowel Procedures without CC/MCC (Proposed Revised). Other Kidney and Urinary Tract Diagnoses with MCC (Proposed Revised). Other Kidney and Urinary Tract Diagnoses with CC (Proposed Revised). Other Kidney and Urinary Tract Diagnoses without CC/MCC (Proposed Revised). Cesarean Section with Sterilization with MCC (Proposed New). Cesarean Section with Sterilization with CC (Proposed New). Cesarean Section with Sterilization without CC/MCC (Proposed New). Cesarean Section without Sterilization with MCC (Proposed New). Cesarean Section without Sterilization with CC (Proposed New). Cesarean Section without Sterilization without CC/MCC (Proposed New). Vaginal Delivery with Sterilization/D&C with MCC (Proposed New). Vaginal Delivery with Sterilization/D&C with CC (Proposed New). Vaginal Delivery with Sterilization/D&C without CC/MCC (Proposed New). Vaginal Delivery without Sterilization/D&C with MCC Proposed New). Vaginal Delivery without Sterilization/D&C with CC (Proposed New). Vaginal Delivery without Sterilization/D&C without CC/MCC (Proposed New). Other Antepartum Diagnoses with O.R. Procedure with MCC (Proposed New). Other Antepartum Diagnoses with O.R. Procedure with CC (Proposed New). Other Antepartum Diagnoses with O.R. Procedure without CC/MCC (Proposed New). Other Antepartum Diagnoses without O.R. Procedure with MCC (Proposed New). Other Antepartum Diagnoses without O.R. Procedure with CC (Proposed New). Other Antepartum Diagnoses without O.R. Procedure without CC/MCC (Proposed New). 20:30 May 04, 2018 Postacute care transfers (55th percentile: 1,372) Frm 00217 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 Postacute care transfer policy status Yes.** 20380 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules LIST OF PROPOSED NEW OR REVISED MS–DRGS SUBJECT TO REVIEW OF POSTACUTE CARE TRANSFER POLICY STATUS FOR FY 2019—Continued Proposed new or revised MS– DRG MS–DRG title 864 ................. 870 ................. 871 ................. 872 ................. Postacute care transfers (55th percentile: 1,372) Short-stay postacute care transfers Percent of short-stay postacute care transfers to all cases (55th percentile: 7.977208%) 12,150 3,882 286 * 2.35 No. 34,335 15,099 4,988 14.53 Yes. 592,110 281,401 43,504 * 7.35 Yes.** 154,469 64,490 6,848 * 4.43 Yes.** Total cases Fever and Inflammatory Conditions (Proposed Revised). Septicemia or Severe Sepsis with Mechanical Ventilation 96 Hours (Proposed Revised). Septicemia or Severe Sepsis without Mechanical Ventilation 96 Hours with MCC (Proposed Revised). Septicemia or Severe Sepsis without Mechanical Ventilation 96 Hours without MCC (Proposed Revised). Postacute care transfer policy status * Indicates a current postacute care transfer policy criterion that the MS–DRG did not meet. ** As described in the policy at 42 CFR 412.4(d)(3)(ii)(D), MS–DRGs that share the same base MS–DRG will all qualify under the postacute care transfer policy if any one of the MS–DRGs that share that same base MS–DRG qualifies. Based on our annual review of proposed new or revised MS–DRGs and analysis of the March 2018 update of the FY 2017 MedPAR file, we have identified MS–DRGs that we are proposing to be included on the list of MS–DRGs subject to the special payment methodology policy. None of the proposed revised MS–DRGs that are listed in the table above as continuing to meet the criteria for postacute care transfer policy status (specifically, MS– DRGs 023, 330, 331, 698, 699, 700, 870, 871, and 872) are currently listed as being subject to the special payment methodology. Based on our analysis of proposed changes to MS–DRGs included in this proposed rule, we have determined that proposed revised MS– DRG 023 (Craniotomy with Major Device Implant or Acute Complex CNS Principal Diagnosis with MCC or Chemotherapy Implant or Epilepsy with Neurostimulator) would meet the criteria for the MS–DRG special payment methodology. Therefore, we are proposing that proposed revised MS–DRG 023 would be subject to the MS–DRG special payment methodology, effective FY 2019. As described in the regulations at § 412.4(f)(6)(iv), MS– DRGs that share the same base MS–DRG will all qualify under the MS–DRG special payment policy if any one of the MS–DRGs that share that same base MS–DRG qualifies. Therefore, we are proposing that MS–DRG 024 (Craniotomy with Major Device Implant or Acute Complex CNS Principal Diagnosis without MCC or Chemotherapy Implant or Epilepsy with Neurostimulator) also would be subject to the MS–DRG special payment methodology, effective for FY 2019. LIST OF PROPOSED REVISED MS–DRGS SUBJECT TO REVIEW OF SPECIAL PAYMENT POLICY STATUS FOR FY 2019 Proposed revised MS–DRG MS–DRG title 023 ................. 330 331 698 699 700 870 ................. ................. ................. ................. ................. ................. 871 ................. daltland on DSKBBV9HB2PROD with PROPOSALS2 872 ................. Craniotomy with Major Device Implant or Acute CNS Principal Diagnosis with MCC or Chemotherapy Implant or Epilepsy with Neurostimulator. Major Small and Large Bowel Procedures with CC ..................... Major Small and Large Bowel procedures without CC/MCC ....... Other Kidney and Urinary Tract Diagnoses with MCC ................ Other Kidney and Urinary Tract Diagnoses with CC ................... Other Kidney and Urinary Tract Diagnoses without CC/MCC ..... Septicemia or Severe Sepsis with Mechanical Ventilation <96 Hours. Septicemia or Severe Sepsis without Mechanical Ventilation <96 Hours with MCC. Septicemia or Severe Sepsis without Mechanical Ventilation <96 Hours without MCC. We are inviting public comments on this proposal. The proposed special payment policy status of these MS–DRGs is reflected in Table 5 associated with this proposed VerDate Sep<11>2014 Geometric mean length of stay 20:30 May 04, 2018 Jkt 244001 Frm 00218 Fmt 4701 Sfmt 4702 50 percent of average charges for all cases within MS–DRG Special payment policy status 7.3 $138,521 $96,268 Yes. 6.1 3.7 4.9 3.4 2.5 12.4 32,410 34,430 17,966 17,040 14,592 0 41,813 28,931 24,920 17,012 12,954 102,333 No. No. No. No. No. No. 4.8 19,479 29,746 No. 3.6 18,911 17,193 No. rule, which is listed in section VI. of the Addendum to this proposed rule and available via the Internet on the CMS website. PO 00000 Average charges of 1-day discharges 3. Proposed Implementation of Changes Required by Section 53109 of the Bipartisan Budget Act of 2018 Prior to the enactment of the Bipartisan Budget Act of 2018 (Pub. L. E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 115–123), under section 1886(d)(5)(J) of the Act, a discharge was deemed a ‘‘qualified discharge’’ if the individual was discharged to one of the following postacute care settings: • A hospital or hospital unit that is not a subsection (d) hospital. • A skilled nursing facility. • Related home health services provided by a home health agency provided within a timeframe established by the Secretary (beginning within 3 days after the date of discharge). Section 53109 of the Bipartisan Budget Act of 2018 amended section 1886(d)(5)(J)(ii) of the Act to also include discharges to hospice care by a hospice program as a qualified discharge, effective for discharges occurring on or after October 1, 2018. Accordingly, effective for discharges occurring on or after October 1, 2018, if a discharge is assigned to one of the MS–DRGs subject to the postacute care transfer policy and the individual is transferred to hospice care by a hospice program, the discharge would be subject to payment as a transfer case. We are proposing to make conforming amendments to § 412.4(c) of the regulation to include discharges to hospice care occurring on or after October 1, 2018 as qualified discharges. We are proposing that hospital bills with a Patient Discharge Status code of 50 (Discharged/Transferred to Hospice—Routine or Continuous Home Care) or 51 (Discharged/Transferred to Hospice, General Inpatient Care or Inpatient Respite) would be subject to the postacute care transfer policy in accordance with this statutory amendment. Consistent with our policy for other qualified discharges, CMS claims processing software will be revised to identify cases in which hospice benefits were billed on the date of hospital discharge without the appropriate discharge status code. Such claims will be returned as unpayable to the hospital and may be rebilled with a corrected discharge code. We are inviting public comments on our proposals. daltland on DSKBBV9HB2PROD with PROPOSALS2 B. Proposed Changes in the Inpatient Hospital Update for FY 2019 (§ 412.64(d)) 1. Proposed FY 2019 Inpatient Hospital Update In accordance with section 1886(b)(3)(B)(i) of the Act, each year we update the national standardized amount for inpatient hospital operating costs by a factor called the ‘‘applicable percentage increase.’’ For FY 2019, we are setting the applicable percentage increase by applying the adjustments VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 listed in this section in the same sequence as we did for FY 2018. Specifically, consistent with section 1886(b)(3)(B) of the Act, as amended by sections 3401(a) and 10319(a) of the Affordable Care Act, we are setting the applicable percentage increase by applying the following adjustments in the following sequence. The applicable percentage increase under the IPPS is equal to the rate-of-increase in the hospital market basket for IPPS hospitals in all areas, subject to— (a) A reduction of one-quarter of the applicable percentage increase (prior to the application of other statutory adjustments; also referred to as the market basket update or rate-of-increase (with no adjustments)) for hospitals that fail to submit quality information under rules established by the Secretary in accordance with section 1886(b)(3)(B)(viii) of the Act; (b) A reduction of three-quarters of the applicable percentage increase (prior to the application of other statutory adjustments; also referred to as the market basket update or rate-of-increase (with no adjustments)) for hospitals not considered to be meaningful EHR users in accordance with section 1886(b)(3)(B)(ix) of the Act; (c) An adjustment based on changes in economy-wide productivity (the multifactor productivity (MFP) adjustment); and (d) An additional reduction of 0.75 percentage point as required by section 1886(b)(3)(B)(xii) of the Act. Sections 1886(b)(3)(B)(xi) and (b)(3)(B)(xii) of the Act, as added by section 3401(a) of the Affordable Care Act, state that application of the MFP adjustment and the additional FY 2019 adjustment of 0.75 percentage point may result in the applicable percentage increase being less than zero. We note that, in compliance with section 404 of the MMA, in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38158 through 38175), we replaced the FY 2010-based IPPS operating market basket with the rebased and revised 2014-based IPPS operating market basket, effective with FY 2018. We are proposing to base the proposed FY 2019 market basket update used to determine the applicable percentage increase for the IPPS on IHS Global Inc.’s (IGI’s) fourth quarter 2017 forecast of the 2014-based IPPS market basket rate-of-increase with historical data through third quarter 2017, which is estimated to be 2.8 percent. We are proposing that if more recent data subsequently become available (for example, a more recent estimate of the market basket and the MFP adjustment), we would use such data, if appropriate, PO 00000 Frm 00219 Fmt 4701 Sfmt 4702 20381 to determine the FY 2019 market basket update and the MFP adjustment in the final rule. For FY 2019, depending on whether a hospital submits quality data under the rules established in accordance with section 1886(b)(3)(B)(viii) of the Act (hereafter referred to as a hospital that submits quality data) and is a meaningful EHR user under section 1886(b)(3)(B)(ix) of the Act (hereafter referred to as a hospital that is a meaningful EHR user), there are four possible applicable percentage increases that can be applied to the standardized amount as specified in the table that appears later in this section. In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51689 through 51692), we finalized our methodology for calculating and applying the MFP adjustment. As we explained in that rule, section 1886(b)(3)(B)(xi)(II) of the Act, as added by section 3401(a) of the Affordable Care Act, defines this productivity adjustment as equal to the 10-year moving average of changes in annual economy-wide, private nonfarm business MFP (as projected by the Secretary for the 10-year period ending with the applicable fiscal year, calendar year, cost reporting period, or other annual period). The Bureau of Labor Statistics (BLS) publishes the official measure of private nonfarm business MFP. We refer readers to the BLS website at https://www.bls.gov/mfp for the BLS historical published MFP data. MFP is derived by subtracting the contribution of labor and capital input growth from output growth. The projections of the components of MFP are currently produced by IGI, a nationally recognized economic forecasting firm with which CMS contracts to forecast the components of the market baskets and MFP. As we discussed in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49509), beginning with the FY 2016 rulemaking cycle, the MFP adjustment is calculated using the revised series developed by IGI to proxy the aggregate capital inputs. Specifically, in order to generate a forecast of MFP, IGI forecasts BLS aggregate capital inputs using a regression model. A complete description of the MFP projection methodology is available on the CMS website at: https://www.cms.gov/ Research-Statistics-Data-and-Systems/ Statistics-Trends-and-Reports/ MedicareProgramRatesStats/ MarketBasketResearch.html. As discussed in the FY 2016 IPPS/LTCH PPS final rule, if IGI makes changes to the MFP methodology, we will announce them on our website rather than in the annual rulemaking. E:\FR\FM\07MYP2.SGM 07MYP2 20382 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules For FY 2019, we are proposing an MFP adjustment of 0.8 percentage point. Similar to the market basket update, for this proposed rule, we used IGI’s fourth quarter 2017 forecast of the MFP adjustment to compute the proposed MFP adjustment. As noted previously, we are proposing that if more recent data subsequently become available, we would use such data, if appropriate, to determine the FY 2019 market basket update and the MFP adjustment for the final rule. Based on these data, for this proposed rule, we have determined four proposed applicable percentage increases to the standardized amount for FY 2019, as specified in the following table: PROPOSED FY 2019 APPLICABLE PERCENTAGE INCREASES FOR THE IPPS Hospital submitted quality data and is a meaningful EHR user FY 2019 Proposed Applicable Percentage Increase Applied to Standardized Amount .................................................................................................. daltland on DSKBBV9HB2PROD with PROPOSALS2 Proposed Market Basket Rate-of-Increase ..................................................... Proposed Adjustment for Failure to Submit Quality Data under Section 1886(b)(3)(B)(viii) of the Act ........................................................................ Proposed Adjustment for Failure to be a Meaningful EHR User under Section 1886(b)(3)(B)(ix) of the Act ................................................................... Proposed MFP Adjustment under Section 1886(b)(3)(B)(xi) of the Act .......... Statutory Adjustment under Section 1886(b)(3)(B)(xii) of the Act ................... We are proposing to revise the existing regulations at 42 CFR 412.64(d) to reflect the current law for the FY 2019 update. Specifically, in accordance with section 1886(b)(3)(B) of the Act, we are proposing to revise paragraph (vii) of § 412.64(d)(1) to include the applicable percentage increase to the FY 2019 operating standardized amount as the percentage increase in the market basket index, subject to the reductions specified under § 412.64(d)(2) for a hospital that does not submit quality data and § 412.64(d)(3) for a hospital that is not a meaningful EHR user, less an MFP adjustment and less an additional reduction of 0.75 percentage point. We are inviting public comments on our proposals. Section 1886(b)(3)(B)(iv) of the Act provides that the applicable percentage increase to the hospital-specific rates for SCHs and MDHs equals the applicable percentage increase set forth in section 1886(b)(3)(B)(i) of the Act (that is, the same update factor as for all other hospitals subject to the IPPS). Therefore, the update to the hospital-specific rates for SCHs and MDHs also is subject to section 1886(b)(3)(B)(i) of the Act, as amended by sections 3401(a) and 10319(a) of the Affordable Care Act. (As discussed in section IV.G. of the preamble of this FY 2019 IPPS/LTCH PPS proposed rule, section 205 of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (Pub. L. 114-10, enacted on April 16, 2015) extended the MDH program through FY 2017 (that is, for discharges occurring on or before September 30, VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Hospital submitted quality data and is not a meaningful EHR user 2.8 2.8 2.8 0 0 ¥0.7 ¥0.7 0 ¥0.8 ¥0.75 ¥2.1 ¥0.8 ¥0.75 0 ¥0.8 ¥0.75 ¥2.1 ¥0.8 ¥0.75 1.25 ¥0.85 0.55 ¥1.55 2. Proposed FY 2019 Puerto Rico Hospital Update As discussed in the FY 2017 IPPS/ LTCH PPS final rule (81 FR 56937 Frm 00220 Fmt 4701 Sfmt 4702 Hospital did not submit quality data and is not a meaningful EHR user 2.8 2017). Section 50205 of the Bipartisan Budget Act of 2018 (Pub. L. 115–123), enacted February 9, 2018, extended the MDH program for discharges on or after October 1, 2017 through September 30, 2022.) For FY 2019, we are proposing the following updates to the hospitalspecific rates applicable to SCHs and MDHs: A proposed update of 1.25 percent for a hospital that submits quality data and is a meaningful EHR user; a proposed update of 0.55 percent for a hospital that fails to submit quality data and is a meaningful EHR user; a proposed update of -0.85 percent for a hospital that submits quality data and is not a meaningful EHR user; and a proposed update of ¥1.55 percent for a hospital that fails to submit quality data and is not a meaningful EHR user. As noted previously, for this FY 2019 IPPS/ LTCH PPS proposed rule, we are using IGI’s fourth quarter 2017 forecast of the 2014-based IPPS market basket update with historical data through third quarter 2017. Similarly, we are using IGI’s fourth quarter 2017 forecast of the MFP adjustment. We are proposing that if more recent data subsequently become available (for example, a more recent estimate of the market basket increase and the MFP adjustment), we would use such data, if appropriate, to determine the update in the final rule. We are inviting public comments on our proposal. PO 00000 Hospital did not submit quality data and is a meaningful EHR user through 56938), prior to January 1, 2016, Puerto Rico hospitals were paid based on 75 percent of the national standardized amount and 25 percent of the Puerto Rico-specific standardized amount. Section 601 of Public Law 114– 113 amended section 1886(d)(9)(E) of the Act to specify that the payment calculation with respect to operating costs of inpatient hospital services of a subsection (d) Puerto Rico hospital for inpatient hospital discharges on or after January 1, 2016, shall use 100 percent of the national standardized amount. Because Puerto Rico hospitals are no longer paid with a Puerto Rico-specific standardized amount under the amendments to section 1886(d)(9)(E) of the Act, there is no longer a need for us to determine an update to the Puerto Rico standardized amount. Hospitals in Puerto Rico are now paid 100 percent of the national standardized amount and, therefore, are subject to the same update to the national standardized amount discussed under section IV.B.1. of the preamble of this proposed rule. Accordingly, in this FY 2019 IPPS/ LTCH PPS proposed rule, for FY 2019, we are proposing an applicable percentage increase of 1.25 percent to the standardized amount for hospitals located in Puerto Rico. We note that section 1886(b)(3)(B)(viii) of the Act, which specifies the adjustment to the applicable percentage increase for ‘‘subsection (d)’’ hospitals that do not submit quality data under the rules established by the Secretary, is not E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules applicable to hospitals located in Puerto Rico. In addition, section 602 of Public Law 114–113 amended section 1886(n)(6)(B) of the Act to specify that Puerto Rico hospitals are eligible for incentive payments for the meaningful use of certified EHR technology, effective beginning FY 2016, and also to apply the adjustments to the applicable percentage increase under section 1886(b)(3)(B)(ix) of the Act to Puerto Rico hospitals that are not meaningful EHR users, effective FY 2022. Accordingly, because the provisions of section 1886(b)(3)(B)(ix) of the Act are not applicable to hospitals located in Puerto Rico until FY 2022, the adjustments under this provision are not applicable for FY 2019. We are inviting public comments on our proposals. C. Rural Referral Centers (RRCs) Proposed Annual Updates to Case-Mix Index and Discharge Criteria (§ 412.96) Under the authority of section 1886(d)(5)(C)(i) of the Act, the regulations at § 412.96 set forth the criteria that a hospital must meet in order to qualify under the IPPS as a rural referral center (RRC). RRCs receive some special treatment under both the DSH payment adjustment and the criteria for geographic reclassification. Section 402 of Public Law 108–173 raised the DSH payment adjustment for RRCs such that they are not subject to the 12-percent cap on DSH payments that is applicable to other rural hospitals. RRCs also are not subject to the proximity criteria when applying for geographic reclassification. In addition, they do not have to meet the requirement that a hospital’s average hourly wage must exceed, by a certain percentage, the average hourly wage of the labor market area in which the hospital is located. Section 4202(b) of Public Law 105–33 states, in part, that any hospital classified as an RRC by the Secretary for FY 1991 shall be classified as such an RRC for FY 1998 and each subsequent fiscal year. In the August 29, 1997 IPPS final rule with comment period (62 FR 45999), we reinstated RRC status for all hospitals that lost that status due to triennial review or MGCRB reclassification. However, we did not reinstate the status of hospitals that lost RRC status because they were now urban for all purposes because of the OMB designation of their geographic area as urban. Subsequently, in the August 1, 2000 IPPS final rule (65 FR 47089), we indicated that we were revisiting that decision. Specifically, we stated that we would permit hospitals that previously qualified as an RRC and lost their status due to OMB redesignation of the county in which they are located from rural to urban, to be reinstated as an RRC. Otherwise, a hospital seeking RRC status must satisfy all of the other applicable criteria. We use the definitions of ‘‘urban’’ and ‘‘rural’’ specified in Subpart D of 42 CFR part 412. One of the criteria under which a hospital may qualify as an RRC is to have 275 or more beds available for use (§ 412.96(b)(1)(ii)). A rural hospital that does not meet the bed size requirement can qualify as an RRC if the hospital meets two mandatory prerequisites (a minimum case-mix index (CMI) and a minimum number of discharges), and at least one of three optional criteria (relating to specialty composition of medical staff, source of inpatients, or referral volume). (We refer readers to § 412.96(c)(1) through (c)(5) and the September 30, 1988 Federal Register (53 FR 38513) for additional discussion.) With respect to the two mandatory prerequisites, a hospital may be classified as an RRC if— • The hospital’s CMI is at least equal to the lower of the median CMI for urban hospitals in its census region, excluding hospitals with approved teaching programs, or the median CMI for all urban hospitals nationally; and • The hospital’s number of discharges is at least 5,000 per year, or, if fewer, the median number of discharges for urban hospitals in the census region in which the hospital is located. The number of discharges criterion for an osteopathic hospital is at least 3,000 discharges per year, as specified in section 1886(d)(5)(C)(i) of the Act. 1. Case-Mix Index (CMI) Section 412.96(c)(1) provides that CMS establish updated national and regional CMI values in each year’s annual notice of prospective payment rates for purposes of determining RRC status. The methodology we used to determine the national and regional CMI values is set forth in the regulations at § 412.96(c)(1)(ii). The proposed national median CMI value for FY 2019 is based on the CMI values of all urban hospitals nationwide, and the proposed regional median CMI values for FY 2019 are based on the CMI values of all urban hospitals within each census region, excluding those hospitals with approved teaching programs (that is, those hospitals that train residents in an approved GME program as provided in § 413.75). These proposed values are based on discharges occurring during FY 2017 (October 1, 2016 through September 30, 2017), and include bills posted to CMS’ records through December 2017. In this FY 2019 IPPS/LTCH PPS proposed rule, we are proposing that, in addition to meeting other criteria, if rural hospitals with fewer than 275 beds are to qualify for initial RRC status for cost reporting periods beginning on or after October 1, 2018, they must have a CMI value for FY 2017 that is at least— • 1.66185 (national—all urban); or • The median CMI value (not transfer-adjusted) for urban hospitals (excluding hospitals with approved teaching programs as identified in § 413.75) calculated by CMS for the census region in which the hospital is located. The proposed median CMI values by region are set forth in the table below. We intend to update these proposed CMI values in the FY 2019 final rule to reflect the updated FY 2017 MedPAR file, which will contain data from additional bills received through March 2018. Case-mix index value daltland on DSKBBV9HB2PROD with PROPOSALS2 Region 1. 2. 3. 4. 5. 6. 7. 8. 9. New England (CT, ME, MA, NH, RI, VT) ........................................................................................................................................ Middle Atlantic (PA, NJ, NY) ........................................................................................................................................................... South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV) ............................................................................................................... East North Central (IL, IN, MI, OH, WI) .......................................................................................................................................... East South Central (AL, KY, MS, TN) ............................................................................................................................................. West North Central (IA, KS, MN, MO, NE, ND, SD) ...................................................................................................................... West South Central (AR, LA, OK, TX) ............................................................................................................................................ Mountain (AZ, CO, ID, MT, NV, NM, UT, WY) ............................................................................................................................... Pacific (AK, CA, HI, OR, WA) ......................................................................................................................................................... VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00221 Fmt 4701 20383 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 1.4071 1.4694 1.5486 1.5765 1.5289 1.6387 1.6872 1.7366 1.6619 20384 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules A hospital seeking to qualify as an RRC should obtain its hospital-specific CMI value (not transfer-adjusted) from its MAC. Data are available on the Provider Statistical and Reimbursement (PS&R) System. In keeping with our policy on discharges, the CMI values are computed based on all Medicare patient discharges subject to the IPPS MS–DRGbased payment. We are inviting public comments on our proposal. 2. Discharges Section 412.96(c)(2)(i) provides that CMS set forth the national and regional numbers of discharges criteria in each year’s annual notice of prospective payment rates for purposes of determining RRC status. As specified in section 1886(d)(5)(C)(ii) of the Act, the national standard is set at 5,000 discharges. In this FY 2019 IPPS/LTCH PPS proposed rule, for FY 2019, we are proposing to update the regional standards based on discharges for urban hospitals’ cost reporting periods that began during FY 2016 (that is, October 1, 2015 through September 30, 2016), which are the latest cost report data available at the time this proposed rule was developed. Therefore, we are proposing that, in addition to meeting other criteria, a hospital, if it is to qualify for initial RRC status for cost reporting periods beginning on or after October 1, 2018, must have, as the number of discharges for its cost reporting period that began during FY 2016, at least— • 5,000 (3,000 for an osteopathic hospital); or • If less, the median number of discharges for urban hospitals in the census region in which the hospital is located, as reflected in the table below. We intend to update these numbers in the FY 2019 final rule based on the latest available cost report data. Number of discharges Region 1. 2. 3. 4. 5. 6. 7. 8. 9. New England (CT, ME, MA, NH, RI, VT) ........................................................................................................................................ Middle Atlantic (PA, NJ, NY) ........................................................................................................................................................... South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV) ............................................................................................................... East North Central (IL, IN, MI, OH, WI) .......................................................................................................................................... East South Central (AL, KY, MS, TN) ............................................................................................................................................. West North Central (IA, KS, MN, MO, NE, ND, SD) ...................................................................................................................... West South Central (AR, LA, OK, TX) ............................................................................................................................................ Mountain (AZ, CO, ID, MT, NV, NM, UT, WY) ............................................................................................................................... Pacific (AK, CA, HI, OR, WA) ......................................................................................................................................................... We note that because the median number of discharges for hospitals in each census region is greater than the national standard of 5,000 discharges, under this proposed rule, 5,000 discharges is the minimum criterion for all hospitals, except for osteopathic hospitals for which the minimum criterion is 3,000 discharges. We are inviting public comments on our proposal. D. Proposed Payment Adjustment for Low-Volume Hospitals (§ 412.101) daltland on DSKBBV9HB2PROD with PROPOSALS2 1. Background Section 1886(d)(12) of the Act provides for an additional payment to each qualifying low-volume hospital under the IPPS beginning in FY 2005. The additional payment adjustment to a low-volume hospital provided for under section 1886(d)(12) of the Act is in addition to any payment calculated under section 1886 of the Act. Therefore, the additional payment adjustment is based on the per discharge amount paid to the qualifying hospital under section 1886 of the Act. In other words, the low-volume hospital payment adjustment is based on total per discharge payments made under section 1886 of the Act, including capital, DSH, IME, and outlier payments. For SCHs and MDHs, the low-volume hospital payment adjustment is based in part on either the Federal rate or the hospital-specific rate, VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 whichever results in a greater operating IPPS payment. Section 50204 of the Bipartisan Budget Act of 2018 (Pub. L. 115–123) modified the definition of a low-volume hospital and the methodology for calculating the payment adjustment for low-volume hospitals for FYs 2019 through 2022. (Section 50204 also extended prior changes to the definition of a low-volume hospital and the methodology for calculating the payment adjustment for low-volume hospitals through FY 2018, as discussed later in this section.). Beginning with FY 2023, the low-volume hospital qualifying criteria and payment adjustment will revert to the statutory requirements that were in effect prior to FY 2011. (For additional information on the low-volume hospital payment adjustment prior to FY 2018, we refer readers to the FY 2017 IPPS/LTCH PPS final rule (81 FR 56941 through 56943). For additional information on the lowvolume hospital payment adjustment for FY 2018, we refer readers to the FY 2018 IPPS notice (CMS–1677–N) that appears elsewhere in this issue of the Federal Register.) In section IV.D.2.b. of the preamble of this proposed rule, we discuss the proposed low-volume hospital payment adjustment policies for FY 2019. PO 00000 Frm 00222 Fmt 4701 Sfmt 4702 8,431 9,762 10,643 8,297 7,796 7,721 5,456 8,819 9,017 2. Proposed Implementation of Changes to the Low-Volume Hospital Definition and Payment Adjustment Methodology Made by the Bipartisan Budget Act of 2018 a. Extension of the Temporary Changes to the Low-Volume Hospital Definition and Payment Adjustment Methodology for FY 2018 and Proposed Conforming Changes to Regulations Section 50204 of the Bipartisan Budget Act of 2018 extended through FY 2018 certain changes to the lowvolume hospital payment policy made by the Affordable Care Act and extended by subsequent legislation. We addressed this extension of the temporary changes to the low-volume hospital payment policy for FY 2018 in a notice (CMS–1677–N) that appears elsewhere in this issue of the Federal Register. However, in this FY 2019 IPPS/LTCH PPS proposed rule, we are proposing to make conforming changes to the regulations text in § 412.101 to reflect the extension of the changes to the qualifying criteria and the payment adjustment methodology for lowvolume hospitals through FY 2018, in accordance with section 50204 of the Bipartisan Budget Act of 2018. Specifically, we are proposing to make conforming changes to paragraphs (b)(2)(ii) and (c)(2) introductory text of § 412.101 to reflect that the low-volume hospital payment adjustment policy in effect for FY 2018 is the same E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 low-volume hospital payment adjustment policy in effect for FYs 2011 through 2017 (as described in the FY 2018 IPPS notice (CMS–1677–N) that appears elsewhere in this issue of the Federal Register). b. Temporary Changes to the LowVolume Hospital Definition and Payment Adjustment Methodology for FYs 2019 Through 2022 As discussed earlier, section 50204 of the Bipartisan Budget Act of 2018 further modified the definition of a lowvolume hospital and the methodology for calculating the payment adjustment for low-volume hospitals for FYs 2019 through 2022. Specifically, section 50204 amended the qualifying criteria for low-volume hospitals under section 1886(d)(12)(C)(i) of the Act to specify that, for FYs 2019 through 2022, a subsection (d) hospital qualifies as a low-volume hospital if it is more than 15 road miles from another subsection (d) hospital and has less than 3,800 total discharges during the fiscal year. Section 50204 also amended section 1886(d)(12)(D) of the Act to provide that, for discharges occurring in FYs 2019 through 2022, the Secretary shall determine the applicable percentage increase using a continuous, linear sliding scale ranging from an additional 25 percent payment adjustment for lowvolume hospitals with 500 or fewer discharges to a zero percent additional payment for low-volume hospitals with more than 3,800 discharges in the fiscal year. Consistent with the requirements of section 1886(d)(12)(C)(ii) of the Act, the term ‘‘discharge’’ for purposes of these provisions refers to total discharges, regardless of payer (that is, Medicare and non-Medicare discharges). To implement this requirement, we are proposing a continuous, linear sliding scale formula to determine the low-volume hospital payment adjustment for FYs 2019 through 2022 that is similar to the continuous, linear sliding scale formula used to determine the low-volume hospital payment adjustment originally established by the Affordable Care Act and implemented in the regulations at § 412.101(c)(2)(ii) in the FY 2011 IPPS/LTCH PPS final rule (75 FR 50240 through 50241). Consistent with the statute, we are proposing that qualifying hospitals with 500 or fewer total discharges would receive a low-volume hospital payment adjustment of 25 percent. For qualifying hospitals with fewer than 3,800 discharges but more than 500 discharges, the low-volume payment adjustment would be calculated by subtracting from 25 percent the proportion of payments associated with VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 the discharges in excess of 500. That proportion is calculated by multiplying the discharges in excess of 500 by a fraction that is equal to the maximum available add-on payment (25 percent) divided by a number represented by the range of discharges for which this policy applies (3,800 minus 500, or 3,300). In other words, for qualifying hospitals with fewer than 3,800 total discharges but more than 500 total discharges, we are proposing the low-volume hospital payment adjustment for FYs 2019 through 2022 would be calculated using the following formula: Low-Volume Hospital Payment Adjustment = 0.25¥[0.25/3300] × (number of total discharges¥500) = (95/330) × (number of total discharges/13,200). To reflect these changes for FYs 2019 through 2022, we are proposing to revise § 412.101(b)(2) by adding paragraph (iii) to specify that a hospital must have fewer than 3,800 total discharges, which includes Medicare and non-Medicare discharges, during the fiscal year, based on the hospital’s most recently submitted cost report, and be located more than 15 road miles from the nearest ‘‘subsection (d)’’ hospital, consistent with the amendments to section 1886(d)(12)(C)(i) of the Act as provided by section 50204(a)(2) of the Bipartisan Budget Act of 2018. We also are proposing to add paragraph (3) to § 412.101(c), consistent with section 1886(d)(12)(D) of the Act as amended by section 50204(a)(3) of the Bipartisan Budget Act of 2018, to specify that: • For low-volume hospitals with 500 or fewer total discharges during the fiscal year, the low-volume hospital payment adjustment is an additional 25 percent for each Medicare discharge. • For low-volume hospitals with total discharges during the fiscal year of more than 500 and fewer than 3,800, the adjustment for each Medicare discharge is an additional percent calculated using the formula [(95/330) × (number of total discharges/13,200)]. The ‘‘number of total discharges’’ would be determined as total discharges, which includes Medicare and non-Medicare discharges during the fiscal year, based on the hospital’s most recently submitted cost report. In addition, in accordance with the provisions of section 50204(a) of the Bipartisan Budget Act of 2018, for FY 2023 and subsequent fiscal years, we are proposing to make conforming changes to paragraphs (b)(2)(i) and (c)(1) of § 412.101 to reflect that the low-volume payment adjustment policy in effect for these years is the same low-volume hospital payment adjustment policy in PO 00000 Frm 00223 Fmt 4701 Sfmt 4702 20385 effect for FYs 2005 through 2010, as described earlier. Lastly, we are proposing to make conforming changes to paragraph (d) (which relates to eligibility of new hospitals for the adjustment), consistent with the provisions of section 50204(a) of the Bipartisan Budget Act of 2018, for FY 2019 and subsequent fiscal years, as total discharges are used under the lowvolume hospital payment adjustment policy in effect for those years as described earlier. 3. Proposed Process for Requesting and Obtaining the Low-Volume Hospital Payment Adjustment In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50238 through 50275 and 50414) and subsequent rulemaking (for example, the FY 2018 IPPS/LTCH PPS final rule (82 FR 38186 through 38188)), we discussed the process for requesting and obtaining the low-volume hospital payment adjustment. Under this previously established process, a hospital makes a written request for the low-volume payment adjustment under § 412.101 to its MAC. This request must contain sufficient documentation to establish that the hospital meets the applicable mileage and discharge criteria. The MAC will determine if the hospital qualifies as a low-volume hospital by reviewing the data the hospital submits with its request for low-volume hospital status in addition to other available data. Under this approach, a hospital will know in advance whether or not it will receive a payment adjustment under the lowvolume hospital policy. The MAC and CMS may review available data, in addition to the data the hospital submits with its request for low-volume hospital status, in order to determine whether or not the hospital meets the qualifying criteria. (For additional information on our existing process for requesting the low-volume hospital payment adjustment, we refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38185 through 38188).) As described earlier, for FY 2019 and subsequent fiscal years, the discharge determination is made based on the hospital’s number of total discharges, that is, Medicare and non-Medicare discharges, as was the case for FYs 2005 through 2010. Under § 412.101(b)(2)(i) and proposed new § 412.101(b)(2)(iii), a hospital’s most recently submitted cost report is used to determine if the hospital meets the discharge criterion to receive the low-volume payment adjustment in the current year. We use cost report data to determine if a hospital meets the discharge criterion because this is the best available data E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20386 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules source that includes information on both Medicare and non-Medicare discharges. (For FYs 2011 through 2018, the most recently available MedPAR data were used to determine the hospital’s Medicare discharges because non-Medicare discharges were not used to determine if a hospital met the discharge criterion for those years.) Therefore, a hospital should refer to its most recently submitted cost report for total discharges (Medicare and nonMedicare) in order to decide whether or not to apply for low-volume hospital status for a particular fiscal year. In addition to the discharge criterion, for FY 2019 and for subsequent fiscal years, eligibility for the low-volume hospital payment adjustment is also dependent upon the hospital meeting the applicable mileage criterion specified in § 412.101(b)(2)(i) or proposed new § 412.101(b)(2)(iii) for the fiscal year. Specifically, to meet the mileage criterion to qualify for the lowvolume hospital payment adjustment for FY 2019, as noted earlier, a hospital must be located more than 15 road miles from the nearest subsection (d) hospital. We define in § 412.101(a) the term ‘‘road miles’’ to mean ‘‘miles’’ as defined in § 412.92(c)(1) (75 FR 50238 through 50275 and 50414). For establishing that the hospital meets the mileage criterion, the use of a web-based mapping tool as part of the documentation is acceptable. The MAC will determine if the information submitted by the hospital, such as the name and street address of the nearest hospitals, location on a map, and distance from the hospital requesting low-volume hospital status, is sufficient to document that it meets the mileage criterion. If not, the MAC will follow up with the hospital to obtain additional necessary information to determine whether or not the hospital meets the applicable mileage criterion. In accordance with our previously established process, a hospital must make a written request for low-volume hospital status that is received by its MAC by September 1 immediately preceding the start of the Federal fiscal year for which the hospital is applying for low-volume hospital status in order for the applicable low-volume hospital payment adjustment to be applied to payments for its discharges for the fiscal year beginning on or after October 1 immediately following the request (that is, the start of the Federal fiscal year). For a hospital whose request for lowvolume hospital status is received after September 1, if the MAC determines the hospital meets the criteria to qualify as a low-volume hospital, the MAC will apply the applicable low-volume hospital payment adjustment to VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 determine payment for the hospital’s discharges for the fiscal year, effective prospectively within 30 days of the date of the MAC’s low-volume status determination. Specifically, for FY 2019, we are proposing that a hospital must submit a written request for low-volume hospital status to its MAC that includes sufficient documentation to establish that the hospital meets the applicable mileage and discharge criteria (as described earlier). Consistent with historical practice, for FY 2019, we are proposing that a hospital’s written request must be received by its MAC no later than September 1, 2018 in order for the low-volume hospital payment adjustment to be applied to payments for its discharges beginning on or after October 1, 2018. If a hospital’s written request for low-volume hospital status for FY 2019 is received after September 1, 2018, and if the MAC determines the hospital meets the criteria to qualify as a low-volume hospital, the MAC will apply the low-volume hospital payment adjustment to determine the payment for the hospital’s FY 2019 discharges, effective prospectively within 30 days of the date of the MAC’s low-volume hospital status determination. Under this process, a hospital receiving the low-volume hospital payment adjustment for FY 2018 may continue to receive a low-volume hospital payment adjustment without reapplying if it continues to meet the mileage criterion (which remains unchanged for FY 2019) and it also meets the applicable discharge criterion as modified for FY 2019 (that is, 3,800 or fewer total discharges). In this case, a hospital’s request can include a verification statement that it continues to meet the mileage criterion applicable for FY 2019. (Determination of meeting the discharge criterion is discussed earlier in this section.) We note that a hospital must continue to meet the applicable qualifying criteria as a lowvolume hospital (that is, the hospital must meet the applicable discharge criterion and mileage criterion for the fiscal year) in order to receive the payment adjustment in that fiscal year; that is, low-volume hospital status is not based on a ‘‘one-time’’ qualification (75 FR 50238 through 50275). We are inviting public comments on our proposal. with residents in an approved graduate medical education (GME) program in order to reflect the higher indirect patient care costs of teaching hospitals relative to nonteaching hospitals. The payment amount is determined by use of a statutorily specified adjustment factor. The regulations regarding the calculation of this additional payment, known as the IME adjustment, are located at § 412.105. We refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51680) for a full discussion of the IME adjustment and IME adjustment factor. Section 1886(d)(5)(B)(ii)(XII) of the Act provides that, for discharges occurring during FY 2008 and fiscal years thereafter, the IME formula multiplier is 1.35. Accordingly, for discharges occurring during FY 2019, the formula multiplier is 1.35. We estimate that application of this formula multiplier for the FY 2019 IME adjustment will result in an increase in IPPS payment of 5.5 percent for every approximately 10 percent increase in the hospital’s resident-to-bed ratio. 2. Proposed Technical Correction to Regulations at 42 CFR 412.105(f)(1)(vii) In the regulation governing the IME payment adjustment at § 412.105(f)(1)(vii), we have identified an inadvertent omission of a crossreference relating to an adjustment to a hospital’s full-time equivalent cap for a new medical residency training program. Section 412.105(f)(1)(vii) states that if a hospital establishes a new medical residency training program, as defined in § 413.79(l), the hospital’s full-time equivalent cap may be adjusted in accordance with the provisions of § 413.79(e)(1) through (e)(4). However, there is a paragraph (e)(5) under § 413.79 that we have inadvertently omitted that applies to the regulation at § 412.105(f)(1)(vii). In this proposed rule, we are proposing to correct this omission by removing the reference to ‘‘§ 413.79(e)(1) through (e)(4)’’ and adding in its place the reference ‘‘§ 413.79(e)’’ to make clear that the provisions of § 413.79(e)(1) through (e)(5) apply. This proposed revision is intended to correct the omission and is not intended to substantially change the underlying regulation. E. Indirect Medical Education (IME) Payment Adjustment Factor (§ 412.105) F. Proposed Payment Adjustment for Medicare Disproportionate Share Hospitals (DSHs) for FY 2019 (§ 412.106) 1. IME Payment Adjustment Factor for FY 2019 Under the IPPS, an additional payment amount is made to hospitals 1. General Discussion Section 1886(d)(5)(F) of the Act provides for additional Medicare payments to subsection (d) hospitals PO 00000 Frm 00224 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules that serve a significantly disproportionate number of low-income patients. The Act specifies two methods by which a hospital may qualify for the Medicare disproportionate share hospital (DSH) adjustment. Under the first method, hospitals that are located in an urban area and have 100 or more beds may receive a Medicare DSH payment adjustment if the hospital can demonstrate that, during its cost reporting period, more than 30 percent of its net inpatient care revenues are derived from State and local government payments for care furnished to needy patients with low incomes. This method is commonly referred to as the ‘‘Pickle method.’’ The second method for qualifying for the DSH payment adjustment, which is the most common, is based on a complex statutory formula under which the DSH payment adjustment is based on the hospital’s geographic designation, the number of beds in the hospital, and the level of the hospital’s disproportionate patient percentage (DPP). A hospital’s DPP is the sum of two fractions: The ‘‘Medicare fraction’’ and the ‘‘Medicaid fraction.’’ The Medicare fraction (also known as the ‘‘SSI fraction’’ or ‘‘SSI ratio’’) is computed by dividing the number of the hospital’s inpatient days that are furnished to patients who were entitled to both Medicare Part A and Supplemental Security Income (SSI) benefits by the hospital’s total number of patient days furnished to patients entitled to benefits under Medicare Part A. The Medicaid fraction is computed by dividing the hospital’s number of inpatient days furnished to patients who, for such days, were eligible for Medicaid, but were not entitled to benefits under Medicare Part A, by the hospital’s total number of inpatient days in the same period. Because the DSH payment adjustment is part of the IPPS, the statutory references to ‘‘days’’ in section 1886(d)(5)(F) of the Act have been interpreted to apply only to hospital acute care inpatient days. Regulations located at 42 CFR 412.106 govern the Medicare DSH payment adjustment and specify how the DPP is calculated as well as how beds and patient days are counted in determining the Medicare DSH payment adjustment. Under § 412.106(a)(1)(i), the number of beds for the Medicare DSH payment adjustment is determined in accordance with bed counting rules for the IME adjustment under § 412.105(b). Section 3133 of the Patient Protection and Affordable Care Act, as amended by section 10316 of the same Act and section 1104 of the Health Care and Education Reconciliation Act (Pub. L. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 111–152), added a section 1886(r) to the Act that modifies the methodology for computing the Medicare DSH payment adjustment. (For purposes of this proposed rule, we refer to these provisions collectively as section 3133 of the Affordable Care Act.) Beginning with discharges in FY 2014, hospitals that qualify for Medicare DSH payments under section 1886(d)(5)(F) of the Act receive 25 percent of the amount they previously would have received under the statutory formula for Medicare DSH payments. This provision applies equally to hospitals that qualify for DSH payments under section 1886(d)(5)(F)(i)(I) of the Act and those hospitals that qualify under the Pickle method under section 1886(d)(5)(F)(i)(II) of the Act. The remaining amount, equal to an estimate of 75 percent of what otherwise would have been paid as Medicare DSH payments, reduced to reflect changes in the percentage of individuals who are uninsured, is available to make additional payments to each hospital that qualifies for Medicare DSH payments and that has uncompensated care. The payments to each hospital for a fiscal year are based on the hospital’s amount of uncompensated care for a given time period relative to the total amount of uncompensated care for that same time period reported by all hospitals that receive Medicare DSH payments for that fiscal year. As provided by section 3133 of the Affordable Care Act, section 1886(r) of the Act requires that, for FY 2014 and each subsequent fiscal year, a subsection (d) hospital that would otherwise receive DSH payments made under section 1886(d)(5)(F) of the Act receives two separately calculated payments. Specifically, section 1886(r)(1) of the Act provides that the Secretary shall pay to such subsection (d) hospital (including a Pickle hospital) 25 percent of the amount the hospital would have received under section 1886(d)(5)(F) of the Act for DSH payments, which represents the empirically justified amount for such payment, as determined by the MedPAC in its March 2007 Report to Congress. We refer to this payment as the ‘‘empirically justified Medicare DSH payment.’’ In addition to this empirically justified Medicare DSH payment, section 1886(r)(2) of the Act provides that, for FY 2014 and each subsequent fiscal year, the Secretary shall pay to such subsection (d) hospital an additional amount equal to the product of three factors. The first factor is the difference between the aggregate amount of payments that would be PO 00000 Frm 00225 Fmt 4701 Sfmt 4702 20387 made to subsection (d) hospitals under section 1886(d)(5)(F) of the Act if subsection (r) did not apply and the aggregate amount of payments that are made to subsection (d) hospitals under section 1886(r)(1) of the Act for such fiscal year. Therefore, this factor amounts to 75 percent of the payments that would otherwise be made under section 1886(d)(5)(F) of the Act. The second factor is, for FY 2018 and subsequent fiscal years, 1 minus the percent change in the percent of individuals who are uninsured, as determined by comparing the percent of individuals who were uninsured in 2013 (as estimated by the Secretary, based on data from the Census Bureau or other sources the Secretary determines appropriate, and certified by the Chief Actuary of CMS), and the percent of individuals who were uninsured in the most recent period for which data are available (as so estimated and certified), minus 0.2 percentage point for FYs 2018 and 2019. The third factor is a percent that, for each subsection (d) hospital, represents the quotient of the amount of uncompensated care for such hospital for a period selected by the Secretary (as estimated by the Secretary, based on appropriate data), including the use of alternative data where the Secretary determines that alternative data are available which are a better proxy for the costs of subsection (d) hospitals for treating the uninsured, and the aggregate amount of uncompensated care for all subsection (d) hospitals that receive a payment under section 1886(r) of the Act. Therefore, this third factor represents a hospital’s uncompensated care amount for a given time period relative to the uncompensated care amount for that same time period for all hospitals that receive Medicare DSH payments in the applicable fiscal year, expressed as a percent. For each hospital, the product of these three factors represents its additional payment for uncompensated care for the applicable fiscal year. We refer to the additional payment determined by these factors as the ‘‘uncompensated care payment.’’ Section 1886(r) of the Act applies to FY 2014 and each subsequent fiscal year. In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50620 through 50647) and the FY 2014 IPPS interim final rule with comment period (78 FR 61191 through 61197), we set forth our policies for implementing the required changes to the Medicare DSH payment methodology made by section 3133 of the Affordable Care Act for FY 2014. In those rules, we noted that, because section 1886(r) of the Act modifies the E:\FR\FM\07MYP2.SGM 07MYP2 20388 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 payment required under section 1886(d)(5)(F) of the Act, it affects only the DSH payment under the operating IPPS. It does not revise or replace the capital IPPS DSH payment provided under the regulations at 42 CFR part 412, subpart M, which were established through the exercise of the Secretary’s discretion in implementing the capital IPPS under section 1886(g)(1)(A) of the Act. Finally, section 1886(r)(3) of the Act provides that there shall be no administrative or judicial review under section 1869, section 1878, or otherwise of any estimate of the Secretary for purposes of determining the factors described in section 1886(r)(2) of the Act or of any period selected by the Secretary for the purpose of determining those factors. Therefore, there is no administrative or judicial review of the estimates developed for purposes of applying the three factors used to determine uncompensated care payments, or the periods selected in order to develop such estimates. 2. Eligibility for Empirically Justified Medicare DSH Payments and Uncompensated Care Payments As explained earlier, the payment methodology under section 3133 of the Affordable Care Act applies to ‘‘subsection (d) hospitals’’ that would otherwise receive a DSH payment made under section 1886(d)(5)(F) of the Act. Therefore, hospitals must receive empirically justified Medicare DSH payments in a fiscal year in order to receive an additional Medicare uncompensated care payment for that year. Specifically, section 1886(r)(2) of the Act states that, in addition to the payment made to a subsection (d) hospital under section 1886(r)(1) of the Act, the Secretary shall pay to such subsection (d) hospitals an additional amount. Because section 1886(r)(1) of the Act refers to empirically justified Medicare DSH payments, the additional payment under section 1886(r)(2) of the Act is limited to hospitals that receive empirically justified Medicare DSH payments in accordance with section 1886(r)(1) of the Act for the applicable fiscal year. In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50622) and the FY 2014 IPPS interim final rule with comment period (78 FR 61193), we provided that hospitals that are not eligible to receive empirically justified Medicare DSH payments in a fiscal year will not receive uncompensated care payments for that year. We also specified that we would make a determination concerning eligibility for interim uncompensated care payments based on each hospital’s VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 estimated DSH status for the applicable fiscal year (using the most recent data that are available). We indicated that our final determination on the hospital’s eligibility for uncompensated care payments will be based on the hospital’s actual DSH status at cost report settlement for that payment year. In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50622) and the FY 2015 IPPS/LTCH PPS final rule (79 FR 50006), we specified our policies for several specific classes of hospitals within the scope of section 1886(r) of the Act. We refer readers to those two final rules for a detailed discussion of our policies. In summary, we specified the following: • Subsection (d) Puerto Rico hospitals that are eligible for DSH payments also are eligible to receive empirically justified Medicare DSH payments and uncompensated care payments under the new payment methodology (78 FR 50623 and 79 FR 50006). • Maryland hospitals are not eligible to receive empirically justified Medicare DSH payments and uncompensated care payments under the payment methodology of section 1886(r) of the Act because they are not paid under the IPPS. As discussed in the FY 2015 IPPS/ LTCH PPS final rule (79 FR 50007), effective January 1, 2014, the State of Maryland elected to no longer have Medicare pay Maryland hospitals in accordance with section 1814(b)(3) of the Act and entered into an agreement with CMS that Maryland hospitals would be paid under the Maryland AllPayer Model. The Maryland All-Payer Model was scheduled to end on December 31, 2018, but CMS and the State have agreed to extend it through December 31, 2019. Alternatively, CMS and the State may enter into an agreement to govern payments to Maryland hospitals under a new payment model. Under either scenario, Maryland hospitals would not be paid under the IPPS in FY 2019, and would remain ineligible to receive empirically justified Medicare DSH payments or uncompensated care payments under section 1886(r) of the Act. • Sole community hospitals (SCHs) that are paid under their hospitalspecific rate are not eligible for Medicare DSH payments. SCHs that are paid under the IPPS Federal rate receive interim payments based on what we estimate and project their DSH status to be prior to the beginning of the Federal fiscal year (based on the best available data at that time) subject to settlement through the cost report, and if they receive interim empirically justified Medicare DSH payments in a fiscal year, they also will receive interim PO 00000 Frm 00226 Fmt 4701 Sfmt 4702 uncompensated care payments for that fiscal year on a per discharge basis, subject as well to settlement through the cost report. Final eligibility determinations will be made at the end of the cost reporting period at settlement, and both interim empirically justified Medicare DSH payments and uncompensated care payments will be adjusted accordingly (78 FR 50624 and 79 FR 50007). • Medicare-dependent, small rural hospitals (MDHs) are paid based on the IPPS Federal rate or, if higher, the IPPS Federal rate plus 75 percent of the amount by which the Federal rate is exceeded by the updated hospitalspecific rate from certain specified base years (76 FR 51684). The IPPS Federal rate that is used in the MDH payment methodology is the same IPPS Federal rate that is used in the SCH payment methodology. Section 50205 of the Bipartisan Budget Act of 2018 (Pub. L. 115–123), enacted on February 9, 2018, extended the MDH program for discharges on or after October 1, 2017, through September 30, 2022. Because MDHs are paid based on the IPPS Federal rate, they continue to be eligible to receive empirically justified Medicare DSH payments and uncompensated care payments if their DPP is at least 15 percent, and we apply the same process to determine MDHs’ eligibility for empirically justified Medicare DSH and uncompensated care payments as we do for all other IPPS hospitals. Due to the extension of the MDH program, MDHs will continue to be paid based on the IPPS Federal rate or, if higher, the IPPS Federal rate plus 75 percent of the amount by which the Federal rate is exceeded by the updated hospitalspecific rate from certain specified base years. Accordingly, we will continue to make a determination concerning eligibility for interim uncompensated care payments based on each hospital’s estimated DSH status for the applicable fiscal year (using the most recent data that are available). Our final determination on the hospital’s eligibility for uncompensated care payments will be based on the hospital’s actual DSH status at cost report settlement for that payment year. In addition, as we do for all IPPS hospitals, we will calculate a numerator for Factor 3 for all MDHs, regardless of whether they are projected to be eligible for Medicare DSH payments during the fiscal year, but the denominator for Factor 3 will be based on the uncompensated care data from the hospitals that we have projected to be eligible for Medicare DSH payments during the fiscal year. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules • IPPS hospitals that elect to participate in the Bundled Payments for Care Improvement Advanced Initiative (BPCI Advanced) model starting October 1, 2018, will continue to be paid under the IPPS and, therefore, are eligible to receive empirically justified Medicare DSH payments and uncompensated care payments. For further information regarding the BPCI Advanced model, we refer readers to the CMS website at: https://innovation.cms.gov/initiatives/ bpci-advanced/. • IPPS hospitals that are participating in the Comprehensive Care for Joint Replacement Model (80 FR 73300) continue to be paid under the IPPS and, therefore, are eligible to receive empirically justified Medicare DSH payments and uncompensated care payments. • Hospitals participating in the Rural Community Hospital Demonstration Program are not eligible to receive empirically justified Medicare DSH payments and uncompensated care payments under section 1886(r) of the Act because they are not paid under the IPPS (78 FR 50625 and 79 FR 50008). The Rural Community Hospital Demonstration Program was originally authorized for a 5-year period by section 410A of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108–173), and extended for another 5-year period by sections 3123 and 10313 of the Affordable Care Act (Pub. L. 114–255). The period of performance for this 5year extension period ended December 31, 2016. Section 15003 of the 21st Century Cures Act (Pub. L. 114–255), enacted December 13, 2016, again amended section 410A of Public Law 108–173 to require a 10-year extension period (in place of the 5-year extension required by the Affordable Care Act), therefore requiring an additional 5-year participation period for the demonstration program. Section 15003 of Public Law 114–255 also required a solicitation for applications for additional hospitals to participate in the demonstration program. As a result, there are currently 30 hospitals participating in the demonstration program. Under the payment methodology that applies during the second 5 years of the extension period under the demonstration program, these hospitals do not receive empirically justified Medicare DSH payments, and they are excluded from receiving interim and final uncompensated care payments. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 3. Empirically Justified Medicare DSH Payments As we have discussed earlier, section 1886(r)(1) of the Act requires the Secretary to pay 25 percent of the amount of the Medicare DSH payment that would otherwise be made under section 1886(d)(5)(F) of the Act to a subsection (d) hospital. Because section 1886(r)(1) of the Act merely requires the program to pay a designated percentage of these payments, without revising the criteria governing eligibility for DSH payments or the underlying payment methodology, we stated in the FY 2014 IPPS/LTCH PPS final rule that we did not believe that it was necessary to develop any new operational mechanisms for making such payments. Therefore, in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50626), we implemented this provision by advising MACs to simply adjust the interim claim payments to the requisite 25 percent of what would have otherwise been paid. We also made corresponding changes to the hospital cost report so that these empirically justified Medicare DSH payments can be settled at the appropriate level at the time of cost report settlement. We provided more detailed operational instructions and cost report instructions following issuance of the FY 2014 IPPS/LTCH PPS final rule that are available on the CMS website at: https://www.cms.gov/ Regulations-and-Guidance/Guidance/ Transmittals/2014-Transmittals-Items/ R5P240.html. 4. Uncompensated Care Payments As we discussed earlier, section 1886(r)(2) of the Act provides that, for each eligible hospital in FY 2014 and subsequent years, the uncompensated care payment is the product of three factors. These three factors represent our estimate of 75 percent of the amount of Medicare DSH payments that would otherwise have been paid, an adjustment to this amount for the percent change in the national rate of uninsurance compared to the rate of uninsurance in 2013, and each eligible hospital’s estimated uncompensated care amount relative to the estimated uncompensated care amount for all eligible hospitals. Below we discuss the data sources and methodologies for computing each of these factors, our final policies for FYs 2014 through 2018, and our proposed policies for FY 2019. a. Calculation of Proposed Factor 1 for FY 2019 Section 1886(r)(2)(A) of the Act establishes Factor 1 in the calculation of PO 00000 Frm 00227 Fmt 4701 Sfmt 4702 20389 the uncompensated care payment. Section 1886(r)(2)(A) of the Act states that this factor is equal to the difference between: (1) The aggregate amount of payments that would be made to subsection (d) hospitals under section 1886(d)(5)(F) of the Act if section 1886(r) of the Act did not apply for such fiscal year (as estimated by the Secretary); and (2) the aggregate amount of payments that are made to subsection (d) hospitals under section 1886(r)(1) of the Act for such fiscal year (as so estimated). Therefore, section 1886(r)(2)(A)(i) of the Act represents the estimated Medicare DSH payments that would have been made under section 1886(d)(5)(F) of the Act if section 1886(r) of the Act did not apply for such fiscal year. Under a prospective payment system, we would not know the precise aggregate Medicare DSH payment amount that would be paid for a Federal fiscal year until cost report settlement for all IPPS hospitals is completed, which occurs several years after the end of the Federal fiscal year. Therefore, section 1886(r)(2)(A)(i) of the Act provides authority to estimate this amount, by specifying that, for each fiscal year to which the provision applies, such amount is to be estimated by the Secretary. Similarly, section 1886(r)(2)(A)(ii) of the Act represents the estimated empirically justified Medicare DSH payments to be made in a fiscal year, as prescribed under section 1886(r)(1) of the Act. Again, section 1886(r)(2)(A)(ii) of the Act provides authority to estimate this amount. Therefore, Factor 1 is the difference between our estimates of: (1) The amount that would have been paid in Medicare DSH payments for the fiscal year, in the absence of the new payment provision; and (2) the amount of empirically justified Medicare DSH payments that are made for the fiscal year, which takes into account the requirement to pay 25 percent of what would have otherwise been paid under section 1886(d)(5)(F) of the Act. In other words, this factor represents our estimate of 75 percent (100 percent minus 25 percent) of our estimate of Medicare DSH payments that would otherwise be made, in the absence of section 1886(r) of the Act, for the fiscal year. As we did for FY 2018, in this FY 2019 IPPS/LTCH PPS proposed rule, in order to determine Factor 1 in the uncompensated care payment formula for FY 2019, we are proposing to continue the policy established in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50628 through 50630) and in the FY 2014 IPPS interim final rule with comment period (78 FR 61194) of E:\FR\FM\07MYP2.SGM 07MYP2 20390 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules determining Factor 1 by developing estimates of both the aggregate amount of Medicare DSH payments that would be made in the absence of section 1886(r)(1) of the Act and the aggregate amount of empirically justified Medicare DSH payments to hospitals under 1886(r)(1) of the Act. These estimates will not be revised or updated after we know the final Medicare DSH payments for FY 2019. Therefore, in order to determine the two elements of proposed Factor 1 for FY 2019 (Medicare DSH payments prior to the application of section 1886(r)(1) of the Act, and empirically justified Medicare DSH payments after application of section 1886(r)(1) of the Act), for this proposed rule, we used the most recently available projections of Medicare DSH payments for the fiscal year, as calculated by CMS’ Office of the Actuary using the most recently filed Medicare hospital cost report with Medicare DSH payment information and the most recent Medicare DSH patient percentages and Medicare DSH payment adjustments provided in the IPPS Impact File. For purposes of calculating the proposed Factor 1 and modeling the impact of this FY 2019 IPPS/LTCH PPS proposed rule, we used the Office of the Actuary’s December 2017 Medicare DSH estimates, which were based on data from the December 2017 update of the Medicare Hospital Cost Report Information System (HCRIS) and the FY 2018 IPPS/LTCH PPS final rule IPPS Impact file, published in conjunction with the publication of the FY 2018 IPPS/LTCH PPS final rule. Because SCHs that are projected to be paid under their hospital-specific rate are excluded from the application of section 1886(r) of the Act, these hospitals also were excluded from the December 2017 Medicare DSH estimates. Furthermore, because section 1886(r) of the Act specifies that the uncompensated care payment is in addition to the empirically justified Medicare DSH payment (25 percent of DSH payments that would be made without regard to section 1886(r) of the Act), Maryland hospitals, which are not eligible to receive DSH payments, were also excluded from the Office of the Actuary’s December 2017 Medicare DSH estimates. The 30 hospitals participating in the Rural Community Hospital Demonstration Program were also excluded from these estimates because, under the payment methodology that applies during the second 5 years of the extension period, these hospitals are not eligible to receive empirically justified Medicare DSH payments or interim and final uncompensated care payments. For this proposed rule, using the data sources discussed above, the Office of the Actuary used the most recently submitted Medicare cost report data for FY 2015 to identify Medicare DSH payments and the most recent Medicare DSH payment adjustments provided in the Impact File published in conjunction with the publication of the FY 2018 IPPS/LTCH PPS final rule and applied update factors and assumptions for future changes in utilization and case-mix to estimate Medicare DSH payments for the upcoming fiscal year. The December 2017 Office of the Actuary estimate for Medicare DSH payments for FY 2019, without regard to the application of section 1886(r)(1) of the Act, was approximately $16.295 billion. This estimate excluded Maryland hospitals participating in the Maryland All-Payer Model, hospitals participating in the Rural Community Hospital Demonstration, and SCHs paid under their hospital-specific payment rate. Therefore, based on the December 2017 estimate, the estimate of empirically justified Medicare DSH payments for FY 2019, with the application of section 1886(r)(1) of the Act, is approximately $4.074 billion (or 25 percent of the total amount of estimated Medicare DSH payments for FY 2019). Under § 412.106(g)(1)(i) of the regulations, Factor 1 is the difference between these two estimates of the Office of the Actuary. Therefore, in this proposed rule, we are proposing that Factor 1 for FY 2019 will be $12,221,027,954.62, which is equal to 75 percent of the total amount of estimated Medicare DSH payments for FY 2018 ($16,294,703,939.49 minus $4,073,675,984.87). The Office of the Actuary’s estimates for FY 2019 for this proposed rule began with a baseline of $13.232 billion in Medicare DSH expenditures for FY 2015. The following table shows the factors applied to update this baseline through the current estimate for FY 2019: FACTORS APPLIED FOR FY 2016 THROUGH FY 2019 TO ESTIMATE MEDICARE DSH EXPENDITURES USING FY 2015 BASELINE FY 2016 2017 2018 2019 Update ......................................................... ......................................................... ......................................................... ......................................................... 1.009 1.0015 1.018088 1.0175 Discharges Case-mix 0.9864 0.9925 0.9921 1.011 1.031 1.004 1.005 1.005 Other Total 1.046 1.0657 1.02745 1.0005 1.073333 1.063531 1.04296 1.034353 Estimated DSH payment (in billions) * 14.202 15.105 15.754 16.295 daltland on DSKBBV9HB2PROD with PROPOSALS2 * Rounded. In this table, the discharges column shows the increase in the number of Medicare fee-for-service (FFS) inpatient hospital discharges. The figure for FY 2016 is based on Medicare claims data that have been adjusted by a completion factor. The discharge figure for FY 2017 is based on preliminary data for 2017. The discharge figures for FYs 2018 and 2019 are assumptions based on recent trends recovering back to the long-term trend and assumptions related to how many beneficiaries will be enrolled in VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Medicare Advantage (MA) plans. The case-mix column shows the increase in case-mix for IPPS hospitals. The casemix figures for FY 2016 and FY 2017 are based on actual data adjusted by a completion factor. The FY 2018 increase is based on preliminary data. The FY 2018 and FY 2019 increases are estimates and are based on the recommendation of the 2010–2011 Medicare Technical Review Panel. The ‘‘Other’’ column shows the increase in other factors that contribute to the PO 00000 Frm 00228 Fmt 4701 Sfmt 4702 Medicare DSH estimates. These factors include the difference between the total inpatient hospital discharges and the IPPS discharges, and various adjustments to the payment rates that have been included over the years but are not reflected in the other columns (such as the change in rates for the 2-midnight stay policy). In addition, the ‘‘Other’’ column includes a factor for the Medicaid expansion due to the Affordable Care Act. The factor for Medicaid expansion was developed E:\FR\FM\07MYP2.SGM 07MYP2 20391 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules using public information and statements for each State regarding its intent to implement the expansion. Based on this information, it is assumed that 50 percent of all individuals who were potentially newly eligible Medicaid enrollees in 2016 resided in States that had elected to expand Medicaid eligibility and, for 2017 and thereafter, that 55 percent of such individuals would reside in expansion States. In the future, these assumptions may change based on actual participation by States. For a discussion of general issues regarding Medicaid projections, we refer readers to the 2016 Actuarial Report on the Financial Outlook for Medicaid (https://www.cms.gov/ResearchStatistics-Data-and-Systems/Research/ ActuarialStudies/Downloads/ MedicaidReport2016.pdf). We note that, in developing their estimates of the Market basket percentage FY 2016 2017 2018 2019 ..................................................................................... ..................................................................................... ..................................................................................... ..................................................................................... Affordable Care Act payment reductions 2.4 2.7 2.7 2.8 effect of Medicaid expansion on Medicare DSH expenditures, our actuaries have assumed that the new Medicaid enrollees are healthier than the average Medicaid recipient and, therefore, use fewer hospital services. The table below shows the factors that are included in the ‘‘Update’’ column of the above table: Multifactor productivity adjustment ¥0.2 ¥0.75 ¥0.75 ¥0.75 Documentation and coding ¥0.5 ¥0.3 ¥0.6 ¥0.8 ¥0.8 ¥1.5 0.4588 0.5 Total update percentage 0.9 0.15 1.8088 1.75 Note: All numbers are based on the FY 2019 President’s Budget projections. We are inviting public comments on our proposed methodology for calculation of Factor 1 for FY 2019. b. Calculation of Proposed Factor 2 for FY 2019 daltland on DSKBBV9HB2PROD with PROPOSALS2 (1) Background Section 1886(r)(2)(B) of the Act establishes Factor 2 in the calculation of the uncompensated care payment. Specifically, section 1886(r)(2)(B)(i) of the Act provides that, for each of FYs 2014, 2015, 2016, and 2017, a factor equal to 1 minus the percent change in the percent of individuals under the age of 65 who are uninsured, as determined by comparing the percent of such individuals (1) who were uninsured in 2013, the last year before coverage expansion under the Affordable Care Act (as calculated by the Secretary based on the most recent estimates available from the Director of the Congressional Budget Office before a vote in either House on the Health Care and Education Reconciliation Act of 2010 that, if determined in the affirmative, would clear such Act for enrollment); and (2) who are uninsured in the most recent period for which data are available (as so calculated), minus 0.1 percentage point for FY 2014 and minus 0.2 percentage point for each of FYs 2015, 2016, and 2017. Section 1886(r)(2)(B)(ii) of the Act permits the use of a data source other than the CBO estimates to determine the percent change in the rate of uninsurance beginning in FY 2018. In addition, for FY 2018 and subsequent years, the statute does not require that the estimate of the percent of individuals who are uninsured be limited to individuals who are under 65. Specifically, the statute states that, for VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 FY 2018 and subsequent fiscal years, the second factor is 1 minus the percent change in the percent of individuals who are uninsured, as determined by comparing the percent of individuals who were uninsured in 2013 (as estimated by the Secretary, based on data from the Census Bureau or other sources the Secretary determines appropriate, and certified by the Chief Actuary of CMS) and the percent of individuals who were uninsured in the most recent period for which data are available (as so estimated and certified), minus 0.2 percentage point for FYs 2018 and 2019. (2) Proposed Methodology for Calculation of Factor 2 for FY 2019 As we discussed in the FY 2018 IPPS/ LTCH PPS final rule (82 FR 38197), in our analysis of a potential data source for the rate of uninsurance for purposes of computing Factor 2 in FY 2018, we considered the following: (a) The extent to which the source accounted for the full U.S. population; (b) the extent to which the source comprehensively accounted for both public and private health insurance coverage in deriving its estimates of the number of uninsured; (c) the extent to which the source utilized data from the Census Bureau; (d) the timeliness of the estimates; (e) the continuity of the estimates over time; (f) the accuracy of the estimates; and (g) the availability of projections (including the availability of projections using an established estimation methodology that would allow for calculation of the rate of uninsurance for the applicable Federal fiscal year). As we explained in the FY 2018 IPPS/ LTCH PPS final rule, these considerations are consistent with the PO 00000 Frm 00229 Fmt 4701 Sfmt 4702 statutory requirement that this estimate be based on data from the Census Bureau or other sources the Secretary determines appropriate and help to ensure the data source will provide reasonable estimates for the rate of uninsurance that are available in conjunction with the IPPS rulemaking cycle. We are proposing to use the same methodology as was used in FY 2018 to determine Factor 2 for FY 2019. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38197 and 38198), we explained that we determined the source that, on balance, best meets all of these considerations is the uninsured estimates produced by CMS’ Office of the Actuary (OACT) as part of the development of the National Health Expenditure Accounts (NHEA). The NHEA represents the government’s official estimates of economic activity (spending) within the health sector. The information contained in the NHEA has been used to study numerous topics related to the health care sector, including, but not limited to, changes in the amount and cost of health services purchased and the payers or programs that provide or purchase these services; the economic causal factors at work in the health sector; the impact of policy changes, including major health reform; and comparisons to other countries’ health spending. Of relevance to the determination of Factor 2 is that the comprehensive and integrated structure of the NHEA creates an ideal tool for evaluating changes to the health care system, such as the mix of the insured and uninsured because this mix is integral to the well-established NHEA methodology. Below we describe some aspects of the methodology used to develop the NHEA that were E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20392 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules particularly relevant in estimating the percent change in the rate of uninsurance for FY 2018 and that we believe continue to be relevant in developing the estimate for FY 2019. A full description of the methodology used to develop the NHEA is available on the CMS website at: https:// www.cms.gov/Research-Statistics-Dataand-Systems/Statistics-Trends-andReports/NationalHealthExpendData/ Downloads/DSM-15.pdf. The NHEA estimates of U.S. population reflect the Census Bureau’s definition of the resident-based population, which includes all people who usually reside in the 50 States or the District of Columbia, but excludes residents living in Puerto Rico and areas under U.S. sovereignty, members of the U.S. Armed Forces overseas, and U.S. citizens whose usual place of residence is outside of the United States, plus a small (typically less than 0.2 percent of population) adjustment to reflect Census undercounts. In past years, the estimates for Factor 2 were made using the CBO’s uninsured population estimates for the under 65 population. For FY 2018 and subsequent years, the statute does not restrict the estimate to the measurement of the percent of individuals under the age of 65 who are uninsured. Accordingly, as we explained in the FY 2018 IPPS/LTCH PPS proposed and final rules, we believe it is appropriate to use an estimate that reflects the rate of uninsurance in the United States across all age groups. In addition, we continue to believe that a resident-based population estimate more fully reflects the levels of uninsurance in the United States that influence uncompensated care for hospitals than an estimate that reflects only legal residents. The NHEA estimates of uninsurance are for the total U.S. population (all ages) and not by specific age cohort, such as the population under the age of 65. The NHEA includes comprehensive enrollment estimates for total private health insurance (PHI) (including direct and employer-sponsored plans), Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and other public programs, and estimates of the number of individuals who are uninsured. Estimates of total PHI enrollment are available for 1960 through 2016, estimates of Medicaid, Medicare, and CHIP enrollment are available for the length of the respective programs, and all other estimates (including the more detailed estimates of direct-purchased and employersponsored insurance) are available for 1987 through 2016. The NHEA data are publicly available on the CMS website at: https://www.cms.gov/Research- VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Statistics-Data-and-Systems/StatisticsTrends-and-Reports/ NationalHealthExpendData/. In order to compute Factor 2, the first metric that is needed is the proportion of the total U.S. population that was uninsured in 2013. In developing the estimates for the NHEA, OACT’s methodology included using the number of uninsured individuals for 1987 through 2009 based on the enhanced Current Population Survey (CPS) from the State Health Access Data Assistance Center (SHADAC). The CPS, sponsored jointly by the U.S. Census Bureau and the U.S. Bureau of Labor Statistics (BLS), is the primary source of labor force statistics for the population of the United States. (We refer readers to the website at: https:// www.census.gov/programs-surveys/ cps.html.) The enhanced CPS, available from SHADAC (available at https:// datacenter.shadac.org) accounts for changes in the CPS methodology over time. OACT further adjusts the enhanced CPS for an estimated undercount of Medicaid enrollees (a population that is often not fully captured in surveys that include Medicaid enrollees due to a perceived stigma associated with being enrolled in the Medicaid program or confusion about the source of their health insurance). To estimate the number of uninsured individuals for 2010 through 2014, OACT extrapolates from the 2009 CPS data using data from the National Health Interview Survey (NHIS). For both 2015 and 2016, OACT’s estimates of the rate of uninsurance are derived by applying the NHIS data on the proportion of uninsured individuals to the total U.S. population as described above. The NHIS is one of the major data collection programs of the National Center for Health Statistics (NCHS), which is part of the Centers for Disease Control and Prevention (CDC). The U.S. Census Bureau is the data collection agent for the NHIS. The NHIS results have been instrumental over the years in providing data to track health status, health care access, and progress toward achieving national health objectives. For further information regarding the NHIS, we refer readers to the CDC website at: https://www.cdc.gov/nchs/nhis/ index.htm. The next metrics needed to compute Factor 2 are projections of the rate of uninsurance in both calendar years 2018 and 2019. On an annual basis, OACT projects enrollment and spending trends for the coming 10-year period. Those projections (currently for years 2017 through 2026) use the latest NHEA historical data, which presently run PO 00000 Frm 00230 Fmt 4701 Sfmt 4702 through 2016. The NHEA projection methodology accounts for expected changes in enrollment across all of the categories of insurance coverage previously listed. The sources for projected growth rates in enrollment for Medicare, Medicaid, and CHIP include the latest Medicare Trustees Report, the Medicaid Actuarial Report, or other updated estimates as produced by OACT. Projected rates of growth in enrollment for private health insurance and the uninsured are based largely on OACT’s econometric models, which rely on the set of macroeconomic assumptions underlying the latest Medicare Trustees Report. Greater detail can be found in OACT’s report titled ‘‘Projections of National Health Expenditure: Methodology and Model Specification,’’ which is available on the CMS website at: https://www.cms.gov/ Research-Statistics-Data-and-Systems/ Statistics-Trends-and-Reports/ NationalHealthExpendData/ Downloads/ProjectionsMethodology.pdf. As discussed in the FY 2018 IPPS/ LTCH PPS final rule, the use of data from the NHEA to estimate the rate of uninsurance is consistent with the statute and meets the criteria we have identified for determining the appropriate data source. Section 1886(r)(2)(B)(ii) of the Act instructs the Secretary to estimate the rate of uninsurance for purposes of Factor 2 based on data from the Census Bureau or other sources the Secretary determines appropriate. The NHEA utilizes data from the Census Bureau; the estimates are available in time for the IPPS rulemaking cycle; the estimates are produced by OACT on an annual basis and are expected to continue to be produced for the foreseeable future; and projections are available for calendar year time periods that span the upcoming fiscal year. Timeliness and continuity are important considerations because of our need to be able to update this estimate annually. Accuracy is also a very important consideration and, all things being equal, we would choose the most accurate data source that sufficiently meets our other criteria. Using these data sources and the methodologies described above, OACT estimates that the uninsured rate for the historical, baseline year of 2013 was 14 percent and for CYs 2018 and 2019 is 9.1 percent and 9.6 percent, respectively. As required by section 1886(r)(2)(B)(ii) of the Act, the Chief Actuary of CMS has certified these estimates. As with the CBO estimates on which we based Factor 2 in prior fiscal years, the NHEA estimates are for a calendar year. In the rulemaking for FY 2014, E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules many commenters noted that the uncompensated care payments are made for the fiscal year and not on a calendar year basis and requested that CMS normalize the CBO estimate to reflect a fiscal year basis. Specifically, commenters requested that CMS calculate a weighted average of the CBO estimate for October through December 2013 and the CBO estimate for January through September 2014 when determining Factor 2 for FY 2014. We agreed with the commenters that normalizing the estimate to cover FY 2014 rather than CY 2014 would more accurately reflect the rate of uninsurance that hospitals would experience during the FY 2014 payment year. Accordingly, we estimated the rate of uninsurance for FY 2014 by calculating a weighted average of the CBO estimates for CY 2013 and CY 2014 (78 FR 50633). We have continued this weighted average approach in each fiscal year since FY 2014. We continue to believe that, in order to estimate the rate of uninsurance during a fiscal year more accurately, Factor 2 should reflect the estimated rate of uninsurance that hospitals will experience during the fiscal year, rather than the rate of uninsurance during only one of the calendar years that the fiscal year spans. Accordingly, we are proposing to continue to apply the weighted average approach used in past fiscal years in order to estimate the rate of uninsurance for FY 2019. OACT has certified this estimate of the fiscal year rate of uninsurance to be reasonable and appropriate for purposes of section 1886(r)(2)(B)(ii) of the Act. The calculation of the proposed Factor 2 for FY 2019 using a weighted average of OACT’s projections for CY 2018 and CY 2019 is as follows: • Percent of individuals without insurance for CY 2013: 14 percent. • Percent of individuals without insurance for CY 2018: 9.1 percent. • Percent of individuals without insurance for CY 2019: 9.6 percent. • Percent of individuals without insurance for FY 2019 (0.25 times 0.091) + (0.75 times 0.096): 9.48 percent. 1¥|((0.0948¥0.14)/0.14)| = 1¥0.3229 = 0.6771 (67.71 percent) 0.6771 (67.71 percent)¥.002 (0.2 percentage points for FY 2019 under section 1886(r)(2)(B)(ii) of the Act) = 0.6751 or 67.51 percent 0.6751 = Factor 2 Therefore, the proposed Factor 2 for FY 2019 is 67.51 percent. The proposed FY 2019 uncompensated care amount is: $12,221,027,954.62 × 0.6751 = $8,250,415,972.16. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Proposed FY 2019 Uncompensated Care Amount ......... $8,250,415,972.16 We are inviting public comments on our proposed methodology for calculation of Factor 2 for FY 2019. c. Calculation of Proposed Factor 3 for FY 2019 (1) Background Section 1886(r)(2)(C) of the Act defines Factor 3 in the calculation of the uncompensated care payment. As we have discussed earlier, section 1886(r)(2)(C) of the Act states that Factor 3 is equal to the percent, for each subsection (d) hospital, that represents the quotient of: (1) The amount of uncompensated care for such hospital for a period selected by the Secretary (as estimated by the Secretary, based on appropriate data (including, in the case where the Secretary determines alternative data are available that are a better proxy for the costs of subsection (d) hospitals for treating the uninsured, the use of such alternative data)); and (2) the aggregate amount of uncompensated care for all subsection (d) hospitals that receive a payment under section 1886(r) of the Act for such period (as so estimated, based on such data). Therefore, Factor 3 is a hospitalspecific value that expresses the proportion of the estimated uncompensated care amount for each subsection (d) hospital and each subsection (d) Puerto Rico hospital with the potential to receive Medicare DSH payments relative to the estimated uncompensated care amount for all hospitals estimated to receive Medicare DSH payments in the fiscal year for which the uncompensated care payment is to be made. Factor 3 is applied to the product of Factor 1 and Factor 2 to determine the amount of the uncompensated care payment that each eligible hospital will receive for FY 2014 and subsequent fiscal years. In order to implement the statutory requirements for this factor of the uncompensated care payment formula, it was necessary to determine: (1) The definition of uncompensated care or, in other words, the specific items that are to be included in the numerator (that is, the estimated uncompensated care amount for an individual hospital) and the denominator (that is, the estimated uncompensated care amount for all hospitals estimated to receive Medicare DSH payments in the applicable fiscal year); (2) the data source(s) for the estimated uncompensated care amount; and (3) the timing and manner of PO 00000 Frm 00231 Fmt 4701 Sfmt 4702 20393 computing the quotient for each hospital estimated to receive Medicare DSH payments. The statute instructs the Secretary to estimate the amounts of uncompensated care for a period based on appropriate data. In addition, we note that the statute permits the Secretary to use alternative data in the case where the Secretary determines that such alternative data are available that are a better proxy for the costs of subsection (d) hospitals for treating individuals who are uninsured. In the course of considering how to determine Factor 3 during the rulemaking process for FY 2014, the first year this provision was in effect, we considered defining the amount of uncompensated care for a hospital as the uncompensated care costs of that hospital and determined that Worksheet S–10 of the Medicare cost report potentially provides the most complete data regarding uncompensated care costs for Medicare hospitals. However, because of concerns regarding variations in the data reported on Worksheet S–10 and the completeness of these data, we did not use Worksheet S–10 data to determine Factor 3 for FY 2014, or for FYs 2015, 2016, or 2017. Instead, we believed that the utilization of insured low-income patients, as measured by patient days, would be a better proxy for the costs of hospitals in treating the uninsured and therefore appropriate to use in calculating Factor 3 for these years. Of particular importance in our decision-making was the relative newness of Worksheet S–10, which went into effect on May 1, 2010. At the time of the rulemaking for FY 2014, the most recent available cost reports would have been from FYs 2010 and 2011, which were submitted on or after May 1, 2010, when the new Worksheet S–10 went into effect. We believed that concerns about the standardization and completeness of the Worksheet S–10 data could be more acute for data collected in the first year of the Worksheet’s use (78 FR 50635). In addition, we believed that it would be most appropriate to use data elements that have been historically publicly available, subject to audit, and used for payment purposes (or that the public understands will be used for payment purposes) to determine the amount of uncompensated care for purposes of Factor 3 (78 FR 50635). At the time we issued the FY 2014 IPPS/LTCH PPS final rule, we did not believe that the available data regarding uncompensated care from Worksheet S–10 met these criteria and, therefore, we believed they were not reliable enough to use for determining FY 2014 uncompensated E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20394 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules care payments. For FYs 2015, 2016, and 2017, the cost reports used for calculating uncompensated care payments (that is, FYs 2011, 2012, and 2013) were also submitted prior to the time that hospitals were on notice that Worksheet S–10 could be the data source for calculating uncompensated care payments. Therefore, we believed it was also appropriate to use proxy data to calculate Factor 3 for these years. We indicated our belief that Worksheet S– 10 could ultimately serve as an appropriate source of more direct data regarding uncompensated care costs for purposes of determining Factor 3 once hospitals were submitting more accurate and consistent data through this reporting mechanism. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38202), we stated that we can no longer conclude that alternative data to the Worksheet S–10 are available for FY 2014 that are a better proxy for the costs of subsection (d) hospitals for treating individuals who are uninsured. Hospitals were on notice as of FY 2014 that Worksheet S–10 could eventually become the data source for CMS to calculate uncompensated care payments. Furthermore, hospitals’ cost reports from FY 2014 had been publicly available for some time, and CMS had analyses of Worksheet S–10, conducted both internally and by stakeholders, demonstrating that Worksheet S–10 accuracy had improved over time. Analyses performed by MedPAC had already shown that the correlation between audited uncompensated care data from 2009 and the data from the FY 2011 Worksheet S–10 was over 0.80, as compared to a correlation of approximately 0.50 between the audited uncompensated care data and 2011 Medicare SSI and Medicaid days. Based on this analysis, MedPAC concluded that use of Worksheet S–10 data was already better than using Medicare SSI and Medicaid days as a proxy for uncompensated care costs, and that the data on Worksheet S–10 would improve over time as the data are actually used to make payments (81 FR 25090). In addition, a 2007 MedPAC analysis of data from the Government Accountability Office (GAO) and the American Hospital Association (AHA) had suggested that Medicaid days and low-income Medicare days are not an accurate proxy for uncompensated care costs (80 FR 49525). Subsequent analyses from Dobson/ DaVanzo, originally commissioned by CMS for the FY 2014 rulemaking and updated in later years, compared Worksheet S–10 and IRS Form 990 data and assessed the correlation in Factor 3s derived from each of the data sources. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 The most recent update of this analysis, which used IRS Form 990 data for tax years 2011, 2012, and 2013 (the latest available years) as a benchmark, found that the amounts for Factor 3 derived using the IRS Form 990 and Worksheet S–10 data continue to be highly correlated and that this correlation continues to increase over time, from 0.80 in 2011 to 0.85 in 2013. This empirical evidence led us to believe that we had reached a tipping point in FY 2018 with respect to the use of the Worksheet S–10 data. We refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38201 through 38203) for a complete discussion of these analyses. We found further evidence for this tipping point when we examined changes to the FY 2014 Worksheet S–10 data submitted by hospitals following the publication of the FY 2017 IPPS/ LTCH PPS final rule. In the FY 2017 IPPS/LTCH PPS final rule, as part of our ongoing quality control and data improvement measures for the Worksheet S–10, we referred readers to Change Request 9648, Transmittal 1681, titled ‘‘The Supplemental Security Income (SSI)/Medicare Beneficiary Data for Fiscal Year 2014 for Inpatient Prospective Payment System (IPPS) Hospitals, Inpatient Rehabilitation Facilities (IRFs), and Long Term Care Hospitals (LTCHs),’’ issued on July 15, 2016 (available at: https://www.cms.gov/ Regulations-and-Guidance/Guidance/ Transmittals/Downloads/ R1681OTN.pdf). In this transmittal, as part of the process for ensuring complete submission of Worksheet S–10 by all eligible DSH hospitals, we instructed MACs to accept amended Worksheets S–10 for FY 2014 cost reports submitted by hospitals (or initial submissions of Worksheet S–10 if none had been submitted previously) and to upload them to the Health Care Provider Cost Report Information System (HCRIS) in a timely manner. The transmittal stated that, for revisions to be considered, hospitals were required to submit their amended FY 2014 cost report containing the revised Worksheet S–10 (or a completed Worksheet S–10 if no data were included on the previously submitted cost report) to the MAC no later than September 30, 2016. For the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19949 through 19950), we examined hospitals’ FY 2014 cost reports to see if the Worksheet S–10 data on those cost reports had changed as a result of the opportunity for hospitals to submit revised Worksheet S–10 data for FY 2014. Specifically, we compared hospitals’ FY 2014 Worksheet S–10 data as they existed in the first PO 00000 Frm 00232 Fmt 4701 Sfmt 4702 quarter of CY 2016 with data from the fourth quarter of CY 2016. We found that the FY 2014 Worksheet S–10 data had changed over that time period for approximately one quarter of hospitals that receive uncompensated care payments. The fact that the Worksheet S–10 data changed for such a significant number of hospitals following a review of the cost report data they originally submitted and that the revised Worksheet S-10 information is available to be used in determining uncompensated care costs contributed to our belief that we could no longer conclude that alternative data are available that are a better proxy than the Worksheet S–10 data for the costs of subsection (d) hospitals for treating individuals who are uninsured. We also recognized commenters’ concerns that, in using Medicaid days as part of the proxy for uncompensated care, it would be possible for hospitals in States that choose to expand Medicaid to receive higher uncompensated care payments because they may have more Medicaid patient days than hospitals in a State that does not choose to expand Medicaid. Because the earliest Medicaid expansions under the Affordable Care Act began in 2014, the 2011, 2012, and 2013 Medicaid days used to calculate uncompensated care payments in FYs 2015, 2016, and 2017 are the latest available data on Medicaid utilization that do not reflect the effects of these Medicaid expansions. Accordingly, if we had used only lowincome insured days to estimate uncompensated care in FY 2018, we would have needed to hold the time period of these data constant and use data on Medicaid days from 2011, 2012, and 2013 in order to avoid the risk of any redistributive effects arising from the decision to expand Medicaid in certain States. As a result, we would have been using older data that may provide a less accurate proxy for the level of uncompensated care being furnished by hospitals, contributing to our growing concerns regarding the continued use of low-income insured days as a proxy for uncompensated care costs in FY 2018. In summary, as we stated in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38203), when weighing the new information regarding the growing correlation between the Worksheet S–10 data and IRS 990 data that became available to us after the FY 2017 rulemaking in conjunction with the information regarding Worksheet S–10 data and the low-income days proxy that we had analyzed as part of our consideration of this issue in prior rulemaking, we determined that we E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 could no longer conclude that alternative data to the Worksheet S–10 are available for FY 2014 that are a better proxy for the costs of subsection (d) hospitals for treating individuals who are uninsured. We also stated that we believe that continued use of Worksheet S–10 will improve the accuracy and consistency of the reported data, especially in light of CMS’ concerted efforts to allow hospitals to review and resubmit their Worksheet S–10 data for past years and the use of select audit protocols to trim aberrant data and replace them with more reasonable amounts. We also committed to continue to work with stakeholders to address their concerns regarding the accuracy of the reporting of uncompensated care costs through provider education and refinement of the instructions to Worksheet S–10. (2) Methodology Used To Calculate Factor 3 in Prior Fiscal Years Section 1886(r)(2)(C) of the Act governs both the selection of the data to be used in calculating Factor 3, and also allows the Secretary the discretion to determine the time periods from which we will derive the data to estimate the numerator and the denominator of the Factor 3 quotient. Specifically, section 1886(r)(2)(C)(i) of the Act defines the numerator of the quotient as the amount of uncompensated care for such hospital for a period selected by the Secretary. Section 1886(r)(2)(C)(ii) of the Act defines the denominator as the aggregate amount of uncompensated care for all subsection (d) hospitals that receive a payment under section 1886(r) of the Act for such period. In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50638), we adopted a process of making interim payments with final cost report settlement for both the empirically justified Medicare DSH payments and the uncompensated care payments required by section 3133 of the Affordable Care Act. Consistent with that process, we also determined the time period from which to calculate the numerator and denominator of the Factor 3 quotient in a way that would be consistent with making interim and final payments. Specifically, we must have Factor 3 values available for hospitals that we estimate will qualify for Medicare DSH payments and for those hospitals that we do not estimate will qualify for Medicare DSH payments but that may ultimately qualify for Medicare DSH payments at the time of cost report settlement. In the FY 2017 IPPS/LTCH PPS final rule, in order to mitigate undue fluctuations in the amount of uncompensated care payments to VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 hospitals from year to year and smooth over anomalies between cost reporting periods, we finalized a policy of calculating a hospital’s share of uncompensated care based on an average of data derived from three cost reporting periods instead of one cost reporting period. As explained in the preamble to the FY 2017 IPPS/LTCH PPS final rule (81 FR 56957 through 56959), instead of determining Factor 3 using data from a single cost reporting period as we did in FY 2014, FY 2015, and FY 2016, we used data from three cost reporting periods (Medicaid data for FYs 2011, 2012, and 2013 and SSI days from the three most recent available years of SSI utilization data (FYs 2012, 2013, and 2014)) to compute Factor 3 for FY 2017. Furthermore, instead of determining a single Factor 3 as we had done since the first year of the uncompensated care payment in FY 2014, we calculated an individual Factor 3 for each of the three cost reporting periods, which we then averaged by the number of cost reporting years with data to compute the final Factor 3 for a hospital. Under this policy, if a hospital had merged, we would combine data from both hospitals for the cost reporting periods in which the merger was not reflected in the surviving hospital’s cost report data to compute Factor 3 for the surviving hospital. Moreover, to further reduce undue fluctuations in a hospital’s uncompensated care payments, if a hospital filed multiple cost reports beginning in the same fiscal year, we combined data from the multiple cost reports so that a hospital could have a Factor 3 calculated using more than one cost report within a cost reporting period. We codified these changes for FY 2017 by amending the regulations at § 412.106(g)(1)(iii)(C). For FY 2018, consistent with the methodology used to calculate Factor 3 for FY 2017, we advanced the time period of the data used in the calculation of Factor 3 forward by one year and used data from FY 2012, FY 2013, and FY 2014 cost reports. We believed it would not be appropriate to use Worksheet S–10 data for periods prior to FY 2014, as hospitals did not have notice that the Worksheet S–10 data from these years might be used for purposes of computing uncompensated care payments and, as a result, may not have fully appreciated the importance of reporting their uncompensated care costs as completely and accurately as possible. Rather, for cost reporting periods prior to FY 2014, we believed it would be appropriate to continue to use low-income insured days. Accordingly, PO 00000 Frm 00233 Fmt 4701 Sfmt 4702 20395 for the time period consisting of three cost reporting years, including FY 2014, FY 2013, and FY 2012, we used Worksheet S–10 data for the FY 2014 cost reporting period and the lowincome insured days proxy data for the two earlier cost reporting periods. In order to perform this calculation, we drew three sets of data (2 years of Medicaid utilization data and 1 year of Worksheet S–10 data) from the most recent available HCRIS extract. Accordingly, for FY 2018, in addition to the Worksheet S–10 data for FY 2014, we used Medicaid days from FY 2012 and FY 2013 cost reports and FY 2014 and FY 2015 SSI ratios. We also continued to use FY 2012 cost report data submitted to CMS by IHS and Tribal hospitals to determine FY 2012 Medicaid days for those hospitals. (Cost report data from IHS and Tribal hospitals are included in HCRIS beginning in FY 2013 and are no longer submitted separately.) We continued the policies that were finalized in the FY 2015 IPPS/LTCH PPS final rule (79 FR 50020) to address several specific issues concerning the process and data to be employed in determining Factor 3 in the case of hospital mergers as well as the policies finalized in the FY 2017 IPPS/ LTCH PPS final rule concerning multiple cost reports beginning in the same fiscal year (81 FR 56957). To limit the effect of aberrant reporting of Worksheet S–10 data, we identified those hospitals that had high levels of reported uncompensated care relative to the total operating costs reported on the cost report. Specifically, for those hospitals where the ratio of uncompensated care costs relative to total operating costs for the hospital’s 2014 cost report exceeded 50 percent, we determined the ratio of uncompensated care costs relative to total operating costs from the hospital’s 2015 cost report and applied that ratio to the hospital’s total operating costs from the 2014 cost report to determine an adjusted amount of uncompensated care costs for FY 2014. We then substituted this amount for the FY 2014 Worksheet S–10 data when determining Factor 3 for FY 2018. We believed that this approach, which affected the data for three hospitals in FY 2018, balanced our desire to exclude potentially aberrant data from a small number of hospitals in the determination of Factor 3 with our concern regarding inappropriately reducing FY 2018 uncompensated care payments to a hospital that may have a legitimately high ratio. We stated our intent to consider in future rulemaking whether continued use of this adjustment or an E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20396 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules alternative adjustment is necessary for subsequent years. Due to concerns that the uncompensated care data reported by Puerto Rico hospitals and Indian Health Service and Tribal hospitals need to be examined further, we concluded that the Worksheet S–10 data for these hospitals should not be used to determine Factor 3 for FY 2018 (82 FR 38209). We also determined that Worksheet S–10 data should not be used to determine Factor 3 for All-Inclusive Rate Providers, whose CCRs were deemed to be potentially erroneous and in need of further examination (82 FR 38212). For the reasons described earlier related to the impact of the Medicaid expansion beginning in FY 2014, we did not believe it was appropriate to calculate a Factor 3 for these hospitals using FY 2014 low-income insured days. Because we did not believe it was appropriate to use the FY 2014 uncompensated care data for these hospitals and we also did not believe it was appropriate to use the FY 2014 low-income insured days, we concluded that the best proxy for the costs of Puerto Rico, Indian Health Service and Tribal hospitals, and All-Inclusive Rate Providers for treating the uninsured is the low-income insured days data for FY 2012 and FY 2013. Accordingly, in order to determine the Factor 3 for FY 2018 for these hospitals, we calculated an average of three individual Factor 3s using the Factor 3 calculated using FY 2013 cost report data twice and the Factor 3 calculated using FY 2012 cost report data once. We believed it was appropriate to double-weight the Factor 3 calculated using FY 2013 data as it reflects the most recent available information regarding the hospital’s low-income insured days before any expansion of Medicaid. We stated that we would reexamine the use of the Worksheet S–10 data for Puerto Rico, Indian Health Service and Tribal hospitals, and All-Inclusive Rate Providers as part of the FY 2019 rulemaking. In addition, for Puerto Rico hospitals, we continued to use a proxy for SSI days consisting of 14 percent of a hospital’s Medicaid days, as was first applied in FY 2017 (82 FR 38209). Therefore, for FY 2018, we computed a Factor 3 for each hospital by— • Step 1: Calculating Factor 3 using the low-income insured days proxy based on FY 2012 cost report data and the FY 2014 SSI ratio; • Step 2: Calculating Factor 3 using the insured low-income days proxy based on FY 2013 cost report data and the FY 2015 SSI ratio; • Step 3: Calculating Factor 3 based on the FY 2014 Worksheet S–10 data (or VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 using the Factor 3 calculated in Step 2 for Puerto Rico, IHS/Tribal hospitals, and All-Inclusive Rate Providers); and • Step 4: Averaging the Factor 3 values from Steps 1, 2, and 3; that is, adding the Factor 3 values from FY 2012, FY 2013, and FY 2014 for each hospital, and dividing that amount by the number of cost reporting periods with data to compute an average Factor 3. We stated our belief that if we were to propose to continue this methodology for FY 2019 and FY 2020, this approach would have the effect of transitioning the incorporation of data from Worksheet S–10 into the calculation of Factor 3 because an additional year of Worksheet S–10 data would be incorporated into the calculation of Factor 3 in FY 2019, and the use of low-income insured days would be phased out by FY 2020. (3) Proposed Methodology for Calculating Factor 3 for FY 2019 Since the publication of the FY 2018 IPPS/LTCH PPS final rule, we have continued to monitor the reporting of Worksheet S–10 data in anticipation of using Worksheet S–10 data from hospitals’ FY 2014 and FY 2015 cost reports in the calculation of Factor 3. We acknowledge the concerns that have been raised regarding the instructions for Worksheet S–10. In particular, commenters have expressed concerns that the lack of clear and concise line level instructions prevents accurate and consistent data from being reported on Worksheet S–10. We note that, in November 2016, CMS issued Transmittal 10, which clarified and revised the instructions for the Worksheet S–10, including the instructions regarding the reporting of charity care charges. Transmittal 10 is available for download on the CMS website at: https://www.cms.gov/ Regulations-and-Guidance/Guidance/ Transmittals/Downloads/R10P240.pdf. In Transmittal 10, we clarified that hospitals may include discounts given to uninsured patients who meet the hospital’s charity care criteria in effect for that cost reporting period. This clarification applied to cost reporting periods beginning prior to October 1, 2016, as well as cost reporting periods beginning on or after October 1, 2016. As a result, nothing prohibits a hospital from considering a patient’s insurance status as a criterion in its charity care policy. A hospital determines its own financial criteria as part of its charity care policy. The instructions for the Worksheet S–10 set forth that hospitals may include discounts given to uninsured patients, including patients PO 00000 Frm 00234 Fmt 4701 Sfmt 4702 with coverage from an entity that does not have a contractual relationship with the provider, who meet the hospital’s charity care criteria in effect for that cost reporting period. In addition, we revised the instructions for the Worksheet S–10 for cost reporting periods beginning on or after October 1, 2016, to provide that charity care charges must be determined in accordance with the hospital’s charity care criteria/policy and written off in the cost reporting period, regardless of the date of service. During the FY 2018 rulemaking, commenters pointed out that, in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56963), CMS agreed to institute certain additional quality control and data improvement measures prior to moving forward with incorporating Worksheet S–10 data into the calculation of Factor 3. However, the commenters indicated that, aside from a brief window in 2016 for hospitals to submit corrected data on their FY 2014 Worksheet S–10 by September 30, 2016, and the issuance of revised instructions (Transmittal 10) in November 2016 that are applicable to cost reports beginning on or after October 1, 2016, CMS has not implemented any additional quality control and data improvement measures. We stated in the FY 2018 IPPS/LTCH PPS final rule that we would continue to work with our stakeholders to address their concerns regarding the reporting of uncompensated care through provider education and refinement of the instructions to the Worksheet S–10 (82 FR 38206). On September 29, 2017, we issued Transmittal 11, which clarified the definitions and instructions for uncompensated care, non-Medicare bad debt, nonreimbursed Medicare bad debt, and charity care, as well as modified the calculations relative to uncompensated care costs and added edits to ensure the integrity of the data reported on Worksheet S–10. Transmittal 11 is available for download on the CMS website at: https://www.cms.gov/ Regulations-and-Guidance/Guidance/ Transmittals/2017Downloads/ R11p240.pdf. We further clarified that full or partial discounts given to uninsured patients who meet the hospital’s charity care policy or financial assistance policy/uninsured discount policy (hereinafter referred to as Financial Assistance Policy or FAP) may be included on Line 20, Column 1 of Worksheet S–10. These clarifications apply to cost reporting periods beginning on or after October 1, 2013. We also modified the application of the CCR. We specified that the CCR will not be applied to the deductible and E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules coinsurance amounts for insured patients approved for charity care and nonreimbursed Medicare bad debt. The CCR will be applied to the charges for uninsured patients approved for charity care or an uninsured discount, non-Medicare bad debt, and charges for noncovered days exceeding a length of stay limit imposed on patients covered by Medicaid or other indigent care programs. We also provided another opportunity for hospitals to submit revisions to their Worksheet S–10 data for FY 2014 and FY 2015 cost reports. We refer readers to Change Request 10378, Transmittal 1981, titled ‘‘Fiscal Year (FY) 2014 and 2015 Worksheet S–10 Revisions: Further Extension for All Inpatient Prospective Payment System (IPPS) Hospitals,’’ issued on December 1, 2017 (available at: https://www.cms.gov/Regulationsand-Guidance/Guidance/Transmittals/ 2017Downloads/R1981OTN.pdf). In this transmittal, we instructed MACs to accept amended Worksheets S–10 for FY 2014 and FY 2015 cost reports submitted by hospitals (or initial submissions of Worksheet S–10 if none have been submitted previously) and to upload them to the Health Care Provider Cost Report Information System (HCRIS) in a timely manner. The transmittal states that hospitals must submit their amended FY 2014 and FY 2015 cost reports containing the revised Worksheet S–10 (or a completed Worksheet S–10 if no data were included on the previously submitted cost report) to the MAC no later than January 2, 2018. We note that this transmittal supersedes the previous deadline in Change Request 10026, which was issued on June 30, 2017, with respect to the dates by which hospitals must submit their revised or newly submitted Worksheet S–10 in order to be considered for purposes of this rulemaking, as well as the dates by which MACs must accept these data and upload a revised cost report to HCRIS. Under the deadlines established in Change Request 10378, in order for revisions to be guaranteed consideration for this FY 2019 proposed rule, hospitals had to submit their amended FY 2014 and FY 2015 cost reports containing the revised Worksheet S–10 (or a completed Worksheet S–10 if no data were included on the previously submitted cost report) to the MAC no later than December 1, 2017. We also indicated that, all revised data received by December 1, 2017, would be considered for purposes of this FY 2019 IPPS/LTCH PPS proposed rule, and all revised data received by the January 2, 2018 deadline would be available to be VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 considered for purposes of the FY 2019 IPPS/LTCH PPS final rule. However, for this FY 2019 IPPS/LTCH PPS proposed rule, we were able to include data updated in HCRIS through February 15, 2018. Specifically, in light of the impact of the hurricanes in 2017 (Harvey, Irma, Maria, and Nate) and the extension of the deadline for resubmitting Worksheets S–10 for FY 2014 and FY 2015 through January 2, 2018, we believed it was appropriate to use data updated through February 15, 2018, rather than the December 2017 HCRIS update, which we typically use for the annual proposed rule. We believe that providing the additional time to allow cost reports that may have been delayed due to these unique circumstances to be included in our calculations for purposes of this FY 2019 proposed rule, enabled us to use more accurate uncompensated care cost data in calculating the proposed Factor 3 values. We examined hospitals’ FY 2014 and FY 2015 cost reports to determine if the Worksheet S–10 data on those cost reports had changed as a result of the additional opportunity for hospitals to submit revised Worksheet S–10 data for FY 2014 and FY 2015. Specifically, we compared hospitals’ FY 2014 and FY 2015 Worksheet S–10 data as reported in the fourth quarter of CY 2016 update of HCRIS to the February 15, 2018 update of HCRIS. We examined hospitals’ cost report data to determine if the Worksheet S–10 data had changed for any of the following lines: Total bad debt from Line 26, charity care for uninsured patients from Line 20, Column 1, or charity care for insured patients from Line 20, Column 2. Based on our review, we found that Worksheet S–10 data for both FY 2014 and FY 2015 had changed over that time period for approximately one-half of the hospitals that were eligible to receive Medicare DSH payments in FY 2018. The fact that the Worksheet S–10 data changed for such a significant number of hospitals following the opportunity to review their previously submitted cost report data and submit a revised Worksheet S– 10, and that this revised Worksheet S– 10 information is available to be used in determining uncompensated care costs, contributes to our determination that it is appropriate to continue to incorporate Worksheet S–10 data into the calculation of Factor 3 values for hospitals that are eligible to receive Medicare DSH payments. With the additional steps we have taken to ensure the accuracy and consistency of the data reported on Worksheet S–10 since the publication of the FY 2018 IPPS/LTCH PPS final rule, PO 00000 Frm 00235 Fmt 4701 Sfmt 4702 20397 we continue to believe that we can no longer conclude that alternative data to the Worksheet S–10 are currently available for FY 2014 that are a better proxy for the costs of subsection (d) hospitals for treating individuals who are uninsured. Similarly, the actions that we have taken to improve the accuracy and consistency of the Worksheet S–10 data, including the opportunity for hospitals to resubmit Worksheet S–10 data for FY 2015, lead us to conclude that there are no alternative data to the Worksheet S–10 data currently available for FY 2015 that are a better proxy for the costs of subsection (d) hospitals for treating uninsured individuals. As such, we are proposing to advance the time period of the data used in the calculation of Factor 3 forward by 1 year and to use data from FY 2013, FY 2014, and FY 2015 cost reports to determine Factor 3 for FY 2019. For the reasons we described earlier, we continue to believe it is inappropriate to use Worksheet S– 10 data for periods prior to FY 2014. Rather, for cost reporting periods prior to FY 2014, we believe it is appropriate to continue to use low-income insured days. Accordingly, with a time period that includes 3 cost reporting years consisting of FY 2015, FY 2014, and FY 2013, we are proposing to use Worksheet S–10 data for the FY 2014 and FY 2015 cost reporting periods and the low-income insured days proxy data for the earliest cost reporting period. As in previous years, in order to perform this calculation, we will draw three sets of data (1 year of Medicaid utilization data and 2 years of Worksheet S–10 data) from the most recent available HCRIS extract, which, is the HCRIS data updated through February 15, 2018, for purposes of this FY 2019 proposed rule. We expect to use the March 2018 update of HCRIS for the final rule. However, due to unique circumstances regarding the impact of the hurricanes in 2017 (Harvey, Irma, Maria, and Nate) and the extension of the deadline to resubmit Worksheet S–10 data through January 2, 2018, and the subsequent impact on the MAC review timeline, we may consider using data updated through May 31, 2018, in the final rule, if necessary. Accordingly, for FY 2019, in addition to the Worksheet S–10 data for FY 2014 and FY 2015, we are proposing to use Medicaid days from FY 2013 cost reports and FY 2016 SSI ratios. We note that cost report data from Indian Health Service and Tribal hospitals are included in HCRIS beginning in FY 2013 and no longer need to be incorporated from a separate data source. We also are proposing to E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20398 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules continue the policies that were finalized in the FY 2015 IPPS/LTCH PPS final rule (79 FR 50020) to address several specific issues concerning the process and data to be employed in determining Factor 3 in the case of hospital mergers. In addition, we are proposing to continue the policies that were finalized in the FY 2018 IPPS/LTCH PPS final rule to address technical considerations related to the calculation of Factor 3 and the incorporation of Worksheet S–10 data (82 FR 38213 through 38220). With respect to the calculation of Factor 3, we adopted a policy under which we annualize Medicaid days data and uncompensated care cost data reported on the Worksheet S–10 if a hospital’s cost report does not equal 12 months of data. As in FY 2018, for FY 2019, we are not proposing to annualize SSI days because we do not obtain these data from hospital cost reports in HCRIS. Rather, we obtain these data from the latest available SSI ratios posted on the Medicare DSH homepage (https:// www.cms.gov/Medicare/Medicare-feefor-service-payment/AcuteInpatientPPS/ dsh.html), which are aggregated at the hospital level and do not include the information needed to determine if the data should be annualized. To address the effects of averaging Factor 3s calculated for 3 separate fiscal years, we apply a scaling factor to the Factor 3 values of all DSH eligible hospitals such that total uncompensated care payments are consistent with the estimated amount available to make uncompensated care payments for the applicable fiscal year. With respect to the incorporation of Worksheet S–10, we believe that the definition of uncompensated care adopted in FY 2018 is still appropriate because it incorporates the most commonly used factors within uncompensated care as reported by stakeholders, including charity care costs and non-Medicare bad debt costs, and correlates to Line 30 of Worksheet S–10. Therefore, we are again proposing that, for purposes of calculating Factor 3 and uncompensated care costs in FY 2019, ‘‘uncompensated care’’ would be defined as the amount on Line 30 of Worksheet S–10, which is the cost of charity care (Line 23) and the cost of non-Medicare bad debt and nonreimbursable Medicare bad debt (Line 29). We note that we are proposing to discontinue the policy finalized in the FY 2017 IPPS/LTCH PPS final rule concerning multiple cost reports beginning in the same fiscal year (81 FR 56957). Under this policy, we would first combine the data across the multiple cost reports before determining VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 the difference between the start date and the end date to determine if annualization is needed. The policy was developed in response to commenters’ concerns regarding the unique circumstances of hospitals that filed cost reports that are shorter or longer than 12 months. As we explained in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56957 through 56959) and in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19953), we believed that, for hospitals that file multiple cost reports beginning in the same year, combining the data from these cost reports had the benefit of supplementing the data of hospitals that filed cost reports that are less than 12 months, such that the basis of their uncompensated care payments and those of hospitals that filed full-year 12-month cost reports would be more equitable. We now believe that concerns about the equitability of the data used as the basis of hospital uncompensated care payments are more thoroughly addressed by the policy finalized in the FY 2018 IPPS/LTCH PPS final rule, under which CMS annualizes the Medicaid days and uncompensated care cost data of hospital cost reports that do not equal 12 months of data. Based on our experience, we believe that in many cases where a hospital files two cost reports beginning in the same fiscal year, combining the data across multiple cost reports before annualizing would yield a similar result to choosing the longer of the two cost reports and then annualizing the data if the cost report is shorter or longer than 12 months. Furthermore, even in cases where a hospital files more than one cost report beginning in the same fiscal year, it is not uncommon for one of those cost reports to span exactly 12 months. In this case, if Factor 3 is determined using only the full 12-month cost report, annualization would be unnecessary as there would already be 12 months of data. Therefore, for FY 2019, we believe it is appropriate to propose to eliminate the additional step of combining data across multiple cost reports if a hospital filed more than one cost report beginning in the same fiscal year. Instead, for purposes of calculating Factor 3, we would use data from the cost report that is equivalent to 12 months or, if no such cost report exists, the cost report that is closest to 12 months and annualize the data. Furthermore, we acknowledge that, in rare cases, a hospital may have more than one cost report beginning in one fiscal year, where one report also spans the entirety of the following fiscal year such that the hospital has no cost report beginning in that fiscal year. For PO 00000 Frm 00236 Fmt 4701 Sfmt 4702 instance, a hospital’s cost reporting period may have started towards the end of FY 2012 but cover the duration of FY 2013. In these rare situations, we are proposing to use data from the cost report that spans both fiscal years in the Factor 3 calculation for the latter fiscal year as the hospital would already have data from the preceding cost report that could be used to determine Factor 3 for the previous fiscal year. We also are proposing to continue to apply statistical trims to anomalous hospital CCRs using the methodology adopted in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38217 through 38219), where we stated our belief that, just as we apply trims to hospitals’ CCRs to eliminate anomalies when calculating outlier payments for extraordinarily high cost cases (§ 412.84(h)(3)(ii)), it is appropriate to apply statistical trims to the CCRs on Worksheet S–10, Line 1, that are considered anomalies. Specifically, § 412.84(h)(3)(ii) states that the Medicare contractor may use a statewide CCR for hospitals whose operating or capital CCR is in excess of 3 standard deviations above the corresponding national geometric mean (that is, the CCR ‘‘ceiling’’). This mean is recalculated annually by CMS and published in the proposed and final IPPS rules each year. Similar to the process used in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38217 through 38218) for trimming CCRs, we are proposing the following steps for FY 2019: Step 1: Remove Maryland hospitals. In addition, we would remove All-Inclusive Rate Providers because they have charge structures that differ from other IPPS hospitals. For providers that did not report a CCR on Worksheet S–10, Line 1, we would assign them the statewide average CCR in step 5 below. Step 2: For each fiscal year (FY 2014 and FY 2015), calculate a CCR ‘‘ceiling’’ with the following data: For each IPPS hospital that was not removed in Step 1 (including non-DSH eligible hospitals), we would use cost report data to calculate a CCR by dividing the total costs on Worksheet C, Part I, Line 202, Column 3 by the charges reported on Worksheet C, Part I, Line 202, Column 8. (Combining data from multiple cost reports from the same FY is no longer necessary in this step, as the longer cost report would be selected). The ceiling would be calculated as 3 standard deviations above the national geometric mean CCR for the applicable fiscal year. This approach is consistent with the methodology for calculating the CCR ceiling used for high-cost outliers. Remove all hospitals that exceed the E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules ceiling so that these aberrant CCRs do not skew the calculation of the statewide average CCR. (Based on the information currently available to us, this trim would remove 5 hospitals that have a CCR above the calculated ceiling of 1.031 for FY 2014 and 9 hospitals that have a CCR above the calculated ceiling of 0.93 for FY 2015.) Step 3: Using the CCRs for the remaining hospitals in Step 2, determine the urban and rural statewide average CCRs for FY 2014 and for FY 2015 for hospitals within each State (including non-DSH eligible hospitals), weighted by the sum of total inpatient discharges and outpatient visits from Worksheet S–3, Part I, Line 14, Column 14. Step 4: Assign the appropriate statewide average CCR (urban or rural) calculated in Step 3 to all hospitals with a CCR for the applicable fiscal year greater than 3 standard deviations above the corresponding national geometric mean for that fiscal year (that is, the CCR ‘‘ceiling’’). The statewide average CCR would therefore be applied to 14 hospitals, of which 2 hospitals in FY 2014 have Worksheet S–10 data and 5 hospitals in FY 2015 have Worksheet S– 10 data. After applying the applicable trims to a hospital’s CCR as appropriate, we would calculate a hospital’s uncompensated care costs for the applicable fiscal year as being equal to Line 30, which is the sum of Line 23, Column 3 and Line 29, as follows: Hospital Uncompensated Care Costs = Line 30 (Line 23, Column 3 + Line 29), which is equal to— [(Line 1 CCR (as adjusted, if applicable) × Uninsured patient charity care Line 20, Column 1)¥(Payments received from uninsured patient charity care Line 22, Column 1)] + [(Insured patient charity care Line 20, Column 2)¥Insured patient charges from days beyond length of stay limit * (1¥(Line 1 CCR (as adjusted, if applicable)))¥(Payments received from insured patient charity care Line 22, Column 2)] + [(Line 1 CCR (as adjusted, if applicable) × NonMedicare bad debt Line 28) + (Medicare allowable bad debts Line 27.01¥Medicare reimbursable bad debt Line 27)]. Similar in concept to the policy that we adopted for FY 2018, for FY 2019, we continue to believe that uncompensated care costs that represent an extremely high ratio of a hospital’s total operating expenses (such as the ratio of 50 percent used in the FY 2018 IPPS/LTCH PPS final rule) may be VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 potentially aberrant, and that using the ratio of uncompensated care costs to total operating costs to identify potentially aberrant data when determining Factor 3 amounts has merit. That is, we continue to believe that, in the rare situations where a hospital has a ratio of uncompensated care costs to total operating expenditures that is extremely high, the issue is most likely with the hospital’s uncompensated care costs and not its total operating costs. We have instructed the MACs to review situations where a hospital has an extremely high ratio of uncompensated care costs to total operating costs with the hospital. We do not intend to make the MACs’ review protocols public. As stated in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56964), for program integrity reasons, CMS desk review and audit protocols are confidential and are for CMS and MAC use only. If the hospital cannot justify its reported uncompensated care amount, we believe it would be appropriate to utilize data from another fiscal year to address the potentially aberrant Worksheet S–10 data for FY 2014 or FY 2015. As we have previously indicated, we do not believe it would be appropriate to use Worksheet S–10 data from years prior to FY 2014 in the determination of Factor 3. Therefore, the most widely available Worksheet S–10 data available to us if a hospital has an extremely high ratio of uncompensated care costs to total operating expenses based on its FY 2014 or FY 2015 Worksheet S–10 data are the FY 2015 and FY 2016 Worksheet S–10 data. Accordingly, similar in concept to the approach we used in FY 2018, in cases where a hospital’s uncompensated care costs for FY 2014 are an extremely high ratio of its total operating costs and the hospital cannot justify the amount it reported, we are proposing to determine the ratio of FY 2015 uncompensated care costs to FY 2015 total operating expenses from the hospital’s FY 2015 cost report and apply that ratio to the FY 2014 total operating expenses from the hospital’s FY 2014 cost report to determine an adjusted amount of uncompensated care costs for FY 2014. We would then use this adjusted amount to determine Factor 3 for FY 2019. Similarly, if a hospital has uncompensated care costs for FY 2015 that are an extremely high ratio of its total operating costs for that year and the hospital cannot justify its reported amount, we are proposing to follow the same methodology using data from the hospital’s FY 2016 cost report to determine an adjusted amount of uncompensated care costs for FY 2015. That is, we would determine the ratio of PO 00000 Frm 00237 Fmt 4701 Sfmt 4702 20399 FY 2016 uncompensated care costs to FY 2016 total operating expenses from a hospital’s FY 2016 cost report and apply that ratio to the FY 2015 total operating expenses from the hospital’s FY 2015 cost report to determine an adjusted amount of uncompensated care costs for FY 2015. We would then use this adjusted amount when determining Factor 3 for FY 2019. We have tentatively included the data for hospitals that have a high ratio of uncompensated care costs to total operating expenses when calculating Factor 3 for this proposed rule. We note, however, that our calculation of Factor 3 for the final rule will be contingent on the results of the ongoing MAC reviews of these hospitals. In the event those reviews necessitate supplemental data edits, we would incorporate such edits in the final rule for the purpose of correcting aberrant data. For FY 2019, we also believe that situations where there were extremely large dollar increases or decreases in a hospital’s uncompensated care costs when it resubmitted its FY 2014 Worksheet S–10 or FY 2015 Worksheet S–10 data, or when the data it had previously submitted were reprocessed by the MAC, may reflect potentially aberrant data and warrant further review. For example, although we do not make our actual review protocols public, we might conclude that it would be appropriate to review hospitals with increases or decreases in uncompensated care costs in the top 1 percent of such changes. We have instructed our MACs to review these situations with each hospital. If it is determined after this review that an increase or decrease in uncompensated care costs cannot be justified by the hospital, we are proposing to follow the same approach that we are proposing to use to address situations when a hospital’s ratio of its uncompensated care costs to its operating expenses is extremely high and the hospital cannot justify its reported amount. Specifically, if after review, the increase or decrease in uncompensated care costs for FY 2014 or FY 2015 cannot be justified by the hospital, we would determine the ratio of the uncompensated care costs to total operating expenses from the hospital’s cost report for the subsequent fiscal year and apply that ratio to the total operating expenses from the hospital’s resubmitted cost report with the large increase or decrease in uncompensated care payments to determine an adjusted amount of uncompensated care costs for the applicable fiscal year. We have tentatively included the data for E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20400 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules hospitals where there was an extremely large increase or decrease in uncompensated care payments when calculating Factor 3 for this proposed rule. However, we note that our calculation of Factor 3 for the final rule will be contingent on the results of the ongoing MAC reviews of these hospitals. In the event those reviews necessitate supplemental data edits, we would incorporate such edits in the final rule for the purpose of correcting aberrant data. For Indian Health Service and Tribal hospitals, subsection (d) Puerto Rico hospitals, and All-Inclusive Rate Providers, we are proposing to continue the policy we first adopted for FY 2018 of substituting data regarding FY 2013 low-income insured days for the Worksheet S–10 data when determining Factor 3. As we discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38209), the use of data from Worksheet S–10 to calculate the uncompensated care amount for Indian Health Service and Tribal hospitals may jeopardize these hospitals’ uncompensated care payments due to their unique funding structure. With respect to Puerto Rico hospitals, we continue to agree with concerns raised by commenters that the uncompensated care data reported by these hospitals need to be further examined before the data are used to determine Factor 3 (82 FR 38209). Finally, the CCRs for All-Inclusive Rate Providers are potentially erroneous and still in need of further examination before they can be used in the determination of uncompensated care amounts for purposes of Factor 3 (82 FR 38212). For the reasons described earlier related to the impact of the Medicaid expansion beginning in FY 2014, we also continue to believe that it is inappropriate to calculate a Factor 3 using FY 2014 and FY 2015 low-income insured days. Because we do not believe it is appropriate to use the FY 2014 or FY 2015 uncompensated care data for these hospitals and we also do not believe it is appropriate to use the FY 2014 or FY 2015 low-income insured days, the best proxy for the costs of Indian Health Service and Tribal hospitals, subsection (d) Puerto Rico hospitals, and All-Inclusive Rate Providers for treating the uninsured continues to be the low-income insured days data for FY 2013. Accordingly, for these hospitals, we are proposing to determine Factor 3 only on the basis of low-income insured days for FY 2013. We believe this approach is appropriate as the FY 2013 data reflect the most recent available information regarding these hospitals’ low-income insured VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 days before any expansion of Medicaid. We are not making any proposals with respect to the calculation of Factor 3 for FY 2020 and will reexamine the use of the Worksheet S–10 data for Indian Health Service and Tribal hospitals, subsection (d) Puerto Rico hospitals, and All-Inclusive Rate Providers as part of the FY 2020 rulemaking. In addition, because we are continuing to use 1 year of insured low-income patient days as a proxy for uncompensated care and residents of Puerto Rico are not eligible for SSI benefits, we are proposing to continue to use a proxy for SSI days consisting of 14 percent of a hospital’s Medicaid days for Puerto Rico hospitals, as finalized in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56953 through 56956). Therefore, for FY 2019, we are proposing to compute Factor 3 for each hospital by— Step 1: Calculating Factor 3 using the low-income insured days proxy based on FY 2013 cost report data and the FY 2016 SSI ratio (or, for Puerto Rico hospitals, 14 percent of the hospital’s FY 2013 Medicaid days); Step 2: Calculating Factor 3 based on the FY 2014 Worksheet S–10 data; Step 3: Calculating Factor 3 based on the FY 2015 Worksheet S–10 data; and Step 4: Averaging the Factor 3 values from Steps 1, 2, and 3; that is, adding the Factor 3 values from FY 2013, FY 2014, and FY 2015 for each hospital, and dividing that amount by the number of cost reporting periods with data to compute an average Factor 3 (or for Puerto Rico hospitals, Indian Health Service and Tribal hospitals, and AllInclusive Rate Providers using the Factor 3 value from Step 1). We also are proposing to amend the regulations at § 412.106(g)(1)(iii)(C) by adding a new paragraph (5) to reflect this proposed methodology for computing Factor 3 for FY 2019. We note that, if a hospital does not have both Medicaid days for FY 2013 and SSI days for FY 2016 available for use in the calculation of Factor 3 in Step 1, we consider the hospital not to have data available for the fiscal year, and will remove that fiscal year from the calculation and divide by the number of years with data. A hospital will be considered to have both Medicaid days and SSI days data available if it reports zero days for either component of the Factor 3 calculation in Step 1. However, if a hospital is missing data due to not filing a cost report in one of the applicable fiscal years, we will divide by the remaining number of fiscal years. Although we are not making any proposals with respect to the development of Factor 3 for FY 2020 PO 00000 Frm 00238 Fmt 4701 Sfmt 4702 and subsequent fiscal years, the above methodology would have the effect of fully transitioning the incorporation of data from Worksheet S–10 into the calculation of Factor 3 if used in FY 2020. Starting with 1 year of Worksheet S–10 data in FY 2018, an additional year of Worksheet S–10 data could be incorporated into the calculation of Factor 3 in FY 2019 if our proposed methodology is finalized, and the use of low-income insured days would be phased out by FY 2020 if the same methodology is proposed and finalized for that year. It is also possible that when we examine the FY 2016 Worksheet S–10 data, we may determine that the use of multiple years of Worksheet S–10 data is no longer necessary in calculating Factor 3 for FY 2020. For new hospitals that do not have data for any of the three cost reporting periods used in the Factor 3 calculation, we are proposing to continue to apply the new hospital policy finalized in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50643). That is, the hospital would not receive either interim empirically justified Medicare DSH payments or interim uncompensated care payments. However, if the hospital is later determined to be eligible to receive empirically justified Medicare DSH payments based on its FY 2019 cost report, the hospital would also receive an uncompensated care payment calculated using a Factor 3, where the numerator is the uncompensated care costs reported on Worksheet S–10 of the hospital’s FY 2019 cost report, and the denominator is the sum of uncompensated care costs reported on Worksheet S–10 of all DSH eligible hospitals’ FY 2015 cost reports. Due to the uncertainty regarding the completeness and accuracy of the FY 2019 uncompensated care cost data at the time this calculation would need to be performed, we believe it would be more appropriate to use the sum of the uncompensated care costs reported on Worksheet S–10 of all DSH eligible hospitals’ cost reports from FY 2015, the most recent year of the 3-year time period used in the development of Factor 3, to determine the denominator of Factor 3 for new hospitals. We note that, given the time period of the data used to calculate Factor 3, any hospitals with a CCN established after October 1, 2015 would be considered new and subject to this policy. As we have done for every proposed and final rule beginning in FY 2014, in conjunction with both the FY 2019 IPPS/LTCH PPS proposed rule and final rule, we will publish on the CMS website a table listing Factor 3 for all E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules hospitals that we estimate would receive empirically justified Medicare DSH payments in FY 2019 (that is, those hospitals that would receive interim uncompensated care payments during the fiscal year), and for the remaining subsection (d) hospitals and subsection (d) Puerto Rico hospitals that have the potential of receiving a Medicare DSH payment in the event that they receive an empirically justified Medicare DSH payment for the fiscal year as determined at cost report settlement. We note that, at the time of the development of this proposed rule, the FY 2016 SSI ratios were available. Accordingly, for modeling purposes, we computed the proposed Factor 3 for each hospital using the most recent available data regarding SSI days from the FY 2016 SSI ratios. We also will publish a supplemental data file containing a list of the mergers that we are aware of and the computed uncompensated care payment for each merged hospital. Hospitals have 60 days from the date of public display of this FY 2019 IPPS/LTCH PPS proposed rule to review the table and supplemental data file published on the CMS website in conjunction with the proposed rule and to notify CMS in writing of any inaccuracies. Comments can be submitted to the CMS inbox at Section3133DSH@cms.hhs.gov. We will address these comments as appropriate in the table and the supplemental data file that we will publish on the CMS website in conjunction with the publication of the FY 2019 IPPS/LTCH PPS final rule. After the publication of the FY 2019 IPPS/LTCH PPS final rule, hospitals will have until August 31, 2018, to review and submit comments on the accuracy of the table and supplemental data file published in conjunction with the final rule. Comments may be submitted to the CMS inbox at Section3133DSH@ cms.hhs.gov through August 31, 2018, and any changes to Factor 3 will be posted on the CMS website prior to October 1, 2018. We are inviting public comments on our proposed methodology for calculating Factor 3 for FY 2019, including, but not limited to, our proposed use of the FY 2013 low-income insured days proxy data, and the FY 2014 and FY 2015 Worksheet S–10 data. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 G. Sole Community Hospitals (SCHs) and Medicare-Dependent, Small Rural Hospitals (MDHs) (§§ 412.90, 412.92, and 412.108) 1. Background on SCHs and MDHs Sections 1886(d)(5)(D) and (d)(5)(G) of the Act provide special payment protections under the IPPS to sole community hospitals (SCHs) and Medicare-dependent, small rural hospitals (MDHs), respectively. Section 1886(d)(5)(D)(iii) of the Act defines an SCH in part as a hospital that the Secretary determines is located more than 35 road miles from another hospital or that, by reason of factors such as isolated location, weather conditions, travel conditions, or absence of other like hospitals (as determined by the Secretary), is the sole source of inpatient hospital services reasonably available to Medicare beneficiaries. The regulations at 42 CFR 412.92 set forth the criteria that a hospital must meet to be classified as a SCH. For more information on SCHs, we refer readers to the FY 2009 IPPS/LTCH PPS final rule (74 FR 43894 through 43897). Section 1886(d)(5)(G)(iv) of the Act defines an MDH as a hospital that is located in a rural area, or is located in an all-urban State but meets one of the specified statutory criteria for rural reclassification (as added by section 50205 of the Bipartisan Budget Act of 2018, Pub. L. 115–123), has not more than 100 beds, is not an SCH, and has a high percentage of Medicare discharges (that is, not less than 60 percent of its inpatient days or discharges during the cost reporting period beginning in FY 1987 or two of the three most recently audited cost reporting periods for which the Secretary has a settled cost report were attributable to inpatients entitled to benefits under Part A). The regulations at 42 CFR 412.108 set forth the criteria that a hospital must meet to be classified as an MDH. For additional information on the MDH program and the payment methodology, we refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51683 through 51684). 2. Implementation of Legislation Relating to the MDH Program a. Legislative Extension of the MDH Program Since the extension of the MDH program through FY 2012 provided by section 3124 of the Affordable Care Act, the MDH program has been extended by subsequent legislation. Most recently, section 50205 of the Bipartisan Budget Act of 2018 (Pub. L. 115–123), enacted on February 9, 2018, extended the MDH PO 00000 Frm 00239 Fmt 4701 Sfmt 4702 20401 program for FYs 2018 through 2022 (that is, for discharges occurring before October 1, 2022). (Additional information on the extensions of the MDH program after FY 2012 and through FY 2017 can be found in the FY 2016 interim final rule with comment period (80 FR 49596).) Section 50205 of the Bipartisan Budget Act of 2018 amended sections 1886(d)(5)(G)(i) and 1886(d)(5)(G)(ii)(II) of the Act to provide for an extension of the MDH program for discharges occurring on or after October 1, 2017, through FY 2022 (that is, for discharges occurring on or before September 30, 2022). We note that, consistent with the previous extensions of the MDH program, generally, a provider that was classified as an MDH as of September 30, 2017, was reinstated as an MDH effective October 1, 2017, with no need to reapply for MDH classification. However, if the MDH had classified as an SCH or cancelled its rural classification under § 412.103(g) effective on or after October 1, 2017, the effective date of MDH status may not be retroactive to October 1, 2017. We refer readers to the notice (CMS–1677–N) that appears elsewhere in this issue of the Federal Register for more information on the MDH extension in FY 2018. b. MDH Classification for Hospitals in All-Urban States In addition to extending the MDH program, section 50205 amended section 1886(d)(5)(G)(iv) of the Act to include in the definition of an MDH a hospital that is located in a State with no rural area (as defined in paragraph (2)(D)) and satisfies any of the criteria in section 1886(d)(8)(E)(ii)(I), (II), or (III) of the Act, in addition to the other qualifying criteria. Section 50205 of the Bipartisan Budget Act of 2018 also amended section 1886(d)(5)(G)(iv) of the Act by adding a provision following section 1886(d)(5)(G)(iv)(IV), which specifies that new section 1886(d)(5)(G)(iv)(I)(bb) of the Act applies for purposes of the MDH payment under sections 1886(d)(5)(G)(ii) of the Act (that is, 75 percent of the amount by which the Federal rate is exceeded by the updated hospital-specific rate from certain specified base years) only for discharges of a hospital occurring on or after the effective date of a determination of MDH status made with respect to the hospital after the date of the enactment of this provision. We note that, under existing regulations, the effective date for a determination of MDH status is 30 days after the date the MAC provides written notification of MDH status. We E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20402 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules also note that we are proposing in section IV.G.3. of the preamble of this proposed rule to change the effective date for a determination of MDH status. If the proposal is finalized, the policy would not be effective until FY 2019 (October 1, 2018) and therefore would not apply to hospitals applying for MDH classification before October 1, 2018. Furthermore, this new provision also specifies that, for purposes of new section 1886(d)(5)(G)(iv)(I)(bb) of the Act, section 1886(d)(8)(E)(ii)(II) of the Act shall be applied by inserting ‘‘as of January 1, 2018,’’ after ‘‘such State’’ each place it appears. Section 50205 of the Bipartisan Budget Act also made conforming amendments to sections 1886(b)(3)(D) (in the language proceeding clause (i)) and 1886(b)(3)(D)(iv) of the Act. Section 1886(d)(8)(E) of the Act provides for an IPPS hospital that is located in an urban area to be reclassified as a rural hospital if it submits an application in accordance with CMS’ established process and meets certain criteria at section 1886(d)(8)(E)(ii)(I), (II), or (III) of the Act (these statutory criteria are implemented in the regulations at § 412.103(a)(1) through (3)). A subsection (d) hospital that is located in an urban area and meets one of the three criteria under § 412.103(a) can reclassify as rural and is treated as being located in the rural area of the State in which it is located. However, a hospital that is located in an all-urban State is ineligible to reclassify as rural in accordance with the provisions of § 412.103 because the State in which it is located does not have a rural area into which it can reclassify. Prior to the amendments made by the Bipartisan Budget Act, a hospital could only qualify for MDH status if it was either geographically located in a rural area or if it reclassified as rural under the regulations at § 412.103. This precluded hospitals in all-urban States from being classified as MDHs. The newly added provision in the Bipartisan Budget Act of 2018 allows a hospital in an all-urban State to be eligible for MDH classification if, in addition to meeting the other criteria for MDH eligibility, it satisfies one of the criteria for rural reclassification under section 1886(d)(8)(E)(ii)(I), (II), or (III) of the Act (as of January 1, 2018, where applicable), notwithstanding its location in an all-urban State. As noted earlier, prior to the enactment of the Bipartisan Budget Act of 2018, a hospital in an all-urban State was ineligible for MDH classification because it could not reclassify as rural. With the new provision added by section 50205 of the Bipartisan Budget VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Act of 2018, a hospital in an all-urban State can apply and be approved for MDH classification if it can demonstrate that: (1) It meets the criteria at § 412.103(a)(1) or (3) or the criteria at § 412.103(a)(2) as of January 1, 2018, for the sole purposes of qualifying for MDH classification; and (2) it meets the MDH classification criteria at § 412.108(a)(1)(i) through (iii), which, as amended, would be redesignated as § 412.108(a)(1)(i) through (iv). We note that for a hospital in an all-urban State to demonstrate that it would have qualified for rural reclassification notwithstanding its location in an allurban State (as of January 1, 2018, where applicable), it must follow the applicable procedures for rural reclassification and MDH classification at § 412.103(b) and § 412.108(b), respectively. We also note that we are not proposing any changes to the reclassification criteria under § 412.103 and that a hospital in an all-urban State that qualifies as an MDH under the newly added statutory provision will not be considered as having reclassified as rural but only as having satisfied one of the criteria at section 1886(d)(8)(E)(ii)(I), (II), or (III) of the Act (as of January 1, 2018, as applicable) for purposes of MDH classification, in accordance with amended section 1886(d)(5)(G)(iv) of the Act. We are proposing to make conforming changes to the regulations at § 412.108(a)(1) and (c)(2)(iii) to reflect the extension of the MDH program for FY 2018 through FY 2022 and the additional MDH classification provision made for hospitals located in all-urban States by section 50205 of the Bipartisan Budget Act of 2018. We are proposing a similar conforming change to § 412.90(j) to reflect the extension of the MDH program through FY 2022. 3. Proposal Regarding Change to SCH and MDH Classification Status Effective Dates The regulations at 42 CFR 412.92(b)(2)(i) set forth an effective date for SCH classification of 30 days after the date of CMS’ written notification of approval. Similarly, § 412.92(b)(2)(iv) specifies that a hospital classified as an SCH receives a payment adjustment effective with discharges occurring on or after 30 days after the date of CMS’ approval of the classification. Section 401 of the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act (BBRA) of 1999 (Pub. L. 106–113, Appendix F) amended section 1886(d)(8) of the Act to add paragraph (E) which authorizes reclassification of certain urban hospitals as rural if the hospital applies for such status and PO 00000 Frm 00240 Fmt 4701 Sfmt 4702 meets certain criteria. The effective date for rural reclassification status under section 1886(d)(8)(E) of the Act is set forth at 42 CFR 412.103(d)(1) as the filing date, which is the date CMS receives the reclassification application (§ 412.103(b)(5)). One way that an urban hospital can reclassify as rural under § 412.103 (specifically, § 412.103(a)(3)) is if the hospital would qualify as a rural referral center (RRC) as set forth in § 412.96, or as an SCH as set forth in § 412.92, if the hospital were located in a rural area. A geographically urban hospital may simultaneously apply for reclassification as rural under § 412.103(a)(3) by meeting the criteria for SCH status (other than being located in a rural area), and apply to obtain SCH status under § 412.92 based on that acquired rural reclassification. However, the rural reclassification is effective as of the filing date, while the SCH status is effective 30 days after approval. In addition, while § 412.103(c) states that the CMS Regional Office will review the application and notify the hospital of its approval or disapproval of the request within 60 days of the filing date, the regulations do not set a timeframe by which CMS must decide on an SCH request. Therefore, geographically urban hospitals that obtain rural reclassification under § 412.103 for the purposes of obtaining SCH status may face a payment disadvantage because they are paid as rural until the SCH application is approved and the SCH classification and payment adjustment become effective 30 days after approval. To minimize the lag between the effective date of rural reclassification under § 412.103 and the effective date for SCH status, we are proposing to revise § 412.92(b)(2)(i) and (b)(2)(iv) so that the effective date for SCH classification and for the payment adjustment would be the date that CMS receives the complete SCH application, effective for SCH applications received on or after October 1, 2018. A complete application includes a request and all supporting documentation needed to demonstrate that the hospital meets criteria for SCH status as of the date of application, which includes documentation of rural reclassification in the case of a geographically urban hospital. For an application to be complete, all criteria must be met as of the date CMS receives the SCH application. For example, a hospital applying for SCH status on the basis of a § 412.103 rural reclassification must submit its § 412.103 application no later than its SCH application in order to be considered rural as of the date CMS receives the SCH application. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules Similar to rural reclassification obtained under § 412.103, the effective date for SCH status would be the date that CMS receives the complete application. We also are proposing conforming changes to the effective date at § 412.92(b)(2)(ii) for instances when a court order or a determination by the Provider Reimbursement Review Board (PRRB) reverses a CMS denial of SCH status and no further appeal is made. In the interest of a clear and consistent policy, we are proposing that this change in the SCH effective date would also apply for hospitals not reclassifying as rural under § 412.103, such as geographically rural hospitals obtaining SCH status. We believe that these proposals to update the regulations at § 412.92 to provide an effective date for SCH status that is consistent with the effective date for rural reclassification under § 412.103 would benefit hospitals by minimizing any payment disadvantage caused by the lag between the effective date of rural reclassification and the effective date of SCH status. We also believe this proposal to align the SCH effective date with the § 412.103 effective date supports agency efforts to reduce regulatory burden because it would provide for a more uniform policy. In addition, we are proposing to make parallel changes to the effective date for an MDH status determination under § 412.108(b)(4). As discussed earlier, section 50205 of the Bipartisan Budget Act of 2018 extended the MDH program through FY 2022 by amending section 1886(d)(5)(G) of the Act. Similar to the proposed change in effective date for SCH status approvals, we are proposing that a determination of MDH status would be effective as of the date that CMS receives the complete application, for applications received on or after October 1, 2018, rather than the current effective date at § 412.108(b)(4) of 30 days after the date the MAC provides written notification to the hospital. Similar to applications for SCH status, a complete application includes a request and all supporting documentation needed to demonstrate that the hospital meets criteria for MDH status as of the date of application. For an application to be complete, all criteria must be met as of the date CMS receives the MDH application. For example, a cost report must be settled at the time of application for a hospital to use that cost report as one of the cost reports required in § 412.108(a)(1)(iii)(C), and a hospital applying for MDH status on the basis of a § 412.103 rural reclassification must submit its § 412.103 application no later VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 than its MDH application in order to be considered rural as of the date CMS receives the MDH application. (We note that a hospital in an all-urban State that applies for MDH status under the expanded definition at section 50205 of the Bipartisan Budget Act of 2018 would need to submit its application for a determination that it meets the criteria at § 412.103(a)(1) or (3) or the criteria at § 412.103(a)(2) as of January 1, 2018 (as discussed in the previous section) no later than its MDH application in order for the application to be considered complete.) We believe that concurrently changing the SCH and MDH status effective dates from 30 days after the date of approval to the date the complete application is received would allow for consistency in the regulations governing effective dates of special rural hospital status. In addition, this proposal would benefit urban hospitals that are requesting § 412.103 rural reclassification at the same time as MDH status because it would synchronize effective dates to eliminate any payment consequences caused by a lag between effective dates for rural reclassification and MDH status. 4. Proposed Conforming Technical Changes to Regulations We note that, in this proposed rule, we also are proposing to make technical conforming changes to the regulations in § 412.92 and § 412.108 to reflect the change CMS made some time ago to identify fiscal intermediaries as Medicare administrative contractors (MACs). H. Hospital Readmissions Reduction Program: Proposed Updates and Changes (§§ 412.150 Through 412.154) 1. Statutory Basis for the Hospital Readmissions Reduction Program Section 1886(q) of the Act, as added by section 3025 of the Affordable Care Act as amended by section 10309 of the Affordable Care Act, and further amended by section 15002 of the 21st Century Cures Act, establishes the Hospital Readmissions Reduction Program. Under the Program, Medicare payments under the acute inpatient prospective payment system for discharges from an applicable hospital, as defined under section 1886(d) of the Act, may be reduced to account for certain excess readmissions. Section 15002 of the 21st Century Cures Act requires the Secretary to compare peer groups of hospitals with respect to the number of their Medicare-Medicaid dual-eligible beneficiaries (dualeligibles) in determining the extent of PO 00000 Frm 00241 Fmt 4701 Sfmt 4702 20403 excess readmissions. We refer readers to section IV.E.1. of the preamble of the FY 2016 IPPS/LTCH PPS final rule (80 FR 49530 through 49531) and section V.I.1. of the preamble of the FY 2018 IPPS/ LTCH PPS final rule (82 FR38221 through 38240) for a detailed discussion of and additional information on the statutory history of the Hospital Readmissions Reduction Program. 2. Regulatory Background We refer readers to the following final rules for detailed discussions of the regulatory background and descriptions of the current policies for the Hospital Readmissions Reduction Program: • FY 2012 IPPS/LTCH PPS final rule (76 FR 51660 through 51676); • FY 2013 IPPS/LTCH PPS final rule (77 FR 53374 through 53401); • FY 2014 IPPS/LTCH PPS final rule (78 FR 50649 through 50676); • FY 2015 IPPS/LTCH PPS final rule (79 FR 50024 through 50048); • FY 2016 IPPS/LTCH PPS final rule (80 FR 49530 through 49543); • FY 2017 IPPS/LTCH PPS final rule (81 FR 56973 through 56979); and • FY 2018 IPPS/LTCH PPS final rule (82 FR 38221 through 38240). These rules describe the general framework for the implementation of the Hospital Readmissions Reduction Program, including: (1) The selection of measures for the applicable conditions/ procedures; (2) the calculation of the excess readmission ratio, which is used, in part, to calculate the payment adjustment factor; (3) beginning in FY 2018, the calculation of the proportion of ‘‘dually eligible’’ Medicare beneficiaries (described below) which is used to stratify hospitals into peer groups and establish the peer group median excess readmission ratios (ERRs); (4) the calculation of the payment adjustment factor, specifically addressing the base operating DRG payment amount, aggregate payments for excess readmissions (including calculating the peer group median ERRs), aggregate payments for all discharges, and the neutrality modifier; (5) the opportunity for hospitals to review and submit corrections using a process similar to what is currently used for posting results on Hospital Compare; (6) the adoption of an extraordinary circumstances exception policy to address hospitals that experience a disaster or other extraordinary circumstance; (7) the clarification that the public reporting of excess readmission ratios will be posted on an annual basis to the Hospital Compare website as soon as is feasible following the Review and Correction period; and (8) the specification that the definition E:\FR\FM\07MYP2.SGM 07MYP2 20404 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules of ‘‘applicable hospital’’ does not include hospitals and hospital units excluded from the IPPS, such as LTCHs, cancer hospitals, children’s hospitals, IRFs, IPFs, CAHs, and hospitals in Puerto Rico. We also have codified certain requirements of the Hospital Readmissions Reduction Program at 42 CFR 412.152 through 412.154. The Hospital Readmissions Reduction Program strives to put patients first by ensuring they are empowered to make decisions about their own healthcare along with their clinicians, using information from data-driven insights that are increasingly aligned with meaningful quality measures. We support technology that reduces costs and allows clinicians to focus on providing high quality health care for their patients. We also support innovative approaches to improve quality, accessibility, and affordability of care, while paying particular attention to improving clinicians’ and beneficiaries’ experiences when interacting with CMS programs. In combination with other efforts across the Department of Health and Human Services, we believe the Hospital Readmissions Reduction Program incentivizes hospitals to improve health care quality and value, while giving patients the tools and information needed to make the best decisions for them. daltland on DSKBBV9HB2PROD with PROPOSALS2 3. Summary of Proposed Policies for the Hospital Readmissions Reduction Program In this proposed rule, we are proposing to: (1) Establish the applicable period for FY 2019, FY 2020 and FY 2021; (2) codify the previously adopted definition of ‘‘dual-eligible’’; (3) codify the previously adopted definition of ‘‘proportion of dual-eligibles’’; and (4) codify the previously adopted definition of ‘‘applicable period for dualeligibility.’’ These proposals are described in more detail below. 4. Current Measures for FY 2019 and Subsequent Years The Hospital Readmissions Reduction Program currently includes six applicable conditions/procedures: Acute myocardial infarction (AMI); heart failure (HF); pneumonia; total hip arthroplasty/total knee arthroplasty (THA/TKA); chronic obstructive pulmonary disease (COPD); and coronary artery bypass graft (CABG). By publicly reporting quality data, we strive to put patients first, ensuring they, along with their clinicians, are empowered to make decisions about VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 their own healthcare using information aligned with a meaningful quality measures. The Hospital Readmissions Reduction Program, together with the Hospital VBP Program and the HAC Reduction Program, represents a key component of the way that we bring quality measurement, transparency, and improvement together with value-based purchasing to the inpatient care setting. We have undertaken efforts to review the existing measure set in the context of these other programs, to identify how to reduce costs and complexity across programs while continuing to incentivize improvement in the quality and value of care provided to patients. To that end, we have begun reviewing our programs’ measures in accordance with the Meaningful Measures Initiative we described in section I.A.2. of the preamble of this proposed rule. As part of this review, we have taken a holistic approach to evaluating the appropriateness of the Hospital Readmissions Reduction Program’s current measures in the context of the measures used in two other IPPS valuebased purchasing programs (that is, the Hospital VBP Program and the HAC Reduction Program), as well as the Hospital IQR Program. We view the three value-based purchasing programs together as a collective set of hospital value-based purchasing programs. Specifically, we believe the goals of the three value-based purchasing programs (the Hospital VBP, Hospital Readmissions Reduction, and HAC Reduction Programs) and the measures used in these programs together cover the Meaningful Measures Initiative quality priorities of making care safer, strengthening person and family engagement, promoting coordination of care, promoting effective prevention and treatment, and making care affordable,— but that the programs should not add unnecessary complexity or costs associated with duplicative measures across programs. The Hospital Readmissions Reduction Program focuses on care coordination measures, which address the quality priority of promoting effective communication and care coordination within the Meaningful Measures Initiative. The HAC Reduction Program focuses on patient safety measures, which address the Meaningful Measures Initiative quality priority of making care safer by reducing harm caused in the delivery of care. As part of this holistic quality payment program strategy, we believe the Hospital VBP Program should focus on the measurement priorities not covered by the Hospital Readmissions Reduction Program or the HAC Reduction Program. The Hospital VBP PO 00000 Frm 00242 Fmt 4701 Sfmt 4702 Program would continue to focus on measures related to: (1) The clinical outcomes, such as mortality and complications (which address the Meaningful Measures Initiative quality priority of promoting effective treatment); (2) patient and caregiver experience, as measured using the HCAHPS survey (which addresses the Meaningful Measures Initiative quality priority of strengthening person and family engagement as partners in their care); and (3) healthcare costs, as measured using the Medicare Spending per Beneficiary measure (which addresses the Meaningful Measures Initiative priority of making care affordable). We believe this framework will allow hospitals and patients to continue to obtain meaningful information about hospital performance and incentivize quality improvement while also streamlining the measure sets to reduce duplicative measures and program complexity so that the costs to hospitals associated with participating in these programs does not outweigh the benefits of improving beneficiary care. Measures in the Hospital Readmissions Reduction Program are important markers of quality of care, particularly of the care of a patient in transition from an acute care setting to a non-acute care setting. By including these measures in the Program, we seek to encourage hospitals to address the serious problems indicated by the necessity of a hospital readmission and to reduce them and improve care coordination and communication. Therefore, after thoughtful review, we have determined that the six readmission measures in the Hospital Readmissions Reduction Program, which we are proposing for removal from the Hospital IQR Program in section VIII.A.5.b.(3) of the preamble of this proposed rule, are nevertheless appropriately included as part of the Hospital Readmissions Reduction Program. We continue to believe that the measures that we have adopted adequately address the conditions and procedures specified in the Hospital Readmissions Reduction Program statute. Therefore, we are not proposing to adopt any new measures at this time. 5. Maintenance of Technical Specifications for Quality Measures We refer readers to the FY 2015 IPPS/ LTCH PPS final rule (79 FR 50039) for a discussion of the maintenance of technical specifications for quality measures for the Hospital Readmissions Reduction Program. Technical specifications of the readmission measures are provided on our website in E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 the Measure Methodology Reports at: https://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/ Measure-Methodology.html. Additional resources about the Hospital Readmissions Reduction Program and measure technical specifications are on the QualityNet website on the Resources page at: https://www.qualitynet.org/dcs/ ContentServer?c=Page&pagename= QnetPublic%2FPage%2F QnetTier3&cid=1228772412995. 6. Proposed Applicable Periods for FY 2019, FY 2020, and FY 2021 Under section 1886(q)(5)(D) of the Act, the Secretary has the authority to specify the applicable period with respect to a fiscal year under the Hospital Readmissions Reduction Program. In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51671), we finalized our policy to use 3 years of claims data to calculate the readmission measures. In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53675), we codified the definition of ‘‘applicable period’’ in the regulations at 42 CFR 412.152 as the 3-year period from which data are collected in order to calculate excess readmissions ratios and payment adjustment factors for the fiscal year, which includes aggregate payments for excess readmissions and aggregate payments for all discharges used in the calculation of the payment adjustment. The applicable period for dual-eligibles is the same as the applicable period that we otherwise adopt for purposes of the Program. In this proposed rule, for FY 2019, consistent with the definition specified at § 412.152, we are proposing that the ‘‘applicable period’’ for the Hospital Readmissions Reduction Program would be the 3-year period from July 1, 2014 through June 30, 2017. In other words, we are proposing that the proportion of dual-eligibles, excess readmissions ratios and the payment adjustment factors (including aggregate payments for excess readmissions and aggregate payments for all discharges) for FY 2019 would be calculated using data for discharges occurring during the 3-year time period of July 1, 2014 through June 30, 2017. In this proposed rule, for FY 2020, consistent with the definition specified at § 412.152, we are proposing that the ‘‘applicable period’’ for the Hospital Readmissions Reduction Program would be the 3-year period from July 1, 2015 through June 30, 2018. As noted earlier, we define the applicable period for dual-eligibles as the applicable period that we otherwise adopted for purposes of the Program; therefore, for FY 2020, VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 the applicable period for dual-eligibles would be the 3-year period from July 1, 2015 through June 30, 2018. In addition, in this proposed rule, for FY 2021, consistent with the definition specified at § 412.152, we are proposing that the ‘‘applicable period’’ for the Hospital Readmissions Reduction Program would be the 3-year period from July 1, 2016 through June 30, 2019. The applicable period for dual-eligibles for FY 2021 would similarly be the 3year period from July 1, 2016 through June 30, 2019. We are inviting public comments on these proposals. 7. Identification of Aggregate Payments for Each Condition/Procedure and All Discharges When calculating the numerator (aggregate payments for excess readmissions), we determine the base operating DRG payment amount for an individual hospital for the applicable period for such condition/procedure, using Medicare inpatient claims from the MedPAR file with discharge dates that are within the applicable period. Under our established methodology, we use the update of the MedPAR file for each Federal fiscal year, which is updated 6 months after the end of each Federal fiscal year within the applicable period, as our data source. In identifying discharges for the applicable conditions/procedures to calculate the aggregate payments for excess readmissions, we apply the same exclusions to the claims in the MedPAR file as are applied in the measure methodology for each of the applicable conditions/procedures. For the FY 2019 applicable period, this includes the discharge diagnoses for each applicable condition/procedure based on a list of specific ICD–9–CM or ICD–10–CM and ICD–10–PCS code sets, as applicable, for that condition/procedure, since diagnoses and procedure codes for discharges occurring prior to October 1, 2015 were reported under the ICD–9– CM code set, while discharges occurring on or after October 1, 2015 (FY 2016), were reported under the ICD–10–CM and ICD–10–PCS code sets. We only identify Medicare Fee-forService (FFS) claims that meet the criteria described above for each applicable condition/procedure to calculate the aggregate payments for excess readmissions (that is, claims paid for under Medicare Part C or Medicare Advantage, are not included in this calculation). This policy is consistent with the methodology to calculate excess readmissions ratios based solely on admissions and readmissions for Medicare FFS patients. Therefore, PO 00000 Frm 00243 Fmt 4701 Sfmt 4702 20405 consistent with our established methodology, for FY 2019, we are proposing to continue to exclude admissions for patients enrolled in Medicare Advantage as identified in the Medicare Enrollment Database. In this proposed rule, for FY 2019, we are proposing to determine aggregate payments for excess readmissions, aggregate payments for all discharges using data from MedPAR claims with discharge dates that are on or after July 1, 2014, and no later than June 30, 2017. As we stated in FY 2018 IPPS/LTCH PPS final rule (82 FR 38232), we will determine the neutrality modifier using the most recently available full year of MedPAR data. However, we note that, for the purpose of modeling the proposed FY 2019 readmissions payment adjustment factors for this proposed rule, we are using the proportion of dual-eligibles, excess readmissions ratios, and aggregate payments for each condition/procedure and all discharges for applicable hospitals from the FY 2018 Hospital Readmissions Reduction Program applicable period. For the FY 2019 program year, applicable hospitals will have the opportunity to review and correct calculations based on the proposed FY 2019 applicable period of July 1, 2014 to June 30, 2017, before they are made public under our policy regarding reporting of hospital-specific information. Again, we reiterate this period is intended to review the program calculations, and not the underlying data. For more information on the review and corrections process, we refer readers to the FY 2013 IPPS/ LTCH PPS final rule (77 FR 53399 through 53401). In this proposed rule, for FY 2019, we are proposing to use MedPAR data from July 1, 2014 through June 30, 2017 for FY 2019 Hospital Readmissions Reduction Program calculations. Specifically— • March 2015 update of the FY 2014 MedPAR file to identify claims within FY 2014 with discharges dates that are on or after July 1, 2014; • March 2016 update of the FY 2015 MedPAR file to identify claims within FY 2015; • March 2017 update of the FY 2016 MedPAR file to identify claims within FY 2016; • March 2018 update of the FY 2017 MedPAR file to identify claims within FY 2017. We are inviting public comments on this proposal. E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 8. Calculation of Payment Adjustment Factors for FY 2019 and Proposed Codification of Certain Definitions daltland on DSKBBV9HB2PROD with PROPOSALS2 As we discussed in the FY 2018 IPPS/ LTCH PPS final rule (82 FR 38226), section 1886(q)(3)(D) of the Act requires the Secretary to group hospitals and apply a methodology that allows for separate comparisons of hospitals within peer groups in determining a hospital’s adjustment factor for payments applied to discharges beginning in FY 2019. To implement this provision, in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38226 through 38237), we finalized where dx is AMI, HF, pneumonia, COPD, THA/TKA or CABG and payments refers to the base operating DRG payments. The payment reduction (1–P) resulting from use of the median ERR for the peer group is scaled by a neutrality modifier (NM) to achieve budget neutrality. We refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38226 through 38237) for a detailed discussion of the changes to the payment adjustment methodology, including alternatives considered, for FY 2019. We are not proposing any changes to the methodology for FY 2019 or subsequent years. However, we are proposing to codify our previously finalized definitions of ‘‘applicable period for dual-eligibility’’, ‘‘dualeligible’’, and ‘‘proportion of dualeligibles’’ at 42 CFR 412.152. The definitions which we are proposing to codify are as follows: • Applicable period for dualeligibility is the 3-year data period corresponding to the applicable period as established by the Secretary for the Hospital Readmissions Reduction Program. • Dual-eligible is a patient beneficiary who has been identified as having full benefit status in both the Medicare and Medicaid programs in the State MMA files for the month the beneficiary was discharged from the hospital. • Proportion of dual-eligibles is the number of dual-eligible patients among all Medicare FFS and Medicare Advantage stays during the applicable period. We are inviting public comment on our proposal to codify these definitions. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 a number of changes to the payment adjustment methodology for FY 2019. First, we finalized that an individual would be counted as a full-benefit dualeligible patient if the beneficiary was identified as full-benefit dual status in the State Medicare Modernization Act (MMA) files for the month he/she was discharged from the hospital (82 FR 38226 through 38228). Second, we finalized our policy to define the proportion of full benefit dual-eligible beneficiaries as the proportion of dualeligible patients among all Medicare FFS and Medicare Advantage stays (82 FR 38226 through 38228). Third, we finalized our policy to define the data period for determining dual-eligibility as the 3-year data period corresponding to the Program’s applicable period (82 FR 38229). Fourth, we finalized our policy to stratify hospitals into quintiles, or five peer groups, based on their proportion of dual-eligible patients (82 FR 38229 through 38231). Finally, we finalized our policy to use the median Excess Readmission Ratio (ERR) for the hospital’s peer group in place of 1.0 in the payment adjustment formula and apply a uniform modifier to maintain budget neutrality (82 FR 38231 through 38237). The payment adjustment formula would then be: 9. Proposed Calculation of Payment Adjustment for FY 2019 10. Accounting for Social Risk Factors in the Hospital Readmissions Reduction Program In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38237 through 38239), we discussed the importance of improving beneficiary outcomes including reducing health disparities. We also discussed our commitment to ensuring that medically complex patients, as well as those with social risk factors, receive excellent care. We discussed how studies show that social risk factors, such as being near or below the poverty level as determined by HHS, belonging to a racial or ethnic minority group, or living with a disability, can be associated with poor health outcomes and how some of this disparity is related to the quality of health care.250 Among our core objectives, we aim to improve health outcomes, attain health equity for all beneficiaries, and ensure that complex patients as well as those with social risk factors receive excellent care. Within this context, reports by the Office of the Assistant Secretary for Planning and Evaluation (ASPE) and the National Academy of Medicine have examined the influence of social risk factors in CMS value-based purchasing programs.251 As we noted in the FY Section 1886(q)(3)(A) of the Act defines the payment adjustment factor for an applicable hospital for a fiscal year as equal to the greater of: (i) The ratio described in subparagraph (B) for the hospital for the applicable period (as defined in paragraph (5)(D)) for such fiscal year; or (ii) the floor adjustment factor specified in subparagraph (C). Section 1886(q)(3)(B) of the Act, in turn, describes the ratio used to calculate the adjustment factor. Specifically, it states that the ratio is equal to 1 minus the ratio of—(i) the aggregate payments for excess readmissions, and (ii) the aggregate payments for all discharges, scaled by the neutrality modifier. The calculation of this ratio is codified at § 412.154(c)(1) of the regulations and the floor adjustment factor is codified at § 412.154(c)(2) of the regulations. Section 1886(q)(3)(C) of the Act specifies the floor adjustment factor at 0.97 for FY 2015 and subsequent fiscal years. Consistent with section 1886(q)(3) of the Act, codified in our regulations at § 412.154(c)(2), for FY 2019, the payment adjustment factor will be either the greater of the ratio or the floor adjustment factor of 0.97. Under our established policy, the ratio is rounded to the fourth decimal place. In other words, for FY 2019, a hospital subject to the Hospital Readmissions Reduction Program would have an adjustment factor that is between 1.0 (no reduction) and 0.9700 (greatest possible reduction). We are inviting public comments on these proposals regarding the calculation of payment adjustment factors for FY 2019. PO 00000 Frm 00244 Fmt 4701 Sfmt 4702 250 See, for example United States Department of Health and Human Services. ‘‘Healthy People 2020: Disparities. 2014.’’ Available at: https:// www.healthypeople.gov/2020/about/foundationhealth-measures/Disparities; or National Academies of Sciences, Engineering, and Medicine. Accounting for Social Risk Factors in Medicare Payment: Identifying Social Risk Factors. Washington, DC: National Academies of Sciences, Engineering, and Medicine 2016. 251 Department of Health and Human Services Office of the Assistant Secretary for Planning and Evaluation (ASPE), ‘‘Report to Congress: Social Risk Factors and Performance Under Medicare’s ValueBased Purchasing Programs.’’ December 2016. E:\FR\FM\07MYP2.SGM 07MYP2 EP07MY18.017</GPH> 20406 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 2018 IPPS/LTCH PPS final rule (82 FR 38404), ASPE’s report to Congress found that, in the context of value-based purchasing programs, dual eligibility was the most powerful predictor of poor health care outcomes among those social risk factors that they examined and tested. In addition, as we noted in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38237), the National Quality Forum (NQF) undertook a 2-year trial period in which certain new measures and measures undergoing maintenance review have been assessed to determine if risk adjustment for social risk factors is appropriate for these measures.252 The trial period ended in April 2017 and a final report is available at: https:// www.qualityforum.org/SES_Trial_ Period.aspx. The trial concluded that ‘‘measures with a conceptual basis for adjustment generally did not demonstrate an empirical relationship’’ between social risk factors and the outcomes measured. This discrepancy may be explained in part by the methods used for adjustment and the limited availability of robust data on social risk factors. NQF has extended the socioeconomic status (SES) trial,253 allowing further examination of social risk factors in outcome measures. In the FY 2018 and CY 2018 proposed rules for our quality reporting and value-based purchasing programs, we solicited feedback on which social risk factors provide the most valuable information to stakeholders and the methodology for illuminating differences in outcomes rates among patient groups within a hospital or provider that would also allow for a comparison of those differences, or disparities, across providers. Feedback we received across our quality reporting programs included encouraging CMS to explore whether factors that could be used to stratify or risk adjust the measures (beyond dual eligibility); considering the full range of differences in patient backgrounds that might affect outcomes; exploring risk adjustment approaches; and offering careful consideration of what type of information display would be most useful to the public. We also sought public comment on confidential reporting and future public reporting of some of our measures stratified by patient dual eligibility. In Available at: https://aspe.hhs.gov/pdf-report/reportcongress-social-risk-factors-and-performanceunder-medicares-value-based-purchasingprograms. 252 Available at: https://www.qualityforum.org/ SES_Trial_Period.aspx. 253 Available at: https:// www.qualityforum.org/WorkArea/ linkit.aspx?LinkIdentifier=id&ItemID=86357. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 general, commenters noted that stratified measures could serve as tools for hospitals to identify gaps in outcomes for different groups of patients, improve the quality of health care for all patients, and empower consumers to make informed decisions about health care. Commenters encouraged us to stratify measures by other social risk factors such as age, income, and educational attainment. With regard to value-based purchasing programs, commenters also cautioned to balance fair and equitable payment while avoiding payment penalties that mask health disparities or discouraging the provision of care to more medically complex patients. Commenters also noted that value-based payment program measure selection, domain weighting, performance scoring, and payment methodology must account for social risk. As a next step, CMS is considering options to improve health disparities among patient groups within and across hospitals by increasing the transparency of disparities as shown by quality measures. We also are considering how this work applies to other CMS quality programs in the future. We refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38403 through 38409) for more details, where we discuss the potential stratification of certain Hospital IQR Program outcome measures. Furthermore, we continue to consider options to address equity and disparities in our value-based purchasing programs. We plan to continue working with ASPE, the public, and other key stakeholders on this important issue to identify policy solutions that achieve the goals of attaining health equity for all beneficiaries and minimizing unintended consequences. I. Hospital Value-Based Purchasing (VBP) Program: Proposed Policy Changes 1. Background a. Statutory Background and Overview of Past Program Years Section 1886(o) of the Act, as added by section 3001(a)(1) of the Affordable Care Act, requires the Secretary to establish a hospital value-based purchasing program (the Hospital VBP Program) under which value-based incentive payments are made in a fiscal year (FY) to hospitals that meet performance standards established for a performance period for such fiscal year. Both the performance standards and the performance period for a fiscal year are to be established by the Secretary. PO 00000 Frm 00245 Fmt 4701 Sfmt 4702 20407 For more of the statutory background and descriptions of our current policies for the Hospital VBP Program, we refer readers to the Hospital Inpatient VBP Program final rule (76 FR 26490 through 26547); the FY 2012 IPPS/LTCH PPS final rule (76 FR 51653 through 51660); the CY 2012 OPPS/ASC final rule with comment period (76 FR 74527 through 74547); the FY 2013 IPPS/LTCH PPS final rule (77 FR 53567 through 53614); the FY 2014 IPPS/LTCH PPS final rule (78 FR 50676 through 50707); the CY 2014 OPPS/ASC final rule (78 FR 75120 through 75121); the FY 2015 IPPS/LTCH PPS final rule (79 FR 50048 through 50087); the FY 2016 IPPS/LTCH PPS final rule (80 FR 49544 through 49570); the FY 2017 IPPS/LTCH PPS final rule (81 FR 56979 through 57011); the CY 2017 OPPS/ASC final rule with comment period (81 FR 79855 through 79862); and the FY 2018 IPPS/LTCH PPS final rule (82 FR 38240 through 38269). We also have codified certain requirements for the Hospital VBP Program at 42 CFR 412.160 through 412.167. b. FY 2019 Program Year Payment Details Section 1886(o)(7)(B) of the Act instructs the Secretary to reduce the base operating DRG payment amount for a hospital for each discharge in a fiscal year by an applicable percent. Under section 1886(o)(7)(A) of the Act, the sum total of these reductions in a fiscal year must equal the total amount available for value-based incentive payments for all eligible hospitals for the fiscal year, as estimated by the Secretary. We finalized details on how we would implement these provisions in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53571 through 53573) and we refer readers to that rule for further details. Under section 1886(o)(7)(C)(iv) of the Act, the applicable percent for the FY 2019 program year is 2.00 percent. Using the methodology we adopted in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53571 through 53573), we estimate that the total amount available for value-based incentive payments for FY 2019 is approximately $1.9 billion, based on the December 2017 update of the FY 2017 MedPAR file. We intend to update this estimate for the FY 2019 IPPS/LTCH PPS final rule using the March 2018 update of the FY 2017 MedPAR file. As finalized in the FY 2013 IPPS/ LTCH PPS final rule (77 FR 53573 through 53576), we will utilize a linear exchange function to translate this estimated amount available into a valuebased incentive payment percentage for E:\FR\FM\07MYP2.SGM 07MYP2 20408 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules each hospital, based on its Total Performance Score (TPS). We will then calculate a value-based incentive payment adjustment factor that will be applied to the base operating DRG payment amount for each discharge occurring in FY 2019, on a per-claim basis. We are publishing proxy valuebased incentive payment adjustment factors in Table 16 associated with this proposed rule (which is available via the internet on the CMS website). The proxy factors are based on the TPS from the FY 2018 program year. These FY 2018 performance scores are the most recently available performance scores hospitals have been given the opportunity to review and correct. The slope of the linear exchange function used to calculate the proxy value-based incentive payment adjustment factors in Table 16 is 2.8888347029. This slope, along with the estimated amount available for value-based incentive payments is also published in Table 16 (which is available via the internet on the CMS website). We intend to update this table as Table 16A in the final rule (which will be available on the CMS website) to reflect changes based on the March 2018 update to the FY 2017 MedPAR file. We also intend to update the slope of the linear exchange function used to calculate those updated proxy valuebased incentive payment adjustment factors. The updated proxy value-based incentive payment adjustment factors for FY 2019 will continue to be based on historic FY 2018 program year TPSs because hospitals will not have been given the opportunity to review and correct their actual TPSs for the FY 2019 program year until after the FY 2019 IPPS/LTCH PPS final rule is published. After hospitals have been given an opportunity to review and correct their actual TPSs for FY 2019, we will post Table 16B (which will be available via the internet on the CMS website) to display the actual value-based incentive payment adjustment factors, exchange function slope, and estimated amount available for the FY 2019 program year. We expect Table 16B will be posted on the CMS website in the fall of 2018. daltland on DSKBBV9HB2PROD with PROPOSALS2 2. Retention and Proposed Removal of Quality Measures a. Retention of Previously Adopted Hospital VBP Program Measures and Proposal To Clarify the Relationship Between the Hospital IQR and Hospital VBP Program Measure Sets In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53592), we finalized a policy to retain measures from prior program years for each successive program year, VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 unless otherwise proposed and finalized. In this proposed rule, we are not proposing any changes to this policy. We are, however, proposing to revise our regulations at 42 CFR 412.164(a) to clarify that once we have complied with the statutory prerequisites for adopting a measure for the Hospital VBP Program (that is, we have selected the measure from the Hospital IQR Program measure set and included data on that measure on Hospital Compare for at least one year prior to its inclusion in a Hospital VBP Program performance period), the Hospital VBP statute does not require that the measure continue to remain in the Hospital IQR Program. The proposed revision to the regulation text would clarify that Hospital VBP measures will be selected from the measures specified under the Hospital IQR Program, but the Hospital VBP Program measure set will not necessarily be a subset of the Hospital IQR Program measure set. As discussed in section I.A.2. of the preamble of this proposed rule, we are engaging in efforts aimed at evaluating and streamlining regulations with the goal to reduce unnecessary costs, increase efficiencies, and improve beneficiary experience. This proposal would reduce costs, such as those discussed in section IV.I.2.b. of the preamble of this proposed rule, by allowing us to remove duplicative measures from the Hospital IQR Program that are retained in the Hospital VBP Program. We are inviting comment on this proposal. b. Proposed Measure Removal Factors for the Hospital VBP Program As discussed earlier, we have adopted a policy to generally retain measures from prior year’s Hospital VBP Program for subsequent years’ measure sets unless otherwise proposed and finalized. We have previously removed measures from the Hospital VBP Program for reasons such as being topped out (80 FR 49550), the measure does not align with current clinical guidelines or practices (78 FR 50680 through 50681), a more applicable measure was available (82 FR 38242 through 38244), there was insufficient evidence that the measure leads to better outcomes (78 FR 50680 through 50681), another measure was more closely linked to better outcomes (77 FR 53582 through 53584, and 53592), unintended consequences (82 FR 38242 through 38244), and impossibility of calculating a score (82 FR 38242 through 38244). The reasons we cited above to support the removal of measures from the PO 00000 Frm 00246 Fmt 4701 Sfmt 4702 Hospital VBP Program generally align with measure removal factors that have been adopted by the Hospital IQR Program. We believe that these factors are also applicable in evaluating Hospital VBP Program quality measures for removal, and that their adoption in the Hospital VBP Program will help ensure consistency in our measure evaluation methodology across our programs. Accordingly, we are proposing to adopt the Hospital IQR Program measure removal factors that we finalized in the FY 2011 IPPS/LTCH PPS final rule (75 FR 50185) and further refined in the FY 2015 IPPS/LTCH PPS and FY 2016 IPPS/LTCH PPS final rules (79 FR 50203 through 50204 and 80 FR 49641 through 49643, respectively) for use in determining whether to remove Hospital VBP Program measures: • Factor 1. Measure performance among hospitals is so high and unvarying that meaningful distinctions and improvements in performance can no longer be made (‘‘topped out’’ measures), defined as: Statistically indistinguishable performance at the 75th and 90th percentiles; and truncated coefficient of variation ≤0.10; 254 • Factor 2. A measure does not align with current clinical guidelines or practice; • Factor 3. The availability of a more broadly applicable measure (across settings, populations, or the availability of a measure that is more proximal in time to desired patient outcomes for the particular topic); • Factor 4. Performance or improvement on a measure does not result in better patient outcomes; • Factor 5. The availability of a measure that is more strongly associated with desired patient outcomes for the particular topic; • Factor 6. Collection or public reporting of a measure leads to negative unintended consequences other than patient harm; and • Factor 7. It is not feasible to implement the measure specifications. We note that these removal factors would be considerations taken into account when deciding whether or not to remove measures, not firm requirements. We continue to believe that there may be circumstances in which a measure that meets one or more factors for removal should be retained regardless, because the drawbacks of removing a measure could be outweighed by other benefits to retaining the measure. 254 We previously adopted the two criteria for determining the ‘‘topped-out’’ status of Hospital VBP Program measures in the FY 2015 IPPS/LTCH PPS final rule (79 FR 50055). E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules Also in alignment with proposals being made for other quality reporting and value-based purchasing programs, we are proposing to adopt the following additional factor to consider when evaluating measures for removal from the Hospital VBP Program measure set: Factor 8, the costs associated with a measure outweigh the benefit of its continued use in the program. As we discuss in section I.A.2. of the preamble of this proposed rule with respect to our new Meaningful Measures Initiative, we are engaging in efforts to ensure that the Hospital VBP Program measure set continues to promote improved health outcomes for beneficiaries while minimizing the overall costs associated with the program. We believe these costs are multifaceted and include not only the burden associated with reporting, but also the costs associated with implementing and maintaining the program. We have identified several different types of costs, including, but not limited to: (1) Provider and clinician information collection burden and related cost and burden associated with the submission/reporting of quality measures to CMS; (2) the provider and clinician cost associated with complying with other quality programmatic requirements; (3) the provider and clinician cost associated with participating in multiple quality programs, and tracking multiple similar or duplicative measures within or across those programs; (4) the CMS cost associated with the program oversight of the measure, including measure maintenance and public display; and (5) the provider and clinician cost associated with compliance with other federal and/or state regulations (if applicable). For example, it may be needlessly costly and/or of limited benefit to retain or maintain a measure which our analyses show no longer meaningfully supports program objectives (for example, informing beneficiary choice or payment scoring). It may also be costly for health care providers to track the confidential feedback, preview reports, and publicly reported information on a measure where we use the measure in more than one program. CMS may also have to expend unnecessary resources to maintain the specifications for the measure, as well as the tools needed to collect, validate, analyze, and publicly report the measure data. Furthermore, beneficiaries may find it confusing to see public reporting on the same measure in different programs. When these costs outweigh the evidence supporting the continued use of a measure in the Hospital VBP VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Program, we believe it may be appropriate to remove the measure from the program. Although we recognize that one of the main goals of the Hospital VBP Program is to improve beneficiary outcomes by incentivizing health care providers to focus on specific care issues and making public data related to those issues, we also recognize that those goals can have limited utility where, for example, the publicly reported data (including percentage payment adjustment data) are of limited use because they cannot be easily interpreted by beneficiaries to influence their choice of providers. In these cases, removing the measure from the Hospital VBP Program may better accommodate the costs of program administration and compliance without sacrificing improved health outcomes and beneficiary choice. We are proposing that we would remove measures based on this factor on a case-by-case basis. We might, for example, decide to retain a measure that is burdensome for health care providers to report if we conclude that the benefit to beneficiaries justifies the reporting burden. Our goal is to move the program forward in the least burdensome manner possible, while maintaining a parsimonious set of meaningful quality measures and continuing to incentivize improvement in the quality of care provided to patients. We are inviting public comment on our proposals to adopt for the Hospital VBP Program the measure removal factors currently adopted in the Hospital IQR Program, and a measure removal factor where ‘‘the costs associated with a measure outweigh the benefit of its continued use in the program,’’ beginning with FY 2019. In addition, to further align with policies adopted in the Hospital IQR Program (74 FR 43864), we are proposing that if we believe continued use of a measure in the Hospital VBP Program poses specific patient safety concerns, we may promptly remove the measure from the program without rulemaking and notify hospitals and the public of the removal of the measure along with the reasons for its removal through routine communication channels to hospital, vendors, and QIOs, including, but not limited to, issuing memos, emails, and notices on the QualityNet website. We would then confirm the removal of the measure from the Hospital VBP Program measure set in the next IPPS rulemaking. In circumstances where we do not believe that continued use of a measure raises specific patient safety concerns, we would use the regular rulemaking process to remove a measure. PO 00000 Frm 00247 Fmt 4701 Sfmt 4702 20409 We are inviting public comment on our proposal to allow the Hospital VBP Program to promptly remove a measure without rulemaking if we believe the measure poses specific patient safety concerns. c. Proposed Removal of Ten Measures From the Hospital VBP Program By publicly reporting quality data, we strive to put patients first, ensuring they, along with their clinicians, are empowered to make decisions about their own healthcare using information that are aligned with meaningful quality measures. The Hospital VBP Program, together with the Hospital Readmissions Reduction Program and the HAC Reduction Program, represents a key component of the way that we bring quality measurement, transparency, and improvement together with value-based purchasing to the inpatient care setting. We have undertaken efforts to review the existing Hospital VBP Program measure set in the context of these other programs, to identify how to reduce costs and complexity across programs while continuing to incentivize improvement in the quality and value of care provided to patients. To that end, we have begun reviewing our programs’ measures in accordance with the Meaningful Measures Initiative we describe in section I.A.2. of the preamble of this proposed rule. As part of this review, we have taken a holistic approach to evaluating the appropriateness of the Hospital VBP Program’s current measures in the context of the measures used in two other IPPS value-based purchasing programs (that is, the Hospital Readmissions Reduction Program and the HAC Reduction Program), as well as in the Hospital IQR Program. We view the three value-based purchasing programs together as a collective set of hospital value-based purchasing programs. Specifically, we believe the goals of the three value-based purchasing programs (the Hospital VBP, Hospital Readmissions Reduction, and HAC Reduction Programs) and the measures used in these programs together cover the Meaningful Measures Initiative quality priorities of making care safer, strengthening person and family engagement, promoting coordination of care, promoting effective prevention and treatment, and making care affordable, but that the programs should not add unnecessary complexity or costs associated with duplicative measures across programs. The Hospital Readmissions Reduction Program focuses on care coordination measures, which address the quality priority of promoting effective E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20410 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules communication and care coordination within the Meaningful Measures Initiative. The HAC Reduction Program focuses on patient safety measures, which address the Meaningful Measures Initiative quality priority of making care safer by reducing harm caused in the delivery of care. As part of this holistic quality payment program strategy, we believe the Hospital VBP Program should focus on the measurement priorities not covered by the Hospital Readmissions Reduction Program or the HAC Reduction Program. The Hospital VBP Program would continue to focus on measures related to: (1) The clinical outcomes, such as mortality and complications (which address the Meaningful Measures Initiative quality priority of promoting effective treatment); (2) patient and caregiver experience, as measured using the HCAHPS survey (which addresses the Meaningful Measures Initiative quality priority of strengthening person and family engagement as partners in their care); and (3) healthcare costs, as measured using the Medicare Spending per Beneficiary measure (which addresses the Meaningful Measures Initiative priority of making care affordable). We believe this framework will allow hospitals and patients to continue to obtain meaningful information about hospital performance and incentivize quality improvement while also streamlining the measure sets to reduce duplicative measures and program complexity so that the costs to hospitals associated with participating in these programs does not outweigh the benefits of improving beneficiary care. In this proposed rule, we are proposing to remove the following 10 measures previously adopted for the Hospital VBP Program: • Elective Delivery (NQF #0469) (PC– 01); • National Healthcare Safety Network (NHSN) Catheter-Associated Urinary Tract Infection (CAUTI) Outcome Measure (NQF #0138) (CAUTI); • National Healthcare Safety Network (NHSN) Central Line-Associated Bloodstream Infection (CLABSI) Outcome Measure (NQF #0139) (CLABSI); • American College of SurgeonsCenters for Disease Control and Prevention (ACS–CDC) Harmonized Procedure Specific Surgical Site Infection (SSI) Outcome Measure (NQF #0753) (Colon and Abdominal Hysterectomy SSI); • National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Methicillin-resistant Staphylococcus aureus (MRSA) VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Bacteremia Outcome Measure (NQF #1716) (MRSA Bacteremia); • National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Clostridium difficile Infection (CDI) Outcome Measure (NQF #1717) (CDI); • Patient Safety and Adverse Events (Composite) (NQF #0531) (PSI 90); 255 • Hospital-Level, Risk-Standardized Payment Associated With a 30-Day Episode-of-Care for Acute Myocardial Infarction (NQF #2431) (AMI Payment); • Hospital-Level, Risk-Standardized Payment Associated With a 30-Day Episode-of-Care for Heart Failure (NQF #2436) (HF Payment); and • Hospital-Level, Risk-Standardized Payment Associated With a 30-Day Episode-of-Care for Pneumonia (NQF #2579) (PN Payment). (1) Proposed Removal of PC–01: Elective Delivery (NQF #0469) We are proposing to remove the Elective Delivery (NQF #0469) (PC–01) measure beginning with the FY 2021 program year because the costs associated with the measure outweigh the benefit of its continued use in the program—proposed removal Factor 8. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38262), we finalized both the benchmark at 0.000000 and the achievement threshold at 0.000000 for the PC–01 measure for the FY 2020 program year, meaning that at least 50 percent of hospitals that met the case minimum performed 0 elective deliveries for the measure during the baseline period of CY 2016. We refer readers to the FY 2013, FY 2014, and FY 2015 IPPS/LTCH PPS final rules (77 FR 53599 through 53605; 78 FR 50694 through 50699; and 79 FR 50080 through 50081, respectively) for a more detailed discussion of the general scoring methodology used in the Hospital VBP Program. Based on past performance on the measure, we anticipate that continued use of the PC– 01 measure in the Hospital VBP Program would result in more than half of hospitals with a calculable score for this measure earning the maximum 10 achievement points. We anticipate that the remaining hospitals with a calculable score would be awarded points based on improvement only because they will not have met the achievement threshold, earning zero to 255 We note that measure stewardship of the recalibrated version of the Patient Safety and Adverse Events Composite (PSI 90) is transitioning from AHRQ to CMS and, as part of the transition, the measure will be referred to as the CMS Recalibrated Patient Safety Indicators and Adverse Events Composite (CMS PSI 90) when it is used in CMS programs. PO 00000 Frm 00248 Fmt 4701 Sfmt 4702 nine improvement points. Therefore, we believe the measure no longer meaningfully differentiates performance among most participating hospitals for scoring purposes in the Hospital VBP Program. We continue to believe that avoiding early elective delivery is important; however, because overall performance on the PC–01 measure has improved over time and we anticipate the measure will have little meaningful effect on the TPS for most hospitals, we believe the measure is no longer appropriate for the Hospital VBP Program. In order to continue tracking and reporting rates of elective deliveries to incentivize continued high performance on the measure, this measure would remain in the Hospital IQR Program. We believe that maintaining the measure in the Hospital IQR Program, which publicly reports measure performance, will be sufficient to incentivize continued high performance or improvement on the measure. At the same time, we believe that removing the measure from the Hospital VBP Program will reduce costs and potential confusion for providers and clinicians to track the measure in both the Hospital IQR and Hospital VBP Programs, which may include reviewing different reports and tracking slightly different measure rates across programs. Based on the reasons described above, we believe that under the measure removal Factor 8, the costs associated with a measure outweigh the benefit of its continued use in the program, which we are proposing in section IV.I.2.b. of the preamble of this proposed rule, the costs of keeping the PC–01 measure in the Hospital VBP Program outweigh the benefits because the measure is costly for health care providers and clinicians to review multiple reports on this measure that is being retained in the Hospital IQR Program and our analyses show that the measure no longer meaningfully differentiates performance among participating hospitals for scoring purposes in the Hospital VBP Program. Therefore, we are proposing to remove the PC–01 measure from the Hospital VBP Program beginning with the FY 2021 program year, with data collection on this measure for purposes of the Hospital VBP Program ending with December 31, 2018 discharges, based on proposed removal Factor 8— because the costs associated with the measure outweigh the benefit of its continued use in the program. We are inviting public comment on this proposal to remove the Elective Delivery (NQF #0469) (PC–01) measure from the Hospital VBP Program as well as feedback on whether there are E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 reasons to retain the measure in the Hospital VBP Program. (2) Proposed Removal of HealthcareAssociated Infection (HAI) Measures and the Patient Safety and Adverse Events (Composite) Measure We are proposing to remove the following five measures of healthcareassociated infections (HAIs) from the Hospital VBP Program beginning with the FY 2021 program year because the costs associated with the measures outweigh the benefit of their continued use in the program—proposed removal Factor 8: • National Healthcare Safety Network (NHSN) Catheter-Associated Urinary Tract Infection (CAUTI) Outcome Measure (NQF #0138) (CAUTI); • National Healthcare Safety Network (NHSN) Central Line-Associated Bloodstream Infection (CLABSI) Outcome Measure (NQF #0139) (CLABSI); • American College of SurgeonsCenters for Disease Control and Prevention (ACS–CDC) Harmonized Procedure Specific Surgical Site Infection Outcome Measure (NQF #0753) (Colon and Abdominal Hysterectomy SSI); • National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Methicillin-resistant Staphylococcus aureus (MRSA) Bacteremia Outcome Measure (NQF #1716) (MRSA Bacteremia); and • National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Clostridium difficile Infection (CDI) Outcome Measure (NQF #1717) (CDI). We are also proposing to remove the Patient Safety and Adverse Events (Composite) (PSI 90) (NQF #0531) because the costs associated with the measure outweigh the benefit of its continued use in the program— proposed removal Factor 8. As discussed in section IV.I.2.b. of the preamble of this proposed rule, one of the main goals of our Meaningful Measures Initiative is to apply a parsimonious set of the most meaningful measures available to track patient outcomes and impact. While we continue to consider patient safety and reducing HAIs as high priorities (as reflected in the Meaningful Measures Initiative quality priority of making care safer by reducing harms caused in the delivery of care), the six measures listed above are all used in the HAC Reduction Program, which specifically focuses on reducing hospital-acquired conditions and improving patient safety outcomes. While there are differences in the scoring methodology between the VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Hospital VBP Program and the HAC Reduction Program, the HAC Reduction Program’s incentive payment structure, like the Hospital VBP Program, ties hospitals’ payment adjustments on claims paid under the IPPS to their performance on selected measures, thereby incentivizing performance improvement on these measures among participating hospitals. We believe removing these measures from the Hospital VBP Program would reduce costs and complexity for hospitals to separately track the confidential feedback, preview reports, and publicly reported information on these measures in both the Hospital VBP and HAC Reduction Programs. We further believe retaining these measures in the HAC Reduction Program and removing them from the Hospital VBP Program would best support the holistic approach to the measures used in the three quality payment programs as described above, while continuing to keep patient safety and improvements in patient safety as high priorities. We refer readers to section IV.J.4 b., d., and h. of the preamble of this proposed rule for how the same HAI measures in the HAC Reduction Program will continue to be reported by hospitals via the CDC’s NHSN and posted on our Hospital Compare website. Therefore, we believe that removing these measures from the Hospital VBP Program, but retaining them in the HAC Reduction Program, strikes an appropriate balance of benefits and costs associated with these measures across payment programs. We also refer readers to section VIII.A.5.b.(2)(b) of the preamble of this proposed rule, where we are proposing to remove these same measures from the Hospital IQR Program. Therefore, we are proposing to remove the CAUTI, CLABSI, Colon and Abdominal Hysterectomy SSI, MRSA Bacteremia, and CDI measures from the Hospital VBP Program beginning with the FY 2021 program year, with data collection on these measures for purposes of the Hospital VBP Program ending with December 31, 2018 discharges, based on proposed removal Factor 8—because the costs associated with the measures outweigh the benefit of their continued use in the program. We are also proposing to remove the PSI 90 measure from the Hospital VBP Program effective with the effective date of the FY 2019 IPPS/LTCH PPS final rule based on proposed removal Factor 8—because the costs associated with the measure outweigh the benefit of its continued use in the program.256 As the 256 In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38256), we finalized the adoption of the PSI 90 PO 00000 Frm 00249 Fmt 4701 Sfmt 4702 20411 PSI 90 measure would not be incorporated into TPS calculations until the FY 2023 program year, we can operationally remove the measure from the program sooner than the HAI measures. We also refer readers to section IV.I.4.a.(2) and b. of the preamble of this proposed rule, where we are proposing to remove the Safety domain from the Hospital VBP Program and to increase the weight of the Clinical Care domain (which we are proposing to rename as the Clinical Outcomes domain) if our proposals to remove all of the current Safety domain measures are adopted, beginning with the FY 2021 program year. We are inviting public comment on these proposals to remove the five HAI measures and the PSI 90 measure from the Hospital VBP Program, as well as comments on whether the removal of these measures from this program and their retention in the HAC Reduction Program would continue to provide a strong incentive for performance on these patient safety measures. (3) Proposed Removal of ConditionSpecific Payment Measures We are proposing to remove the following three condition-specific payment measures from the Hospital VBP Program, effective with the effective date of the FY 2019 IPPS/LTCH PPS final rule, because the costs associated with the measures outweigh the benefit of their continued use in the program—proposed removal Factor 8: • Hospital-Level, Risk-Standardized Payment Associated With a 30-Day Episode-of-Care for Acute Myocardial Infarction (NQF #2431) (AMI Payment); • Hospital-Level, Risk-Standardized Payment Associated With a 30-Day Episode-of-Care for Heart Failure (NQF #2436) (HF Payment); and • Hospital-Level, Risk-Standardized Payment Associated With a 30-Day Episode-of-Care for Pneumonia (NQF #2579) (PN Payment). As discussed in section IV.I.2.b. of the preamble of this proposed rule, one of the main goals of our Meaningful Measures Initiative is to apply a parsimonious set of the most meaningful measures. We also seek to reduce costs and complexity across the hospital quality programs. Currently, the Hospital IQR and Hospital VBP Programs both include the Medicare Spending Per Beneficiary (MSPB)—Hospital (NQF #2158) (MSPB) measure beginning with the FY 2023 program year. We are proposing to remove this measure effective with the effective date of the FY 2019 IPPS/LTCH PPS final rule, meaning the measure would not be used in calculating hospitals’ TPS for any program year. E:\FR\FM\07MYP2.SGM 07MYP2 20412 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules measure, as well as the three conditionspecific payment measures listed above. We continue to believe the conditionspecific payment measures provide important data for patients and hospitals, and we will continue to use these measures in the Hospital IQR Program along with the Hospital-Level, Risk-Standardized Payment Associated with an Episode-of-Care for Primary Elective Total Hip and/or Total Knee Arthroplasty measure, to provide more granular information to hospitals for reducing costs and resource use while maintaining quality care. However, we believe that continuing to retain the AMI Payment, HF Payment, and PN Payment measures in both the Hospital VBP and Hospital IQR Programs no longer aligns with current CMS and HHS policy priorities for reducing program costs and complexity. We believe the Hospital IQR Program’s public reporting of these conditionspecific payment measures provide hospitals and patients with sufficient information to make decisions about care and to drive resource use improvement efforts, while removing them from the Hospital VBP Program would reduce the costs and complexity for hospitals to separately track the confidential feedback, preview reports, and publicly reported information on these measures in both programs. We note that the Hospital VBP Program would still retain the MSPB measure, which is an overall hospital efficiency measure required under section 1886(o)(2)(B)(ii) of the Act. We also refer readers to section VIII.A.5.b.(6) of the preamble of this proposed rule, where we are proposing to remove the MSPB measure from the Hospital IQR Program. Therefore, we are proposing to remove the AMI Payment, HF Payment, and PN Payment measures from the Hospital VBP Program effective with the effective date of the FY 2019 IPPS/LTCH PPS final rule based on proposed removal Factor 8—because the costs associated with the measures outweigh the benefit of their continued use in the program. As the AMI Payment and HF Payment measures 257 would not be incorporated into TPS calculations until the FY 2021 program year and the PN Payment measure 258 would not be incorporated into TPS calculations until the FY 2022 program year, we can operationally remove these measures from the program sooner than the HAI measures. We are inviting public comment on this proposal to remove the three condition-specific payment measures from the Hospital VBP Program, as well as comments on whether there are potential reasons to retain these condition-specific payment measures in the program. d. Summary of Previously Adopted Measures for the FY 2020 Program Year In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38244), we finalized the following measure set for the Hospital VBP Program for the FY 2020 program year. We note that we are not proposing any changes to this measure set in this proposed rule. PREVIOUSLY ADOPTED MEASURES FOR THE FY 2020 PROGRAM YEAR Measure short name Domain/measure name NQF # Person and Community Engagement Domain HCAHPS .............. Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) (including Care Transition Measure). 0166 (0228) Clinical Outcomes Domain * MORT–30–AMI .... MORT–30–HF ...... MORT–30–PN ...... THA/TKA .............. Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Acute Myocardial Infarction (AMI) Hospitalization. Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Heart Failure (HF) Hospitalization Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Pneumonia Hospitalization ........... Hospital-Level Risk-Standardized Complication Rate Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA). 0230 0229 0468 1550 Safety Domain ** CAUTI .................. CLABSI ................ Colon and Abdominal Hysterectomy SSI. MRSA Bacteremia CDI ....................... daltland on DSKBBV9HB2PROD with PROPOSALS2 PC–01 .................. National Healthcare Safety Network (NHSN) Catheter-Associated Urinary Tract Infection (CAUTI) Outcome Measure. National Healthcare Safety Network (NHSN) Central Line-Associated Bloodstream Infection (CLABSI) Outcome Measure. American College of Surgeons—Centers for Disease Control and Prevention Harmonized Procedure Specific Surgical Site Infection (SSI) Outcome Measure. National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Methicillin-resistant Staphylococcus aureus (MRSA) Bacteremia Outcome Measure. National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Clostridium difficile Infection (CDI) Outcome Measure. Elective Delivery ............................................................................................................................................... 257 In the FY 2017 IPPS/LTCH PPS final rule (81 FR 56987 through 56992), we adopted the AMI Payment and HF Payment measures in the Hospital VBP Program beginning with the FY 2021 program year. We are proposing to remove these measures effective with the effective date of the FY 2019 VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 IPPS/LTCH PPS final rule, meaning the measures would not be used in calculating hospitals’ TPS for any program year. 258 In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38251), we adopted the PN Payment measure in the Hospital VBP Program beginning with the FY PO 00000 Frm 00250 Fmt 4701 Sfmt 4702 0138 0139 0753 1716 1717 0469 2022 program year. We are proposing to remove this measure effective with the effective date of the FY 2019 IPPS/LTCH PPS final rule, meaning the measure would not be used in calculating hospitals’ TPS for any program year. E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20413 PREVIOUSLY ADOPTED MEASURES FOR THE FY 2020 PROGRAM YEAR—Continued Measure short name Domain/measure name NQF # Efficiency and Cost Reduction Domain MSPB ................... Medicare Spending Per Beneficiary (MSPB)—Hospital ................................................................................... 2158 * We are proposing, in section IV.I.4.a.(1) of the preamble of this proposed rule, to change the name of this domain from the Clinical Care domain to the Clinical Outcomes domain beginning with the FY 2020 program year. ** As discussed in sections IV.I.4.a.(2) and IV.I.2.c.(1) and (2) of the preamble of this proposed rule, respectively, we are proposing to remove the Safety domain and the measures in the Safety domain, beginning with the following program year (FY 2021). e. Summary of Measures for the FY 2021, FY 2022, and FY 2023 Program Years if Proposals for Removal of Measures are Finalized For the FY 2021 program year, we are proposing to remove six measures from the Safety domain (PC–01, CAUTI, CLABSI, Colon and Abdominal Hysterectomy SSI, MRSA Bacteremia, and CDI), as all of the HAI measures will be retained in the HAC Reduction Program, and to remove the Safety domain itself, as there would be no measures remaining in the domain, along with proposing to remove two measures from the Efficiency and Cost Reduction domain (AMI Payment and HF Payment). If these measure removals are finalized as proposed, the Hospital VBP Program measure set for the FY 2021 program year would contain the following measures: SUMMARY OF MEASURES FOR THE FY 2021 PROGRAM YEAR IF PROPOSED MEASURE REMOVALS ARE FINALIZED * Measure short name Domain/measure name NQF No. Person and Community Engagement Domain HCAHPS .............. Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) (including Care Transition Measure). 0166 (0228) Clinical Outcomes Domain ** MORT–30–AMI .... Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Acute Myocardial Infarction (AMI) Hospitalization. Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Heart Failure (HF) Hospitalization Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Pneumonia Hospitalization ........... MORT–30–HF ...... MORT–30–PN (updated cohort). MORT–30–COPD Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Chronic Obstructive Pulmonary Disease (COPD) Hospitalization. THA/TKA .............. Hospital-Level Risk-Standardized Complication Rate Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA). 0230 0229 0468 1893 1550 Efficiency and Cost Reduction Domain MSPB ................... Medicare Spending Per Beneficiary (MSPB)—Hospital ................................................................................... 2158 * As discussed in sections IV.I.2.c.(1) and (2) and IV.I.2.c.(3) of the preamble of this proposed rule, respectively, we are proposing to remove six measures in the Safety domain (PC–01, CAUTI, CLABSI, Colon and Abdominal Hysterectomy SSI, MRSA Bacteremia, and CDI) beginning with the FY 2021 program year, and two measures in the Efficiency and Cost Reduction domain (AMI Payment and HF Payment), which would have entered the program beginning with the FY 2021 program year. As discussed in section IV.I.4.a.(2) of the preamble of this proposed rule, we are also proposing to remove the Safety domain itself beginning with the FY 2021 program year. Therefore, we did not include these measures or the Safety domain in this summary table. ** We are proposing, in section IV.I.4.a.(1) of the preamble of this proposed rule, to change the name of this domain from the Clinical Care domain to the Clinical Outcomes domain beginning with the FY 2020 program year. daltland on DSKBBV9HB2PROD with PROPOSALS2 For the FY 2022 and FY 2023 program years, in addition to the eight measures we are proposing to remove for the FY 2021 program year (PC–01, CAUTI, CLABSI, Colon and Abdominal Hysterectomy SSI, MRSA Bacteremia, VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 CDI, AMI Payment, and HF Payment), we are also proposing to remove the PN Payment measure, which would be entering the program beginning with the FY 2022 program year, and the PSI 90 measure, which would be entering the PO 00000 Frm 00251 Fmt 4701 Sfmt 4702 program beginning with the FY 2023 program year. If all of these measure removals are finalized as proposed, the Hospital VBP Program measure set for the FY 2022 and 2023 program years would contain the following measures: E:\FR\FM\07MYP2.SGM 07MYP2 20414 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules SUMMARY OF MEASURES FOR THE FY 2022 AND FY 2023 PROGRAM YEARS IF PROPOSED MEASURE REMOVALS ARE FINALIZED * Measure short name Domain/measure name NQF No. Person and Community Engagement Domain HCAHPS .............. Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) (including Care Transition Measure). 0166 (0228) Clinical Outcomes Domain ** MORT–30–AMI .... Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Acute Myocardial Infarction (AMI) Hospitalization. Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Heart Failure (HF) Hospitalization Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Pneumonia Hospitalization ........... MORT–30–HF ...... MORT–30–PN (updated cohort). MORT–30–COPD Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Chronic Obstructive Pulmonary Disease (COPD) Hospitalization. MORT–30–CABG Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Coronary Artery Bypass Graft (CABG) Surgery. THA/TKA .............. Hospital-Level Risk-Standardized Complication Rate Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA). 0230 0229 0468 1893 2558 1550 Efficiency and Cost Reduction Domain MSPB ................... Medicare Spending Per Beneficiary (MSPB)—Hospital ................................................................................... 2158 * As discussed in sections IV.I.2.c.(1) and (2) and IV.I.2.c.(3) of the preamble of this proposed rule, respectively, we are proposing to remove six measures in the Safety domain (PC–01, CAUTI, CLABSI, Colon and Abdominal Hysterectomy SSI, MRSA Bacteremia, and CDI) beginning with the FY 2021 program year, and two measures in the Efficiency and Cost Reduction domain (AMI Payment and HF Payment), which would have entered the program beginning with the FY 2021 program year; the PN Payment measure, which would have entered the program beginning with the FY 2022 program year; and the PSI 90 measure, which would have entered the program beginning with the FY 2023 program year. As discussed in section IV.I.4.a.(2) of the preamble of this proposed rule, we are also proposing to remove the Safety domain itself beginning with the FY 2021 program year. Therefore, we did not include these measures or the Safety domain in this summary table. ** We are proposing, in section IV.I.4.a.(1) of the preamble of this proposed rule, to change the name of this domain from the Clinical Care domain to the Clinical Outcomes domain beginning with the FY 2020 program year. daltland on DSKBBV9HB2PROD with PROPOSALS2 3. Accounting for Social Risk Factors in the Hospital VBP Program In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38241 through 38242), we discussed the importance of improving beneficiary outcomes including reducing health disparities. We also discussed our commitment to ensuring that medically complex patients, as well as those with social risk factors, receive excellent care. We discussed how studies show that social risk factors, such as being near or below the poverty level as determined by HHS, belonging to a racial or ethnic minority group, or living with a disability, can be associated with poor health outcomes and how some of this disparity is related to the quality of health care.259 Among our core objectives, we aim to improve health outcomes, attain health equity for all beneficiaries, and ensure that complex patients as well as those with social risk factors receive excellent 259 See, for example United States Department of Health and Human Services. ‘‘Healthy People 2020: Disparities. 2014.’’ Available at: https:// www.healthypeople.gov/2020/about/foundationhealth-measures/Disparities; or National Academies of Sciences, Engineering, and Medicine. Accounting for Social Risk Factors in Medicare Payment: Identifying Social Risk Factors. Washington, DC: National Academies of Sciences, Engineering, and Medicine 2016. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 care. Within this context, reports by the Office of the Assistant Secretary for Planning and Evaluation (ASPE) and the National Academy of Medicine have examined the influence of social risk factors in CMS value-based purchasing programs.260 As we noted in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38404), ASPE’s report to Congress found that, in the context of value-based purchasing programs, dual eligibility was the most powerful predictor of poor health care outcomes among those social risk factors that they examined and tested. In addition, as we noted in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38241), the National Quality Forum (NQF) undertook a 2-year trial period in which certain new measures and measures undergoing maintenance review have been assessed to determine if risk adjustment for social risk factors is appropriate for these measures.261 260 Department of Health and Human Services Office of the Assistant Secretary for Planning and Evaluation (ASPE), ‘‘Report to Congress: Social Risk Factors and Performance Under Medicare’s ValueBased Purchasing Programs.’’ December 2016. Available at: https://aspe.hhs.gov/pdf-report/reportcongress-social-risk-factors-and-performanceunder-medicares-value-based-purchasingprograms. 261 Available at: https://www.qualityforum.org/ SES_Trial_Period.aspx. PO 00000 Frm 00252 Fmt 4701 Sfmt 4702 The trial period ended in April 2017 and a final report is available at: https:// www.qualityforum.org/SES_Trial_ Period.aspx. The trial concluded that ‘‘measures with a conceptual basis for adjustment generally did not demonstrate an empirical relationship’’ between social risk factors and the outcomes measured. This discrepancy may be explained in part by the methods used for adjustment and the limited availability of robust data on social risk factors. NQF has extended the socioeconomic status (SES) trial,262 allowing further examination of social risk factors in outcome measures. In the FY 2018 and CY 2018 proposed rules for our quality reporting and value-based purchasing programs, we solicited feedback on which social risk factors provide the most valuable information to stakeholders and the methodology for illuminating differences in outcomes rates among patient groups within a provider that would also allow for a comparison of those differences, or disparities, across providers. Feedback we received across our quality reporting programs included encouraging CMS: To explore whether 262 Available at: https://www.qualityforum.org/ WorkArea/ linkit.aspx?LinkIdentifier=id&ItemID=86357. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules factors that could be used to stratify or risk adjust the measures (beyond dual eligibility); to consider the full range of differences in patient backgrounds that might affect outcomes; to explore risk adjustment approaches; and to offer careful consideration of what type of information display would be most useful to the public. We also sought public comment on confidential reporting and future public reporting of some of our measures stratified by patient dual eligibility. In general, commenters noted that stratified measures could serve as tools for hospitals to identify gaps in outcomes for different groups of patients, improve the quality of health care for all patients, and empower consumers to make informed decisions about health care. Commenters encouraged us to stratify measures by other social risk factors such as age, income, and educational attainment. With regard to value-based purchasing programs, commenters also cautioned CMS to balance fair and equitable payment while avoiding payment penalties that mask health disparities or discouraging the provision of care to more medically complex patients. Commenters also noted that value-based purchasing program measure selection, domain weighting, performance scoring, and payment methodology must account for social risk. As a next step, CMS is considering options to improve health disparities among patient groups within and across hospitals by increasing the transparency of disparities as shown by quality measures. We also are considering how this work applies to other CMS quality programs in the future. We refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38403 through 38409) for more details, where we discuss the potential stratification of certain Hospital Inpatient Quality Reporting Program outcome measures. Furthermore, we continue to consider options to address equity and disparities in our value-based purchasing programs. We plan to continue working with ASPE, the public, and other key stakeholders on this important issue to identify policy solutions that achieve the goals of attaining health equity for all beneficiaries and minimizing unintended consequences. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 4. Scoring Methodology and Data Requirements a. Proposed Changes to the Hospital VBP Program Domains (1) Proposed Domain Name Change for the FY 2020 Program Year and Subsequent Years In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49553 through 49554), we renamed the Clinical Care—Outcomes subdomain as the Clinical Care domain beginning with the FY 2018 program year. As discussed in the section I.A.2. of the preamble of this proposed rule, we strive to have measures in our programs that can drive improvement in patients’ health outcomes. We also strive to align quality measurement and value-based payment programs with other national strategies, such as the Meaningful Measures Initiative. As discussed in section IV.I.2.c. of the preamble of this proposed rule, we believe that one of the primary areas of focus for the Hospital VBP Program should be on measures of clinical outcomes, such as measures of mortality and complications, which address the Meaningful Measures Initiative quality priority of promoting effective treatment. The Clinical Care domain currently contains these types of measures; therefore, to better align the name of the domain with our priority area of focus, we are proposing to change the domain name from Clinical Care to Clinical Outcomes, beginning with the FY 2020 program year. We believe this proposed domain name better captures our goal of driving improvement in health outcomes and focusing on those outcomes that are most meaningful to patients and their providers. We are inviting public comment on this proposal. (2) Proposed Removal of the Safety Domain for the FY 2021 Program Year and Subsequent Years We previously adopted five HAI measures and the PC–01 measure for the Safety domain (82 FR 38242 through 38244). We also previously adopted PSI 90 as a measure in the Safety domain beginning with the FY 2023 program year (82 FR 38251 through 38256). However, as discussed in section IV.I.2.c.(1) and (2) of the preamble of this proposed rule, above, we are proposing to remove the PC–01 measure and the five HAI measures from the Hospital VBP Program beginning with the FY 2021 program year and to remove the PSI 90 measure effective with the effective date of the FY 2019 IPPS/LTCH PPS final rule, as the PSI 90 measure and all five of the HAI PO 00000 Frm 00253 Fmt 4701 Sfmt 4702 20415 measures will be retained in the HAC Reduction Program. We are not proposing any new measures for the Safety domain in this proposed rule. In addition, as discussed in section IV.I.2.c. of the preamble of this proposed rule, by taking a holistic approach to evaluating the appropriateness of the measures used in the three hospital value-based purchasing programs—the Hospital VBP, Hospital Readmissions Reduction, and HAC Reduction Programs—we believe the HAC Reduction Program is the primary part of the quality payment framework that should focus on the safety aspect of care quality for the inpatient hospital setting (Meaningful Measures Initiative quality priority of making care safer by reducing harm caused in the delivery of care). We believe this framework will allow hospitals and patients to continue to obtain meaningful information about hospital performance and incentivize quality improvement while also streamlining the measure sets to reduce the costs of duplicative measures and program complexity. In the FY 2015 IPPS/LTCH PPS final rule (79 FR 50056) and FY 2016 IPPS/ LTCH PPS final rule (80 FR 49546), we noted that hospital acquired condition measures comprise some of the most critical patient safety areas, therefore justifying the use of the measures in more than one program. However, we have also stated that we will monitor the HAC Reduction and Hospital VBP Programs and analyze the impact of our measures selection, including any unintended consequences with having a measure in more than one program, and will revise the measure set in one or both programs if needed (79 FR 50056). We have continued to receive stakeholder feedback expressing concern about overlapping measures amongst different payment programs, such as the Hospital VBP and HAC Reduction Programs. For the Hospital VBP Program, specifically, we believe removing the measures in the Safety domain and retaining them in the HAC Reduction Program directly addresses the concerns expressed by stakeholders about the costs to hospitals participating in these programs so that the costs of participation do not outweigh the benefits of improving beneficiary care. In this proposed rule, we are proposing to remove the Safety domain from the Hospital VBP Program, beginning with the FY 2021 program year, because there would no longer be any measures in that domain if our measure removal proposals are finalized. We acknowledge that by removing the Safety domain and its E:\FR\FM\07MYP2.SGM 07MYP2 20416 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 measures from the Hospital VBP Program, the overall effect would be to decrease the total percent of hospital payment at risk that is based on performance on these measures (by no longer tying performance on them to Hospital VBP Program reimbursement), and that it might reduce the current incentive for hospitals to perform as well on them. However, we believe hospitals will still be sufficiently incentivized to perform well on the measures even if they are only in one value-based purchasing program, and we intend to monitor the effects of this proposal, if finalized, as the patient safety measures would be maintained in the HAC Reduction Program, validated, and publicly reported on the Hospital Compare website. We also refer readers to section IV.I.4.b.(2) of the preamble of this proposed rule, where we discuss how we considered keeping the Safety domain and the current domain weighting of 25 percent weight for each of the four domains with proportionate reweighting if a hospital has sufficient data on only three domains, which would include retaining in the Hospital VBP Program one or more of the measures in the Safety domain (such as measures which are also used in the HAC Reduction Program). However, based on the considerations discussed above, we decided to propose removal of the Safety domain measures and the Safety domain from the Hospital VBP Program. If our proposals to remove the Safety domain measures (PC–01, the five HAI measures, and PSI 90) are adopted, there would be no measures left in the Safety domain beginning with the FY 2021 program year. Therefore, we are proposing to remove the Safety domain from the Hospital VBP Program beginning with the FY 2021 program year. We are inviting public comment on this proposal and whether we should keep the Safety domain along with one or more of its measures. b. Proposed Domain Weighting With Increased Weight to Clinical Outcomes and Alternatives Considered for the FY 2021 Program Year and Subsequent Years In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38266), we finalized our proposal to retain the equal weight of 25 percent for each of the four domains in the FY 2020 program year and subsequent years for hospitals that receive a score in all domains. For the FY 2017 program year and subsequent years, we adopted a policy that hospitals must receive domain scores on at least three of four quality domains in VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 order to receive a TPS, and hospitals with sufficient data on only three domains will have their TPSs proportionately reweighted (79 FR 50084 through 50085). As discussed above, we are proposing to remove the Hospital VBP Program Safety domain beginning with the FY 2021 program year in connection with our proposal to remove all of the measures previously adopted for the Safety domain. We are also proposing to remove the three condition-specific payment measures (AMI Payment, HF Payment, and PN Payment) effective with the effective date of the FY 2019 IPPS/LTCH PPS final rule. If these proposals are adopted, there would be only three domains remaining in the Hospital VBP Program, beginning with the FY 2021 program year—Clinical Outcomes (proposed name change; currently referred to as the Clinical Care domain), Person and Community Engagement, and Efficiency and Cost Reduction. The Clinical Outcomes domain would have five measures of mortality and complications for the FY 2021 program year and 6 measures beginning with the FY 2022 program year, the Person and Community Engagement domain would have the HCAHPS survey with its eight dimensions of patient experience, and the Efficiency and Cost Reduction domain would include only the MSPB measure. To account for these changes, we assessed the weighting of scores on the three remaining domains in constituting each hospital’s TPS. Specifically, we considered: (1) Weighting the Clinical Outcomes domain at 50 percent of a hospital’s TPS, and to weight the Person and Community Engagement and Efficiency and Cost Reduction at 25 percent each; and (2) weighting all three domains equally, each as one-third (1⁄3) of a hospital’s TPS. Because there would be only three domains if our proposals to remove the Safety domain and all of the Safety domain measures are adopted, we are not proposing any changes to the requirement that a hospital must receive domain scores on at least three domains to receive a TPS. Historically, when the Hospital VBP Program had three domains, scores in all three were required to receive a TPS (76 FR 74534; 76 FR 74544). We also discuss in this section that we considered keeping the current domain weighting (25 percent for each of the four domains—Safety, Clinical Outcomes (proposed name change), Person and Community Engagement, and Efficiency and Cost Reduction—with proportionate reweighting if a hospital has sufficient PO 00000 Frm 00254 Fmt 4701 Sfmt 4702 data on only three domains), which would require keeping at least one or more of the measures in the Safety domain and the Safety domain itself. (1) Proposed Domain Weighting With Increased Weight to Clinical Outcomes For the reasons discussed below, in this proposed rule, we are proposing to weight the domains as follows beginning with the FY 2021 program year: PROPOSED DOMAIN WEIGHTS FOR THE FY 2021 PROGRAM YEAR AND SUBSEQUENT YEARS Domain Clinical Outcomes * ............... Person and Community Engagement .......................... Efficiency and Cost Reduction .................................... Weight (percent) 50 25 25 * We are proposing, in section IV.I.4.a.(1) of the preamble of this proposed rule, to change the name of this domain from the Clinical Care domain to the Clinical Outcomes domain beginning with the FY 2020 program year. We believe this proposed domain weighting best aligns with our emphasis on clinical outcomes, which address the Meaningful Measures Initiative quality priority of promoting effective treatment, and provides a greater weight for the domain with the greatest number of measures (Clinical Outcomes), while providing appropriate weighting to the domains that focus on patient experience and cost reduction commensurate with their continued importance. In proposing to increase the weight of the Clinical Outcomes domain from 25 percent to 50 percent of hospitals’ TPSs, we took into account that the Clinical Outcomes domain will include five outcome measures for the FY 2021 program year (MORT–30–AMI, MORT–30–HF, MORT–30–COPD, MORT–30–PN (updated cohort), and THA/TKA) and six outcome measures for the FY 2022 program year (MORT– 30–CABG, MORT–30–AMI, MORT–30– HF, MORT–30–COPD, MORT–30–PN (updated cohort), and THA/TKA), while the Person and Community Engagement domain includes the HCAHPS survey measure, and the Efficiency and Cost Reduction domain would include only one measure (MSPB) if our proposals to remove the condition-specific payment measures, discussed in section IV.I.2.c.(3) of the preamble of this proposed rule, above, are adopted. Under this proposed domain weighting, each measure in the Clinical Outcomes domain (measures of mortality and complications) would E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules comprise 10 percent of each hospital’s TPS for the FY 2021 program year and 8.33 percent for the FY 2022 program year and subsequent years, if a hospital meets the case minimum for each measure in the domain, and no more than 25 percent for each measure if a hospital can only meet the minimum two measure scores for the Clinical Outcomes domain. The MSPB measure would continue to be weighted at 25 percent, if our proposals to remove the condition specific payment measures are adopted; and each of the eight HCAHPS dimensions would continue to be weighted at 3.125 percent for a total of 25 percent for the Person and Community Engagement domain. We believe the proposed domain weighting better balances the contributing weights of each individual measure that would be retained in the Hospital VBP Program compared to the alternative weighting we considered of equal weights (onethird (1⁄3) for each domain), as discussed in more detail below. We also believe the proposal to increase the weight of the Clinical Outcomes domain would help address concerns expressed by the Government Accountability Office (GAO) in a June 2017 report.263 In the report, GAO observed that high scores in the Efficiency and Cost Reduction domain resulted in positive payment adjustments for some hospitals that had composite quality scores below the median (the GAO assessed each hospital’s composite quality score as its TPS minus its weighted Efficiency and Cost Reduction domain score). GAO also expressed concern that proportionate reweighting of the Efficiency and Cost Reduction domain (for example, from 25 percent to onethird (1⁄3) of a hospital’s TPS in FY 2016), due to a missing domain score for another domain, amplified the contribution of the Efficiency and Cost Reduction domain to the TPS. GAO recommended that CMS take action to avoid disproportionate impact of the Efficiency and Cost Reduction domain on the TPS, and to change the proportionate reweighting policy so it does not facilitate positive payment adjustments for hospitals with lower quality scores. Other stakeholders and researchers have expressed similar concerns.264 263 Hospital Value-Based Purchasing: CMS Should Take Steps to Ensure Lower Quality Hospitals Do Not Quality for Bonuses: Report to Congressional Committees. (GAO Publication No. GAO–17–551) Retrieved from U.S. Government Accountability Office: Available at: https:// www.gao.gov/assets/690/685586.pdf. 264 For example, Ryan AM, Krinsky S, Maurer KA, Dimick JB. Changes in Hospital Quality VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Using actual FY 2018 program data,265 we analyzed the estimated potential impacts to hospital TPSs and payment adjustment. Based on this analysis, we estimate that with the proposed domain weighting, approximately 200 hospitals with composite quality scores below the median composite quality score for all Hospital VBP Program-eligible hospitals would no longer receive a positive payment adjustment mainly driven by their high performance on the Efficiency and Cost Reduction domain. This represents an approximate 50 percent reduction in the percent of hospitals receiving positive payment adjustments that have composite quality scores below the median (from 21 percent of hospitals receiving payment adjustments to 11 percent). We refer readers to the table in the section IV.I.4.b.(3) below summarizing the results of this analysis. In further analyzing the potential impacts of the proposed domain weighting on hospitals’ TPSs using actual FY 2018 program data, our analysis showed that, on average, hospitals with large bed size, hospitals in urban areas, teaching hospitals, and safety net status hospitals,266 which have historically received lower overall TPSs on average (generally due to lower average performance on the Efficiency and Cost Reduction and Patient and Community Engagement domains), moved closer to the average TPS under the proposed domain weighting (generally due to their higher average performance on the Clinical Outcomes domain). With average scores for these types of hospitals moving closer to the average TPS for all hospitals, this would increase their TPSs, on average, and thereby increase their chances for a positive payment adjustment. On average, hospitals with small bed size, rural hospitals, and non-teaching hospitals, which were historically high scorers on average (generally due to Associated with Hospital Value-Based Purchasing. N Engl J Med. 2017 June 15;376(24):2358–2366. 265 Only eligible hospitals were included in this analysis. Excluded hospitals (for example, hospitals not meeting the minimum domains required for calculation, hospitals receiving three or more immediate jeopardy citations in the FY 2018 performance period, hospitals subject to payment reductions under the Hospital IQR Program in FY 2018, and hospitals located in the State of Maryland) were removed from this analysis. 266 For purposes of this analysis, ‘‘safety net’’ status is defined as those hospitals with top 10 percentile of Disproportionate Share Hospital (DSH) patient percentage from the FY 2018 IPPS/LTCH PPS final rule impact file, available at: https:// www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/FY2018-IPPS-FinalRule-Home-Page-Items/FY2018-IPPS-Final-RuleData-Files.html?DLPage=1&DLEntries=10& DLSort=0&DLSortDir=ascending. PO 00000 Frm 00255 Fmt 4701 Sfmt 4702 20417 higher average performance on the Efficiency and Cost Reduction and Patient and Community Engagement domains), also moved closer to the average TPS under the proposed domain weighting (generally due to lower average performance on the Clinical Outcomes domain). With average scores for these types of hospitals also moving closer to the average TPS for all hospitals, this would decrease their TPSs, on average, and thereby decrease their chances for a positive payment adjustment. This would also be consistent with our analysis discussed above that the proposed domain weighting would better address GAO’s recommendations for the Hospital VBP Program by reducing the percent of hospitals receiving positive payment adjustments that have composite quality scores below the median. Our analysis also simulated that removing the Safety domain and increasing the weight of the Clinical Outcomes domain would have decreased the slope of the linear exchange function from 2.89 (actual FY 2018) to 2.78 (estimated using actual FY 2018 program data) and would have decreased the percent of hospitals receiving a positive payment adjustment from 57 percent to 45 percent. We believe this is mainly due to hospitals with greater total MS–DRGs payments (such as larger hospitals that generally have higher average performance on the Clinical Outcomes domain) earning higher TPSs relative to hospitals with smaller total MS–DRGs payments in this estimated budget-neutral program. We refer readers to the tables in section IV.I.4.b.(3) below summarizing the results of these analyses. (2) Alternatives Considered As an alternative, we also considered weighting each of the three domains equally, meaning that each domain (Clinical Outcomes, Person and Community Engagement, and Efficiency and Cost Reduction) would be weighted as one-third (1⁄3) of a hospital’s TPS, which is similar to the proportionate reweighting policy when a hospital is missing one domain score due to insufficient cases to score enough measures for the domain. Our analysis showed that, on average, hospitals with small bed size, rural hospitals, nonteaching hospitals, and non-safety net status hospitals would earn TPSs relatively closer to or better than historic levels of performance, particularly with increased weighting of the Patient and Community Engagement and Efficiency and Cost Reduction domains from 25 percent each to onethird (1⁄3) each, domains in which these E:\FR\FM\07MYP2.SGM 07MYP2 20418 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules types of hospitals historically perform better than average compared to large bed size, hospitals in urban areas, teaching hospitals, and safety net status hospitals.267 In addition, our analysis showed that equally weighting the domains does not address the GAO’s concern of positive payment adjustments for hospitals with composite quality scores below the median. Based on our analyses, we estimate that approximately 20 percent of hospitals with composite quality scores below the median composite quality score for all Hospital VBP Program-eligible hospitals would receive a positive payment adjustment mainly driven by their high performance on the Efficiency and Cost Reduction domain, if we weighted the domains equally. This is approximately double the number of hospitals that we estimate would receive a positive payment adjustment with composite quality scores below the median as compared to our proposed domain weighting of increasing the Clinical Outcomes domain to 50 percent and keeping the Patient and Community Engagement and Efficiency and Cost Reduction domains at 25 percent each. We refer readers to the tables in section IV.I.4.b.(3) of the preamble of this proposed rule summarizing the results of these analyses. We also considered keeping the Safety domain and the current domain weighting (25 percent weight for each of the four domains with proportionate reweighting if a hospital has sufficient data on only three domains), which would include retaining in the Hospital VBP Program one or more of the measures in the Safety domain (such as measures which are also used in the HAC Reduction Program). As discussed in section IV.I.2.c. of the preamble of this proposed rule, we continue to consider patient safety and reducing HAIs as high priorities, which is why the PSI 90 and five HAI measures being proposed for removal from the Hospital VBP Program will continue to be used in the HAC Reduction Program. As discussed earlier, we believe the more holistic quality payment program strategy we seek to undertake will allow hospitals and patients to continue to obtain meaningful information about hospital performance and incentivize quality improvement while also streamlining the measure sets to reduce duplicative measures and program complexity. For the Hospital VBP Program, specifically, we believe removing the measures in the Safety domain and retaining them in the HAC Reduction Program directly addresses the concerns expressed by provider stakeholders about the costs to hospitals participating in these programs so that the costs of participation do not outweigh the benefits of improving beneficiary care. (3) Analysis Our priority is to adopt a domain weighting policy that appropriately reflects hospital performance under the Hospital VBP Program, aligns with CMS policy goals, including the more holistic quality payment program strategy for hospitals discussed above, and continues to incentivize quality improvement. As noted above, to understand the potential impacts of the proposed domain weighting on hospitals’ TPSs, we conducted analyses using FY 2018 program data that estimated the potential impacts of our proposed domain weighting policy to increase the weight of the Clinical Outcomes domain from 25 percent to 50 percent of a hospital’s TPS and an alternative weighting policy we considered of equal weights whereby each domain would constitute one-third (1⁄3) of a hospital’s TPS. The table below provides an overview of the estimated impact on hospitals’ TPS by certain hospital characteristics and as they would compare to actual FY 2018 TPSs, which include scoring on four domains, including the Safety domain, and applying proportionate reweighting if a hospital has sufficient data on only three domains. COMPARISON OF ESTIMATED AVERAGE TPSS AND UNWEIGHTED DOMAIN SCORES * Actual FY 2018 average clinical care domain score daltland on DSKBBV9HB2PROD with PROPOSALS2 Hospital characteristic All Hospitals ** .......................................... Bed Size: 1–99 .................................................. 100–199 ............................................ 200–299 ............................................ 300–399 ............................................ 400+ .................................................. Geographic Location: Urban ................................................ Rural ................................................. Safety Net Status: *** Non-Safety Net ................................. Safety Net ......................................... Teaching Status: Non-Teaching ................................... Teaching ........................................... Actual FY 2018 average person and community engagement domain score Actual FY 2018 average efficiency and cost reduction domain score Actual FY 2018 average TPS (4 domains) + Proposed increased weighting of clinical care domain: estimated average TPS Alternative weighting: estimated average TPS 43.2 33.5 18.8 37.4 34.6 31.8 33.4 42.2 44.5 48.2 50.9 46.0 34.5 27.9 27.3 26.9 35.7 21.0 12.9 10.0 7.6 44.6 39.2 34.4 33.3 31.9 37.2 35.0 32.4 33.4 34.1 38.4 32.6 28.4 28.5 28.5 46.8 33.7 30.7 40.5 13.7 31.7 35.7 41.9 34.5 34.9 30.4 35.3 42.7 45.1 35.4 25.7 19.0 18.1 37.9 35.6 34.9 33.5 32.4 29.6 39.9 48.7 36.7 27.9 22.9 11.8 39.4 34.1 34.9 34.3 33.2 29.5 * Analysis based on FY 2018 Hospital VBP Program data. ** Only eligible hospitals are included in this analysis. Excluded hospitals (for example, hospitals not meeting the minimum domains required for calculation, hospitals receiving three or more immediate jeopardy citations in the FY 2018 performance period, hospitals subject to payment reductions under the Hospital IQR Program in FY 2018, and hospitals located in the state of Maryland) were removed from this analysis. 267 For purposes of this analysis, ‘safety net’ status is defined as those hospitals with top 10 percentile of Disproportionate Share Hospital (DSH) patient percentage from the FY 2018 IPPS final rule VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 impact file, available at: https://www.cms.gov/ Medicare/Medicare-Fee-for-Service-Payment/ AcuteInpatientPPS/FY2018-IPPS-Final-Rule-HomePage-Items/FY2018-IPPS-Final-Rule-Data- PO 00000 Frm 00256 Fmt 4701 Sfmt 4702 Files.html?DLPage=1&DLEntries=10& DLSort=0&DLSortDir=ascending. E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20419 + Based on current policies, which includes the Safety domain, and proportionate reweighting for hospitals with sufficient data on only three domains. *** For purposes of this analysis, ‘safety net’ status is defined as those hospitals with top 10 percentile of Disproportionate Share Hospital (DSH) patient percentage from the FY 2018 IPPS/LTCH PPS final rule impact file: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-Items/FY2018-IPPS-Final-Rule-DataFiles.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending. The table below provides a summary of the estimated impacts on average TPSs and payment adjustments for all hospitals,268 including as they would compare to actual FY 2018 program Summary of estimated impacts on average TPS and payment adjustments using FY 2018 program data Total number of hospitals with a payment adjustment ............................................................... Number of hospitals receiving a positive payment adjustment (percent) ................................... Average positive payment adjustment percentage ..................................................................... Estimated average positive payment adjustment ........................................................................ Number of hospitals receiving a negative payment adjustment (percent) .................................. Average negative payment adjustment percentage .................................................................... Estimated average negative payment adjustment ...................................................................... Number of hospitals receiving a positive payment adjustment with a composite quality score * below the median (percent) ..................................................................................................... Average TPS ............................................................................................................................... Lowest TPS receiving a positive payment adjustment ............................................................... Slope of the linear exchange function ......................................................................................... results under current domain weighting policies. Actual (4 domains) + Proposed increased weight for clinical outcomes (3 domains) Equal weighting alternative (3 domains) 2,808 1,597 (57%) 0.60% $128,161 1,211 (43%) ¥0.41% $169,011 2,701 1,209 (45%) 0.58% $233,620 1,492 (55%) ¥0.60% $189,307 2,701 1,337 (50%) 0.70% $204,038 1,364 (50%) ¥0.57% $200,000 341 (21%) 37.4 34.6 2.8908851882 134 (11%) 34.6 35.9 2.7849297316 266 (20%) 31.8 30.9 3.2405954322 daltland on DSKBBV9HB2PROD with PROPOSALS2 + Based on current policies, which includes the Safety domain, and proportionate reweighting for hospitals with sufficient data on only three domains. * ‘‘Composite quality score’’ is defined as a hospital’s TPS minus the hospital’s weighted Efficiency and Cost Reduction domain score. The estimated total number of hospitals with a payment adjustment is lower under the proposed domain weighting and equal weighting alternative considered (2,701), compared to the current four domain policy (2,808), because under the proposed domain weighting and equal weighting alternative, scores would be required on all three domains (Clinical Care (proposed Clinical Outcomes), Person and Community Engagement, and Efficiency and Cost Reduction) to receive a TPS and hence, a payment adjustment, whereas under the current scoring policy, if a hospital has sufficient data on any three of the four domains it can receive a TPS and payment adjustment. For example, under the current scoring policy, if a hospital does not have sufficient data for a score on the Clinical Care (Clinical Outcomes) domain, but receives a score on the other three domains (Safety, Person and Community Engagement, and Efficiency and Cost Reduction), the hospital could have its domain scores proportionately reweighted and receive a TPS and payment adjustment, whereas under the proposed domain weighting and equal weighting alternative considered (which do not include the Safety domain and retain the requirement for at least three domain scores to receive a TPS), a hospital that does not have sufficient data for a score on the Clinical Care (Clinical Outcomes) domain would not receive a TPS or payment adjustment. We also refer readers to section I.H.6.b. of Appendix A of this proposed rule for a detailed discussion regarding the estimated impacts of the proposed domain weighting and equal weighting alternative on hospital percentage payment adjustments. (4) Summary Based on our analyses and all of the other considerations discussed above, we believe our proposed domain weighting policy to increase the weight of the Clinical Outcomes domain from 25 percent to 50 percent of a hospital’s TPS best aligns with the goal of the Hospital VBP Program to make valuebased incentive payment adjustments based on hospitals’ performance on quality and cost, as well as emphasizes the Meaningful Measures Initiative’s focus on high impact areas that are meaningful to patients and providers. As discussed in sections IV.I.4.a.(2), IV.I.2.c.(1) and (2) of the preamble of this proposed rule, we believe removing the Safety domain and its measures from the Hospital VBP Program supports the holistic approach to the measures collectively used in the three quality payment programs. Patient safety and reducing HAIs continues to be a high priority for us, which is why we believe retaining the PSI 90 and HAI measures in the HAC Reduction Program is important and will continue to incentivize quality improvement in this area, directly addressing the Meaningful Measures Initiative quality priority of making care safer by reducing harm caused in the delivery of care. We believe removing the same measures from the Hospital VBP Program would also reduce program costs and complexity for hospitals, and directly address their concerns about high program costs and their feedback to reduce duplicative measures between programs. Because we are proposing to remove the Safety domain and its measures from the Hospital VBP Program, we considered the two options for weighting the three remaining domains. Increasing the weight of the Clinical Outcomes domain from 25 percent to 50 percent of each hospital’s TPS emphasizes our priority and focus on improving patients’ health outcomes, without decreasing the weight of the 268 Only eligible hospitals are included in this analysis. Excluded hospitals (for example, hospitals not meeting the minimum domains required for calculation, hospitals receiving three or more immediate jeopardy citations in the FY 2018 performance period, hospitals subject to payment reductions under the Hospital IQR Program in FY 2018, and hospitals located in the state of Maryland) were removed from this analysis. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00257 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 20420 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules Efficiency and Cost Reduction or Person and Communities Engagement domains. By contrast, equally weighting each of the three domains at one-third (1⁄3) of each hospital’s TPS would result in the MSPB measure and the HCAHPS survey measure together accounting for twothirds (2⁄3) of each hospital’s TPS. If our proposal to remove the Safety domain beginning with the FY 2021 program year is adopted, we are proposing to weight the three remaining domains as follows: Clinical Outcomes domain—50 percent; Person and Community Engagement domain—25 percent; and Efficiency and Cost Reduction domain—25 percent— beginning with the FY 2021 program year. We are inviting comment on our proposal and alternatives considered. c. Minimum Numbers of Measures for Hospital VBP Program Domains for the FY 2021 Program Year and Subsequent Years Based on previously finalized policies (82 FR 38266), for a hospital to receive a TPS for the FY 2021 program year and subsequent years: • A hospital must report a minimum number of 100 completed HCAHPS surveys for a hospital to receive a Person and Community Engagement domain score. • A hospital must receive a minimum of two measure scores within the Clinical Outcomes domain (currently referred to as the Clinical Care domain). • A hospital must receive a minimum of one measure score within the Efficiency and Cost Reduction domain. As discussed in section IV.I.4.a.(2) of the preamble of this proposed rule, we are proposing to remove the Safety domain from the Hospital VBP Program beginning with the FY 2021 program year. We note that if our proposal to remove the condition-specific payment measures from the Hospital VBP Program is finalized as proposed, a hospital’s Efficiency and Cost Reduction domain scores would be based solely on its MSPB measure score. In this proposed rule, we are not proposing any changes to this policy. d. Minimum Numbers of Cases for Hospital VBP Program Measures for the FY 2021 Program Year and Subsequent Years (1) Background Section 1886(o)(1)(C)(ii)(IV) of the Act requires the Secretary to exclude for the fiscal year hospitals that do not report a minimum number (as determined by the Secretary) of cases for the measures that apply to the hospital for the performance period for the fiscal year. For additional discussion of the previously finalized minimum numbers of cases for measures under the Hospital VBP Program, we refer readers to the Hospital Inpatient VBP Program final rule (76 FR 26527 through 26531); the CY 2012 OPPS/ASC final rule (76 FR 74532 through 74534); the FY 2013 IPPS/LTCH PPS final rule (77 FR 53608 through 53609); the FY 2015 IPPS/LTCH PPS final rule (79 FR 50085); the FY 2016 IPPS/LTCH PPS final rule (80 FR 49570); the FY 2017 IPPS/LTCH PPS final rule (81 FR 57011); and the FY 2018 IPPS/LTCH PPS final rule (82 FR 38266 through 38267). (2) Clinical Care Domain (Proposed Clinical Outcomes Domain) In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53608 through 53609), we adopted a minimum number of 25 cases for the MORT–30–AMI, MORT–30–HF, and MORT–30–PN measures. We adopted the same 25-case minimum for the MORT–30–COPD measure in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49570), and for the MORT–30–CABG, MORT–30–PN (updated cohort), and THA/TKA measures in the FY 2017 IPPS/LTCH PPS final rule (81 FR 57011). In this proposed rule, we are not proposing any changes to these policies. (3) Person and Community Engagement Domain In the Hospital Inpatient VBP Program final rule (76 FR 26527 through 26531), we adopted a minimum number of 100 completed HCAHPS surveys for a hospital to receive a score on the HCAHPS measure. In this proposed rule, we are not proposing any changes to this policy. (4) Efficiency and Cost Reduction Domain In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53609 through 53610), we adopted a minimum of 25 cases in order to receive a score for the MSPB measure. In the FY 2015 IPPS/LTCH PPS final rule (79 FR 50085 through 50086), we retained the same MSPB measure case minimum for the FY 2016 program year and subsequent years. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38267), we adopted a policy that hospitals must report a minimum number of 25 cases per measure in order to receive a measure score for the condition-specific payment measures (namely, the AMI Payment, HF Payment, and PN Payment measures), for the FY 2021 program year, FY 2022 program year, and subsequent years. In this proposed rule, we are not proposing any changes to these policies for the MSPB measure; however, as discussed in section IV.I.2.c.(3) of the preamble of this proposed rule, we are proposing to remove the three condition-specific payment measures (AMI Payment, HF Payment, and PN Payment) from the Hospital VBP Program effective with the effective date of the FY 2019 IPPS/LTCH PPS final rule. (5) Summary of Previously Adopted Minimum Numbers of Cases for the FY 2021 Program Year and Subsequent Years The previously adopted minimum numbers of cases for these measures are set forth in the table below. PREVIOUSLY ADOPTED MINIMUM CASE NUMBER REQUIREMENTS FOR THE FY 2021 PROGRAM YEAR AND SUBSEQUENT YEARS daltland on DSKBBV9HB2PROD with PROPOSALS2 Measure short name Minimum number of cases Person and Community Engagement Domain HCAHPS .............. Hospitals must report a minimum number of 100 completed HCAHPS surveys. Clinical Outcomes Domain * MORT–30–AMI .... Hospitals must report a minimum number of 25 cases. MORT–30–HF ...... Hospitals must report a minimum number of 25 cases. MORT–30–PN Hospitals must report a minimum number of 25 cases. (updated cohort). VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00258 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20421 PREVIOUSLY ADOPTED MINIMUM CASE NUMBER REQUIREMENTS FOR THE FY 2021 PROGRAM YEAR AND SUBSEQUENT YEARS—Continued Measure short name MORT–30–COPD MORT–30–CABG THA/TKA .............. Minimum number of cases Hospitals must report a minimum number of 25 cases. Hospitals must report a minimum number of 25 cases. Hospitals must report a minimum number of 25 cases. Efficiency and Cost Reduction Domain MSPB ................... Hospitals must report a minimum number of 25 cases. * We are proposing, in section IV.I.4.a.(1) of the preamble of this proposed rule, to change the name of this domain from the Clinical Care domain to the Clinical Outcomes domain beginning with the FY 2020 program year. 5. Previously Adopted Baseline and Performance Periods c. Efficiency and Cost Reduction Domain a. Background Since the FY 2016 program year, we have adopted a 12-month baseline period and 12-month performance period for the MSPB measure in the Efficiency and Cost Reduction domain (78 FR 50692; 79 FR 50072; 80 FR 49562). In the FY 2017 IPPS/LTCH PPS final rule, we finalized our proposal to adopt a 12-month performance period for the MSPB measure that runs on the calendar year 2 years prior to the applicable program year and a 12-month baseline period that runs on the calendar year 4 years prior to the applicable program year for the FY 2019 program year and subsequent years (81 FR 56998). In this proposed rule, we are not proposing any changes to these policies. Section 1886(o)(4) of the Act requires the Secretary to establish a performance period for the Hospital VBP Program that begins and ends prior to the beginning of such fiscal year. We refer readers to the FY 2017 IPPS/LTCH PPS final rule (81 FR 56998 through 57003) for baseline and performance periods that we have adopted for the FY 2019, FY 2020, FY 2021, and FY 2022 program years. In the same rule, we finalized a schedule for all future baseline and performance periods for previously adopted measures. We refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38256 through 38261) for additional baseline and performance periods that we have adopted for the FY 2022, FY 2023, and subsequent program years. daltland on DSKBBV9HB2PROD with PROPOSALS2 b. Person and Community Engagement Domain Since the FY 2015 program year, we have adopted a 12-month baseline period and 12-month performance period for measures in the Person and Community Engagement domain (previously referred to as the Patientand Caregiver-Centered Experience of Care/Care Coordination domain) (77 FR 53598; 78 FR 50692; 79 FR 50072; 80 FR 49561). In the FY 2017 IPPS/LTCH PPS final rule (81 FR 56998), we finalized our proposal to adopt a 12-month performance period for the Person and Community Engagement domain that runs on the calendar year 2 years prior to the applicable program year and a 12month baseline period that runs on the calendar year 4 years prior to the applicable program year, for the FY 2019 program year and subsequent years. In this proposed rule, we are not proposing any changes to these policies. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 d. Clinical Care Domain (Proposed Clinical Outcomes Domain) For the FY 2020 and FY 2021 program years, we adopted a 36-month baseline period and 36-month performance period for measures in the Clinical Outcomes domain (currently referred to as the Clinical Care domain) (78 FR 50692 through 50694; 79 FR 50073; 80 FR 49563).269 In the FY 2017 IPPS/ LTCH PPS final rule (81 FR 57000), we finalized our proposal to adopt a 36month performance period and 36month baseline period for the FY 2022 program year for each of the previously finalized measures in the Clinical Outcomes domain—that is, the MORT– 30–AMI, MORT–30–HF, MORT–30– COPD, THA/TKA, and MORT–30– CABG measures. In the FY 2017 IPPS/ LTCH PPS final rule (81 FR 57001), we also adopted a 22-month performance period for the MORT–30–PN (updated cohort) measure and a 36-month 269 The THA/TKA measure was added for the FY 2019 program year with a 36-month baseline period and a 24-month performance period (79 FR 50072), but we have since adopted 36-month baseline and performance periods for the FY 2021 program year (80 FR 49563). PO 00000 Frm 00259 Fmt 4701 Sfmt 4702 baseline period for the FY 2021 program year. In the same final rule, we adopted a 34-month performance period and 36month baseline period for the MORT– 30–PN (updated cohort) measure for the FY 2022 program year. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38259), we adopted a 36month performance period and 36month baseline period for the MORT– 30–AMI, MORT–30–HF, MORT–30– COPD, MORT–30–CABG, MORT–30–PN (updated cohort), and THA/TKA measures for the FY 2023 program year and subsequent years. Specifically, for the mortality measures (MORT–30– AMI, MORT–30–HF, MORT–30–COPD, MORT–30–CABG, and MORT–30–PN (updated cohort)), the performance period runs for 36 months from July 1, five years prior to the applicable fiscal program year, to June 30, two years prior to the applicable fiscal program year, and the baseline period runs for 36 months from July 1, ten years prior to the applicable fiscal program year, to June 30, seven years prior to the applicable fiscal program year. For the THA/TKA measure, the performance period runs for 36 months from April 1, five years prior to the applicable fiscal program year, to March 31, two years prior to the applicable fiscal program year, and the baseline period runs for 36 months from April 1, ten years prior to the applicable fiscal program year, to March 31, seven years prior to the applicable fiscal program year. In this proposed rule, we are not proposing any changes to the length of these performance or baseline periods. e. Safety Domain In the FY 2017 IPPS/LTCH PPS final rule, we finalized our proposal to adopt a performance period for all measures in the Safety domain—with the exception of the PSI 90 measure—that runs on the calendar year two years prior to the applicable program year and a baseline period that runs on the calendar year 4 years prior to the applicable program year for the FY 2019 program year and E:\FR\FM\07MYP2.SGM 07MYP2 20422 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules subsequent program years (81 FR 57000). In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38242 through 38244, 38251 through 38256), we removed the former PSI 90 measure beginning with the FY 2019 program year, and adopted the Patient Safety and Adverse Events (Composite) (PSI 90) measure beginning with the FY 2023 program year, along with baseline and performance periods for the measure (80 FR 38258 through 38259). As discussed in sections IV.I.4.a.(2), IV.I.2.c.(1) and (2) of the preamble of this proposed rule, we are proposing to remove the Safety domain and remove the PC–01 and the HAI measures (CAUTI, CLABSI, Colon and Abdominal Hysterectomy SSI, CDI, and MRSA Bacteremia) beginning with the FY 2021 program year, and to remove the PSI 90 measure effective with the effective date of the FY 2019 IPPS/LTCH PPS final rule. f. Summary of Previously Adopted Baseline and Performance Periods for the FY 2020 Through FY 2024 Program Years The tables below summarize the baseline and performance periods that we have previously adopted. PREVIOUSLY ADOPTED BASELINE AND PERFORMANCE PERIODS FOR THE FY 2020 PROGRAM YEAR: PERSON AND COMMUNITY ENGAGEMENT; CLINICAL OUTCOMES; SAFETY; AND EFFICIENCY AND COST REDUCTION DOMAINS Domain Baseline period Person and Community Engagement: • HCAHPS .................................................. Clinical Outcomes: * • Mortality (MORT–30–AMI, MORT–30– HF, MORT–30–PN) • THA/TKA. Safety: ** • PC–01 and NHSN measures (CAUTI, CLABSI, Colon and Abdominal Hysterectomy SSI, CDI, MRSA Bacteremia). Efficiency and Cost Reduction: • MSPB ....................................................... Performance period • January 1, 2016–December 31, 2016 ......... • January 1, 2018–December 31, 2018. • July 1, 2010–June 30, 2013 ......................... • July 1, 2010–June 30, 2013 ......................... • July 1, 2015–June 30, 2018. • July 1, 2015–June 30, 2018. • January 1, 2016–December 31, 2016 ......... • January 1, 2018–December 31, 2018. • January 1, 2016–December 31, 2016 ......... • January 1, 2018–December 31, 2018. * We are proposing, in section IV.I.4.a.(1) of the preamble of this proposed rule, to change the name of this domain from the Clinical Care domain to the Clinical Outcomes domain beginning with the FY 2020 program year. ** As discussed in sections IV.I.2.c.(1) and (2) of the preamble of this proposed rule, we are proposing to remove PC–01, CAUTI, CLABSI, Colon and Abdominal Hysterectomy SSI, CDI, and MRSA Bacteremia measures beginning with the FY 2021 program year. PREVIOUSLY ADOPTED BASELINE AND PERFORMANCE PERIODS FOR THE FY 2021 PROGRAM YEAR: PERSON AND COMMUNITY ENGAGEMENT; CLINICAL OUTCOMES; * AND EFFICIENCY AND COST REDUCTION DOMAINS ** Domain Baseline period Person and Community Engagement: • HCAHPS .................................................. Clinical Outcomes: * • Mortality (MORT–30–AMI, MORT–30– HF, MORT–30–COPD). • MORT–30–PN (updated cohort) ............. • THA/TKA .................................................. Efficiency and Cost Reduction: *** • MSPB ....................................................... Performance Period • January 1, 2017–December 31, 2017 ......... • January 1, 2019–December 31, 2019. • July 1, 2011–June 30, 2014 ......................... • July 1, 2016–June 30, 2019. • July 1, 2012–June 30, 2015 ......................... • April 1, 2011–March 31, 2014 ...................... • September 1, 2017–June 30, 2019. • April 1, 2016–March 31, 2019. • January 1, 2017–December 31, 2017 ......... • January 1, 2019–December 31, 2019. * We are proposing, in section IV.I.4.a.(1) of the preamble of this proposed rule, to change the name of this domain from the Clinical Care domain to the Clinical Outcomes domain beginning with the FY 2020 program year. ** As discussed in section IV.I.2.c.(1) and (2) of the preamble of this proposed rule, we are proposing to remove PC–01, CAUTI, CLABSI, Colon and Abdominal Hysterectomy SSI, CDI, and MRSA Bacteremia measures beginning with the FY 2021 program year, which would leave no measures in the Safety domain. As a result, the Safety domain and the previously finalized performance and baseline periods for those six measures are not included in this table. *** As discussed in section IV.I.2.c.(3) of the preamble of this proposed rule, we are proposing to remove AMI Payment and HF Payment measures effective with the effective date of the FY 2019 IPPS/LTCH PPS final rule. As a result, the previously finalized performance and baseline periods for those measures are not included in this table. PREVIOUSLY ADOPTED BASELINE AND PERFORMANCE PERIODS FOR THE FY 2022 PROGRAM YEAR: PERSON AND COMMUNITY ENGAGEMENT; CLINICAL OUTCOMES; * AND EFFICIENCY AND COST REDUCTION DOMAINS ** daltland on DSKBBV9HB2PROD with PROPOSALS2 Domain Baseline period Person and Community Engagement: • HCAHPS .................................................. Clinical Outcomes: * • Mortality (MORT–30–AMI, MORT–30– HF, MORT–30–COPD, MORT–30– CABG). • MORT–30–PN (updated cohort) ............. • THA/TKA .................................................. Efficiency and Cost Reduction: *** VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Performance period • January 1, 2018–December 31, 2018 ......... • January 1, 2020–December 31, 2020. • July 1, 2012–June 30, 2015 ......................... • July 1, 2017–June 30, 2020. • July 1, 2012–June 30, 2015 ......................... • April 1, 2012–March 31, 2015 ...................... • September 1, 2017–June 30, 2020. • April 1, 2017–March 31, 2020. PO 00000 Frm 00260 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20423 PREVIOUSLY ADOPTED BASELINE AND PERFORMANCE PERIODS FOR THE FY 2022 PROGRAM YEAR: PERSON AND COMMUNITY ENGAGEMENT; CLINICAL OUTCOMES; * AND EFFICIENCY AND COST REDUCTION DOMAINS **—Continued Domain Baseline period • MSPB ....................................................... Performance period • January 1, 2018–December 31, 2018 ......... • January 1, 2020–December 31, 2020. * We are proposing, in section IV.I.4.a.(1) of the preamble of this proposed rule, to change the name of this domain from the Clinical Care domain to the Clinical Outcomes domain beginning with the FY 2020 program year. ** As discussed in section IV.I.2.c.(1) and (2) of the preamble of this proposed rule, we are proposing to remove PC–01, CAUTI, CLABSI, Colon and Abdominal Hysterectomy SSI, CDI, and MRSA Bacteremia measures beginning with the FY 2021 program year, which would leave no measures in the Safety domain. As a result, the Safety domain and the previously finalized performance and baseline periods for those six measures are not included in this table. *** As discussed in section IV.I.2.c.(3) of the preamble of this proposed rule, we are proposing to remove AMI Payment, HF Payment, and PN Payment measures effective with the effective date of the FY 2019 IPPS/LTCH PPS final rule. As a result, the previously finalized performance and baseline periods for these three measures are not included in this table. PREVIOUSLY ADOPTED BASELINE AND PERFORMANCE PERIODS FOR THE FY 2023 PROGRAM YEAR: PERSON AND COMMUNITY ENGAGEMENT; CLINICAL OUTCOMES; * AND EFFICIENCY AND COST REDUCTION DOMAINS ** Domain Baseline period Person and Community Engagement: • HCAHPS .................................................. Clinical Outcomes: * • Mortality (MORT–30–AMI, MORT–30– HF, MORT–30–COPD, MORT–30– CABG, MORT–30–PN (updated cohort). • THA/TKA .................................................. Efficiency and Cost Reduction: *** • MSPB ....................................................... Performance period • January 1, 2019–December 31, 2019 ......... • January 1, 2021–December 31, 2021. • July 1, 2013–June 30, 2016 ......................... • July 1, 2018–June 30, 2021. • April 1, 2013–March 31, 2016 ...................... • April 1, 2018–March 31, 2021. • January 1, 2019–December 31, 2019 ......... • January 1, 2021–December 31, 2021. * We are proposing, in section IV.I.4.a.(1) of the preamble of this proposed rule, to change the name of this domain from the Clinical Care domain to the Clinical Outcomes domain beginning with the FY 2020 program year. ** As discussed in sections IV.I.2.c.(1) and (2) of the preamble of this proposed rule, we are proposing to remove PC–01 and the NHSN measures (CAUTI, CLABSI, Colon and Abdominal Hysterectomy SSI, CDI, MRSA Bacteremia) beginning with the FY 2021 program year and we are proposing to remove the PSI 90 measure effective with the effective date of the FY 2019 IPPS/LTCH PPS final rule. If finalized these proposals would leave no measures in the Safety domain. As a result, the Safety Domain and these seven measures are not included in this table. *** As discussed in section IV.I.2.c.(3) of the preamble of this proposed rule, we are proposing to remove AMI Payment, HF Payment, and PN Payment measures effective with the effective date of the FY 2019 IPPS/LTCH PPS final rule. As a result, the previously finalized performance and baseline periods for these three measures are not included in this table. PREVIOUSLY ADOPTED BASELINE AND PERFORMANCE PERIODS FOR THE FY 2024 PROGRAM YEAR: PERSON AND COMMUNITY ENGAGEMENT; CLINICAL OUTCOMES; * AND EFFICIENCY AND COST REDUCTION DOMAINS ** Domain Baseline period Person and Community Engagement: • HCAHPS .................................................. Clinical Outcomes: * • Mortality (MORT–30–AMI, MORT–30– HF, MORT–30–COPD, MORT–30– CABG, MORT–30–PN (updated cohort). • THA/TKA .................................................. Efficiency and Cost Reduction: *** • MSPB ....................................................... Performance period • January 1, 2020–December 31, 2020 ......... • January 1, 2022–December 31, 2022. • July 1, 2014–June 30, 2017 ......................... • July 1, 2019–June 30, 2022. • April 1, 2014–March 31, 2017 ...................... • April 1, 2019–March 31, 2022. • January 1, 2020–December 31, 2020 ......... • January 1, 2022–December 31, 2022. daltland on DSKBBV9HB2PROD with PROPOSALS2 * We are proposing, in section IV.I.4.a.(1) of the preamble of this proposed rule, to change the name of this domain from the Clinical Care domain to the Clinical Outcomes domain beginning with the FY 2020 program year. ** As discussed in section IV.I.2.c.(1) and (2) of the preamble of this proposed rule, we are proposing to remove PC–01 and the NHSN measures (CAUTI, CLABSI, Colon and Abdominal Hysterectomy SSI, CDI, MRSA Bacteremia) beginning with the FY 2021 program year and we are proposing to remove the PSI 90 effective with the effective date of the FY 2019 IPPS/LTCH PPS final rule. If finalized these proposals would leave no measures in the Safety domain. As a result, the Safety Domain and these seven measures are not included in this table. *** As discussed in section IV.I.2.c.(3) of the preamble of this proposed rule, we are proposing to remove AMI Payment, HF Payment, and PN Payment measures effective with the effective date of the FY 2019 IPPS/LTCH PPS final rule. As a result, the previously finalized performance and baseline periods for these three measures are not included in this table. 6. Previously Adopted and Proposed Performance Standards for the Hospital VBP Program a. Background Section 1886(o)(3)(A) of the Act requires the Secretary to establish performance standards for the measures selected under the Hospital VBP VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Program for a performance period for the applicable fiscal year. The performance standards must include levels of achievement and improvement, as required by section 1886(o)(3)(B) of the Act, and must be established no later than 60 days before the beginning of the performance period for the fiscal year involved, as required by section PO 00000 Frm 00261 Fmt 4701 Sfmt 4702 1886(o)(3)(C) of the Act. We refer readers to the Hospital Inpatient VBP Program final rule (76 FR 26511 through 26513) for further discussion of achievement and improvement standards under the Hospital VBP Program. In addition, when establishing the performance standards, section E:\FR\FM\07MYP2.SGM 07MYP2 20424 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 1886(o)(3)(D) of the Act requires the Secretary to consider appropriate factors, such as: (1) Practical experience with the measures, including whether a significant proportion of hospitals failed to meet the performance standard during previous performance periods; (2) historical performance standards; (3) improvement rates; and (4) the opportunity for continued improvement. We refer readers to the FY 2013, FY 2014, and FY 2015 IPPS/LTCH PPS final rules (77 FR 53599 through 53605; 78 FR 50694 through 50699; and 79 FR 50080 through 50081, respectively) for a more detailed discussion of the general scoring methodology used in the Hospital VBP Program. b. Previously Adopted and Proposed Performance Standards for the FY 2021 Program Year In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38263), we summarized the previously adopted performance standards for the FY 2021 program year for the Clinical Care domain (proposed Clinical Outcome domain) measures (MORT–30–HF, MORT–30–AMI, MORT–30–COPD, THA/TKA, and MORT–30–PN (updated cohort)) and the Efficiency and Cost Reduction domain measure (MSPB). We note that the performance standards for the MSPB measure are based on performance period data; therefore, we are unable to provide numerical equivalents for the standards at this time. The previously adopted performance standards for the measures in the Clinical Care (proposed Clinical Outcome domain) and Efficiency and Cost Reduction domains for the FY 2021 program year are set out in the tables below. PREVIOUSLY ADOPTED PERFORMANCE STANDARDS FOR THE FY 2021 PROGRAM YEAR: CLINICAL OUTCOMES ∧ AND EFFICIENCY AND COST REDUCTION DOMAINS # Measure short name Achievement threshold Benchmark Clinical Outcomes Domain ∧* MORT–30–AMI ................................................... MORT–30–HF .................................................... MORT–30–PN (updated cohort) ........................ MORT–30–COPD ............................................... THA/TKA ** ......................................................... 0.860355 0.883803 0.836122 0.923253 0.031157 .......................................................... .......................................................... .......................................................... .......................................................... .......................................................... 0.879714 0.906144 0.870506 0.938664 0.022418 Efficiency and Cost Reduction Domain MSPB ** .............................................................. Median Medicare Spending per Beneficiary ratio across all hospitals during the performance period. Mean of the lowest decile Medicare Spending per Beneficiary ratios across all hospitals during the performance period. ∧ We are proposing, in section IV.I.4.a.(1) of the preamble of this proposed rule, to change the name of this domain from the Clinical Care domain to the Clinical Outcomes domain beginning with the FY 2020 program year. # As discussed in section IV.I.2.c.(3) of the preamble of this proposed rule, we are proposing to remove the AMI Payment and HF Payment measures effective with the effective date of the FY 2019 IPPS/LTCH PPS final rule. As a result, the previously finalized performance standards for those measures are not included in this table. * We note that the mortality measures in the Hospital VBP Program use survival rates rather than mortality rates; as a result, higher values indicate better performance on these measures. ** Lower values represent better performance. The eight dimensions of the HCAHPS measure are calculated to generate the HCAHPS Base Score. For each of the eight dimensions, Achievement Points (0–10 points) and Improvement Points (0–9 points) are calculated, the larger of which is then summed across the eight dimensions to create the HCAHPS Base Score (0–80 points). Each of the eight dimensions is of equal weight, thus the HCAHPS Base Score ranges from 0 to 80 points. HCAHPS Consistency Points are then calculated, which range from 0 to 20 points. The Consistency Points take into consideration the scores of all eight Person and Community Engagement dimensions. The final element of the scoring formula is the summation of the HCAHPS Base Score and the HCAHPS Consistency Points, which results in the Person and Community Engagement Domain score that ranges from 0 to 100 points. In accordance with our finalized methodology for calculating performance standards (discussed more fully in the Hospital Inpatient VBP Program final rule (76 FR 26511 through 26513)), we are proposing to adopt performance standards for the FY 2021 program year for the Person and Community Engagement domain. We note that the numerical values for the proposed performance standards displayed in this proposed rule represent estimates based on the most recently available data, and we intend to update the numerical values in the FY 2019 IPPS/LTCH PPS final rule. PROPOSED PERFORMANCE STANDARDS FOR THE FY 2021 PROGRAM YEAR: PERSON AND COMMUNITY ENGAGEMENT DOMAIN ± Floor (percent) daltland on DSKBBV9HB2PROD with PROPOSALS2 HCAHPS survey dimension Communication with Nurses ........................................................................................................ Communication with Doctors ....................................................................................................... Responsiveness of Hospital Staff ................................................................................................ Communication about Medicines ................................................................................................ Hospital Cleanliness & Quietness ............................................................................................... Discharge Information .................................................................................................................. Care Transition ............................................................................................................................ VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00262 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 55.75 56.94 40.36 20.95 42.76 68.87 6.65 07MYP2 Achievement threshold (percent) 79.05 80.11 65.41 63.64 65.63 87.49 51.68 Benchmark (percent) 87.27 88.17 80.39 74.40 79.74 92.18 63.24 20425 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules PROPOSED PERFORMANCE STANDARDS FOR THE FY 2021 PROGRAM YEAR: PERSON AND COMMUNITY ENGAGEMENT DOMAIN ±—Continued Floor (percent) HCAHPS survey dimension Overall Rating of Hospital ............................................................................................................ 36.42 Achievement threshold (percent) 71.76 Benchmark (percent) 85.64 ± The performance standards displayed in this table were calculated using one quarter (Q4) CY 2016 data and three quarters (Q1, Q2, and Q3) CY 2017 data. We will update this table’s performance standards using four quarters of CY 2017 data in the final rule. We are inviting public comments on these proposed performance standards for the FY 2021 program year. c. Previously Adopted Performance Standards for Certain Measures for the FY 2022 Program Year We have adopted certain measures for the Clinical Care (proposed Clinical Outcome domain) and Efficiency and Cost Reduction domains for future program years in order to ensure that we can adopt baseline and performance periods of sufficient length for performance scoring purposes. In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57009), we adopted performance standards for the FY 2022 program year for the Clinical Care domain (proposed Clinical Outcome domain) measures (THA/TKA, MORT–30–HF, MORT–30– AMI, MORT–30–PN (updated cohort), MORT–30–COPD, and MORT–30– CABG) and the Efficiency and Cost Reduction domain measure (MSPB). We note that the performance standards for the MSPB measure are based on performance period data; therefore, we are unable to provide numerical equivalents for the standards at this time. The previously adopted performance standards for these measures are set out in the table below. PREVIOUSLY ADOPTED PERFORMANCE STANDARDS FOR THE FY 2022 PROGRAM YEAR Measure short name Achievement threshold Benchmark Clinical Outcomes Domain ∧* MORT–30–AMI ................................................... MORT–30–HF .................................................... MORT–30–PN (updated cohort) ........................ MORT–30–COPD ............................................... MORT–30–CABG † ............................................ THA/TKA ** ......................................................... 0.861793 0.879869 0.836122 0.920058 0.968210 0.029833 .......................................................... .......................................................... .......................................................... .......................................................... .......................................................... .......................................................... 0.881305 0.903608 0.870506 0.936962 0.979000 0.021493 Efficiency and Cost Reduction Domain # MSPB ** .............................................................. Median Medicare Spending per Beneficiary ratio across all hospitals during the performance period. Mean of the lowest decile Medicare Spending per Beneficiary ratios across all hospitals during the performance period. ∧ We are proposing, in section IV.I.4.a.(1) of the preamble of this proposed rule, to change the name of this domain from the Clinical Care domain to the Clinical Outcomes domain beginning with the FY 2020 program year. † After publication of the FY 2017 IPPS/LTCH PPS final rule, we determined there was a display error in the performance standards for this measure. Specifically, the Achievement Threshold and Benchmark values, while accurate, were presented in the wrong categories. We corrected this issue in the FY 2018 IPPS/LTCH PPS final rule, and the correct performance standards are displayed here in the table above. * The mortality measures in the Hospital VBP Program use survival rates rather than mortality rates; as a result, higher values indicate better performance on these measures. ** Lower values represent better performance. # As discussed in section IV.I.2.c.(3) of the preamble of this proposed rule, we are proposing to remove the AMI Payment, HF Payment, and PN Payment measures effective with the effective date of the FY 2019 IPPS/LTCH PPS final rule. As a result, the previously finalized performance standards for those three measures are not included in this table. daltland on DSKBBV9HB2PROD with PROPOSALS2 d. Previously Adopted Performance Standards for Certain Measures for the FY 2023 Program Year We have adopted certain measures for the Clinical Care (proposed Clinical Outcome domain) and Efficiency and Cost Reduction domains for future program years in order to ensure that we can adopt baseline and performance periods of sufficient length for performance scoring purposes. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38264 through 38265), we adopted the following performance standards for the VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 FY 2023 program year for the Clinical Care domain (proposed Clinical Outcome domain) measures (THA/TKA, MORT–30–AMI, MORT–30–HF, MORT–30–PN (updated cohort), MORT–30–COPD, and MORT–30– CABG) and for the Efficiency and Cost Reduction domain measure (MSPB). In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38264), we stated our intent to propose performance standards for the PSI 90 measure in this year’s rulemaking. However, as discussed in section IV.I.2.c.(2) of the preamble of this proposed rule, we are proposing to PO 00000 Frm 00263 Fmt 4701 Sfmt 4702 remove the PSI 90 measure from the Hospital VBP Program effective with the effective date of the FY 2019 IPPS/LTCH PPS final rule. For this reason, we are not including proposed performance standards for this measure in this proposed rule. We note that the performance standards for the MSPB measure is based on performance period data; therefore, we are unable to provide numerical equivalents for the standards at this time. The previously adopted performance standards for these measures are set out in the table below. E:\FR\FM\07MYP2.SGM 07MYP2 20426 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules PREVIOUSLY ADOPTED PERFORMANCE STANDARDS FOR THE FY 2023 PROGRAM YEAR Measure short name Achievement threshold Benchmark Clinical Outcomes Domain ∧* MORT–30–AMI ................................................... MORT–30–HF .................................................... MORT–30–PN (updated cohort) ........................ MORT–30–COPD ............................................... MORT–30–CABG ............................................... THA/TKA ** ......................................................... 0.866548 0.881939 0.840138 0.919769 0.968747 0.027428 .......................................................... .......................................................... .......................................................... .......................................................... .......................................................... .......................................................... 0.885499 0.906798 0.871741 0.936349 0.979620 0.019779 Efficiency and Cost Reduction Domain # MSPB ** .............................................................. Median Medicare Spending per Beneficiary ratio across all hospitals during the performance period. Mean of the lowest decile Medicare Spending per Beneficiary ratios across all hospitals during the performance period. ∧ We are proposing, in section IV.I.4.a.(1) of the preamble of this proposed rule, to change the name of this domain from the Clinical Care domain to the Clinical Outcomes domain beginning with the FY 2020 program year. * The mortality measures in the Hospital VBP Program use survival rates rather than mortality rates; as a result, higher values indicate better performance on these measures. ** Lower values represent better performance. # As discussed in section IV.I.2.c.(3) of the preamble of this proposed rule, we are proposing to remove the AMI Payment, HF Payment, and PN Payment measures effective with the effective date of the FY 2019 IPPS/LTCH PPS final rule. As a result, the previously finalized performance standards for those three measures are not included in this table. e. Proposed Performance Standards for Certain Measures for the FY 2024 Program Year We have adopted certain measures for the Clinical Care (proposed Clinical Outcome domain) and Efficiency and Cost Reduction domains for future program years in order to ensure that we can adopt baseline and performance periods of sufficient length for performance scoring purposes. We are proposing the following performance standards for the FY 2024 program year for the Clinical Care domain (proposed Clinical Outcome domain) and the Efficiency and Cost Reduction domain. We note that the performance standards for the MSPB measure is based on performance period data; therefore, we are unable to provide numerical equivalents for the standards at this time. These newly proposed performance standards for these measures are set out in the table below. PROPOSED PERFORMANCE STANDARDS FOR THE FY 2024 PROGRAM YEAR Measure short name Achievement threshold Benchmark Clinical Outcomes Domain ∧* MORT–30–AMI ................................................... MORT–30–HF .................................................... MORT–30–PN (updated cohort) ........................ MORT–30–COPD ............................................... MORT–30–CABG ............................................... THA/TKA ** ......................................................... 0.869247 0.882308 0.840281 0.916491 0.969499 0.025396 .......................................................... .......................................................... .......................................................... .......................................................... .......................................................... .......................................................... 0.887868 0.907733 0.872976 0.934002 0.980319 0.018159 Efficiency and Cost Reduction Domain MSPB ** .............................................................. Median Medicare Spending per Beneficiary ratio across all hospitals during the performance period. Mean of the lowest decile Medicare Spending per Beneficiary ratios across all hospitals during the performance period. daltland on DSKBBV9HB2PROD with PROPOSALS2 ∧ We are proposing, in section IV.I.4.a.(1) of the preamble of this proposed rule, to change the name of this domain from the Clinical Care domain to the Clinical Outcomes domain beginning with the FY 2020 program year. * The mortality measures in the Hospital VBP Program use survival rates rather than mortality rates; as a result, higher values indicate better performance on these measures. ** Lower values represent better performance. We are inviting public comments on these proposed performance standards for the FY 2024 program year. J. Hospital-Acquired Condition (HAC) Reduction Program 1. Background We refer readers to section V.I.1.a. of the preamble of the FY 2014 IPPS/LTCH PPS final rule (78 FR 50707 through 50708) for a general overview of the VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 HAC Reduction Program. For a detailed discussion of the statutory basis of the HAC Reduction Program, we refer readers to section V.I.2. of the preamble of the FY 2014 IPPS/LTCH PPS final rule (78 FR 50708 through 50709). For a further description of our previously finalized policies for the HAC Reduction Program, we refer readers to the FY 2014 IPPS/LTCH PPS final rule (78 FR 50707 through 50729), the FY PO 00000 Frm 00264 Fmt 4701 Sfmt 4702 2015 IPPS/LTCH PPS final rule (79 FR 50087 through 50104), the FY 2016 IPPS/LTCH PPS final rule (80 FR 49570 through 49581), the FY 2017 IPPS/LTCH PPS final rule (81 FR 57011 through 57026) and the FY 2018 IPPS/LTCH PPS final rule (82 FR 38269 through 38278). These policies describe the general framework for implementation of the HAC Reduction Program, including: (1) The relevant definitions applicable to E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules the program; (2) the payment adjustment under the program; (3) the measure selection process and conditions for the program, including a risk-adjustment and scoring methodology; (4) performance scoring; (5) the process for making hospitalspecific performance information available to the public, including the opportunity for a hospital to review the information and submit corrections; and (6) limitation of administrative and judicial review. We also have codified certain requirements of the HAC Reduction Program at 42 CFR 412.170 through 412.172. By publicly reporting quality data, we strive to put patients first by ensuring they, along with their clinicians, are empowered to make decisions about their own healthcare using information aligned with meaningful quality measures. The HAC Reduction Program, together with the Hospital VBP Program and the Hospital Readmissions Reduction Program, represents a key component of the way that we bring quality measurement, transparency, and improvement together with value-based purchasing programs to the inpatient care setting. We have undertaken efforts to review the existing HAC Reduction Program measure set in the context of these other programs, to identify how to reduce costs and complexity across programs while continuing to incentivize improvement in the quality and value of care provided to patients. To that end, we have begun reviewing our programs’ measures in accordance with the Meaningful Measures Initiative we described in section I.A.2. of the preamble of this proposed rule. As part of this review, we have taken a holistic approach to evaluating the appropriateness of the HAC Reduction Program’s current measures in the context of the measures used in two other IPPS value-based purchasing programs (that is, the Hospital VBP Program and the Hospital Readmissions Reduction Program), as well as in the Hospital IQR Program. We view the three value-based purchasing programs together as a collective set of hospital value-based purchasing programs. Specifically, we believe the goals of the three value-based purchasing programs (the Hospital VBP, Hospital Readmissions Reduction, and HAC Reduction Programs) and the measures used in these programs together cover the Meaningful Measures Initiative quality priorities of making care safer, strengthening person and family engagement, promoting coordination of care, promoting effective prevention and treatment, and making care affordable— VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 but that the programs should not add unnecessary complexity or costs associated with duplicative measures across programs. The Hospital Readmissions Reduction Program focuses on care coordination measures, which address the quality priority of promoting effective communication and care coordination within the Meaningful Measures Initiative. The HAC Reduction Program focuses on patient safety measures, which address the Meaningful Measures Initiative quality priority of making care safer by reducing harm caused in the delivery of care. As part of this holistic quality payment program strategy, we believe the Hospital VBP Program should focus on the measurement priorities not covered by the Hospital Readmissions Reduction Program or the HAC Reduction Program. The Hospital VBP Program would continue to focus on measures related to: (1) The clinical outcomes, such as mortality and complications (which address the Meaningful Measures Initiative quality priority of promoting effective treatment); (2) patient and caregiver experience, as measured using the HCAHPS survey (which addresses the Meaningful Measures Initiative quality priority of strengthening person and family engagement as partners in their care); and (3) healthcare costs, as measured using the Medicare Spending per Beneficiary measure (which addresses the Meaningful Measures Initiative priority of making care affordable). We believe this framework will allow hospitals and patients to continue to obtain meaningful information about hospital performance and incentivize quality improvement while also streamlining the measure sets to reduce duplicative measures and program complexity so that the costs to hospitals associated with participating in these programs does not outweigh the benefits of improving beneficiary care. As previously stated, the HAC Reduction Program focuses on making care safer by reducing harm caused in the delivery of care. Measures in the HAC Reduction Program, generally represent ‘‘never events’’ 270 and often, 270 ‘‘The term ‘‘Never Event’’ was first introduced in 2001 by Ken Kizer, MD, former CEO of the National Quality Forum (NQF), in reference to particularly shocking medical errors (such as wrong-site surgery) that should never occur. Over time, the list has been expanded to signify adverse events that are unambiguous (clearly identifiable and measurable), serious (resulting in death or significant disability), and usually preventable. The NQF initially defined 27 such events in 2002. The list has been revised since then, most recently in 2011, and now consists of 29 events grouped into 7 categories: surgical, product or device, patient protection, care management, environmental, radiologic, and criminal.’’ Never Events, Available PO 00000 Frm 00265 Fmt 4701 Sfmt 4702 20427 if not always, assess preventable conditions. By including these measures in the Program, we seek to encourage hospitals to address the serious harm caused by these adverse events and to reduce them. Therefore, after thoughtful review, we have determined that the Patient Safety and Adverse Events Composite (PSI 90) and the Centers for Disease Control and Prevention (CDC) National Healthcare Safety Network (NHSN) Healthcare-Associated Infection (HAI) measures (NHSN HAI measures) are most appropriately included as part of the HAC Reduction Program, and we are proposing to remove these measures from the Hospital IQR and VBP Programs. We believe this framework will allow hospitals and patients to continue to obtain meaningful information about hospital performance while streamlining the measure sets. The HAC Reduction Program has historically relied on Hospital IQR Program processes for administrative support; we therefore are proposing HAC Reduction Program-specific healthcare-associated infection measure data collection and validation requirements, and scoring associated with data completeness, timeliness, and accuracy. Contingent upon the Hospital IQR Program finalizing its proposal to remove NHSN HAI measures from its program (section VIII.A.5.b.(2)(b) of the preamble of this proposed rule), the HAC Reduction Program is proposing to formally adopt analogous processes and independently manage these administrative processes to receive CDC NHSN data and begin validation seamlessly with January 1, 2019 infectious events. We note that if the Hospital IQR Program does not finalize its proposal to remove NHSN HAI measures from its program, then the HAC Reduction Program would subsequently not finalize its proposals to manage the associated administrative processes. In this proposed rule, for the HAC Reduction Program, we are proposing to: (1) Establish administrative policies for the HAC Reduction Program to collect, validate, and publicly report quality measure data independently instead of conducting these activities through the Hospital IQR Program; (2) adjust the scoring methodology by removing domains and assigning equal weighting to each measure for which a hospital has a measure score in order to improve fairness across hospital types in the Program; (3) establish the data collection period for the FY 2021 Program Year; and (4) solicit at: https://psnet.ahrq.gov/primers/primer/3/neverevents. E:\FR\FM\07MYP2.SGM 07MYP2 20428 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules stakeholder feedback regarding the potential future inclusion of additional measures, including eCQMs. daltland on DSKBBV9HB2PROD with PROPOSALS2 2. Accounting for Social Risk Factors in the HAC Reduction Program In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38273 through 38276), we discussed the importance of improving beneficiary outcomes including reducing health disparities. We also discussed our commitment to ensuring that medically complex patients, as well as those with social risk factors, receive excellent care. We discussed how studies show that social risk factors, such as being near or below the poverty level as determined by HHS, belonging to a racial or ethnic minority group, or living with a disability, can be associated with poor health outcomes and how some of this disparity is related to the quality of health care.271 Among our core objectives, we aim to improve health outcomes, attain health equity for all beneficiaries, and ensure that complex patients as well as those with social risk factors receive excellent care. Within this context, reports by the Office of the Assistant Secretary for Planning and Evaluation (ASPE) and the National Academy of Medicine have examined the influence of social risk factors in CMS value-based purchasing programs.272 As we noted in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38404), ASPE’s report to Congress found that, in the context of value-based purchasing programs, dual eligibility was the most powerful predictor of poor health care outcomes among those social risk factors that they examined and tested. In addition, as we noted in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38274), the National Quality Forum (NQF) undertook a 2-year trial period in which certain new measures and measures undergoing maintenance review have been assessed to determine 271 See, for example United States Department of Health and Human Services. ‘‘Healthy People 2020: Disparities. 2014.’’ Available at: https:// www.healthypeople.gov/2020/about/foundationhealth-measures/Disparities; or National Academies of Sciences, Engineering, and Medicine. Accounting for Social Risk Factors in Medicare Payment: Identifying Social Risk Factors. Washington, DC: National Academies of Sciences, Engineering, and Medicine 2016. 272 Department of Health and Human Services Office of the Assistant Secretary for Planning and Evaluation (ASPE), ‘‘Report to Congress: Social Risk Factors and Performance Under Medicare’s ValueBased Purchasing Programs.’’ December 2016. Available at: https://aspe.hhs.gov/pdf-report/reportcongress-social-risk-factors-and-performanceunder-medicares-value-based-purchasingprograms. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 if risk adjustment for social risk factors is appropriate for these measures.273 The trial period ended in April 2017 and a final report is available at: https:// www.qualityforum.org/SES_Trial_ Period.aspx. The trial concluded that ‘‘measures with a conceptual basis for adjustment generally did not demonstrate an empirical relationship’’ between social risk factors and the outcomes measured. This discrepancy may be explained in part by the methods used for adjustment and the limited availability of robust data on social risk factors. NQF has extended the socioeconomic status (SES) trial,274 allowing further examination of social risk factors in outcome measures. In the FY 2018 and CY 2018 proposed rules for our quality reporting and value-based purchasing programs, we solicited feedback on which social risk factors provide the most valuable information to stakeholders and the methodology for illuminating differences in outcomes rates among patient groups within a hospital or provider that would also allow for a comparison of those differences, or disparities, across providers. Feedback we received across our quality reporting programs included encouraging CMS to explore whether factors that could be used to stratify or risk adjust the measures (beyond dual eligibility); considering the full range of differences in patient backgrounds that might affect outcomes; exploring risk adjustment approaches; and offering careful consideration of what type of information display would be most useful to the public. We also sought public comment on confidential reporting and future public reporting of some of our measures stratified by patient dual eligibility. In general, commenters noted that stratified measures could serve as tools for hospitals to identify gaps in outcomes for different groups of patients, improve the quality of health care for all patients, and empower consumers to make informed decisions about health care. Commenters encouraged us to stratify measures by other social risk factors such as age, income, and educational attainment. With regard to value-based purchasing programs, commenters also cautioned to balance fair and equitable payment 273 Available at: https://www.qualityforum.org/ SES_Trial_Period.aspx. 274 Available at: https://www.qualityforum.org/ WorkArea/linkit.aspx?LinkIdentifier= id&ItemID=86357. PO 00000 Frm 00266 Fmt 4701 Sfmt 4702 while avoiding payment penalties that mask health disparities or discouraging the provision of care to more medically complex patients. Commenters also noted that value-based purchasing program measure selection, domain weighting, performance scoring, and payment methodology must account for social risk. As a next step, CMS is considering options to improve health disparities among patient groups within and across hospitals by increasing the transparency of disparities as shown by quality measures. We also are considering how this work applies to other CMS quality programs in the future. We refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38403 through 38409) for more details, where we discuss the potential stratification of certain Hospital IQR Program outcome measures. Furthermore, we continue to consider options to address equity and disparities in our value-based purchasing programs. We plan to continue working with ASPE, the public, and other key stakeholders on this important issue to identify policy solutions that achieve the goals of attaining health equity for all beneficiaries and minimizing unintended consequences. 3. Previously-Adopted Measures for FY 2019 and Subsequent Years In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57013 through 57020), we finalized the Patient Safety and Adverse Events Composite (PSI 90) 275 measure for use in the FY 2018 program and subsequent years for Domain 1. In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50717), we finalized the use of Centers for Disease Control and Prevention (CDC) National Healthcare Safety Network (NHSN) measures for Domain 2 for use in the FY 2015 program and subsequent years. Currently, the Program utilizes five NHSN measures: CAUTI, CDI, CLABSI, Colon and Abdominal Hysterectomy SSI, and MRSA Bacteremia. These previously finalized measures, with their full measure names, are shown in the table below. 275 We note that measure stewardship of the recalibrated version of the Patient Safety and Adverse Events Composite (PSI 90) is transitioning from AHRQ to CMS and, as part of the transition, the measure will be referred to as the CMS Recalibrated Patient Safety Indicators and Adverse Events Composite (CMS PSI 90) when it is used in CMS quality programs. E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20429 HAC REDUCTION PROGRAM MEASURES FOR FY 2019 Short name Measure name Domain 1: CMS PSI 90 ....................................... Domain 2: CAUTI ................................................ CDI ..................................................... Patient Safety and Adverse Events Composite ........................................................... MRSA Bacteremia ............................. 0531 NHSN Catheter-associated Urinary Tract Infection (CAUTI) Outcome Measure ....... NHSN Facility-wide Inpatient Hospital-onset Clostridium difficile Infection (CDI) Outcome Measure. NHSN Central Line-Associated Bloodstream Infection (CLABSI) Outcome Measure American College of Surgeons—Centers for Disease Control and Prevention (ACS–CDC) Harmonized Procedure Specific Surgical Site Infection (SSI) Outcome Measure. NHSN Facility-wide Inpatient Hospital-onset Methicillin-resistant Staphylococcus aureus (MRSA) Bacteremia Outcome Measure. CLABSI .............................................. Colon and Abdominal Hysterectomy SSI. 0138 1717 daltland on DSKBBV9HB2PROD with PROPOSALS2 4. Administrative Policies for the HAC Reduction Program for FY 2019 and Subsequent Years a. Measure Specifications As we stated in the FY 2013 IPPS/ LTCH PPS final rule (77 FR 53504 through 53505) for the Hospital IQR Program and subsequently finalized for the HAC Reduction Program in the FY 2015 IPPS/LTCH PPS final rule (79 FR 50100 through 50101), we will use a subregulatory process to make nonsubstantive updates to measures used for the HAC Reduction Program and to use rulemaking to adopt substantive updates to measures. As with the Hospital IQR Program, we will determine what constitutes a substantive versus nonsubstantive change on a case-by-case basis. As we have stated in past rulemaking (79 FR 50100), examples of nonsubstantive changes to measures might include updated diagnosis or procedure codes, medication updates for categories of medications, broadening of age ranges, and exclusions for a measure (such as the addition of a hospice exclusion to the 30-day mortality measures). We believe nonsubstantive changes may also include nonsubstantive updates to NQF-endorsed measures based upon changes to the measures’ underlying clinical guidelines. We will continue to use rulemaking to adopt substantive updates, and a subregulatory process to make nonsubstantive updates, to measures we have adopted for the HAC Reduction Program. As stated in past rules (78 FR 50776), examples of changes that we might consider to be substantive would be those in which the changes are so significant that the measure is no longer the same measure, or when a standard of performance assessed by a measure becomes more stringent (for example, changes in acceptable timing of medication, procedure/process, or test administration). Another example of a substantive change would be where the VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 NQF No. NQF has extended its endorsement of a previously endorsed measure to a new setting, such as extending a measure from the inpatient setting to hospice. These policies regarding what is considered substantive versus nonsubstantive would apply to all measures in the HAC Reduction Program. We also note that the NQF process incorporates an opportunity for public comment and engagement in the measure maintenance process, which is available through its website at: https:// www.qualityforum.org/ projectlisting.aspx. We believe this policy adequately balances our need to incorporate updates to HAC Reduction Program measures in the most expeditious manner possible while preserving the public’s ability to comment on updates that so fundamentally change an endorsed measure that it is no longer the same measure that we originally adopted. Technical specifications for the CMS PSI 90 in Domain 1 can be found on the QualityNet website at: https:// www.qualitynet.org/dcs/Content Server?c=Page&pagename=Qnet Public%2FPage%2FQnetBasic&cid= 1228695355425. Technical specifications for the NHSN HAI measures in Domain 2 can be found at CDC’s NHSN website at: https:// www.cdc.gov/nhsn/acute-care-hospital/ index.html. Both websites provide measure updates and other information necessary to guide hospitals participating in the collection of HAC Reduction Program data. b. Proposed Data Collection Beginning CY 2019 We are proposing to adopt data collection processes for the HAC Reduction Program to receive CDC NHSN data beginning with January 1, 2019 infection events to correspond with the Hospital IQR Program’s calendar year reporting period and maintain the HAC Reduction Program’s PO 00000 Frm 00267 Fmt 4701 Sfmt 4702 0139 0753 1716 annual performance period start date. All reporting requirements, including quarterly frequency, CDC collection system, and deadlines would not change from current Hospital IQR Program requirements to aid continued hospital reporting through clear and consistent requirements. This proposed start date aligns with the effective date of the Hospital IQR Program’s proposed removal of these measures beginning with CY 2019 reporting period/FY 2021 payment determination as discussed in section VIII.A.5.b.(2)(b) of the preamble of this rule and should allow for a seamless transition. The HAC Reduction Program identifies the worst-performing quartile of hospitals by calculating a Total HAC Score derived from the CMS PSI 90 and NHSN HAI measures, which require that we collect claims-based and chartabstracted measures data, respectively. No additional collection mechanisms are required for the CMS PSI 90 measure because it is a claims-based measure calculated using data submitted to CMS by hospitals for Medicare payment, and therefore imposes no additional administrative or reporting requirements on participating hospitals. For the NHSN HAI measures, if the Hospital IQR Program finalizes its proposal to remove them from its program, we are proposing to adopt the HAI data collection process established in the Hospital IQR Program. We refer readers to the FY 2011 IPPS/LTCH PPS final rule (75 FR 50190), where we finalized the CDC NHSN as the mechanism to submit data on the NHSN HAI measures to the Hospital IQR Program, and to the FY 2014 IPPS/LTCH PPS final rule (78 FR 50723), where the HAC Reduction Program stated that it would obtain HAI measure results that hospitals submitted to the CDC NHSN for the Hospital IQR Program. Hospitals would continue to submit data through the CDC NHSN portal located by selecting ‘‘NHSN Reporting’’ after E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20430 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules signing in at: https://sams.cdc.gov, and the HAC Reduction Program would receive the NHSN data directly from the CDC instead of through the Hospital IQR Program as an intermediary. We also are proposing to adopt the Hospital IQR Program’s exception policy to reporting and data submission requirements for the CAUTI, CLABSI, and Colon and Abdominal Hysterectomy SSI measures. As noted in FY 2013 IPPS/LTCH PPS final rule (77 FR 53539) and in FY 2014 IPPS/LTCH PPS final rule (78 FR 50821 through 50822) for the Hospital IQR Program and in FY 2015 IPPS/LTCH PPS final rule (79 FR 50096) for the HAC Reduction Program, CMS acknowledges that some hospitals may not have locations that meet the NHSN criteria for CLABSI or CAUTI reporting and that some hospitals may perform so few procedures requiring surveillance under the Colon and Abdominal Hysterectomy SSI measure that the data may not be meaningful for public reporting nor sufficiently reliable to be utilized for a program year. If a hospital does not have adequate locations or procedures, it should submit the Measure Exception Form to the HAC Reduction Program beginning on January 1, 2019. The IPPS Quality Reporting Programs Measure Exception Form is located using the link located on the QualityNet website under the Hospitals – Inpatient > Hospital Inpatient Quality Reporting Program tab at: https://www.qualitynet.org/dcs/ ContentServer?c=Page&pagename=Qnet Public%2FPage%2FQnetTier2&cid= 1228760487021. As has been the case under the Hospital IQR Program, hospitals seeking an exception would submit this form at least annually to be considered. Beginning in FY 2019, the HAC Reduction Program would provide the same NHSN HAI measures quarterly reports that stakeholders are accustomed to under the Hospital IQR Program. However, some hospitals that elected not to participate in the Hospital IQR Program may be unfamiliar with them. These reports, provided via the QualityNet Secure Portal at: https:// cportal.qualitynet.org/QNet/pgm_ select.jsp, provide hospitals with their facility’s quarterly measure data as well as facility-, State- and national-level results for the measures. To access their reports, hospitals must register for a QualityNet Secure Portal Account. We anticipate the transition to occur without interruption, with the only change to stakeholders being that they would receive reports from both the HAC Reduction Program and the Hospital IQR Program for the respective measures adopted in each program. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 c. Review and Correction of Claims Data Used in the HAC Reduction Program for FY 2019 and Subsequent Years In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50726 through 50727), we detailed the process for the review and correction of claims-based data, and we are not proposing any changes. We calculate the measure in Domain 1 using a static snapshot (data extract) taken after the 90-day period following the last date of discharge used in the applicable period. We create data extracts using claims in CMS’ Common Working File (CWF) 90 days after the last discharge date in the applicable period which we will use for the calculations. For example, if the last discharge date in the applicable period for a measure is June 30, 2018, we would create the data extract on September 30, 2018, and use those data to calculate the claims based measures for that applicable period. Hospitals are not able to submit corrections to the underlying claims snapshot used for the Domain 1 measure calculations after the extract date, and are not be able to add claims to this data set. Therefore, hospitals are encouraged to ensure that their claims are accurate prior to the snapshot date. We consider hospitals’ claims data to be complete for purposes of calculating the Domain 1 for the HAC Reduction Program after the 90-day period following the last date of discharge used in the applicable period. For more information, we refer readers to FY 2014 IPPS/LTCH PPS final rule (78 FR 50726 through 50727). We reiterate that under this process, hospitals retain the ability to submit new claims and corrections to submitted claims for payment purposes in line with CMS’ timely claims filing policies, but the administrative claims data used to calculate the Domain 1 measure and the resulting Domain Score reflect the state of the claims at the time of extraction from CMS’ CWF. We are not proposing any change to our current administrative policy regarding the submission, review, and correction of claims data. d. Review and Correction of ChartAbstracted NHSN HAI Data Used in the HAC Reduction Program for FY 2019 and Subsequent Years In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50726), we stated that the HAC Reduction Program would use the same process as the Hospital IQR Program for hospitals to submit, review, and correct data for chart-abstracted NHSN HAI measures. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38270 through 38271), we clarified that PO 00000 Frm 00268 Fmt 4701 Sfmt 4702 hospitals had an opportunity to submit, review, and correct any of the chartabstracted information for the full 4 1⁄2 months after the end of the reporting quarter. We also noted that for the purposes of fulfilling CMS quality measurement reporting requirements, each facility’s data must be entered into NHSN no later than 4 1⁄2 months after the end of the reporting quarter. For a detailed description of the process, we refer readers to FY 2014 IPPS/LTCH PPS final rule (78 FR 50726) where we explained that hospitals can begin submitting data on the first discharge day of any reporting quarter. Hospitals are encouraged to submit data early in the submission schedule not only to allow them sufficient time to identify errors and resubmit data before the quarterly submission deadline, but also to identify opportunities for continued improvement. Users may view and make corrections to the data that they submit starting immediately following submission. The data are populated into reports that are updated immediately with all data that have been submitted successfully. We believe that 41⁄2 months is sufficient time for hospitals to submit, review, and make corrections to their HAI data. We also balance the correction needs of hospitals with the need to publicly report and refresh measure information on Hospital Compare in a timely manner. Historically, CMS has generally refreshed HAI data on a quarterly basis on Hospital Compare in the Hospital IQR Program. We wish to clarify that this HAI review and correction process is intended to permit hospitals review of measure performance and data submission feedback. Hospitals can use the NHSN system during the quarterly data submission period to identify any errors made in the reporting of a patient’s specific ‘‘infection event,’’ the denominator (that is, overall admissions data), and other NHSN protocol data used to calculate measure results before the quarterly submission deadline. The HAI review and correction process is different than and occurs prior to the annual Scoring Calculations Review and Correction Process, which is intended to ensure the accurate calculation of measure scoring used for payment, and is discussed in section IV.J.4.g. of the preamble of this proposed rule. We are not proposing any changes to our current administrative policy regarding the submission, review, and correction of chart-abstracted HAI data. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules e. Proposed Changes to Existing Validation Processes As discussed in above in section IV.J.1. of the preamble of this proposed rule, we are proposing to adopt processes to validate the NHSN HAI measure data used in the HAC Reduction Program if the Hospital IQR Program finalizes its proposals to remove NHSN HAI measures from its program. While the HAC Reduction Program cannot adopt the Hospital IQR Program’s process as is for various reasons as discussed below, we intend for the HAC Reduction Program’s processes to reflect, to the greatest extent possible, the current processes previously established the Hospital IQR Program. We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53539 through 53553), the FY 2014 IPPS/LTCH PPS final rule (78 FR 50822 through 50835), the FY 2015 IPPS/LTCH PPS final rule (79 FR 50262 through 50273), the FY 2016 IPPS/LTCH PPS final rule (80 FR 49710 through 49712), the FY 2017 IPPS/LTCH PPS final rule (81 FR 57173 through 57181), and the FY 2018 IPPS/LTCH PPS final rule (82 FR 38398 through 38403) for detailed information on the Hospital IQR Program’s validation processes. Currently, CMS estimates accuracy for the hospital-reported data submitted to the clinical warehouse and data submitted to NHSN as reproduced by a trained abstractor using a standardized NHSN HAI measure abstraction protocol created by CDC and CMS and posted on the QualityNet website at: https:// www.qualitynet.org/dcs/ContentServer ?cid=%201228776288808&pagename= QnetPublic%2FPage%2FQnet Tier3&c=Page. We are proposing to adopt the validation processes into the HAC Reduction Program as previously established by the Hospital IQR Program (with some exceptions as discussed below) in this section as follows: Section IV.J.4.e.(1) of the preamble of this proposed rule (proposed measures subject to validation); section IV.J.4.e.(2) of the preamble of this proposed rule (proposed provider selection); section (IV.J.4.e.(3) of the preamble of this proposed rule (proposed targeting criteria); section IV.J.4.e.(4) of the preamble of this proposed rule (proposed calculation of the confidence period); section IV.J.4.e.(5) of the preamble of this proposed rule (proposed educational review process); section IV.J.4.e.(6) of the preamble of this proposed rule (proposed application of validation penalty); and section IV.J.4.e.(7) of the preamble of this proposed rule (proposed validation period). VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 (1) Proposed Measures Subject to Validation In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50828 through 50832) and the FY 2015 IPPS/LTCH PPS final rule (79 FR 50264 through 50265), the Hospital IQR Program identified the following chart-abstracted NHSN HAI measures submitted via NHSN as being subject to validation: CAUTI, CDI, CLABSI, Colon and Abdominal Hysterectomy SSI, and MRSA Bacteremia. In this proposed rule, we are proposing that chart-abstracted NHSN HAI measures submitted via NHSN would be subject to validation in the HAC Reduction Program beginning with the Q3 2019 discharges for FY 2022. As stated in section IV.J.3. of the preamble of this proposed rule, above, and as finalized in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50717), the HAC Reduction Program currently includes five NHSN HAI measures: CAUTI, CDI, CLABSI, Colon and Abdominal Hysterectomy SSI, and MRSA Bacteremia. We are inviting public comment on our proposal. (2) Proposed Provider Selection For chart-abstracted data validation in the Hospital IQR Program, CMS currently performs a random and targeted selection of participating hospitals on an annual basis, as initially set out in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50833 through 50834). For example, in December of 2017, CMS randomly selected 400 hospitals for validation for the FY 2020 payment determination. In April/May of 2018, an additional targeted provider sample of up to 200 hospitals are selected (78 FR 50833 through 50834). We intend to mirror these policies for the HAC Reduction Program, and thus, we are proposing annual random selection of 400 hospitals and the annual targeted selection of 200 hospitals using the targeting criteria proposed below in section IV.J.4.e.(3) of the preamble of this proposed rule. Unlike the Hospital IQR Program, which includes only hospitals with active Notices of Participation (77 FR 53536), we intend to include all subsection (d) hospitals in these proposed validation procedures, since all subsection (d) hospitals are subject to the HAC Reduction Program. Therefore, for the HAC Reduction Program, we are proposing to include all subsection (d) hospitals in the provider sample for validation beginning with the Q3 2019 discharges for FY 2022. We believe this would be better representative of PO 00000 Frm 00269 Fmt 4701 Sfmt 4702 20431 hospitals impacted by the Program. We note that for the FY 2018 HAC Reduction Program, which uses CY 2015 and 2016 NHSN HAI data, 44 hospitals were subject to the HAC Reduction Program, but chose not to participate in the Hospital IQR Program. These hospitals would be included in the validation process. We are inviting public comment on our proposal. (3) Proposed Targeting Criteria As stated above, the Hospital IQR Program currently performs a random and targeted selection of hospitals for validation on an annual basis (78 FR 50833 through 50834). In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50227 through 50229), the Hospital IQR finalized that the targeted selection will include all hospitals that failed validation the previous year. In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53552 through 53553), the Hospital IQR Program finalized additional criteria for selecting targeted hospitals: Any hospital with abnormal or conflicting data patterns; any hospital with rapidly changing data patterns; any hospital that submits data to NHSN after the Hospital IQR Program data submission deadline has passed; any hospital that joined the Hospital IQR Program within the previous 3 years, and which has not been previously validated; any hospital that has not been randomly selected for validation in any of the previous 3 years; and any hospital that passed validation in the previous year, but had a two-tailed confidence interval that included 75 percent. In the FY 2014 IPPS/LTCH PPS final rule, the Hospital IQR Program expanded its targeting criteria to include any hospital which failed to report to NHSN at least half of actual HAI events detected as determined during the previous year’s validation effort. We intend to propose similar policies for the HAC Reduction Program. Therefore, we are proposing the following targeting criteria for the HAC Reduction Program beginning with the Q3 2019 discharges for FY 2022: • Any hospital that failed validation the previous year; • Any hospital that submits data to NHSN after the HAC Reduction Program data submission deadline has passed; • Any hospital that not been randomly selected for validation in the past 3 years; • Any hospital that passed validation in the previous year, but had a two- E:\FR\FM\07MYP2.SGM 07MYP2 20432 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules tailed confidence interval that included 75 percent; 276 and • Any hospital which failed to report to NHSN at least half of actual HAI events detected as determined during the previous year’s validation effort. We are inviting public comment on our proposals. daltland on DSKBBV9HB2PROD with PROPOSALS2 (4) Proposed Calculation of the Confidence Interval The Hospital IQR Program scores hospitals based on an agreement rate between hospital-reported infections compared to events identified as infections by a trained CMS abstractor using a standardized protocol (77 FR 53548). As finalized in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53550 through 53551), the Hospital IQR Program uses the upper bound of a twotailed 90 percent confidence interval around the combined clinical process of care and HAI scores to determine if a hospital passes or fails validation; if this number is greater than or equal to 75 percent, then the hospital passes validation. We believe that a similar computation of the confidence interval is appropriate for the HAC Reduction Program, but that it include only the NHSN HAI measures and not the clinical process of care measures, which are not a part of the Program’s measure set. Therefore, we are proposing that for the HAC Reduction Program beginning in FY 2022: (1) We would score hospitals based on an agreement rate between hospital-reported infections compared to events identified as infections by a trained CMS abstractor using a standardized protocol; (2) we would compute a confidence interval; (3) if the upper bound of this confidence interval is 75 percent or higher, the hospital would pass the HAC Reduction Program validation requirement; and (4) if the upper bound is below 75 percent, the hospital would fail the HAC Reduction Program validation requirement. We are inviting public comment on our proposals. (5) Proposed Educational Review Process Under the Hospital IQR Program, within 30 days of validation results being posted on the QualityNet Secure Portal at: https://cportal.qualitynet.org/ QNet/pgm_select.jsp, if a hospital has a question or needs further clarification on a particular outcome, the hospital may request an educational review (82 FR 38402 through 38403). Furthermore, 276 We will devise a two-tailed confidence interval formula using only NHSN HAI measures for the HAC Reduction Program. This will be posted to the QualityNet website. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 if an educational review that is requested for any of the first three quarters of validation yields incorrect CMS validation results for chartabstracted measures, the corrected quarterly score will be used to compute the final confidence interval (82 FR 38402 through 38403). We plan to have similar procedures under the HAC Reduction Program. Therefore, for the HAC Reduction Program beginning with the Q3 2019 data validation, we are proposing to have an educational review process, such that hospitals selected for validation would have a 30-day period following the receipt of quarterly validation results to seek educational review. During this 30-day period, hospitals may review, seek clarification, and potentially identify a CMS validation error. In addition, like the Hospital IQR Program, we are proposing that if an educational review is timely requested for any of the first three quarters and the review yields an incorrect CMS validation result, the corrected quarterly score would be used to compute the final confidence interval. Unlike the Hospital IQR Program educational review process (82 FR 38402), we are also proposing that if an educational review is timely requested and an error is identified in the 4th quarter of review, we would use the corrected quarterly score to compute the final confidence interval. We are inviting public comment on our proposals. (6) Proposed Application of Validation Penalty Currently, under the Hospital IQR Program, we randomly assign half of the hospitals selected for validation to submit CLABSI and CAUTI Validation Templates and the other half of hospitals to submit MRSA and CDI Validation Templates (78 FR 50826 through 50834). CMS selects up to four candidate NHSN HAI cases per hospital from each of the assigned Validation Templates (79 FR 50263 through 50265). CMS also selects up to two candidate Colon and Abdominal Hysterectomy SSI cases from Medicare claims data for patients who had colon surgeries or abdominal hysterectomies that appear suspicious of infection (78 FR 50826 through 50834). The Hospital IQR Program applies a full payment reduction if a hospital fails to meet any part of the validation process (75 FR 50219 through 50220; 81 FR 57180). For the HAC Reduction Program, if a hospital does not meet the overall validation requirement, we are proposing to penalize hospitals that fail validation by assigning the maximum PO 00000 Frm 00270 Fmt 4701 Sfmt 4702 Winsorized z-score only for the set of measures CMS validated. For example, if a hospital was in the half selected to submit CLABSI and CAUTI Validation Templates but failed the validation, we are proposing that hospital receive the maximum Winsorized z-score for CLABSI, CAUTI, and Colon and Abdominal Hysterectomy SSI. Although it would better align with the Hospital IQR Program’s current ‘‘all or nothing’’ approach (75 FR 50219 through 50220; 81 FR 57180) to penalize hospitals by assigning the maximum Winsorized zscores for the entire domain, we believe that our chosen approach would be fairer to hospitals and would lessen the likelihood of their automatically ranking in the worst-performing quartile based on validation results. Furthermore, we believe our proposed approach better aligns with the current HAC Reduction Program policy of assigning the maximum Winsorized z-score if hospitals do not submit data to NHSN for a given NHSN HAI measure (81 FR 57013). (7) Proposed Validation Period The Hospital IQR Program currently uses a calendar year reporting period for NHSN HAI measures (76 FR 51644). For example, the FY 2020 measure reporting quarters include Q1 2018, Q2 2018, Q3 2018, and Q4 2018. Under the Hospital IQR Program, FY 2020 data validation consists of the following quarters: Q3 2017, Q4 2017, Q1 2018, and Q2 2018, the Hospital IQR Program schedule is available on QualityNet at: https:// www.qualitynet.org/dcs/ ContentServer?cid=%201228776288808 &pagename=QnetPublic%2FPage %2FQnetTier3&c=Page. Currently, the HAC Reduction Program utilizes NHSN HAI data from two calendar years to calculate measure results. For example, the FY 2021 measure reporting quarters include Q1 2018 through Q4 2019. When determining the proposed validation period for the HAC Reduction Program, we considered the performance and validation cycles currently in place under the Hospital IQR Program, and we considered key public reporting dates for the HAC Reduction Program. HAC Reduction Program scores must be calculated in time for hospital specific reports (HSRs) to be issued annually, usually in July, and the 30-day Scoring Calculations Review and Correction period of the HSRs serves as the preview period for Hospital Compare. Then, HAC Reduction Program data published on Hospital Compare is refreshed annually as soon as feasible following the review period. E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules After consideration, we are proposing that the HAC Reduction Program’s performance period would remain 2 calendar years and that the validation period would include the four middle quarters in the HAC Reduction Program performance period (that is, third quarter through second quarter). This approach aligns with current the HAC Reduction Program performance period, it also aligns with current NHSN HAI validation quarters, and because we would continue to collect eight quarters of measure data, we anticipate no impact on the reliability of NHSN HAI results. Because our validation sample of hospitals is selected annually and because of the time needed to build the required infrastructure, we believe the 20433 earliest opportunity to seamlessly begin this work under the HAC Reduction Program is Q3 2019. Therefore, we are proposing that the HAC Reduction Program would begin validation of NHSN HAI measures data with July 2019 infection event data. The proposed commencement of validation, along with key validation dates, is shown in the table below. PROPOSED VALIDATION PERIOD FOR THE HAC REDUCTION PROGRAM [* Dates are subject to change] Current NHSN HAI submission deadline * Discharge quarters by fiscal year (FY) Current NHSN HAI validation templates * 08/15/2019 11/15/2019 02/15/2020 05/15/2020 08/15/2020 11/15/2020 02/15/2021 05/15/2021 02/01/2020 05/01/2020 08/01/2020 11/01/2020 02/28/2020 05/30/2020 08/30/2020 11/29/2020 03/30/2020 06/29/2020 09/29/2020 12/29/2020 06/15/2020 09/15/2020 12/15/2020 03/15/2021 08/15/2020 11/15/2020 02/15/2021 05/15/2021 08/15/2021 11/15/2021 02/15/2022 05/15/2022 02/01/2021 05/01/2021 08/01/2021 11/01/2021 02/28/2021 05/30/2021 08/30/2021 11/29/2021 03/30/2021 06/29/2021 09/29/2021 12/29/2021 06/15/2021 09/15/2021 12/15/2021 03/15/2022 FY 2022: Q1 2019 ........................................................................ Q2 2019 ........................................................................ Q3 2019∧ ...................................................................... Q4 2019∧ ...................................................................... Q1 2020∧ ...................................................................... Q2 2020∧ ...................................................................... Q3 2020 ........................................................................ Q4 2020 ........................................................................ FY 2023: Q1 2020 ........................................................................ Q2 2020 ........................................................................ Q3 2020∧ ...................................................................... Q4 2020∧ ...................................................................... Q1 2021∧ ...................................................................... Q2 2021∧ ...................................................................... Q3 2021 ........................................................................ Q4 2021 ........................................................................ Estimated CDAC record request Estimated date records due to CDAC Estimated validation completion daltland on DSKBBV9HB2PROD with PROPOSALS2 Bolded rows with dates in each column, denoted with the ∧ symbol next to the date in the Discharge Quarter by Fiscal Year (FY) column, indicate the validation cycle for the FY. To maintain symmetry with the current Hospital IQR Program validation schedule as set forth on QualityNet at: https://www.qualitynet.org/dcs/ ContentServer?c=Page &pagename=QnetPublic%2FPage%2 FQnetTier4&cid=1140537256076, we are proposing that for hospitals selected for validation, the NHSN HAI validation templates would be due before the HAC Reduction Program NHSN HAI data submission deadlines. To the greatest extent possible, we are proposing to keep the processes the same as they are currently implemented in the Hospital IQR Program. Because these deadlines would function in the same manner as the current policy under the Hospital IQR Program, we expect that most providers are familiar with this process. For more information, we refer readers to the Chart-Abstracted Data Validation Resources information available at: https://www.qualitynet.org/dcs/ ContentServer?cid=1140537256076 &pagename=QnetPublic%2FPage %2FQnetTier3&c=Page. We are inviting public comment regarding our validation proposals. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 f. Proposed Data Accuracy and Completeness Acknowledgement (DACA) We refer readers to the FY 2013 IPPS/ LTCH PPS final rule (77 FR 53554) for DACA requirements previously adopted by the Hospital IQR Program. We are proposing that if the Hospital IQR Program finalizes its proposal to remove NHSN HAI measures from its program, then the HAC Reduction Program would adopt this same process. Hospitals would have to electronically acknowledge the data submitted are accurate and complete to the best of their knowledge. Hospitals would be required to complete and sign the DACA on an annual basis via the QualityNet Secure Portal: https:// cportal.qualitynet.org/QNet/pgm_ select.jsp. The submission period for signing and completing the DACA is April 1 through May 15, with respect to the time period of January 1 through December 31 of the preceding year. The initial HAC Reduction Program proposed annual DACA signing and completing period would be April 1 PO 00000 Frm 00271 Fmt 4701 Sfmt 4702 through May 15, 2020 for calendar year 2019 data. We are inviting public comment regarding our proposal to adopt DACA requirements. g. Scoring Calculations Review and Correction Period Although we are not proposing any changes to the review and correction procedures for FY 2019, we intend to rename the annual 30-day review and correction period to the ‘‘Scoring Calculations Review and Correction Period.’’ The purpose of the annual 30day review and corrections period is to allow hospitals to review the calculation of their HAC Reduction Program scores, and the new name would more clearly convey both the intent and limitation. The naming convention would further distinguish this period from earlier opportunities during which hospitals can review and correct their underlying data. The HAC Reduction Program will continue to provide annual confidential hospital-specific reports and discharge level information used in the calculation of their Total HAC Scores E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20434 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules via the QualityNet Secure Portal. As noted in section IV.J.4.b. of the preamble of this proposed rule regarding quarterly reports, hospitals must also register at: https:// www.qualitynet.org/dcs/ ContentServer?c=Page &pagename=QnetPublic%2FPage%2 FQnetTier2&cid=1138115992011 for a QualityNet Secure Portal account in order to access their annual hospitalspecific reports. As we stated in the FY 2014 IPPS/ LTCH PPS final rule (78 FR 50725 through 50728), hospitals have a period of 30 days after the information is posted to the QualityNet Secure Portal to review their HAC Reduction Program scores, submit questions about the calculation of their results, and request corrections for their HAC Reduction Program scores prior to public reporting. Hospitals may use the 30-day Scoring Calculations Review and Correction Period to request corrections to the following information prior to public reporting: • CMS PSI 90 measure score • CMS PSI 90 measure result and Winsorized measure result • Domain 1 score • CLABSI measure score • CAUTI measure score • Colon and Abdominal Hysterectomy SSI measure score • MRSA Bacteremia measure score • CDI measure score • Domain 2 score • Total HAC Score As we clarified in the FY 2018 IPPS/ LTCH PPS final rule (82 FR 38270 through 38271), this 30-day period is not an opportunity for hospitals to submit additional corrections related to the underlying claims data for the CMS PSI 90, or to add new claims to the data extract used to calculate the results. Hospitals have an opportunity to review and correct claims data used in the HAC Reduction Program as described in section IV.J.4.c. of the preamble of this proposed rule, and detailed in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50726 through 50727). As we also clarified in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38270 through 38271), this 30-day period is not an opportunity for hospitals to submit additional corrections related to the underlying NHSN HAI data used to calculate the scores, including: Reported number of NSHN HAIs; Standardized Infection Ratios (SIRs); or reported central-line days, urinary catheter days, surgical procedures performed, or patient days. Hospitals would have an opportunity to review and correct chartabstracted NHSN HAI data used in the VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 HAC Reduction Program as described in section IV.J.4.d. of the preamble of this proposed rule. Hospital Compare, including how they are displayed and the frequency of reporting. h. Proposed Public Reporting of Hospital-Specific Data Beginning FY 2019 (2) Clarification of Location of PubliclyReported HAC Reduction Program Information (1) Proposed Public Reporting of Hospital-Specific Data Beginning FY 2019 Section 1886(p)(6)(A) of the Act requires the Secretary to ‘‘make information available to the public regarding HAC rates of each subsection (d) hospital’’ under the HAC Reduction Program. Section 1886(p)(6)(B) of the Act also requires the Secretary to ‘‘ensure that an applicable hospital has the opportunity to review, and submit corrections for, the HAC information to be made public for each hospital.’’ Section 1886(p)(6)(C) of the Act requires the Secretary to post the HAC information for each applicable hospital on the Hospital Compare website in an easily understood format. Generally, data collected during the first quarter of a calendar year are publicly reported annually. As finalized in FY 2014 IPPS/LTCH PPS final rule (78 FR 50725), we will make the following information public on the Hospital Compare website: (1) Hospital scores with respect to each measure; (2) each hospital’s domain-specific score; and (3) the hospital’s Total HAC Score. If the Hospital IQR Program finalizes its proposal to remove the CMS PSI 90 from the Program, the CMS PSI 90 individual indicator measure results (that is, the child measures) would be reported under the HAC Reduction Program. The CMS PSI 90 measure is reported on the Hospital Compare web pages; however, the child measures are reported in the downloadable database on Hospital Compare. Similarly, we believe the NHSN HAI measures represent important quality data consumers of healthcare can use to make informed decisions. Therefore, we intend to continue making NHSN HAI data available to the public on a quarterly basis. As we stated in FY 2018 IPPS/LTCH PPS final rule (82 FR 38324), our current policy has been to report data under the Hospital IQR Program as soon as it is feasible on CMS websites such as the Hospital Compare website, https://www.medicare.gov/ hospitalcompare, after a 30-day preview period. We are proposing to make data available in the same form and manner as currently displayed under the Hospital IQR Program. We intend to maintain as much consistency as possible in how the measures are currently reported on Section 1886(p)(6)(C) of the Act, as codified at 42 CFR 412.172(f), requires that HAC information is posted on the Hospital Compare website in an easily understandable format. Hospital Compare is the official website for the publication of the required HAC Reduction Program data, and the location where the HAC Reduction Program will continue to post data. We believe the above approach complies with the Act and provides hospitals and the public sufficient access to information. PO 00000 Frm 00272 Fmt 4701 Sfmt 4702 i. Limitation on Administrative and Judicial Review Section 1886(p)(7) of the Act, as codified at 42 CFR 412.172(g), provides that there will be no administrative or judicial review under section 1869 of the Act, under section 1878 of the Act, or otherwise for any of the following: • The criteria describing an applicable hospital in paragraph 1886(p)(2)(A) of the Act; • The specification of hospital acquired conditions under paragraph 1886(p)(3) of the Act; • The specification of the applicable period under paragraph 1886(p)(4) of the Act; • The provision of reports to applicable hospitals under paragraph 1886(p)(5) of the Act; and • The information made available to the public under paragraph 1886(p)(6) of the Act. For additional information, we refer readers to FY 2014 IPPS/LTCH PPS final rule (78 FR 50729) and FY 2015 IPPS/ LTCH PPS final rule (79 FR 50100). 5. Proposed Changes to the HAC Reduction Program Scoring Methodology We regularly examine the HAC Reduction Program’s scoring methodology for opportunities for improvement. This year, we examined several alternative scoring options that would allow the scoring methodology to continue to fairly assess all hospitals. a. Current Methodology In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57022 through 57025), we adopted a Winsorized z-score scoring methodology for FY 2018 in which we rank hospitals by calculating a Total HAC Score based on hospitals’ performance on two domains: patient E:\FR\FM\07MYP2.SGM 07MYP2 20435 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules safety (Domain 1) and NHSN HAIs (Domain 2). Domain 1 includes the CMS PSI 90 measure. Domain 2 includes the CLABSI, CAUTI, Colon and Abdominal Hysterectomy SSI,277 MRSA Bacteremia, and CDI measures. Under the current scoring methodology, hospitals’ Total HAC Scores are calculated as a weighted average of Domain 1 (15 percent) and Domain 2 (85 percent). Hospitals with a measure score for at least one Domain 2 measure receive a Domain 2 score. Hospitals with 3 or more discharges for at least one component indicator for the CMS PSI 90 receive a Domain 1 score. The first table below illustrates the weight CMS applies to each measure for the roughly 99 percent of non-Maryland hospitals with a Domain 1 score and the second table below illustrates the weight CMS applies to each measure for the one percent of non-Maryland hospitals without a Domain 1 score. WEIGHT APPLIED TO EACH MEASURE BY NUMBER OF DOMAIN 2 MEASURES WITH MEASURE SCORES FOR HOSPITALS WITH A DOMAIN 1 SCORE IN FY 2018 [N = 3,147] Number (percent) of hospitals in FY 2018 a Number of Domain 2 measures with measure scores 0 1 2 3 4 5 ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... a The 188 (5.9%) 288 (9.1%) 218 (6.9%) 196 (6.2%) 251 (7.9%) 2,006 (63.0%) Weight applied to: CMS PSI 90 Each Domain 2 measure 100.0 15.0 15.0 15.0 15.0 15.0 N/A 85.0 42.5 28.3 21.3 17.0 denominator for percentage calculations is all non-Maryland hospitals with a FY 2018 Total HAC Score. WEIGHT APPLIED TO EACH MEASURE BY NUMBER OF DOMAIN 2 MEASURES WITH MEASURE SCORES FOR HOSPITALS WITHOUT A DOMAIN 1 SCORE IN FY 2018 [N = 36] Number (percent) of hospitals in FY 2018 a Number of Domain 2 measures with measure scores 1 2 3 4 5 ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... daltland on DSKBBV9HB2PROD with PROPOSALS2 a The 8 7 2 2 16 (0.3%) (0.2%) (0.1%) (0.1%) (0.5%) Weight applied to: CMS PSI 90 N/A N/A N/A N/A N/A Each Domain 2 measure 100.0 50.0 33.3 25.0 20.0 denominator for percentage calculations is all non-Maryland hospitals with a FY 2018 Total HAC Score. As shown in the first table above, under the currently methodology, the weight applied to the CMS PSI 90 and each Domain 2 measure is almost the same (15.0 and 17.0 percent, respectively) for hospitals with measure scores for all six program measures. However, for hospitals with between one and four Domain 2 measures, the weight applied to the CMS PSI 90 is lower (and in some cases much lower) than the weight applied to each Domain 2 measure. For hospitals with a measure score for only one or two Domain 2 measures (that is, low-volume hospitals in particular), a disproportionately large weight is applied to each Domain 2 measure. Several stakeholders voiced concerns about the disproportionately large weight applied to the one or two Domain 2 measures for which lowvolume hospitals have a measure score. As seen in the tables above; under the currently methodology, the weighting for the Domain 2 measures is dependent on the number of measures with data for those hospitals without a Domain 1 score. In this proposed rule, we are discussing two alternative scoring methodologies for calculating hospitals’ Total HAC Scores. Our preferred approach, the Equal Measure Weights policy, involves removing domains and applying an equal weight to each measure for which a hospital has a measure score in Total HAC Score calculations. However, we are seeking public comment on an additional approach: applying a different weight to each domain depending on the number of measures for which a hospital has a measure score (Variable Domain Weights). b. Equal Measure Weights In this proposed rule, our preferred approach is the Equal Measure Weights Policy. We would remove domains from the HAC Reduction Program and simply assign equal weight to each measure for which a hospital has a measure score. We would calculate each hospital’s Total HAC Score as the equally weighted average of the hospital’s measure scores. The table below displays the weights applied to each measure under this approach. All other aspects of the HAC Reduction Program scoring methodology would remain the same, including the calculation of measure scores as Winsorized z-scores, the determination of the 75th percentile Total HAC Score, and the determination of the worst-performing quartile. 277 Colon and Abdominal Hysterectomy SSI is reported as one score under the HAC Reduction Program. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00273 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 20436 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules WEIGHT APPLIED TO EACH MEASURE BY NUMBER OF MEASURES WITH MEASURE SCORE FOR HOSPITALS WITH AND WITHOUT A CMS PSI 90 SCORE UNDER EQUAL MEASURE WEIGHTS APPROACH Weight applied to: Number of NHSN HAI measures with measure score CMS PSI 90 0 .................................................................................................. 1 .................................................................................................. 2 .................................................................................................. 3 .................................................................................................. 4 .................................................................................................. 5 .................................................................................................. Any number ................................................................................ As shown in the table above, by applying an equal weight to each measure for all hospitals, the Equal Measure Weights approach addresses stakeholders’ concerns about the disproportionately large weight applied to Domain 2 measures for certain 100.0 50.0 33.3 25.0 20.0 16.7 N/A Each NHSN HAI measure N/A 50.0 33.3 25.0 20.0 16.7 100.0 (equally divided among each NHSN HAI measure). hospitals under the current scoring methodology. c. Alternative Methodology Considered: Variable Domain Weights We also analyzed a Variable Domain Weights approach. Under this approach, the weights applied to Domain 1 and Domain 2 depend upon the number of measure scores a hospital has in each domain. The table below displays the weights applied to each domain under this approach. WEIGHT APPLIED TO EACH MEASURE BY NUMBER OF DOMAIN 2 MEASURES WITH MEASURE SCORES FOR HOSPITALS WITH AND WITHOUT A DOMAIN 1 SCORE UNDER VARIABLE DOMAIN WEIGHTS APPROACH Weight applied to: Number of Domain 2 measures with measure score Domain 1 (CMS PSI 90) 0 ................................................................................................................................... 1 ................................................................................................................................... 2 ................................................................................................................................... 3 ................................................................................................................................... 4 ................................................................................................................................... 5 ................................................................................................................................... Any number ................................................................................................................. As shown in the table above, under the Variable Domain Weights approach, the difference in the weight applied to the CMS PSI 90 and each Domain 2 measure is smaller than the difference under the current scoring methodology for hospitals that have a Domain 1 score (the first table under the Equal Measure Weights approach discussion, above). 100.0 40.0 30.0 20.0 15.0 15.0 N/A d. Analysis Our priority is to adopt a policy that improves the scoring methodology and increases fairness for all hospitals. Both proposed approaches address stakeholders’ concerns about the disproportionate weight applied to Domain 2 measures for low-volume hospitals. We simulated results under Domain 2 Each Domain 2 measure N/A 60.0 70.0 80.0 85.0 85.0 100.0 N/A 60.0 35.0 26.7 21.3 17.0 Equally divided. each scoring approach using FY 2018 HAC Reduction Program data. We compared the percentage of hospitals in the worst-performing quartile in FY 2018 to the percentage that would be in the worst-performing quartile under each scoring approach. The table below provides a high-level overview of the impact of these approaches on several key groups of hospitals. ESTIMATED IMPACT OF SCORING APPROACHES ON PERCENTAGE OF HOSPITALS IN WORST-PERFORMING QUARTILE BY HOSPITAL GROUP Equal measure weights daltland on DSKBBV9HB2PROD with PROPOSALS2 Hospital group a Teaching hospitals: 100 or more residents (N = 248) ................................................................................. Safety-net b (N = 644) ................................................................................................................................... Urban hospitals: 400 or more beds (N = 360) ............................................................................................. Hospitals with 100 or fewer beds (N = 1,169) ............................................................................................. Hospitals with a measure score for: Zero Domain 2 measures (N = 188) ..................................................................................................... One Domain 2 measure (N = 269) ....................................................................................................... Two Domain 2 measures (N = 225) ...................................................................................................... Three Domain 2 measures (N = 198) ................................................................................................... Four Domain 2 measures (N = 253) ..................................................................................................... Five Domain 2 measures (N = 2,022) ................................................................................................... a The Variable domain weights 2.4% 0.6% 2.2% ¥1.8% 1.6% 0.8% 1.1% ¥0.9% 0.0% ¥4.2% ¥0.8% ¥2.5% ¥0.4% 1.0% 0.0% ¥1.9% ¥0.4% ¥2.5% 0.4% 0.5% number of hospitals in the given hospital group for FY 2018 is specified in parenthesis in this column (for example, N = 248). are considered safety-net hospitals if they are in the top quintile for DSH percent. b Hospitals VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00274 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules As shown in the table above, the Equal Measure Weights approach generally has a larger impact than the Variable Domain Weights approach. Under the Equal Measure Weights Approach, as compared to the current methodology using FY2018 HAC Reduction Program data, the percentage of hospitals in the worst-performing quartile decreases by 1.8 percent for small hospitals (that is, 100 or fewer beds), 4.2 percent for hospitals with one Domain 2 measure, 0.8 percent for hospitals with two Domain 2 measures, while it increases by 2.2 percent for large urban hospitals (that is, 400 or more beds) and 2.4 percent for large teaching hospitals (that is, 100 or more residents). The Variable Domain Weights approach changes the percentage of hospitals in the worstperforming quartile by less than two percent for these groups of hospitals. We prefer the Equal Measure Weights approach because it reduces the percentage of low-volume hospitals in the worst-performing quartile in the simplest manner to hospitals, while not greatly increasing the potential costs on other hospital groups. In addition, should we add measures or remove measures from the program in the future, we would not need to modify the weighting scheme under the Equal Measure Weights approach, unlike the current scoring methodology or the Variable Domain Weights approach. Finally, the Equal Measure Weights policy aligns with the intent of the original program design to apply a similar weight to each measure. That is, we applied a weight of 35 percent to Domain 1 and 65 percent to Domain 2 in FY 2015, so that the weight applied to each measure would be roughly the same for hospitals with measure scores for all measures. When we added Colon and Abdominal Hysterectomy SSI to Domain 2 in FY 2016 and CDI and MRSA Bacteremia in FY 2017, we increased the weight of Domain 2 to 75 percent and 85 percent, respectively, so that the weight applied to each measure would be nearly the same for hospitals with measure scores for all measures. However, the static domain weights we applied for these program years led to a substantially lower weight being applied to the CMS PSI 90 compared with Domain 2 measures for hospitals with only one or two Domain 2 measures. After assessing the results of our analysis and these additional considerations, we are proposing to adopt the Equal Measure Weights Policy starting in FY 2020. We also recognize that under this proposal the NHSN HAI portfolio of up to five measures would continue to be VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 weighted much more highly than the CMS PSI 90 for the vast majority of hospitals with more than one NHSN HAI data meeting minimum precision criteria (MPC) of 1.0. For example, hospitals reporting five NHSN HAI measures meeting the MPC of 1.0 and CMS PSI 90 would be weighted as 83.33 percent using the equal weighting proposal for the set of NHSN HAI measures and 16.67 percent for the CMS PSI 90. Hospitals reporting fewer NHSN HAIs meeting the MPC of 1.0 would receive lower total HAI weighting to account for the reduced number of NHSN HAI measures. This proposal is intended to address the impact of disproportionate weighting at the measure level for the subset of hospitals with relatively few NHSN HAI measures. Under the current weighting methodology, hospitals reporting on a single NHSN HAI measure receive 85 percent measure level weight for that one measure. We are inviting public comment on our proposed preferred change to the HAC Reduction Program scoring methodology and the alternative considered. 6. Proposed Applicable Period for FY 2021 Consistent with the definition specified at § 412.170, we are proposing to adopt the applicable period for the FY 2021 HAC Reduction Program for the CMS PSI 90 as the 24-month period from July 1, 2017 through June 30, 2019, and the applicable period for NHSN HAI measures as the 24-month period from January 1, 2018 through December 31, 2019. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38271), we finalized a return to a 24-month data collection period for the calculation of HAC Reduction Program measure results. As we stated then, we believe that using 24 months of data for the CMS PSI 90 and the NHSN HAI measures balances the Program’s needs against the burden imposed on hospitals’ data-collection processes, and allows for sufficient time to process the data for each measure and calculate the measure results. We are inviting public comment on this proposal. 7. Request for Comments on Additional Measures for Potential Future Adoption As we did in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19986 through 19990), and as part of our ongoing efforts to evaluate and strengthen the HAC Reduction Program, we seek stakeholder feedback on the adoption of additional Program measures. PO 00000 Frm 00275 Fmt 4701 Sfmt 4702 20437 We welcome public comment and suggestions for additional HAC Reduction Program measures, specifically on whether electronic clinical quality measures (eCQMs) would benefit the program at some point in the future. We first raised the potential future consideration of electronically specified measures in the FY 2015 IPPS/LTCH PPS final rule (79 FR 50104), and stated that we would continue to review the viability of including electronic measures. We are now specifically interested in stakeholder comments regarding the potential for the Program’s future adoption of eCQMs. These measures use data from electronic health records (EHRs) and/or health information technology systems to measure health care quality. We believe eCQMs will allow for the improved measurement of processes, observations, treatments and outcomes. Measuring and reporting eCQMs provide information on the safety, effectiveness, and timeliness of care. We are also interested in adopting eCQMs because we support technology that reduces burden and allows clinicians to focus on providing highquality healthcare for their patients. We also support innovative approaches to improve quality, accessibility, and affordability of care while paying attention to improving clinicians’ and beneficiaries’ experience when interacting with CMS programs. We believe eCQMs offer many benefits to clinicians and quality reporting and are an improvement over traditional quality measures because they leverage the EHR to generate chart-abstracted data, which is less resource intensive and likely to produce fewer human errors than traditional chart-abstraction. We believe that our continued efforts to reduce HACs are vital to improving patients’ quality of care and reducing complications and mortality, while simultaneously decreasing costs. The reduction of HACs is an important marker of quality of care and has a positive impact on both patient outcomes and cost of care. Our goal for the HAC Reduction Program is to heighten the awareness of HACs and reduce the number of incidences that occur. We are inviting public comments and suggestions on future measures, including eCQMs, for the HAC Reduction Program. E:\FR\FM\07MYP2.SGM 07MYP2 20438 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 K. Payments for Indirect and Direct Graduate Medical Education Costs (§§ 412.105 and 413.75 Through 413.83) 1. Background Section 1886(h) of the Act, as added by section 9202 of the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 (Pub. L. 99–272), establishes a methodology for determining payments to hospitals for the direct costs of approved graduate medical education (GME) programs. Section 1886(h)(2) of the Act sets forth a methodology for the determination of a hospital-specific base-period per resident amount (PRA) that is calculated by dividing a hospital’s allowable direct costs of GME in a base period by its number of full-time equivalent (FTE) residents in the base period. The base period is, for most hospitals, the hospital’s cost reporting period beginning in FY 1984 (that is, October 1, 1983 through September 30, 1984). The base year PRA is updated annually for inflation. In general, Medicare direct GME payments are calculated by multiplying the hospital’s updated PRA by the weighted number of FTE residents working in all areas of the hospital complex (and at nonprovider sites, when applicable), and the hospital’s Medicare share of total inpatient days. The provisions of section 1886(h) of the Act are implemented in regulations at 42 CFR 413.75 through 413.83. Section 1886(d)(5)(B) of the Act provides for a payment adjustment known as the indirect medical education (IME) adjustment under the IPPS for hospitals that have residents in an approved GME program, in order to account for the higher indirect patient care costs of teaching hospitals relative to nonteaching hospitals. The regulations regarding the calculation of this additional payment are located at 42 CFR 412.105. The hospital’s IME adjustment applied to the DRG payments is calculated based on the ratio of the hospital’s number of FTE residents training in either the inpatient or outpatient departments of the IPPS hospital to the number of inpatient hospital beds. The calculation of both direct GME and IME payments is affected by the number of FTE residents that a hospital is allowed to count. Generally, the greater the number of FTE residents a hospital counts, the greater the amount of Medicare direct GME and IME payments the hospital will receive. Therefore, Congress, through the Balanced Budget Act of 1997 (Pub. L. 105–33), established a limit (that is, a cap) on the number of allopathic and VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 osteopathic residents that a hospital may include in its FTE resident count for direct GME and IME payment purposes. Under section 1886(h)(4)(F) of the Act, for cost reporting periods beginning on or after October 1, 1997, a hospital’s unweighted FTE count of residents for purposes of direct GME may not exceed the hospital’s unweighted FTE count for direct GME in its most recent cost reporting period ending on or before December 31, 1996. Under section 1886(d)(5)(B)(v) of the Act, a similar limit based on the FTE count for IME during that cost reporting period is applied effective for discharges occurring on or after October 1, 1997. Dental and podiatric residents are not included in this statutorily mandated cap. 2. Proposed Changes to Medicare GME Affiliated Groups for New Urban Teaching Hospitals Section 1886(h)(4)(H)(ii) of the Act authorizes the Secretary to prescribe rules that allow hospitals that form affiliated groups to elect to apply direct GME caps on an aggregate basis, and such authority applies for purposes of aggregating IME caps under section 1886(d)(5)(B)(viii) of the Act. Under such authority, the Secretary promulgated rules to allow hospitals that are members of the same Medicare GME affiliated group to elect to apply their direct GME and IME FTE caps on an aggregate basis. As specified in §§ 412.105(f)(1)(vi) and 413.79(f) of the regulations, hospitals that are part of the same Medicare GME affiliated group are permitted to apply their IME and direct GME FTE caps on an aggregate basis, and to temporarily adjust each hospital’s caps to reflect the rotation of residents among affiliated hospitals during an academic year. Sections 413.75(b) and 413.79(f) specify the rules for Medicare GME affiliated groups. Generally, two or more hospitals may form a Medicare GME affiliated group if the hospitals are located in the same urban or rural area or in contiguous urban or rural areas, if they are under common ownership, or if they are jointly listed as program sponsors or major participating institutions in the same program. Sections 413.75(b) and 413.79(f) also address emergency Medicare GME affiliation agreements, which can apply in the event of a section 1135 waiver and if certain conditions are met. For a new urban teaching hospital that qualifies for an adjustment to its FTE cap under § 412.105(f)(1)(vii) or § 413.79(e)(1), or both, § 413.79(e)(1)(iv) provides that the new urban hospital may enter into a Medicare GME PO 00000 Frm 00276 Fmt 4701 Sfmt 4702 affiliation agreement only if the resulting adjustment is an increase to its direct GME and IME FTE caps (for purposes of this discussion, the term ‘‘urban’’ is defined as that term is described at § 412.64(b) of the regulations). We adopted this policy in the FY 2006 IPPS final rule (70 FR 47452 through 47454). Prior to that final rule, new urban teaching hospitals were not permitted to participate in a Medicare GME affiliation agreement (63 FR 26333). In modifying our rules to allow new urban teaching hospitals to participate in Medicare GME affiliation agreements, we noted our concerns about such affiliation agreements (70 FR 47452). Specifically, we were concerned that hospitals with existing medical residency training programs could otherwise, with the cooperation of new teaching hospitals, circumvent the statutory FTE resident caps by establishing new medical residency programs in the new teaching hospitals solely for the purpose of affiliating with the new teaching hospitals to receive an upward adjustment to their FTE caps under an affiliation agreement. This would effectively allow existing teaching hospitals to achieve an increase in their FTE resident caps beyond the number allowed by their statutory caps (70 FR 47452). Accordingly, we adopted the restriction under § 413.79(e)(1)(iv). We refer readers to the FY 2006 IPPS final rule for a discussion of the regulatory history of this provision (70 FR 47452 through 47454). We have received questions about whether two (or more) new urban teaching hospitals can form a Medicare GME affiliated group; that is, whether an affiliated group consisting solely of new urban teaching hospitals is permissible, considering that, under § 413.79(e)(1)(iv), a new urban teaching hospital may only enter into a Medicare GME affiliation agreement if the resulting adjustments to its direct GME and IME FTE caps are increases to those caps. The type of Medicare GME affiliated group contemplated under the regulation at § 413.79(e)(1)(iv) involves an existing teaching hospital(s) (a hospital with cap(s) based on training occurring in 1996) and a new teaching hospital(s), and therefore, we do not believe a Medicare GME affiliation agreement consisting solely of new urban teaching hospitals is permissible under § 413.79(e)(1)(iv). However, we believe it is important to provide flexibility with regard to Medicare GME affiliation agreements in light of the statutorily mandated caps on the number of FTE residents a hospital may E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules count for direct GME and IME payment purposes. As we noted in the FY 2006 IPPS final rule, while the rules we established in § 413.79(e)(1)(iv) were meant to prevent gaming on the part of existing teaching hospitals, we did not wish to preclude affiliations that clearly are designed to facilitate additional training at a new teaching hospital. We believe allowing two (or more) new urban teaching hospitals to form a Medicare GME affiliated group will enable these hospitals to provide residents training at their facilities with both the required and more varied training experiences necessary to complete their residency training programs. Furthermore, we believe the proposed change would facilitate increased training within local, smallersized communities because generally new urban teaching hospitals are smaller-sized, community-based hospitals compared with existing urban teaching hospitals, which are generally large academic medical centers. Accordingly, under our authority in section 1886(h)(4)(H)(ii) of the Act, we are proposing to revise the regulation to specify that new urban teaching hospitals (that is, hospitals that qualify for an adjustment under § 412.105(f)(1)(vii) or § 413.79(e)(1), or both) may form a Medicare GME affiliated group and therefore be eligible to receive both decreases and increases to their FTE caps. We emphasize that the existing restriction under § 413.79(e)(1)(iv) would still apply to Medicare GME affiliated groups composed of existing and new urban teaching hospitals, given our concerns about gaming. We do not share the same level of concern in regards to Medicare GME affiliated groups consisting solely of new urban teaching hospitals because we believe these teaching hospitals are similarly situated in terms of size and scope of residency training programs and, therefore, less likely to participate in a Medicare GME affiliated group where the outcome of that agreement would only provide advantages to one of the daltland on DSKBBV9HB2PROD with PROPOSALS2 CCN Provider name #151 ................ Affinity Medical Center. participating hospitals. However, we still believe it is important to ensure that Medicare GME affiliation agreements entered into between new urban teaching hospitals are consistent with the intent of the Medicare GME affiliation agreement provision; that is, to promote the cross-training of residents at the participating hospitals and not to provide for an unfair advantage of one participating hospital at the expense of another hospital. Therefore, we are proposing to revise § 413.79(e)(1)(iv) by designating the existing provision of paragraph (iv) as paragraph (A) and adding proposed paragraph (B) to specify that an urban hospital that qualifies for an adjustment to its FTE cap under this section is permitted to be part of a Medicare GME affiliated group for purposes of establishing an aggregate FTE cap and receive an adjustment that is a decrease to the urban hospital’s FTE cap only if the decrease results from a Medicare GME affiliated group consisting solely of two or more urban hospitals that qualify to receive adjustments to their FTE caps under this paragraph (e)(1). Because Medicare GME affiliation agreements can only be entered into at the start of an academic year (that is, July 1), we are proposing that this proposed change would be effective beginning with affiliation agreements entered into for the July 1, 2019 through June 30, 2020 residency training year. We note that, if adopted, the proposed change discussed in this proposed rule would apply to both Medicare GME affiliation agreements and emergency Medicare GME affiliation agreements. 3. Notice of Closure of Two Teaching Hospitals and Opportunity To Apply for Available Slots a. Background Section 5506 of the Patient Protection and Affordable Care Act (Pub. L. 111– 148), as amended by the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111–152) (collectively, the ‘‘Affordable Care Act’’), authorizes the Secretary to redistribute residency slots City and state Massillon, OH CBSA code 15940 Terminating date February 11, 2018. 20439 after a hospital that trained residents in an approved medical residency program closes. Specifically, section 5506 of the Affordable Care Act amended the Act by adding subsection (vi) to section 1886(h)(4)(H) of the Act and modifying language at section 1886(d)(5)(B)(v) of the Act, to instruct the Secretary to establish a process to increase the FTE resident caps for other hospitals based upon the FTE resident caps in teaching hospitals that closed ‘‘on or after a date that is 2 years before the date of enactment’’ (that is, March 23, 2008). In the CY 2011 Outpatient Prospective Payment System (OPPS) final rule (75 FR 72212), we established regulations (42 CFR 413.79(o)) and an application process for qualifying hospitals to apply to CMS to receive direct GME and IME FTE resident cap slots from the hospital that closed. We made certain modifications to those regulations in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53434), and we made changes to the section 5506 application process in the FY 2015 IPPS/LTCH PPS final rule (79 FR 50122 through 50134). The procedures we established apply both to teaching hospitals that closed on or after March 23, 2008, and on or before August 3, 2010, and to teaching hospitals that close after August 3, 2010. b. Notice of Closure of Affinity Medical Center, Located in Massillon, OH, and the Application Process—Round 11 CMS has learned of the closure of Affinity Medical Center, located in Massillon, OH (CCN 360151). Accordingly, this notice serves to notify the public of the closure of this teaching hospital and initiate another round of the section 5506 application and selection process. This round will be the 11th round (‘‘Round 11’’) of the application and selection process. The table below contains the identifying information and IME and direct FTE GME resident caps for the closed teaching hospital, which is part of the Round 11 application process under section 5506 of the Affordable Care Act. IME FTE resident cap (including +/¥ MMA Sec. 422 1 and ACA Sec. 5503 2 adjustments) Direct GME FTE resident cap (including +/¥ MMA Sec. 422 1 and ACA Sec. 5503 2 adjustments) 28.63¥4.27 sec. 422 reduction¥2.00 sec. 5503 reduction = 22.36 3. 29.49¥4.79 sec. 422 reduction¥2.22 sec. 5503 reduction = 22.48 4. 1 Section 422 of the MMA, Public Law 108–173, redistributed unused IME and direct GME residency slots effective July 1, 2005. 5503 of the Affordable Care Act of 2010, Public Law 111–148 and Public Law 111–152, redistributed unused IME and direct GME residency slots effective July 1, 2011. 3 Affinity Medical Center’s 1996 IME FTE resident cap is 28.63. Under section 422 of the MMA, the hospital received a reduction of 4.27 to its IME FTE resident cap, and under section 5503 of the Affordable Care Act, the hospital received a reduction of 2.00 to its IME FTE resident cap: 28.63¥4.27¥2.00 = 22.36. 2 Section VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00277 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 20440 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 4 Affinity Medical Center’s 1996 direct GME FTE resident cap is 29.49. Under section 422 of the MMA, the hospital received a reduction of 4.79 to its direct GME FTE resident cap, and under section 5503 of the Affordable Care Act, the hospital received a reduction of 2.22 to its direct GME FTE resident cap: 29.49¥4.79¥2.22 = 22.48. c. Notice of Closure of Baylor Scott & White Medical Center—Garland, Located in Garland, TX, and the Application Process—Round 12 CMS has learned of the closure of Baylor Scott & White Medical Center— Garland, located in Garland, TX (CCN 450280). Accordingly, this notice serves to notify the public of the closure of this teaching hospital and initiate another round of the section 5506 application and selection process. This round will be the 12th round (‘‘Round 12’’) of the CCN Provider name City and state 450280 ............ Baylor Scott & White Medical Center Garland. Garland, TX .... CBSA code 19124 Terminating date February 28, 2018. application and selection process. The table below contains the identifying information and the IME and direct GME FTE resident caps for the closed teaching hospital, which is part of the Round 12 application process under section 5506 of the Affordable Care Act: IME FTE resident cap (including +/¥ MMA Sec. 422 1 and ACA Sec. 5503 2 Adjustments) Direct GME FTE resident cap (including +/¥ MMA Sec. 422 1 and ACA Sec. 5503 2 Adjustments) 3.91 + 12.96¥0.05 sec. 422 reduction¥4.30 sec. 5503 reduction = 12.52 3. 3.91 + 14.09¥1.88 sec. 422 reduction¥2.59 sec. 5503 reduction = 13.53 4. 1 Section 422 of the MMA, Public Law 108–173, redistributed unused IME and direct GME residency slots effective July 1, 2005. Section 5503 of the Affordable Care Act, Public Law 111–148 and Public Law 111–152, redistributed unused IME and direct GME residency slots effective July 1, 2011. 3 Baylor Scott & White Medical Center Garland’s 1996 IME FTE resident cap is 3.91. The hospital received a new program IME FTE resident cap add-on of 12.96. Under section 422 of the MMA, the hospital received a reduction of 0.05 to its IME FTE resident cap, and under section 5503 of the Affordable Care Act, the hospital received a reduction of 4.30 to its IME FTE resident cap: 3.91 + 12.96¥0.05¥4.30 = 12.52. 4 Baylor Scott & White Medical Center Garland’s 1996 direct GME FTE resident cap is 3.91. The hospital received a new program direct GME FTE resident cap add-on of 14.09. Under section 422 of the MMA, the hospital received a reduction of 1.88 to its direct GME FTE resident cap, and under section 5503 of the Affordable Care Act, the hospital received a reduction of 2.59 to its direct GME FTE resident cap: 3.91 + 14.09¥ 1.88¥2.59 = 13.53. daltland on DSKBBV9HB2PROD with PROPOSALS2 2 d. Application Process for Available Resident Slots The application period for hospitals to apply for slots under section 5506 of the Affordable Care Act is 90 days following notification to the public of a hospital closure (77 FR 53436). Therefore, hospitals that wish to apply for and receive slots from the above hospitals’ FTE resident caps must submit applications (Section 5506 Application Form posted on Direct Graduate Medical Education (DGME) website as noted at the end of this section) directly to the CMS Central Office no later than July 23, 2018. The mailing address for the CMS Central Office is included on the application form. Applications must be received by the CMS Central Office by the July 23, 2018 deadline date. It is not sufficient for applications to be postmarked by this date. We note that an applying hospital may apply for either or both of the two rounds of section 5506 slot applications that are being announced in this proposed rule. However, a separate application must be submitted for each round for which a hospital wishes to apply. After an applying hospital sends a hard copy of a section 5506 slot application to the CMS Central Office mailing address, the hospital is strongly encouraged to notify the CMS Central Office of the mailed application by sending an email to: VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 ACA5506application@cms.hhs.gov. In the email, the hospital should state: ‘‘On behalf of [insert hospital name and Medicare CCN#], I, [insert your name], am sending this email to notify CMS that I have mailed to CMS a hard copy of a section 5506 application under Round [11 or 12] due to the closure of [Affinity Medical Center or Baylor Scott & White Medical Center Garland]. If you have any questions, please contact me at [insert phone number] or [insert your email address].’’ An applying hospital should not attach an electronic copy of the application to the email. The email will only serve to notify the CMS Central Office to expect a hard copy application that is being mailed to the CMS Central Office. We have not established a deadline by when CMS will issue the final determinations to hospitals that receive slots under section 5506 of the Affordable Care Act. However, we review all applications received by the deadline and notify applicants of our determinations as soon as possible. We refer readers to the CMS Direct Graduate Medical Education (DGME) website at: https://www.cms.gov/ Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/ DGME.html to download a copy of the section 5506 application form (Section 5506 CMS Application Form) that hospitals must use to apply for slots under section 5506 of the Affordable Care Act. Hospitals should also access PO 00000 Frm 00278 Fmt 4701 Sfmt 4702 this same website for a list of additional section 5506 guidelines for the policy and procedures for applying for slots, and the redistribution of the slots under sections 1886(h)(4)(H)(vi) and 1886(d)(5)(B)(v) of the Act. L. Rural Community Hospital Demonstration Program 1. Introduction The Rural Community Hospital Demonstration was originally authorized for a 5-year period by section 410A of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108–173), and extended for another 5-year period by sections 3123 and 10313 of the Affordable Care Act (Pub. L. 111–148). Subsequently, section 15003 of the 21st Century Cures Act (Pub. L. 114–255), enacted December 13, 2016, amended section 410A of Public Law 108–173 to require a 10-year extension period (in place of the 5-year extension required by the Affordable Care Act, as further discussed below). Section 15003 also requires that, no later than 120 days after enactment of Public Law 114–255, the Secretary must issue a solicitation for applications to select additional hospitals to participate in the demonstration program for the second 5 years of the 10-year extension period, so long as the maximum number of 30 hospitals stipulated by the Affordable Care Act is not exceeded. In this E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 proposed rule, we are providing a summary of the previous legislative provisions and their implementation; a description of the provisions of section 15003 of Public Law 114–255; our final policies for implementation; the finalized budget neutrality methodology for the extension period authorized by section 15003 of Public Law 114–255, including a discussion of the budget neutrality methodology used in previous final rules for periods prior to the extension period; and an update on the reconciliation of actual and estimated costs of the demonstration for previous years (2011, 2012, and 2013). 2. Background Section 410A(a) of Public Law 108– 173 required the Secretary to establish a demonstration program to test the feasibility and advisability of establishing rural community hospitals to furnish covered inpatient hospital services to Medicare beneficiaries. The demonstration pays rural community hospitals under a reasonable cost-based methodology for Medicare payment purposes for covered inpatient hospital services furnished to Medicare beneficiaries. A rural community hospital, as defined in section 410A(f)(1), is a hospital that— • Is located in a rural area (as defined in section 1886(d)(2)(D) of the Act) or is treated as being located in a rural area under section 1886(d)(8)(E) of the Act; • Has fewer than 51 beds (excluding beds in a distinct part psychiatric or rehabilitation unit) as reported in its most recent cost report; • Provides 24-hour emergency care services; and • Is not designated or eligible for designation as a CAH under section 1820 of the Act. Section 410A(a)(4) of Public Law 108– 173 specified that the Secretary was to select for participation no more than 15 rural community hospitals in rural areas of States that the Secretary identified as having low population densities. Using 2002 data from the U.S. Census Bureau, we identified the 10 States with the lowest population density in which rural community hospitals were to be located in order to participate in the demonstration: Alaska, Idaho, Montana, Nebraska, Nevada, New Mexico, North Dakota, South Dakota, Utah, and Wyoming (Source: U.S. Census Bureau, Statistical Abstract of the United States: 2003). CMS originally solicited applicants for the demonstration in May 2004; 13 hospitals began participation with cost reporting periods beginning on or after October 1, 2004. In 2005, 4 of these 13 hospitals withdrew from the VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 demonstration program and converted to CAH status. This left 9 hospitals participating at that time. In 2008, we announced a solicitation for up to 6 additional hospitals to participate in the demonstration program. Four additional hospitals were selected to participate under this solicitation. These 4 additional hospitals began under the demonstration payment methodology with the hospitals’ first cost reporting period starting on or after July 1, 2008. At that time, 13 hospitals were participating in the demonstration. Five hospitals withdrew from the demonstration program during CYs 2009 and 2010. In CY 2011, one hospital among this original set of participating hospitals withdrew. These actions left 7 of the hospitals that were selected to participate in either 2004 or 2008 participating in the demonstration program as of June 1, 2011. Sections 3123 and 10313 of the Affordable Care Act (Pub. L. 111–148) amended section 410A of Public Law 108–173, changing the Rural Community Hospital Demonstration program in several ways. First, the Secretary was required to conduct the demonstration program for an additional 5-year period, to begin on the date immediately following the last day of the initial 5-year period. Further, the Affordable Care Act required the Secretary to provide for the continued participation of such rural community hospital in the demonstration program during the 5-year extension period, in the case of a rural community hospital participating in the demonstration program as of the last day of the initial 5-year period, unless the hospital made an election to discontinue participation. In addition, the Affordable Care Act required, during the 5-year extension period, that the Secretary expand the number of States with low population densities determined by the Secretary to 20. Further, the Secretary was required to use the same criteria and data that the Secretary used to determine the States for purposes of the initial 5-year period. The Affordable Care Act also allowed not more than 30 rural community hospitals in such States to participate in the demonstration program during the 5-year extension period. We published a solicitation for applications for additional participants in the Rural Community Hospital Demonstration program in the Federal Register on August 30, 2010 (75 FR 52960). The 20 States with the lowest population density that were eligible for the demonstration program were: Alaska, Arizona, Arkansas, Colorado, Idaho, Iowa, Kansas, Maine, Minnesota, Mississippi, Montana, Nebraska, PO 00000 Frm 00279 Fmt 4701 Sfmt 4702 20441 Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Utah, and Wyoming (Source: U.S. Census Bureau, Statistical Abstract of the United States: 2003). Sixteen new hospitals began participation in the demonstration with the first cost reporting period beginning on or after April 1, 2011. In addition to the 7 hospitals that were selected in either 2004 or 2008, the new selection led to a total of 23 hospitals in the demonstration. During CY 2013, one additional hospital of the set selected in 2011 withdrew from the demonstration, which left 22 hospitals participating in the demonstration, effective July 1, 2013, all of which continued their participation through December 2014. Starting from that date and extending through the end of FY 2015, the 7 hospitals that were selected in either 2004 or 2008 ended their scheduled 5-year periods of performance authorized by the Affordable Care Act on a rolling basis. Likewise, the participation period for the 14 hospitals that entered the demonstration following the mandate of the Affordable Care Act and that were still participating ended their scheduled periods of performance on a rolling basis according to the end dates of the hospitals’ cost report periods, respectively, from April 30, 2016 through December 31, 2016. (One hospital among this group closed in October 2015.) 3. Provisions of the 21st Century Cures Act (Pub. L. 114–255) and Finalized Policies for Implementation a. Statutory Provisions As stated earlier, section 15003 of Public Law 114–255 further amended section 410A of Public Law 108–173 to require the Secretary to conduct the Rural Community Hospital Demonstration for a 10-year extension period (in place of the 5-year extension period required by the Affordable Care Act), beginning on the date immediately following the last day of the initial 5year period under section 410A(a)(5) of Public Law 108–173. Thus, the Secretary is required to conduct the demonstration for an additional 5-year period. Specifically, section 15003 of Public Law 114–255 amended section 410A(g)(4) of Public Law 108–173 to require that, for hospitals participating in the demonstration as of the last day of the initial 5-year period, the Secretary shall provide for continued participation of such rural community hospitals in the demonstration during the 10-year extension period, unless the hospital makes an election, in such form E:\FR\FM\07MYP2.SGM 07MYP2 20442 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 and manner as the Secretary may specify, to discontinue participation. Furthermore, section 15003 of Public Law 114–255 added subsection (g)(5) to section 410A of Public Law 108–173 to require that, during the second 5 years of the 10-year extension period, the Secretary shall apply the provisions of section 410A(g)(4) of Public Law 108– 173 to rural community hospitals that are not described in subsection (g)(4) but that were participating in the demonstration as of December 30, 2014, in a similar manner as such provisions apply to hospitals described in subsection (g)(4). In addition, section 15003 of Public Law 114–255 amended section 410A of Public Law 108–173 to add paragraph (g)(6)(A) which requires that the Secretary issue a solicitation for applications no later than 120 days after enactment of paragraph (g)(6), to select additional rural community hospitals located in any State to participate in the demonstration program for the second 5 years of the 10-year extension period, without exceeding the maximum number of hospitals (that is, 30) permitted under section 410A(g)(3) of Public Law 108–173 (as amended by the Affordable Care Act). Paragraph 410A(g)(6)(B) provides that, in determining which hospitals submitting an application pursuant to this solicitation are to be selected for participation in the demonstration, the Secretary must give priority to rural community hospitals located in one of the 20 States with the lowest population densities, as determined using the 2015 Statistical Abstract of the United States. The Secretary may also consider closures of hospitals located in rural areas in the State in which an applicant hospital is located during the 5-year period immediately preceding the date of enactment of the 21st Century Cures Act (December 13, 2016), as well as the population density of the State in which the rural community hospital is located. b. Solicitation for Additional Participants As required under section 15003 of Public Law 114–255, we issued a solicitation for additional hospitals to participate in the demonstration. We released this solicitation on April 17, 2017. As described in the FY 2018 IPPS/ LTCH PPS proposed rule, the solicitation identified the 20 States with the lowest population density according to the population estimates from the Census Bureau for 2013, from the ProQuest Statistical Abstract of the United States, 2015. These 20 States are: Alaska, Arizona, Arkansas, Colorado, Idaho, Iowa, Kansas, Maine, VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Mississippi, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Utah, Vermont, and Wyoming. Applications were due May 17, 2017. Applications were assessed in accordance with the information requested in the solicitation; that is, the problem description, plan for financial viability, goals for the demonstration, contributions to quality of care, and collaboration with other providers and organizations. In accordance with the authorizing statute, closure of hospitals within the State of the applicant hospital and population density were considered in assessing applications. c. Terms of Participation for the Extension Period Authorized by Public Law 114–255 In the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19994), we stated that our goal was to finalize the selection of participants for the extension period authorized by Public Law 114–255 by June 2017, in time to include in the FY 2018 IPPS/LTCH PPS final rule an estimate of the costs of the demonstration during FY 2018 and the resulting budget neutrality offset amount, for these newly participating hospitals, as well as for those hospitals among the previously participating hospitals that decided to participate in the extension period. (The specific method for ensuring budget neutrality under section 410A of Public Law 108– 173 was described in the FY 2018 IPPS proposed rule, consistent with general policies adopted in previous years). We indicated that upon announcing the selection of new participants, we would confirm the start dates for the periods of performance for these newly selected hospitals and for previously participating hospitals. We stated, on the other hand, that if final selection were not to occur by June 2017, we would not be able to include an estimate of the costs of the demonstration or an estimate of the budget neutrality offset amount for FY 2018 for these additional hospitals in the FY 2018 IPPS/LTCH PPS final rule. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38280), we finalized our policy with regard to the effective date for the application of the reasonable cost-based payment methodology under the demonstration for those previously participating hospitals choosing to participate in the second 5-year extension period. According to our finalized policy, each previously participating hospital began the second 5 years of the 10-year extension period and the cost-based payment methodology under section 410A of PO 00000 Frm 00280 Fmt 4701 Sfmt 4702 Public Law 108–173 (as amended by section 15003 of Pub. L. 114–255) on the date immediately after the date the period of performance under the first 5year extension period ended. However, by the time of the FY 2018 IPPS/LTCH PPS final rule, we had not been able to verify which among the previously participating hospitals would be continuing participation, and thus were not able to estimate the costs of the demonstration for that year’s final rule. We stated in the final rule that we would instead include the estimated costs of the demonstration for all participating hospitals for FY 2018, along with those for FY 2019, in the budget neutrality offset amount for the FY 2019 proposed and final rules. Seventeen of the 21 hospitals that completed their periods of participation under the extension period authorized by the Affordable Care Act have elected to continue in the second 5-year extension period for the full second 5year extension period. Of the four hospitals that did not elect to continue participating, three hospitals converted to CAH status during the time period of the second 5-year extension period. Thus, the 5-year period of performance for each of these hospitals started on dates beginning May 1, 2015 and extending through January 1, 2017. On November 20, 2017, we announced that, as a result of the solicitation issued earlier in the year, 13 additional hospitals were selected to participate in the demonstration in addition to these 17 hospitals continuing participation from the first 5-year extension period. (Hereafter, these two groups are referred to as ‘‘newly participating’’ and ‘‘previously participating’’ hospitals, respectively.) We announced, as well, that each of these newly participating hospitals would begin its 5-year period of participation effective the start of the first cost reporting period on or after October 1, 2017. Thus, 30 hospitals are participating in the demonstration during FY 2018. 4. Budget Neutrality a. Statutory Budget Neutrality Requirement Section 410A(c)(2) of Public Law 108– 173 requires that, in conducting the demonstration program under this section, the Secretary shall ensure that the aggregate payments made by the Secretary do not exceed the amount which the Secretary would have paid if the demonstration program under this section was not implemented. This requirement is commonly referred to as ‘‘budget neutrality.’’ Generally, when we implement a demonstration program E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules on a budget neutral basis, the demonstration program is budget neutral on its own terms; in other words, the aggregate payments to the participating hospitals do not exceed the amount that would be paid to those same hospitals in the absence of the demonstration program. Typically, this form of budget neutrality is viable when, by changing payments or aligning incentives to improve overall efficiency, or both, a demonstration program may reduce the use of some services or eliminate the need for others, resulting in reduced expenditures for the demonstration program’s participants. These reduced expenditures offset increased payments elsewhere under the demonstration program, thus ensuring that the demonstration program as a whole is budget neutral or yields savings. However, the small scale of this demonstration program, in conjunction with the payment methodology, made it extremely unlikely that this demonstration program could be held to budget neutrality under the methodology normally used to calculate it—that is, cost-based payments to participating small rural hospitals were likely to increase Medicare outlays without producing any offsetting reduction in Medicare expenditures elsewhere. In addition, a rural community hospital’s participation in this demonstration program would be unlikely to yield benefits to the participants if budget neutrality were to be implemented by reducing other payments for these same hospitals. Therefore, in the 12 IPPS final rules spanning the period from FY 2005 through FY 2016, we adjusted the national inpatient PPS rates by an amount sufficient to account for the added costs of this demonstration program, thus applying budget neutrality across the payment system as a whole rather than merely across the participants in the demonstration program. (A different methodology was applied for FY 2017.) As we discussed in the FYs 2005 through 2017 IPPS IPPS/LTCH PPS final rules (69 FR 49183; 70 FR 47462; 71 FR 48100; 72 FR 47392; 73 FR 48670; 74 FR 43922, 75 FR 50343, 76 FR 51698, 77 FR 53449, 78 FR 50740, 77 FR 50145; 80 FR 49585; and 81 FR 57034, respectively), we believe that the language of the statutory budget neutrality requirements permits the agency to implement the budget neutrality provision in this manner. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 b. Methodology Used In Previous Final Rules for Periods Prior to the Extension Period Authorized by the 21st Century Cures Act (Pub. L. 114–255) We have generally incorporated two components into the budget neutrality offset amounts identified in the final IPPS rules in previous years. First, we have estimated the costs of the demonstration for the upcoming fiscal year, generally determined from historical, ‘‘as submitted’’ cost reports for the hospitals participating in that year. Update factors representing nationwide trends in cost and volume increases have been incorporated into these estimates, as specified in the methodology described in the final rule for each fiscal year. Second, as finalized cost reports became available, we have determined the amount by which the actual costs of the demonstration for an earlier, given year differed from the estimated costs for the demonstration set forth in the final IPPS rule for the corresponding fiscal year, and we have incorporated that amount into the budget neutrality offset amount for the upcoming fiscal year. If the actual costs for the demonstration for the earlier fiscal year exceeded the estimated costs of the demonstration identified in the final rule for that year, this difference was added to the estimated costs of the demonstration for the upcoming fiscal year when determining the budget neutrality adjustment for the upcoming fiscal year. Conversely, if the estimated costs of the demonstration set forth in the final rule for a prior fiscal year exceeded the actual costs of the demonstration for that year, this difference was subtracted from the estimated cost of the demonstration for the upcoming fiscal year when determining the budget neutrality adjustment for the upcoming fiscal year. (We note that we have calculated this difference for FYs 2005 through 2010 between the actual costs of the demonstration as determined from finalized cost reports once available, and estimated costs of the demonstration as identified in the applicable IPPS final rules for these years.) c. Budget Neutrality Methodology for the Extension Period Authorized by the 21st Century Cures Act (Pub. L. 114– 255) (1) General Approach We finalized our budget neutrality methodology for periods of participation under the second 5 years of the 10-year extension period in the FY 2018 IPPS/ LTCH PPS final rule (82 FR 38285 through 38287). Similar to previous PO 00000 Frm 00281 Fmt 4701 Sfmt 4702 20443 years, we will incorporate an estimate of the costs of the demonstration, generally determined from historical, ‘‘as submitted’’ cost reports for the participating hospitals and appropriate update factors, into a budget neutrality offset amount to be applied to the national IPPS rates for the upcoming fiscal year. In addition, we will continue to apply our general policy from previous years of including, as a second component to the budget neutrality offset amount, the amount by which the actual costs of the demonstration for an earlier, given year (as determined from finalized cost reports when available) differed from the estimated costs for the demonstration set forth in the final IPPS rule for the corresponding fiscal year. As we described in the FY 2018 final rule, we will be incorporating several distinct components into the budget neutrality offset amount for FY 2019: • For each previously participating hospital that has decided to participate in the second 5 years of the 10-year extension period, the cost-based payment methodology under the demonstration began on the date immediately following the end date of its period of performance for the first 5year extension period. In addition, for previously participating hospitals that converted to CAH status during the time period of the second 5-year extension period, the demonstration payment methodology has been applied to the date following the end date of its period of performance for the first extension period to the date of conversion. As we finalized in the FY 2018 IPPS/LTCH PPS final rule, we are applying a specific methodology for ensuring that the budget neutrality requirement under section 410A of Public Law 108–173 is met. To reflect the costs of the demonstration for the previously participating hospitals, for their cost reporting periods starting in FYs 2015, 2016, and 2017, we will use available finalized cost reports that detail the actual costs of the demonstration for each of these fiscal years. We will then incorporate these amounts in the budget neutrality offset amount to be included in a future IPPS final rule. We expect to do this in either FY 2020 or FY 2021, based on the availability of finalized reports. • In addition, we will include a component to our overall methodology similar to previous years, according to which an estimate of the costs of the demonstration for both previously and newly participating hospitals for the upcoming fiscal year is incorporated into a budget neutrality offset amount to be applied to the national IPPS rates for the upcoming fiscal year. For FY 2019, E:\FR\FM\07MYP2.SGM 07MYP2 20444 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 we will include the estimated costs of the demonstration for FYs 2018 and 2019 in accordance with the methodology finalized in the FY 2018 IPPS/LTCH PPS final rule. • Similar to previous years, in order to meet the budget neutrality requirement in section 410A(c)(2) of Public Law 108–173 with respect to the second 5-year extension period, we will continue to implement the policy according to when finalized cost reports become available for each of the second 5 years of the 10-year extension period for the newly participating hospitals and for cost reporting periods starting in or after FY 2018 that occur during the second 5-year extension period for the previously participating hospitals. We will determine the difference between the actual costs of the demonstration as determined from these finalized cost reports and the estimated cost indicated in the corresponding fiscal year IPPS final rule, and include that difference either as a positive or negative adjustment in the upcoming year’s final rule. As described earlier, we have calculated this difference for FYs 2005 through 2010 between the actual costs of the demonstration, as determined from finalized cost reports and estimated costs of the demonstration set forth in the applicable IPPS final rules for these years, and then incorporated that amount into the budget neutrality offset amount for an upcoming fiscal year. In this FY 2019 IPPS/LTCH PPS proposed rule, we are proposing to include this difference based on finalized cost reports for FYs 2011, 2012, and 2013 in the budget neutrality offset adjustment to be applied to the national IPPS rates for FY 2019. In future IPPS rules, we will continue this reconciliation, calculating the difference between actual and estimated costs for the remaining years of the first extension period (that is, FYs 2014 through 2016), and, as described above, the further years of the demonstration under the second extension period, applying this difference to the budget neutrality offset adjustments identified in future years’ final rules. (2) Methodology for the Budget Neutrality Adjustment for the Previously Participating Hospitals for FYs 2015 Through 2017 As we finalized in the FY 2018 IPPS/ LTCH PPS final rule, for each previously participating hospital, the cost-based payment methodology under the demonstration will be applied to the date immediately following the end date of its period of performance for the first 5-year extension period. We are VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 applying the same methodology as previously finalized to account for the costs of the demonstration and ensure that the budget neutrality requirement under section 410A of Public Law 108– 173 is met for the previously participating hospitals for cost reporting periods starting in FYs 2015, 2016, and 2017. We believe it is appropriate to determine such a specific methodology applicable to these cost reporting periods because they are a component of the payment methodology for the demonstration under the second extension period, authorized by section 15003 of Public Law 114–255, yet encompass the provision of services and incurred costs occurring prior to the start of FY 2018, when the terms of continuation for these hospitals under this second extension period were finalized. To reflect the costs of the demonstration for the previously participating hospitals for their cost reporting periods under the second extension period starting before FY 2018 (that is, cost reporting periods starting in FYs 2015, 2016, and 2017), we will determine the actual costs of the demonstration for each of these fiscal years when finalized cost reports become available. Thus, for a hospital with an end date of June 30, 2015 for the first participation period, we will determine from finalized cost reports the specific amount contributing to the total costs of the demonstration for the 3 cost reporting years from July 1, 2015 through June 30, 2018; for a hospital with an end date of June 30, 2016, we will determine from finalized cost reports the amount contributing to costs of the demonstration for the 2 cost reporting periods from July 1, 2016 through June 30, 2018. We note that, for these hospitals, this last cost report period may include services occurring since the enactment of Public Law 114–255 and also during FY 2018. However, we believe that applying a uniform method for determining costs across a cost report year would be more reasonable from the standpoint of operational feasibility and consistent application of cost determination principles. Under this approach, we will incorporate these amounts for the previously participating hospitals for cost reporting periods starting in FYs 2015, 2016, and 2017 into a single amount to be included in the calculation of the budget neutrality offset amount to the national IPPS rates in a future final rule after such finalized cost reports become available. As noted above, we expect to do this in FY 2020 or FY 2021. PO 00000 Frm 00282 Fmt 4701 Sfmt 4702 (3) Methodology for Estimating Demonstration Costs for FY 2018 As discussed earlier, in this FY 2019 IPPS/LTCH PPS proposed rule, as a component of the overall budget neutrality methodology, we are using a methodology similar to previous years, according to which an estimate of the costs of the demonstration for the upcoming fiscal year is incorporated into a budget neutrality offset amount to be applied to the national IPPS rates for the upcoming fiscal year. As explained above, for FY 2019, we will be including the estimated costs of the demonstration for FYs 2018 and 2019. As described in the FY 2018 IPPS/ LTCH PPS final rule (82 FR 38286), we will incorporate a specific calculation to account for the fact that the cost reporting periods for the participating hospitals applicable to the estimate of the costs of the demonstration for FY 2018 would start at different points of time during FY 2018. That is, we will be prorating estimated reasonable cost amounts and amounts that would be paid without the demonstration for FY 2018 according to the fraction of the number of months within the hospital’s cost reporting period starting in FY 2018 that fall within the total number of months in the fiscal year. For example, if a hospital started its cost reporting period on January 1, 2018, we will multiply the estimated cost and payment amounts, derived as described below, by a factor of 0.75. (In this discussion of how the overall calculations are conducted, this factor is referred to as ‘‘the hospital-specific prorating factor.’’) The methodology for calculating the amount applicable to FY 2018 to be incorporated into the budget neutrality offset amount for FY 2019 was described in the FY 2018 IPPS/ LTCH PPS final rule (82 FR 38286) and proceeds according to the following steps: Step 1: For each of the 30 participating hospitals, we will identify the reasonable cost amount calculated under the reasonable cost methodology for covered inpatient hospital services, including swing beds, as indicated on the ‘‘as submitted’’ cost report for the most recent cost reporting period available. (For each of these hospitals, these ‘‘as submitted’’ cost reports are those with cost report period end dates in CY 2016.) We believe these most recent available cost reports to be an accurate predictor of the costs of the demonstration in FY 2018 because they give us a recent picture of the participating hospitals’ costs. For each hospital, we will multiply each of these amounts by the FY 2017 E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules and 2018 IPPS market basket percentage increases, which are formulated by the CMS Office of the Actuary. For each of FYs 2017 and 2018, we would then multiply these products (for covered inpatient hospital services, including swing beds), of the estimated reasonable cost amounts for each participating hospital and the market basket percentage increases applicable to the years involved by a 3-percent annual volume adjustment. The result for each participating hospital would be the general estimated reasonable cost amount for covered inpatient hospital services for FY 2018. Consistent with our methods in previous years for formulating this estimate, we will apply the IPPS market basket percentage increases for FYs 2017 through 2018 to the applicable estimated reasonable cost amounts (described above) in order to model the estimated FY 2018 reasonable cost amount under the demonstration. We believe that the IPPS market basket percentage increases appropriately indicate the trend of increase in inpatient hospital operating costs under the reasonable cost methodology for the years involved. The 3-percent annual volume adjustment was stipulated by the CMS Office of the Actuary and is intended to reflect the tendency of hospitals’ inpatient caseloads to increase. We acknowledge the possibility that inpatient caseloads for small hospitals may fluctuate, and therefore we are incorporating into the estimate of demonstration costs a factor to allow for a potential increase in inpatient hospital services. Step 2: For each of the participating hospitals, we will identify the estimated amount that would otherwise be paid in FY 2018 under applicable Medicare payment methodologies for covered inpatient hospital services, including swing beds (as indicated on the same set of ‘‘as submitted’’ cost reports as in Step 1), if the demonstration were not implemented. We then will multiply each of these hospital-specific amounts (for covered inpatient hospital services including swing-bed services), by the FYs 2017 and 2018 (in accordance with the discussion above) IPPS applicable percentage increases. This methodology differs from Step 1, in which we will be applying the market basket percentage increases to the hospitals’ applicable estimated reasonable cost amount for covered inpatient hospital services. We believe that the IPPS applicable percentage increases are appropriate factors to update the estimated amounts that generally would otherwise be paid without the demonstration. This is because IPPS payments would VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 constitute the majority of payments that would otherwise be made without the demonstration and the applicable percentage increase is the factor used under the IPPS to update the inpatient hospital payment rates. Then, for the same reasons discussed in Step 1, we would multiply these hospital-specific products of the applicable estimated payments that generally would otherwise be made without the demonstration and the IPPS applicable percentage increases applicable to the years involved by the 3-percent annual volume adjustment for each of FYs 2017 through 2018. Step 3: We will subtract the amounts derived in Step 2 from the amount derived in Step 1. According to our methodology, each of these resulting amounts indicates the difference for the hospital (for covered inpatient hospital services, including swing beds), which would be the general estimated amount of the costs of the demonstration for FY 2018. Step 4: For each hospital, we will multiply the amount derived in Step 3 by the hospital-specific prorating factor. The resulting amount represents for each hospital the cost of the demonstration applicable to the cost reporting period beginning in FY 2018, on the basis of which the specific component of the budget neutrality offset amount applicable to FY 2018 will be derived. Step 5: We will then sum the hospitalspecific amounts derived in Step 4 across all 30 hospitals participating in the demonstration in FY 2018. This resulting sum will be the proposed estimated costs of the demonstration applicable to FY 2018 to be incorporated in the budget neutrality offset amount for rulemaking in FY 2019. For this proposed rule, the resulting amount applicable to FY 2018 is $33,254,247, which we are proposing to include in the budget neutrality offset adjustment for FY 2019. This estimated amount is based on the specific assumptions regarding the data sources used, that is, ‘‘as submitted’’ recently available cost reports and historical and specific update factors described for cost, payment, and volume. If updated data become available prior to the FY 2019 IPPS/LTCH PPS final rule, we will use them to the extent appropriate to estimate the costs for the demonstration program applicable to FY 2018 in accordance with our methodology for determining the budget neutrality estimate. In particular, we are evaluating the appropriateness of the 3percent annual volume adjustment in light of empirical trends specific to the PO 00000 Frm 00283 Fmt 4701 Sfmt 4702 20445 participating hospitals. Therefore, the estimated budget neutrality offset amount may change in the final rule, depending on the availability of updated data. (4) Methodology for Estimating Demonstration Costs for FY 2019 To estimate the costs of the demonstration for FY 2019, we will apply two differences specific to the application of adjustment factors to the methodology described for FY 2018. We will use the same set of ‘‘as submitted’’ cost reports in determining preliminary cost and payment amounts for covered inpatient hospital services. However, in updating these amounts to reflect increases in cost, payment, and volume, our methodology for determining the component of the budget neutrality offset amount applicable to FY 2019 entails applying the market basket percentage increase and applicable percentage increase for FY 2019, in addition to these update factors for FYs 2017 and 2018. The proposed amounts for FY 2019 for these respective update factors are found in sections IV.L.4.c.(2) and (3) of the preamble to this proposed rule. In addition, consistent with the methodology for FY 2018, we would again apply the 3-percent volume adjustment to reflect possible increases for FY 2019, in addition to applying this factor for each of FYs 2017 and 2018. In addition, because we are expecting all of the participating hospitals to participate for the entire 12-month period encompassing FY 2019, there will be no application of any prorating factor in determining the estimated costs of the demonstration for FY 2019. For this proposed rule, the resulting amount for FY 2019 is $78,409,842, which we are likewise proposing to include in the budget neutrality offset adjustment for FY 2019. This estimated amount is based on the specific assumptions regarding the data sources used, that is, ‘‘as submitted’’ recently available cost reports and historical and proposed update factors for cost, payment, and volume. If updated data become available prior to the FY 2019 IPPS/LTCH PPS final rule, we will use them to the extent appropriate to estimate the costs for the demonstration program in FY 2019 in accordance with our finalized methodology. Again, we are considering the appropriateness of applying the 3-percent annual volume adjustment. Therefore, the estimated budget neutrality offset amount may change in the final rule, depending on the availability of updated data. E:\FR\FM\07MYP2.SGM 07MYP2 20446 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules (5) Reconciling Actual and Estimated Costs for the Years of the Extension Period Similar to previous years, as finalized in the FY 2018 IPPS/LTCH PPS final rule, we plan to operationalize the second specific component to the budget neutrality requirement. That is, when finalized cost reports become available for each of the second 5 years of the 10-year extension period for the newly participating hospitals and for cost reporting periods starting in or after FY 2018 that occur during the second 5year extension period for the previously participating hospitals, we will calculate the difference between the actual costs of the demonstration as determined from these finalized cost reports and the estimated cost indicated in the corresponding fiscal year IPPS final rule, and include that difference either as a positive or negative adjustment in the upcoming year’s final rule. Therefore, in keeping with the methodologies used in previous final rules, we will continue to use a methodology for calculating the budget neutrality offset amount for the second 5 years of the 10-year extension period consisting of two components: (1) The estimated demonstration costs in the upcoming fiscal year (as described above); and (2) the amount by which the actual demonstration costs corresponding to an earlier, given year (which would be known once finalized cost reports became available for that year) differed from the budget neutrality offset amount finalized in the corresponding year’s IPPS final rule. daltland on DSKBBV9HB2PROD with PROPOSALS2 d. Reconciling Actual and Estimated Costs of the Demonstration for Previous Years (2011, 2012, and 2013) As described earlier, we have calculated the difference for FYs 2005 through 2010 between the actual costs of the demonstration, as determined from finalized cost reports once available, and estimated costs of the demonstration as identified in the applicable IPPS final rules for these years. In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57037), we finalized a proposal to reconcile the budget neutrality offset amounts identified in the IPPS final rules for FYs 2011 through 2016 with the actual costs of the demonstration for those years, considering the fact that the demonstration was scheduled to end December 31, 2016. In that final rule, we stated that we believed it would be appropriate to conduct this analysis for FYs 2011 through 2016 at one time, when all of the finalized cost reports for VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 cost reporting periods beginning in FYs 2011 through 2016 are available. We stated that such an aggregate analysis encompassing the cost experience through the end of the period of performance of the demonstration would represent an administratively streamlined method, allowing for the determination of any appropriate adjustment to the IPPS rates and obviating the need for multiple, fiscal year-specific calculations and regulatory actions. Given the general lag of 3 years in finalizing cost reports, we stated that we expected any such analysis would be conducted in FY 2020. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38287), with the extension of the demonstration for another 5-year period, as authorized by section 15003 of Public Law 114–255, we modified the plan outlined in the FY 2017 IPPS/ LTCH PPS final rule, and instead returned to the general procedure in previous final rules; that is, as finalized cost reports become available, we would determine the amount by which the actual costs of the demonstration for an earlier, given year differ from the estimated costs for the demonstration set forth in the IPPS final rule for the corresponding fiscal year, and then incorporate that amount into the budget neutrality offset amount for an upcoming fiscal year. We finalized a policy that if the actual costs of the demonstration for the earlier fiscal year exceeded the estimated costs of the demonstration identified in the final rule for that year, this difference would be added to the estimated costs of the demonstration for the upcoming fiscal year when determining the budget neutrality adjustment for the final rule. Likewise, we finalized a policy that if the estimated costs of the demonstration set forth in the final rule for a prior fiscal year exceeded the actual costs of the demonstration for that year, this difference would be subtracted from the estimated cost of the demonstration for the upcoming fiscal year when determining the budget neutrality adjustment for an upcoming fiscal year. However, given that this adjustment for specific years could be positive or negative, we would combine this reconciliation for multiple prior years into one adjustment to be applied to the budget neutrality offset amount for a single fiscal year, thus reducing the possibility of both positive and negative adjustments to be applied in consecutive years, and enhancing administrative feasibility. Specifically, when finalized cost reports for FYs 2011, 2012, and 2013 are available, we stated that we would include this PO 00000 Frm 00284 Fmt 4701 Sfmt 4702 difference for these years in the budget neutrality offset adjustment to be applied to the national IPPS rates in a future final rule. We stated that we expected that this would occur in FY 2019. We also stated that when finalized cost reports for FYs 2014 through 2016 are available, we would include the difference between the actual costs as reflected on these cost reports and the amounts included in the budget neutrality offset amounts for these fiscal years in a future final rule. We stated that we plan to provide an update in a future final rule regarding the year that we would expect that this analysis would occur. Therefore, in this proposed rule, we are identifying the differences between the total cost of the demonstration as indicated on finalized FY 2011 and 2012 cost reports and the estimates for the costs of the demonstration for the corresponding year in each of these years’ final rules, and we are proposing to adjust the current year’s budget neutrality offset amount by the combined difference. If any information relevant to the determination of these amounts (for example, a cost report reopening) would necessitate a revision of these amounts, we will make the appropriate change and include the determination in the FY 2019 IPPS/ LTCH PPS final rule. Furthermore, if the needed costs reports are available in time for the FY 2019 IPPS/LTCH PPS final rule, we will also identify the difference between the total cost of the demonstration based on finalized FY 2013 cost reports and the estimates for the costs of the demonstration for that year, and incorporate that amount into the budget neutrality offset amount for FY 2019. Currently, finalized cost reports are now available for the 16 hospitals that completed a cost reporting period beginning in FY 2011 according to the demonstration cost-based payment methodology. We note that the estimate of the costs of the demonstration for FY 2011 that was incorporated into the budget neutrality offset amount was formulated prior to the selection of hospitals under the expansion of the demonstration authorized by the Affordable Care Act. Accordingly, we based the estimate of the costs of the demonstration for FY 2011 on projected costs for 30 hospitals, the maximum number allowed by the authorizing statute in the Affordable Care Act. The actual costs of the demonstration for FY 2011 (that is, the amount from finalized cost reports for the 16 hospitals that were paid under the demonstration payment methodology for cost reporting periods with start dates during FY E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 2011), fell short of the estimated amount that was finalized in the FY 2011 IPPS/ LTCH PPS final rule for FY 2011 by $29,971,829. In addition, finalized cost reports for the 23 hospitals that completed a cost reporting period under the demonstration payment methodology beginning in FY 2012 are also now available. The actual costs of the demonstration as determined from these finalized cost reports fell short of the estimated amount that was finalized in the FY 2012 final rule by $8,500,373. We note that, for this proposed rule, the amounts identified for the actual cost of the demonstration for each of FYs 2011 and 2012 (determined from current finalized cost reports) is less than the amounts that were identified in the final rule for these fiscal years. Therefore, in keeping with previous policy finalized in similar situations when the costs of the demonstration fell short of the amount estimated in the corresponding year’s final rule, we will be including this component as a negative adjustment to the budget neutrality offset amount for the current fiscal year. e. Total Proposed Budget Neutrality Offset Amount for FY 2019 Therefore, for this FY 2019 IPPS/ LTCH PPS proposed rule, we are incorporating the following components into the calculation of the total budget neutrality offset for FY 2019: Step 1: The amount determined under subsection IV.4.c.(3) of the preamble of this proposed rule, representing the difference applicable to FY 2018 between the sum of the estimated reasonable cost amounts that would be paid under the demonstration to participating hospitals for covered inpatient hospital services and the sum of the estimated amounts that would generally be paid if the demonstration had not been implemented. The determination of this amount includes prorating to reflect for each participating hospital the fraction of the number of months for the cost report year starting in FY 2018 falling into the overall 12 months of the fiscal year. This estimated amount is $33,254,247. Step 2: The amount, determined under section IV.4.c.(4) of the preamble of this proposed rule representing the corresponding difference of these estimated amounts for FY 2019. No prorating is applied in the determination of this amount. This estimated amount is $78,409,842. Step 3: The amount determined under section IV.4.d. of the preamble of this proposed rule according to which the actual costs of the demonstration for FY VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 2011 for the 16 hospitals that completed a cost reporting period beginning in FY 2011 differ from the estimated amount that was incorporated into the budget neutrality offset amount for FY 2011 in the FY 2011 IPPS/LTCH PPS final rule. Analysis of this set of cost reports shows that the actual costs of the demonstration fell short of the estimated amount finalized in the FY 2011 IPPS/ LTCH PPS final rule by $29,971,829. Step 4: The amount, also determined under subsection IV.4.d. of the preamble of this proposed rule according to which the actual costs for the demonstration for FY 2012 for the 23 hospitals that completed a cost reporting period beginning in FY 2012 differ from the estimated amount in the FY 2012 final rule. Analysis of this set of cost reports shows that the actual costs of the demonstration for FY 2012 fell short of the estimated amount finalized in the FY 2012 IPPS/LTCH PPS final rule by $8,500,373. In keeping with previously finalized policy, we will be applying these differences, according to which the actual costs of the demonstration for each of FYs 2011 and 2012 fell short of the estimated amount determined in the final rule for each of these fiscal years, by reducing the budget neutrality offset amount to the national IPPS rates for FY 2019 by these amounts. Thus, for FY 2019, the total budget neutrality offset amount that we are proposing to apply is: The amount determined under Step 1 ($33,254,247) plus the amount determined under Step 2 ($78,409,842) minus the amount determined under Step 3 ($29,971,829) minus the amount determined under Step 4 ($8,500,373). This total is $73,191,887. If updated data become available prior to the FY 2019 IPPS/ LTCH PPS final rule, we would use them to the extent appropriate to determine the budget neutrality offset amount for FY 2019. Therefore, the amount of the budget neutrality offset amount may change in the FY 2019 IPPS/LTCH PPS final rule. Furthermore, if the needed costs reports are available in time for the FY 2019 IPPS/LTCH PPS final rule, we will also identify the difference between the total cost of the demonstration based on finalized FY 2013 cost reports and the estimates for the costs of the demonstration for that year, and incorporate that amount into the budget neutrality offset amount for FY 2019. In addition, in accordance with the policy finalized in the FY 2018 final IPPS/LTCH PPS final rule, we will incorporate the actual costs of the demonstration for the previously participating hospitals for cost reporting PO 00000 Frm 00285 Fmt 4701 Sfmt 4702 20447 periods starting in FYs 2015, 2016, and 2017 into a single amount to be included in the calculation of the budget neutrality offset amount to the national IPPS rates in a future final rule after such finalized cost reports become available. We expect to do this in FY 2020 or FY 2021. M. Proposed Revision of Hospital Inpatient Admission Orders Documentation Requirements Under Medicare Part A 1. Background In the CY 2013 OPPS/ASC final rule with comment period (77 FR 68426 through 68433), we solicited public comments for potential policy changes to improve clarity and consensus among providers, Medicare, and other stakeholders regarding the relationship between hospital admission decisions and appropriate Medicare payment, such as when a Medicare beneficiary is appropriately admitted to the hospital as an inpatient and the cost to hospitals associated with making this decision. In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50938 through 50942), we adopted a set of policies widely referred to as the ‘‘2 midnight’’ payment policy. Among the finalized changes, we codified through regulations at 42 CFR 412.3 the longstanding policy that a beneficiary becomes a hospital inpatient if formally admitted pursuant to the order of a physician (or other qualified practitioner as provided in the regulations) in accordance with the hospital conditions of participation (CoPs). In addition, we required that a written inpatient admission order be present in the medical record as a specific condition of Medicare Part A payment. In response to public comments that the requirement of a written admission order as a condition of payment is duplicative and burdensome on hospitals, we responded that the physician order reflects affirmation by the ordering physician or other qualified practitioner that hospital inpatient services are medically necessary, and the ‘‘order serves the unique purpose of initiating the inpatient admission and documenting the physician’s (or other qualified practitioner as provided in the regulations) intent to admit the patient, which impacts its required timing.’’ Therefore, we finalized the policy requiring a written inpatient order for all hospital admissions as a specific condition of payment. We acknowledged that in the extremely rare circumstance the order to admit is missing or defective, yet the intent, decision, and recommendation of the E:\FR\FM\07MYP2.SGM 07MYP2 20448 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 ordering physician or other qualified practitioner to admit the beneficiary as an inpatient can clearly be derived from the medical record, medical review contractors are provided with discretion to determine that this information constructively satisfies the requirement that a written hospital inpatient admission order be present in the medical record. 2. Proposed Revisions Regarding Admission Order Documentation Requirements Despite the discretion granted to medical reviewers to determine that admission order information derived from the medical record constructively satisfies the requirement that a written hospital inpatient admission order is present in the medical record, as we have gained experience with the policy, it has come to our attention that some otherwise medically necessary inpatient admissions are being denied payment due to technical discrepancies with the documentation of inpatient admission orders. Common technical discrepancies consist of missing practitioner admission signatures, missing cosignatures or authentication signatures, and signatures occurring after discharge. We have become aware that, particularly during the case review process, these discrepancies have occasionally been the primary reason for denying Medicare payment of an individual claim. In looking to reduce unnecessary administrative burden on physicians and providers and having gained experience with the policy since it was implemented, we have concluded that if the hospital is operating in accordance with the hospital CoPs, medical reviews should primarily focus on whether the inpatient admission was medically reasonable and necessary rather than occasional inadvertent signature documentation issues unrelated to the medical necessity of the inpatient stay. It was not our intent when we finalized the admission order documentation requirements that they should by themselves lead to the denial of payment for otherwise medically reasonable necessary inpatient stay, even if such denials occur infrequently. Therefore, we are proposing to revise the admission order documentation requirements by removing the requirement that written inpatient admission orders are a specific requirement for Medicare Part A payment. Specifically, we are proposing to revise the inpatient admission order policy to no longer require a written inpatient admission order to be present in the medical record as a specific condition of Medicare Part A payment. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Hospitals and physicians are already required to document relevant orders in the medical record to substantiate medical necessity requirements. If other available documentation, such as the physician certification statement when required, progress notes, or the medical record as a whole, supports that all the coverage criteria (including medical necessity) are met, and the hospital is operating in accordance with the hospital conditions of participation (CoPs), we believe it is no longer necessary to also require specific documentation requirements of inpatient admission orders as a condition of Medicare Part A payment. This proposal does not change the requirement that an individual is considered an inpatient if formally admitted as an inpatient under an order for inpatient admission. While this continues to be a requirement, as indicated earlier, technical discrepancies with the documentation of inpatient admission orders have led to the denial of otherwise medically necessary inpatient admission. To reduce this unnecessary administrative burden on physicians and providers, we are no longer requiring that the specific documentation requirements of inpatient admission orders be present in the medical record as a condition of Medicare Part A payment. Therefore, we are proposing to revise the regulations at 42 CFR 412.3(a) to remove the language stating that a physician order must be present in the medical record and be supported by the physician admission and progress notes, in order for the hospital to be paid for hospital inpatient services under Medicare Part A. We note that we are not proposing any changes with respect to the ‘‘2 midnight’’ payment policy. V. Proposed Changes to the IPPS for Capital-Related Costs A. Overview Section 1886(g) of the Act requires the Secretary to pay for the capital-related costs of inpatient acute hospital services in accordance with a prospective payment system established by the Secretary. Under the statute, the Secretary has broad authority in establishing and implementing the IPPS for acute care hospital inpatient capitalrelated costs. We initially implemented the IPPS for capital-related costs in the FY 1992 IPPS final rule (56 FR 43358). In that final rule, we established a 10year transition period to change the payment methodology for Medicare hospital inpatient capital-related costs from a reasonable cost-based payment methodology to a prospective payment PO 00000 Frm 00286 Fmt 4701 Sfmt 4702 methodology (based fully on the Federal rate). FY 2001 was the last year of the 10year transition period that was established to phase in the IPPS for hospital inpatient capital-related costs. For cost reporting periods beginning in FY 2002, capital IPPS payments are based solely on the Federal rate for almost all acute care hospitals (other than hospitals receiving certain exception payments and certain new hospitals). (We refer readers to the FY 2002 IPPS final rule (66 FR 39910 through 39914) for additional information on the methodology used to determine capital IPPS payments to hospitals both during and after the transition period.) The basic methodology for determining capital prospective payments using the Federal rate is set forth in the regulations at 42 CFR 412.312. For the purpose of calculating capital payments for each discharge, the standard Federal rate is adjusted as follows: (Standard Federal Rate) × (DRG Weight) × (Geographic Adjustment Factor (GAF)) x (COLA for hospitals located in Alaska and Hawaii) × (1 + Capital DSH Adjustment Factor + Capital IME Adjustment Factor, if applicable). In addition, under § 412.312(c), hospitals also may receive outlier payments under the capital IPPS for extraordinarily high-cost cases that qualify under the thresholds established for each fiscal year. B. Additional Provisions 1. Exception Payments The regulations at 42 CFR 412.348 provide for certain exception payments under the capital IPPS. The regular exception payments provided under §§ 412.348(b) through (e) were available only during the 10-year transition period. For a certain period after the transition period, eligible hospitals may have received additional payments under the special exceptions provisions at § 412.348(g). However, FY 2012 was the final year hospitals could receive special exceptions payments. For additional details regarding these exceptions policies, we refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51725). Under § 412.348(f), a hospital may request an additional payment if the hospital incurs unanticipated capital expenditures in excess of $5 million due to extraordinary circumstances beyond the hospital’s control. Additional information on the exception payment for extraordinary circumstances in E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules § 412.348(f) can be found in the FY 2005 IPPS final rule (69 FR 49185 and 49186). 2. New Hospitals Under the capital IPPS, the regulations at 42 CFR 412.300(b) define a new hospital as a hospital that has operated (under previous or current ownership) for less than 2 years and lists examples of hospitals that are not considered new hospitals. In accordance with § 412.304(c)(2), under the capital IPPS, a new hospital is paid 85 percent of its allowable Medicare inpatient hospital capital-related costs through its first 2 years of operation, unless the new hospital elects to receive full prospective payment based on 100 percent of the Federal rate. We refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51725) for additional information on payments to new hospitals under the capital IPPS. daltland on DSKBBV9HB2PROD with PROPOSALS2 3. Payments for Hospitals Located in Puerto Rico In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57061), we revised the regulations at 42 CFR 412.374 relating to the calculation of capital IPPS payments to hospitals located in Puerto Rico beginning in FY 2017 to parallel the change in the statutory calculation of operating IPPS payments to hospitals located in Puerto Rico, for discharges occurring on or after January 1, 2016, made by section 601 of the Consolidated Appropriations Act, 2016 (Pub. L. 114– 113). Section 601 of Public Law 114– 113 increased the applicable Federal percentage of the operating IPPS payment for hospitals located in Puerto Rico from 75 percent to 100 percent and decreased the applicable Puerto Rico percentage of the operating IPPS payments for hospitals located in Puerto Rico from 25 percent to zero percent, applicable to discharges occurring on or after January 1, 2016. As such, under revised § 412.374, for discharges occurring on or after October 1, 2016, capital IPPS payments to hospitals located in Puerto Rico are based on 100 percent of the capital Federal rate. C. Proposed Annual Update for FY 2019 The proposed annual update to the national capital Federal rate, as provided for in § 412.308(c), for FY 2019 is discussed in section III. of the Addendum to this proposed rule. In section II.D. of the preamble of this proposed rule, we present a discussion of the MS–DRG documentation and coding adjustment, including previously finalized policies and historical adjustments, as well as the adjustment to the standardized amount under section 1886(d) of the Act that we are VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 proposing for FY 2019, in accordance with the amendments made to section 7(b)(1)(B) of Public Law 110–90 by section 414 of the MACRA. Because these provisions require us to make an adjustment only to the operating IPPS standardized amount, we are not proposing to make a similar adjustment to the national capital Federal rate (or to the hospital-specific rates). VI. Proposed Changes for Hospitals Excluded From the IPPS A. Proposed Rate-of-Increase in Payments to Excluded Hospitals for FY 2019 Certain hospitals excluded from a prospective payment system, including children’s hospitals, 11 cancer hospitals, and hospitals located outside the 50 States, the District of Columbia, and Puerto Rico (that is, hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa) receive payment for inpatient hospital services they furnish on the basis of reasonable costs, subject to a rate-of-increase ceiling. A per discharge limit (the target amount, as defined in § 413.40(a) of the regulations) is set for each hospital based on the hospital’s own cost experience in its base year, and updated annually by a rate-of-increase percentage. For each cost reporting period, the updated target amount is multiplied by total Medicare discharges during that period and applied as an aggregate upper limit (the ceiling as defined in § 413.40(a)) of Medicare reimbursement for total inpatient operating costs for a hospital’s cost reporting period. In accordance with § 403.752(a) of the regulations, religious nonmedical health care institutions (RNHCIs) also are subject to the rate-ofincrease limits established under § 413.40 of the regulations discussed previously. Furthermore, in accordance with § 412.526(c)(3) of the regulations, extended neoplastic disease care hospitals also are subject to the rate-ofincrease limits established under § 413.40 of the regulations discussed previously. As explained in the FY 2006 IPPS final rule (70 FR 47396 through 47398), beginning with FY 2006, we use the percentage increase in the IPPS operating market basket to update the target amounts for children’s hospitals, cancer hospitals, and RNHCIs. Consistent with the regulations at §§ 412.23(g), 413.40(a)(2)(ii)(A), and 413.40(c)(3)(viii), we also use the percentage increase in the IPPS operating market basket to update target amounts for short-term acute care PO 00000 Frm 00287 Fmt 4701 Sfmt 4702 20449 hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa. In the FYs 2014 and 2015 IPPS/LTCH PPS final rules (78 FR 50747 through 50748 and 79 FR 50156 through 50157, respectively), we adopted a policy of using the percentage increase in the FY 2010-based IPPS operating market basket to update the target amounts for FY 2014 and subsequent fiscal years for children’s hospitals, cancer hospitals, RNHCIs, and short-term acute care hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa. However, in the FY 2018 IPPS/LTCH PPS final rule, we rebased and revised the IPPS operating basket to a 2014 base year, effective for FY 2018 and subsequent years (82 FR 38158 through 38175), and finalized the use of the percentage increase in the 2014-based IPPS operating market basket to update the target amounts for children’s hospitals, the 11 cancer hospitals, RNHCIs, and short-term acute care hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa for FY 2018 and subsequent years. Accordingly, for FY 2019, the rate-of-increase percentage to be applied to the target amount for these hospitals would be the FY 2019 percentage increase in the 2014-based IPPS operating market basket. Based on IGI’s 2017 fourth quarter forecast, for this proposed rule, we estimate that the 2014-based IPPS operating market basket update for FY 2019 is 2.8 percent (that is, the estimate of the market basket rate-of-increase). Therefore, the FY 2019 rate-of-increase percentage that would be applied to the FY 2018 target amounts in order to calculate the FY 2019 target amounts for children’s hospitals, cancer hospitals, RNCHIs, and short-term acute care hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa would be 2.8 percent, in accordance with the applicable regulations at 42 CFR 413.40. We are proposing that if more recent data become available for the final rule, we would use them to calculate the final IPPS operating market basket update for FY 2019. In addition, payment for inpatient operating costs for hospitals classified under section 1886(d)(1)(B)(vi) of the Act (which we refer to as ‘‘extended neoplastic disease care hospitals’’) for cost reporting periods beginning on or after January 1, 2015, is to be made as described in 42 CFR 412.526(c)(3), and payment for capital costs for these hospitals is to be made as described in E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20450 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 42 CFR 412.526(c)(4). (For additional information on these payment regulations, we refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38321 through 38322).) Section 412.526(c)(3) provides that the hospital’s Medicare allowable net inpatient operating costs for that period are paid on a reasonable cost basis, subject to that hospital’s ceiling, as determined under § 412.526(c)(1), for that period. Under section 412.526(c)(1), for each cost reporting period, the ceiling was determined by multiplying the updated target amount, as defined in § 412.526(c)(2), for that period by the number of Medicare discharges paid during that period. Section 412.526(c)(2)(i) describes the method for determining the target amount for cost reporting periods, beginning during FY 2015. Section 412.526(c)(2)(ii) specifies that, for cost reporting periods beginning during fiscal years after FY 2015, the target amount will equal the hospital’s target amount for the previous cost reporting period updated by the applicable annual rate-of-increase percentage specified in § 413.40(c)(3) for the subject cost reporting period (79 FR 50197). For FY 2019, in accordance with § 412.22(i) and § 412.526(c)(2)(ii) of the regulations, for cost reporting periods beginning during FY 2019, the update to the target amount for long-term care neoplastic disease hospitals (that is, hospitals described under § 412.22(i)) is the applicable annual rate-of-increase percentage specified in § 413.40(c)(3) for FY 2019, which would be equal to the percentage increase in the hospital market basket index. As described earlier, for this proposed rule, the percentage increase in the hospital market basket index is estimated to be the percentage increase in the 2014based IPPS operating market basket (that is, the estimate of the market basket rate-of-increase). Accordingly, for this proposed rule, the proposed update to an extended neoplastic disease care hospital’s target amount for FY 2019 is 2.8 percent, which is based on IGI’s 2017 fourth quarter forecast. Furthermore, we are proposing that if more recent data become available for the final rule, we would use that updated data to calculate the IPPS operating market basket update for FY 2019. B. Proposed Changes to Regulations Governing Satellite Facilities In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38292 through 38294), we finalized a change to our hospitalwithin-hospital (HwH) regulations at 42 CFR 412.22(e) to only require, as of VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 October 1, 2017, that IPPS-excluded HwHs that are co-located with IPPS hospitals comply with the separateness and control requirements in those regulations. We adopted this change because we believe that the policy concerns that underlay the previous HwH regulations (that is, inappropriate patient shifting and hospitals acting as illegal de facto units) are sufficiently moderated in situations where IPPSexcluded hospitals are co-located with each other, in large part due to changes that have been made to the way most types of IPPS-excluded hospitals are paid under Medicare. In response to our proposal on this issue, we received some public comments requesting that CMS make analogous changes to the rules governing satellite facilities, and we responded in the FY 2018 IPPS/ LTCH PPS final rule that we would take that request under consideration for future rulemaking. Under 42 CFR 412.22(h), a satellite facility is defined as part of a hospital that provides inpatient services in a building also used by another hospital, or in one or more entire buildings located on the same campus as buildings used by another hospital. There are significant similarities between the definition of a satellite facility and the definition of an HwH as those definitions relate to their colocation with host hospitals. Our policies on satellite facilities have also been premised on many of the same concerns that formed the basis for our HwH policies. That is, the separateness and control policies for satellite facilities at 42 CFR 412.22(h) were aimed at mitigating our concern that the co-location of a satellite facility and a host hospital raised a potential for inappropriate patient shifting that we believed could be guided more by attempts to maximize Medicare reimbursements than by patient welfare (71 FR 48107). However, just as changes to the way most types of IPPS-excluded hospitals are paid under Medicare have sufficiently moderated this concern in situations where IPPS-excluded hospitals are co-located with each other, we believe that these payment changes also sufficiently moderate these concerns in situations where IPPSexcluded satellite facilities are colocated with IPPS-excluded host hospitals. Furthermore, we believe that there is no compelling policy rational for treating satellite facilities and HwHs differently on the issue of separateness and control because there is no meaningful distinction between these types of facilities that would justify a satellite facility having to comply with separateness and control requirements PO 00000 Frm 00288 Fmt 4701 Sfmt 4702 in a situation in which an HwH would not be required to comply (we note that the separateness and control requirements for satellite facilities are not the same as those for HwHs; however, they are similar). Therefore, we are proposing to revise our regulations at § 412.22(h)(2)(iii)(A) to only require IPPS-excluded satellite facilities that are co-located with IPPS hospitals to comply with the separateness and control requirements. Specifically, we are proposing to add a new paragraph (4) to § 412.22(h)(2)(iii)(A) to specify that, effective on or after October 1, 2018, a satellite facility that is part of an IPPSexcluded hospital that provides inpatient services in a building also used by an IPPS-excluded hospital, or in one or more entire buildings located on the same campus as buildings used by an IPPS-excluded hospital, is not required to meet the criteria in § 412.22(h)(2)(iii)(A)(1) through (3) in order to be excluded from the IPPS. Proposed new § 412.22(h)(2)(iii)(A)(4) would also specify that a satellite facility that is part of an IPPS-excluded hospital which is located in a building also used by an IPPS hospital, or in one or more entire buildings located on the same campus as buildings used by an IPPS hospital, is still required to meet the criteria in § 412.22 (h)(2)(iii)(A)(1) through (3) in order to be excluded from the IPPS. As described in further detail in section VI.C. of the preamble of this proposed rule, we are proposing that, for cost reporting periods beginning on or after October 1, 2019, an IPPS excluded hospital would no longer be precluded from having an excluded psychiatric and/or rehabilitation unit. Consistent with our proposed changes to the regulations governing satellite facilities discussed earlier, we also are proposing to add new paragraph (iv) to § 412.25(e)(2) to specify that an IPPSexcluded satellite facility of an IPPSexcluded unit of an IPPS-excluded hospital would not have to comply with the separateness and control requirements so long as the satellite of the excluded unit is not co-located with an IPPS hospital, and to make conforming revisions to § 412.25(e)(2)(iii)(A) to subject that provision to paragraph (iv). It is important to point out that payment rules, such as the HwH or satellite facility rules, never waive or supersede the requirement that all hospitals must comply with the hospital conditions of participation (CoPs). All hospitals, regardless of payment status, must always demonstrate separate and independent compliance with the E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 hospital CoPs, even when an entire hospital or a part of a hospital is located in a building also used by another hospital, or in one or more entire buildings located on the same campus as buildings used by another hospital. We further note that this proposal would not affect IPPS-excluded satellite facilities that are co-located with IPPS hospitals that are currently grandfathered under § 412.22 (h)(2)(iii)(A)(2). Those satellite facilities would continue to maintain their IPPSexcluded status without complying with the separateness and control requirements so long as all applicable requirements at § 412.22(h) are met. C. Proposed Changes to Regulations Governing Excluded Units of Hospitals Under existing regulations at 42 CFR 412.25, an excluded psychiatric or rehabilitation unit cannot be part of an institution that is excluded in its entirety from the IPPS. These regulations were codified in the FY 1994 IPPS final rule (58 FR 46318). However, as we explained in that rule, while this prohibition was not explicitly stated in the regulations until that time, the prohibition had been our longstanding policy. This policy was adopted at that time because it would have been redundant to allow an IPPSexcluded hospital to have an IPPSexcluded unit because both the hospital and the unit would have been paid under the same Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) payment system methodology, described in section VI.A. of this proposed rule. In addition, we were concerned about the possibility of IPPSexcluded hospitals artificially inflating their target amounts by operating IPPSexcluded units (58 FR 46318). In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38292 through 38294), we finalized a change to the HwH regulations to only require, as of October 1, 2017, that IPPS-excluded HwHs that are co-located with IPPS hospitals comply with the separateness and control requirements in those regulations. In this proposed rule, we are proposing to make similar changes to the regulations governing satellite facilities, which would allow these facilities, including satellite facilities of hospital units, to maintain their IPPSexcluded status without complying with the separateness and control requirements so long as they are not colocated with an IPPS hospital. In conjunction with the HwH regulation changes and the proposed satellite facilities regulation changes, and as part of our continued efforts to reduce regulatory burden and achieve program VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 simplification, we believe it is appropriate to propose changes to our regulations for the establishment of IPPS-excluded units in IPPS-excluded hospitals. Given the introduction of prospective payment systems for both inpatient rehabilitation facilities and units (collectively IRFs) and psychiatric hospitals and units (collectively IPFs), we no longer believe it is redundant for an IPPS-excluded hospital to have an IPPS-excluded unit, nor is it possible for IPPS-excluded hospitals to use units to artificially inflate their target amounts, because Medicare payment for discharges from the units would not be based on reasonable cost. For example, under our proposal, an LTCH operating a psychiatric unit would receive payment under the IPF PPS for discharges from the psychiatric unit and payment under the LTCH PPS for discharges not from the psychiatric unit. Payment for discharges from the psychiatric unit would be made under the IPF PPS rather than the LTCH PPS because Medicare pays for services provided by an excluded hospital unit under a separate payment system from the hospital in which the unit is a part. For the purposes of payment, services furnished by a unit are considered to be inpatient hospital services provided by the unit and not inpatient hospital services provided by the hospital operating the unit. In this proposed rule, we are proposing to revise § 412.25(a)(1)(ii) to specify that the requirement that an excluded psychiatric or rehabilitation unit cannot be part of an IPPS-excluded hospital is only effective through cost reporting periods beginning on or before September 30, 2019. Under this proposal, effective with cost reporting periods beginning on or after October 1, 2019, an IPPS-excluded hospital would be permitted to have an excluded psychiatric and/or rehabilitation unit. In addition, we are proposing to revise § 412.25(d) to specify that an IPPSexcluded hospital may not have an IPPS-excluded unit of the same type (psychiatric or rehabilitation) as the hospital (for example, an IRF may not have an IRF unit). We believe that this proposed change would be consistent with the current preclusion in § 412.25(d) that prevents one hospital from having more than one of the same type of IPPS-excluded unit. However, we note that if these proposed changes to the payment rules are finalized, an IPPS-excluded hospital operating an IPPS-excluded unit must continue to be in compliance with other Medicare regulations and CoPs applicable to the hospital or unit. An IPPS-excluded unit PO 00000 Frm 00289 Fmt 4701 Sfmt 4702 20451 within a hospital is part of the hospital. Noncompliance with any of the hospital CoPs at 42 CFR 482.1 through 482.58 at any part of a certified hospital is noncompliance for the entire Medicarecertified hospital. Therefore, noncompliance with the hospital CoPs in an IPPS excluded unit is CoP noncompliance for the entire certified hospital. For example, the CoPs that govern IPFs would apply to an IPF that operates an excluded rehabilitation unit, and those CoPs require that certain psychiatric treatment protocols apply to every IPF patient (including those in the rehabilitation unit). We are proposing cost reporting periods beginning on or after October 1, 2019 would be the effective date of these changes to allow sufficient time for both CMS and IPPS-excluded hospitals to make the necessary administrative and operational changes to fully implement the proposed changes. We believe this proposed effective date would, to the best of our ability, ensure that these units can begin to operate without unnecessary administrative issues and delays. D. Critical Access Hospitals (CAHs) 1. Background Section 1820 of the Act provides for the establishment of Medicare Rural Hospital Flexibility Programs (MRHFPs), under which individual States may designate certain facilities as critical access hospitals (CAHs). Facilities that are so designated and meet the CAH conditions of participation under 42 CFR part 485, subpart F, will be certified as CAHs by CMS. Regulations governing payments to CAHs for services to Medicare beneficiaries are located in 42 CFR part 413. 2. Frontier Community Health Integration Project (FCHIP) Demonstration Section 123 of the Medicare Improvements for Patients and Providers Act of 2008 (Pub. L. 110–275), as amended by section 3126 of the Affordable Care Act, authorizes a demonstration project to allow eligible entities to develop and test new models for the delivery of health care services in eligible counties in order to improve access to and better integrate the delivery of acute care, extended care and other health care services to Medicare beneficiaries. The demonstration is titled ‘‘Demonstration Project on Community Health Integration Models in Certain Rural Counties,’’ and is commonly known as the Frontier Community Health E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20452 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules Integration Project (FCHIP) demonstration. The authorizing statute states the eligibility criteria for entities to be able to participate in the demonstration. An eligible entity, as defined in section 123(d)(1)(B) of Public Law 110–275, as amended, is an MRHFP grantee under section 1820(g) of the Act (that is, a CAH); and is located in a State in which at least 65 percent of the counties in the State are counties that have 6 or less residents per square mile. The authorizing statute stipulates several other requirements for the demonstration. Section 123(d)(2)(B) of Public Law 110–275, as amended, limits participation in the demonstration to eligible entities in not more than 4 States. Section 123(f)(1) of Public Law 110–275 requires the demonstration project to be conducted for a 3-year period. In addition, section 123(g)(1)(B) of Public Law 110–275 requires that the demonstration be budget neutral. Specifically, this provision states that in conducting the demonstration project, the Secretary shall ensure that the aggregate payments made by the Secretary do not exceed the amount which the Secretary estimates would have been paid if the demonstration project under the section were not implemented. Furthermore, section 123(i) of Public Law 110–275 states that the Secretary may waive such requirements of titles XVIII and XIX of the Act as may be necessary and appropriate for the purpose of carrying out the demonstration project, thus allowing the waiver of Medicare payment rules encompassed in the demonstration. In January 2014, CMS released a request for applications (RFA) for the FCHIP demonstration. Using 2013 data from the U.S. Census Bureau, CMS identified Alaska, Montana, Nevada, North Dakota, and Wyoming as meeting the statutory eligibility requirement for participation in the demonstration. The RFA solicited CAHs in these five States to participate in the demonstration, stating that participation would be limited to CAHs in four of the States. To apply, CAHs were required to meet the eligibility requirements in the authorizing legislation, and, in addition, to describe a proposal to enhance health-related services that would complement those currently provided by the CAH and better serve the community’s needs. In addition, in the RFA, CMS interpreted the eligible entity definition in the statute as meaning a CAH that receives funding through the MHRFP. The RFA identified four interventions, under which specific waivers of Medicare payment rules VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 would allow for enhanced payment for telehealth, skilled nursing facility/ nursing facility beds, ambulance services, and home health services, respectively. These waivers were formulated with the goal of increasing access to care with no net increase in costs. Ten CAHs were selected for participation in the demonstration, which started on August 1, 2016. These CAHs are located in Montana, Nevada, and North Dakota, and they are participating in three of the four interventions identified in the FY 2017 IPPS/LTCH PPS final rule (81 FR 57064 through 57065) and FY 2018 IPPS/LTCH PPS final rule (82 FR 38294 through 38296). Eight CAHs are participating in the telehealth intervention, three CAHs are participating in the skilled nursing facility/nursing facility bed intervention, and two CAHs are participating in the ambulance services intervention. Each CAH is allowed to participate in more than one of the interventions. None of the selected CAHs are participants in the home health intervention, which was the fourth intervention included in the RFA. In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57064 through 57065) and FY 2018 IPPS/LTCH PPS final rule (82 FR 38294 through 38296), we finalized a policy to address the budget neutrality requirement for the demonstration. As explained in the FY 2018 IPPS/LTCH PPS final rule, we based our selection of CAHs for participation with the goal of maintaining the budget neutrality of the demonstration on its own terms (that is, the demonstration will produce savings from reduced transfers and admissions to other health care providers, thus offsetting any increase in payments resulting from the demonstration). However, because of the small size of this demonstration and uncertainty associated with projected Medicare utilization and costs, we adopted a contingency plan to ensure that the budget neutrality requirement in section 123 of Public Law 110–275 is met. If analysis of claims data for Medicare beneficiaries receiving services at each of the participating CAHs, as well as from other data sources, including cost reports for these CAHs, shows that increases in Medicare payments under the demonstration during the 3-year period are not sufficiently offset by reductions elsewhere, we will recoup the additional expenditures attributable to the demonstration through a reduction in payments to all CAHs nationwide. Because of the small scale of the demonstration, we indicated that we did not believe it would be feasible PO 00000 Frm 00290 Fmt 4701 Sfmt 4702 to implement budget neutrality by reducing payments to only the participating CAHs. Therefore, in the event that this demonstration is found to result in aggregate payments in excess of the amount that would have been paid if this demonstration were not implemented, we will comply with the budget neutrality requirement by reducing payments to all CAHs, not just those participating in the demonstration. We stated that we believe it is appropriate to make any payment reductions across all CAHs because the FCHIP demonstration is specifically designed to test innovations that affect delivery of services by the CAH provider category. We explained our belief that the language of the statutory budget neutrality requirement at section 123(g)(1)(B) of Public Law 110–275 permits the agency to implement the budget neutrality provision in this manner. The statutory language merely refers to ensuring that aggregate payments made by the Secretary do not exceed the amount which the Secretary estimates would have been paid if the demonstration project was not implemented, and does not identify the range across which aggregate payments must be held equal. Based on actuarial analysis using cost report settlements for FYs 2013 and 2014, the demonstration is projected to satisfy the budget neutrality requirement and likely yield a total net savings. As we estimated for the FY 2018 IPPS/LTCH PPS final rule, for this FY 2019 IPPS/LTCH PPS proposed rule, we estimate that the total impact of the payment recoupment would be no greater than 0.03 percent of CAHs’ total Medicare payments within one fiscal year (that is, Medicare Part A and Part B). The final budget neutrality estimates for the FCHIP demonstration will be based on the demonstration period, which is August 1, 2016 through July 31, 2019. The demonstration is projected to impact payments to participating CAHs under both Medicare Part A and Part B. As stated in the FY 2018 IPPS/LTCH PPS final rule, in the event the demonstration is found not to have been budget neutral, any excess costs will be recouped over a period of 3 cost reporting years, beginning in CY 2020. The 3-year period for recoupment will allow for a reasonable timeframe for the payment reduction and to minimize any impact on CAHs’ operations. Therefore, because any reduction to CAH payments in order to recoup excess costs under the demonstration will not begin until CY 2020, this policy will have no impact for any national payment system for FY 2019. E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules VII. Proposed Changes to the LongTerm Care Hospital Prospective Payment System (LTCH PPS) for FY 2019 A. Background of the LTCH PPS daltland on DSKBBV9HB2PROD with PROPOSALS2 1. Legislative and Regulatory Authority Section 123 of the Medicare, Medicaid, and SCHIP (State Children’s Health Insurance Program) Balanced Budget Refinement Act of 1999 (BBRA) (Pub. L. 106–113), as amended by section 307(b) of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106–554), provides for payment for both the operating and capital-related costs of hospital inpatient stays in long-term care hospitals (LTCHs) under Medicare Part A based on prospectively set rates. The Medicare prospective payment system (PPS) for LTCHs applies to hospitals that are described in section 1886(d)(1)(B)(iv) of the Act, effective for cost reporting periods beginning on or after October 1, 2002. Section 1886(d)(1)(B)(iv)(I) of the Act originally defined an LTCH as a hospital which has an average inpatient length of stay (as determined by the Secretary) of greater than 25 days. Section 1886(d)(1)(B)(iv)(II) of the Act (‘‘subclause II’’ LTCHs) also provided an alternative definition of LTCHs. However, section 15008 of the 21st Century Cures Act (Pub. L. 114–255) amended section 1886 of the Act to exclude former ‘‘subclause II’’ LTCHs from being paid under the LTCH PPS and created a new category of IPPSexcluded hospitals, which we refer to as ‘‘extended neoplastic disease care hospitals’’), to be paid as hospitals that were formally classified as ‘‘subclause (II)’’ LTCHs (82 FR 38298). Section 123 of the BBRA requires the PPS for LTCHs to be a ‘‘per discharge’’ system with a diagnosis-related group (DRG) based patient classification system that reflects the differences in patient resources and costs in LTCHs. Section 307(b)(1) of the BIPA, among other things, mandates that the Secretary shall examine, and may provide for, adjustments to payments under the LTCH PPS, including adjustments to DRG weights, area wage adjustments, geographic reclassification, outliers, updates, and a disproportionate share adjustment. In the August 30, 2002 Federal Register, we issued a final rule that implemented the LTCH PPS authorized under the BBRA and BIPA (67 FR 55954). For the initial implementation of the LTCH PPS (FYs 2003 through FY 2007), the system used information from VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 LTCH patient records to classify patients into distinct long-term care diagnosis-related groups (LTC–DRGs) based on clinical characteristics and expected resource needs. Beginning in FY 2008, we adopted the Medicare severity long-term care diagnosis-related groups (MS–LTC–DRGs) as the patient classification system used under the LTCH PPS. Payments are calculated for each MS–LTC–DRG and provisions are made for appropriate payment adjustments. Payment rates under the LTCH PPS are updated annually and published in the Federal Register. The LTCH PPS replaced the reasonable cost-based payment system under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) (Pub. L. 97–248) for payments for inpatient services provided by an LTCH with a cost reporting period beginning on or after October 1, 2002. (The regulations implementing the TEFRA reasonable cost-based payment provisions are located at 42 CFR part 413.) With the implementation of the PPS for acute care hospitals authorized by the Social Security Amendments of 1983 (Pub. L. 98–21), which added section 1886(d) to the Act, certain hospitals, including LTCHs, were excluded from the PPS for acute care hospitals and were paid their reasonable costs for inpatient services subject to a per discharge limitation or target amount under the TEFRA system. For each cost reporting period, a hospitalspecific ceiling on payments was determined by multiplying the hospital’s updated target amount by the number of total current year Medicare discharges. (Generally, in this section of the preamble of this proposed rule, when we refer to discharges, we describe Medicare discharges.) The August 30, 2002 final rule further details the payment policy under the TEFRA system (67 FR 55954). In the August 30, 2002 final rule, we provided for a 5-year transition period from payments under the TEFRA system to payments under the LTCH PPS. During this 5-year transition period, an LTCH’s total payment under the PPS was based on an increasing percentage of the Federal rate with a corresponding decrease in the percentage of the LTCH PPS payment that is based on reasonable cost concepts, unless an LTCH made a one-time election to be paid based on 100 percent of the Federal rate. Beginning with LTCHs’ cost reporting periods beginning on or after October 1, 2006, total LTCH PPS payments are based on 100 percent of the Federal rate. In addition, in the August 30, 2002 final rule, we presented an in-depth PO 00000 Frm 00291 Fmt 4701 Sfmt 4702 20453 discussion of the LTCH PPS, including the patient classification system, relative weights, payment rates, additional payments, and the budget neutrality requirements mandated by section 123 of the BBRA. The same final rule that established regulations for the LTCH PPS under 42 CFR part 412, subpart O, also contained LTCH provisions related to covered inpatient services, limitation on charges to beneficiaries, medical review requirements, furnishing of inpatient hospital services directly or under arrangement, and reporting and recordkeeping requirements. We refer readers to the August 30, 2002 final rule for a comprehensive discussion of the research and data that supported the establishment of the LTCH PPS (67 FR 55954). In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49601 through 49623), we implemented the provisions of the Pathway for Sustainable Growth Rate (SGR) Reform Act of 2013 (Pub. L. 113– 67), which mandated the application of the ‘‘site neutral’’ payment rate under the LTCH PPS for discharges that do not meet the statutory criteria for exclusion beginning in FY 2016. For cost reporting periods beginning on or after October 1, 2015, discharges that do not meet certain statutory criteria for exclusion are paid based on the site neutral payment rate. Discharges that do meet the statutory criteria continue to receive payment based on the LTCH PPS standard Federal payment rate. For more information on the statutory requirements of the Pathway for SGR Reform Act of 2013, we refer readers to the FY 2016 IPPS/LTCH PPS final rule (80 FR 49601 through 49623) and the FY 2017 IPPS/LTCH PPS final rule (81 FR 57068 through 57075). In the FY 2018 IPPS/LTCH PPS final rule, we implemented several provisions of the 21st Century Cures Act (‘‘the Cures Act’’) (Pub. L. 114–255) that affected the LTCH PPS: • Section 15004(a), which changed the moratorium on increasing the number of beds in existing LTCHs and LTCH satellite facilities. However, we note that this moratorium expired effective October 1, 2017. • Section 15004(b), which specifies that, beginning in FY 2018, the estimated aggregate amount of HCO payments in a given year is equal to 99.6875 percent of the 8 percent estimated aggregate payments for standard Federal payment rate cases (that is, 7.975 percent) while requiring that we adjust the standard Federal payment rate each year to ensure budget neutrality for HCO payments as if estimated aggregate HCO payments E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20454 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules made for standard Federal payment rate discharges remained at 8 percent as done through our previous regulatory requirement. (We note these provisions do not apply with respect to the computation of the applicable site neutral payment rate under section 1886(m)(6) of the Act.) • Section 15006, which amended sections 114(c)(1)(A) and (c)(2) of the MMSEA, which provided a statutory extension on the moratoria on the full implementation of the 25-percent threshold policy on LTCH PPS discharges for LTCHs governed under § 412.534, § 412.536, and § 412.538 based on the LTCH’s cost reporting period beginning dates. In addition to the statutory moratorium, in the FY 2018 IPPS/LTCH PPS final rule, we also implemented a 1-year regulatory delay on the full implementation of the 25percent threshold policy under § 412.538 (82 FR 38318 through 38320). • Section 15007, which extends the exclusion of Medicare Advantage plans’ and site neutral payment rate discharges from the calculation of the average length of stay for all LTCHs, for discharges occurring in any cost reporting period beginning on or after October 1, 2015. • Section 15008, which changed the classification of certain hospitals. Specifically, section 15008 of Pub. L. 114–255 provided for the change in Medicare classification for ‘‘subclause (II)’’ LTCHs by redesignating such hospitals from section 1886(d)(1)(B)(iv)(II) of the Act to section 1886(d)(1)(B)(vi) of the Act, which is described earlier. • Section 15009, which provides for a temporary exception to the site neutral payment rate for certain spinal cord specialty hospitals for discharges occurring in cost reporting periods beginning during FY 2018 and 2019 for LTCHs that meet specified statutory criteria to be excepted from the site neutral payment rate. • Section 15010, which created a new temporary exception to the site neutral payment rate for certain severe wound discharges from certain LTCHs during such LTCHs’ cost reporting periods beginning during FY 2018. In this FY 2019 IPPS/LTCH PPS proposed rule, we are proposing to make conforming changes to our regulations to implement the provisions of section 51005 of the Bipartisan Budget Act of 2018, Pub. L. 115–123, which extends the transitional blended payment rate for site neutral payment rate cases for an additional 2 years. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 2. Criteria for Classification as an LTCH a. Classification as an LTCH Under the regulations at § 412.23(e)(1), to qualify to be paid under the LTCH PPS, a hospital must have a provider agreement with Medicare. Furthermore, § 412.23(e)(2)(i), which implements section 1886(d)(1)(B)(iv) of the Act, requires that a hospital have an average Medicare inpatient length of stay of greater than 25 days to be paid under the LTCH PPS. In accordance with section 1206(a)(3) of the Pathway for SGR Reform Act of 2013 (Pub. L. 113–67), as amended by section 15007 of Public Law 114–255, we amended our regulations to specify that Medicare Advantage plans’ and site neutral payment rate discharges are excluded from the calculation of the average length of stay for all LTCHs, for discharges occurring in cost reporting period beginning on or after October 1, 2015. b. Hospitals Excluded From the LTCH PPS The following hospitals are paid under special payment provisions, as described in § 412.22(c) and, therefore, are not subject to the LTCH PPS rules: • Veterans Administration hospitals. • Hospitals that are reimbursed under State cost control systems approved under 42 CFR part 403. • Hospitals that are reimbursed in accordance with demonstration projects authorized under section 402(a) of the Social Security Amendments of 1967 (Pub. L. 90–248) (42 U.S.C. 1395b–1), section 222(a) of the Social Security Amendments of 1972 (Pub. L. 92–603) (42 U.S.C. 1395b&1 (note)) (Statewide all-payer systems, subject to the rate-ofincrease test at section 1814(b) of the Act), or section 3201 of the Patient Protection and Affordable Care Act (Pub. L. 111–148 (42 U.S.C. 1315a). • Nonparticipating hospitals furnishing emergency services to Medicare beneficiaries. 3. Limitation on Charges to Beneficiaries In the August 30, 2002 final rule, we presented an in-depth discussion of beneficiary liability under the LTCH PPS (67 FR 55974 through 55975). This discussion was further clarified in the RY 2005 LTCH PPS final rule (69 FR 25676). In keeping with those discussions, if the Medicare payment to the LTCH is the full LTC–DRG payment amount, consistent with other established hospital prospective payment systems, § 412.507 currently provides that an LTCH may not bill a Medicare beneficiary for more than the deductible and coinsurance amounts as PO 00000 Frm 00292 Fmt 4701 Sfmt 4702 specified under §§ 409.82, 409.83, and 409.87 and for items and services specified under § 489.30(a). However, under the LTCH PPS, Medicare will only pay for days for which the beneficiary has coverage until the shortstay outlier (SSO) threshold is exceeded. If the Medicare payment was for a SSO case (§ 412.529), and that payment was less than the full LTC–DRG payment amount because the beneficiary had insufficient remaining Medicare days, the LTCH is currently also permitted to charge the beneficiary for services delivered on those uncovered days (§ 412.507). In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49623), we amended our regulations to expressly limit the charges that may be imposed on beneficiaries whose discharges are paid at the site neutral payment rate under the LTCH PPS. In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57102), we amended the regulations under § 412.507 to clarify our existing policy that blended payments made to an LTCH during its transitional period (that is, payment for discharges occurring in cost reporting periods beginning in FY 2016 or 2017) are considered to be site neutral payment rate payments. B. Proposed Medicare Severity LongTerm Care Diagnosis-Related Group (MS–LTC–DRG) Classifications and Relative Weights for FY 2019 1. Background Section 123 of the BBRA required that the Secretary implement a PPS for LTCHs to replace the cost-based payment system under TEFRA. Section 307(b)(1) of the BIPA modified the requirements of section 123 of the BBRA by requiring that the Secretary examine the feasibility and the impact of basing payment under the LTCH PPS on the use of existing (or refined) hospital DRGs that have been modified to account for different resource use of LTCH patients. When the LTCH PPS was implemented for cost reporting periods beginning on or after October 1, 2002, we adopted the same DRG patient classification system utilized at that time under the IPPS. As a component of the LTCH PPS, we refer to this patient classification system as the ‘‘long-term care diagnosis-related groups (LTC– DRGs).’’ Although the patient classification system used under both the LTCH PPS and the IPPS are the same, the relative weights are different. The established relative weight methodology and data used under the LTCH PPS result in relative weights under the LTCH PPS that reflect the E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules differences in patient resource use of LTCH patients, consistent with section 123(a)(1) of the BBRA (Pub. L. 106–113). As part of our efforts to better recognize severity of illness among patients, in the FY 2008 IPPS final rule with comment period (72 FR 47130), the MS–DRGs and the Medicare severity long-term care diagnosis-related groups (MS–LTC–DRGs) were adopted under the IPPS and the LTCH PPS, respectively, effective beginning October 1, 2007 (FY 2008). For a full description of the development, implementation, and rationale for the use of the MS–DRGs and MS–LTC– DRGs, we refer readers to the FY 2008 IPPS final rule with comment period (72 FR 47141 through 47175 and 47277 through 47299). (We note that, in that same final rule, we revised the regulations at § 412.503 to specify that for LTCH discharges occurring on or after October 1, 2007, when applying the provisions of 42 CFR part 412, subpart O applicable to LTCHs for policy descriptions and payment calculations, all references to LTC– DRGs would be considered a reference to MS–LTC–DRGs. For the remainder of this section, we present the discussion in terms of the current MS–LTC–DRG patient classification system unless specifically referring to the previous LTC–DRG patient classification system that was in effect before October 1, 2007.) The MS–DRGs adopted in FY 2008 represent an increase in the number of DRGs by 207 (that is, from 538 to 745) (72 FR 47171). The MS–DRG classifications are updated annually. There are currently 757 MS–DRG groupings. For FY 2019, there would be 761 MS–DRG groupings based on the proposed changes discussed in section II.F. of the preamble of this FY 2019 IPPS/LTCH PPS proposed rule. Consistent with section 123 of the BBRA, as amended by section 307(b)(1) of the BIPA, and § 412.515 of the regulations, we use information derived from LTCH PPS patient records to classify LTCH discharges into distinct MS–LTC–DRGs based on clinical characteristics and estimated resource needs. We then assign an appropriate weight to the MS–LTC–DRGs to account for the difference in resource use by patients exhibiting the case complexity and multiple medical problems characteristic of LTCHs. In this section of the proposed rule, we provide a general summary of our existing methodology for determining the proposed FY 2019 MS–LTC–DRG relative weights under the LTCH PPS. In this proposed rule, in general, for FY 2019, we are proposing to continue VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 to use our existing methodology to determine the proposed MS–LTC–DRG relative weights (as discussed in greater detail in section VII.B.3. of the preamble of this proposed rule). As we established when we implemented the dual rate LTCH PPS payment structure codified under § 412.522, which began in FY 2016, we are proposing that the annual recalibration of the MS–LTC– DRG relative weights are determined: (1) Using only data from available LTCH PPS claims that would have qualified for payment under the new LTCH PPS standard Federal payment rate if that rate had been in effect at the time of discharge when claims data from time periods before the dual rate LTCH PPS payment structure applies are used to calculate the relative weights; and (2) using only data from available LTCH PPS claims that qualify for payment under the new LTCH PPS standard Federal payment rate when claims data from time periods after the dual rate LTCH PPS payment structure applies are used to calculate the relative weights (80 FR 49624). That is, under our current methodology, our MS–LTC– DRG relative weight calculations would not use data from cases paid at the site neutral payment rate under § 412.522(c)(1) or data from cases that would have been paid at the site neutral payment rate if the dual rate LTCH PPS payment structure had been in effect at the time of that discharge. For the remainder of this discussion, we use the phrase ‘‘applicable LTCH cases’’ or ‘‘applicable LTCH data’’ when referring to the resulting claims data set used to calculate the relative weights (as described later in greater detail in section VII.B.3.c. of the preamble of this proposed rule). In addition, in this FY 2019 IPPS/LTCH PPS proposed rule, for FY 2019, we are proposing to continue to exclude the data from all-inclusive rate providers and LTCHs paid in accordance with demonstration projects, as well as any Medicare Advantage claims from the MS–LTC–DRG relative weight calculations for the reasons discussed in section VII.B.3.c. of the preamble of this proposed rule. Furthermore, for FY 2019, in using data from applicable LTCH cases to establish MS–LTC–DRG relative weights, we are proposing to continue to establish low-volume MS–LTC–DRGs (that is, MS–LTC–DRGs with less than 25 cases) using our quintile methodology in determining the MS– LTC–DRG relative weights because LTCHs do not typically treat the full range of diagnoses as do acute care hospitals. Therefore, for purposes of determining the relative weights for the PO 00000 Frm 00293 Fmt 4701 Sfmt 4702 20455 large number of low-volume MS–LTC– DRGs, we group all of the low-volume MS–LTC–DRGs into five quintiles based on average charges per discharge. Then, under our existing methodology, we account for adjustments made to LTCH PPS standard Federal payments for short-stay outlier (SSO) cases (that is, cases where the covered length of stay at the LTCH is less than or equal to fivesixths of the geometric average length of stay for the MS–LTC–DRG), and we make adjustments to account for nonmonotonically increasing weights, when necessary. The methodology is premised on more severe cases under the MS–LTC–DRG system requiring greater expenditure of medical care resources and higher average charges such that, in the severity levels within a base MS–LTC–DRG, the relative weights should increase monotonically with severity from the lowest to highest severity level. (We discuss each of these components of our MS–LTC–DRG relative weight methodology in greater detail in section VII.B.3.g. of the preamble of this proposed rule.) 2. Patient Classifications Into MS–LTC– DRGs a. Background The MS–DRGs (used under the IPPS) and the MS–LTC–DRGs (used under the LTCH PPS) are based on the CMS DRG structure. As noted previously in this section, we refer to the DRGs under the LTCH PPS as MS–LTC–DRGs although they are structurally identical to the MS–DRGs used under the IPPS. The MS–DRGs are organized into 25 major diagnostic categories (MDCs), most of which are based on a particular organ system of the body; the remainder involve multiple organ systems (such as MDC 22, Burns). Within most MDCs, cases are then divided into surgical DRGs and medical DRGs. Surgical DRGs are assigned based on a surgical hierarchy that orders operating room (O.R.) procedures or groups of O.R. procedures by resource intensity. The GROUPER software program does not recognize all ICD–10–PCS procedure codes as procedures affecting DRG assignment. That is, procedures that are not surgical (for example, EKGs), or minor surgical procedures (for example, a biopsy of skin and subcutaneous tissue (procedure code 0JBH3ZX)) do not affect the MS–LTC–DRG assignment based on their presence on the claim. Generally, under the LTCH PPS, a Medicare payment is made at a predetermined specific rate for each discharge that varies based on the MS– LTC–DRG to which a beneficiary’s discharge is assigned. Cases are E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20456 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules classified into MS–LTC–DRGs for payment based on the following six data elements: • Principal diagnosis; • Additional or secondary diagnoses; • Surgical procedures; • Age; • Sex; and • Discharge status of the patient. Currently, for claims submitted using version ASC X12 5010 format, up to 25 diagnosis codes and 25 procedure codes are considered for an MS–DRG assignment. This includes one principal diagnosis and up to 24 secondary diagnoses for severity of illness determinations. (For additional information on the processing of up to 25 diagnosis codes and 25 procedure codes on hospital inpatient claims, we refer readers to section II.G.11.c. of the preamble of the FY 2011 IPPS/LTCH PPS final rule (75 FR 50127).) Under the HIPAA transactions and code sets regulations at 45 CFR parts 160 and 162, covered entities must comply with the adopted transaction standards and operating rules specified in subparts I through S of part 162. Among other requirements, by January 1, 2012, covered entities were required to use the ASC X12 Standards for Electronic Data Interchange Technical Report Type 3—Health Care Claim: Institutional (837), May 2006, ASC X12N/005010X223, and Type 1 Errata to Health Care Claim: Institutional (837) ASC X12 Standards for Electronic Data Interchange Technical Report Type 3, October 2007, ASC X12N/ 005010X233A1 for the health care claims or equivalent encounter information transaction (45 CFR 162.1102(c)). HIPAA requires covered entities to use the applicable medical data code set requirements when conducting HIPAA transactions (45 CFR 162.1000). Currently, upon the discharge of the patient, the LTCH must assign appropriate diagnosis and procedure codes from the most current version of the International Classification of Diseases, 10th Revision, Clinical Modification (ICD–10–CM) for diagnosis coding and the International Classification of Diseases, 10th Revision, Procedure Coding System (ICD–10–PCS) for inpatient hospital procedure coding, both of which were required to be implemented October 1, 2015 (45 CFR 162.1002(c)(2) and (3)). For additional information on the implementation of the ICD–10 coding system, we refer readers to section II.F.1. of the FY 2017 IPPS/LTCH PPS final rule (81 FR 56787 through 56790) and section II.F.1. of the preamble of this proposed rule. Additional coding VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 instructions and examples are published in the AHA’s Coding Clinic for ICD–10– CM/PCS. To create the MS–DRGs (and by extension, the MS–LTC–DRGs), base DRGs were subdivided according to the presence of specific secondary diagnoses designated as complications or comorbidities (CCs) into one, two, or three levels of severity, depending on the impact of the CCs on resources used for those cases. Specifically, there are sets of MS–DRGs that are split into 2 or 3 subgroups based on the presence or absence of a CC or a major complication or comorbidity (MCC). We refer readers to section II.D. of the FY 2008 IPPS final rule with comment period for a detailed discussion about the creation of MS– DRGs based on severity of illness levels (72 FR 47141 through 47175). MACs enter the clinical and demographic information submitted by LTCHs into their claims processing systems and subject this information to a series of automated screening processes called the Medicare Code Editor (MCE). These screens are designed to identify cases that require further review before assignment into a MS–LTC–DRG can be made. During this process, certain cases are selected for further explanation (74 FR 43949). After screening through the MCE, each claim is classified into the appropriate MS–LTC–DRG by the Medicare LTCH GROUPER software on the basis of diagnosis and procedure codes and other demographic information (age, sex, and discharge status). The GROUPER software used under the LTCH PPS is the same GROUPER software program used under the IPPS. Following the MS–LTC–DRG assignment, the MAC determines the prospective payment amount by using the Medicare PRICER program, which accounts for hospital-specific adjustments. Under the LTCH PPS, we provide an opportunity for LTCHs to review the MS–LTC–DRG assignments made by the MAC and to submit additional information within a specified timeframe as provided in § 412.513(c). The GROUPER software is used both to classify past cases to measure relative hospital resource consumption to establish the MS–LTC–DRG relative weights and to classify current cases for purposes of determining payment. The records for all Medicare hospital inpatient discharges are maintained in the MedPAR file. The data in this file are used to evaluate possible MS–DRG and MS–LTC–DRG classification changes and to recalibrate the MS–DRG and MS–LTC–DRG relative weights during our annual update under both PO 00000 Frm 00294 Fmt 4701 Sfmt 4702 the IPPS (§ 412.60(e)) and the LTCH PPS (§ 412.517), respectively. b. Proposed Changes to the MS–LTC– DRGs for FY 2019 As specified by our regulations at § 412.517(a), which require that the MS– LTC–DRG classifications and relative weights be updated annually, and consistent with our historical practice of using the same patient classification system under the LTCH PPS as is used under the IPPS, in this FY 2019 IPPS/ LTCH PPS proposed rule, we are proposing to update the MS–LTC–DRG classifications effective October 1, 2018, through September 30, 2019 (FY 2019), consistent with the proposed changes to specific MS–DRG classifications presented in section II.F. of the preamble of this proposed rule. Accordingly, the proposed MS–LTC– DRGs for FY 2019 presented in this proposed rule are the same as the proposed MS–DRGs that are being used under the IPPS for FY 2019. In addition, because the MS–LTC–DRGs for FY 2019 are the same as the proposed MS–DRGs for FY 2019, the other proposed changes that affect MS–DRG (and by extension MS–LTC–DRG) assignments under proposed GROUPER Version 36 as discussed in section II.F. of the preamble of this proposed rule, including the proposed changes to the MCE software and the ICD–10–CM/PCS coding system, also would be applicable under the LTCH PPS for FY 2019. 3. Development of the Proposed FY 2019 MS–LTC–DRG Relative Weights a. General Overview of the Development of the MS–LTC–DRG Relative Weights One of the primary goals for the implementation of the LTCH PPS is to pay each LTCH an appropriate amount for the efficient delivery of medical care to Medicare patients. The system must be able to account adequately for each LTCH’s case-mix in order to ensure both fair distribution of Medicare payments and access to adequate care for those Medicare patients whose care is more costly (67 FR 55984). To accomplish these goals, we have annually adjusted the LTCH PPS standard Federal prospective payment rate by the applicable relative weight in determining payment to LTCHs for each case. In order to make these annual adjustments under the dual rate LTCH PPS payment structure, beginning with FY 2016, we recalibrate the MS–LTC– DRG relative weighting factors annually using data from applicable LTCH cases (80 FR 49614 through 49617). Under this policy, the resulting MS–LTC–DRG relative weights would continue to be E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules used to adjust the LTCH PPS standard Federal payment rate when calculating the payment for LTCH PPS standard Federal payment rate cases. The established methodology to develop the MS–LTC–DRG relative weights is generally consistent with the methodology established when the LTCH PPS was implemented in the August 30, 2002 LTCH PPS final rule (67 FR 55989 through 55991). However, there have been some modifications of our historical procedures for assigning relative weights in cases of zero volume and/or nonmonotonicity resulting from the adoption of the MS–LTC–DRGs, along with the change made in conjunction with the implementation of the dual rate LTCH PPS payment structure beginning in FY 2016 to use LTCH claims data from only LTCH PPS standard Federal payment rate cases (or LTCH PPS cases that would have qualified for payment under the LTCH PPS standard Federal payment rate if the dual rate LTCH PPS payment structure had been in effect at the time of the discharge). (For details on the modifications to our historical procedures for assigning relative weights in cases of zero volume and/or nonmonotonicity, we refer readers to the FY 2008 IPPS final rule with comment period (72 FR 47289 through 47295) and the FY 2009 IPPS final rule (73 FR 48542 through 48550).) For details on the change in our historical methodology to use LTCH claims data only from LTCH PPS standard Federal payment rate cases (or cases that would have qualified for such payment had the LTCH PPS dual payment rate structure been in effect at the time) to determine the MS–LTC–DRG relative weights, we refer readers to the FY 2016 IPPS/LTCH PPS final rule (80 FR 49614 through 49617). Under the LTCH PPS, relative weights for each MS–LTC–DRG are a primary element used to account for the variations in cost per discharge and resource utilization among the payment groups (§ 412.515). To ensure that Medicare patients classified to each MS–LTC–DRG have access to an appropriate level of services and to encourage efficiency, we calculate a relative weight for each MS–LTC–DRG that represents the resources needed by an average inpatient LTCH case in that MS–LTC–DRG. For example, cases in an MS–LTC–DRG with a relative weight of 2 would, on average, cost twice as much to treat as cases in an MS–LTC–DRG with a relative weight of 1. b. Development of the Proposed MS– LTC–DRG Relative Weights for FY 2019 In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38303 through 38304), we VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 presented our policies for the development of the MS–LTC–DRG relative weights for FY 2018. In this FY 2019 IPPS/LTCH PPS proposed rule, we are proposing to continue to use our current methodology to determine the proposed MS–LTC–DRG relative weights for FY 2019, including the continued application of established policies related to: The hospital-specific relative value methodology, the treatment of severity levels in the proposed MS– LTC–DRGs, proposed low-volume and no-volume MS–LTC–DRGs, proposed adjustments for nonmonotonicity, the steps for calculating the proposed MS– LTC–DRG relative weights with a proposed budget neutrality factor, and only using data from applicable LTCH cases (which includes our policy of only using cases that would meet the criteria for exclusion from the site neutral payment rate (or, for discharges occurring prior to the implementation of the dual rate LTCH PPS payment structure, would have met the criteria for exclusion had those criteria been in effect at the time of the discharge)). In this section, we present our proposed application of our existing methodology for determining the proposed MS–LTC–DRG relative weights for FY 2019, and we discuss the effects of our proposals concerning the data used to determine the proposed FY 2019 MS–LTC–DRG relative weights on the various components of our existing methodology in the discussion that follows. In previous fiscal years, Table 13A— Composition of Low-Volume Quintiles for MS–LTC–DRGs (which was listed in section VI. of the Addendum to the proposed and final rules and available via the internet on the CMS website) listed the composition of the lowvolume quintiles for MS–LTC–DRGs for the respective year, and Table 13B—NoVolume MS–LTC–DRG Crosswalk (also listed in section VI. of the Addendum to the proposed rule final rules and available via the internet on the CMS website) listed the no-volume MS–LTC– DRGs and the MS–LTC–DRGs to which each was cross-walked (that is, the cross-walked MS–LTC–DRGs). The information contained in Tables 13A and 13B is used in the development Table 11—MS–LTC–DRGs, Relative Weights, Geometric Average Length of Stay, and Short-Stay Outlier (SSO) Threshold for LTCH PPS Discharges, which contains the proposed MS–LTC– DRGs and their respective proposed relative weights, geometric mean length of stay, and five-sixths of the geometric mean length of stay (used to identify SSO cases) for the respective fiscal year PO 00000 Frm 00295 Fmt 4701 Sfmt 4702 20457 (and also is listed in section VI. of the Addendum to the proposed and final rules and is available via the internet on the CMS website). Because the information contained in Tables 13A and 13B does not contain proposed payment rates or factors for the applicable payment year, we are proposing to generally provide the data previously published in Tables 13A and 13B for each annual proposed and final rule as one of our supplemental IPPS/ LTCH PPS related data files that are made available for public use via the internet on the CMS website for the respective rule and fiscal year (that is, FY 2019 and subsequent fiscal years) at: https://www.cms.hhs.gov/Medicare/ Medicare-Fee-for-Service-Payment/ AcuteInpatientPPS/. To streamline the information made available to the public that is used in the annual development of Table 11, we believe that this proposed change in the presentation of the information contained in Tables 13A and 13B will make it easier for the public to navigate and find the relevant data and information used for the development of proposed payment rates or factors for the applicable payment year while continuing to furnish the same information the tables provided in previous fiscal years. c. Data For this proposed rule, consistent with our proposals regarding the calculation of the proposed MS–LTC– DRG relative weights for FY 2019, we obtained total charges from FY 2017 Medicare LTCH claims data from the December 2017 update of the FY 2017 MedPAR file, which are the best available data at this time, and we are proposing to use Version 36 of the GROUPER to classify LTCH cases. Consistent with our historical practice, we are proposing that if more recent data become available, we would use those data and the finalized Version 36 of the GROUPER in establishing the FY 2019 MS–LTC–DRG relative weights in the final rule. To calculate the proposed FY 2019 MS–LTC–DRG relative weights under the dual rate LTCH PPS payment structure, we are proposing to continue to use applicable LTCH data, which includes our policy of only using cases that meet the criteria for exclusion from the site neutral payment rate (or would have met the criteria had they been in effect at the time of the discharge) (80 FR 49624). Specifically, we began by first evaluating the LTCH claims data in the December 2017 update of the FY 2017 MedPAR file to determine which LTCH cases would meet the criteria for exclusion from the site neutral payment E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20458 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules rate under § 412.522(b) had the dual rate LTCH PPS payment structure applied to those cases at the time of discharge. We identified the FY 2017 LTCH cases that were not assigned to MS–LTC–DRGs 876, 880, 881, 882, 883, 884, 885, 886, 887, 894, 895, 896, 897, 945 and 946, which identify LTCH cases that do not have a principal diagnosis relating to a psychiatric diagnosis or to rehabilitation; and that either— • The admission to the LTCH was ‘‘immediately preceded’’ by discharge from a subsection (d) hospital and the immediately preceding stay in that subsection (d) hospital included at least 3 days in an ICU, as we define under the ICU criterion; or • The admission to the LTCH was ‘‘immediately preceded’’ by discharge from a subsection (d) hospital and the claim for the LTCH discharge includes the applicable procedure code that indicates at least 96 hours of ventilator services were provided during the LTCH stay, as we define under the ventilator criterion. Claims data from the FY 2017 MedPAR file that reported ICD–10–PCS procedure code 5A1955Z were used to identify cases involving at least 96 hours of ventilator services in accordance with the ventilator criterion. We note that, for purposes of developing the proposed FY 2019 MS–LTC–DRG relative weights using our current methodology, we are not making any proposals regarding the identification of cases that would have been excluded from the site neutral payment rate under the statutory provisions that provided for temporary exception from the site neutral payment rate under the LTCH PPS for certain severe wound care discharges from certain LTCHs or for certain spinal cord specialty hospitals provided by sections 15009 and 15010 of Public Law 114–255, respectively, had our implementation of that law and the dual rate LTCH PPS payment structure been in effect at the time of the discharge. At this time, it is uncertain how many LTCHs and how many cases in the claims data we are using for this proposed rule meet the criteria to be excluded from the site neutral payment rate under those exceptions (or would have met the criteria for exclusion had the dual rate LTCH PPS payment structure been in effect at the time of the discharge). Therefore, for the remainder of this section, when we refer to LTCH claims only from cases that meet the criteria for exclusion from the site neutral payment rate (or would have met the criteria had the applicable statutes been in effect at the time of the discharge), such data do not include any discharges that would have been paid based on the LTCH PPS standard VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Federal payment rate under the provisions of sections 15009 and 15010 of Public Law 114–255, had the exception been in effect at the time of the discharge. Furthermore, consistent with our historical methodology, we are excluding any claims in the resulting data set that were submitted by LTCHs that are all-inclusive rate providers and LTCHs that are paid in accordance with demonstration projects authorized under section 402(a) of Public Law 90– 248 or section 222(a) of Public Law 92– 603. In addition, consistent with our historical practice and our policies, we are excluding any Medicare Advantage (Part C) claims in the resulting data. Such claims were identified based on the presence of a GHO Paid indicator value of ‘‘1’’ in the MedPAR files. The claims that remained after these three trims (that is, the applicable LTCH data) were then used to calculate the proposed MS–LTC–DRG relative weights for FY 2019. In summary, in general, we identified the claims data used in the development of the proposed FY 2019 MS–LTC–DRG relative weights in this proposed rule, as we are proposing, by trimming claims data that were paid the site neutral payment rate (or would have been paid the site neutral payment rate had the dual payment rate structure been in effect, except for discharges which would have been excluded from the site neutral payment under the temporary exception for certain severe wound care discharges from certain LTCHs and under the temporary exception for certain spinal cord specialty hospitals), as well as the claims data of 9 allinclusive rate providers reported in the December 2017 update of the FY 2017 MedPAR file and any Medicare Advantage claims data. (We note that there were no data from any LTCHs that are paid in accordance with a demonstration project reported in the December 2017 update of the FY 2017 MedPAR file. However, had there been we would trim the claims data from those LTCHs as well, in accordance with our established policy.) We are proposing to use the remaining data (that is, the applicable LTCH data) to calculate the proposed relative weights for FY 2019. d. Hospital-Specific Relative Value (HSRV) Methodology By nature, LTCHs often specialize in certain areas, such as ventilatordependent patients. Some case types (MS–LTC–DRGs) may be treated, to a large extent, in hospitals that have, from a perspective of charges, relatively high (or low) charges. This nonrandom PO 00000 Frm 00296 Fmt 4701 Sfmt 4702 distribution of cases with relatively high (or low) charges in specific MS–LTC– DRGs has the potential to inappropriately distort the measure of average charges. To account for the fact that cases may not be randomly distributed across LTCHs, consistent with the methodology we have used since the implementation of the LTCH PPS, in this FY 2019 IPPS/LTCH PPS proposed rule, we are proposing to continue to use a hospital-specific relative value (HSRV) methodology to calculate the proposed MS–LTC–DRG relative weights for FY 2019. We believe that this method removes this hospitalspecific source of bias in measuring LTCH average charges (67 FR 55985). Specifically, under this methodology, we are proposing to reduce the impact of the variation in charges across providers on any particular MS–LTC– DRG relative weight by converting each LTCH’s charge for an applicable LTCH case to a relative value based on that LTCH’s average charge for such cases. Under the HSRV methodology, we standardize charges for each LTCH by converting its charges for each applicable LTCH case to hospitalspecific relative charge values and then adjusting those values for the LTCH’s case-mix. The adjustment for case-mix is needed to rescale the hospital-specific relative charge values (which, by definition, average 1.0 for each LTCH). The average relative weight for an LTCH is its case-mix; therefore, it is reasonable to scale each LTCH’s average relative charge value by its case-mix. In this way, each LTCH’s relative charge value is adjusted by its case-mix to an average that reflects the complexity of the applicable LTCH cases it treats relative to the complexity of the applicable LTCH cases treated by all other LTCHs (the average LTCH PPS case-mix of all applicable LTCH cases across all LTCHs). In accordance with our established methodology, for FY 2019, we are proposing to continue to standardize charges for each applicable LTCH case by first dividing the adjusted charge for the case (adjusted for SSOs under § 412.529 as described in section VII.B.3.g. (Step 3) of the preamble of this proposed rule) by the average adjusted charge for all applicable LTCH cases at the LTCH in which the case was treated. SSO cases are cases with a length of stay that is less than or equal to five-sixths the average length of stay of the MS– LTC–DRG (§ 412.529 and § 412.503). The average adjusted charge reflects the average intensity of the health care services delivered by a particular LTCH and the average cost level of that LTCH. The resulting ratio is multiplied by that E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 LTCH’s case-mix index to determine the standardized charge for the case. Multiplying the resulting ratio by the LTCH’s case-mix index accounts for the fact that the same relative charges are given greater weight at an LTCH with higher average costs than they would at an LTCH with low average costs, which is needed to adjust each LTCH’s relative charge value to reflect its case-mix relative to the average case-mix for all LTCHs. By standardizing charges in this manner, we count charges for a Medicare patient at an LTCH with high average charges as less resource intensive than they would be at an LTCH with low average charges. For example, a $10,000 charge for a case at an LTCH with an average adjusted charge of $17,500 reflects a higher level of relative resource use than a $10,000 charge for a case at an LTCH with the same case-mix, but an average adjusted charge of $35,000. We believe that the adjusted charge of an individual case more accurately reflects actual resource use for an individual LTCH because the variation in charges due to systematic differences in the markup of charges among LTCHs is taken into account. e. Treatment of Severity Levels in Developing the Proposed MS–LTC–DRG Relative Weights For purposes of determining the MS– LTC–DRG relative weights, under our historical methodology, there are three different categories of MS–DRGs based on volume of cases within specific MS– LTC–DRGs: (1) MS–LTC–DRGs with at least 25 applicable LTCH cases in the data used to calculate the relative weight, which are each assigned a unique relative weight; (2) low-volume MS–LTC–DRGs (that is, MS–LTC–DRGs that contain between 1 and 24 applicable LTCH cases that are grouped into quintiles (as described later in this section of the proposed rule) and assigned the relative weight of the quintile); and (3) no-volume MS–LTC– DRGs that are cross-walked to other MS–LTC–DRGs based on the clinical similarities and assigned the relative weight of the cross-walked MS–LTC– DRG (as described in greater detail below). For FY 2019, we are proposing to continue to use applicable LTCH cases to establish the same volumebased categories to calculate the FY 2019 MS–LTC–DRG relative weights. In determining the proposed FY 2019 MS–LTC–DRG relative weights, when necessary, as is our longstanding practice, we are proposing to make adjustments to account for nonmonotonicity, as discussed in greater detail later in Step 6 of section VII.B.3.g. of the preamble of this VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 proposed rule. We refer readers to the discussion in the FY 2010 IPPS/RY 2010 LTCH PPS final rule for our rationale for including an adjustment for nonmonotonicity (74 FR 43953 through 43954). f. Proposed Low-Volume MS–LTC– DRGs In order to account for proposed MS– LTC–DRGs with low-volume (that is, with fewer than 25 applicable LTCH cases), consistent with our existing methodology, we are proposing to continue to employ the quintile methodology for proposed low-volume MS–LTC–DRGs, such that we group the proposed ‘‘low-volume MS–LTC–DRGs’’ (that is, proposed MS–LTC–DRGs that contain between 1 and 24 applicable LTCH cases into one of five categories (quintiles) based on average charges (67 FR 55984 through 55995; 72 FR 47283 through 47288; and 81 FR 25148)). In cases where the initial assignment of a proposed low-volume MS–LTC–DRG to a quintile results in nonmonotonicity within a base-DRG, we are proposing to make adjustments to the resulting lowvolume proposed MS–LTC–DRGs to preserve monotonicity, as discussed in detail in section VII.B.3.g. (Step 6) of the preamble of this proposed rule. In this proposed rule, based on the best available data (that is, the December 2017 update of the FY 2017 MedPAR files), we identified 271 proposed MS–LTC–DRGs that contained between 1 and 24 applicable LTCH cases. This list of proposed MS–LTC– DRGs was then divided into 1 of the proposed 5 low-volume quintiles, each containing at least 54 MS–LTC–DRGs (271/5 = 54 with a remainder of 1). We assigned the proposed low-volume MS– LTC–DRGs to specific proposed lowvolume quintiles by sorting the proposed low-volume MS–LTC–DRGs in ascending order by average charge in accordance with our established methodology. Based on the data available for this proposed rule, the number of proposed MS–LTC–DRGs with less than 25 applicable LTCH cases was not evenly divisible by 5 and, therefore, we are proposing to employ our historical methodology for determining which of the proposed lowvolume quintiles contain the additional proposed low-volume MS–LTC–DRG. Specifically for this proposed rule, after organizing the proposed MS–LTC–DRGs by ascending order by average charge, we would assign the first 54 (1st through 54th) of proposed low-volume MS–LTC–DRGs (with the lowest average charge) into Quintile 1. The 54 proposed MS–LTC–DRGs with the highest average charge cases would be assigned into PO 00000 Frm 00297 Fmt 4701 Sfmt 4702 20459 Quintile 5. Because the average charge of the 216th proposed low-volume MS– LTC–DRG in the sorted list was closer to the average charge of the 215th proposed low-volume MS–LTC–DRG (assigned to Quintile 4) than to the average charge of the 217th proposed low-volume MS–LTC–DRG (assigned to Quintile 5), we assigned it to Quintile 4 (such that Quintile 4 contains 55 proposed low-volume MS–LTC–DRGs before any adjustments for nonmonotonicity, as discussed below). This results in 4 of the 5 proposed lowvolume quintiles containing 54 proposed MS–LTC–DRGs (Quintiles 1, 2, 3, and 5) and 1 proposed low-volume quintile containing 55 MS–LTC–DRGs (Quintile 4). As discussed earlier, for this proposed rule, we are proposing to provide the list of the proposed composition of the low-volume quintiles for MS–LTC–DRGs for FY 2019 (previously displayed in Table 13A, which was in previous fiscal years listed in section VI. of the Addendum to the respective proposed and final rules and available via the internet on the CMS website) in a supplemental data file for public use posted via the internet on the CMS website for this proposed rule at: https:// www.cms.hhs.gov/Medicare/MedicareFee-for-Service-Payment/ AcuteInpatientPPS/ in order to streamline the information made available to the public that is used in the annual development of Table 11. In order to determine the proposed FY 2019 relative weights for the proposed low-volume MS–LTC–DRGs, consistent with our historical practice, we are proposing to use the five low-volume quintiles described previously. We determined a proposed relative weight and (geometric) average length of stay for each of the five proposed lowvolume quintiles using the proposed methodology described in section VII.B.3.g. of the preamble of this proposed rule. We are proposing to assign the same proposed relative weight and average length of stay to each of the proposed low-volume MS– LTC–DRGs that make up an individual low-volume quintile. We note that, as this system is dynamic, it is possible that the number and specific type of MS–LTC–DRGs with a low-volume of applicable LTCH cases will vary in the future. Furthermore, we note that we continue to monitor the volume (that is, the number of applicable LTCH cases) in the low-volume quintiles to ensure that our quintile assignments used in determining the MS–LTC–DRG relative weights result in appropriate payment for LTCH cases grouped to proposed E:\FR\FM\07MYP2.SGM 07MYP2 20460 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 low-volume MS–LTC–DRGs and do not result in an unintended financial incentive for LTCHs to inappropriately admit these types of cases. g. Steps for Determining the Proposed FY 2019 MS–LTC–DRG Relative Weights In this proposed rule, we are proposing to continue to use our current methodology to determine the proposed FY 2019 MS–LTC–DRG relative weights. In summary, to determine the proposed FY 2019 MS–LTC–DRG relative weights, we are proposing to group applicable LTCH cases to the appropriate proposed MS–LTC–DRG, while taking into account the proposed low-volume quintiles (as described above) and cross-walked proposed novolume MS–LTC–DRGs (as described later in this section). After establishing the appropriate proposed MS–LTC–DRG (or proposed low-volume quintile), we are proposing to calculate the FY 2019 relative weights by first removing cases with a length of stay of 7 days or less and statistical outliers (Steps 1 and 2 below). Next, we are proposing to adjust the number of applicable LTCH cases in each proposed MS–LTC–DRG (or proposed low-volume quintile) for the effect of SSO cases (Step 3 below). After removing applicable LTCH cases with a length of stay of 7 days or less (Step 1 below) and statistical outliers (Step 2 below), which are the SSO-adjusted applicable LTCH cases and corresponding charges (step 3 below), we are proposing to calculate proposed ‘‘relative adjusted weights’’ for each proposed MS–LTC–DRG (or proposed low-volume quintile) using the HSRV method. Step 1—Remove cases with a length of stay of 7 days or less. The first step in our proposed calculation of the proposed FY 2019 MS–LTC–DRG relative weights is to remove cases with a length of stay of 7 days or less. The MS–LTC–DRG relative weights reflect the average of resources used on representative cases of a specific type. Generally, cases with a length of stay of 7 days or less do not belong in an LTCH because these stays do not fully receive or benefit from treatment that is typical in an LTCH stay, and full resources are often not used in the earlier stages of admission to an LTCH. If we were to include stays of 7 days or less in the computation of the FY 2019 MS–LTC–DRG relative weights, the value of many proposed relative weights would decrease and, therefore, payments would decrease to a level that may no longer be appropriate. We do not believe that it would be appropriate to compromise the integrity VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 of the payment determination for those LTCH cases that actually benefit from and receive a full course of treatment at an LTCH by including data from these very short stays. Therefore, consistent with our existing relative weight methodology, in determining the proposed FY 2019 MS–LTC–DRG relative weights, we are proposing to remove LTCH cases with a length of stay of 7 days or less from applicable LTCH cases. (For additional information on what is removed in this step of the relative weight methodology, we refer readers to 67 FR 55989 and 74 FR 43959.) Step 2—Remove statistical outliers. The next step in our proposed calculation of the proposed FY 2019 MS–LTC–DRG relative weights is to remove statistical outlier cases from the LTCH cases with a length of stay of at least 8 days. Consistent with our existing relative weight methodology, we are proposing to continue to define statistical outliers as cases that are outside of 3.0 standard deviations from the mean of the log distribution of both charges per case and the charges per day for each MS–LTC–DRG. These statistical outliers are removed prior to calculating the proposed relative weights because we believe that they may represent aberrations in the data that distort the measure of average resource use. Including those LTCH cases in the calculation of the proposed relative weights could result in an inaccurate relative weight that does not truly reflect relative resource use among those MS–LTC–DRGs. (For additional information on what is removed in this step of the proposed relative weight methodology, we refer readers to 67 FR 55989 and 74 FR 43959.) After removing cases with a length of stay of 7 days or less and statistical outliers, we are left with applicable LTCH cases that have a length of stay greater than or equal to 8 days. In this proposed rule, we refer to these cases as ‘‘trimmed applicable LTCH cases.’’ Step 3—Adjust charges for the effects of SSOs. As the next step in the proposed calculation of the proposed FY 2019 MS–LTC–DRG relative weights, consistent with our historical approach, we are proposing to adjust each LTCH’s charges per discharge for those remaining cases (that is, trimmed applicable LTCH cases) for the effects of SSOs (as defined in § 412.529(a) in conjunction with § 412.503). Specifically, we are proposing to make this adjustment by counting an SSO case as a fraction of a discharge based on the ratio of the length of stay of the case to the average length of stay for the PO 00000 Frm 00298 Fmt 4701 Sfmt 4702 MS–LTC–DRG for non-SSO cases. This has the effect of proportionately reducing the impact of the lower charges for the SSO cases in calculating the average charge for the MS–LTC– DRG. This process produces the same result as if the actual charges per discharge of an SSO case were adjusted to what they would have been had the patient’s length of stay been equal to the average length of stay of the MS–LTC– DRG. Counting SSO cases as full LTCH cases with no adjustment in determining the proposed FY 2019 MS– LTC–DRG relative weights would lower the proposed FY 2019 MS–LTC–DRG relative weight for affected MS–LTC– DRGs because the relatively lower charges of the SSO cases would bring down the average charge for all cases within a MS–LTC–DRG. This would result in an ‘‘underpayment’’ for nonSSO cases and an ‘‘overpayment’’ for SSO cases. Therefore, we are proposing to continue to adjust for SSO cases under § 412.529 in this manner because it would result in more appropriate payments for all LTCH PPS standard Federal payment rate cases. (For additional information on this step of the relative weight methodology, we refer readers to 67 FR 55989 and 74 FR 43959.) Step 4—Calculate the proposed FY 2019 MS–LTC–DRG relative weights on an iterative basis. Consistent with our historical relative weight methodology, we are proposing to calculate the proposed FY 2019 MS– LTC–DRG relative weights using the HSRV methodology, which is an iterative process. First, for each SSOadjusted trimmed applicable LTCH case, we calculate a hospital-specific relative charge value by dividing the charge per discharge after adjusting for SSOs of the LTCH case (from Step 3) by the average charge per SSO-adjusted discharge for the LTCH in which the case occurred. The resulting ratio is then multiplied by the LTCH’s case-mix index to produce an adjusted hospital-specific relative charge value for the case. We used an initial case-mix index value of 1.0 for each LTCH. For each proposed MS–LTC–DRG, we calculated the proposed FY 2019 relative weight by dividing the SSOadjusted average of the hospital-specific relative charge values for applicable LTCH cases for the proposed MS–LTC– DRG (that is, the sum of the hospitalspecific relative charge value from above divided by the sum of equivalent cases from Step 3 for each proposed MS–LTC–DRG) by the overall SSOadjusted average hospital-specific relative charge value across all E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules applicable LTCH cases for all LTCHs (that is, the sum of the hospital-specific relative charge value from above divided by the sum of equivalent applicable LTCH cases from Step 3 for each proposed MS–LTC–DRG). Using these recalculated MS–LTC–DRG relative weights, each LTCH’s average relative weight for all of its SSOadjusted trimmed applicable LTCH cases (that is, its case-mix) was calculated by dividing the sum of all the LTCH’s MS–LTC–DRG relative weights by its total number of SSO-adjusted trimmed applicable LTCH cases. The LTCHs’ hospital-specific relative charge values (from previous) are then multiplied by the hospital-specific casemix indexes. The hospital-specific casemix adjusted relative charge values are then used to calculate a new set of proposed MS–LTC–DRG relative weights across all LTCHs. This iterative process continued until there was convergence between the relative weights produced at adjacent steps, for example, when the maximum difference was less than 0.0001. Step 5—Determine a proposed FY 2019 relative weight for MS–LTC–DRGs with no applicable LTCH cases. Using the trimmed applicable LTCH cases, consistent with our historical methodology, we identified the proposed MS–LTC–DRGs for which there were no claims in the December 2017 update of the FY 2017 MedPAR file and, therefore, for which no charge data was available for these proposed MS–LTC–DRGs. Because patients with a number of the diagnoses under these proposed MS–LTC–DRGs may be treated at LTCHs, consistent with our historical methodology, we generally assign a proposed relative weight to each of the proposed no-volume MS– LTC–DRGs based on clinical similarity and relative costliness (with the exception of ‘‘transplant’’ proposed MS– LTC–DRGs, ‘‘error’’ proposed MS–LTC– DRGs, and proposed MS–LTC–DRGs that indicate a principal diagnosis related to a psychiatric diagnosis or rehabilitation (referred to as the ‘‘psychiatric or rehabilitation’’ MS– LTC–DRGs), as discussed later in this section of this proposed rule). (For additional information on his step of the proposed relative weight methodology, we refer readers to 67 FR 55991 and 74 FR 43959 through 43960.) We are proposing to cross-walk each proposed no-volume MS–LTC–DRG to another proposed MS–LTC–DRG for which we calculated a proposed relative weight (determined in accordance with the methodology described above). Then, the ‘‘no-volume’’ proposed MS– LTC–DRG was assigned the same VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 proposed relative weight (and average length of stay) of the proposed MS– LTC–DRG to which it was cross-walked (as described in greater detail in this section of this proposed rule). Of the 761 proposed MS–LTC–DRGs for FY 2019, we identified 347 MS– LTC–DRGs for which there are no trimmed applicable LTCH cases (the number identified includes the 8 ‘‘transplant’’ MS–LTC–DRGs, the 2 ‘‘error’’ MS–LTC–DRGs, and the 15 ‘‘psychiatric or rehabilitation’’ MS– LTC–DRGs, which are discussed below). We are proposing to assign proposed relative weights to each of the 347 novolume proposed MS–LTC–DRGs that contained trimmed applicable LTCH cases based on clinical similarity and relative costliness to 1 of the remaining 414 (761 ¥ 347 = 414) proposed MS– LTC–DRGs for which we calculated proposed relative weights based on the trimmed applicable LTCH cases in the FY 2017 MedPAR file data using the steps described previously. (For the remainder of this discussion, we refer to the ‘‘cross-walked’’ proposed MS–LTC– DRGs as the proposed MS–LTC–DRGs to which we cross-walked 1 of the 347 ‘‘no volume’’ proposed MS–LTC–DRGs.) Then, we are generally proposing to assign the 347 no-volume proposed MS– LTC–DRGs the proposed relative weight of the cross-walked proposed MS–LTC– DRG. (As explained below in Step 6, when necessary, we made adjustments to account for nonmonotonicity.) We cross-walked the no-volume proposed MS–LTC–DRG to a proposed MS–LTC–DRG for which we calculated proposed relative weights based on the December 2017 update of the FY 2017 MedPAR file, and to which it is similar clinically in intensity of use of resources and relative costliness as determined by criteria such as care provided during the period of time surrounding surgery, surgical approach (if applicable), length of time of surgical procedure, postoperative care, and length of stay. (For more details on our process for evaluating relative costliness, we refer readers to the FY 2010 IPPS/RY 2010 LTCH PPS final rule (73 FR 48543).) We believe in the rare event that there would be a few LTCH cases grouped to one of the no-volume proposed MS– LTC–DRGs in FY 2018, the proposed relative weights assigned based on the cross-walked proposed MS–LTC–DRGs would result in an appropriate LTCH PPS payment because the crosswalks, which are based on clinical similarity and relative costliness, would be expected to generally require equivalent relative resource use. We then assigned the proposed relative weight of the cross-walked PO 00000 Frm 00299 Fmt 4701 Sfmt 4702 20461 proposed MS–LTC–DRG as the proposed relative weight for the novolume proposed MS–LTC–DRG such that both of these proposed MS–LTC– DRGs (that is, the no-volume proposed MS–LTC–DRG and the cross-walked proposed MS–LTC–DRG) have the same proposed relative weight (and average length of stay) for FY 2019. We note that, if the cross-walked proposed MS– LTC–DRG had 25 applicable LTCH cases or more, its proposed relative weight (calculated using the methodology described in Steps 1 through 4 above) is assigned to the novolume proposed MS–LTC–DRG as well. Similarly, if the proposed MS– LTC–DRG to which the no-volume proposed MS–LTC–DRG was crosswalked had 24 or less cases and, therefore, is designated to 1 of the proposed low-volume quintiles for purposes of determining the proposed relative weights, we assigned the proposed relative weight of the applicable proposed low-volume quintile to the no-volume proposed MS– LTC–DRG such that both of these proposed MS–LTC–DRGs (that is, the no-volume proposed MS–LTC–DRG and the cross-walked proposed MS–LTC– DRG) have the same proposed relative weight for FY 2019. (As we noted previously, in the infrequent case where nonmonotonicity involving a no-volume proposed MS–LTC–DRG resulted, additional adjustments as described in Step 6 are required in order to maintain monotonically increasing proposed relative weights.) As discussed earlier, for this proposed rule, we are proposing to provide the list of the no-volume proposed MS– LTC–DRGs and the proposed MS–LTC– DRGs to which each was cross-walked (that is, the cross-walked proposed MS– LTC–DRGs) for FY 2019 (previously displayed in Table 13B, which was in previous fiscal years listed in section VI. of the Addendum to the respective proposed and final rules and available via the internet on the CMS website) in a supplemental data file for public use posted via the internet on the CMS website for this proposed rule at: https:// www.cms.hhs.gov/Medicare/MedicareFee-for-Service-Payment/ AcuteInpatientPPS/ in order to streamline the information made available to the public that is used in the annual development of Table 11. To illustrate this methodology for determining the proposed relative weights for the proposed FY 2019 MS– LTC–DRGs with no applicable LTCH cases, we are providing the following example, which refers to the no-volume proposed MS–LTC–DRGs crosswalk information for FY 2019 (which, as E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20462 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules previously stated, we are proposing to provide in a supplemental data file posted via the internet on the CMS website for this proposed rule). Example: There were no trimmed applicable LTCH cases in the FY 2017 MedPAR file that we are proposing to use for this proposed rule for proposed MS–LTC–DRG 061 (Acute Ischemic Stroke with Use of Thrombolytic Agent with MCC). We determined that proposed MS–LTC–DRG 070 (Nonspecific Cerebrovascular Disorders with MCC) is similar clinically and based on resource use to proposed MS– LTC–DRG 061. Therefore, we assigned the same proposed relative weight (and average length of stay) of proposed MS– LTC–DRG 70 of 0.8881 for FY 2019 to proposed MS–LTC–DRG 061 (we refer readers to Table 11, which is listed in section VI. of the Addendum to this proposed rule and is available via the internet on the CMS website). Again, we note that, as this system is dynamic, it is entirely possible that the number of MS–LTC–DRGs with no volume will vary in the future. Consistent with our historical practice, we used the most recent available claims data to identify the trimmed applicable LTCH cases from which we determined the proposed relative weights in this proposed rule. For FY 2019, consistent with our historical relative weight methodology, we are proposing to establish a relative weight of 0.0000 for the following transplant MS–LTC–DRGs: Heart Transplant or Implant of Heart Assist System with MCC (MS–LTC–DRG 001); Heart Transplant or Implant of Heart Assist System without MCC (MS–LTC– DRG 002); Liver Transplant with MCC or Intestinal Transplant (MS–LTC–DRG 005); Liver Transplant without MCC (MS–LTC–DRG 006); Lung Transplant (MS–LTC–DRG 007); Simultaneous Pancreas/Kidney Transplant (MS–LTC– DRG 008); Pancreas Transplant (MS– LTC–DRG 010); and Kidney Transplant (MS–LTC–DRG 652). This is because Medicare only covers these procedures if they are performed at a hospital that has been certified for the specific procedures by Medicare and presently no LTCH has been so certified. At the present time, we include these eight proposed transplant MS–LTC–DRGs in the GROUPER program for administrative purposes only. Because we use the same GROUPER program for LTCHs as is used under the IPPS, removing these MS–LTC–DRGs would be administratively burdensome. (For additional information regarding our treatment of transplant MS–LTC–DRGs, we refer readers to the RY 2010 LTCH PPS final rule (74 FR 43964).) In VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 addition, consistent with our historical policy, we are proposing to establish a relative weight of 0.0000 for the 2 ‘‘error’’ MS–LTC–DRGs (that is, MS– LTC–DRG 998 (Principal Diagnosis Invalid as Discharge Diagnosis) and MS–LTC–DRG 999 (Ungroupable)) because applicable LTCH cases grouped to these MS–LTC–DRGs cannot be properly assigned to an MS–LTC–DRG according to the grouping logic. As discussed in section VII.C. of the preamble of this proposed rule, section 51005 of the Bipartisan Budget Act of 2018 (Public Law 115–123) extended the transitional blended payment rate for site neutral payment rate cases for an additional 2 years (that is, discharges occurring in cost reporting periods beginning in FYs 2018 and 2019 will continue to be paid under the blended payment rate). Therefore, in this proposed rule, consistent with our practice in FYs 2016 through 2018, we are proposing to establish a proposed relative weight for FY 2019 equal to the respective FY 2015 relative weight of the MS–LTC–DRGs for the following ‘‘psychiatric or rehabilitation’’ MS– LTC–DRGs: proposed MS–LTC–DRG 876 (O.R. Procedure with Principal Diagnoses of Mental Illness); proposed MS–LTC–DRG 880 (Acute Adjustment Reaction & Psychosocial Dysfunction); proposed MS–LTC–DRG 881 (Depressive Neuroses); proposed MS– LTC–DRG 882 (Neuroses Except Depressive); MS–LTC–DRG 883 (Disorders of Personality & Impulse Control); proposed MS–LTC–DRG 884 (Organic Disturbances & Mental Retardation); proposed MS–LTC–DRG 885 (Psychoses); proposed MS–LTC– DRG 886 (Behavioral & Developmental Disorders); proposed MS–LTC–DRG 887 (Other Mental Disorder Diagnoses); proposed MS–LTC–DRG 894 (Alcohol/ Drug Abuse or Dependence, Left Ama); proposed MS–LTC–DRG 895 (Alcohol/ Drug Abuse or Dependence, with Rehabilitation Therapy); proposed MS– LTC–DRG 896 (Alcohol/Drug Abuse or Dependence, without Rehabilitation Therapy with MCC); proposed MS– LTC–DRG 897 (Alcohol/Drug Abuse or Dependence, without Rehabilitation Therapy without MCC); proposed MS– LTC–DRG 945 (Rehabilitation with CC/ MCC); and proposed MS–LTC–DRG 946 (Rehabilitation without CC/MCC). As we discussed when we implemented the dual rate LTCH PPS payment structure, LTCH discharges that are grouped to these 15 ‘‘psychiatric and rehabilitation’’ proposed MS–LTC– DRGs do not meet the criteria for exclusion from the site neutral payment rate. As such, under the criterion for a PO 00000 Frm 00300 Fmt 4701 Sfmt 4702 principal diagnosis relating to a psychiatric diagnosis or to rehabilitation, there are no applicable LTCH cases to use in calculating a proposed relative weight for the ‘‘psychiatric and rehabilitation’’ proposed MS–LTC–DRGs. In other words, any LTCH PPS discharges grouped to any of the 15 ‘‘psychiatric and rehabilitation’’ proposed MS–LTC– DRGs would always be paid at the site neutral payment rate, and, therefore, those proposed MS–LTC–DRGs would never include any LTCH cases that meet the criteria for exclusion from the site neutral payment rate. However, section 1886(m)(6)(B) of the Act establishes a transitional payment method for cases that would be paid at the site neutral payment rate for LTCH discharges occurring in cost reporting periods beginning during FY 2016 or FY 2017, which was extended to include FYs 2018 and 2019 under Public Law 115– 123. (We refer readers to section VII.C. of the preamble of this proposed rule for a detailed discussion of the extension of the transitional blended payment method provisions under Public Law 115–123 and our proposals for FY 2019. Under the transitional payment method for site neutral payment rate cases, for LTCH discharges occurring in cost reporting periods beginning on or after October 1, 2018, and on or before September 30, 2019, site neutral payment rate cases are paid a blended payment rate, calculated as 50 percent of the applicable site neutral payment rate amount for the discharge and 50 percent of the applicable LTCH PPS standard Federal payment rate. Because the LTCH PPS standard Federal payment rate is based on the relative weight of the MS–LTC–DRG, in order to determine the transitional blended payment for site neutral payment rate cases grouped to one of the ‘‘psychiatric or rehabilitation’’ proposed MS–LTC– DRGs in FY 2019, we assigned a proposed relative weight to these proposed MS–LTC–DRGs for FY 2019 that is the same as the FY 2018 relative weight (which is also the same as the FYs 2016 and 2017 relative weight). We believe that using the respective FY 2015 relative weight for each of the ‘‘psychiatric or rehabilitation’’ proposed MS–LTC–DRGs results in appropriate payments for LTCH cases that are paid at the site neutral payment rate under the transition policy provided by the statute because there are no clinically similar MS–LTC–DRGs for which we are able to determine proposed relative weights based on applicable LTCH cases in the December 2017 update of the FY 2017 MedPAR file data using the steps E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules described above. Furthermore, we believe that it would be administratively burdensome and introduce unnecessary complexity to the proposed MS–LTC– DRG relative weight calculation to use the LTCH discharges in the MedPAR file data to calculate a proposed relative weight for those 15 ‘‘psychiatric and rehabilitation’’ proposed MS–LTC– DRGs to be used for the sole purposes of determining half of the transitional blended payment for site neutral payment rate cases during the transition period (80 FR 49631 through 49632) or payment for discharges from spinal cord specialty hospitals under § 412.522(b)(4). In summary, for FY 2019, we are proposing to establish a proposed relative weight (and average length of stay thresholds) equal to the respective FY 2015 relative weight of the proposed MS–LTC–DRGs for the 15 ‘‘psychiatric or rehabilitation’’ proposed MS–LTC– DRGs listed previously (that is, proposed MS–LTC–DRGs 876, 880, 881, 882, 883, 884, 885, 886, 887, 894, 895, 896, 897, 945, and 946). Table 11, which is listed in section VI. of the Addendum to this proposed rule and is available via the internet on the CMS website, reflects this policy. Step 6—Adjust the proposed FY 2019 MS–LTC–DRG relative weights to account for nonmonotonically increasing relative weights. The MS–DRGs contain base DRGs that have been subdivided into one, two, or three severity of illness levels. Where there are three severity levels, the most severe level has at least one secondary diagnosis code that is referred to as an MCC (that is, major complication or comorbidity). The next lower severity level contains cases with at least one secondary diagnosis code that is a CC (that is, complication or comorbidity). Those cases without an MCC or a CC are referred to as ‘‘without CC/MCC.’’ When data do not support the creation of three severity levels, the base MS–DRG is subdivided into either two levels or the base MS–DRG is not subdivided. The two-level subdivisions may consist of the MS–DRG with CC/MCC and the MS–DRG without CC/MCC. Alternatively, the other type of twolevel subdivision may consist of the MS–DRG with MCC and the MS–DRG without MCC. In those base MS–LTC–DRGs that are split into either two or three severity levels, cases classified into the ‘‘without CC/MCC’’ MS–LTC–DRG are expected to have a lower resource use (and lower costs) than the ‘‘with CC/MCC’’ MS– LTC–DRG (in the case of a two-level split) or both the ‘‘with CC’’ and the ‘‘with MCC’’ MS–LTC–DRGs (in the VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 case of a three-level split). That is, theoretically, cases that are more severe typically require greater expenditure of medical care resources and would result in higher average charges. Therefore, in the three severity levels, relative weights should increase by severity, from lowest to highest. If the relative weights decrease as severity increases (that is, if within a base MS–LTC–DRG, an MS–LTC–DRG with CC has a higher relative weight than one with MCC, or the MS–LTC–DRG ‘‘without CC/MCC’’ has a higher relative weight than either of the others), they are nonmonotonic. We continue to believe that utilizing nonmonotonic relative weights to adjust Medicare payments would result in inappropriate payments because the payment for the cases in the higher severity level in a base MS–LTC–DRG (which are generally expected to have higher resource use and costs) would be lower than the payment for cases in a lower severity level within the same base MS–LTC–DRG (which are generally expected to have lower resource use and costs). Therefore, in determining the proposed FY 2019 MS–LTC–DRG relative weights, consistent with our historical methodology, we are proposing to continue to combine MS– LTC–DRG severity levels within a base MS–LTC–DRG for the purpose of computing a relative weight when necessary to ensure that monotonicity is maintained. For a comprehensive description of our existing methodology to adjust for nonmonotonicity, we refer readers to the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43964 through 43966). Any adjustments for nonmonotonicity that were made in determining the proposed FY 2018 MS– LTC–DRG relative weights in this proposed rule by applying this methodology are denoted in Table 11, which is listed in section VI. of the Addendum to this proposed rule and is available via the internet on the CMS website. Step 7— Calculate the proposed FY 2019 MS–LTC–DRG reclassification and recalibration budget neutrality factor. In accordance with the regulations at § 412.517(b) (in conjunction with § 412.503), the annual update to the MS–LTC–DRG classifications and relative weights is done in a budget neutral manner such that estimated aggregate LTCH PPS payments would be unaffected, that is, would be neither greater than nor less than the estimated aggregate LTCH PPS payments that would have been made without the MS– LTC–DRG classification and relative weight changes. (For a detailed discussion on the establishment of the budget neutrality requirement for the PO 00000 Frm 00301 Fmt 4701 Sfmt 4702 20463 annual update of the MS–LTC–DRG classifications and relative weights, we refer readers to the RY 2008 LTCH PPS final rule (72 FR 26881 and 26882).) The MS–LTC–DRG classifications and relative weights are updated annually based on the most recent available LTCH claims data to reflect changes in relative LTCH resource use (§ 412.517(a) in conjunction with § 412.503). To achieve the budget neutrality requirement at § 412.517(b), under our established methodology, for each annual update, the MS–LTC–DRG relative weights are uniformly adjusted to ensure that estimated aggregate payments under the LTCH PPS would not be affected (that is, decreased or increased). Consistent with that provision, we are proposing to update the MS–LTC–DRG classifications and relative weights for FY 2019 based on the most recent available LTCH data for applicable LTCH cases, and continue to apply a budget neutrality adjustment in determining the proposed FY 2019 MS– LTC–DRG relative weights. In this FY 2019 IPPS/LTCH PPS proposed rule, to ensure budget neutrality in the update to the MS–LTC– DRG classifications and relative weights under § 412.517(b), we are proposing to continue to use our established two-step budget neutrality methodology. To calculate the proposed normalization factor for FY 2019, we grouped applicable LTCH cases using the proposed FY 2019 Version 36 GROUPER, and the recalibrated proposed FY 2019 MS–LTC–DRG relative weights to calculate the average case-mix index (CMI); we grouped the same applicable LTCH cases using the FY 2018 GROUPER Version 35 and MS– LTC–DRG relative weights and calculated the average CMI; and computed the ratio by dividing the average CMI for FY 2018 by the average CMI for proposed FY 2019. That ratio is the proposed normalization factor. Because the calculation of the proposed normalization factor involves the proposed relative weights for the proposed MS–LTC–DRGs that contained applicable LTCH cases to calculate the average CMIs, any low-volume proposed MS–LTC–DRGs are included in the calculation (and the proposed MS–LTC– DRGs with no applicable LTCH cases are not included in the calculation). To calculate the proposed budget neutrality adjustment factor, we simulated estimated total FY 2019 LTCH PPS standard Federal payment rate payments for applicable LTCH cases using the proposed FY 2019 normalized relative weights and proposed GROUPER Version 36; simulated estimated total FY 2018 E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20464 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules LTCH PPS standard Federal payment rate payments for applicable LTCH cases using the FY 2018 MS–LTC–DRG relative weights and the FY 2018 GROUPER Version 35; and calculated the ratio of these estimated total payments by dividing the simulated estimated total LTCH PPS standard Federal payment rate payments for FY 2018 by the simulated estimated total LTCH PPS standard Federal payment rate payments for FY 2019. The resulting ratio is the proposed budget neutrality adjustment factor. The calculation of the proposed budget neutrality factor involves the proposed relative weights for the LTCH cases used in the payment simulation, which includes any cases grouped to lowvolume proposed MS–LTC–DRGs or to proposed MS–LTC–DRGs with no applicable LTCH cases, and generally does not include payments for cases grouped to a proposed MS–LTC–DRG with no applicable LTCH cases. (Occasionally, a few LTCH cases (that is, those with a covered length of stay of 7 days or less, which are removed from the proposed relative weight calculation in step 2) that are grouped to a proposed MS–LTC–DRG with no applicable LTCH cases are included in the payment simulations used to calculate the proposed budget neutrality factor. However, the number and payment amount of such cases have a negligible impact on the proposed budget neutrality factor calculation). In this proposed rule, to ensure budget neutrality in the update to the MS–LTC–DRG classifications and relative weights under § 412.517(b), we are proposing to continue to use our established two-step budget neutrality methodology. Therefore, in this proposed rule, in the first step of our proposed MS–LTC–DRG budget neutrality methodology, for FY 2019, we are proposing to calculate and apply a proposed normalization factor to the recalibrated proposed relative weights (the result of Steps 1 through 6 discussed previously) to ensure that estimated payments are not affected by changes in the composition of case types or the proposed changes to the classification system. That is, the proposed normalization adjustment is intended to ensure that the recalibration of the proposed MS–LTC–DRG relative weights (that is, the process itself) neither increases nor decreases the average case-mix index. To calculate the proposed normalization factor for FY 2019 (the first step of our proposed budget neutrality methodology), we used the following three steps: (1.a.) used the most recent available applicable LTCH VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 cases from the most recent available data (that is, LTCH discharges from the FY 2017 MedPAR file) and grouped them using the proposed FY 2019 GROUPER (that is, Version 36 for FY 2019) and the recalibrated proposed FY 2019 MS–LTC–DRG relative weights (determined in Steps 1 through 6 above) to calculate the average case-mix index; (1.b.) grouped the same applicable LTCH cases (as are used in Step 1.a.) using the FY 2018 GROUPER (Version 35) and FY 2018 MS–LTC–DRG relative weights and calculated the average casemix index; and (1.c.) computed the ratio of these average case-mix indexes by dividing the average CMI for FY 2018 (determined in Step 1.b.) by the average case-mix index for FY 2019 (determined in Step 1.a.). As a result, in determining the proposed MS–LTC–DRG relative weights for FY 2019, each recalibrated proposed MS–LTC–DRG relative weight is multiplied by the proposed normalization factor of 1.27598 (determined in Step 1.c.) in the first step of the proposed budget neutrality methodology, which produced ‘‘normalized relative weights.’’ In the second step of our proposed MS–LTC–DRG budget neutrality methodology, we calculate a second proposed budget neutrality factor consisting of the ratio of estimated aggregate FY 2019 LTCH PPS standard Federal payment rate payments for applicable LTCH cases (the sum of all calculations under Step 1.a. mentioned previously) after reclassification and recalibration to estimated aggregate payments for FY 2019 LTCH PPS standard Federal payment rate payments for applicable LTCH cases before reclassification and recalibration (that is, the sum of all calculations under Step 1.b. mentioned previously). That is, for this proposed rule, for FY 2019, under the second step of the proposed budget neutrality methodology, we are proposing to determine the proposed budget neutrality adjustment factor using the following three steps: (2.a.) simulated estimated total FY 2018 LTCH PPS standard Federal payment rate payments for applicable LTCH cases using the proposed normalized relative weights for FY 2019 and GROUPER Version 35 (as described above); (2.b.) simulated estimated total FY 2018 LTCH PPS standard Federal payment rate payments for applicable LTCH cases using the FY 2018 GROUPER (Version 35) and the FY 2018 MS–LTC– DRG relative weights in Table 11 of the FY 2018 IPPS/LTCH PPS final rule available on the internet, as described in section VI. of the Addendum of that final rule; and (2.c.) calculated the ratio PO 00000 Frm 00302 Fmt 4701 Sfmt 4702 of these estimated total payments by dividing the value determined in Step 2.b. by the value determined in Step 2.a. In determining the proposed FY 2019 MS–LTC–DRG relative weights, each normalized proposed relative weight is then multiplied by a budget neutrality factor of 0.992183 (the value determined in Step 2.c.) in the second step of the proposed budget neutrality methodology to achieve the budget neutrality requirement at § 412.517(b). Accordingly, in determining the proposed FY 2019 MS–LTC–DRG relative weights in this proposed rule, consistent with our existing methodology, we are proposing to apply a normalization factor of 1.27598 and a budget neutrality factor of 0.992183. Table 11, which is listed in section VI. of the Addendum to this proposed rule and is available via the internet on the CMS website, lists the proposed MS– LTC–DRGs and their respective proposed relative weights, geometric mean length of stay, and five-sixths of the geometric mean length of stay (used to identify SSO cases under § 412.529(a)) for FY 2019. C. Proposed Modifications to the Application of the Site Neutral Payment Rate (§ 412.522) Section 1206 of Pathway for SGR Reform Act (Public Law 113–67) mandated the new dual rate payment system under the LTCH PPS beginning with LTCH discharges occurring in cost reporting periods beginning on or after October 1, 2015. In addition, the statute established a transitional blended payment method for cases that would be paid the site neutral payment rate for LTCH discharges occurring in cost reporting periods beginning during FY 2016 or FY 2017. For those discharges, the applicable site neutral payment rate is the transitional blended payment rate specified in section 1886(m)(6)(B)(iii) of the Act. Section 1886(m)(6)(B)(iii) of the Act specifies that the transitional blended payment rate is comprised of 50 percent of the site neutral payment rate for the discharge under section 1886(m)(6)(B)(ii) of the Act and 50 percent of the LTCH PPS standard Federal payment rate that would have applied to the discharge if paragraph (6) of section 1886(m) of the Act had not been enacted. In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49610 through 49612), we specified under § 412.522(c)(3), for LTCH discharges occurring in cost reporting periods beginning on or after October 1, 2015, and on or before September 30, 2017 (that is, discharges occurring in cost reporting periods beginning during FYs 2016 and 2017), E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules that the payment amount for site neutral payment rate cases is a blended payment rate, which is calculated as 50 percent of the applicable site neutral payment rate amount for the discharge as determined under § 412.522(c)(1) and 50 percent of the applicable LTCH PPS standard Federal payment rate determined under § 412.523. In addition, we established that the payment amounts determined under § 412.522(c)(1) (the site neutral payment rate) and under § 412.523 (the LTCH PPS standard Federal rate) include any applicable adjustments, such as HCO payments, as applicable. Section 51005 of the Bipartisan Budget Act of 2018 (Public Law 115– 123) extended the transitional blended payment rate period for site neutral payment rate cases for 2 years, and provided for an adjustment to the payment for discharges paid under the site neutral payment rate through FY 2026. Specifically, section 51005(a) of Public Law 115–123 amended section 1886(m)(6)(B)(i) of the Act to extend the transitional blended payment rate for site neutral payment rate cases for an additional 2 years; that is, discharges occurring in cost reporting periods beginning in FYs 2018 and 2019 will continue to be paid under the blended payment rate. To codify the provisions of section 51005(a) of Public Law 115– 123, we are proposing to revise our regulations at § 412.522(c)(3) to reflect the extension of the transitional blended payment rate period for discharges paid at the site neutral payment rate to include discharges occurring in cost reporting periods beginning on or before September 30, 2019. In addition, as initially enacted, section 1886(m)(6)(B)(iii) of the Act specified that, for LTCH discharges occurring in cost reporting periods beginning during FY 2018 or later, the applicable site neutral payment rate would be the site neutral payment rate as defined in section 1886(m)(6)(B)(ii) of the Act. Section 51005(b) of Public Law 115–123 amended section 1886(m)(6)(B) by adding new clause (iv), which specifies that the IPPS comparable amount defined at section 1886(m)(6)(B)(ii)(I) shall be reduced by 4.6 percent for FYs 2018 through 2026. In order to implement section 51005(b) of Public Law 115–123, we are proposing to revise § 412.522(c)(1) by adding new paragraph (iii) to specify that, for discharges occurring in FYs 2018 through 2026, the amount payable under § 412.522(c)(1)(i) (that is, the IPPS comparable amount) will be reduced by 4.6 percent. We also are proposing to make a conforming amendment to § 412.500, VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 which specifies the basis and scope of subpart O of 42 CFR part 412, by adding paragraph (a)(9) to reflect the provisions of section 51005 of the Bipartisan Budget Act of 2018. D. Proposed Changes to the LTCH PPS Payment Rates and Other Proposed Changes to the LTCH PPS for FY 2019 1. Overview of Development of the LTCH PPS Standard Federal Payment Rates The basic methodology for determining LTCH PPS standard Federal payment rates is currently set forth at 42 CFR 412.515 through 412.538. In this section, we discuss the factors that we are proposing to use to update the LTCH PPS standard Federal payment rate for FY 2019, that is, effective for LTCH discharges occurring on or after October 1, 2018 through September 30, 2019. Under the dual rate LTCH PPS payment structure required by statute, beginning with discharges in cost reporting periods beginning in FY 2016, only LTCH discharges that meet the criteria for exclusion from the site neutral payment rate are paid based on the LTCH PPS standard Federal payment rate specified at § 412.523. (For additional details on our finalized policies related to the dual rate LTCH PPS payment structure required by statute, we refer readers to the FY 2016 IPPS/LTCH PPS final rule (80 FR 49601 through 49623).) Prior to the implementation of the dual payment rate system in FY 2016, all LTCHs were paid similarly to those now exempt from the site neutral payment rate. That legacy payment rate was called the standard Federal rate. For details on the development of the initial standard Federal rate for FY 2003, we refer readers to the August 30, 2002 LTCH PPS final rule (67 FR 56027 through 56037). For subsequent updates to the standard Federal rate (FYs 2003 through 2015)/LTCH PPS standard Federal payment rate (FY 2016 through present) as implemented under § 412.523(c)(3), we refer readers to the following final rules: RY 2004 LTCH PPS final rule (68 FR 34134 through 34140); RY 2005 LTCH PPS final rule (68 FR 25682 through 25684); RY 2006 LTCH PPS final rule (70 FR 24179 through 24180); RY 2007 LTCH PPS final rule (71 FR 27819 through 27827); RY 2008 LTCH PPS final rule (72 FR 26870 through 27029); RY 2009 LTCH PPS final rule (73 FR 26800 through 26804); FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 44021 through 44030); FY 2011 IPPS/LTCH PPS final rule (75 FR 50443 through 50444); FY 2012 IPPS/LTCH PPS final rule (76 FR PO 00000 Frm 00303 Fmt 4701 Sfmt 4702 20465 51769 through 51773); FY 2013 IPPS/ LTCH PPS final rule (77 FR 53479 through 53481); FY 2014 IPPS/LTCH PPS final rule (78 FR 50760 through 50765); FY 2015 IPPS/LTCH PPS final rule (79 FR 50176 through 50180); FY 2016 IPPS/LTCH PPS final rule (80 FR 49634 through 49637); FY 2017 IPPS/ LTCH PPS final rule (81 FR 57296 through 57310); and the FY 2018 IPPS/ LTCH PPS final rule (82 FR 58536 through 58547). In this FY 2019 IPPS/LTCH PPS proposed rule, we present our proposals related to the proposed annual update to the LTCH PPS standard Federal payment rate for FY 2019. The proposed update to the LTCH PPS standard Federal payment rate for FY 2019 is presented in section V.A. of the Addendum to this proposed rule. The components of the proposed annual update to the LTCH PPS standard Federal payment rate for FY 2019 are discussed below, including the statutory reduction to the annual update for LTCHs that fail to submit quality reporting data for FY 2019 as required by the statute (as discussed in section VII.E.2.c. of the preamble of this proposed rule). In addition, we are proposing to make an adjustment to the LTCH PPS standard Federal payment rate to account for the estimated effect of the changes to the area wage level adjustment for FY 2019 on estimated aggregate LTCH PPS payments, in accordance with § 412.523(d)(4) (as discussed in section V.B. of the Addendum to this proposed rule). 2. Proposed FY 2019 LTCH PPS Standard Federal Payment Rate Annual Market Basket Update a. Overview Historically, the Medicare program has used a market basket to account for input price increases in the services furnished by providers. The market basket used for the LTCH PPS includes both operating and capital related costs of LTCHs because the LTCH PPS uses a single payment rate for both operating and capital-related costs. We adopted the 2013-based LTCH market basket for use under the LTCH PPS beginning in FY 2017 (81 FR 57100 through 57102). For additional details on the historical development of the market basket used under the LTCH PPS, we refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53467 through 53476), and for a complete discussion of the LTCH market basket and a description of the methodologies used to determine the operating and capital-related portions of the 2013-based LTCH market basket, we refer readers to section VII.D. of the E:\FR\FM\07MYP2.SGM 07MYP2 20466 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 preamble of the FY 2017 IPPS/LTCH PPS proposed and final rules (81 FR 25153 through 25167 and 81 FR 57086 through 57099, respectively). Section 3401(c) of the Affordable Care Act provides for certain adjustments to any annual update to the LTCH PPS standard Federal payment rate and refers to the timeframes associated with such adjustments as a ‘‘rate year’’ We note that because the annual update to the LTCH PPS policies, rates, and factors now occurs on October 1, we adopted the term ‘‘fiscal year’’ (FY) rather than ‘‘rate year’’ (RY) under the LTCH PPS beginning October 1, 2010, to conform with the standard definition of the Federal fiscal year (October 1 through September 30) used by other PPSs, such as the IPPS (75 FR 50396 through 50397). Although the language of sections 3004(a), 3401(c), 10319, and 1105(b) of the Affordable Care Act refers to years 2010 and thereafter under the LTCH PPS as ‘‘rate year,’’ consistent with our change in the terminology used under the LTCH PPS from ‘‘rate year’’ to ‘‘fiscal year,’’ for purposes of clarity, when discussing the annual update for the LTCH PPS standard Federal payment rate, including the provisions of the Affordable Care Act, we use ‘‘fiscal year’’ rather than ‘‘rate year’’ for 2011 and subsequent years. b. Proposed Annual Update to the LTCH PPS Standard Federal Payment Rate for FY 2019 CMS has used an estimated market basket increase to update the LTCH PPS. As noted above, we adopted the 2013based LTCH market basket for use under the LTCH PPS beginning in FY 2017. The 2013-based LTCH market basket is based solely on the Medicare cost report data submitted by LTCHs and, therefore, specifically reflects the cost structures of only LTCHs. (For additional details on the development of the 2013-based LTCH market basket, we refer readers to the FY 2017 IPPS/LTCH PPS final rule (81 FR 57101 through 57102).) We continue to believe that the 2013-based LTCH market basket appropriately reflects the cost structure of LTCHs for the reasons discussed when we adopted its use in the FY 2017 IPPS/LTCH PPS final rule (81 FR 57100). Therefore, in this proposed rule, we are proposing to use the 2013-based LTCH market basket to update the LTCH PPS standard Federal payment rate for FY 2019. Section 1886(m)(3)(A) of the Act provides that, beginning in FY 2010, any annual update to the LTCH PPS standard Federal payment rate is reduced by the adjustments specified in clauses (i) and (ii) of subparagraph (A). Clause (i) of section 1886(m)(3)(A) of the VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Act provides for a reduction, for FY 2012 and each subsequent rate year, by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act (that is, ‘‘the multifactor productivity (MFP) adjustment’’). Clause (ii) of section 1886(m)(3)(A) of the Act provides for a reduction, for each of FYs 2010 through 2019, by the ‘‘other adjustment’’ described in section 1886(m)(4)(F) of the Act. Section 1886(m)(3)(B) of the Act provides that the application of paragraph (3) of section 1886(m) of the Act may result in the annual update being less than zero for a rate year, and may result in payment rates for a rate year being less than such payment rates for the preceding rate year. c. Proposed Adjustment to the LTCH PPS Standard Federal Payment Rate Under the Long-Term Care Hospital Quality Reporting Program (LTCH QRP) In accordance with section 1886(m)(5) of the Act, the Secretary established the Long-Term Care Hospital Quality Reporting Program (LTCH QRP). The reduction in the annual update to the LTCH PPS standard Federal payment rate for failure to report quality data under the LTCH QRP for FY 2014 and subsequent fiscal years is codified under 42 CFR 412.523(c)(4). The LTCH QRP, as required for FY 2014 and subsequent fiscal years by section 1886(m)(5)(A)(i) of the Act, applies a 2.0 percentage point reduction to any update under § 412.523(c)(3) for an LTCH that does not submit quality reporting data to the Secretary in accordance with section 1886(m)(5)(C) of the Act with respect to such a year (that is, in the form and manner and at the time specified by the Secretary under the LTCH QRP) (§ 412.523(c)(4)(i)). Section 1886(m)(5)(A)(ii) of the Act provides that the application of the 2.0 percentage points reduction may result in an annual update that is less than 0.0 for a year, and may result in LTCH PPS payment rates for a year being less than such LTCH PPS payment rates for the preceding year. Furthermore, section 1886(m)(5)(B) of the Act specifies that the 2.0 percentage points reduction is applied in a noncumulative manner, such that any reduction made under section 1886(m)(5)(A) of the Act shall apply only with respect to the year involved, and shall not be taken into account in computing the LTCH PPS payment amount for a subsequent year). These requirements are codified in the regulations at § 412.523(c)(4). (For additional information on the history of the LTCH QRP, including the statutory authority and the selected measures, we PO 00000 Frm 00304 Fmt 4701 Sfmt 4702 refer readers to section VIII.C. of the preamble of this proposed rule.) d. Proposed Annual Market Basket Update Under the LTCH PPS for FY 2019 Consistent with our historical practice and our proposal, we estimate the market basket increase and the MFP adjustment based on IGI’s forecast using the most recent available data. Based on IGI’s fourth quarter 2017 forecast, the FY 2019 full market basket estimate for the LTCH PPS using the 2013-based LTCH market basket is 2.7 percent. The current estimate of the MFP adjustment for FY 2019 based on IGI’s fourth quarter 2017 forecast is 0.8 percent. For FY 2019, section 1886(m)(3)(A)(i) of the Act requires that any annual update to the LTCH PPS standard Federal payment rate be reduced by the productivity adjustment (‘‘the MFP adjustment’’) described in section 1886(b)(3)(B)(xi)(II) of the Act. Consistent with the statute, we are proposing to reduce the full estimated FY 2019 market basket increase by the proposed FY 2019 MFP adjustment. To determine the proposed market basket increase for LTCHs for FY 2019, as reduced by the proposed MFP adjustment, consistent with our established methodology, we are subtracting the proposed FY 2019 MFP adjustment from the estimated FY 2019 market basket increase. Furthermore, sections 1886(m)(3)(A)(ii) and 1886(m)(4)(E) of the Act requires that any annual update to the LTCH PPS standard Federal payment rate for FY 2019 be reduced by the ‘‘other adjustment’’ described in paragraph (4), which is 0.75 percent for FY 2019. Therefore, following application of the proposed productivity adjustment, we are proposing to further reduce the proposed adjusted market basket update (that is, the proposed full FY 2019 market basket increase less the proposed MFP adjustment) by the ‘‘other adjustment’’ specified by sections 1886(m)(3)(A)(ii) and 1886(m)(4) of the Act. (For additional details on our established methodology for adjusting the market basket increase by the MFP adjustment and the ‘‘other adjustment’’ required by the statute, we refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51771).) For FY 2019, section 1886(m)(5) of the Act requires that for LTCHs that do not submit quality reporting data as required under the LTCH QRP, any annual update to an LTCH PPS standard Federal payment rate, after application of the adjustments required by section 1886(m)(3) of the Act, shall be further reduced by 2.0 percentage points. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules Therefore, the proposed update to the LTCH PPS standard Federal payment rate for FY 2019 for LTCHs that fail to submit quality reporting data under the LTCH QRP, the full LTCH PPS market basket increase estimate, subject to the MFP adjustment as required under section 1886(m)(3)(A)(i) of the Act and an additional reduction required by sections 1886(m)(3)(A)(ii) and 1886(m)(4) of the Act, is also further reduced by 2.0 percentage points. In this FY 2019 IPPS/LTCH PPS proposed rule, in accordance with the statute, we are proposing to reduce the proposed FY 2019 full market basket estimate of 2.7 percent (based on IGI’s fourth quarter 2017 forecast of the 2013based LTCH market basket) by the proposed FY 2019 MFP adjustment of 0.8 percentage point (based on IGI’s fourth quarter 2017 forecast). Following application of the proposed MFP adjustment, we are proposing to reduce the proposed adjusted market basket update of 1.9 percent (2.7 percent minus 0.8 percentage point) by 0.75 percentage point, as required by sections 1886(m)(3)(A)(ii) and 1886(m)(4)(F) of the Act. Therefore, under the authority of section 123 of the BBRA as amended by section 307(b) of the BIPA, we are proposing an annual market basket update to the LTCH PPS standard Federal payment rate for FY 2019 of 1.15 percent (that is, the most recent estimate of the proposed LTCH PPS market basket increase of 2.7 percent, less the proposed MFP adjustment of 0.8 percentage point, and less the 0.75 percentage point required under section 1886(m)(4)(F) of the Act). Accordingly, we are proposing to revise § 412.523(c)(3) by adding a new paragraph (xv), which would specify that the LTCH PPS standard Federal payment rate for FY 2019 is the LTCH PPS standard Federal payment rate for the previous LTCH PPS payment year updated by 1.15 percent, and as further adjusted, as appropriate, as described in § 412.523(d) (including the proposed budget neutrality adjustment for the proposed elimination of the 25-percent threshold policy under proposed § 412.523(d)(6) discussed in section VII.E. of the preamble of this proposed rule). For LTCHs that fail to submit quality reporting data under the LTCH QRP, under proposed § 412.523(c)(3)(xv) in conjunction with § 412.523(c)(4), we are proposing to further reduce the proposed annual update to the LTCH PPS standard Federal payment rate by 2.0 percentage points, in accordance with section 1886(m)(5) of the Act. Accordingly, we are proposing an annual update to the LTCH PPS VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 standard Federal payment rate of -0.85 percent (that is, 1.15 percent minus 2.0 percentage points) for FY 2019 for LTCHs that fail to submit quality reporting data as required under the LTCH QRP. As stated earlier, consistent with our historical practice, we are proposing to use a more recent estimate of the market basket and the MFP adjustment to establish an annual update to the LTCH PPS standard Federal payment rate for FY 2019 under § 412.523(c)(3)(xv) in the FY 2019 IPPS/ LTCH PPS final rule. (We note that, consistent with historical practice, we also are proposing to adjust the proposed FY 2019 LTCH PPS standard Federal payment rate by an area wage level budget neutrality factor in accordance with § 412.523(d)(4) (as discussed in section V.B.5. of the Addendum to this proposed FY 2019 rule).) E. Proposed Elimination of the ‘‘25Percent Threshold Policy’’ Adjustment (§ 412.538) The ‘‘25-percent threshold policy’’ is a per discharge payment adjustment in the LTCH PPS that is applied to payments for Medicare patient discharges from an LTCH when the number of such patients originating from any single referring hospital is in excess of the applicable threshold for a given cost reporting period (such threshold is generally set at 25 percent, with exceptions for rural and urban single or MSA-dominant hospitals). If an LTCH exceeds the applicable threshold during a cost reporting period, payment for the discharge that puts the LTCH over its threshold and all discharges subsequent to that discharge in the cost reporting period from the referring hospital are adjusted at cost report settlement (discharges not in excess of the threshold are unaffected by the 25-percent threshold policy). The 25-percent threshold policy was originally established in the FY 2005 IPPS final rule for LTCH HwHs and satellites (69 FR 49191 through 49214). We later expanded the 25-percent threshold policy in the RY 2008 LTCH PPS final rule to include all LTCHs and LTCH satellite facilities (72 FR 26919 through 26944). Several laws have mandated delayed implementation of the 25-percent threshold policy. For more details on the various laws that delayed the full implementation of the 25-percent threshold policy, we refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38318 through 38319). In light of the further statutory delays and our continued consideration of public comments received in response to our proposal to consolidate and PO 00000 Frm 00305 Fmt 4701 Sfmt 4702 20467 streamline the 25-percent threshold policy in the FY 2017 IPPS/LTCH PPS proposed rule, in the FY 2018 IPPS/ LTCH PPS final rule (82 FR 38320), we adopted a 1-year regulatory moratorium on the implementation of the 25-percent threshold policy; that is, we imposed a regulatory moratorium on our implementation of the provisions of § 412.538 until October 1, 2018. Since the introduction of the site neutral payment rate in FY 2016, many public commenters have asserted that the new site neutral payment rate would alleviate the policy concerns underlying the establishment of the 25-percent threshold policy. As we stated in our response to those comments in the FY 2017 IPPS/LTCH PPS final rule (81 FR 57106) and in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38320), at that time, we were not convinced that this was the case. In addition, we received many public comments urging CMS to permanently rescind the 25-percent threshold policy in response to the Request for Information on CMS Flexibilities and Efficiencies that was included in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 20159). These public comments also asserted that this policy is no longer necessary in light of the new dual payment rate system. As discussed in the FY 2018 IPPS/ LTCH PPS proposed and final rules (82 FR 20028 and 82 FR 38318 through 38319, respectively), the best available LTCH claims data at the time of the development of both rules (FY 2016 discharges) included many LTCH discharges that occurred during FY 2016 that were not yet subject to the site neutral payment rate because the statute provides that the site neutral payment rate be phased in, effective with LTCH cost reporting periods beginning on or after October 1, 2015 (that is, LTCH cost reporting periods beginning in FY 2016). Therefore, all FY 2016 discharges that occurred in a LTCH cost reporting period that began prior to October 1, 2016 were not subject to the site neutral payment rate. Given these widespread concerns, the longstanding statutory delays, and the limited experience under the new dual rate payment system, we implemented the 1-year regulatory moratorium for FY 2018 to allow for the opportunity to do an analysis of LTCH admission practices under the new dual payment rate under the LTCH PPS based on more complete data. This implementation plan was, in part, intended to avoid confusion and expending unnecessary resources in implementation should our analysis ultimately conclude that the policy concerns underlying the 25-percent E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20468 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules threshold policy have been moderated (82 FR 38320). Since establishing the current regulatory moratorium in the FY 2018 IPPS/LTCH PPS rulemaking, we have continued to receive additional communications seeking an end to our 25-percent threshold policy. We have considered these requests, along with reconsidering the many requests and public comments received through rulemaking, as we have reviewed our policies in the context of our ongoing initiative to reduce unnecessary regulatory burden. Our review also took note of the significant changes to LTCH admission practices and the LTCH PPS payment structure since the advent of the 25-percent threshold policy’s adoption, such as the introduction of the site neutral payment rate beginning in FY 2016. One effect of these changes is the creation of a financial incentive for LTCHs to limit admissions according to the criteria for payment at the LTCH PPS standard Federal payment rate. While these changes do not specifically address our regulatory requirement to ensure that an LTCH does not act as an IPPS step-down unit, we believe that the creation of these financial incentives likely results in LTCH providers closely considering the appropriateness of admitting a potential transfer to an LTCH setting, regardless of the referral source, thereby lessening the concerns that led to the introduction of the 25percent threshold policy. In light of these factors, we recognize that the policy concerns that led to the 25-percent threshold policy may have been ameliorated, and that implementation of the 25-percent threshold policy would place a regulatory burden on providers. Therefore, we believe it is appropriate at this time to propose the removal of this payment adjustment policy. For these same reasons, we believe the specific regulatory framework of the 25-percent threshold policy at § 412.538 is no longer an appropriate mechanism to ensure that the statutory requirement that an LTCH does not act as a defacto unit of an IPPS hospital is not violated. Therefore, in this proposed rule, we are proposing to eliminate the 25-percent threshold policy under § 412.538. The goal of our proposal to eliminate the 25-percent threshold policy is to reduce unnecessary regulatory burden. Independent of this goal, we continue to believe aggregate LTCH PPS payments are sufficient. Therefore, we do not believe that it would be appropriate to change the aggregate amount of LTCH PPS payments on a permanent basis. As described earlier, the 25-percent threshold policy would have reduced VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 the LTCH PPS payments for certain discharges, and if finalized, this proposal to eliminate the 25-percent threshold policy would be expected to result in an increase in aggregate LTCH PPS payments. As a result, we believe that this proposal should be accomplished in a budget-neutral manner. With respect to the issue about the adequacy of LTCH payment levels, we note that MedPAC, in each of its annual updates to Congress since 2011, has concluded that current LTCH PPS payment levels are appropriate, and thus has recommended since 2011 the elimination of the annual update to the LTCH payment rates. (For example, we refer readers to MedPAC’s March 2011 ‘‘Report to the Congress: Medicare Payment Policy,’’ Chapter 10, page 246, and MedPAC’s March 2018 ‘‘Report to the Congress: Medicare Payment Policy,’’ Chapter 11, page 315.) We believe application of this burden reduction-related proposal to eliminate the 25-percent threshold policy would result in an unwarranted increase in aggregate payment levels. Therefore, if we finalize our proposal to eliminate the 25-percent threshold policy, under the broad authority of section 123 of the BBRA, as amended by section 307(b) of the BIPA, we also are proposing to make a one-time, permanent adjustment to the proposed FY 2019 LTCH PPS standard Federal payment rate. That adjustment would be set such that our projection of aggregate LTCH payments in FY 2019 that would have been paid if the 25percent threshold policy had gone into effect (that is, as if the 25-percent threshold policy under § 412.538 remained in effect during FY 2019) are equal to our projection of aggregate LTCH payments in FY 2019 payments for such cases in the absence of that policy. To do this, we are proposing to remove the provisions of § 412.538, reserve this section, and add a new paragraph (d)(6) to § 412.523 to provide for a one-time permanent budget neutrality factor adjustment to the LTCH PPS standard Federal payment rate to ensure that removal of the 25-percent threshold policy at existing § 412.538 is budget neutral. (We note that, in the proposed § 412.523(d)(6), we refer to the 25-percent threshold policy as ‘‘limitation on long-term care hospital admissions from referring hospitals’’, which is the title of existing § 412.538.) In addition, we are proposing to make conforming technical changes to remove paragraph (c)(2)(v) of § 412.522 and paragraph (d)(6) of § 412.525. Under this proposal, the budget neutrality adjustment would only be PO 00000 Frm 00306 Fmt 4701 Sfmt 4702 applied to the LTCH PPS standard Federal payment rate (or such portion of a blended payment) because payments made under the site neutral payment rate would be unaffected by the 25percent threshold policy. (Discharges in excess of the 25-percent threshold policy would be paid the lesser of the applicable LTCH payment or an IPPS equivalent payment. The site neutral payment rate would remain set at the lesser of the IPPS comparable amount or cost, neither of which would exceed the IPPS equivalent payment amount.) However, because the applicable site neutral payment rate for all LTCHs during all of FY 2019 is based on the transitional blended payment rate (that is, 50 percent of the site neutral payment rate and 50 percent of the LTCH PPS standard Federal payment rate), any adjustment applied to the LTCH PPS standard Federal payment rate would also need to be applied to the LTCH PPS standard Federal rate portion of payments that affect site neutral payment rate cases. Therefore, as noted earlier, we must account for the change in payments to both LTCH PPS standard Federal payment rate cases and site neutral payment rate cases when determining the proposed budget neutrality adjustment. To do so, we are proposing to use the following methodology to determine the proposed budget neutrality factor that would be applied to the proposed FY 2019 LTCH PPS standard Federal payment rate using the best available LTCH claims data (the December 2017 update of the FY 2017 MedPAR files). Consistent with historical practice, if more recent data become available, we are proposing to use such data for the final rule. Step 1—Simulate estimated aggregate FY 2019 LTCH PPS payments (that is, both LTCH PPS standard Federal payment rate payment cases and site neutral payment rate cases) without the 25-percent threshold policy at § 412.538. Step 2—Estimate aggregate payments incorporating the payment reduction under the 25-percent threshold policy at § 412.538 as follows: • Step 2a—Determine the applicable percentage threshold for each LTCH. In general, the applicable percentage threshold is 25 percent; however, the applicable percentage threshold is 50 percent for exclusively rural LTCHs, and LTCHs located in an MSA with an MSA-dominant hospital get an adjusted threshold (§ 412.538(e)). To determine the applicable percentage threshold for LTCHs located in an MSA with an MSA-dominant hospital, we used IPPS claims data from the March 2017 update E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules of the FY 2016 MedPAR files to determine, for each CBSA, the highest discharge percentage among all IPPS providers within that CBSA. (As discussed in section V. of the Addendum to this proposed rule, the CBSA-based geographic classifications currently used under the LTCH PPS are based on the OMB labor market area delineations based on the 2010 Decennial Census data (that is, are an MSA under § 412.503). The applicable percentage threshold for a given CBSA is this highest discharge percentage unless this percentage is higher than 50 percent or lower than 25 percent. In those cases, the threshold is 50 percent or 25 percent, respectively (§ 412.538(e)(3)). • Step 2b—For each LTCH, determine the percentage of Medicare discharges admitted from any single referring IPPS hospital, consistent with § 412.538(d)(2). To do so, we used the March 2017 update of the FY 2016 MedPAR files to determine the total discharges for each LTCH and the number of applicable transfers from each referring IPPS hospital. The referring IPPS hospital’s applicable transfers are the LTCH’s Medicare discharges that were admitted from that single referring IPPS hospital where an outlier payment was not made to that referring hospital and for whom payment was not made by a Medicare Advantage plan. The ratio of the referring IPPS hospital’s applicable transfers to the LTCH’s total Medicare discharges, multiplied by 100, is the percentage of Medicare discharges admitted from any single referring IPPS hospital. • Step 2c—Estimate the aggregate payment reduction under the 25-percent threshold policy: (i) Determine the LTCH’s discharges that are in excess of the applicable percentage threshold by comparing the LTCH’s percentage of Medicare discharges admitted from each single referring IPPS hospital (Step 2b) to the LTCH’s applicable percentage threshold (Step 2a). (ii) Estimate the aggregate payment reduction under the 25-percent threshold policy for the Medicare discharges that caused the LTCH to exceed or remain in excess of the threshold by summing the difference between: • The original LTCH PPS payment amount (that is, the otherwise applicable LTCH PPS payment without an adjustment under the 25-percent threshold policy); and • The estimated adjusted payment amount under the 25-percent threshold policy. (We note that there is no VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 payment adjustment under the 25percent threshold policy for discharges that are not in excess of the LTCH’s applicable percentage threshold.) Step 3—Calculate the ratio of the estimated aggregate FY 2019 LTCH PPS payments with and without the estimated aggregate payment reduction under the 25-percent threshold policy to determine the adjustment factor that would need to be applied to the proposed FY 2019 LTCH PPS standard Federal payment rate to achieve budget neutrality (that is, the adjustment that would have to be applied to the proposed FY 2019 LTCH PPS standard Federal payment rate so that the estimated aggregate payments calculated in Step 1 are equal to the estimated aggregate payments with the reduction as calculated in Step 2). This ratio is calculated by dividing the estimated FY 2019 payments without incorporating the estimated aggregate payment reduction under the 25-percent threshold policy at § 412.538 (calculated in Step 1) by the estimated FY 2019 payments incorporating the estimated aggregate payment reduction under the 25-percent threshold policy at § 412.538 (calculated in Step 2). We note that, under Step 3, an iterative process is used to determine the adjustment factor that would need to be applied to the proposed FY 2019 LTCH PPS standard Federal payment rate to achieve budget neutrality because the portion of estimated FY 2019 payments that are not based on the LTCH PPS standard Federal payment rate (that is, the IPPS comparable amount portion under the SSO payment methodology and the site neutral payment rate portion of the transitional blended payment rate payment for site neutral payment rate discharges in FY 2019) are not affected by the application of budget neutrality factor. We also note that, under this step, the proposed budget neutrality factor is applied to the proposed FY 2019 LTCH PPS standard Federal payment rate after the application of the proposed FY 2019 annual update and the proposed FY 2019 area wage level adjustment budget neutrality factor (discussed in section V. of the Addendum to this proposed rule). Based on the FY 2017 LTCH claims data used for this proposed rule, we estimate that our proposed elimination of the 25-percent threshold policy would increase aggregate LTCH PPS payments by approximately $36 million. For this proposed rule, using the steps in the proposed methodology described above, we have determined a proposed budget neutrality factor for the proposed elimination of the 25-percent threshold policy of 0.990535. Accordingly, in PO 00000 Frm 00307 Fmt 4701 Sfmt 4702 20469 section V. of the Addendum to this proposed rule, to determine the proposed FY 2019 LTCH PPS standard Federal payment rate, we are proposing to apply a one-time, permanent budget neutrality factor of 0.990535 for the proposed elimination of the 25-percent threshold policy. The proposed FY 2019 LTCH PPS standard Federal payment rate shown in Table 1E reflects this proposed adjustment. As part of the reexamination and review of the 25-percent threshold policy described earlier, we also considered proposing an additional 1year regulatory moratorium on the full implementation of the 25-percent threshold policy. Such a policy would also have resulted in an unwarranted increase in LTCH payments for the reasons discussed earlier, and for these same reasons we also would have proposed to implement such a moratorium in a budget neutral manner. We calculated the budget neutrality factor that would have had to be applied to address such increases during that 1year delay in implementation using the proposed methodology outlined above (that is, a factor of 0.990535) to the LTCH PPS standard Federal payment rate for 1 year, FY 2019. Furthermore, under such a proposal, we would have proposed to modify § 412.538 by revising the effective date to apply to discharges occurring on or after October 1, 2019, and we would have proposed to amend § 412.523(d) to specify that the LTCH PPS standard Federal payment rate would be adjusted for FY 2019 by a factor that would ensure the 1-year delay in the implementation of the 25percent threshold policy at § 412.538 for discharges occurring during FY 2019 would be budget neutral. We are inviting public comments on our proposal to permanently eliminate the 25-percent threshold policy in a budget neutral manner, or, in the alternative, the adoption of an additional 1-year delay on the implementation of the policy with a budget neutrality adjustment. In addition, we are inviting public comments on whether the 25-percent threshold policy should be retained in FY 2019 and subsequent years. VIII. Quality Data Reporting Requirements for Specific Providers and Suppliers In section VIII. of the preamble of this proposed rule, we are proposing changes to the following Medicare quality reporting systems: • In section VIII.A., the Hospital IQR Program; • In section VIII.B., the PCHQR Program; and E:\FR\FM\07MYP2.SGM 07MYP2 20470 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules • In section VIII.C., the LTCH QRP Program. In addition, in section VIII.D. of the preamble of this proposed rule, we are proposing changes to the Medicare and Medicaid Promoting Interoperability Programs (previously known as the Medicare and Medicaid EHR Incentive Programs) for eligible hospitals and critical access hospitals (CAHs). We refer readers to section I.A.2. of the preamble of this proposed rule for a discussion of the Meaningful Measures Initiative. A. Hospital Inpatient Quality Reporting (IQR) Program daltland on DSKBBV9HB2PROD with PROPOSALS2 1. Background a. History of the Hospital IQR Program The Hospital IQR Program strives to put patients first by ensuring they are empowered to make decisions about their own healthcare along with their clinicians using information from datadriven insights that are increasingly aligned with meaningful quality measures. We support technology that reduces burden and allows clinicians to focus on providing high quality health care for their patients. We also support innovative approaches to improve quality, accessibility, and affordability of care, while paying particular attention to improving clinicians’ and beneficiaries’ experiences when interacting with CMS programs. In combination with other efforts across the Department of Health and Human Services, we believe the Hospital IQR Program incentivizes hospitals to improve health care quality and value, while giving patients the tools and information needed to make the best decisions for them. We seek to promote higher quality and more efficient health care for Medicare beneficiaries. This effort is supported by the adoption of widelyagreed upon quality measures. We have worked with relevant stakeholders to define measures of quality in almost every setting and currently measure some aspect of care for almost all Medicare beneficiaries. These measures assess structural aspects of care, clinical processes, patient experiences with care, and outcomes. We have implemented quality measure reporting programs for multiple settings of care. To measure the quality of hospital inpatient services, we implemented the Hospital IQR Program, previously referred to as the Reporting Hospital Quality Data for Annual Payment Update (RHQDAPU) Program. We refer readers to the FY 2010 IPPS/LTCH PPS final rule (74 FR 43860 through 43861) and the FY 2011 IPPS/LTCH PPS final VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 rule (75 FR 50180 through 50181) for detailed discussions of the history of the Hospital IQR Program, including the statutory history, and to the FY 2015 IPPS/LTCH PPS final rule (79 FR 50217 through 50249), the FY 2016 IPPS/LTCH PPS final rule (80 FR 49660 through 49692), the FY 2017 IPPS/LTCH PPS final rule (81 FR 57148 through 57150), and the FY 2018 IPPS/LTCH PPS final rule (82 FR 38326 through 38328 and 82 FR 38348) for the measures we have adopted for the Hospital IQR Program measure set through the FY 2019 and FY 2020 payment determinations and subsequent years. b. Maintenance of Technical Specifications for Quality Measures The technical specifications for chartabstracted clinical process of care measures used in the Hospital IQR Program, or links to websites hosting technical specifications, are contained in the CMS/The Joint Commission (TJC) Specifications Manual for National Hospital Inpatient Quality Measures (Specifications Manual). This Specifications Manual is posted on the QualityNet website at: https:// www.qualitynet.org/. We generally update the Specifications Manual on a semiannual basis and include in the updates detailed instructions and calculation algorithms for hospitals to use when collecting and submitting data on required chart-abstracted clinical process of care measures. The technical specifications for electronic clinical quality measures (eCQMs) used in the Hospital IQR Program are contained in the CMS Annual Update for Hospital Quality Reporting Programs (Annual Update). This Annual Update is posted on the Electronic Clinical Quality Improvement (eCQI) Resource Center web page at: https://ecqi.healthit.gov/. We generally update the measure specifications on an annual basis through the Annual Update, which includes code updates, logic corrections, alignment with current clinical guidelines, and additional guidance for hospitals and EHR vendors to use in order to collect and submit data on eCQMs from hospital EHRs. We refer readers to section VIII.A.11.d.(1) of the preamble of this proposed rule in which we discuss the transition to Clinical Quality Language (CQL) beginning with the Annual Update that will be published in the spring of 2018 and for implementation in CY 2019. In addition, we believe that it is important to have in place a subregulatory process to incorporate nonsubstantive updates to the measure specifications for measures we have PO 00000 Frm 00308 Fmt 4701 Sfmt 4702 adopted for the Hospital IQR Program so that these measures remain up-to-date. We refer readers to the FY 2013 IPPS/ LTCH PPS final rule (77 FR 53504 through 53505) and the FY 2015 IPPS/ LTCH PPS final rule (79 FR 50203) for our policy for using a subregulatory process to make nonsubstantive updates to measures used for the Hospital IQR Program. We recognize that some changes made to measures undergoing maintenance review are substantive in nature and might not be appropriate for adoption using a subregulatory process. For substantive measure updates, after submission to the Measures Under Consideration list and evaluation by the Measure Applications Partnership (MAP), we will continue to use rulemaking to adopt those substantive measure updates for the Hospital IQR Program. We refer readers to the FY 2017 IPPS/LTCH PPS final rule (81 FR 57111) for additional discussion of the maintenance of technical specifications for quality measures for the Hospital IQR Program. We also refer readers to the FY 2015 IPPS/LTCH PPS final rule (79 FR 50202 through 50203) for additional details on the measure maintenance process. We are not proposing any changes to our policies on the measure maintenance process in this proposed rule. c. Public Display of Quality Measures Section 1886(b)(3)(B)(viii)(VII) of the Act was amended by the Deficit Reduction Act (DRA) of 2005. Section 5001(a) of the DRA requires that the Secretary establish procedures for making information regarding measures available to the public after ensuring that a hospital has the opportunity to review its data before they are made public. Our current policy is to report data from the Hospital IQR Program as soon as it is feasible on CMS websites such as the Hospital Compare website, https://www.medicare.gov/ hospitalcompare after a 30-day preview period (78 FR50776 through 50778). Information is available to the public on the Hospital Compare website. Hospital Compare is an interactive web tool that assists beneficiaries and providers by providing information on hospital quality of care to those who need to select a hospital and to support quality improvement efforts. The Hospital IQR Program currently includes measures capturing performance data on many aspects of care provided in the acute inpatient hospital setting. For more information on measures reported to Hospital Compare, we refer readers to the E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 website at: https://www.medicare.gov/ hospitalcompare. Other information that may not be as relevant to or easily understood by beneficiaries and information for which there are unresolved display issues or design considerations are not reported on the Hospital Compare website and may be made available on other CMS websites, such as https:// data.medicare.gov. CMS also provides stakeholders access to archived data from the Hospital Compare website, which can be found at: https:// data.medicare.gov/data/archives/ hospital-compare. In this proposed rule, we are not proposing any changes to these policies. We note that in section VIII.A.10. of the preamble of this proposed rule, we discuss our efforts to provide stratified data in hospital confidential feedback reports and potentially making stratified data publicly available on the Hospital Compare website in the future. d. Meaningful Measures Initiative and the Hospital IQR Program In this proposed rule, we are proposing a number of new policies for the Hospital IQR Program. We developed these proposals after conducting an overall review of the Program under our new ‘‘Meaningful Measures Initiative,’’ which is discussed in more detail in section I.A.2. of the preamble of this proposed rule. The proposals reflect our efforts to ensure that the Hospital IQR Program measure set continues to promote improved health outcomes for our beneficiaries while minimizing costs, which can consist of several different types of costs, including, but not limited to: (1) Provider and clinician information collection burden and related cost and burden associated with the submitting/ reporting of quality measures to CMS; (2) the provider and clinician cost associated with complying with other quality programmatic requirements; (3) the provider and clinician cost associated with participating in multiple quality programs, and tracking multiple similar or duplicative measures within or across those programs; (4) the CMS cost associated with the program oversight of the measure, including measure maintenance and public display; and (5) the provider and clinician cost associated with compliance with other federal and/or State regulations (if applicable). They also reflect our efforts to improve the usefulness of the data that we publicly report in the Hospital IQR Program. Our goal is to improve the usefulness and usability of CMS quality program data by streamlining how VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 providers are reporting and accessing data, while maintaining or improving consumer understanding of the data publicly reported on a Compare website. As part of this review, we have taken a holistic approach to evaluating the Hospital IQR Program’s current measures in the context of the measures used in the other IPPS quality programs (that is, the Hospital Readmissions Reduction Program, the HAC Reduction Program, and the Hospital VBP Program). We view the value-based purchasing programs together as a collective set of hospital value-based programs. Specifically, we believe the goals of the three value-based purchasing programs (the Hospital VBP, Hospital Readmissions Reduction, and HAC Reduction Programs) and the measures used in these programs together cover the Meaningful Measures Initiative quality priorities of making care safer, strengthening person and family engagement, promoting coordination of care, promoting effective prevention and treatment of illness, and making care affordable—but that the programs should not add unnecessary complexity or costs associated with duplicative measures across programs. The Hospital Readmissions Reduction Program focuses on care coordination measures, which address the quality priority of promoting effective communication and care coordination within the Meaningful Measures Initiative. The HAC Reduction Program focuses on patient safety measures, which address the Meaningful Measures Initiative quality priority of making care safer by reducing harm caused in the delivery of care. As part of this holistic quality payment program strategy, we believe the Hospital VBP Program should focus on the measurement priorities not covered by the Hospital Readmissions Reduction Program or the HAC Reduction Program. The Hospital VBP Program would continue to focus on measures related to: (1) The clinical outcomes, such as mortality and complications (which address the Meaningful Measures Initiative quality priority of promoting effective treatment); (2) patient and caregiver experience, as measured using the HCAHPS Survey (which addresses the Meaningful Measures Initiative quality priority of strengthening person and family engagement as partners in their care); and (3) healthcare costs, as measured using the Medicare Spending Per Beneficiary (MSPB)—Hospital measure (which addresses the Meaningful Measures Initiative priority of making care affordable). As part of PO 00000 Frm 00309 Fmt 4701 Sfmt 4702 20471 this larger quality program strategy, we believe the Hospital IQR Program should focus on measure topics not covered in the other programs’ measures. Although new Hospital VBP measures will be selected from the measures specified under the Hospital IQR Program, the Hospital VBP Program measure set will no longer necessarily be a subset of the Hospital IQR Program measure set. As discussed in section I.A.2. of the preamble of this proposed rule, we are engaging in efforts aimed at evaluating and streamlining regulations with the goal to reduce unnecessary costs, increase efficiencies, and improve beneficiary experience. While there may be some overlap between the Hospital IQR Program measure set and the Hospital VBP measure set, allowing removal of duplicative measures from the Hospital IQR Program once they have been adopted into the Hospital VBP Program would further these goals. We believe this framework will allow hospitals and patients to continue to obtain meaningful information about hospital performance and incentivize quality improvement while also streamlining the measure sets to reduce duplicative measures and program complexity so that the costs to hospitals associated with participating in these programs does not outweigh the benefits of improving beneficiary care. 2. Retention of Previously Adopted Hospital IQR Program Measures for Subsequent Payment Determinations We refer readers to the FY 2013 IPPS/ LTCH PPS final rule (77 FR 53512 through 53513) for our finalized measure retention policy. Pursuant to this policy, when we adopt measures for the Hospital IQR Program beginning with a particular payment determination, we automatically readopt these measures for all subsequent payment determinations unless we propose to remove, suspend, or replace the measures. In this proposed rule, we are not proposing any changes to this policy. 3. Considerations in Expanding and Updating Quality Measures We refer readers to the FY 2013 IPPS/ LTCH PPS final rule (77 FR 53510 through 53512) for a discussion of the previous considerations we have used to expand and update quality measures under the Hospital IQR Program. In this proposed rule, we are not proposing any changes to these policies. We also refer readers to section I.A.2. of the preamble of this proposed rule, in which we describe the quality topics that we have identified as high impact measurement E:\FR\FM\07MYP2.SGM 07MYP2 20472 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules areas that are relevant and meaningful to both patients and providers. Furthermore, in selecting measures for the Hospital IQR Program, we are mindful of the conceptual framework we have developed for the Hospital VBP Program. Because measures adopted for the Hospital VBP Program must first have been adopted under the Hospital IQR Program and publicly reported on the Hospital Compare website for at least one year, these two programs are linked. We view the value-based purchasing programs, including the Hospital VBP Program, as the next step in promoting higher quality care for Medicare beneficiaries by transforming Medicare from a passive payer of claims into an active purchaser of quality healthcare for its beneficiaries. 4. Removal Factors for Hospital IQR Program Measures daltland on DSKBBV9HB2PROD with PROPOSALS2 a. Current Policy We most recently updated our measure removal and retention factors in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49641 through 49643).278 The previously adopted removal factors are: • Factor 1. Measure performance among hospitals is so high and unvarying that meaningful distinctions and improvements in performance can no longer be made (that is, ‘‘topped-out’’ measures): statistically indistinguishable performance at the 75th and 90th percentiles; and truncated coefficient of variation ≤ 0.10. • Factor 2. A measure does not align with the current clinical guidelines or practice. • Factor 3. The availability of a more broadly applicable measure (across settings, populations, or the availability of a measure that is more proximal in time to desired patient outcomes for the particular topic). • Factor 4. Performance or improvement on a measure does not result in better patient outcomes. • Factor 5. The availability of a measure that is more strongly associated 278 As discussed above, we generally retain measures from the previous year’s Hospital IQR Program measure set for subsequent years’ measure sets except when we specifically propose to remove, suspend, or replace a measure. We refer readers to the FY 2011 IPPS/LTCH PPS final rule (75 FR 50185) and the FY 2015 IPPS/LTCH PPS final rule (79 FR 50203 through 50204) for more information on the criteria we consider for removing quality measures. We refer readers to the FY 2016 IPPS/LTCH PPS final rule (80 FR 49641 through 49643) for more information on the additional factors we consider in removing quality measures and the factors we consider in order to retain measures. We note in the FY 2015 IPPS/ LTCH PPS final rule (79 FR 50203 through 50204), we clarified the criteria for determining when a measure is ‘‘topped-out.’’ VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 with desired patient outcomes for the particular topic. • Factor 6. Collection or public reporting of a measure leads to negative unintended consequences other than patient harm. • Factor 7. It is not feasible to implement the measure specifications. We are not proposing to modify any existing removal factors. b. Proposed New Measure Removal Factor We are proposing to adopt an additional factor to consider when evaluating measures for removal from the Hospital IQR Program measure set: Factor 8, the costs associated with a measure outweigh the benefit of its continued use in the program. As we discuss in section I.A.2. of the preamble of this proposed rule with respect to our new ‘‘Meaningful Measures Initiative,’’ we are engaging in efforts to ensure that the Hospital IQR Program measure set continues to promote improved health outcomes for beneficiaries while minimizing the overall costs associated with the program. We believe these costs are multifaceted and include not only the burden associated with reporting, but also the costs associated with implementing and maintaining the program. We have identified several different types of costs, including, but not limited to: (1) Provider and clinician information collection burden and related cost and burden associated with the submission/reporting of quality measures to CMS; (2) the provider and clinician cost associated with complying with other quality programmatic requirements; (3) the provider and clinician cost associated with participating in multiple quality programs, and tracking multiple similar or duplicative measures within or across those programs; (4) the CMS cost associated with the program oversight of the measure, including measure maintenance and public display; and (5) the provider and clinician cost associated with compliance with other federal and/or State regulations (if applicable). For example, it may be needlessly costly and/or of limited benefit to retain or maintain a measure which our analyses show no longer meaningfully supports program objectives (for example, informing beneficiary choice or payment scoring). It may also be costly for health care providers to track confidential feedback preview reports and publicly reported information on a measure where we use the measure in more than one program. CMS may also have to expend unnecessary resources to maintain the PO 00000 Frm 00310 Fmt 4701 Sfmt 4702 specifications for the measure, as well as the tools needed to collect, validate, analyze, and publicly report the measure data. Furthermore, beneficiaries may find it confusing to see public reporting on the same measure in different programs. When these costs outweigh the evidence supporting the continued use of a measure in the Hospital IQR Program, we believe it may be appropriate to remove the measure from the Program. Although we recognize that one of the main goals of the Hospital IQR Program is to improve beneficiary outcomes by incentivizing health care providers to focus on specific care issues and making public data related to those issues, we also recognize that those goals can have limited utility where, for example, the publicly reported data (including payment determination data) are of limited use because they cannot be easily interpreted by beneficiaries to influence their choice of providers. In these cases, removing the measure from the Hospital IQR Program may better accommodate the costs of program administration and compliance without sacrificing improved health outcomes and beneficiary choice. We are proposing that we would remove measures based on this factor on a case-by-case basis. We might, for example, decide to retain a measure that is burdensome for health care providers to report if we conclude that the benefit to beneficiaries justifies the reporting burden. Our goal is to move the program forward in the least burdensome manner possible, while maintaining a parsimonious set of meaningful quality measures and continuing to incentivize improvement in the quality of care provided to patients. We are inviting public comment on our proposal to adopt an additional measure removal factor, ‘‘the costs associated with a measure outweigh the benefit of its continued use in the program,’’ beginning with the effective date of the FY 2019 IPPS/LTCH PPS final rule. We refer readers to section VIII.A.5.b. of the preamble of this proposed rule, where we are proposing to remove a number of measures based on this proposed removal factor. 5. Proposed Removal of Hospital IQR Program Measures We refer readers to section VIII.A.4. of the preamble of this proposed rule for a discussion of our current and proposed measure removal criteria. In this proposed rule, we are proposing to remove a total of 39 measures from the Hospital IQR Program across the FYs 2020, 2021, 2022, and 2023 payment E:\FR\FM\07MYP2.SGM 07MYP2 20473 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules determinations as further discussed below. a. Proposed Removal of Measure— Removal Factor 4, Performance or Improvement on a Measure Does Not Result in Better Patient Outcomes: Hospital Survey on Patient Safety Culture We are proposing to remove the Hospital Survey on Patient Safety Culture measure beginning with the CY 2018 reporting period/FY 2020 payment determination based on removal Factor 4, ‘‘performance or improvement on a measure does not result in better patient outcomes.’’ The Hospital Survey on Patient Safety Culture measure was adopted in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49662 through 49664) for the FY 2018 payment determination and subsequent years, to allow us to assess whether and which patient safety culture surveys were being utilized by hospitals and the frequency of their use. In that rule, we stated our belief that this would be a time-limited measure that would assist us in assessing the feasibility of implementing a single survey on patient safety culture in the future (80 FR 49661). When we adopted the measure, we acknowledged that we had not yet determined for how many years we would keep the measure in the Hospital IQR Program (80 FR 49664). By design, this structural measure does not provide information on patient outcomes, because hospitals are asked only whether they administer a patient safety culture survey, and therefore, does not result in better patient outcomes, removal Factor 4. Our data indicate that 98 percent of hospitals have reported they use some version of a patient safety culture survey; a large majority of hospitals (69.6 percent) that reported on the measure for the CY 2016 reporting period/FY 2018 payment determination use the AHRQ Surveys on Patient Safety Culture (SOPS).279 While we are proposing to remove this measure, the data already collected would still help inform consideration of a potential future patient safety culture measure for the Hospital IQR Program. However, at this time, we believe that the burden of reporting this measure outweighs the benefits of continued data collection. Therefore, we are proposing to remove the Hospital Survey on Patient Safety Culture measure for the CY 2018 reporting period/FY 2020 payment determination (for which the data submission period is April 1, 2019 through May 15, 2019) and subsequent years. We are inviting public comment on our proposal. b. Proposed Removal of Measures— Proposed Removal Factor 8, the Costs Associated With a Measure Outweigh the Benefit of Its Continued Use in the Program We are proposing to remove a number of measures under our proposed new removal Factor 8, the costs associated with a measure outweigh the benefit of its continued use in the program, across the FYs 2020, 2021, 2022, and 2023 payment determinations. These proposals are presented by measure type: (1) Structural measure: safe surgery checklist use; (2) patient safety; Number of hospitals Encounters FY 2017 .............................. FY 2018 .............................. daltland on DSKBBV9HB2PROD with PROPOSALS2 Payment determination CY 2015 Q1–Q4 ................ CY 2016 Q1–Q4 ................ Rate 3,201 3,195 0.961 0.968 (3) claims-based readmission; (4) claims-based mortality; (5) hip/knee complications; (6) Medicare Spending Per Beneficiary (MSPB)—Hospital (NQF #2158); (7) clinical episode-based payment; (8) chart-abstracted clinical process of care; and (9) eCQMs. These are discussed in detail below. (1) Structural Measure: Safe Surgery Checklist Use We refer readers to the FY 2013 IPPS/ LTCH PPS final rule where we adopted the Safe Surgery Checklist Use measure (77 FR 53531 through 53533). We are proposing to remove the Safe Surgery Checklist Use measure beginning with the CY 2018 reporting period/FY 2020 payment determination under proposed removal Factor 8, the costs associated with a measure outweigh the benefit of its continued use in the program. We refer readers to section VIII.A.4.b. of the preamble of this proposed rule, where we acknowledge that costs are multi-faceted and include not only the burden associated with reporting, but also the costs associated with implementing and maintaining the program. For example, we believe it may be unnecessarily costly for health care providers to report a measure for which our analyses show that there is no meaningful difference in performance or there is little room for continued improvement. Based on our review of reported data on this measure, there is no meaningful difference in performance or there is little room for continued improvement. Our analysis is captured by the table below: 75th percentile 100.00 100.00 90th percentile 100.00 100.00 Truncated COV 0.201 0.181 Based on the analysis above, the national rate of ‘‘Yes’’ response for this measure is nearly 1.0, or 100 percent, nationwide, and has remained at this level for the last two years, such that there is no distinguishable difference in hospital performance between the 75th and 90th percentiles. In addition, the truncated coefficient of variation has decreased such that it is trending towards 0.10. Our analysis indicates that performance on this measure is trending towards topped-out status, that is to say, safe surgery checklists for surgical procedures are widely in use and there is little room for improvement on this structural measure. In addition, we believe this measure is of more limited utility for internal hospital quality improvement efforts. This structural measure of hospital process determines whether a hospital utilizes a safe surgery checklist that assesses whether effective communication and safe practices are performed during three distinct perioperative periods. For the measure, hospitals indicate by ‘‘Yes’’ or ‘‘No’’ whether or not they use a safe surgery checklist for surgical procedures that includes safe surgery practices during each of the aforementioned perioperative periods. The measure does not require a hospital to report whether it uses a checklist in connection with each individual inpatient procedure. Furthermore, removal of this measure would alleviate burden to hospitals associated with reporting on this measure. We anticipate a reduction in information collection burden because 279 The Agency for Healthcare Research and Quality (AHRQ) sponsored the development of patient safety culture assessment tools for various healthcare organizations which assess patient safety culture in a health care setting. Patient safety culture is the extent to which an organization’s culture supports and promotes patient safety. The survey tools are measured by what is rewarded, supported, and accepted, expected, and accepted in an organization as it relates to patient safety. (https://www.ahrq.gov/sops/quality-patient-safety/ patientsafetyculture/). VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00311 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 20474 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules reporting on this measure takes hospitals approximately two minutes each year (77 FR 53666). As such, we believe the costs associated with reporting on this measure outweigh the associated benefits of keeping it in the Hospital IQR Program because it no longer meaningfully supports the Program objective of informing beneficiary choice since safe surgery checklists are widely in use. Therefore, we are proposing to remove the Safe Surgery Checklist Use measure beginning with the CY 2018 reporting period/FY 2020 payment determination, for which the data submission period is April 1, 2019 through May 15, 2019, under proposed removal Factor 8, the costs associated with a measure outweigh the benefit of its continued use in the program. We also refer readers to the CY 2018 OPPS/ ASC PPS final rule in which the Hospital OQR and ASCQR Programs finalized removal of the Safe Surgery Checklist Use measure beginning with the CY 2018 reporting period/CY 2020 payment determination for the Hospital OQR Program and with the CY 2019 payment determination for the ASCQR Program (82 FR 52363 through 52364; 82 FR 52571 through 52572; and 82 FR 52588 through 52589). We note that if the proposed removal Factor 8 is not finalized, removal of this measure would not be finalized. We are inviting public comment on our proposal. (2) Patient Safety Measures daltland on DSKBBV9HB2PROD with PROPOSALS2 We are proposing to remove the Patient Safety and Adverse Events Composite 280 (PSI 90) beginning with the CY 2018 reporting period/FY 2020 payment determination and five National Health and Safety Network (NHSN) hospital-acquired infection (HAI) measures beginning with the CY 2019 reporting period/FY 2021 payment determination under the proposed removal Factor 8, the costs associated with a measure outweigh the benefit of its continued use in the program. 280 We note that measure stewardship of the recalibrated version of the Patient Safety and Adverse Events Composite (PSI 90) is transitioning from AHRQ to CMS and, as part of the transition, the measure will be referred to as the CMS Recalibrated Patient Safety Indicators and Adverse Events Composite (CMS PSI 90) when it is used in CMS quality programs. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 (a) Proposed Removal for CY 2018 Reporting Period/FY 2020 Payment Determination—Patient Safety and Adverse Events Composite (PSI 90) (NQF #0531) (Adopted at 73 FR 48602, Refined at 81 FR 57128 Through 57133) We are proposing to remove PSI 90 beginning with the FY 2020 payment determination (which would use a performance period of July 1, 2016 through June 30, 2018). As PSI 90 is a claims-based measure, it uses claims and administrative data to calculate the measure without any additional data collection from hospitals. Thus, operationally, we would be able to remove the PSI 90 measure sooner than the NHSN HAI measures. Our reasons for proposing to remove this measure are discussed further below. (b) Proposed Removals for the CY 2019 Reporting Period/FY 2021 Payment Determination • National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Clostridium difficile Infection (CDI) Outcome Measure (NQF #1717) (adopted at 76 FR 51630 through 51631); • National Healthcare Safety Network (NHSN) Catheter-Associated Urinary Tract Infection (CAUTI) Outcome Measure (NQF #0138) (adopted at 76 FR 51616 through 51618); • National Healthcare Safety Network (NHSN) Central Line-Associated Bloodstream Infection (CLABSI) Outcome Measure (NQF #0139) (adopted at 75 FR 50200 through 50202); • National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Methicillin-Resistant Staphylococcus Aureus Bacteremia (MRSA) Outcome Measure (NQF # 1716) (adopted at 76 FR 51630); and • American College of Surgeons— Centers for Disease Control and Prevention (ACS–CDC) Harmonized Procedure Specific Surgical Site Infection (SSI) Outcome Measure (NQF #0753) (Colon and Abdominal Hysterectomy SSIs) (adopted at 75 FR 50200 through 50202). We are proposing to remove the CDI, CAUTI, CLABSI, MRSA Bacteremia, and Colon and Abdominal Hysterectomy SSI measures from the Hospital IQR Program beginning with the CY 2019 reporting period/FY 2021 payment determination. These measures would remain in the Hospital IQR Program until that time, and their reporting would still be tied to FY 2019 and FY 2020 payment adjustments under the Hospital IQR Program. Although we are proposing to remove these measures PO 00000 Frm 00312 Fmt 4701 Sfmt 4702 from the Hospital IQR Program, we are not proposing to remove them from the HAC Reduction Program, and they will continue to be tied to the payment adjustment under that program (section IV.J.1. of the preamble of this proposed rule). After removal from the Hospital IQR Program, these measures would continue to be reported on the Hospital Compare website under the public reporting requirements of the HAC Reduction Program. We are proposing to remove these measures beginning with the FY 2021 payment determination because hospitals already would have collected and reported data for the first three quarters of the CY 2018 reporting period for the FY 2020 payment determination by the time of publication of the FY 2019 IPPS/LTCH PPS final rule. Removing these five NHSN HAI measures in the proposed timeline would allow us to use the data already reported by hospitals in the CY 2018 reporting period for purposes of the FY 2020 payment adjustment. We are proposing to remove these six measures under proposed removal Factor 8, the costs associated with a measure outweigh the benefit of its continued use in the program. We believe that removing the PSI 90, CDI, CAUTI, CLABSI, MRSA, and Colon and Abdominal Hysterectomy SSI measures from one program would eliminate development and release of duplicative and potentially confusing CMS confidential feedback reports provided to hospitals across multiple hospital quality and value-based purchasing programs. We refer readers to section VIII.A.4.b. of the preamble of this proposed rule where we discuss examples of the costs associated with implementing and maintaining these measures for the programs. For example, it may be costly for health care providers to track the confidential feedback, preview reports, and publicly reported information on a measure where we use the measure in more than one program. Health care providers incur additional cost to monitor measure performance in multiple programs for internal quality improvement and financial planning purposes when measures are used across value-based purchasing programs. Hospitals currently review multiple feedback reports for the NHSN HAI measures from three different hospital quality programs that use three different reporting periods, which result in interpreting slightly different measure rates for the same measures (under the Hospital IQR Program, a rolling four quarters of data are used to update the Hospital Compare website; E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules under the Hospital VBP Program, 1-year periods are used for each of the baseline period and the performance period; and under the HAC Reduction Program, a 2year performance period is used). Beneficiaries may also find it confusing to see public reporting on the same measures in different programs. In addition, maintaining the specifications for the measures, as well as the tools we need to collect, validate, analyze, and publicly report the measure data result in costs to CMS. We believe the costs as discussed above outweigh the associated benefit to beneficiaries of receiving the same information from multiple programs, because that information can be captured through inclusion of these measures solely in the HAC Reduction Program. Although we are proposing to remove these six patient safety measures from the Hospital IQR Program, we continue to recognize that improving patient safety and reducing NHSN HAIs is an important quality area, and we still believe these measures provide significant data on patient safety outcomes during inpatient hospitalization. For these reasons, and as discussed below, we intend to continue to use these measures in the HAC Reduction Program. Unlike the Hospital IQR Program, performance data on measures maintained in the HAC Reduction Program are used both to assess the quality of care provided at a hospital and to calculate incentive payment adjustments for a given year of the Program based on performance. Also, the HAC Reduction Program’s incentive payment structure ties hospitals’ payment adjustments on claims paid under the IPPS to their performance on selected quality measures, including the above measures which are already included in the HAC Reduction Program, sufficiently incentivizing performance improvement on these measures among participating hospitals. By keeping the measures in the HAC Reduction Program, patients, hospitals, and the public continue to receive information about the quality of care provided with respect to these measures. We believe that removing these measures from the Hospital IQR Program, while keeping them in the HAC Reduction Program, strikes an appropriate balance of benefits in driving improvement on patient safety and costs associated with retaining these measures in more than one program, while continuing to keep patient safety improvement and reducing NHSN HAIs as high priorities. We refer readers to section IV.J.1. of the preamble of this proposed rule where VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 we discuss safety measures included in the HAC Reduction Program. As discussed in section VIII.A.4.b. of the preamble of this proposed rule, one of our main goals is to move forward in the least burdensome manner possible, while maintaining a parsimonious set of the most meaningful quality measures and continuing to incentivize improvement in the quality of care provided to patients. We believe retaining these measures in the HAC Reduction Program addresses the Meaningful Measures Initiative quality priority of making care safer by reducing harm caused in the delivery of care.281 In addition, as discussed in section I.A.2. of the preamble of this proposed rule, we believe keeping these measures in both programs no longer aligns with our goal of not adding unnecessary complexity or cost with duplicative measures across programs. Therefore, we are proposing to remove the: (1) PSI 90 measure for the FY 2020 payment determination (which applies to the performance period of July 1, 2016 through June 30, 2018) and subsequent years; and (2) CDI, CAUTI, CLABSI, MRSA, and Colon and Abdominal Hysterectomy SSI measures for the CY 2019 reporting period/FY 2021 payment determination and subsequent years. We refer readers to section IV.I.2.c.(2) of the preamble of this proposed rule, where we also are proposing to remove these same measures from the Hospital VBP Program. We note that if the proposed removal Factor 8 is not finalized, removal of this measure would not be finalized. We are inviting public comment on our proposals. (3) Claims-Based Readmission Measures We are proposing to remove the following seven claims-based readmission measures beginning with the FY 2020 payment determination: • Hospital 30-Day, All-Cause, RiskStandardized Readmission Rate (RSRR) Following Acute Myocardial Infarction (AMI) Hospitalization (NQF #0505) (READM–30–AMI) (adopted at 73 FR 68781); • Hospital 30-Day, All-Cause, RiskStandardized Readmission Rate (RSRR) Following Coronary Artery Bypass Graft (CABG) Surgery (NQF #2515) (READM– 30–CABG) (adopted at 79 FR 50220 through 50224); • Hospital 30-Day, All-Cause, RiskStandardized Readmission Rate (RSRR) 281 https://www.cms.gov/Medicare/QualityInitiatives-Patient-Assessment-Instruments/ QualityInitiativesGenInfo/MMF/General-info-SubPage.html. PO 00000 Frm 00313 Fmt 4701 Sfmt 4702 20475 Following Chronic Obstructive Pulmonary Disease (COPD) Hospitalization (NQF #1891) (READM– 30–COPD) (adopted at 78 FR 50790 through 50792); • Hospital 30-Day, All-Cause, RiskStandardized Readmission Rate (RSRR) Following Heart Failure (HF) Hospitalization (NQF #0330) (READM– 30–HF) (adopted at 73 FR 48606); • Hospital 30-Day, All-Cause, RiskStandardized Readmission Rate (RSRR) Following Pneumonia Hospitalization (NQF #0506) (READM–30–PN) (adopted at 73 FR 68780 through 68781); • Hospital-Level 30-Day, All-Cause, Risk-Standardized Readmission Rate (RSRR) Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) (NQF #1551) (READM–30–THA/TKA) (adopted at 77 FR 53519 through 53521); and • 30-Day Risk-Standardized Readmission Rate Following Stroke Hospitalization (READM–30–STK) (adopted at 78 FR 50794 through 50798). We are proposing to remove READM– 30–AMI, READM–30–CABG, READM– 30–COPD, READM–30–HF, READM– 30–PN, and READM–30–THA/TKA under proposed removal Factor 8, the costs associated with a measure outweigh the benefit of its continued use in the program. (The READM–30– STK measure is discussed further below.) We believe removing these measures from the Hospital IQR Program would eliminate costs associated with implementing and maintaining these measures for the program, and in particular, development and release of duplicative and potentially confusing CMS confidential feedback reports provided to hospitals across multiple hospital quality and value-based purchasing programs. We refer readers to section VIII.A.4.b. of the preamble of this proposed rule where we discuss examples of the costs associated with implementing and maintaining these measures for the programs. For example, it may be costly for health care providers to track the confidential feedback, preview reports, and publicly reported information on a measure where we use the measure in more than one program. Health care providers incur additional cost to monitor measure performance in multiple programs for internal quality improvement and financial planning purposes when measures are used across value-based purchasing programs. Beneficiaries may also find it confusing to see public reporting on the same measures in different programs. In addition, maintaining the specifications E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20476 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules for the measures, as well as the tools we need to analyze and publicly report the measure data result in costs to CMS. We believe the costs as described above outweigh the associated benefit to beneficiaries of receiving the same information from multiple programs, because that information can be captured through inclusion of these measures solely in the Hospital Readmissions Reduction Program. We believe the benefit to beneficiaries of keeping this measure in the Hospital IQR Program is limited because the public would continue to receive measure information via another CMS quality program. Because we continue to believe these measures provide important data on patient outcomes following inpatient hospitalization (addressing the Meaningful Measures Initiative quality priority of promoting effective communication and coordination of care), we will continue to use these measures in the Hospital Readmissions Reduction Program. By keeping the measures in the Hospital Readmissions Reduction Program, patients, hospitals, and the public would continue to receive information about the quality of care provided with respect to these measures. Unlike the Hospital IQR Program, performance data on measures maintained in the Hospital Readmissions Reduction Program are used both to assess the quality and value of care provided at a hospital and to calculate incentive payment adjustments for a given year of the program based on performance. The Hospital Readmissions Reduction Program’s incentive payment structure ties hospitals’ payment adjustments on claims paid under the IPPS to their performance on selected quality measures, including the above measures which are already in the Hospital Readmissions Reduction Program, sufficiently incentivizing performance improvement on these measures among participating hospitals. As discussed in section VIII.A.4.b. of the preamble of this proposed rule, one of our main goals is to move the program forward in the least burdensome manner possible, while maintaining a parsimonious set of the most meaningful quality measures and continuing to incentivize improvement in the quality of care provided to patients, and we believe removing these measures from the Hospital IQR Program is the best way to achieve this. In addition, as discussed in section I.A.2. of the preamble of this proposed rule, we believe keeping these measures in both programs no longer aligns with our goal of not adding VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 unnecessary complexity or cost with duplicative measures across programs. Furthermore, we are proposing to remove the READM–30–STK measure under proposed removal Factor 8, the costs associated with a measure outweigh the benefit of its continued use in the program. The READM–30– STK measure collects important hospital-level, risk-standardized readmission rates following inpatient hospitalizations for strokes (78 FR 50794). However, these data also are captured in the Hospital-Wide AllCause Unplanned Readmission Measure (HWR) adopted into the Hospital IQR Program in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53521 through 53528), because that measure comprises a single summary score, derived from the results of different models for each of the following specialty cohorts: medicine; surgery/gynecology; cardiorespiratory; cardiovascular; and neurology (77 FR 53522). These cohorts cover conditions and procedures defined by the AHRQ CCS, which collapsed more than 17,000 different ICD–9–CM diagnoses and procedure codes into 285 clinicallycoherent, mutually-exclusive condition categories and 231 mutually-exclusive procedure categories (77 FR 53525). Readmission rates following inpatient hospitalizations for strokes are captured in that information, specifically, the neurology cohort. We believe that the costs associated with interpreting the requirements for two measures with overlapping data points outweigh the benefit to beneficiaries of the additional information provided by this measure, because the measure data are already captured within another measure in the Hospital IQR Program. Also, maintaining the specifications for this measure, as well as the tools we need to analyze and publicly report the measure data result in costs to CMS. Thus, removing the READM–30–STK measure would help to reduce duplicative data and produce a more harmonized and streamlined measure set. As discussed in section VIII.A.4.b. of the preamble of this proposed rule, one of our main goals is to move forward in the least burdensome manner possible, while maintaining a parsimonious set of the most meaningful quality measures and continuing to incentivize improvement in the quality of care provided to patients, and we believe removing this measure from the Hospital IQR Program is the best way to do that. We recognize, however, that including condition- and procedurespecific clinical quality measure data can provide hospitals with actionable feedback to better equip them to implement targeted improvements in PO 00000 Frm 00314 Fmt 4701 Sfmt 4702 comparison to an overall quality measure. In addition, condition- and procedure-specific measures can provide valuable data to specialty societies by clearly assessing performance for their specialty, and may be valuable to persons and families who prefer information on certain conditions and procedures relevant to them. The Hospital-Wide Readmission measure, unlike condition- and procedurespecific measures, also requires improvement in quality across multiple service lines to produce improvement in the overall rate, which may give the perception of slower or smaller gains in hospital quality. Conversely, hospitals would still have a strong motivation to improve stroke readmissions performance if they want to improve their overall performance on the Hospital-Wide Readmission measure posted on Hospital Compare. Therefore, we are proposing to remove the READM–30–AMI, READM– 30–CABG, READM–30–COPD, READM– 30–HF, READM–30–PN, READM–30– THA/TKA, and READM–30–STK measures for the FY 2020 payment determination (which would apply to the performance period of July 1, 2015 through June 30, 2018) and subsequent years. We note that if the proposed removal Factor 8 is not finalized, removal of these measures would not be finalized. We are inviting public comment on our proposal to remove these measures from the Hospital IQR Program as well as feedback on whether there are reasons to retain one or more of the measures in the Hospital IQR Program. (4) Claims-Based Mortality Measures We are proposing to remove five claims-based mortality measures across the FYs 2020, 2021, and 2022 payment determinations and subsequent years: • Hospital 30-Day, All-Cause, RiskStandardized Mortality Rate Following Acute Myocardial Infarction (AMI) Hospitalization (NQF #0230) (MORT– 30–AMI) beginning with the FY 2020 payment determination (adopted at 71 FR 68206); • Hospital 30-Day, All-Cause, RiskStandardized Mortality Rate Following Heart Failure (HF) Hospitalization Surgery (NQF #0229) (MORT–30–HF) beginning with the FY 2020 payment determination (adopted at 71 FR 68206); • Hospital 30-Day, All-Cause, RiskStandardized Mortality Rate Following Chronic Obstructive Pulmonary Disease (COPD) (NQF #1893) (MORT–30–COPD) beginning with the FY 2021 payment determination (adopted at 78 FR 50792 through 50794); E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules • Hospital 30-Day, All-Cause, RiskStandardized Mortality Rate Following Pneumonia Hospitalization (NQF #0468) (MORT–30–PN) beginning with the FY 2021 payment determination (adopted at 72 FR 47351); and, • Hospital 30-Day, All-Cause, RiskStandardized Mortality Rate Following Coronary Artery Bypass Graft (CABG) Surgery (NQF #2515) (MORT–30– CABG) beginning with the FY 2022 payment determination (adopted at 79 FR 50224 through 50227). We are proposing to remove MORT– 30–AMI, MORT–30–HF, MORT–30– COPD, MORT–30–PN, and MORT–30– CABG under proposed removal Factor 8, the costs associated with a measure outweigh the benefit of its continued use in the program. Removing these measures from the Hospital IQR Program would eliminate costs associated with implementing and maintaining these measures for the program, and in particular, development and release of duplicative and potentially confusing CMS confidential feedback reports provided to hospitals for both the Hospital IQR and Hospital VBP Programs. We refer readers to section VIII.A.4.b. of this proposed rule where we discuss examples of the costs associated with implementing and maintaining these measures for the programs. For example, it may be costly for health care providers to track the confidential feedback, preview reports, and publicly reported information on a measure where we use the measure in more than one program. Health care providers incur additional cost to monitor measure performance in multiple programs for internal quality improvement and financial planning purposes when measures are used across value-based purchasing programs. Beneficiaries may also find it confusing to see public reporting on the same measures using different reporting periods in different programs. In addition, maintaining the specifications for the measures, as well as the tools we need to analyze and publicly report the measure data result in costs to CMS. We believe the costs associated with reviewing multiple feedback reports on these measures for more than one program outweigh the associated benefit to beneficiaries of receiving the same information from multiple programs, because that information can be captured through inclusion of these measures solely in the Hospital VBP Program. We continue to believe these measures provide important data on patient outcomes following inpatient hospitalization (addressing the Meaningful Measures Initiative quality VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 priority of promoting effective communication and coordination of care), which is why we will continue to use these measures in the Hospital VBP Program. Unlike the Hospital IQR Program, performance data on measures maintained in the Hospital VBP Program are used both to assess the quality and value of care provided at a hospital and to calculate incentive payment adjustments for a given year of the program based on performance. The Hospital VBP Program’s incentive payment structure ties hospitals’ payment adjustments on claims paid under the IPPS to their performance on selected quality measures, including the above listed measures, sufficiently incentivizing performance improvement on these measures among participating hospitals. By keeping the measures in the Hospital VBP Program, patients, hospitals, and the public continue to receive information about the quality of care provided with respect to these measures. As discussed in section VIII.A.4.b. of the preamble of this proposed rule, one of our main goals is to move forward in the least burdensome manner possible, while maintaining a parsimonious set of the most meaningful quality measures and continuing incentivize improvement in the quality of care provided to patients, and we believe removing these measures from the Hospital IQR Program is the best way to achieve that goal. In addition, as discussed in section I.A.2. of the preamble of this proposed rule, we believe keeping these measures in both programs no longer aligns with our goal of not adding unnecessary complexity or cost with duplicative measures across programs. We note that the Hospital VBP Program has adopted the MORT–30– COPD measure beginning with the FY 2021 program year (80 FR 49558), the MORT–30–PN measure (modified with the expanded cohort) beginning with the FY 2021 program year (81 FR 56996), and the MORT–30–CABG measure beginning with the FY 2022 program year (81 FR 56998). Therefore, we are proposing to stagger the beginning date of the removals of these measures from the Hospital IQR Program to avoid a gap in public reporting of measure data. For the Hospital IQR Program, we are proposing to remove the: (1) MORT–30–AMI and MORT–30–HF measures for the FY 2020 payment determination (which would use a performance period of July 1, 2015 through June 30, 2018) and subsequent years; (2) MORT–30–COPD and MORT– 30–PN measures for the FY 2021 payment determination (which would PO 00000 Frm 00315 Fmt 4701 Sfmt 4702 20477 use a performance period of July 1, 2016 through June 30, 2019) and subsequent years; and (3) MORT–30–CABG measure for the FY 2022 payment determination (which would use a performance period of July 1, 2017 through June 30, 2020) and subsequent years. We note that if the proposed removal Factor 8 is not finalized, removal of these measures would not be finalized. We are inviting public comment on our proposal. (5) Hospital-Level Risk-Standardized Complication Rate (RSCR) Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) (NQF #1550) (Hip/Knee Complications) Measure We are proposing to remove one complications measure, Hospital-level Risk-Standardized Complication Rate (RSCR) Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) (NQF #1550) (Hip/Knee Complications), beginning with the FY 2023 payment determination, under proposed removal Factor 8, the costs associated with a measure outweigh the benefit of its continued use in the program. We refer readers to FY 2013 IPPS/LTCH PPS final rule (77 FR 53516 through 53518), where we adopted this measure. We believe that removing this measure from the Hospital IQR Program would eliminate costs associated with implementing and maintaining the measure for the program, and in particular, development and release of duplicative and potentially confusing CMS confidential feedback reports provided to hospitals across multiple hospital quality and value-based purchasing programs. We refer readers to section VIII.A.4.b. of the preamble of this proposed rule where we discuss examples of the costs associated with implementing and maintaining these measures for the programs. For example, it may be costly for health care providers to track the confidential feedback, preview reports, and publicly reported information on this measure as we also use the measure in the Hospital VBP Program and the Comprehensive Care for Joint Replacement model (CJR model). Health care providers incur additional cost to monitor measure performance in multiple programs for internal quality improvement and financial planning purposes when measures are used across value-based purchasing programs. Beneficiaries may also find it confusing to see public reporting on the same measure in different programs. In addition, maintaining the specifications for the measure, as well as the tools we need to E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20478 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules analyze and publicly report the measure data result in cost to CMS. We believe the costs as discussed above outweigh the associated benefit to beneficiaries of receiving the same information from more than one program, because that information can be captured through inclusion of this measure in the Hospital VBP Program. As discussed in section VIII.A.4.b. of the preamble of this proposed rule, one of our main goals is to move the program forward in the least burdensome manner possible, while maintaining a parsimonious set of the most meaningful quality measures and continuing to incentivize improvement in the quality of care provided to patients, and we believe removing this measure from the Hospital IQR Program is the best way to achieve this goal. We believe retaining the Hip/Knee Complications measure in both the Hospital IQR Program and the Hospital VBP Program no longer aligns with our current goal of not adding unnecessary complexity or cost with duplicative measures across programs, as stated in section I.A.2. of the preamble of this proposed rule. We continue to believe this measure provides important data on patient outcomes following inpatient hospitalization (addressing the Meaningful Measures Initiative quality priority of promoting effective treatment), which is why we will continue to use this measure in the Hospital VBP Program. Unlike the Hospital IQR Program, performance data on measures maintained in the Hospital VBP Program are used both to assess the quality and value of care provided at a hospital and to calculate incentive payment adjustments for a given year of the program based on performance. The Hospital VBP Program’s incentive payment structure ties hospitals’ payment adjustments on claims paid under the IPPS to their performance on selected quality measures, including the Hip/Knee Complications measure, sufficiently incentivizing performance improvement on this measure among participating hospitals. By keeping the measure in the Hospital VBP Program, patients, hospitals, and the public continue to receive information about the quality of care provided with respect to this measure. Therefore, we are proposing to remove the Hip/Knee Complications measure from the Hospital IQR Program beginning with the FY 2023 payment determination (which applies to the performance period of April 1, 2018 through March 31, 2021) and subsequent years. We chose to propose this timeframe because the VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Comprehensive Care for Joint Replacement model (CJR model) previously adopted the same measure and requires use of data collected under the Hospital IQR Program through the FY 2022 payment determination (which would use a performance period of April 1, 2017 through March 31, 2020) (80 FR 73507). After removal from the Hospital IQR Program, we note that this measure would continue to be reported on the Hospital Compare website under the public reporting requirements of the Hospital VBP Program. In addition, if the proposed removal Factor 8 is not finalized, removal of this measure would not be finalized. We are inviting public comment on our proposal. (6) Medicare Spending Per Beneficiary (MSPB)—Hospital Measure (NQF #2158) (MSPB) We are proposing to remove one resource use measure, Medicare Spending Per Beneficiary (MSPB)— Hospital (NQF #2158) (MSPB), from the Hospital IQR Program beginning with the FY 2020 payment determination, under the proposed removal Factor 8, the costs associated with a measure outweigh the benefit of its continued use in the program. We refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51619) where we adopted this measure. We believe that removing this measure from the Hospital IQR Program would eliminate costs associated with implementing and maintaining the measure, and in particular, development and release of duplicative and potentially confusing CMS confidential feedback reports provided to hospitals across multiple hospital quality and value-based purchasing programs. We refer readers to section VIII.A.4.b. of the preamble of this proposed rule where we discuss examples of the costs associated with implementing and maintaining these measures for the programs. For example, it may be costly for health care providers to track the confidential feedback, preview reports, and publicly reported information on this measure as we use the measure in the Hospital VBP Program. Health care providers incur additional cost to monitor measure performance in multiple programs for internal quality improvement and financial planning purposes when measures are used across value-based purchasing programs. Beneficiaries may also find it confusing to see public reporting on the same measure in different programs. In addition, maintaining the specifications for the measure, as well as the tools we need to analyze and publicly report the PO 00000 Frm 00316 Fmt 4701 Sfmt 4702 measure data result in costs to CMS. We believe the costs as discussed above outweigh the associated benefit to beneficiaries of receiving the same information from multiple programs, because that information can be captured through inclusion of this measure solely in the Hospital VBP Program. As discussed in section VIII.A.4.b. of the preamble of this proposed rule, one of our main goals is to move the program forward in the least burdensome manner possible, while maintaining a parsimonious set of the most meaningful quality measures and continuing to incentivize improvement in the quality of care provided to patients, and we believe removing this measure from the Hospital IQR Program helps achieve that goal. In addition, as discussed in section I.A.2. of the preamble of this proposed rule, we believe keeping this measure in both programs no longer aligns with our goal of not adding unnecessary complexity or cost with duplicative measures across programs. We continue to believe this measure provides important data on resource use (addressing the Meaningful Measures Initiative priority of making care affordable), which is why we will continue to use this measure in the Hospital VBP Program. Unlike the Hospital IQR Program, performance data on measures maintained in the Hospital VBP Program are used both to assess the quality and value of care provided at a hospital and to calculate incentive payment adjustments for a given year of the program based on performance. The Hospital VBP Program’s incentive payment structure ties hospitals’ payment adjustments on claims paid under the IPPS to their performance on selected quality measures, including the MSPB measure, sufficiently incentivizing performance improvement on this measure among participating hospitals. By keeping the measure in the Hospital VBP Program, patients, hospitals, and the public continue to receive information about the quality of care provided with respect to these measures. Therefore, we are proposing to remove the MSPB measure from the Hospital IQR Program beginning with the FY 2020 payment determination (which applies to the performance period of January 1, 2018 through December 31, 2018) and subsequent years. As a claims-based measure, which uses claims and administrative data to calculate the measure without any additional data collection from hospitals, we can operationally remove the MSPB measure sooner than certain E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 other measures we are proposing for removal in this proposed rule. We note that if proposed removal Factor 8 is not finalized, removal of this measure would not be finalized. We are inviting public comment on our proposal. (7) Clinical Episode-Based Payment Measures We are proposing to remove six clinical episode-based payment measures from the Hospital IQR Program beginning with the FY 2020 payment determination: • Cellulitis Clinical Episode-Based Payment Measure (Cellulitis Payment) (adopted at 80 FR 49664 through 49674); • Gastrointestinal Hemorrhage Clinical Episode-Based Payment Measure (GI Payment) (adopted at 80 FR 49664 through 49674); • Kidney/Urinary Tract Infection Clinical Episode-Based Payment Measure (Kidney/UTI Payment) (adopted at 80 FR 49664 through 49674); • Aortic Aneurysm Procedure Clinical Episode-Based Payment Measure (AA Payment) (adopted at 81 FR 57133 through 57142); • Cholecystectomy and Common Duct Exploration Clinical EpisodeBased Payment Measure (Chole and CDE Payment) (adopted at 81 FR 57133 through 57142); and • Spinal Fusion Clinical EpisodeBased Payment Measure (SFusion Payment) (adopted at 81 FR 57133 through 57142). We are proposing to remove the Cellulitis Payment, GI Payment, Kidney/ UTI Payment, AA Payment, Chole and CDE Payment, and SFusion Payment measures under proposed removal Factor 8, the costs associated with a measure outweigh the benefit of its continued use in the program. We refer readers to section VIII.A.4.b. of the preamble of this proposed rule where we discuss examples of the costs associated with implementing and maintaining these measures for the programs. Specifically, maintaining the specifications for the measure, as well as the tools we need to analyze and publicly report the measure data result in costs to CMS. We believe the costs associated with interpreting the requirements for multiple measures with overlapping data points outweigh the benefit to beneficiaries and providers of the additional information provided by these measures, because the measure data are already captured within the overall hospital MSPB measure, which will be retained in the Hospital VBP Program. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 These measures are clinically coherent groupings of health care services that can be used to assess providers’ resource use associated with the clinically coherent groupings (80 FR 49664). Specifically, these measures all use Part A and Part B Medicare administrative claims data from Medicare FFS beneficiaries hospitalized for a clinical issue associated with the respective clinical groupings (80 FR 49664 through 49668; 81 FR 57133 through 57140). However, these data also are captured in the MSPB measure, which uses claims data for hospital discharges, including Medicare Part A and Part B payments for services rendered to Medicare beneficiaries during the Medicare spending per beneficiary episode surrounding an index hospitalization (76 FR 51618 through 51627). Although the MSPB measure does not provide the same level of granularity that these individual measures do, the most essential data elements will be captured by and publicly reported under the MSPB measure in the Hospital VBP Program. We understand that some hospitals may appreciate receiving more granular payment measure data from individual episode-based payment measures, while other hospitals may not benefit from the use of individual measures in addition to MSPB because they do not have a sufficient number of cases for those measures to be calculated. We are proposing to remove these measures because we believe that in balancing the costs of keeping these measures in the program compared to the benefit, providers would prefer to focus their improvement efforts on total payment, rather than both total payment and the payments associated with these individual types of clinical episodes. While we are proposing to remove the MSPB measure from the Hospital IQR Program as discussed in the section above, the measure would continue to be included in the Hospital VBP Program (section IV.I.2.e. of the preamble of this proposed rule). We also note that the Hospital IQR Program will retain certain condition- and procedurespecific payment measures (specifically, focusing on patients hospitalized for heart failure, AMI, pneumonia, and elective hip and/or knee replacement procedures) with readmissions and mortality measure data for the same patient cohorts. Since the MSPB measure would still be reported for the Hospital VBP Program, patients, hospitals, and the public would continue to receive information about the data provided by these resource measures. Thus, removing these six PO 00000 Frm 00317 Fmt 4701 Sfmt 4702 20479 measures from the Hospital IQR Program would help to reduce duplicative data and produce a more harmonized and streamlined measure set. Further, and as explained above, the Hospital VBP Program’s incentive payment structure ties hospitals’ payment adjustments on claims paid under the IPPS to their performance on selected quality measures, including the MSPB measure, sufficiently incentivizing performance improvement on this measure among participating hospitals. As discussed in section VIII.A.4.b. of the preamble of this proposed rule, above, one of our main goals is to move forward in the least burdensome manner possible, while maintaining a parsimonious set of the most meaningful quality measures and continuing to incentivize improvement in the quality of care provided to patients, and we believe that removing these measures from the Hospital IQR Program helps achieve that goal. We recognize, however, that including specific episode-based payment measure data can provide hospitals with actionable feedback to better equip them to implement targeted improvements in comparison to an overall payment measure. In addition, these measures were only recently implemented in the Hospital IQR Program in the FY 2017 IPPS/LTCH PPS final rule and data have not yet become publicly available on the Hospital Compare website. However, because these episode-based payment measures are not tied directly with other clinical quality measures that could contribute to the overall picture of providers’ clinical effectiveness and efficiency, we believe that the data derived from these measures may be of lower utility to patients in deciding where to seek care, as well as to providers in gaining feedback to reduce cost and improve efficiency while maintaining high quality care; they address resource use which is not directly tied to clinical quality, unless combined with other clinical quality measures (81 FR 57133 through 57134). Therefore, we are proposing to remove the Cellulitis Payment, GI Payment, Kidney/UTI Payment, AA Payment, Chole and CDE Payment, and SFusion Payment measures for the FY 2020 payment determination (which applies to the performance period of January 1, 2018 through December 31, 2018) and subsequent years. Because these are claims-based measures, operationally, we are able to remove them sooner than certain other measures we are proposing for removal in this proposed rule. We note that if the proposed removal Factor 8 is not E:\FR\FM\07MYP2.SGM 07MYP2 20480 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules finalized, removal of these measures would not be finalized. We are inviting public comment on our proposal to remove these measures from the Hospital IQR Program as well as feedback on whether there are reasons to retain one or more of the measures in the Hospital IQR Program. (8) Chart-Abstracted Clinical Process of Care Measures In this proposed rule, we are proposing to remove the Influenza Immunization, Incidence of Potentially Preventable Venous Thromboembolism, Median Time from ED Arrival to ED Departure for Admitted ED Patients, and Admit Decision Time to ED Departure Time for Admitted Patients measures as discussed in detail below. Manual abstraction of these chart-abstracted measures is highly burdensome. We (a) Influenza Immunization Measure (NQF #1659) (IMM–2) We refer readers to the FY 2011 IPPS/ LTCH PPS final rule (75 FR 50211) where we adopted the Influenza Immunization measure (NQF #1659) (IMM–2). In this proposed rule, we are proposing to remove IMM–2 beginning with the CY 2019 reporting period/FY 2021 payment determination under Number of hospitals Encounters FY 2016 .............................. FY 2017 .............................. FY 2018 .............................. daltland on DSKBBV9HB2PROD with PROPOSALS2 Payment determination 2014 (Q1–Q4) .................... 2015 (Q1–Q4) .................... 2016 (Q1–Q4) .................... Our topped-out analysis shows that administration of the influenza vaccination to admitted patients is widely in practice and there is little room for improvement. We believe that hospitals will continue this practice even after the measure is removed; thus, utility in the program is limited. Moreover, we are proposing to remove this measure under proposed removal Factor 8, ‘‘the costs associated with a measure outweigh the benefit of its continued use in the program. We believe the information collection burden associated with manual chart abstraction, as discussed above, outweighs the associated benefit to beneficiaries of receiving this information, because: (1) It is topped out and there is little room for improvement (discussed above); and (2) it does not directly measure patient outcomes. As discussed in section I.A.2. of the preamble of this proposed rule, one of the goals of the Meaningful Measures Initiative is to reduce costs associated with payment policy, quality measures, documentation requirements, conditions of participation, and health information technology. Another goal of the Meaningful Measures Initiative is to utilize measures that are ‘‘outcomebased where possible.’’ IMM–2 is a process measure that tracks patients assessed and given an influenza vaccination with their consent, but does not directly measure patient outcomes. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 removal Factor 1—topped-out measure and under proposed removal Factor 8, the costs associated with a measure outweigh the benefit of its continued use in the program. Hospital performance on IMM–2 is statistically ‘‘topped-out’’—removal Factor 1. The Hospital IQR Program previously finalized two criteria for determining when a measure is ‘‘topped out’’: (1) When there is statistically indistinguishable performance at the 75th and 90th percentiles; and (2) when the measure’s truncated coefficient of variation is less than or equal to 0.10 (79 FR 50203). Our analysis indicates that performance on this measure has been topped-out for the past three payment determination years and also for Q1 and Q2 of 2017 encounters. This analysis is captured by the table below: have previously stated our intent to move away from chart-abstracted measures in order to reduce this information collection burden (78 FR 50808; 79 FR 50242; 80 FR 49693). We refer readers to our discussion below and to section XIV.B.3.b. of the preamble of this proposed rule, where we discuss the information collection burden associated with each of these measures with greater specificity. Mean 3326 3293 3258 75th percentile 90th percentile 0.9867 0.9890 0.9890 0.9965 0.9970 0.9970 0.9292 0.9372 0.9370 We recognize and agree that influenza prevention is an important public health issue. We note that the Influenza Vaccination Coverage Among Healthcare Personnel (HCP) measure (adopted at 76 FR 51631 through 51633), which assesses the percentage of healthcare personnel at a facility who receive the influenza vaccination, remains in the Hospital IQR Program. Although the HCP measure is focused on vaccination of providers and other hospital personnel and not beneficiaries, it promotes improved health outcomes among beneficiaries because: (1) Health care personnel that have received the influenza vaccination are less likely to transmit influenza to patients under their care; and (2) vaccination of health care personnel reduces the probability that hospitals may experience staffing shortages as a result of illness that would impact ability to provide adequate patient care. Thus, we believe the costs associated with reporting this chart-abstracted measure outweighs the associated benefits of keeping it in the Hospital IQR Program. We are proposing to remove the IMM– 2 measure beginning with the CY 2019 reporting period/FY 2021 payment determination (which applies to the performance period of January 1, 2019 through December 31, 2019) because hospitals already would have collected and reported data for the first three quarters of the CY 2018 reporting period PO 00000 Frm 00318 Fmt 4701 Sfmt 4702 Truncated COV 0.0560 0.0494 0.0500 for the FY 2020 payment determination by the time of publication of the FY 2019 IPPS/LTCH PPS final rule. In addition, there are operational limitations associated with updating CMS systems in time to remove this measure sooner for the CY 2018 reporting period/FY 2020 payment determination. This proposed timeline (that is, beginning with the CY 2019 reporting period/FY 2021 payment determination) would subsequently allow us to use the data already reported by hospitals in the CY 2018 reporting period for public reporting on our Hospital Compare website and for data validation. Therefore, we are proposing to remove the IMM–2 measure from the Hospital IQR Program for the CY 2019 reporting period/FY 2021 payment determination and subsequent years. We are inviting public comment on our proposal. (b) Incidence of Potentially Preventable Venous Thromboembolism Measure (VTE–6); Median Time From ED Arrival to ED Departure for Admitted ED Patients Measure (NQF #0495) (ED–1); and Admit Decision Time to ED Departure Time for Admitted Patients Measure (NQF #0497) (ED–2) We refer readers to the FY 2012 IPPS/ LTCH PPS final rule (76 FR 51634 through 51636), where we adopted the Incidence of Potentially Preventable Venous Thromboembolism measure E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules (VTE–6), and to the FY 2011 IPPS/LTCH PPS final rule (75 FR 50210 through 50211), where we adopted both the chart-abstracted version of the Median Time from ED Arrival to ED Departure for Admitted ED Patients measure (NQF #0495) (ED–1) and the Admit Decision Time to ED Departure Time for Admitted Patients measure (NQF #0497) (ED–2). In this proposed rule, we are proposing to remove VTE–6 and the chart-abstracted version of ED–1 beginning with the CY 2019 reporting period/FY 2021 payment determination; in addition, we are proposing to remove the chart-abstracted version of ED–2 beginning with the CY 2020 reporting period/FY 2022 payment determination. We are proposing to remove these three measures under proposed removal Factor 8, the costs associated with a measure outweigh the benefit of its continued use in the program. As discussed in section I.A.2. of the preamble of this proposed rule, one of the goals of our Meaningful Measures Initiative is to reduce costs associated with payment policy, quality measures, documentation requirements, conditions of participation, and health information technology. We believe the information collection burden associated with manual chart abstraction, as discussed above, outweighs the associated benefit to beneficiaries of receiving information provided by these measures because much of the information provided by these measures is available through other Program measure data (as further discussed below). Furthermore, in the case of ED–2, hospitals still would have the opportunity to submit data since the eCQM version will remain part of the Hospital IQR Program measure set. We note that in section VIII.A.5.b.(9)(c) of the preamble of this proposed rule, below, we are proposing to remove the eCQM version of ED–1, but to retain the eCQM version of ED–2 due to the continued importance of assessing ED wait times for admitted patients. Although ED–1 is an important metric for patients, ED–2 has greater clinical significance for quality improvement because it provides more actionable information such that hospitals have greater ability to allocate resources to consistently reduce the time between decision to admit and time of inpatient admission. Hospitals have somewhat less control to consistently reduce wait time between ED arrival and decision to admit, as measured by ED–1, due to the need to triage and prioritize more complex or urgent patients. Also, the Hospital OQR Program includes an ED throughput measure, OP–18: Median VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Time from ED Arrival to ED Departure for Discharged ED Patients (81 FR 79755), which publicly reports similar data as captured by ED–1. Therefore, we believe the costs to providers for submitting data on the chart-abstracted ED–1 and ED–2 measures outweigh the associated benefits of keeping the measures in the program given that other measures in the Hospital IQR Program and in other CMS hospital quality programs are able to capture actionable data on ED wait times. Furthermore, although the eCQM version of VTE–6 is not included in the Hospital IQR Program, hospitals still would have the opportunity to submit data for two other VTE related measures (eCQMs), which were already adopted in the Hospital IQR Program measure set—Venous Thromboembolism Prophylaxis (VTE–1) (NQF #0371) eCQM (adopted at 78 FR 50809) and Intensive Care Unit Venous Thromboembolism Prophylaxis (VTE–2) (NQF #0372) eCQM (adopted at 78 FR 50809). The VTE–1 eCQM assesses the number of patients who received venous thromboembolism (VTE) prophylaxis or have documentation why no VTE prophylaxis was given the day of or day after hospital admission or surgery end date for surgeries that start the day of or the day after hospital admission; the VTE–2 eCQM assesses the number of patients who received VTE prophylaxis or have documentation why no VTE prophylaxis was given on the day of or the day after the initial admission (or transfer) to the Intensive Care Unit (ICU) or surgery end date for surgeries that start the day of or the day after ICU admission (or transfer). The VTE–1 and VTE–2 measures will be retained in the Hospital IQR Program to encourage best clinical practices to those patients in this high risk population by providing prophylactic steps which will decrease the incidence of preventable VTE. In contrast, the VTE–6 measure assesses the number of patients diagnosed with confirmed VTE during hospitalization (not present at admission) who did not receive VTE prophylaxis between hospital admission and the day before the VTE diagnostic testing order date. While awareness of the occurrence of preventable VTE is valuable knowledge, the prevention of the initial occurrence is more actionable and meaningful for both providers and beneficiaries. Therefore, we believe the costs to providers of submitting data on this chart-abstracted measure outweigh its limited clinical utility given other VTE measures in the Program are able to capture more actionable data on VTE. As discussed in section VIII.A.4.b. of the preamble of this proposed rule, one PO 00000 Frm 00319 Fmt 4701 Sfmt 4702 20481 of our main goals is to move the program forward in the least burdensome manner possible, while maintaining a parsimonious set of the most meaningful quality measures and continuing to incentivize improvement in the quality of care provided to patients. Therefore, we believe removing the chart-abstracted versions of the VTE–6, ED–1, and ED–2 measures from the Hospital IQR Program measure set helps achieve that goal. We are proposing to remove the VTE– 6 measure and chart-abstracted version of the ED–1 measure beginning with the CY 2019 reporting period/FY 2021 payment determination, because hospitals already would have collected and reported data for the first three quarters of the CY 2018 reporting period for the FY 2020 payment determination by the time of publication of the FY 2019 IPPS/LTCH PPS final rule. Moreover, we would not be able to overcome operational limitations associated with updating our systems in time to support removal of the VTE–6 and chart-abstracted version of the ED– 1 measures for the CY 2018 reporting period/FY 2020 payment determination. In addition, we are proposing to remove the chart-abstracted version of the ED– 2 measure beginning with the CY 2020 reporting period/FY 2022 payment determination, because the first results from validation of ED–2 eCQM data will be available beginning with the FY 2021 payment determination. We believe it is important to keep the chart-abstracted version of ED–2 in the program until after the validated data from the eCQM version of ED–2 is available for comparative analysis to evaluate the accuracy and completeness of the eCQM data. Further, removing these three measures on the proposed timelines would allow us to use the data already reported by hospitals in the CY 2018 reporting period for public reporting on our Hospital Compare website and for data validation. Therefore, we are proposing to remove: (1) VTE–6 and the chartabstracted version of ED–1 beginning with the CY 2019 reporting period/FY 2021 payment determination; and (2) the chart-abstracted version of ED–2 beginning with the CY 2020 reporting period/FY 2022 payment determination. We note that if the proposed removal Factor 8 is not finalized, removal of these measures would not be finalized. We are inviting public comment on our proposals. (9) Proposed Removal of Electronic Clinical Quality Measures (eCQMs) In alignment with the Medicare and Medicaid Promoting Interoperability E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20482 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules Programs (previously known as the Medicare and Medicaid EHR Incentive Programs) for eligible hospitals and CAHs, we are proposing to reduce the number of electronic Clinical Quality Measures (eCQMs) in the Hospital IQR Program eCQM measure set from which hospitals must select four to report, by proposing to remove seven eCQMs (of the 15 measures currently in the measure set) beginning with the CY 2020 reporting period/FY 2022 payment determination. The seven eCQMs we are proposing to remove are: • Primary PCI Received Within 90 Minutes of Hospital Arrival (AMI–8a) (adopted at 79 FR 50246); • Home Management Plan of Care Document Given to Patient/Caregiver (CAC–3) (adopted at 79 FR 50243 through 50244); • Median Time from ED Arrival to ED Departure for Admitted ED Patients (NQF #0495) (ED–1) (adopted at 78 FR 50807 through 50710); • Hearing Screening Prior to Hospital Discharge (NQF #1354) (EHDI–1a) (adopted at 79 FR 50242); • Elective Delivery (NQF #0469) (PC– 01) (adopted at 78 FR 50807 through 50810); • Stroke Education (STK–08) (adopted at 78 FR 50807 through 50810); and, • Assessed for Rehabilitation (NQF #0441) (STK–10) (adopted at 78 FR 50807 through 50810). We are proposing to remove all seven eCQMs under proposed removal Factor 8, the costs associated with a measure outweigh the benefit of its continued use in the program. As discussed in section I.A.2. of the preamble of this proposed rule, two of the goals of our Meaningful Measures Initiative are to: (1) Reduce costs associated with payment policy, quality measures, documentation requirements, conditions of participation, and health information technology; and (2) to apply a parsimonious set of the most meaningful measures available to track patient outcomes and impact. In section VIII.A.11.d.(2) of the preamble of this proposed rule, for the CY 2019 reporting period/FY 2021 payment determination, we are proposing to extend the same eCQM reporting requirements finalized for the CY 2018 reporting period/FY 2020 payment determination, such that hospitals submit one, self-selected calendar quarter of data on four selfselected eCQMs. Thus, we anticipate the collection of information burden associated with eCQM data reporting for the CY 2019 reporting period/FY 2021 payment determination will be the same as for the CY 2018 reporting period/FY 2020 payment determination. However, VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 in section VIII.A.4.b. of the preamble of this proposed rule, we discuss our belief that costs associated with program requirements are multi-faceted and include not only the burden associated with reporting, but also the costs associated with implementing and maintaining the measures for the Program, such as staying current on clinical guidelines and maintaining measure specifications in hospitals’ EHR systems for all of the eCQMs available for use in the Hospital IQR Program. With respect to eCQMs, we believe that a coordinated reduction in the overall number of eCQMs in both the Hospital IQR and Medicare and Medicaid Promoting Interoperability Programs (previously known as the Medicare and Medicaid EHR Incentive Programs) would reduce costs and improve the quality of reported data by enabling hospitals to focus on a smaller, more specific subset of eCQMs, while still allowing hospitals some flexibility to select which eCQMs to report that best reflect their patient populations and support internal quality improvement efforts. We refer readers to the FY 2017 IPPS/LTCH PPS final rule (81 FR 57116 through 57120) where we previously removed 13 eCQMs from the eCQM measure set in order to develop a smaller, more specific subset of eCQMs. In order to move the program forward in the least burdensome manner possible, while maintaining a parsimonious set of the most meaningful quality measures and continuing to incentivize improvement in the quality of care provided to patients, we believe it is appropriate to propose to remove additional eCQMs at this time to develop an even more streamlined set of the most meaningful eCQMs for hospitals. In selecting which eCQMs to propose for removal, we considered the relative benefits and costs associated with each eCQM in the measure set. Individual eCQMs are discussed in more detail below. (a) AMI–8a We are proposing to remove AMI–8a because the costs associated with implementing and maintaining this eCQM outweigh the associated benefit to beneficiaries because too few hospitals select to report on this measure. Only a single hospital reported on this measure for the CY 2016 reporting period. Because we do not receive enough data to conduct meaningful, statistically significant analysis, we believe the costs of maintaining this measure in the Program outweigh any associated PO 00000 Frm 00320 Fmt 4701 Sfmt 4702 benefit to patients, consumers, and providers—proposed removal Factor 8. (b) CAC–3, STK–08, and STK–10 We are proposing to remove the CAC– 3, STK–08, and STK–10 eCQMs, because we believe the costs associated with implementing and maintaining these eCQMs outweigh the benefit to beneficiaries because they do not provide information evaluating the clinical quality of the activity. Home Management Plan of Care Document Given to Patient/Caregiver (CAC–3) assesses the proportion of pediatric asthma patients discharged from an inpatient hospital stay with a Home Management Plan of Care (HMPC) document given to the pediatric asthma patient/caregiver. Stroke Education (STK–08) captures ischemic or hemorrhagic stroke patients or their caregivers who were given educational materials during the hospital stay and at discharge. Assessed for Rehabilitation (STK–10) captures ischemic or hemorrhagic stroke patients who were assessed for rehabilitation. We have issued guidance that measure developers should avoid selecting or constructing measures that can be met primarily through documentation without evaluating the clinical quality of the activity—often satisfied with a checkbox, date, or code—for example, a completed assessment, care plan, or delivered instruction.282 CAC–3, STK–08, and STK–10 are examples of those types of measures. In our effort to create a more parsimonious measure set, we assessed which measures are the least costly to report and most effective in particular priority areas, including stroke, and we believe these measures provide less benefit to providers and Beneficiaries, relative to their costs. Furthermore, if our proposals to remove the STK–08 and STK–10 eCQMs are finalized as proposed, we believe the resulting set of four stroke eCQMs (STK–02, STK–03, STK–05, and STK– 06) will be more meaningful to both patients and providers because they capture the proportion of ischemic stroke patients who are prescribed a statin medication,283 specific antithrombolytic therapy,284 and/or 282 https://www.cms.gov/Medicare/QualityInitiatives-Patient-Assessment-Instruments/MMS/ Downloads/Blueprint-120.pdf. 283 Measure specifications for STK–06 available at: https://ecqi.healthit.gov/ecqm/measures/ cms105v6. 284 Measure specifications for STK–02 and STK– 05 available at: https://ecqi.healthit.gov/ecqm/ measures/cms104v6 and https://ecqi.healthit.gov/ ecqm/measures/cms072v6. E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules anticoagulation therapy 285 at hospital discharges, which would address follow-up care and promote future preventative actions. Moreover, these remaining stroke eCQMs continue to be meaningful because ischemic strokes account for 87 percent of all strokes, and strokes are the fifth leading cause of death and disability.286 We also note that the STK–08 and STK–10 eCQMs already have been removed from The Joint Commission’s eCQM measure set.287 (c) ED–1 daltland on DSKBBV9HB2PROD with PROPOSALS2 We are proposing to remove the Median Time from ED Arrival to ED Departure for Admitted ED Patients (ED–1) eCQM because we believe that among the ED measures in the eCQM measure set, Median Time from ED Arrival to ED Departure for Admitted ED Patients (ED–2) is more effective at driving quality improvement. We note that in section VIII.A.5.b.(8)(b) of the preamble of this proposed rule, above, we are proposing to remove the chartabstracted versions of ED–1 and ED–2. As stated above, we believe that although ED–1 is an important metric for patients, ED–2 has greater clinical significance for quality improvement because it provides more actionable information—hospitals have greater ability to allocate resources and align inter-departmental communication to consistently reduce the time between decision to admit and time of inpatient admission. Hospitals have somewhat less ability to consistently reduce wait time between ED arrival and decision to admit, as measured by ED–1, due to the need to triage and prioritize more complex or urgent patients, which might inadvertently prolong ED wait times for less urgent patients. Also, the Hospital OQR Program includes an ED throughput measure, OP–18: Median Time from ED Arrival to ED Departure for Discharged ED Patients (81 FR 79755), which publicly reports similar data as captured by ED–1. Therefore, we believe the costs of implementing and maintaining the eCQM, as discussed above, outweigh the limited benefits of keeping the measure in the Program given that other measures in the Hospital IQR Program and in other CMS hospital quality programs are able to 285 Measure specifications for STK–03 available at: https://ecqi.healthit.gov/ecqm/measures/ cms071v7. 286 https://www.strokassociation.org/ STROKEORG/AboutStroke/Impact-of-StrokeStroke-statistics_UCM_310728_ Article.jsp#.WtDzy42Wzg9. 287 https://www.jointcommission.org/the_joint_ commission_measures_effective_january_1_2018/. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 capture actionable data on ED wait times. (d) EHDI–1a We are proposing to remove the EHDI–1a eCQM because we believe the costs associated with implementing and maintaining the measure, as discussed above, outweigh the benefits to beneficiaries because newborn hearing screening is already widely practiced by hospitals as the standard of care and already mandated by many State laws. Forty-three States currently have statutes or rules related to newborn hearing screening and 28 of the 43 States require babies to be screened.288 Thus, this measure may be duplicative with local regulations for most hospitals. Therefore, we believe the costs associated with the measure outweigh the associated benefits of keeping the measure in the Hospital IQR Program. (e) PC–01 We are proposing to remove the eCQM version of PC–01. Due to the importance of child and maternal health, we are not proposing to also remove the chart-abstracted version of the measure because we believe all hospitals with a sufficient number of cases should be required to report data on this measure (adopted at 77 FR 53530). Although we have expressed in section XIII.A.4.b.ii.(8) of the preamble of this proposed rule our intent to move away from the use of chart-abstracted measures in quality reporting programs, our previously adopted policy requires that hospitals should need less time to submit data for this measure because, unlike the other chart-abstracted measures, hospitals are only required to submit several aggregate counts instead of potentially numerous patient-level charts. We note that submission of this measure places less information collection burden on hospitals than the other chart-abstracted measures because of the ease with which hospitals can simply submit their aggregate counts using our Web-Based Measure Tool through the QualityNet website (77 FR 53537). In addition, if the chartabstracted version of this measure were removed from the Program, and hospitals could only elect to report the eCQM version of this measure as one of four required eCQMs, we believe that due to the low volume of patients relative to total adult hospital population, we would not receive enough data to produce meaningful 288 https://www.infanthearing.org/ehdi-ebook/ 2017_ebook/1b%20Chapter1Evolution EHDI2017.pdf. PO 00000 Frm 00321 Fmt 4701 Sfmt 4702 20483 analyses. Also, PC–01 is one of only two measures of child and maternal health in the Hospital IQR Program measure set (PC–05 eCQM being the other) and since eCQM data are not currently publicly reported, the chart-abstracted version of PC–01 is currently the only publicly reported measure of child and maternal health in the Program. However, retaining this measure in both eCQM and chart-abstracted form may be duplicative and costly. Consequently, we are proposing to remove the eCQM version of PC–01 while retaining the chart-abstracted version of PC–01. Therefore, we believe the costs associated with implementing and maintaining the eCQM, as discussed above, outweigh the associated benefit to beneficiaries because the information is already collected and publicly reported in the chart-abstracted form of this measure for the Hospital IQR Program. Thus, we are proposing to remove seven eCQMs as discussed above beginning with the CY 2020 reporting period/FY 2022 payment determination. If our proposals are finalized as proposed, the eCQMs remaining in the eCQM measure set would focus on: (a) ED wait times for admitted patients (ED–2), which addresses the Meaningful Measures Initiative quality priority of promoting effective communication and coordination of care; (b) Exclusive Breast Milk Feeding (PC–05), which addresses the Meaningful Measures Initiative quality priority that care is personalized and aligned with patients’ goals; and (c) stroke care (STK–02, STK– 03, STK–05, and STK–06) and VTE care (VTE–1 and VTE–2), which address the Meaningful Measures Initiative quality priority of promoting effective prevention and treatment. In crafting our proposals to remove these seven eCQMs from the Hospital IQR Program for the CY 2020 reporting period/FY 2022 payment determination and subsequent years, we also considered proposing to remove these seven eCQMs one year earlier, beginning with the CY 2019 reporting period/FY 2021 payment determination. We establish program requirements considering all hospitals that participate in the Hospital IQR Program at a national level, which involves a wide spectrum of capabilities and resources with respect to eCQM reporting. In establishing our eCQM policies, we must balance the needs of hospitals with variable preferences and capabilities. Overall, across the range of capabilities and resources for eCQM reporting, stakeholders have expressed that they want more time to prepare for eCQM changes. Specifically, as noted in E:\FR\FM\07MYP2.SGM 07MYP2 20484 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules the FY 2018 IPPS/LTCH PPS final rule, we have continued to receive frequent feedback (via email, webinar questions, help desk questions, and conference call discussions) from hospitals and health IT vendors about ongoing challenges of implementing eCQM reporting, including, ‘‘a need for at least one year between new EHR requirements due to the varying 6- to 24-month cycles needed for vendors to code new measures, test and institute measure updates, train hospital staff, and rollout other upgraded features (82 FR 38355).’’ We recognize that some hospitals and health IT vendors may prefer earlier removal in order to forgo maintenance on those eCQMs proposed for removal. In preparation for this proposed rule, we weighed the relative burdens and costs associated with removing these measures beginning with the CY 2019 reporting period/FY 2021 payment determination or beginning with the CY 2020 reporting period/FY 2021 payment determination. Ultimately, in order to be responsive to the previous stakeholder feedback we have received, we are proposing to remove these seven eCQMs beginning with the CY 2020 reporting period/FY 2022 payment determination and subsequent years, even if as a result some hospitals may have to perform measure maintenance on measures that would be removed the following year. We believe our proposal to remove these eCQMs would spare hospitals that have already allocated and expended resources in 2018 in preparation for the CY 2019 reporting period that begins January 1, 2019 from the burden of unnecessarily expended resources or expending additional time and resources to update their EHR systems or adjust the eCQMs they selected to report for the CY 2019 reporting period/ FY 2021 payment determination. In this proposed rule, we are striving to establish program requirements that reflect the wide range of capabilities and resources of hospitals for eCQM reporting. Our proposal would allow more advanced notice of eCQMs that would and would not be available to report for the CY 2020 reporting period/ FY 2022 payment determination. Therefore, we are proposing to remove the AMI–8a, CAC–3, ED–1, EHDI–1a, PC–01, STK–08, and STK–10 eCQMs from the Hospital IQR Program for the CY 2020 reporting period/FY 2022 payment determination and subsequent years. We refer readers to section VIII.A.5.b.(9) of the preamble of this proposed rule for our proposals to remove these seven eCQMs from the Medicare and Medicaid Promoting Interoperability Programs (previously known as the Medicare and Medicaid EHR Incentive Programs). We also refer readers to sections VIII.A.11.d. of the preamble of this proposed rule for our proposals on the eCQM reporting requirements for the CY 2019 reporting period/FY 2021 payment determination, including further discussion on the 2015 Edition of CEHRT. We are inviting public comment on our proposal as discussed above, including the specific measures proposed for removal and the timing of removal from the Program. c. Summary of Hospital IQR Program Measures Proposed for Removal In this proposed rule, we are proposing to remove a total of 39 measures from the program, as summarized in the table below: SUMMARY OF HOSPITAL IQR PROGRAM MEASURES PROPOSED FOR REMOVAL Short name First payment determination year proposed for removal Measure name NQF # Structural Patient Safety Measures Safe Surgery Checklist ................... Patient Safety Culture .................... Safe Surgery Checklist Use .................................................................. Hospital Survey on Patient Safety Culture ............................................ FY 2020 ............. FY 2020 ............. N/A N/A FY 2020 ............. FY 2021 ............. 0531 0138 FY 2021 ............. 1717 FY 2021 ............. 0139 FY 2021 ............. 0753 FY 2021 ............. 1716 FY 2020 ............. 0505 FY 2020 ............. 2515 FY 2020 ............. 1891 FY 2020 ............. 0330 FY 2020 ............. 0506 Patient Safety Measures PSI 90 ............................................. CAUTI ............................................. CDI .................................................. CLABSI ........................................... Colon and Hysterectomy SSI. Abdominal MRSA Bacteremia .......................... Patient Safety and Adverse Events Composite .................................... National Healthcare Safety Network (NHSN) Catheter-associated Urinary Tract Infection (CAUTI) Outcome Measure. National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Clostridium difficile Infection (CDI) Outcome Measure. National Healthcare Safety Network (NHSN) Central Line-Associated Bloodstream Infection (CLABSI) Outcome Measure. American College of Surgeons—Centers for Disease Control and Prevention (ACS–CDC) Harmonized Procedure Specific Surgical Site Infection (SSI) Outcome Measure. National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Methicillin-resistant Staphylococcus aureus (MRSA) Bacteremia Outcome Measure. Claims-Based Coordination of Care Measures daltland on DSKBBV9HB2PROD with PROPOSALS2 READM–30–AMI ............................ READM–30–CABG ......................... READM–30–COPD ........................ READM–30–HF .............................. READM–30–PNA ........................... VerDate Sep<11>2014 20:30 May 04, 2018 Hospital 30-Day All-Cause Risk-Standardized Readmission Rate Following Acute Myocardial Infarction (AMI) Hospitalization. Hospital 30-Day, All-Cause, Unplanned, Risk-Standardized Readmission Rate Following Coronary Artery Bypass Graft (CABG) Surgery. Hospital 30-Day, All-Cause, Risk-Standardized Readmission Rate Following Chronic Obstructive Pulmonary Disease (COPD) Hospitalization. Hospital 30-Day, All-Cause, Risk-Standardized Readmission Rate Following Heart Failure (HF) Hospitalization. Hospital 30-Day, All-Cause, Risk-Standardized Readmission Rate Following Pneumonia Hospitalization. Jkt 244001 PO 00000 Frm 00322 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20485 SUMMARY OF HOSPITAL IQR PROGRAM MEASURES PROPOSED FOR REMOVAL—Continued First payment determination year proposed for removal Short name Measure name READM–30–THA/TKA .................... Hospital-Level 30-Day, All-Cause Risk-Standardized Readmission Rate Following Elective Primary Total Hip Arthroplasty (THA) and/ or Total Knee Arthroplasty (TKA). 30-Day Risk Standardized Readmission Rate Following Stroke Hospitalization. READM–30–STK ............................ NQF # FY 2020 ............. 1551 FY 2020 ............. N/A FY 2020 ............. 0230 FY 2020 ............. 0229 FY 2021 ............. 1893 FY 2021 ............. 0468 FY 2022 ............. 2558 FY 2023 ............. 1550 FY 2020 ............. FY 2020 ............. FY 2020 ............. 2158 N/A N/A FY 2020 ............. N/A FY 2020 ............. N/A FY 2020 ............. N/A FY 2020 ............. N/A FY 2021 ............. FY 2021 ............. FY 2021 ............. 1659 + 0495 FY 2022 ............. 0497 Claims-Based Mortality Measures MORT–30–AMI ............................... MORT–30–HF ................................ MORT–30–COPD ........................... MORT–30–PN ................................ MORT–30–CABG ........................... Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Acute Myocardial Infarction (AMI) Hospitalization. Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Heart Failure (HF) Hospitalization. Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Chronic Obstructive Pulmonary Disease (COPD) Hospitalization. Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Pneumonia Hospitalization. Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Coronary Artery Bypass Graft (CABG) Surgery. Claims-Based Patient Safety Measure Hip/Knee Complications ................. Hospital-Level Risk-Standardized Complication Rate Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA). Claims-Based Payment Measures MSPB .............................................. Cellulitis Payment ........................... GI Payment ..................................... Kidney/UTI Payment ....................... AA Payment .................................... Chole and CDE Payment ............... SFusion Payment ........................... Medicare Spending Per Beneficiary (MSPB)—Hospital Measure ........ Cellulitis Clinical Episode-Based Payment Measure ............................. Gastrointestinal Hemorrhage Clinical Episode-Based Payment Measure. Kidney/Urinary Tract Infection Clinical Episode-Based Payment Measure. Aortic Aneurysm Procedure Clinical Episode-Based Payment Measure. Cholecystectomy and Common Duct Exploration Clinical EpisodeBased Payment Measure. Spinal Fusion Clinical Episode-Based Payment Measure .................... Chart-Abstracted Clinical Process of Care Measures IMM–2 ............................................. VTE–6 ............................................. ED–1 ............................................... ED–2 * ............................................. Influenza Immunization .......................................................................... Incidence of Potentially Preventable VTE [Venous Thromboembolism] Median Time from ED Arrival to ED Departure for Admitted ED Patients. Admit Decision Time to ED Departure Time for Admitted Patients ...... EHR-Based Clinical Process of Care Measures (that is, Electronic Clinical Quality Measures (eCQMs)) AMI–8a ........................................... CAC–3 ............................................ ED–1 ............................................... daltland on DSKBBV9HB2PROD with PROPOSALS2 EHDI–1a ......................................... PC–01 ............................................. STK–08 ........................................... STK–10 ........................................... Primary PCI Received Within 90 Minutes of Hospital Arrival ............... Home Management Plan of Care Document Given to Patient/Caregiver. Median Time from ED Arrival to ED Departure for Admitted ED Patients. Hearing Screening Prior to Hospital Discharge .................................... Elective Delivery .................................................................................... Stroke Education ................................................................................... Assessed for Rehabilitation ................................................................... FY 2022 ............. FY 2022 ............. + + FY 2022 ............. 0495 FY FY FY FY 1354 0469 + 0441 2022 2022 2022 2022 ............. ............. ............. ............. * Measure is proposed for removal in chart-abstracted form, but will be retained in eCQM form. + NQF endorsement removed. 6. Summary of Previously Adopted Hospital IQR Program Measures for the FY 2020 Payment Determination The table below summarizes the Hospital IQR Program measure set for VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 the FY 2020 payment determination (including previously adopted measures, but not including measures proposed for removal beginning with the FY 2020 payment determination in this proposed rule): 289 We note that measure stewardship of the recalibrated version of the Death Rate among Continued PO 00000 Frm 00323 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 20486 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules PREVIOUSLY ADOPTED MEASURES FOR THE FY 2020 PAYMENT DETERMINATION * Short name Measure name NQF # Healthcare-Associated Infection Measures CAUTI .............................................. CDI ................................................... CLABSI ............................................ Colon and Abdominal Hysterectomy SSI. HCP ................................................. MRSA Bacteremia ........................... National Healthcare Safety Network Catheter-associated Urinary Tract Infection (CAUTI) Outcome Measure. National Healthcare Safety Network Facility-wide Inpatient Hospital-onset Clostridium difficile Infection (CDI) Outcome Measure. National Healthcare Safety Network Central Line-Associated Bloodstream Infection (CLABSI) Outcome Measure. American College of Surgeons—Centers for Disease Control and Prevention Harmonized Procedure Specific Surgical Site Infection (SSI) Outcome Measure. Influenza Vaccination Coverage Among Healthcare Personnel ........................................... National Healthcare Safety Network Facility-wide Inpatient Hospital-onset Methicillin-resistant Staphylococcus aureus (MRSA) Bacteremia Outcome Measure. 0138 1717 0139 0753 0431 1716 Claims-Based Patient Safety Measures Hip/Knee Complications .................. PSI 04 .............................................. Hospital-Level Risk-Standardized Complication Rate Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA). Death Rate among Surgical Inpatients with Serious Treatable Complications 289 .............. 1550 0351 Claims-Based Mortality Measures MORT–30–CABG ............................ MORT–30–COPD ............................ MORT–30–PN ................................. MORT–30–STK ............................... Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Coronary Artery Bypass Graft (CABG) Surgery. Hospital 30-Day, All-Cause, Risk Standardized Mortality Rate Following Chronic Obstructive Pulmonary Disease (COPD) Hospitalization. Hospital 30-Day, All-Cause, Risk Standardized Mortality Rate Following Pneumonia Hospitalization. Hospital 30-Day, All-Cause, Risk Standardized Mortality Rate Following Acute Ischemic Stroke. 2558 1893 0468 N/A Claims-Based Coordination of Care Measures READM–30–HWR ........................... AMI Excess Days ............................ HF Excess Days .............................. PN Excess Days .............................. Hospital-Wide All-Cause Unplanned Readmission Measure (HWR) ................................... Excess Days in Acute Care after Hospitalization for Acute Myocardial Infarction ............... Excess Days in Acute Care after Hospitalization for Heart Failure ..................................... Excess Days in Acute Care after Hospitalization for Pneumonia ........................................ 1789 2881 2880 2882 Claims-Based Payment Measures AMI Payment ................................... HF Payment ..................................... PN Payment ..................................... THA/TKA Payment .......................... Hospital-Level, Risk-Standardized Payment Associated with a 30-Day Episode-of-Care for Acute Myocardial Infarction (AMI). Hospital-Level, Risk-Standardized Payment Associated with a 30-Day Episode-of-Care For Heart Failure (HF). Hospital-Level, Risk-Standardized Payment Associated with a 30-day Episode-of-Care For Pneumonia. Hospital-Level, Risk-Standardized Payment Associated with an Episode-of-Care for Primary Elective Total Hip Arthroplasty and/or Total Knee Arthroplasty. 2431 2436 2579 N/A Chart-Abstracted Clinical Process of Care Measures ED–1 ** ............................................. ED–2 ** ............................................. IMM–2 .............................................. PC–01 ** ........................................... Sepsis .............................................. VTE–6 .............................................. Median Time from ED Arrival to ED Departure for Admitted ED Patients ........................... Admit Decision Time to ED Departure Time for Admitted Patients ..................................... Influenza Immunization ......................................................................................................... Elective Delivery .................................................................................................................... Severe Sepsis and Septic Shock: Management Bundle (Composite Measure) .................. Incidence of Potentially Preventable Venous Thromboembolism ........................................ 0495 0497 1659 0469 0500 + daltland on DSKBBV9HB2PROD with PROPOSALS2 EHR-Based Clinical Process of Care Measures (that is, Electronic Clinical Quality Measures (eCQMs)) AMI–8a ............................................. CAC–3 ............................................. ED–1 ** ............................................. ED–2 ** ............................................. EHDI–1a .......................................... Primary PCI Received Within 90 Minutes of Hospital Arrival ............................................... Home Management Plan of Care Document Given to Patient/Caregiver ............................ Median Time from ED Arrival to ED Departure for Admitted ED Patients ........................... Admit Decision Time to ED Departure Time for Admitted Patients ..................................... Hearing Screening Prior to Hospital Discharge .................................................................... Surgical Inpatients with Serious Treatable Complications measure is transitioning from AHRQ to CMS and, as part of the transition, the measure will be referred to as the CMS Recalibrated Death Rate among Surgical Inpatients with Serious Treatable Complications (CMS PSI 04) when it is used in CMS quality programs. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00324 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 + + 0495 0497 1354 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20487 PREVIOUSLY ADOPTED MEASURES FOR THE FY 2020 PAYMENT DETERMINATION *—Continued Short name Measure name NQF # PC–01 ** ........................................... PC–05 .............................................. STK–02 ............................................ STK–03 ............................................ STK–05 ............................................ STK–06 ............................................ STK–08 ............................................ STK–10 ............................................ VTE–1 .............................................. VTE–2 .............................................. Elective Delivery .................................................................................................................... Exclusive Breast Milk Feeding .............................................................................................. Discharged on Antithrombotic Therapy ................................................................................ Anticoagulation Therapy for Atrial Fibrillation/Flutter ............................................................ Antithrombotic Therapy by the End of Hospital Day Two .................................................... Discharged on Statin Medication .......................................................................................... Stroke Education ................................................................................................................... Assessed for Rehabilitation .................................................................................................. Venous Thromboembolism Prophylaxis ............................................................................... Intensive Care Unit Venous Thromboembolism Prophylaxis ............................................... 0469 0480 0435 0436 0438 0439 + 0441 0371 0372 Patient Experience of Care Survey Measures HCAHPS .......................................... Hospital Consumer Assessment of Healthcare Providers and Systems Survey (including Care Transition Measure). 0166 (0228) * As discussed in section VIII.A.5. of the preamble of this proposed rule, we are proposing to remove 19 measures—17 claims-based measures and two structural measures—beginning with the FY 2020 payment determination. These measures, which had previously been finalized for the FY 2020 payment determination are not included in this summary table. ** Measure listed twice, as both chart-abstracted and eCQM versions. + NQF endorsement has been removed. 7. Summary of Previously Adopted Hospital IQR Program Measures for the FY 2021 Payment Determination The table below summarizes the Hospital IQR Program measure set for the FY 2021 payment determination (including previously adopted measures, but not including measures proposed for removal beginning with the FY 2021 payment determination in this proposed rule): PREVIOUSLY ADOPTED MEASURES FOR THE FY 2021 PAYMENT DETERMINATION Short name Measure name NQF # Healthcare-Associated Infection Measures HCP ................................................. Influenza Vaccination Coverage Among Healthcare Personnel ........................................... 0431 Claims-Based Patient Safety Measures Hip/Knee Complications .................. PSI 04 .............................................. Hospital-Level Risk-Standardized Complication Rate Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA). Death Rate among Surgical Inpatients with Serious Treatable Complications .................... 1550 + Claims-Based Mortality Measures MORT–30–STK ............................... Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Acute Ischemic Stroke *. N/A Claims-Based Coordination of Care Measures READM–30–HWR ........................... AMI Excess Days ............................ HF Excess Days .............................. PN Excess Days .............................. Hospital-Wide All-Cause Unplanned Readmission Measure (HWR) ................................... Excess Days in Acute Care after Hospitalization for Acute Myocardial Infarction ............... Excess Days in Acute Care after Hospitalization for Heart Failure ..................................... Excess Days in Acute Care after Hospitalization for Pneumonia ........................................ 1789 2881 2880 2882 Claims-Based Payment Measures AMI Payment ................................... HF Payment ..................................... daltland on DSKBBV9HB2PROD with PROPOSALS2 PN Payment ..................................... THA/TKA Payment .......................... Hospital-Level, Risk-Standardized Payment Associated with a 30-Day Episode-of-Care for Acute Myocardial Infarction (AMI). Hospital-Level, Risk-Standardized Payment Associated with a 30-Day Episode-of-Care For Heart Failure (HF). Hospital-Level, Risk-Standardized Payment Associated with a 30-day Episode-of-Care For Pneumonia. Hospital-Level, Risk-Standardized Payment Associated with an Episode-of-Care for Primary Elective Total Hip Arthroplasty and/or Total Knee Arthroplasty. 2431 2436 2579 N/A Chart-Abstracted Clinical Process of Care Measures ED–2 * .............................................. PC–01 * ............................................ Sepsis .............................................. VerDate Sep<11>2014 20:30 May 04, 2018 Admit Decision Time to ED Departure Time for Admitted Patients ..................................... Elective Delivery .................................................................................................................... Severe Sepsis and Septic Shock: Management Bundle (Composite Measure) .................. Jkt 244001 PO 00000 Frm 00325 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 0497 0469 0500 20488 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules PREVIOUSLY ADOPTED MEASURES FOR THE FY 2021 PAYMENT DETERMINATION—Continued Short name Measure name NQF # EHR-Based Clinical Process of Care Measures (that is, Electronic Clinical Quality Measures (eCQMs)) AMI–8a ............................................. CAC–3 ............................................. ED–1 ................................................ ED–2 * .............................................. EHDI–1a .......................................... PC–01 * ............................................ PC–05 .............................................. STK–02 ............................................ STK–03 ............................................ STK–05 ............................................ STK–06 ............................................ STK–08 ............................................ STK–10 ............................................ VTE–1 .............................................. VTE–2 .............................................. + Primary Percutaneous Coronary Intervention Received within 90 minutes of Hospital Arrival. Home Management and Plan of Care Document Given to Patient/Caregiver .................... Median Time From ED Arrival to ED Departure for Admitted ED Patients (ED–1) ............. Admit Decision Time to ED Departure Time for Admitted Patients (ED–2) ......................... Hearing Screening Prior to Hospital Discharge .................................................................... Elective Delivery .................................................................................................................... Exclusive Breast Milk Feeding .............................................................................................. Discharged on Antithrombotic Therapy ................................................................................ Anticoagulation Therapy for Atrial Fibrillation/Flutter ............................................................ Antithrombotic Therapy by the End of Hospital Day Two .................................................... Discharged on Statin Medication .......................................................................................... Stroke Education ................................................................................................................... Assessed for Rehabilitation .................................................................................................. Venous Thromboembolism Prophylaxis ............................................................................... Intensive Care Unit Thromboembolism Prophylaxis ............................................................. + 0495 0497 1354 0469 0480 0435 0436 0438 0438 + 0441 0371 0372 Patient Experience of Care Survey Measures HCAHPS .......................................... Hospital Consumer Assessment of Healthcare Providers and Systems Survey (including Care Transition Measure). 0166 (0228) * Measure listed twice, as both chart-abstracted and eCQM versions. + NQF endorsement has been removed. 8. Summary of Previously Adopted Hospital IQR Program Measures for the FY 2022 Payment Determination and Subsequent Years The table below summarizes the Hospital IQR Program measure set for the FY 2022 payment determination (including previously adopted measures, but not including measures proposed for removal beginning with the FY 2022 payment determination in this proposed rule) and subsequent years: PREVIOUSLY ADOPTED MEASURES FOR THE FY 2022 PAYMENT DETERMINATION AND SUBSEQUENT YEARS Short name Measure name NQF # Healthcare-Associated Infection Measures HCP ................................................. Influenza Vaccination Coverage Among Healthcare Personnel ........................................... 0431 Claims-Based Patient Safety Measures Hip/Knee Complications * ................ PSI 04 .............................................. Hospital-Level Risk-Standardized Complication Rate (RSCR) Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA). Death Rate among Surgical Inpatients with Serious Treatable Complications .................... 1550 0351 Claims-Based Mortality Measures MORT–30–STK ............................... Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Acute Ischemic Stroke. N/A Claims-Based Coordination of Care Measures READM–30–HWR ........................... AMI Excess Days ............................ HF Excess Days .............................. PN Excess Days .............................. Hospital-Wide All-Cause Unplanned Readmission Measure (HWR) ................................... Excess Days in Acute Care after Hospitalization for Acute Myocardial Infarction ............... Excess Days in Acute Care after Hospitalization for Heart Failure ..................................... Excess Days in Acute Care after Hospitalization for Pneumonia ........................................ 1789 2881 2880 2882 daltland on DSKBBV9HB2PROD with PROPOSALS2 Claims-Based Payment Measures AMI Payment ................................... HF Payment ..................................... PN Payment ..................................... THA/TKA Payment .......................... VerDate Sep<11>2014 20:30 May 04, 2018 Hospital-Level, Risk-Standardized Payment Associated with a 30-Day Episode-of-Care for Acute Myocardial Infarction (AMI). Hospital-Level, Risk-Standardized Payment Associated with a 30-Day Episode-of-Care For Heart Failure (HF). Hospital-Level, Risk-Standardized Payment Associated with a 30-day Episode-of-Care For Pneumonia. Hospital-Level, Risk-Standardized Payment Associated with an Episode-of-Care for Primary Elective Total Hip Arthroplasty and/or Total Knee Arthroplasty. Jkt 244001 PO 00000 Frm 00326 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 2431 2436 2579 N/A Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20489 PREVIOUSLY ADOPTED MEASURES FOR THE FY 2022 PAYMENT DETERMINATION AND SUBSEQUENT YEARS—Continued Short name Measure name NQF # Chart-Abstracted Clinical Process of Care Measures PC–01 .............................................. Sepsis .............................................. Elective Delivery .................................................................................................................... Severe Sepsis and Septic Shock: Management Bundle (Composite Measure) .................. 0469 0500 EHR-based Clinical Process of Care Measures (that is, Electronic Clinical Quality Measures (eCQMs)) ED–2 ................................................ PC–05 .............................................. STK–02 ............................................ STK–03 ............................................ STK–05 ............................................ STK–06 ............................................ VTE–1 .............................................. VTE–2 .............................................. Admit Decision Time to ED Departure Time for Admitted Patients ..................................... Exclusive Breast Milk Feeding .............................................................................................. Discharged on Antithrombotic Therapy ................................................................................ Anticoagulation Therapy for Atrial Fibrillation/Flutter ............................................................ Antithrombotic Therapy by the End of Hospital Day Two .................................................... Discharged on Statin Medication .......................................................................................... Venous Thromboembolism Prophylaxis ............................................................................... Intensive Care Unit Venous Thromboembolism Prophylaxis ............................................... 0497 0480 0435 0436 0438 0439 0371 0372 Patient Experience of Care Survey Measures HCAHPS .......................................... Hospital Consumer Assessment of Healthcare Providers and Systems Survey (including Care Transition Measure). 0166 (0228) * Proposed for removal from the Hospital IQR Program beginning with the FY 2023 payment determination, as discussed in section VIII.A.5.b.(5) of the preamble of this proposed rule. daltland on DSKBBV9HB2PROD with PROPOSALS2 9. Possible New Quality Measures, Measure Topics, and Other Future Considerations In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53510 through 53512), we outlined considerations to guide us in selecting new quality measures to adopt into the Hospital IQR Program. We also refer readers to section I.A.2. of the preamble of this proposed rule where we describe the Meaningful Measures Initiative—quality priorities that we have identified as high impact measurement areas that are relevant and meaningful to both patients and providers. In keeping with these considerations, we are inviting public comment on the potential future inclusion of a hospitalwide mortality measure in the Hospital IQR Program, specifically whether to propose to adopt a Claims-Only, Hospital-Wide, All-Cause, RiskStandardized Mortality measure or a Hybrid Hospital-Wide, All-Cause, RiskStandardized Mortality measure. We are also considering a newly specified eCQM for possible concurrent inclusion in future years of the Hospital IQR and Medicare and Medicaid Promoting Interoperability Programs (previously known as the Medicare and Medicaid EHR Incentive Programs), the Opioid Harm Electronic Clinical Quality Measure (eCQM). We also seek public input on the future development and adoption of eCQMs more generally (for example, burdens, incentives). These topics are discussed in more detail below. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 a. Potential Inclusion of Claims-Only Hospital-Wide Mortality Measure and/ or Hybrid Hospital-Wide Mortality Measure With Electronic Health Record Data (1) Background Mortality is an important health outcome that is meaningful to patients and providers, and the vast majority of patients admitted to the hospital have survival as a primary goal. However, estimates using data from 2002 to 2008 suggest that more than 400,000 patients die each year from preventable harm in hospitals.290 While we do not expect mortality rates to be zero, studies have shown that mortality within 30 days of hospital admission is related to quality of care, and that high and variable mortality rates across hospitals indicate opportunities for improvement.291 292 In addition to the harm to individuals, their families, and caregivers resulting from preventable death, there are also significant financial costs to the healthcare system associated with high and variable mortality rates. While capturing monetary savings for preventable mortality events is challenging, using two recent estimates 290 James JT. A new, evidence-based estimate of patient harms associated with hospital care. Journal of patient safety. 2013;9(3):122–128. 291 Peterson ED, Roe MT, Mulgund J, et al. Association between hospital process performance and outcomes among patients with acute coronary syndromes. JAMA. 2006;295(16):1912–1920. 292 Writing Group for the Checklist- I.C.U. Investigators, Brazilian Research in Intensive Care Network. Effect of a quality improvement intervention with daily round checklists, goal setting, and clinician prompting on mortality of critically ill patients: A randomized clinical trial. JAMA. 2016;315(14):1480–1490. PO 00000 Frm 00327 Fmt 4701 Sfmt 4702 of the number of deaths due to preventable medical errors and assuming an average of ten lost years of life per death (valued at $75,000 per year in lost quality adjusted life years), the annual direct and indirect cost of potentially preventable deaths could be as much as $73.5 to $735 billion.293 294 295 Existing condition-specific mortality measures adopted into the Hospital IQR Program support quality improvement work targeted toward patients with a set of common medical conditions, such as heart failure, acute myocardial infarction, or pneumonia. The use of these measures may have contributed to national declines in hospital mortality rates for the measured conditions and/ or procedures.296 However, a measure of hospital-wide mortality captures a hospital’s performance across a broader set of patients and across more areas of the hospital. Because more patients are included in the measure, a hospital293 Institute of Medicine. To Err is Human: Building a Safer Health System. 1999; Available at: https://iom.nationalacademies.org/∼/media/Files/ Report%20Files/1999/To-Err-is-Human/To%20 Err%20is%20Human%201999%20%20report%20 brief.pdf. 294 Classen DC, Resar R, Griffin F, et al. ‘Global trigger tool’ shows that adverse events in hospitals may be ten times greater than previously measured. Health Affairs. 2011;30(4):581–589. 295 Andel C, Davidow SL, Hollander M, Moreno DA. The economics of health care quality and medical errors. Journal of health care finance. 2012;39(1):39–50. 296 Suter LG, Li SX, Grady JN, et al. National patterns of risk-standardized mortality and readmission after hospitalization for acute myocardial infarction, heart failure, and pneumonia: update on publicly reported outcomes measures based on the 2013 release. Journal of general internal medicine. 2014;29(10):1333–1340. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20490 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules wide mortality measure also captures the performance for smaller volume hospitals that would otherwise not have sufficient cases to calculate conditionor procedure-specific mortality measures. We developed two versions of a hospital-wide, all-cause, riskstandardized mortality measure: one that is calculated using only claims data (the Claims-Only Hospital-Wide AllCause Risk Standardized Mortality Measure (hereinafter referred to as the ‘‘Claims-Only HWM measure’’)); and a hybrid version that uses claims data to define the measure cohort and a combination of data from electronic health records (EHRs) and claims for risk adjustment (Hybrid Hospital-Wide All-Cause Risk Standardized Mortality Measure (hereinafter referred to as the ‘‘Hybrid HWM measure’’)). The goal of developing hospital-wide mortality measures is to assess hospital performance on patient outcomes among patients for whom mortality is likely to present an important quality signal and those where the hospital can positively influence the outcome for the patient. Both versions of the measure address the Meaningful Measures Initiative quality priority of promoting effective treatment to reduce riskadjusted mortality. Several stakeholder groups were engaged throughout the development process, including a Technical Work Group and a Patient and Family Work Group, as well as a national, multistakeholder Technical Expert Panel consisting of a diverse set of stakeholders, including providers and patients. These groups were convened by the measure developer under contract with us and provided feedback on the measure concept, outcome, cohort, risk model variables, and reporting results. The measure developer also solicited stakeholder feedback during measure development as required in the Measures Management System (MMS) Blueprint.297 We developed a Hybrid HWM measure in addition to a Claims-Only HWM measure in order to move toward greater use of EHR data for quality measurement, and in response to stakeholder feedback that is important to include clinical data in outcome measures (80 FR 49702 through 49703). The Hybrid HWM measure is harmonized with the Claims-Only HWM measure. Both measures use the same 297 CMS Measures Management System Blueprint (Blueprint v 13.0). CMS. 2017. Available at: https:// www.cms.gov/Medicare/Quality-Initiatives-PatientAssessment-Instruments/MMS/Downloads/ Blueprint-130.pdf. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 cohort definition, outcome assessment, and claims-based risk variables (discussed in more detail below). The Hybrid HWM measure builds upon prior efforts to use of a set of core clinical data elements extracted from hospital EHRs for each hospitalized Medicare FFS beneficiary over the age of 65 years, as outlined in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49698). The core clinical data elements are data which are routinely collected on hospitalized adults, extraction from hospital EHRs is feasible, and the data can be utilized as part of specific quality outcome measures. The Hybrid HWM measure’s core clinical data elements are very similar to, but not precisely that same as, those used in the Hybrid Hospital-Wide Readmission Measure with Claims and Electronic Health Record Data measure (NQF #2879), for which we are currently collecting data from hospitals on a voluntary basis and are considering proposing as a required measure as early as the FY 2023 payment determination (82 FR 38350 through 38355). For more detail about the core clinical data elements used in the Hybrid Hospital-Wide Readmission Measure with Claims and Electronic Health Record Data measure (NQF #2879), we refer readers to our discussion in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49698 through 49704) and the Hybrid Hospital-Wide Readmission Measure with Electronic Health Record Extracted Risk Factors report (available at: https:// www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/ Measure-Methodology.html). The Claims-Only Hospital-Wide AllCause Risk Standardized Mortality Measure (MUC17–195) and the Hybrid Hospital-Wide All-Cause Risk Standardized Mortality Measure (MUC17–196) were included in a publicly available document entitled ‘‘2017 Measures Under Consideration List’’ (available at: https:// www.qualityforum.org/Project Materials.aspx?projectID=75367) and have been reviewed by the NQF MAP Hospital Workgroup. The MAP conditionally supported both measures pending NQF review and endorsement, as referenced in the 2017–2018 Spreadsheet of Final Recommendations to HHS and CMS (available at: https:// www.qualityforum.org/WorkArea/ linkit.aspx?LinkIdentifier=id&ItemID= 86972). The MAP also recommended the Hybrid HWM measure have a PO 00000 Frm 00328 Fmt 4701 Sfmt 4702 voluntary reporting period before mandatory implementation.298 The MAP noted both measures are important measures for patient safety, and that these measures could help reduce deaths due to medical errors.299 We agree with MAP stakeholder concerns regarding the need for the NQF endorsement process to ensure the measures have appropriate clinical and social risk factors in the risk adjustment models and address necessary exclusions to ensure the measure does not disproportionately penalize facilities that may treat more complex patients.300 The MAP also expressed concern regarding the potential unintended consequences of unnecessary interventions for patients at the end of life; 301 however, this issue was carefully addressed during measure development by excluding patients at the end of life and for whom survival is unlikely to be the goal of care from the measure cohort based upon the TEP and patient work group input. Specifically, the measure does not include patients enrolled in hospice in the 12 months prior to admission, on admission, or within 2 days of admission; the measure also does not include patients admitted primarily for cancer that are enrolled in hospice at any time during the admission, those admitted primarily for metastatic cancer, and those admitted for specific diagnoses with limited chances of survival. The MAP further suggested that condition-specific mortality measures may be more actionable for providers and informative for consumers.302 While service-line divisions may not be as granular as condition-specific measures, we believe a single comprehensive marker of hospital quality encourages organization-wide improvement, allows more hospitals to meet volume requirements for inclusion, offers more rapid detection of changes in performance due to performance being based on the most recent year of data available, and aligns with to the Meaningful Measures Initiative by creating the framework for stakeholders to have fewer measures to track and a single score to reference. We plan to submit both measures to NQF for endorsement proceedings as part of the Patient Safety Committee as early as 298 Measure Application Partnership. MAP 2018 Considerations for Implementing Measures in Federal Programs: Hospitals. Washington, DC: NQF; 2018. Available at: https://www.qualityforum.org/ WorkArea/linkit.aspx?LinkIdentifier=id&ItemID= 87083. 299 Ibid. 300 Ibid. 301 Ibid. 302 Ibid. E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 FY 2019, after the measures have been fully specified for use with ICD–10 data. (2) Overview of Measures Both the Claims-Only HWM measure and the Hybrid HWM measure capture hospital-level, risk-standardized mortality within 30 days of hospital admission for most conditions or procedures. The measures are reported as a single summary score, derived from the results of risk-adjustment models for 13 mutually exclusive service-line divisions (categories of admissions grouped based on discharge diagnoses or procedures), with a separate risk model for each of the 13 service-line divisions. The 13 service-line divisions include: 8 non-surgical divisions and 5 surgical divisions. The non-surgical divisions are: Cancer; cardiac; gastrointestinal; infectious disease; neurology; orthopedics; pulmonary; and renal. The surgical divisions are: Cancer; cardiothoracic; general; neurosurgery; and orthopedics. Hospitalizations are eligible for inclusion in the measure if the patient was hospitalized at a non-Federal, shortstay acute care hospital. To compare mortality performance across hospitals, the measure accounts for differences in patient characteristics (patient case mix) as well as differences in the medical services provided and procedures performed by hospitals (hospital service mix). In addition, the Hybrid HWM Measure employs a combination of administrative claims data and clinical EHR data to enhance clinical case mix adjustment with additional clinical data. Our goal is to more comprehensively measure the mortality rates of hospitals, including to improve the ability to measure mortality rates in smaller volume hospitals. The cohort definition attempts to capture as many admissions as possible for which survival would be a reasonable indicator of quality and for which adequate risk adjustment is possible. We assume survival would be a reasonable indicator of quality for admissions fulfilling two criteria: (1) Survival is most likely the primary goal of the patient when they enter the hospital; and (2) the hospital can reasonably influence the patient’s chance of survival through quality of care. These measures would provide information to hospitals that can facilitate quality improvement efforts for hospital settings, types of care, and types of patients not included in currently available condition-and procedure-specific mortality measures. Also, these measures would provide more transparency about the quality of care in clinical areas not captured in the VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 current condition- and procedurespecific measures. Additional information on the development of both the Claims-Only and Hybrid versions of the HWM measure can be found on the CMS website at: https://www.cms.gov/ Medicare/Quality-Initiatives-PatientAssessment-Instruments/MMS/PCUpdates-on-Previous-CommentPeriods.html. (3) Data Sources Both the Claims-Only and Hybrid versions of the HWM measure use Part A Medicare administrative claims data from Medicare FFS beneficiaries aged between 65 and 94 years, and use one year of data. Part A data from the 12 months prior to the index admission are used for risk adjustment. The Hybrid HWM measure uses two sources of data for the calculation of the measure: Medicare Part A claims and a set of core clinical data elements from hospitals’ EHRs. Claims and enrollment data are used to identify index admissions included in the measure cohort, in the risk-adjustment model, and to assess the 30-day mortality outcome. These data are merged with the core clinical data elements for eligible patient admissions from each hospital’s EHR. The data elements are the values for a set of vital signs and common laboratory tests collected at presentation and used for riskadjustment of patients’ severity of illness (for Medicare FFS beneficiaries who are aged between 65 and 94 years), in addition to data from claims. (4) Outcome The outcome of interest for both the Claims-Only and Hybrid versions of the HWM measure is the same, all-cause 30day mortality. We define all-cause mortality as death from any cause within 30 days of the index hospital admission date. (5) Cohort The cohorts for both the Claims-Only HWM and Hybrid versions of the HWM measure are the same. The measure cohorts consist of Medicare FFS beneficiaries, aged between 65 and 94 years, discharged from non-federal acute care hospitals. The Claims-Only HWM measure and Hybrid HWM measure were developed using ICD–9 codes. The measures are currently being updated for use with ICD–10 codes; ICD–10 updates will be completed prior to NQF submission and potential future implementation. Similar to the existing Hospital-Wide All-Cause Unplanned Readmission measure (NQF #1789), which was PO 00000 Frm 00329 Fmt 4701 Sfmt 4702 20491 adopted into the Hospital IQR Program in the FY 2013 IPPS/LTCH PPS final rule beginning with the FY 2015 payment determination (77 FR 53521 through 53528), the Claims-Only HWM measure and Hybrid HWM measure include a large and diverse number of admissions represented by thousands of included ICD–9 codes. We used the AHRQ Clinical Classification Software (CCS) 303 to group numerous diagnostic and procedural ICD–9 codes into the clinically meaningful categories defined by the AHRQ grouper. Both the ClaimsOnly and Hybrid versions of the HWM measure use those CCS categories as part of cohort specification and riskadjustment, including the 13 serviceline risk models. For the AHRQ CCSs and individual ICD–9–CM codes that define the measure development cohort, we refer readers to the measure methodology reports on our website at: https:// www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/MMS/PC-Updates-onPrevious-Comment-Periods.html. (6) Inclusion and Exclusion Criteria The inclusion and exclusion criteria for both the Claims-Only and Hybrid versions of the HWM measure are the same. For both versions of the HWM measure, the cohort currently includes Medicare FFS patients who: (1) Were enrolled in Medicare FFS Part A for the 12 months prior to the date of admission and during the index admission; (2) have not been transferred from another inpatient facility; (3) were admitted for acute care (do not have a principal discharge diagnosis of a psychiatric disease or do not have a principal discharge diagnosis of ‘‘rehabilitation care; fitting of prostheses and adjustment devices’’); (4) are aged between 65 and 94 years; (5) are not enrolled in hospice at the time of or in the 12 months prior to their index admission; (6) are not enrolled in hospice within two days of admission; (7) are without a principal diagnosis of cancer and enrolled in hospice during their index admission; (8) are without any diagnosis of metastatic cancer; and (9) are without a principal discharge diagnosis of a condition which hospitals have limited ability to influence survival, including: Anoxic brain damage; persistent vegetative state; prion diseases such as Creutzfeldt-Jakob disease, Cheyne-Stokes respiration; brain death; respiratory arrest; or 303 Clinical Classifications Software (CCS) for ICD–9–CM Fact Sheet. Accessed at: https:// www.hcup-us.ahrq.gov/toolssoftware/ccs/ ccsfactsheet.jsp. E:\FR\FM\07MYP2.SGM 07MYP2 20492 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules cardiac arrest without a secondary diagnosis of acute myocardial infarction. Both the Claims-Only and Hybrid versions of the HWM measure currently exclude the following index admissions for patients: (1) With inconsistent or unknown vital status; (2) discharged against medical advice; (3) with an admission for crush injury, burn, intracranial injury, or spinal cord injury; (4) with specific principal discharge diagnosis codes for which mortality may not be a quality signal; (5) with an admission in a CCS condition or procedure categorized as in the serviceline divisions: Other Surgical Procedures or Other Non-Surgical Conditions (this exclusion is being reassessed to include these patients in the final measure); and (6) with an admission in a low-volume CCS (within a particular service-line division), defined as equal to or less than 100 patients with that principle diagnosis across all hospitals. For both the Claims-Only and Hybrid versions of the HWM measure, each index admission is assigned to one of 13 mutually exclusive service-line divisions. For details on how each admission is assigned to a specific service-line division, and for a complete description and rationale of the inclusion and exclusion criteria, we refer readers to the methodology reports found on the CMS website at: https:// www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/MMS/PC-Updates-onPrevious-Comment-Periods.html. (7) Risk-Adjustment Both the Claims-Only and Hybrid versions of the HWM measure adjust for both case mix differences (clinical status of the patient, accounted for by adjusting for age and comorbidities) and service-mix differences (the types of conditions and procedures cared for and procedures conducted by the hospital, accounted for by the discharge condition category), and use the same patient comorbidities in the risk models. Patient comorbidities are based on inpatient hospital administrative claims during the 12 months prior to and including the index admission derived from ICD–9 codes grouped into the CMS condition categories (CMS–CCs). The measures are currently being updated for use with ICD–10 codes; ICD–10 updates will be completed prior to NQF submission and potential future adoption. The Hybrid HWM measure also includes the core clinical data elements from patients’ EHRs in the case mix adjustment. The core clinical data elements are derived from information captured in the EHR during the index admission only, and are listed below. CURRENTLY SPECIFIED CORE CLINICAL DATA ELEMENT VARIABLES Time window for first captured values Data elements Units of measurement Heart Rate ............................................................................... Systolic Blood Pressure .......................................................... Temperature ............................................................................ Oxygen Saturation .................................................................. Hemoglobin ............................................................................. Platelet .................................................................................... White Blood Cell Count ........................................................... Sodium .................................................................................... Bicarbonate ............................................................................. Creatinine ................................................................................ Beats per minute ................................................................... mmHg .................................................................................... Degrees (Fahrenheit or Celsius) ........................................... Percent .................................................................................. g/dL ........................................................................................ Count ..................................................................................... Cells/mL ................................................................................. mEq/L .................................................................................... mmol/L ................................................................................... mg/dL ..................................................................................... daltland on DSKBBV9HB2PROD with PROPOSALS2 The core clinical data elements are clinical information meant to reflect a patient’s clinical status upon arrival to the hospital. For more details on how the risk variables in each measure were chosen, we refer readers to the methodology reports found on the CMS website at: https://www.cms.gov/ Medicare/Quality-Initiatives-PatientAssessment-Instruments/MMS/PCUpdates-on-Previous-CommentPeriods.html. (8) Calculating the Risk-Standardized Mortality Rate (RSMR) The method for calculating the RSMR for both the Claims-Only and the Hybrid versions of the HWM measure is the same. Index admissions are assigned to one of 13 mutually exclusive serviceline divisions consisting of related conditions or procedures. For each service-line division, the standardized mortality ratio (SMR) is calculated as the ratio of the number of ‘‘predicted’’ deaths to the number of ‘‘expected’’ deaths at a given hospital. For each hospital, the numerator of the ratio is VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 the number of deaths within 30 days predicted based on the hospital’s performance with its observed case mix and service mix, and the denominator is the number of deaths expected based on the nation’s performance with that hospital’s case mix and service mix. This approach is analogous to a ratio of ‘‘observed’’ to ‘‘expected’’ used in other types of statistical analyses. The service-line SMRs are then pooled for each hospital using an inverse variance-weighted mean to create a hospital-wide composite SMR. The inverse variance-weighted mean can be interpreted as a weighted average of all SMRs that takes into account the precision of SMRs. The composite SMR is multiplied by the national observed mortality rate to produce the RSMR. For additional details regarding the measure specifications to calculate the RSMR, we refer readers to the Claims-Only Hospital-Wide (All-Condition, AllProcedure) Risk-Standardized Mortality Measure: Measure Methodology for Public Comment report and Hybrid PO 00000 Frm 00330 Fmt 4701 Sfmt 4702 0–2 hours. 0–2 hours. 0–2 hours. 0–2 hours. 0–24 hours. 0–24 hours. 0–24 hours. 0–24 hours. 0–24 hours. 0–24 hours. Hospital-Wide (All-Condition, AllProcedure) Risk-Standardized Mortality Measure with Electronic Health Record Extracted Risk Factors: Measure Methodology for Public Comment report, which are posted on the CMS website at: https://cms.gov/Medicare/ Quality-Initiatives-Patient-AssessmentInstruments/HospitalQualityInits/ Measure-Methodology.html. We are inviting public comment on the possible future inclusion of one or both hospital-wide mortality measures in the Hospital IQR Program simultaneously. We are also considering possible future inclusion of the Hybrid HWM measure in the Medicare and Medicaid Promoting Interoperability Programs (previously known as the Medicare and Medicaid EHR Incentive Programs) for Clinical Quality Measures (CQM) electronic reporting by eligible hospitals and CAHs. We are also inviting public comment on other aspects of the measure. Specifically, we are seeking public comment on the following: (1) Feedback about the E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules service-line division structure of the measure; (2) input on the measure testing approach, particularly if there is any additional validity testing that would be meaningful; and (3) how the measure results might be presented to the public, including ways that we could present supplemental hospital performance information in public reporting, such as service-line divisionlevel results, to create a more meaningful and usable measure and ways that we could report more information about hospitals in a No Different From National Average group (defined using 95 percent confidence intervals) to help clinicians and patients use the measure results to improve patient care and make informed choices. b. Potential Future Inclusion of the Hospital Harm—Opioid-Related Adverse Events Electronic Clinical Quality Measure (eCQM) (1) Background daltland on DSKBBV9HB2PROD with PROPOSALS2 Opioids are among the most frequently implicated medications in adverse drug events among hospitalized patients. The most serious opioidrelated adverse events include those with respiratory depression, which can lead to brain damage and death. Opioidrelated adverse events have both negative patient impacts and financial implications. These patients have been noted to have 55 percent longer lengths of stay, 47 percent higher costs, 36 percent higher risk of 30-day readmission, and 3.4 times higher payments than patients without these adverse events.304 While noting that data are limited, The Joint Commission suggested that opioid-induced respiratory arrest may contribute substantially to the 350,000–750,000 inhospital cardiac arrests annually.305 Most opioid-related adverse events are preventable. Of the opioid-related adverse drug events reported to The Joint Commission’s Sentinel Event database,306 47 percent were due to a wrong medication dose, 29 percent to improper monitoring, and 11 percent to 304 Kessler ER, Shah M, Gruschkkus SK, et al. Cost and quality implications of opioid-based postsurgical pain control using administrative claims data from a large health system: opioidrelated adverse events and their impact on clinical and economic outcomes. Pharmacotherapy. 2013; 33(4):383–391. 305 Overdyk FJ. Postoperative respiratory depression and opioids. Initiatives in Safe Patient Care. 2009; Available at: https://files.sld.cu/ anestesiologia/files/2012/01/postoperativerespiratory-depression-opioids.pdf. 306 The Joint Commission. Safe use of opioids in hospitals. The Joint Commission Sentinel Event Alert. 2012; 49:1–5. https:// www.jointcommission.org/assets/1/18/SEA_49_ opioids_8_2_12_final.pdf. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 other causes (for example, medication interactions and/or drug reactions). In addition, in an analysis of a malpractice claims database, a review of cases in which there was opioid-induced respiratory depression among postoperative surgical patients, 97 percent of these adverse events were judged preventable with better monitoring and response.307 While hospital quality interventions such as, proper dosing, adequate monitoring, and attention to potential drug interactions that can lead to overdose are key to prevention of opioid-related respiratory events, the use of these practices can vary substantially across hospitals. Administration of opioids also varies widely by hospital, ranging from 5 percent in the lowest-use hospital to 72 percent in the highest-use hospital.308 Notably, hospitals that use opioids most frequently have increased adjusted risk of severe opioid-related adverse events.309 Surgical patients are at particular risk of these adverse events because opioid administration is common in this population. For example, among a diverse group of surgical patients undergoing common surgical procedures at a large medical center, 98.6 percent received opioids and 13.6 percent of those patients experienced an opioid-related adverse drug event.310 Reduction of adverse events in surgical and non-surgical patients receiving opioids, may be enhanced by measuring the rates of these events at each hospital in a systematic, comparable way. We have developed the Hospital Harm—OpioidRelated Adverse Events eCQM to assess the rates of these adverse events as well as the variation in rates among hospitals. (2) Overview of Measure The Hospital Harm—Opioid-Related Adverse Events eCQM outcome measure assesses, by hospital, the proportion of patients who had an opioid-related adverse event. This measure addresses the Meaningful Measures Initiative quality priority of making care safer by reducing harm caused in the delivery of 307 Lee LA, Caplan RA, Stephens LS, et al. Postoperative opioid-induced respiratory depression: a closed claims analysis. Anesthesiology. 2015; 122(3):659–665. 308 Herzig SJ, Rothberg MB, Cheung M, et al. Opioid utilization and opioid-related adverse events in nonsurgical patients in US hospitals. J Hosp Med. 2014; 9(2):73–81. 309 Ibid. 310 Kessler ER, Shah M, Gruschkkus SK, et al. Cost and quality implications of opioid-based postsurgical pain control using administrative claims data from a large health system: opioidrelated adverse events and their impact on clinical and economic outcomes. Pharmacotherapy. 2013; 33(4):383–391. PO 00000 Frm 00331 Fmt 4701 Sfmt 4702 20493 care. The measure uses the administration of naloxone, an opioid reversal agent that has been used in a number of studies as an indicator of opioid-related adverse respiratory events, to indicate a harm to a patient.311 312 The intent of this measure is for hospitals to track and improve their monitoring and response to patients administered opioids during hospitalization, and to avoid harm, such as respiratory depression, which can lead to brain damage and death. This measure focuses specifically on inhospital opioid-related adverse events, rather than opioid overdose events that happen in the community and may bring a patient into the emergency department. We acknowledge that some stakeholders have expressed concern that some providers could withhold the use of naloxone, believing that may help those providers avoid poor performance on this quality measure. This measure is not intended to incentivize hospitals to not administer naloxone to patients who are in respiratory depression, but rather incentivize hospitals to closely monitor patients who receive opioids during their hospitalization to prevent respiratory depression. In addition, the aim of this measure is not to identify preventability of an individual harm instance or whether each instance of harm was an error, but rather to assess the overall rate of the harm within a hospital incorporating a definition of harm that is likely to be reduced as a result of hospital best practice. As with all quality measures we develop, testing was performed to establish the feasibility of the measure, data elements, and validity of the numerator. Clinical adjudicators reviewed medical records on each instance of a harm identified through query of the EHR data to confirm naloxone was in fact administered to reverse symptoms of opioid overdose. Additional testing is currently being performed to establish the data element validity using output from the Measure Authoring Tool (MAT) 313 in multiple hospitals, using multiple EHR systems. The MAT is a web-based tool used to develop the electronic measure 311 Eckstrand JA, Habib AS, Williamson A, et al. Computerized surveillance of opioid-related adverse drug events in perioperative care: a crosssectional study. Patient Saf Surg. 2009; 3:18. 312 Nwulu U, Nirantharakumar K, Odesanya R, et al. Improvement in the detections of adverse drug events by the use of electronic health and prescription records: an evaluation of two trigger tools. Eur J Clin Pharmacol. 2013; 69(2):255–259. 313 The Measure Authoring Tool (MAT) is a webbased tool used by measure developers in the creation of eMeasures. For additional information, we refer readers to: https:// www.emeasuretool.cms.gov/. E:\FR\FM\07MYP2.SGM 07MYP2 20494 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 specifications, which expresses complicated measure logic in several formats including a human-readable document. The electronically extracted data would be validated by comparison to medical chart abstracted data. This measure addresses the Meaningful Measures Initiative quality priority of making care safer by reducing harm caused in the delivery of care discussed in section I.A.2. of the preamble of this proposed rule. The Hospital Harm—Opioid-related Adverse Events (MUC17–210) was included in a publicly available document entitled ‘‘2017 Measures Under Consideration List’’ (available at: https:// www.qualityforum.org/ ProjectMaterials.aspx?projectID=75367). This measure was reviewed by the NQF MAP Hospital Workgroup in December 2017 and received the recommendation to refine and resubmit for consideration for programmatic inclusion, as referenced in the 2017–2018 Spreadsheet of Final Recommendations to HHS and CMS (available at: https:// www.qualityforum.org/WorkArea/ linkit.aspx?LinkIdentifier =id&ItemID=86972). For additional information and discussion of concerns and considerations raised by the MAP related to this measure, we refer readers to the December 2017 NQF MAP Hospital Workgroup meeting transcript (available at: https:// www.qualityforum.org/WorkArea/ linkit.aspx?LinkIdentifier =id&ItemID=87148). MAP stakeholders acknowledged the significant health risks associated with opioid-related adverse events, but recommended adjusting the numerator to consider the impact on chronic opioid users.314 Accordingly, we will address this issue in upcoming testing and NQF review. Regarding MAP stakeholder concern that the measure needs to be tested in more facilities to demonstrate reliability and validity, as stated previously, we are currently testing the MAT output for this measure in multiple hospitals that use a variety of EHR systems.315 We plan to submit this measure for NQF endorsement as part of the Patient Safety Committee in November 2018. (3) Cohort The measure denominator includes all patients 18 years or older discharged from an inpatient hospital encounter 314 Measure Application Partnership. MAP 2018 Considerations for Implementing Measures in Federal Programs: Hospitals. Washington, DC: NQF; 2018. Available at: https://www.qualityforum.org/ WorkArea/linkit.aspx?LinkIdentifier= id&ItemID=87083. 315 Ibid. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 during the 1-year measurement period. The measure includes inpatient admissions that were initially seen in the emergency department or in observational status and then admitted to the hospital. Interoperability Programs (previously known as the Medicare and Medicaid EHR Incentive Programs) for Clinical Quality Measures (CQM) electronic reporting by eligible hospitals and CAHs. (4) Outcome The numerator for this electronic outcome measure is the number of patients who received naloxone outside of the operating room either: (1) After 24 hours from hospital arrival; or (2) during the first 24 hours after hospital arrival with evidence of hospital opioid administration prior to the naloxone administration. We narrowed cases to exclude naloxone use in the operating room where it could be part of the sedation plan as administered by an anesthesiologist. Use of naloxone for procedures outside of the operating room (such as bone marrow biopsy) are counted in the numerator as it would indicate the patient was over sedated. These criteria exist to ensure patients are not considered to have experienced harm if they receive naloxone in the first 24 hours due to an opioid overdose that occurred in the community prior to hospital arrival. We do not require the administration of an opioid prior to naloxone after 24 hours from hospital arrival because an event occurring 24 hours after admission is most likely due to hospitals’ administration of opioids. By limiting the requirement of documented opioid administration to the first 24 hours of the encounter, we are reducing the complexity of the measure logic and therefore the burden of implementation for hospitals. For more information about the measure specifications, we refer readers to our MAT Header (measure specs) and framing document (available at: https:// www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/MMS/PublicComments.html). We are inviting public comment on the possible future inclusion of the Hospital Harm—Opioid-related Adverse Events eCQM in the Hospital IQR Program. Specifically, we are seeking public comment on whether to: (1) Initially introduce this measure as voluntary; (2) adopt the measure into the existing eCQM measure set from which hospitals currently select four to report; or (3) adopt the measure as mandatory for all hospitals to report. In addition, we are seeking public comment on ways to address any potential unintended consequences resulting from future implementation of this measure. We are also considering future adoption of this measure in the Medicare and Medicaid Promoting c. Potential Future Development and Adoption of eCQMs Generally Stakeholders continue to identify areas for improvement in the implementation of eCQMs under a variety of CMS programs, including the Hospital IQR Program and the Medicare and Medicaid Promoting Interoperability Programs (previously known as the Medicare and Medicaid EHR Incentive Programs). While effective utilization of eCQMs promises greater efficiency and more timely access to data to support quality improvement activities, various types of costs associated with these measurement approaches detract from these benefits. Moreover, some providers may have low awareness of the resources and tools available to help address issues that arise in utilizing eCQMs. Program design and operations associated with measurement aspects of these programs can be a significant source of cost for providers. Uncertainty around rapidly shifting timelines and requirements can pose significant financial and operational planning challenges for organizations, while lack of alignment across programs results in further complexity. In addition, the implementation of eCQMs within the EHR is a significant source of cost. Health IT products vary widely in the eCQMs they offer, and incorporating new measure specifications into a product, along with validation and testing of the updates, can be challenging and time-consuming. Lack of transparency from developers around data sources within the EHR, mapping, measure calculations, and reporting schemas, can hinder providers’ ability to implement eCQMs and ensure the accuracy of results. Moreover, challenges in extracting data from the EHR and integrating with other applications can serve as a source of cost for providers seeking to bring together different technology solutions and work with other third party services to complete reporting and quality improvement activities. Stakeholders have expressed support for increasing the availability of new eCQMs, developing eCQMs that focus on patient outcomes and higher impact measurement areas, and exploring how eCQMs can reduce the costs and information collection burden associated with chart-abstracted PO 00000 Frm 00332 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 measures. However, they have also identified barriers which may contribute to a lack of adequate development of eCQMs and limit their potential, including long development timelines, lack of guidelines/prioritization of and participation in eCQM development, limited field testing, and program policies that limit innovation by focusing on ‘‘least common denominator’’ approaches. We are seeking stakeholder feedback on ways that we could address these and other challenges related to eCQM use. Specifically, we are inviting comment on the following questions: (1) What aspects of the use of eCQMs are most costly to hospitals and health IT vendors?; (2) What program and policy changes, such as improved regulatory alignment, would have the greatest impact on addressing eCQM costs?; (3) What are the most significant barriers to the availability and use of new eCQMs today?; (4) What specifically would stakeholders like to see us do to reduce costs and maximize the benefits of eCQMs?; (5) How could we encourage hospitals and health IT vendors to engage in improvements to existing eCQMs?; (6) How could we encourage hospitals and health IT vendors to engage in testing new eCQMs?; (7) Would hospitals and health IT vendors be interested in or willing to participate in pilots or models of alternative approaches to quality measurement that would explore less burdensome ways of approaching quality measurement, such as sharing data with third parties that use machine learning and natural language processing to classify quality of care or other approaches?; (8) What ways could we incentivize or reward innovative uses of health IT that could reduce costs for hospitals?; and (9) What additional resources or tools would hospitals and health IT vendors like to have publicly available to support testing, implementation, and reporting of eCQMs? and how some of this disparity is related to the quality of health care.316 Among our core objectives, we aim to improve health outcomes, attain health equity for all beneficiaries, and ensure that complex patients as well as those with social risk factors receive excellent care. Within this context, reports by the Office of the Assistant Secretary for Planning and Evaluation (ASPE) and the National Academy of Medicine have examined the influence of social risk factors in our value-based purchasing programs.317 As we noted in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38404), ASPE’s report to Congress, which was required by the IMPACT Act of 2014, found that, in the context of value-based purchasing programs, dual eligibility was the most powerful predictor of poor health care outcomes among those social risk factors that they examined and tested. ASPE is continuing to examine this issue in its second report required by the IMPACT Act of 2014, which is due to Congress in the fall of 2019. In addition, as we noted in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38324), the National Quality Forum (NQF) undertook a 2year trial period in which certain new measures and measures undergoing maintenance review have been assessed to determine if risk adjustment for social risk factors is appropriate for these measures.318 The trial period ended in April 2017 and a final report is available at: https://www.qualityforum.org/SES_ Trial_Period.aspx. The trial concluded that ‘‘measures with a conceptual basis for adjustment generally did not demonstrate an empirical relationship’’ between social risk factors and the outcomes measured. This discrepancy may be explained in part by the methods used for adjustment and the limited availability of robust data on social risk factors. NQF has extended 10. Accounting for Social Risk Factors in the Hospital IQR Program In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38324 through 38326), we discussed the importance of improving beneficiary outcomes including reducing health disparities. We also discussed our commitment to ensuring that medically complex patients, as well as those with social risk factors, receive excellent care. We discussed how studies show that social risk factors, such as being near or below the poverty level as determined by HHS, belonging to a racial or ethnic minority group, or living with a disability, can be associated with poor health outcomes 316 See, for example, United States Department of Health and Human Services. ‘‘Healthy People 2020: Disparities. 2014.’’ Available at: https:// www.healthypeople.gov/2020/about/foundationhealth-measures/Disparities; or National Academies of Sciences, Engineering, and Medicine. Accounting for Social Risk Factors in Medicare Payment: Identifying Social Risk Factors. Washington, DC: National Academies of Sciences, Engineering, and Medicine 2016. 317 Department of Health and Human Services Office of the Assistant Secretary for Planning and Evaluation (ASPE), ‘‘Report to Congress: Social Risk Factors and Performance Under Medicare’s ValueBased Purchasing Programs.’’ December 2016. Available at: https://aspe.hhs.gov/pdf-report/reportcongress-social-risk-factors-and-performanceunder-medicares-value-based-purchasingprograms. 318 Available at: https://www.qualityforum.org/ SES_Trial_Period.aspx. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00333 Fmt 4701 Sfmt 4702 20495 the socioeconomic status (SES) trial,319 allowing further examination of social risk factors in outcome measures. In the FY 2018 and CY 2018 proposed rules for our quality reporting and value-based purchasing programs, we solicited feedback on which social risk factors provide the most valuable information to stakeholders and the methodology for illuminating differences in outcomes rates among patient groups within a provider that would also allow for a comparison of those differences, or disparities, across providers. Feedback we received across our quality reporting programs included encouraging CMS: To explore other factors that could be used to stratify or risk adjust the measures (beyond dual eligibility); to consider the full range of differences in patient backgrounds that might affect outcomes; to explore risk adjustment approaches; and to offer careful consideration of what type of information display would be most useful to the public. We also sought public comment on confidential reporting and future public reporting of some of our measures stratified by patient dual eligibility. In general, commenters noted that stratified measures could serve as tools for hospitals to identify gaps in outcomes for different groups of patients, improve the quality of health care for all patients, and empower consumers to make informed decisions about health care. Commenters encouraged us to stratify measures by other social risk factors such as age, income, and educational attainment. With regard to value-based purchasing programs, commenters also cautioned us to balance fair and equitable payment while avoiding payment penalties that mask health disparities or discouraging the provision of care to more medically complex patients. Commenters also noted that value-based purchasing program measure selection, domain weighting, performance scoring, and payment methodology must account for social risk. Specifically, in the FY 2018 IPPS/ LTCH PPS proposed and final rules for the Hospital Inpatient Quality Reporting (IQR) Program, we invited and received public comment on: (1) Which social risk factors provide the most valuable information to stakeholders; (2) providing hospitals with confidential feedback reports containing stratified results for certain Hospital IQR Program measures, specifically the Pneumonia Readmission measure (NQF #0506) and 319 Available at: https://www.qualityforum.org/ WorkArea/ linkit.aspx?LinkIdentifier=id&ItemID=86357. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20496 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules the Pneumonia Mortality measure (NQF #0468); (3) a potential methodology for illuminating differences in outcomes rates among patient groups within a hospital that would also allow for a comparison of those differences, or disparities, across hospitals; (4) an alternative methodology that compares performance for patient subgroups across hospitals but does not provide information on within hospital disparities and any additional suggested methodologies for calculating stratified results by patient dual eligibility status; and (5) future public reporting of these same measures stratified by patient dual eligibility status on the Hospital Compare website (82 FR 38407). For the Hospital IQR Program in general, commenters noted that stratified measures could serve as tools for hospitals to identify gaps in outcomes for different groups of patients, improve the quality of health care for all patients, and empower consumers to make informed decisions about health care (82 FR 38404). Commenters encouraged us to stratify measures by other social risk factors such as age, income, and educational attainment (82 FR 38404). As a next step, we are considering options to reduce health disparities among patient groups within and across hospitals by increasing the transparency of disparities as shown by quality measures. We are considering implementing the two above-mentioned methods to promote health equity and improve healthcare quality for patients with social risk factors. The first method (the hospital-specific disparity method) would promote quality improvement by calculating differences in outcome rates among patient groups within a hospital while accounting for their clinical risk factors. This method would also allow for a comparison of those differences, or disparities, across hospitals, so hospitals could assess how well they are closing disparities gaps compared to other hospitals. The second methodological approach is complementary and would assess hospitals’ outcome rates for subgroups of patients, such as dual eligible patients, across hospitals, allowing for a comparison among hospitals on their performance caring for their patients with social risk factors. We acknowledge the complexity of interpreting stratified outcome measures. As we discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38404 through 38409), due to this complexity, and prior to any future public reporting of stratified measure data, we plan to stratify the Pneumonia Readmission measure (NQF #0506) data by highlighting both hospital-specific disparities and readmission rates VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 specific for dual-eligible beneficiaries across hospitals for dual-eligible patients in hospitals’ confidential feedback reports beginning Fall 2018. In FY 2018 IPPS/LTCH PPS final rule (82 FR 38402 through 38409), we explained that we believe the Pneumonia Readmission measure and the Pneumonia Mortality measure are appropriate first measures to stratify, because we currently publicly report the results of both measures for a large cohort of hospitals. In addition, both measures include a large number of admissions per hospital and therefore have sufficiently large sample sizes for most hospitals to support adequate reliability of stratified calculations. As a first step, in the interest of simplicity and to minimize confusion for hospitals, we are planning to provide confidential feedback reports for the Pneumonia Readmission measure only, using both methodologies. For the future, we are considering: (1) Expanding our efforts to provide stratified data in hospital confidential feedback reports for other measures; (2) including other social risk factors beyond dual-eligible status in hospital confidential feedback reports; and (3) eventually, making stratified data publicly available on the Hospital Compare website, as mentioned in previous rules, to allow consumers and other stakeholders to view critical information about the care and outcomes of subgroups of patients with social risk factors. We believe the stratified results will provide hospitals with information that could illuminate disparities in care or outcome, which could subsequently be targeted through quality improvement efforts. We further believe that public display of this information could drive consumer choice and spark additional improvement efforts. A CMS contractor will convene a Technical Expert Panel (TEP) in the spring of 2018 to solicit feedback from stakeholders on approaches to consider for stratification for the Hospital IQR Program. We anticipate receiving additional input from hospitals when they receive confidential feedback reports of the stratified results and will encourage stakeholders to submit comments during this process. We are also considering how these methodologies may be adapted to apply to other CMS quality programs in the future. We refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38403 through 38409) for more details, where we discuss the potential stratification of certain Hospital IQR Program outcome measures. Furthermore, we continue to PO 00000 Frm 00334 Fmt 4701 Sfmt 4702 consider options to address equity and disparities in our value-based purchasing programs. We plan to continue working with ASPE, the public, and other key stakeholders on this important issue to identify policy solutions that achieve the goals of attaining health equity for all beneficiaries and minimizing unintended consequences. We are inviting public comments on these considerations for the future. 11. Form, Manner, and Timing of Quality Data Submission a. Background Sections 1886(b)(3)(B)(viii)(I) and (b)(3)(B)(viii)(II) of the Act state that the applicable percentage increase for FY 2015 and each subsequent year shall be reduced by one-quarter of such applicable percentage increase (determined without regard to sections 1886(b)(3)(B)(ix), (xi), or (xii) of the Act) for any subsection (d) hospital that does not submit data required to be submitted on measures specified by the Secretary in a form and manner, and at a time, specified by the Secretary. Previously, the applicable percentage increase for FY 2007 and each subsequent fiscal year until FY 2015 was reduced by 2.0 percentage points for subsection (d) hospitals failing to submit data in accordance with the description above. In accordance with the statute, the FY 2019 payment determination will begin the fifth year that the Hospital IQR Program will reduce the applicable percentage increase by one-quarter of such applicable percentage increase. In order to participate in the Hospital IQR Program, hospitals must meet specific procedural, data collection, submission, and validation requirements. For each Hospital IQR Program payment determination, we require that hospitals submit data on each specified measure in accordance with the measure’s specifications for a particular period of time. The data submission requirements, Specifications Manual, and submission deadlines are posted on the QualityNet website at: https://www.QualityNet.org/. The annual update of electronic clinical quality measure (eCQM) specifications and implementation guidance documents are available on the Electronic Clinical Quality Improvement (eCQI) Resource Center website at: https:// ecqi.healthit.gov/. Hospitals must register and submit quality data through the secure portion of the QualityNet website. There are safeguards in place in accordance with the HIPAA Security E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules Rule to protect patient information submitted through this website. b. Procedural Requirements The Hospital IQR Program’s procedural requirements are codified in regulation at 42 CFR 412.140. We refer readers to these codified regulations for participation requirements, as further explained by the FY 2014 IPPS/LTCH PPS final rule (78 FR 50810 through 50811) and the FY 2017 IPPS/LTCH PPS final rule (81 FR 57168). We are not proposing any changes to these procedural requirements in this proposed rule. c. Data Submission Requirements for Chart-Abstracted Measures We refer readers to the FY 2012 IPPS/ LTCH PPS final rule (76 FR 51640 through 51641), the FY 2013 IPPS/LTCH PPS final rule (77 FR 53536 through 53537), and the FY 2014 IPPS/LTCH PPS final rule (78 FR 50811) for details on the Hospital IQR Program data submission requirements for chartabstracted measures. We are not proposing any changes to the data submission requirements for chartabstracted measures in this proposed rule. daltland on DSKBBV9HB2PROD with PROPOSALS2 d. Reporting and Submission Requirements for eCQMs For a discussion of our previously finalized eCQMs and policies, we refer readers to the FY 2014 IPPS/LTCH PPS final rule (78 FR 50807 through 50810; 50811 through 50819), the FY 2015 IPPS/LTCH PPS final rule (79 FR 50241 through 50253; 50256 through 50259; and 50273 through 50276), the FY 2016 IPPS/LTCH PPS final rule (80 FR 49692 through 49698; and 49704 through 49709), the FY 2017 IPPS/LTCH PPS final rule (81 FR 57150 through 57161; and 57169 through 57172), and the FY 2018 IPPS/LTCH PPS final rule (82 FR 38355 through 38361; 38386 through 38394; 38474 through 38485; and 38487 through 38493). In this proposed rule, we are: Clarifying measure logic used in eCQM development; proposing to extend previously established eCQM reporting and submission requirements for the CY 2019 reporting period/FY 2021 payment determination; and proposing to require hospitals to use the 2015 Edition certification criteria for CEHRT beginning with the CY 2019 reporting period/FY 2021 payment determination. These matters are discussed in detail below. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 (1) Clarification of the Measure Logic Used in eCQM Development— Transition to Clinical Quality Language (CQL) Although the measure logic, which represents the lines of logic that comprise a single AND/OR statement composing each population, used in eCQM development is not generally specified through notice and comment rulemaking, we wish to notify the public that all eCQM specifications published in CY 2018 for the CY 2019 reporting period/FY 2021 payment determination and subsequent years (beginning with the Annual Update that will be published in Spring 2018 and for implementation in CY 2019) will use the Clinical Quality Language (CQL). CQL is a Health Level Seven (HL7) International standard 320 and aims to unify the expression of logic for eCQMs and Clinical Decision Support (CDS).321 CQL provides the ability to better express logic defining measure populations to improve the accuracy and clarity of eCQMs. In addition, CQL is a high-level authoring language that is intended to be human-readable and allows measure developers to express data criteria and represent it in a manner suitable for language processing. Prior to CY 2017, eCQM logic was defined by ‘‘Quality Data Model (QDM) Logic,’’ an information model that defines relationships between patients and clinical concepts in a standardized format to enable electronic quality performance measurement.322 We believe that compared to CQL, QDM logic is more complex and difficult to compute. QDM logic limits a measure developer’s ability to express the type of comparisons needed to truly evaluate outcomes of care because QDM logic cannot request patient results that indicate outcomes and assess improvement over time; in contrast, CQL’s mathematical expression logic allows this type of comparison over time and is independent of the model.323 Moreover, CQL: (1) Offers improved expressivity; (2) is more precise/unambiguous; (3) can share 320 Additional details about HL7 are available at: https://www.hl7.org/about/index.cfm?ref=nav. In addition, readers may learn more under ‘‘Where can I find more information on CQL’’ on the eCQI Resource Center website at: https:// ecqi.healthit.gov/cql. 321 Additional details about CDS is available on the eCQI Resource Center website at: https:// ecqi.healthit.gov/cds. 322 Additional details about QDM Logic are available at: https://ecqi.healthit.gov/qdm. 323 Additional details about how CQL Logic is Different from QDM Logic are available at: https:// ecqi.healthit.gov/qdm/qdm-Qs%26As#QualityData ModelQDMforusewithClinicalQualityLanguageCQL. PO 00000 Frm 00335 Fmt 4701 Sfmt 4702 20497 logic between measures; (4) allows for measure logic to be shared with CDS tools; (5) can be used with multiple information data models (for example, QDM, Fast Healthcare Interoperability Resources (FHIR) 324); and (6) simplifies calculation engine implementation.325 CQL replaces the logic expressions defined in the QDM, and QDM (beginning with v5.3 326) includes only the conceptual model for defining the data elements. Measure developers successfully tested CQL for expressing eCQMs from 2016 through 2017.327 Based on the results, the Measure Authoring Tool (MAT) 328 and the Bonnie 329 tool have been updated to use CQL. We believe replacing the measure logic used in eCQM development from QDM to CQL will enable measure developers to engineer more precise, more interoperable measures that interface with CDS tools, which in turn, will result in availability of better measures of patient outcomes for use in the Hospital IQR Program and other CMS programs. We note that utilization of CQL for the eCQMs currently available for reporting in the Hospital IQR Program measure set would not affect the intent of the measure, the numerator, denominator, or any measure exclusions or exceptions. For additional information about the CQL transition and its impact on eCQM development, we refer readers to the eCQI Resource Center website at: https://ecqi.healthit.gov/cql. 324 FHIR, developed by Health Level Seven International (HL7), is designed to enable information exchange to support the provision of healthcare in a wide variety of settings. The specification builds on and adapts modern, widely used RESTful practices to enable the provision of integrated healthcare across a wide range of teams and organizations. Additional information available at: https://hl7.org/fhir/overview-dev.html. 325 Additional details on the benefits of Clinical Quality Language (CQL) are available at: https:// ecqi.healthit.gov/system/files/Benefits_of_CQL_ May2017-508.pdf. 326 Additional details about QDM v5.3 available at: https://ecqi.healthit.gov/qdm/qdm-news-0/nowavailable-quality-data-model-qdm-v53. 327 Additional details about the Timeline for the Transition to CQL are available at: https:// ecqi.healthit.gov/cql. 328 The Measure Authoring Tool (MAT) is a webbased tool that allows measure developers to author electronic Clinical Quality Measures (eCQMs). Using the tool, authors create Clinical Quality Language (CQL) expressions, which have the conceptual portion of the Quality Data Model (QDM) as their foundation (https:// www.emeasuretool.cms.gov/). 329 Bonnie is a tool for testing electronic clinical quality measures (eCQMs) designed to support streamlined and efficient pre-testing of eCQMs, particularly those used in the CMS quality programs (https://bonnie.healthit.gov/). E:\FR\FM\07MYP2.SGM 07MYP2 20498 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules (2) Reporting and Submission Requirements for eCQMs for the CY 2019 Reporting Period/FY 2021 Payment Determination In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38361), we finalized eCQM reporting and submission requirements such that hospitals are required to report only one, self-selected calendar quarter of data for four self-selected eCQMs for the CY 2018 reporting period/FY 2020 payment determination. In this proposed rule, in alignment with the Medicare and Medicaid Promoting Interoperability Programs (previously known as the Medicare and Medicaid EHR Incentive Programs), we are proposing to extend the same eCQM reporting and submission requirements, such that hospitals would be required to report one, self-selected calendar quarter of data for four self-selected eCQMs for the CY 2019 reporting period/FY 2021 payment determination. We believe continuing the same eCQM reporting and submission requirements is appropriate because doing so continues to offer hospitals reporting flexibility and does not increase the information collection burden on data submitters, allowing them to shift resources to support system upgrades, data mapping, and staff training related to eCQM documentation and reporting. We also refer readers to section VIII.D.9. of the preamble of this proposed rule where similar proposals are discussed for the Medicare and Medicaid Promoting Interoperability Programs (previously known as the Medicare and Medicaid EHR Incentive Programs). We are inviting public comment on our proposal. daltland on DSKBBV9HB2PROD with PROPOSALS2 (3) Changes to the Certification Requirements for eCQM Reporting Beginning With the CY 2019 Reporting Period/FY 2021 Payment Determination In the FY 2018 IPPS/LTCH PPS final rule, we finalized a policy to allow flexibility for hospitals to use the 2014 Edition certification criteria, the 2015 Edition certification criteria, or a combination of both for the CY 2018 reporting period/FY 2020 payment determination only (82 FR 38388). This was a change to the policy previously finalized in the FY 2017 IPPS/LTCH PPS final rule that required hospitals to use the 2015 Edition certification criteria for CEHRT for the CY 2018 reporting period/FY 2020 payment determination and subsequent years (81 FR 57171). In this proposed rule, to align with the Medicare and Medicaid Promoting Interoperability Programs (previously known as the Medicare and Medicaid VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 EHR Incentive Programs), for the Hospital IQR Program, we are proposing to require hospitals to use only the 2015 Edition certification criteria for CEHRT beginning with the CY 2019 reporting period/FY 2021 payment determination. We refer readers to section VIII.D.3. of the preamble of this proposed rule in which the Medicare and Medicaid Promoting Interoperability Programs discuss more broadly the reasons for and benefits of requiring hospitals to use the 2015 Edition certification criteria for CEHRT, beginning with the CY 2019 reporting period/FY 2021 payment determination. There are certain functionalities in the 2015 Edition of certified electronic health record technology that were not available in the 2014 Edition that we believe will increase interoperability and the flow of information between providers and patients. In addition, as we discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38387 through 38388), specifically as to eCQM reporting, the 2015 Edition includes updates to standards for structured data capture as well as data elements in the common clinical data set which can be captured in a structured format. We continue to believe the use of relevant, up-to-date, standards-based structured data capture with an EHR certified to the 2015 Edition supports electronic clinical quality measurement. The 2015 Edition certification criteria (that make up CEHRT) within the certification testing process includes features that are designed to improve the functionality and quality of eCQM data.330 Specifically, systems must demonstrate they can import and allow a user to export one or more QRDA files. This allows systems to share files and extract data for reporting into another system or send to another system. In addition, testing coverage is much more robust; all measures have >80 percent of test pathways tested in the test bundle with most >95 percent. In addition, the 2015 Edition includes a revised requirement that products must be able to export data from one patient, a set of patients, or a subset of patients, which is responsive to health care provider feedback that their data is unable to carry over from a previous EHR. The 2014 Edition did not include a requirement that the vendor allow the provider to export the data themselves. In the 2015 Edition, the provider has the 330 For CEHRT definition, see 42 CFR 495.4. For additional details about the updates to the 2015 Edition, we refer readers to ONC’s Common Clinical Data Set resource, available at: https:// www.healthit.gov/sites/default/files/ commonclinicaldataset_ml_11-4-5.pdf. PO 00000 Frm 00336 Fmt 4701 Sfmt 4702 autonomy to export data themselves without intervention by their vendor, resulting in increased interoperability and data exchange between the two Editions. This includes a new function that supports increased patient access to their health information through email transmission. The increased interoperability in this requirement provides patients more control of their health data to inform the decisions that they make regarding their health. The 2015 Edition certification criteria for CEHRT also includes optional certification criteria and program specific testing which can also support electronic clinical quality reporting. The filter criteria ensure a product can filter an electronic file based on demographics like sex or race, based on provider or site characteristics like TIN/ NPI, and based on a diagnosis or problem. The testing for this function checks that patients are appropriately aggregated and calculated for this new function which supports flexibility, specificity, and more robust analysis of eCQM data. Finally, the 2015 Edition provides optional testing to CMS requirements for reporting, such as form and manner specifications and implementation guides. For these reasons, in this proposed rule, we are proposing to require hospitals to use the 2015 Edition certification criteria for CEHRT beginning with the CY 2019 reporting period/FY 2021 payment determination. We note that the Medicare and Medicaid Promoting Interoperability Programs (previously known as the Medicare and Medicaid EHR Incentive Programs) previously finalized a requirement that hospitals use the 2015 Edition certification criteria for CEHRT beginning with the CY 2019 reporting period/FY 2021 payment determination (80 FR 62873 through 62875), such that hospitals participating in both the Hospital IQR Program and the Medicare and Medicaid Promoting Interoperability Programs already would be required to use the 2015 Edition certification criteria for CEHRT beginning with the CY 2019 reporting period/FY 2021 payment determination. We are inviting public comment on our proposal to require hospitals to use the 2015 Edition certification criteria for CEHRT beginning with the CY 2019 reporting period/FY 2021 payment determination. e. Electronic Submission Deadlines We refer readers to the FY 2015 IPPS/ LTCH PPS final rule (79 FR 50256 through 50259) and the FY 2016 IPPS/ LTCH PPS final rule (80 FR 49705 through 49708) for our previously E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules adopted policies to align eCQM data reporting periods and submission deadlines for both the Hospital IQR Program and the Medicare Promoting Interoperability Program (previously known as the Medicare EHR Incentive Program). In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57172), we established eCQM submission deadlines for the Hospital IQR Program. We are not proposing any changes to the eCQM submission deadlines in this proposed rule. readers to sections VIII.A.5.a. and VIII.A.5.b.(1) of the preamble of this proposed rule, in which we are proposing to remove two structural measures from the Hospital IQR Program. If our proposals to remove two structural measures are adopted, no structural measures would remain in the Hospital IQR Program and hospitals would not be required to submit any data for structural measures for the CY 2019 reporting period/FY 2021 payment determination or subsequent years. f. Sampling and Case Thresholds We refer readers to the FY 2011 IPPS/ LTCH PPS final rule (75 FR 50221), the FY 2012 IPPS/LTCH PPS final rule (76 FR 51641), the FY 2013 IPPS/LTCH PPS final rule (77 FR 53537), the FY 2014 IPPS/LTCH PPS final rule (78 FR 50819), and the FY 2016 IPPS/LTCH PPS final rule (80 FR 49709) for details on our sampling and case thresholds for the FY 2016 payment determination and subsequent years. We are not proposing any changes to our sampling and case threshold policies in this proposed rule. i. Data Submission and Reporting Requirements for HAI Measures Reported via NHSN daltland on DSKBBV9HB2PROD with PROPOSALS2 g. HCAHPS Administration and Submission Requirements We refer readers to the FY 2011 IPPS/ LTCH PPS final rule (75 FR 50220), the FY 2012 IPPS/LTCH PPS final rule (76 FR 51641 through 51643), the FY 2013 IPPS/LTCH PPS final rule (77 FR 53537 through 53538), and the FY 2014 IPPS/ LTCH PPS final rule (78 FR 50819 through 50820) for details on previously-adopted HCAHPS requirements. We also refer hospitals and HCAHPS Survey vendors to the official HCAHPS website at: https:// www.hcahpsonline.org for new information and program updates regarding the HCAHPS Survey, its administration, oversight, and data adjustments. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38328 through 38342), we finalized refinements to the three questions of the Pain Management measure in the HCAHPS Survey (now referred to as the Communication About Pain measure). We are not proposing any changes to the HCAHPS Survey administration and submission requirements in this proposed rule. h. Data Submission Requirements for Structural Measures We refer readers to the FY 2012 IPPS/ LTCH PPS final rule (76 FR 51643 through 51644) and the FY 2013 IPPS/ LTCH PPS final rule (77 FR 53538 through 53539) for details on the data submission requirements for structural measures. We are not proposing any changes to those requirements in this proposed rule; however, we refer VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 For details on the data submission and reporting requirements for HAI measures reported via the CDC’s NHSN website, we refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51629 through 51633; 51644 through 51645), the FY 2013 IPPS/LTCH PPS final rule (77 FR 53539), the FY 2014 IPPS/LTCH PPS final rule (78 FR 50821 through 50822), and the FY 2015 IPPS/LTCH PPS final rule (79 FR 50259 through 50262). The data submission deadlines are posted on the QualityNet website at: https://www.QualityNet.org/. While we are not proposing any changes to these requirements, we refer readers to section VIII.A.5.b.(2)(b) of the preamble of this proposed rule, in which we are proposing to remove five HAI measures reported via NHSN from the Hospital IQR Program. If our proposals to remove these five measures are adopted, there would be no HAI measures reported via NHSN and hospitals would not be required to submit any data for HAI measures via NHSN for the Hospital IQR Program for the CY 2019 reporting period/FY 2021 payment determination or subsequent years. We note that the HCP measure remains in the Hospital IQR Program and will continue to be reported via NHSN. In addition, we note that the five HAI measures being proposed for removal in the Hospital IQR Program will still remain in the HAC Reduction Program. We refer readers to section IV.J. of the preamble of this proposed rule for more information about how those measures will be collected and validated under the HAC Reduction Program. 12. Validation of Hospital IQR Program Data a. Background In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53539 through 53553), we finalized the processes and procedures for validation of chart-abstracted measures in the Hospital IQR Program PO 00000 Frm 00337 Fmt 4701 Sfmt 4702 20499 for the FY 2015 payment determination and subsequent years. The FY 2013 IPPS/LTCH PPS final rule also contains a comprehensive summary of all procedures finalized in previous years that are still in effect. We refer readers to the FY 2014 IPPS/LTCH PPS final rule (78 FR 50822 through 50835), the FY 2015 IPPS/LTCH PPS final rule (79 FR 50262 through 50273), and the FY 2016 IPPS/LTCH PPS final rule (80 FR 49710 through 49712) for detailed information on the modifications to these processes finalized for the FY 2016, FY 2017, and FY 2018 payment determinations and subsequent years. We are not proposing any changes to the existing processes for validation of either eCQM or chart-abstracted measure data in this proposed rule. b. Existing Processes for Validation of Hospital IQR Program eCQM Data In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57173 through 57181), we finalized updates to the validation procedures in order to incorporate a process for validating eCQM data for the FY 2020 payment determination and subsequent years (starting with the validation of CY 2017 eCQM data that would impact FY 2020 payment determinations). We also refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38398 through 38403), in which we finalized several proposals regarding processes and procedures for validation of CY 2017 eCQM data for the FY 2020 payment determination, validation of CY 2018 eCQM data for the FY 2021 payment determination, and eCQM data validation for subsequent years. We are not proposing any changes to the existing processes for validation of Hospital IQR Program eCQM data in this proposed rule. c. Existing Process for Chart-Abstracted Measures Validation In the FY 2015 IPPS/LTCH PPS final rule, we stated that we rely on hospitals to request an educational review or appeal cases to identify any potential CDAC or CMS errors (79 FR 50260). We refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38402 through 38403) for more details on the formalized Educational Review Process for Chart-Abstracted Measures Validation. We are not proposing any changes to the validation of chartabstracted measures, including the educational review process. While we are not proposing any changes to our previously established validation procedures in this proposed rule, we refer readers to: (1) Section VIII.A.5.b.(8) of the preamble of this proposed rule, in which we are E:\FR\FM\07MYP2.SGM 07MYP2 20500 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 proposing to remove three clinical process of care measures beginning with the CY 2019 reporting period/FY 2021 payment determination, and one clinical process of care measure beginning with the CY 2020 reporting period/FY 2022 payment determination; and (2) section VIII.A.5.b.(2)(b) of the preamble of this proposed rule, in which we are proposing to remove five Hospital-Acquired Infection (HAI) chartabstracted measures from the Hospital IQR Program beginning with the CY 2019 reporting period/FY 2021 payment determination. If our proposals to remove these measures are adopted, only two chart-abstracted clinical process of care measures would remain in the Hospital IQR Program that would require validation for the FY 2022 payment determination (ED–2 and Sepsis measures), and only one chartabstracted clinical process of care measure would remain in the program that would require validation for the FY 2023 payment determination and subsequent years (Sepsis measure). As our validation processes remain unchanged, we will continue to sample up to 8 cases for each selected chartabstracted clinical process of care measure. We plan to evaluate our existing validation scoring methodology to ensure that there will be no significant impact to the estimated reliability (ER) of Hospital IQR Program chart-abstracted data validation activities despite any measure removals. In addition, the CY 2019 reporting period/FY 2021 payment determination would be the last year for which validation would occur under the Hospital IQR Program with respect to the CDI, CAUTI, CLABSI, MRSA Bacteremia, and Colon and Abdominal Hysterectomy SSI measures, if our proposed measure removals are finalized in section VIII.A.5.b.(2)(b) of the preamble of this proposed rule. Beyond the FY 2021 payment determination, we intend for validation of those measures to occur under the HAC Reduction Program, as further discussed in section IV.J.4.e. of the preamble of this proposed rule. 13. Data Accuracy and Completeness Acknowledgement (DACA) Requirements We refer readers to the FY 2013 IPPS/ LTCH PPS final rule (77 FR 53554) for previously adopted details on DACA requirements. We are not proposing any changes to the DACA requirements in this proposed rule. 14. Public Display Requirements We refer readers to the FY 2008 IPPS/ LTCH PPS final rule (72 FR 47364), the VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 FY 2011 IPPS/LTCH PPS final rule (75 FR 50230), the FY 2012 IPPS/LTCH PPS final rule (76 FR 51650), the FY 2013 IPPS/LTCH PPS final rule (77 FR 53554), the FY 2014 IPPS/LTCH PPS final rule (78 FR 50836), the FY 2015 IPPS/LTCH PPS final rule (79 FR 50277), the FY 2016 IPPS/LTCH PPS final rule (80 FR 49712 through 49713), and the FY 2018 IPPS/LTCH PPS final rule (82 FR 38403 through 38409) for details on public display requirements. The Hospital IQR Program quality measures are typically reported on the Hospital Compare website at: https:// www.medicare.gov/hospitalcompare, but on occasion are reported on other CMS websites such as: https:// data.medicare.gov. We are not proposing any changes to the public display requirements in this proposed rule. However, we note that in section VIII.A.10. of the preamble of this proposed rule, we discuss our efforts to provide stratified data by patient dual eligibility status in hospital confidential feedback reports and considerations to make stratified data publicly available on the Hospital Compare website in the future. 15. Reconsideration and Appeal Procedures We refer readers to the FY 2012 IPPS/ LTCH PPS final rule (76 FR 51650 through 51651), the FY 2014 IPPS/LTCH PPS final rule (78 FR 50836), and 42 CFR 412.140(e) for details on reconsideration and appeal procedures for the FY 2017 payment determination and subsequent years. We are not proposing any changes to the reconsideration and appeals procedures in this proposed rule. 16. Hospital IQR Program Extraordinary Circumstances Exceptions (ECE) Policy We refer readers to the FY 2012 IPPS/ LTCH PPS final rule (76 FR 51651 through 51652), the FY 2014 IPPS/LTCH PPS final rule (78 FR 50836 through 50837), the FY 2015 IPPS/LTCH PPS final rule (79 FR 50277), the FY 2016 IPPS/LTCH PPS final rule (80 FR 49713), the FY 2017 IPPS/LTCH PPS final rule (81 FR 57181 through 57182), the FY 2018 IPPS/LTCH PPS final rule (82 FR 38409 through 38411), and 42 CFR 412.140(c)(2) for details on the current Hospital IQR Program ECE policy. We also refer readers to the QualityNet website at: https:// www.QualityNet.org/ for our current requirements for submission of a request for an exception. We are not proposing any changes to the ECE policy in this proposed rule. PO 00000 Frm 00338 Fmt 4701 Sfmt 4702 B. PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program 1. Background Section 1866(k) of the Act establishes a quality reporting program for hospitals described in section 1886(d)(1)(B)(v) of the Act (referred to as ‘‘PPS-Exempt Cancer Hospitals’’ or ‘‘PCHs’’) that specifically applies to PCHs that meet the requirements under 42 CFR 412.23(f). Section 1866(k)(1) of the Act states that, for FY 2014 and each subsequent fiscal year, a PCH must submit data to the Secretary in accordance with section 1866(k)(2) of the Act with respect to such fiscal year. The PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program strives to put patients first by ensuring they, along with their clinicians, are empowered to make decisions about their own health care using data-driven insights that are increasingly aligned with meaningful quality measures. To this end, we support technology that reduces burden and allows clinicians to focus on providing high quality health care to their patients. We also support innovative approaches to improve quality, accessibility, and affordability of care, while paying particular attention to improving clinicians’ and beneficiaries’ experiences when participating in CMS programs. In combination with other efforts across the Department of Health and Human Services, we believe the PCHQR Program incentivizes PCHs to improve their health care quality and value, while giving patients the tools and information needed to make the best decisions. For additional background information, including previously finalized measures and other policies for the PCHQR Program, we refer readers to the following final rules: The FY 2013 IPPS/LTCH PPS final rule (77 FR 53556 through 53561); the FY 2014 IPPS/LTCH PPS final rule (78 FR 50838 through 50846); the FY 2015 IPPS/LTCH PPS final rule (79 FR 50277 through 50288); the FY 2016 IPPS/LTCH PPS final rule (80 FR 49713 through 49723); the FY 2017 IPPS/LTCH PPS final rule (81 FR 57182 through 57193); and the FY 2018 IPPS/LTCH PPS final rule (82 FR 38411 through 38425). In this proposed rule, we are proposing a number of new policies for the PCHQR Program. We developed these proposals after conducting an overall review of the program under our new Meaningful Measures Initiative, which is discussed in more detail in section I.A.2. of the preamble of this proposed rule. The proposals reflect our efforts to ensure that the PCHQR E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules Program measure set continues to promote improved health outcomes for our beneficiaries while minimizing the following: (1) The reporting burden associated with submitting/reporting quality measures; (2) the burden associated with complying with other programmatic requirements; and/or (3) the burden associated with compliance with other Federal and/or State regulations (if applicable). In addition, we aim to reduce beneficiary confusion by reducing duplicative reporting, thereby streamlining the process of analyzing publicly reported quality measures data. They also reflect our efforts to improve the usefulness of the data that we publicly report in the PCHQR Program, which are guided by the following two goals: (1) To improve the usefulness of CMS quality program data by providing providers with adequate measure information from one program; and (2) to improve consumer understanding of the data publicly reported on a Compare other website by eliminating the reporting of duplicative measure data in more than one program that applies to the same provider setting. daltland on DSKBBV9HB2PROD with PROPOSALS2 2. Factors for Removal and Retention of PCHQR Program Measures a. Background and Current Measure Removal Factors In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57182 through 57183), we adopted policies for measure retention and removal. We generally retain measures from the previous year’s PCHQR Program measure set for subsequent years’ measure sets, except when we specifically propose to remove or replace a measure. We adopted the following measure removal factors 331 for the PCHQR Program, which are based on factors adopted for the Hospital IQR Program (80 FR 49641 through 49642): • Factor 1. Measure performance among PCHs is so high and unvarying that meaningful distinctions and improvements in performance can no longer be made (‘‘topped-out’’ measures); • Factor 2. A measure does not align with current clinical guidelines or practice; • Factor 3. The availability of a more broadly applicable measure (across settings or populations) or the availability of a measure that is more 331 We note that we previously referred to these factors as ‘‘criteria’’ (for example, 81 FR 57182 through 57183); we now use the term ‘‘factors’’ in order to align the PCHQR Program terminology with the terminology we use in other CMS quality reporting and pay for performance value-based purchasing programs. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 proximal in time to desired patient outcomes for the particular topic; • Factor 4. Performance or improvement on a measure does not result in better patient outcomes; • Factor 5. The availability of a measure that is more strongly associated with desired patient outcomes for the particular topic; • Factor 6. Collection or public reporting of a measure leads to negative unintended consequences other than patient harm; and • Factor 7. It is not feasible to implement the measure specifications. For the purposes of considering measures for removal from the program, we consider a measure to be ‘‘toppedout’’ if there is statistically indistinguishable performance at the 75th and 90th percentiles and the truncated coefficient of variation is less than or equal to 0.10. b. Measure Retention Factors We have also recognized that there are times when measures may meet some of the outlined criteria for removal from the program, but continue to bring value to the program. Therefore, we have adopted the following factors for consideration in determining whether to retain a measure in the PCHQR Program, which also are based on factors established in the Hospital IQR Program (80 FR 49641 through 49642): • Measure aligns with other CMS and HHS policy goals; • Measure aligns with other CMS programs, including other quality reporting programs; and • Measure supports efforts to move PCHs towards reporting electronic measures. c. Proposed New Measure Removal Factor We are proposing to adopt an additional factor to consider when evaluating potential measures for removal from the PCHQR measure set: Factor 8, the costs associated with the measure outweigh the benefit of its continued use in the program. As we discussed in section I.A.2. of the preamble of this proposed rule, with respect to our new Meaningful Measures Initiative, we are engaging in efforts to ensure that the PCHQR measure set continues to promote improved health outcomes for beneficiaries while minimizing the overall costs associated with the program. We believe these costs are multifaceted and include not only the burden associated with reporting, but also the costs associated with implementing and maintaining the program. We have identified several different types of costs, including, but PO 00000 Frm 00339 Fmt 4701 Sfmt 4702 20501 not limited to: (1) Provider and clinician information collection burden and burden associated with the submission/ reporting of quality measures to CMS; (2) the provider and clinician cost associated with complying with other programmatic requirements; (3) the provider and clinician cost associated with participating in multiple quality programs, and tracking multiple similar or duplicative measures within or across those programs; (4) the cost to CMS associated with the program oversight of the measure including measure maintenance and public display; and (5) the provider and clinician cost associated with compliance with other Federal and/or State regulations (if applicable). For example, it may be needlessly costly and/or of limited benefit to retain or maintain a measure which our analyses show no longer meaningfully supports program objectives (for example, informing beneficiary choice or payment scoring). It may also be costly for health care providers to track the confidential feedback, preview reports, and publicly reported information on a measure where we use the measure in more than one program. CMS may also have to expend unnecessary resources to maintain the specifications for the measure, as well as the tools we need to collect, validate, analyze, and publicly report the measure data. Furthermore, beneficiaries may find it confusing to see public reporting on the same measure in different programs. When these costs outweigh the evidence supporting the continued use of a measure in the PCHQR Program, we believe it may be appropriate to remove the measure from the program. Although we recognize that one of the main goals of the PCHQR Program is to improve beneficiary outcomes by incentivizing health care providers to focus on specific care issues and making public data related to those issues, we also recognize that those goals can have limited utility where, for example, the publicly reported data is of limited use because it cannot be easily interpreted by beneficiaries and used to influence their choice of providers. In these cases, removing the measure from the PCHQR Program may better accommodate the costs of program administration and compliance without sacrificing improved health outcomes and beneficiary choice. We are proposing that we would remove measures based on this factor on a case-by-case basis. We might, for example, decide to retain a measure that is burdensome for health care providers to report if we conclude that the benefit to beneficiaries justifies the reporting E:\FR\FM\07MYP2.SGM 07MYP2 20502 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules burden. Our goal is to move the program forward in the least burdensome manner possible, while maintaining a parsimonious set of meaningful quality measures and continuing to incentivize improvement in the quality of care provided to patients. We are inviting public comment on our proposal to adopt an additional measure removal factor, ‘‘the costs associated with a measure outweigh the benefit of its continued use in the program,’’ beginning with the effective date of the FY 2019 IPPS/LTCH PPS final rule. 3. Retention and Proposed Removal of Previously Finalized Quality Measures for PCHs Beginning With the FY 2021 Program Year a. Background In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53556 through 53561), we finalized five quality measures for the FY 2014 program year and subsequent years. In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50837 through 50847), we finalized one new quality measure for the FY 2015 program year and subsequent years and 12 new quality measures for the FY 2016 program year and subsequent years. In the FY 2015 IPPS/LTCH PPS final rule (79 FR 50278 through 50280), we finalized one new quality measure for the FY 2017 program year and subsequent years. In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49713 through 49719), we finalized three new Centers for Disease Control and Prevention (CDC) National Healthcare Safety Network (NHSN) measures for the FY 2018 program year and subsequent years, and finalized the removal of six previously finalized measures for fourth quarter (Q4) 2015 discharges and subsequent years. In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57183 through 57184), for the FY 2019 program year and subsequent years, we finalized one additional quality measure and updated the Oncology: Radiation Dose Limits to Normal Tissues (NQF #0382) measure. In the FY 2018 IPPS/LTCH PPS final rule, we finalized four new quality measures (82 FR 38414 through 38420), for the FY 2020 program year and subsequent years, and finalized the removal of three previously finalized measures (82 FR 38412 through 38414). b. Proposed Removal of Measures From the PCHQR Program Beginning With the FY 2021 Program Year We are proposing to remove four webbased, structural measures from the PCHQR Program beginning with the FY 2021 program year because they are topped-out: • Oncology: Radiation Dose Limits to Normal Tissues (PCH–14/NQF #0382); • Oncology: Medical and Radiation— Pain Intensity Quantified (PCH–16/NQF #0384); • Prostate Cancer: Adjuvant Hormonal Therapy for High Risk Patients (PCH–17/NQF #0390); and • Prostate Cancer: Avoidance of Overuse of Bone Scan for Staging LowRisk Patients (PCH–18/NQF #0389). We also are proposing to apply the newly proposed measure removal factor to two National Healthcare Safety Network (NHSN) chart-abstracted measures and, if that factor is finalized, to remove both measures from the PCHQR Program beginning with the FY 2021 program year because we have concluded that the costs associated with these measures outweigh the benefit of their continued use in the program. • NHSN Catheter-Associated Urinary Tract Infection (CAUTI) Outcome Measure (PCH–5/NQF #0138); and • NHSN Central Line-Associated Bloodstream Infection (CLABSI) Outcome Measure (PCH–4/NQF #0139). (1) Proposed Removal of Web-Based Structural Measures We are proposing to remove the following web-based, structural measures beginning with the FY 2021 program year because they are toppedout: (1) Oncology: Radiation Dose Limits to Normal Tissues (PCH–14/NQF #0382); (2) Oncology: Medical and Radiation—Pain Intensity Quantified (PCH–16/NQF #0384); (3) Prostate Cancer: Adjuvant Hormonal Therapy for High Risk Patients (PCH–17/NQF #0390); and (4) Prostate Cancer: Avoidance of Overuse of Bone Scan for Staging Low-Risk Patients (PCH–18/ NQF #0389). We first adopted these measures for the FY 2016 program year in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50841 through 50844). We refer readers to that rule for a detailed discussion of the measures. Based on an analysis of data from January 1, 2015 through December 31, 2016, we have determined that these three measures meet our topped-out criteria. This analysis evaluated data sets and calculated the 5th, 10th, 25th, 50th, 75th, 90th, and 95th percentiles of national facility performance for each measure. For measures where higher values indicate better performance, the percent relative difference (PRD) between the 75th and 90th percentiles were obtained by taking their absolute difference divided by the average of their values and multiplying the result by 100. To calculate the truncated coefficient of variation (TCV), the lowest 5 percent and the highest 5 percent of hospital rates were discarded before calculating the mean and standard deviation for each measure. The following criteria were applied to the results: • For measures ranging from 0–100 percent, with 100 percent being best, national measure data for the 75th and 90th percentiles have a relative difference of <=5 percent, or for measures ranging from 0–100 percent, with 100 percent being the best, performance achieved by the median hospital is >=95 percent, and national measure data have a truncated coefficient of variation <=0.10. • For measures ranging from 0–100 percent, with 0 percent being best, national measure data for the complement of the 10th and 25th percentiles have a relative difference of <=5 percent, or for measures ranging from 0–100 percent, with 0 percent being best, national measure data for the median hospital is <=5 percent, or for other measures with a low number indicating good performance, national measure data for the 10th and 25th percentiles have a relative difference of <=5 percent, and national measure data have a truncated coefficient of variation <=0.10. The results for 2015 and 2016 are set out in the tables below. daltland on DSKBBV9HB2PROD with PROPOSALS2 TOPPED-OUT ANALYSIS RESULTS FOR PCHQR MEASURES (2015) Measure PCH–14 PCH–16 PCH–17 PCH–18 Mean .................................................... .................................................... .................................................... .................................................... VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 98.4 92.5 99.7 98.9 PO 00000 75th Percentile Median Frm 00340 99.6 92.3 100 99.4 Fmt 4701 Sfmt 4702 90th Percentile 100 93.1 100 100 E:\FR\FM\07MYP2.SGM 100 94.3 100 100 07MYP2 Relative difference (%) 0 1.2 0 0 Topped-out Yes Yes Yes Yes 20503 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules TOPPED-OUT ANALYSIS RESULTS FOR PCHQR MEASURES (2016) Measure PCH–14 PCH–16 PCH–17 PCH–18 Mean .................................................... .................................................... .................................................... .................................................... 99.8 96.8 99.4 99.0 daltland on DSKBBV9HB2PROD with PROPOSALS2 Based on this analysis, we have concluded that these four measures are topped-out and, as discussed below, we believe that collecting PCH data on these measures does not further program goals. We also believe that continuing to collect PCH data on these measures does not further program goals of improving quality, given that performance on the measures is so high and unvarying that meaningful distinctions and improvements in performance can no longer be made. We believe that these measures also do not meet the criteria for retention of an otherwise topped-out measure, as they: Do not align with the HHS and CMS policy goal to focus our measure set on outcome measures; do not align with measures used in other CMS programs; and do not support our efforts to develop electronic clinical quality measure reporting for PCHs. If we determine at a subsequent point in the future that PCH adherence to the aforementioned HHS and CMS policy goals, the aforementioned program efforts, and the standard of care established by the measure has unacceptably declined, we may propose to readopt these measures in future rulemaking. We are inviting public comment on our proposal to remove these four measures from the PCHQR Program beginning with the FY 2021 program year. (2) Proposed Removal of National Healthcare Safety Network (NHSN) Chart-Abstracted Measures We are proposing to remove two measures from the PCHQR Program beginning with the FY 2021 program year if the measure removal factor ‘‘the costs associated with the measure outweigh the benefit of its continued use in the program’’ proposed for adoption in section VIII.B.2.c. of the preamble of this proposed rule, is finalized because we have concluded that the costs associated with these measures outweigh the benefit of their continued use in the PCHQR Program. These measures are: (1) CatheterAssociated Urinary Tract Infection (CAUTI) Outcome Measure (PCH–5/ NQF #0138); and (2) Central Line- VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 75th Percentile Median 100 96.8 99.6 100 100 97.3 100 100 Associated Bloodstream Infection (CLABSI) Outcome Measure (PCH–4/ NQF #0139). We first adopted the CAUTI and CLABSI measures for the FY 2014 program year in the FY 2013 IPPS/ LTCH PPS final rule (77 FR 53557 through 53559); we refer readers to this rule for a detailed discussion of the measures. As discussed in section I.A.2. of the preamble of this proposed rule, above, our Meaningful Measures Initiative is intended to reduce costs and minimize burden. We continue to believe the CAUTI and CLABSI measures provide important data for patients and hospitals in making decisions about care and informing quality improvement efforts. However, we believe that removing these measures in the PCHQR Program will reduce program costs and complexity. We believe the costs, coupled with the high technical and administrative burden on PCHs, associated with collecting and reporting this measure data outweigh the benefits to continued use in the program. As a result of these costs, it has become difficult to publicly report these measures due to the low volume of data produced and reported by the small number of facilities participating in the PCHQR Program and the corresponding lack of an appropriate methodology to publicly report this data. Consequently, we have been unable to offer beneficiaries the benefit of pertinent information on how these measures assess hospital-acquired infections and impact patient safety. As we state in section I.A.2. of the preamble of this proposed rule, we strive to ensure that patients are empowered to make decisions about their health care along using information from data-driven insights. We continue to believe that these measures evaluate important aspects of patient safety. However, as discussed earlier, we believe the high costs, reporting burden, and difficulties associated with publicly reporting this data for use by patients in making decisions about their care outweigh the benefit associated with the measures’ continued use in the PCHQR Program. Therefore, if our proposal to adopt the new measure removal factor described PO 00000 Frm 00341 Fmt 4701 Sfmt 4702 90th Percentile 100 97.4 100 100 Relative difference (%) Topped—out 0 0.1 0 0 Yes Yes Yes Yes in section VIII.B.2.c. of the preamble of this proposed rule is finalized as proposed, we are proposing that under that factor, we would remove the CAUTI and CLABSI measures from the PCHQR Program beginning with the FY 2021 program year. We are inviting public comment on our proposal to remove these two measures from the PCHQR Program beginning with the FY 2021 program year. 4. Proposed New Quality Measures Beginning With the FY 2021 Program Year a. Considerations in the Selection of Quality Measures In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53556), the FY 2014 IPPS/ LTCH PPS final rule (78 FR 50837 through 50838), and the FY 2015 IPPS/ LTCH PPS final rule (79 FR 50278), we indicated that we take many principles into consideration when developing and selecting measures for the PCHQR Program, and that many of these principles are modeled on those we use for measure development and selection under the Hospital IQR Program. In section I.A.2. of the preamble of this proposed rule, we also discuss our Meaningful Measures Initiative, and its relation to how we will assess and select quality measures for the PCHQR Program. Section 1866(k)(3)(A) of the Act requires that any measure specified by the Secretary must have been endorsed by the entity with a contract under section 1890(a) of the Act (the NQF is the entity that currently holds this contract). Section 1866(k)(3)(B) of the Act provides an exception under which, in the case of a specified area or medical topic determined appropriate by the Secretary for which a feasible and practical measure has not been endorsed by the entity with a contract under section 1890(a) of the Act, the Secretary may specify a measure that is not so endorsed as long as due consideration is given to measures that have been endorsed or adopted by a consensus organization. Using these principles for measure selection in the PCHQR Program, we are E:\FR\FM\07MYP2.SGM 07MYP2 20504 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules proposing one new measure, described below. b. Proposed New Quality Measure Beginning With the FY 2021 Program Year: 30-Day Unplanned Readmissions for Cancer Patients (NQF #3188) In an effort to expand the PCHQR measure set to include measures that are less burdensome to report to CMS, but provide valuable information for beneficiaries, we are proposing to adopt the 30-Day Unplanned Readmissions for Cancer Patients measure (NQF #3188) for the FY 2021 program year and subsequent years. This measure meets the requirement under section 1866(k)(3)(A) of the Act that measures specified for the PCHQR Program be endorsed by the entity with a contract under section 1890(a) of the Act (currently the NQF). This measure aligns with recent initiatives to incorporate more outcome measures in quality reporting programs. This measure also aligns with the Promote Effective Communication and Coordination of Care domain of our Meaningful Measures Initiative,332 and would fill an existing gap area of riskadjusted readmission measures in the PCHQR Program. In compliance with section 1890A(a)(2) of the Act, the proposed measure was included on a publicly available document entitled ‘‘2017 Measures under Consideration Spreadsheet,’’ 333 a list of quality and efficiency measures under consideration for use in various Medicare programs, and was reviewed by the Measures Application Partnership (MAP) Hospital Workgroup. daltland on DSKBBV9HB2PROD with PROPOSALS2 (1) Background Cancer is the second leading cause of death in the United States, with nearly 600,000 cancer-related deaths expected this year. It is estimated roughly 1.7 million Americans will be diagnosed with cancer in 2016, and the number of Americans living with a cancer diagnosis reached nearly 14.5 million in 2014.334 Cancer disproportionately affects older Americans, with 86 percent of all cancers diagnosed in people 50 years of age and older.335 It is now the 332 Overview of the CMS Meaningful Measures Initiative available at: https://www.cms.gov/ Newsroom/MediaReleaseDatabase/Press-releases/ 2017-Press-releases-items/2017-10-30.html. 333 2017 Spreadsheet of Measures Under Consideration. Available at: https:// www.qualityforum.org/Show_ Content.aspx?id=30279. 334 NIH’s National Cancer Institute Statistics. Available at: https://www.cancer.gov/about-cancer/ understanding/statistics. 335 American Cancer Society. Cancer facts and figures 2016. 2016. Available at: https:// VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 leading cause of death among adults age 40 to 79 years nationwide, and the leading cause of death among all adults in 21 States.336 Oncology care contributes greatly to Medicare spending, and accounted for an estimated $125 billion in health care spending in 2010.337 This figure is projected to rise to between $173 billion and $207 billion by 2020.338 A 2012 audit from the US Government Accountability Office (GAO) revealed that the estimated differences in Medicare payment between PCHs and local PPS teaching hospitals varied greatly across the PCHs; with the largest payment difference at 90.9 percent and the smallest payment difference at 6.7 percent. Overall, the difference between the amount Medicare paid PCHs and the estimated amount Medicare would have paid PPS hospitals for treating comparable cancer patients suggests that Medicare would have saved approximately $166 million in 2012.339 Further, GAO calculated that, if PCHs were paid for outpatient services in the same way as PPS teaching hospitals, Medicare would have saved approximately $303 million in 2012.340 Given the current and projected increases in cancer prevalence and costs of care, it is essential that health care providers look for opportunities to lower the costs of cancer care. Reducing readmissions after hospital discharge has been proposed as an effective means of lowering health care costs and improving the outcomes of care.341 Research suggests that between 9 percent and 48 percent of all hospital readmissions are preventable, owing to inadequate treatment during the patient’s original admission or after discharge.342 It is estimated that allcause, unplanned readmissions cost the Medicare program $17.4 billion in 2004.343 Unnecessary hospital www.cancer.org/acs/groups/content/@research/ documents/document/acspc-047079.pdf. 336 Siegel RL, Miller KD, Jemal A. Cancer statistics, 2016. CA Cancer J Clin. 2016;66(1):7–30. 337 Mariotto AB, Yabroff KR, Shao Y, Feuer EJ, Brown ML. Projections of the cost of cancer care in the United States: 2010–2020. J Natl Cancer Inst. 2011;103(2):117–128. 338 Ibid. 339 US Government Accountability Office. ‘‘Medicare Payments to Certain Cancer Hospitals.’’ Accessed on March 9, 2018. Available at: https:// www.gao.gov/modules/ereport/ handler.php?1=1&path=/ereport/GAO–15–404SP/ data_center_savings/Health/19._Medicare_ Payments_to_Certain_Cancer_Hospitals. 340 Ibid. 341 Benbassat J, Taragin M. Hospital readmissions as a measure of quality of health care: advantages and limitations. Arch Intern Med. 2000;160(8):1074–108. 342 Ibid. 343 Jencks SF, Williams MV, Coleman EA. Rehospitalizations among patients in the Medicare PO 00000 Frm 00342 Fmt 4701 Sfmt 4702 readmissions also negatively impact cancer patients by compromising their quality of life, placing them at risk for health-acquired infections, and increasing the costs of their care.344 Furthermore, unplanned readmissions during treatment can delay treatment completion and, potentially, worsen patient prognosis.345 Preventing these readmissions improves the quality of care for cancer patients. Existing studies in cancer patients have largely focused on postoperative readmissions, reporting readmission rates of between 6.5 percent and 25 percent.346 One study noted that surgical cancer patients were most often readmitted for surgical complications, while nonsurgical patients were typically readmitted for the same condition treated during the index admission.347 Together, these studies suggest that certain readmissions in cancer patients are preventable and should be routinely measured for purposes of quality improvement and accountability. (2) Overview of Measure Readmission rates have been developed for pneumonia, acute myocardial infarction, and heart failure. However, the development of validated readmission rates for cancer patients has lagged. In 2012, the Comprehensive Cancer Center Consortium for Quality Improvement, or C4QI (a group of 18 academic medical centers that collaborate to measure and improve the quality of cancer care in their centers), began development of a cancer-specific unplanned readmissions measure: 30Day Unplanned Readmissions for Cancer Patients. This measure incorporates the unique clinical characteristics of oncology patients and results in readmission rates that more accurately reflect the quality of cancer care delivery, when compared with broader readmissions measures. Likewise, this measure addresses gaps in existing readmissions measures (such as the Hospital-Wide All-Cause Unplanned Readmission Measure (HWR) stewarded by CMS) related to the evaluation of hospital readmissions associated cancer patients. The 30-Day Unplanned Readmissions for Cancer fee-for-service program. N Engl J Med. 2009;360(14):1418–1428. 344 Ibid. 345 Ibid. 346 Rochefort MM, Tomlinson JS. Unexpected readmissions after major cancer surgery: an evaluation of readmissions as a quality-of-care indicator. Surg Oncol Clin N Am. 2012;21(3):397– 405, viii. 347 Ji H, Abushomar H, Chen XK, Qian C, Gerson D. All-cause readmission to acute care for cancer patients. Healthc Q. 2012;15(3):14–16. E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules Patients measure can be used by PCHs to inform their quality improvement efforts. Through adoption in the PCHQR Program, it can increase transparency around the quality of care delivered to patients with cancer. The 30-Day Unplanned Readmissions for Cancer Patients measure is NQFendorsed (NQF #3188). The MAP Hospital Workgroup reviewed this measure on December 14, 2017 and supported the inclusion of this measure in the PCHQR Program. The MAP acknowledged that this measure is fully developed and tested and further noted this measure fills a current gap in the PCHQR Program by addressing unplanned readmissions of cancer patients.348 349 The proposed readmission measure fits within the Promote Effective Communication and Coordination of Care measurement domain (categorical area), and specifically applies to the associated clinical topic of ‘‘Admissions and Readmissions to Hospitals’’ of our Meaningful Measures Initiative. This measure is intended to assess the rate of unplanned readmissions among cancer patients treated at PCHs and to support improved care delivery and quality of life for this patient population. By providing an accurate and comprehensive assessment of unplanned readmissions within 30 days of discharge, PCHs can better identify and address preventable readmissions. Through routine monitoring of these performance data by PCHs, this measure can be used to improve patient outcomes and quality of care. (3) Data Sources daltland on DSKBBV9HB2PROD with PROPOSALS2 The proposed 30-Day Unplanned Readmissions for Cancer Patients measure is claims-based. Therefore, PCHs would not be required to submit any new data for purposes of reporting this measure. We are proposing that we would calculate this measure on a yearly basis using Medicare administrative claims data. Specifically, we are proposing that the data collection period for each program year would span from July 1 of the year 3 years prior to the program year to June 30 of the year 2 years prior to the program year. Therefore, for the FY 2021 program year, we would calculate 348 2018 Considerations for Implementing Measures Draft Report-Hospitals. Available at: https://www.qualityforum.org/Show_ Content.aspx?id=30279. 349 2017–2018 Spreadsheet of Final Recommendations to HHS and CMS. Available at: VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 measure rates using PCH claims data from July 1, 2018 through June 30, 2019. We assessed the measure’s reliability, and set a minimum case count of 50 index admissions (25 per subset) per PCH. There were 3,502 facilities 350 included in the 100 split-half simulations for CY 2013 through CY 2015. In our reliability assessment, we examined the reliability of the measure by testing the hypothesis that the mean S–B statistic from each year was greater than 0.5. The S–B statistic allows us to project what the reliability would be if the entire sample were used instead of the split sample. Overall, the consistent calculations between the two data randomly-split subsets for each period provided evidence that performance variations between PCHs were attributable to hospital-level factors, rather than patient-level factors. Regarding the validity of this measure, global sensitivity and specificity scores of 0.879 and 0.896, respectively, confirmed the validity of the Type of Admission/ Visit reported via the UB–04 Uniform Bill Locator 14 (Claim Inpatient Admission Type Code 351 in the Medicare SAF) to accurately identify planned and unplanned readmissions, as validated by chart review. Together, these statistics indicate that there are opportunities to utilize this measure to reduced unplanned readmissions in cancer patients, making it useful for performance improvement and public reporting. Additional details on the testing results for this measure are provided in the testing attachment, which is available at: https:// www.qualityforum.org/ ProjectMeasures.aspx?projectID=86089. (4) Measure Calculation This outcome measure utilizes claims data to demonstrate the rate at which adult cancer patients have unplanned readmissions within 30 days of discharge from an eligible index admission. The numerator includes all eligible unplanned readmissions to the PCH within 30 days of the discharge date from an index admission to the PCH that is included in the measure denominator. The denominator includes inpatient admissions for all adult Medicare fee-for-service (FFS) beneficiaries where the patient is https://www.qualityforum.org/ ProjectMaterials.aspx?projectID=75367. 350 We note that hospital testing occurred prior to our proposal for PCHQR Program inclusion. As such, the sample size is far greater than the number of applicable PCHs for which implementation this PO 00000 Frm 00343 Fmt 4701 Sfmt 4702 20505 discharged from a short-term acute care hospital (PCH, short-term acute care PPS hospital, or CAH) with a principal or secondary diagnosis (that is, not admitting diagnosis) of malignant cancer within the defined measurement period. The measure excludes readmissions for patients readmitted for chemotherapy or radiation therapy treatment or with disease progression. The measure will be calculated as the numerator divided by the denominator. Measure specifications for the proposed measure can be accessed on the NQF’s website at: https:// www.qualityforum.org/ ProjectMeasures.aspx?projectID=86089. (5) Cohort This measure includes inpatient admissions for all adult Medicare FFS beneficiaries where the patient is discharged from a short-term acute care hospital (PCH, short-term acute care PPS hospital, or CAH) with a principal or secondary diagnosis (that is, not admitting diagnosis) of malignant cancer within the defined measurement period. Additional methodology and measure development details are available on the NQF’s website at: https://www.qualityforum.org/ ProjectMeasures.aspx?projectID=86089. (6) Risk Adjustment This measure is risk-adjusted based on a comparison of observed versus expected readmission rates. Logistic regression analysis is used to estimate the probability of an unplanned readmission, based on the measure specifications and risk factors described herein. The probability of unplanned readmission is then summed over the index admissions for each hospital to calculate the expected unplanned readmission rate. Subsequently, the actual or observed unplanned readmissions for each hospital are summed and used to calculate the ratio of observed unplanned readmissions to expected unplanned readmissions for each hospital. Each hospital’s ratio was then multiplied by the national or standard unplanned readmissions rate to generate the risk-adjusted 30-Day Unplanned Readmissions for Cancer Patients rate (as specified in the following formula): measure is being proposed for use to ensure data reliability. 351 Claim Inpatient Admission Type Code available at: https://www.resdac.org/cms-data/ variables/Claim-Inpatient-Admission-Type-Code. E:\FR\FM\07MYP2.SGM 07MYP2 20506 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules c. Summary of Previously Finalized and Proposed PCHQR Program Measures for the FY 2021 Program Year and Subsequent Years We are inviting public comment on our proposal to adopt the 30-Day Unplanned Readmissions for Cancer Patients measure (NQF #3188) for the FY 2021 program year and subsequent years. The table below summarizes what the PCHQR Program measure set would look like for the FY 2021 program year if we finalized our measure removal proposals and our proposal to adopt the 30-Day Unplanned Readmissions for Cancer Patients measure (NQF #3188): FY 2021 PCHQR PROGRAM MEASURE SET IF PROPOSALS TO REMOVE FOUR MEASURES AND ADOPT A NEW READMISSIONS MEASURE ARE FINALIZED Short name NQF No. Measure name Safety and Healthcare-Associated Infection (HAI) Colon and Abdominal Hysterectomy SSI. 0753 CDI ............................................ 1717 MRSA ....................................... 1716 HCP .......................................... 0431 American College of Surgeons—Centers for Disease Control and Prevention (ACS–CDC) Harmonized Procedure Specific Surgical Site Infection (SSI) Outcome Measure [currently includes SSIs following Colon Surgery and Abdominal Hysterectomy Surgery]. National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Clostridium difficile Infection (CDI) Outcome Measure. National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Methicillin-resistant Staphylococcus aureus Bacteremia Outcome Measure. National Healthcare Safety Network (NHSN) Influenza Vaccination Coverage Among Healthcare Personnel. Clinical Process/Oncology Care Measures N/A ............................................ EOL-Chemo .............................. 0383 0210 EOL-Hospice ............................ 0215 Oncology: Plan of Care for Pain—Medical Oncology and Radiation Oncology. Proportion of Patients Who Died from Cancer Receiving Chemotherapy in the Last 14 Days of Life. Proportion of Patients Who Died from Cancer Not Admitted to Hospice. Intermediate Clinical Outcome Measures EOL–ICU .................................. 0213 EOL–3DH ................................. 0216 Proportion of Patients Who Died from Cancer Admitted to the ICU in the Last 30 Days of Life. Proportion of Patients Who Died from Cancer Admitted to Hospice for Less Than Three Days. Patient Engagement/Experience of Care HCAHPS ................................... 0166 HCAHPS. Clinical Effectiveness Measure EBRT ........................................ 1822 External Beam Radiotherapy for Bone Metastases. Claims Based Outcome Measures N/A ............................................ N/A N/A * .......................................... 3188 Admissions and Emergency Department (ED) Visits for Patients Receiving Outpatient Chemotherapy. 30-Day Unplanned Readmissions for Cancer Patients. * Measure proposed for adoption for the FY 2021 program year and subsequent years. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38428 through 38429), we discussed the importance of improving beneficiary outcomes including reducing health disparities. We also discussed our commitment to ensuring that medically complex patients, as well as those with social risk factors, receive excellent care. We discussed how studies show that social risk factors, such as being near or below the poverty VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 level as determined by HHS, belonging to a racial or ethnic minority group, or living with a disability, can be associated with poor health outcomes and how some of this disparity is related to the quality of health care.352 352 See, for example United States Department of Health and Human Services. ‘‘Healthy People 2020: Disparities. 2014.’’ Available at: https:// www.healthypeople.gov/2020/about/foundationhealth-measures/Disparities; or National Academies of Sciences, Engineering, and Medicine. Accounting for Social Risk Factors in Medicare Payment: Identifying Social Risk Factors. Washington, DC: PO 00000 Frm 00344 Fmt 4701 Sfmt 4702 Among our core objectives, we aim to improve health outcomes, attain health equity for all beneficiaries, and ensure that complex patients as well as those with social risk factors receive excellent care. Within this context, reports by the Office of the Assistant Secretary for Planning and Evaluation (ASPE) and the National Academy of Medicine have examined the influence of social risk factors in CMS value-based purchasing National Academies of Sciences, Engineering, and Medicine 2016. E:\FR\FM\07MYP2.SGM 07MYP2 EP07MY18.018</GPH> daltland on DSKBBV9HB2PROD with PROPOSALS2 5. Accounting for Social Risk Factors in the PCHQR Program Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules programs.353 As we noted in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38428 through 38429), ASPE’s report to Congress found that, in the context of value-based purchasing programs, dual eligibility was the most powerful predictor of poor health care outcomes among those social risk factors that they examined and tested. In addition, as we noted in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38428), the National Quality Forum (NQF) undertook a 2year trial period in which certain new measures and measures undergoing maintenance review have been assessed to determine if risk adjustment for social risk factors is appropriate for these measures.354 The trial period ended in April 2017 and a final report is available at: https://www.qualityforum.org/SES_ Trial_Period.aspx. The trial concluded that ‘‘measures with a conceptual basis for adjustment generally did not demonstrate an empirical relationship’’ between social risk factors and the outcomes measured. This discrepancy may be explained in part by the methods used for adjustment and the limited availability of robust data on social risk factors. NQF has extended the socioeconomic status (SES) trial,355 allowing further examination of social risk factors in outcome measures. In the FY 2018/CY 2018 proposed rules for our quality reporting and value-based purchasing programs, we solicited feedback on which social risk factors provide the most valuable information to stakeholders and the methodology for illuminating differences in outcomes rates among patient groups within a hospital or provider that would also allow for a comparison of those differences, or disparities, across providers. Feedback we received across our quality reporting programs included encouraging CMS to explore whether factors that could be used to stratify or risk adjust the measures (beyond dual eligibility); considering the full range of differences in patient backgrounds that might affect outcomes; exploring risk adjustment approaches; and offering careful consideration of what type of information display would be most daltland on DSKBBV9HB2PROD with PROPOSALS2 353 Department of Health and Human Services Office of the Assistant Secretary for Planning and Evaluation (ASPE), ‘‘Report to Congress: Social Risk Factors and Performance Under Medicare’s ValueBased Purchasing Programs.’’ December 2016. Available at: https://aspe.hhs.gov/pdf-report/reportcongress-social-risk-factors-and-performanceunder-medicares-value-based-purchasingprograms. 354 Available at: https://www.qualityforum.org/ SES_Trial_Period.aspx. 355 Available at: https://www.qualityforum.org/ WorkArea/ linkit.aspx?LinkIdentifier=id&ItemID=86357. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 useful to the public. We also sought public comment on confidential reporting and future public reporting of some of our measures stratified by patient dual eligibility. In general, commenters noted that stratified measures could serve as tools for hospitals to identify gaps in outcomes for different groups of patients, improve the quality of health care for all patients, and empower consumers to make informed decisions about health care. Commenters encouraged us to stratify measures by other social risk factors such as age, income, and educational attainment. With regard to value-based purchasing programs, commenters also cautioned to balance fair and equitable payment while avoiding payment penalties that mask health disparities or discouraging the provision of care to more medically complex patients. Commenters also noted that value-based purchasing program measure selection, domain weighting, performance scoring, and payment methodology must account for social risk. As a next step, CMS is considering options to improve health disparities among patient groups within and across hospitals by increasing the transparency of disparities as shown by quality measures. We also are considering how this work applies to other CMS quality programs in the future. We refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38403 through 38409) for more details, where we discuss the potential stratification of certain Hospital IQR Program outcome measures. Furthermore, we continue to consider options to address equity and disparities in our value-based purchasing programs. We plan to continue working with ASPE, the public, and other key stakeholders on this important issue to identify policy solutions that achieve the goals of attaining health equity for all beneficiaries and minimizing unintended consequences. 6. Possible New Quality Measure Topics for Future Years a. Background As discussed in sections section I.A.2. of the preamble of this proposed rule, we have begun analyzing our programs’ measures using the framework we developed for the Meaningful Measures Initiative. We have also discussed future quality measure topics and quality measure domain areas in the FY 2015 IPPS/LTCH PPS final rule (79 FR 50280), the FY 2016 IPPS/LTCH PPS final rule (80 FR4979), the FY 2017 IPPS/LTCH PPS final rule (81 FR 25211), and the FY 2018 IPPS/LTCH PO 00000 Frm 00345 Fmt 4701 Sfmt 4702 20507 PPS final rule (82 FR 38421 through 38423). Specifically, we discussed public comment and suggestions for measure topics addressing: (1) Making care affordable; (2) communication and care coordination; and (3) working with communities to promote best practices of healthy living. In addition, in the FY 2018 IPPS/LTCH PPS final rule, we welcomed public comment and specific suggestions for measure topics that we should consider for future rulemaking, including considerations related to risk adjustment and the inclusion of social risk factors in risk adjustment for any individual performance measures. In this proposed rule, we are again seeking public comment on the types of measure topics we should consider for future rulemaking. We also are seeking public comment on two measures for potential future inclusion in the PCHQR Program: • Risk-Adjusted Morbidity and Mortality for Lung Resection for Lung Cancer (NQF #1790); and • Shared Decision Making Process (NQF #2962). We discuss these measures and measurement topic areas in more detail below. b. Risk-Adjusted Morbidity and Mortality for Lung Resection for Lung Cancer (NQF #1790) The Risk-Adjusted Morbidity and Mortality for Lung Resection for Lung Cancer (NQF #1790) measure is an outcome measure. It assesses postoperative complications and operative mortality, which are important negative outcomes associated with lung cancer resection surgery. Specifically, the measure assesses the number of patients 18 years of age or older undergoing elective lung resection (Open or video-assisted thoracoscopic surgery (VATS) wedge resection, segmentectomy, lobectomy, bilobectomy, sleeve lobectomy, pneumonectomy) for lung cancer who developed one of the listed postoperative complications described in the measure’s specifications.356 The lung cancer resection risk model utilized in this measure identifies predictors of these outcomes, including patient age, smoking status, comorbid medical conditions, and other patient characteristics, as well as operative approach and the extent of pulmonary resection. Knowledge of these predictors informs clinical decision-making by 356 Risk-Adjusted Morbidity and Mortality for Lung Resection for Lung Cancer (NQF #1790) Measure Specifications. Available at: https:// www.qualityforum.org/Projects/Cancer_ Endorsement_Maintenance_2011.aspx#t=2& s=&p=3%7C. E:\FR\FM\07MYP2.SGM 07MYP2 20508 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules enabling physicians and patients to understand the associations between individual patient characteristics and outcomes. Further, with continuous feedback of performance data over time, knowledge of these predictors and their relationship with patient outcomes also will foster quality improvement. This measure aligns with recent initiatives to incorporate more outcome measures in quality reporting programs. This measure also aligns with the Promote Effective Prevention and Treatment of Chronic Disease domain of our Meaningful Measures Initiative,357 and would fill an existing gap area of risk-adjusted mortality measures in the PCHQR Program. This measure has not yet been reviewed by the MAP. Additional information on this measure is available at: https:// www.qualityforum.org/Projects/Cancer_ Endorsement_Maintenance_ 2011.aspx#t=2&s=&p=3%7C, under the ‘‘Candidate Consensus Standards Review: Phase-1’’ section. We are requesting public comment on the possible inclusion of this measure in future years of the program. daltland on DSKBBV9HB2PROD with PROPOSALS2 c. Shared Decision-Making Process (NQF #2962) The Shared Decision-Making Process (NQF #2962) measure is a patientreported outcome measure. This measure asks patients who had any of seven preference-sensitive surgical interventions to report on the interactions they had with their providers when the decision was made to have the surgery. Specifically, this measure assesses patient answers to four questions about whether three essential elements of shared decision-making: (1) Laying out options; (2) discussing the reasons to have the intervention and not to have the intervention; and (3) asking for patient input—were part of the patient’s interactions with providers when the decision was made to have the procedure. When faced with a medical problem for which there is more than one reasonable approach to treatment or management, shared decision-making means providers should outline for patients that there is a choice to be made, discuss the pros and cons of the available options, and make sure that patients have input into the final decision. The result will be decisions 357 Overview of CMS ‘‘Meaningful Measures’’ Initiative available at: https://www.cms.gov/ Newsroom/MediaReleaseDatabase/Press-releases/ 2017-Press-releases-items/2017-10-30.html. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 that align better with patient goals, concerns, and preferences. This measure aligns with recent initiatives to include patient-reported outcomes and experience of care into quality reporting programs, as well as to incorporate more outcome measures generally. This measure also aligns with the Strengthen Person and Family Engagement as Partners in Their Care domain of our Meaningful Measures Initiative,358 and would fill an existing gap area of care aligned with the person’s goals in the PCHQR Program. This measure has not yet been reviewed by the MAP. Additional information on this measure is available at: https:// www.qualityforum.org/ ProjectMeasures.aspx?projectID=80842. We are requesting public comment on the possible inclusion of this measure in future years of the program. d. Future Measurement Topic Areas As discussed in section I.A.2. of the preamble of this proposed rule, we intend to review and assess the quality measures that we collect and score in our quality programs. As a part of the review process, we are continually evaluating the existing PCHQR measures portfolio and identifying gap areas for future measure adoption and/ or development. In tandem with this portfolio evaluation, we have conducted a measure environmental scan. We believe that staying abreast of the cancer measurement environment and staying in communication with the cancer measure development community are vital to the ensure that the PCHQR Program measure portfolio remains aligned with current CMS and HHS goals. As a part of our efforts to include a comprehensive set of cancer measures in the PCHQR Program, we are currently assessing whether we should redefine the scope of new quality metrics we implement in the PCHQR Program in future years. Specifically, we are trying to determine whether the PCHQR Program would most benefit from the inclusion of more quality measures that examine general cancer care (that is, outcome measures that assess cancer care) or more measures that examine cancer-specific clinical conditions (such as prostate cancer, esophageal cancer, colon cancer, or uterine cancer). We welcome public comment and specific suggestions on the inclusion of quality measures that examine general 358 Ibid. PO 00000 Frm 00346 Fmt 4701 Sfmt 4702 cancer care versus the inclusion of quality measures that examine cancerspecific clinical conditions in future rulemaking. 7. Maintenance of Technical Specifications for Quality Measures We maintain technical specifications for the PCHQR Program measures, and we periodically update those specifications. The specifications may be found on the QualityNet website at: https://qualitynet.org/dcs/Content Server?c=Page&pagename=Qnet Public%2FPage%2FQnetTier2&cid= 1228774479863. We also refer readers to the FY 2015 IPPS/LTCH PPS final rule (79 FR 50281), where we adopted a policy under which we use a subregulatory process to make nonsubstantive updates to measures used for the PCHQR Program. 8. Public Display Requirements a. Background Under section 1866(k)(4) of the Act, we are required to establish procedures for making the data submitted under the PCHQR Program available to the public. Such procedures must ensure that a PCH has the opportunity to review the data that are to be made public with respect to the PCH prior to such data being made public. Section 1866(k)(4) of the Act also provides that the Secretary must report quality measures of process, structure, outcome, patients’ perspective on care, efficiency, and costs of care that relate to services furnished in such hospitals on the CMS website. In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57191 through 57192), we finalized that although we would continue to use rulemaking to establish what year we would first publicly report data on each measure, we would actually publish the data as soon as feasible during that year. We also stated that our intent is to make the data available on at least a yearly basis, and that the time period for PCHs to review their data before the data are made public would be approximately 30 days in length. We announce the exact data review and public reporting timeframes on a CMS website and/or on our applicable Listservs. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38422 through 38424), we listed our finalized public display requirements for the FY 2020 program year. E:\FR\FM\07MYP2.SGM 07MYP2 20509 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules PREVIOUSLY FINALIZED PUBLIC DISPLAY REQUIREMENTS FOR THE FY 2020 PROGRAM YEAR Summary of previously finalized public display requirements Measures • • • • • • • • • Public reporting Oncology: Radiation Dose Limits to Normal Tissues (NQF #0382). * Oncology: Plan of Care for Pain—Medical Oncology and Radiation Oncology (NQF #0383). Oncology: Medical and Radiation—Pain Intensity Quantified (NQF #0384). * Prostate Cancer: Avoidance of Overuse of Bone Scan for Staging Low Risk Prostate Cancer Patients (NQF #0389). * Prostate Cancer: Adjuvant Hormonal Therapy for High Risk Prostate Cancer Patients (NQF #0390). * HCAHPS (NQF #0166) .................................................................................................................................. CLABSI (NQF #0139). * CAUTI (NQF #0138). * .................................................................................................................................... External Beam Radiotherapy for Bone Metastases (NQF #1822) ................................................................ 2016 and subsequent years. Deferred. Beginning when feasible in 2017 and for subsequent years. * Measure proposed for removal beginning with the FY 2021 program year. We recognize the importance of being transparent with stakeholders and keeping them abreast of any changes that arise with the PCHQR set. As such, we provide a discussion of some recent changes affecting the timetable for the public displaying of data for specific PCHQR measures in the section below. b. Proposed Deferment of Public Display of Four Measures We adopted the Colon and Abdominal Hysterectomy SSI (NQF #0753) measure in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50839 through 50840) and the MRSA measure (NQF #1716), the CDI measure (NQF #1717) and the HCP measure (NQF #0431) in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49715 through 49718). At present, all PCHs are reporting Colon and Abdominal Hysterectomy SSI, MRSA, CDI, and HCP data to the NHSN under the PCHQR Program. However, performance data for these measures are new, and do not span a long enough measurement period to draw conclusions about their statistical significance at this point. Specifically, in 2016, the Centers for Disease Control and Prevention (CDC) announced that HAI data reported to NHSN for 2015 will be used as the new baseline, serving as a new ‘‘reference point’’ for comparing progress.359 These current rebaselining efforts make year-to-year data comparisons inappropriate at this time. However, in FY 2019, we will have 2 years of comparable data to properly assess trends.360 Therefore, we are proposing to delay the public reporting of data for the SSI, MRSA, CDI, and HCP measures until CY 2019. We are inviting public comment on our proposal to delay public reporting of these four measures until CY 2019. c. Clarification of Public Display of External Beam Radiotherapy for Bone Metastases (EBRT) (NQF #1822) Measure In the FY 2015 IPPS/LTCH PPS final rule (79 FR 50282 through 50283), we finalized that PCHs would begin reporting the External Beam Radiotherapy for Bone Metastases (EBRT) (NQF #1822) measure beginning with January 1, 2015 discharges and for subsequent years. We finalized that PCHs would report this measure to us via a CMS web-based tool on an annual basis (July 1 through August 15 of each respective year). Lastly, we finalized in the FY 2017 IPPS/LTCH PPS final rule (81 FR 57192) that we would begin to display the measure data during CY 2017, and that we would use a CMS website and/or our applicable Listservs to announce the exact timeframe. We publicly reported data on this measure in December of 2017, and that data can be accessed on Hospital Compare at: https://www.medicare.gov/ hospitalcompare/cancer-measures.html. We note that this measure is updated on an annual basis, and that new Hospital Compare data is published four times each year: April, July, October, and December. As such, we anticipate an update of EBRT measure data to be available in December of 2018. d. Summary of Proposed Public Display Requirements for the FY 2021 Program Year Our proposed public display requirements for the FY 2021 program year are shown in the following table: PROPOSED PUBLIC DISPLAY REQUIREMENTS FOR THE FY 2021 PROGRAM YEAR Summary of newly proposed public display requirements daltland on DSKBBV9HB2PROD with PROPOSALS2 Measures Public reporting • HCAHPS (NQF #0166) .................................................................................................................................. • Oncology: Plan of Care for Pain—Medical Oncology and Radiation Oncology (NQF #0383). • American College of Surgeons—Centers for Disease Control and Prevention (ACS–CDC) Harmonized Procedure Specific Surgical Site Infection (SSI) Outcome Measure [currently includes SSIs following Colon Surgery and Abdominal Hysterectomy Surgery] (NQF #0753). • National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Methicillin-resistant Staphylococcus aureus Bacteremia Outcome Measure (NQF #1716). • National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Clostridium difficile Infection (CDI) Outcome Measure (NQF #1717). • National Healthcare Safety Network (NHSN) Influenza Vaccination Coverage Among Healthcare Personnel (NQF #0431). 359 Centers for Disease Control and Prevention. ‘‘Paving Path Forward: 2015 Rebase line.’’ Available VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 at: https://www.cdc.gov/nhsn/2015rebaseline/ index.html. PO 00000 Frm 00347 Fmt 4701 Sfmt 4702 2016 and subsequent years. * Deferred 2019. Until Calendar 360 Rebase line Timeline FAQ Document. Available at: https://www.cdc.gov/nhsn/pdfs/ rebaseline/faq-timeline-rebaseline.pdf. E:\FR\FM\07MYP2.SGM 07MYP2 Year 20510 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules PROPOSED PUBLIC DISPLAY REQUIREMENTS FOR THE FY 2021 PROGRAM YEAR—Continued Summary of newly proposed public display requirements Measures Public reporting • External Beam Radiotherapy for Bone Metastases (EBRT) (NQF #1822) ................................................... 2017 and subsequent years. * Newly proposed in this FY 2019 IPPS/LTCH PPS proposed rule. 9. Form, Manner, and Timing of Data Submission a. Background Data submission requirements and deadlines for the PCHQR Program are generally posted on the QualityNet website at: https://www.qualitynet.org/ dcs/ContentServer?c=Page& pagename=QnetPublic%2FPage%2 FQnetTier3&cid=1228772864228. b. Proposed Reporting Requirements for the Newly Proposed 30-Day Unplanned Readmissions for Cancer Patients Measure As further described in section VIII.B.4.b. of the preamble of this proposed rule, we are proposing the adoption of a new measure beginning with the FY 2021 program year, the 30Day Unplanned Readmissions for Cancer Patients measure. This is a claims-based measure, therefore, there will be no separate data submission requirements for PCHs related to this measure as CMS will calculate measure rates from PCH claims data. We are proposing that the data collection period would be from July 1 of the year 3 years prior to the program year to June 30 of the year 2 years prior to the program year. Therefore, for the FY 2021 program year, we would collect data from October 1, 2018 through September 30, 2019. We are inviting public comment on this proposal. daltland on DSKBBV9HB2PROD with PROPOSALS2 10. Extraordinary Circumstances Exceptions (ECE) Policy Under the PCHQR Program In our experience with other quality reporting and performance programs, we have noted occasions when providers have been unable to submit required quality data due to extraordinary circumstances that are not within their control (for example, natural disasters). We do not wish to increase their burden unduly during these times. Therefore, in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50848), we finalized our policy that, for the FY 2014 program year and subsequent years, PCHs may request and we may grant exceptions (formerly VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 referred to as waivers) 361 with respect to the reporting of required quality data when extraordinary circumstances beyond the control of the PCH warrant. The PCH may request a reporting extension or a complete exception from the requirement to submit quality data for one or more quarters. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38424 through 38425), we finalized modifications to the extraordinary circumstances exceptions (ECE) policy to extend the deadline for a PCH to submit a request for an extension or exception from 30 days following the date that the extraordinary circumstance occurred to 90 days following the date that the extraordinary circumstance occurred and to allow CMS to grant an exception or extension due to CMS data system issues which affect data submission. In addition, to ensure transparency and understanding of our process, we have clarified that we will strive to provide our response to an ECE request within 90 days of receipt. C. Long-Term Care Hospital Quality Reporting Program (LTCH QRP) 1. Background The LTCH QRP is authorized by section 1886(m)(5) of the Act, and it applies to all hospitals certified by Medicare as long-term care hospitals (LTCHs). Under the LTCH QRP, the Secretary reduces by two percentage points the annual update to the LTCH PPS standard Federal rate for discharges for an LTCH during a fiscal year if the LTCH has not complied with the LTCH QRP requirements specified for that fiscal year. For more detailed information on the requirements we have adopted for the LTCH QRP, we refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51743 through 51744), the FY 2013 IPPS/LTCH PPS final rule (77 FR 53614), the FY 2014 IPPS/LTCH PPS final rule (78 FR 50853), the FY 2015 IPPS/LTCH PPS final rule (79 FR 50286), the FY 2016 IPPS/LTCH PPS final rule (80 FR 49723 through 49725), the FY 2017 IPPS/LTCH PPS final rule (81 FR 57193), and the FY 361 ECEs were originally referred to as ‘‘waivers.’’ This term was changed to ‘‘exceptions’’ in the FY 2015 IPPS/LTCH PPS final rule (79 FR 50286). PO 00000 Frm 00348 Fmt 4701 Sfmt 4702 2018 IPPS/LTCH PPS final rule (82 FR 38425 through 38426). Although we have historically used the preamble to the IPPS/LTCH PPS proposed and final rules each year to remind stakeholders of all previously finalized program requirements, we have concluded that repeating the same discussion each year is not necessary for every requirement, especially if we have codified it in our regulations. Accordingly, the following discussion is limited as much as possible to a discussion of our proposals for future years of the LTCH QRP, and represents the approach we intend to use in our rulemakings for this program going forward. 2. General Considerations Used for the Selection of Measures for the LTCH QRP a. Background For a detailed discussion of the considerations we historically used for the selection of LTCH QRP quality, resource use, and other measures, we refer readers to the FY 2016 IPPS/LTCH PPS final rule (80 FR 49728). b. Accounting for Social Risk Factors in the LTCH QRP In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38428 through 38429), we discussed the importance of improving beneficiary outcomes including reducing health disparities. We also discussed our commitment to ensuring that medically complex patients, as well as those with social risk factors, receive excellent care. We discussed how studies show that social risk factors, such as being near or below the poverty level as determined by HHS, belonging to a racial or ethnic minority group, or living with a disability, can be associated with poor health outcomes and how some of this disparity is related to the quality of health care.362 Among our core objectives, we aim to improve health outcomes, attain health 362 See, for example United States Department of Health and Human Services. ‘‘Healthy People 2020: Disparities. 2014.’’ Available at: https:// www.healthypeople.gov/2020/about/foundationhealth-measures/Disparities; or National Academies of Sciences, Engineering, and Medicine. Accounting for Social Risk Factors in Medicare Payment: Identifying Social Risk Factors. Washington, DC: National Academies of Sciences, Engineering, and Medicine 2016. E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 equity for all beneficiaries, and ensure that complex patients as well as those with social risk factors receive excellent care. Within this context, reports by the Office of the Assistant Secretary for Planning and Evaluation (ASPE) and the National Academy of Medicine have examined the influence of social risk factors in our value-based purchasing programs.363 As we noted in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38404), ASPE’s report to Congress, which was required by the IMPACT Act, found that, in the context of value-based purchasing programs, dual eligibility was the most powerful predictor of poor health care outcomes among those social risk factors that they examined and tested. ASPE is continuing to examine this issue in its second report required by the IMPACT Act, which is due to Congress in the fall of 2019. In addition, as we noted in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38428), the National Quality Forum (NQF) undertook a 2-year trial period in which certain new measures and measures undergoing maintenance review have been assessed to determine if risk adjustment for social risk factors is appropriate for these measures.364 The trial period ended in April 2017 and a final report is available at: https:// www.qualityforum.org/SES_Trial_ Period.aspx. The trial concluded that ‘‘measures with a conceptual basis for adjustment generally did not demonstrate an empirical relationship’’ between social risk factors and the outcomes measured. This discrepancy may be explained in part by the methods used for adjustment and the limited availability of robust data on social risk factors. NQF has extended the socioeconomic status (SES) trial,365 allowing further examination of social risk factors in outcome measures. In the FY 2018/CY 2018 proposed rules for our quality reporting and value-based purchasing programs, we solicited feedback on which social risk factors provide the most valuable information to stakeholders and the methodology for illuminating differences in outcomes rates among patient groups within a provider that 363 Department of Health and Human Services Office of the Assistant Secretary for Planning and Evaluation (ASPE), ‘‘Report to Congress: Social Risk Factors and Performance Under Medicare’s ValueBased Purchasing Programs.’’ December 2016. Available at: https://aspe.hhs.gov/pdf-report/reportcongress-social-risk-factors-and-performanceunder-medicares-value-based-purchasingprograms. 364 Available at: https://www.qualityforum.org/ SES_Trial_Period.aspx. 365 Available at: https://www.qualityforum.org/ WorkArea/linkit.aspx?LinkIdentifier=id&Item ID=86357. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 would also allow for a comparison of those differences, or disparities, across providers. Feedback we received across our quality reporting programs included encouraging CMS: To explore whether factors that could be used to stratify or risk adjust the measures (beyond dual eligibility); to consider the full range of differences in patient backgrounds that might affect outcomes; to explore risk adjustment approaches; and to offer careful consideration of what type of information display would be most useful to the public. We also sought public comment on confidential reporting and future public reporting of some of our measures stratified by patient dual eligibility. In general, commenters noted that stratified measures could serve as tools for hospitals to identify gaps in outcomes for different groups of patients, improve the quality of health care for all patients, and empower consumers to make informed decisions about health care. Commenters encouraged us to stratify measures by other social risk factors such as age, income, and educational attainment. With regard to value-based purchasing programs, commenters also cautioned CMS to balance fair and equitable payment while avoiding payment penalties that mask health disparities or discouraging the provision of care to more medically complex patients. Commenters also noted that value-based payment program measure selection, domain weighting, performance scoring, and payment methodology must account for social risk. As a next step, we are considering options to improve health disparities among patient groups within and across hospitals by increasing the transparency of disparities as shown by quality measures. We also are considering how this work applies to other CMS quality programs in the future. We refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38403 through 38409) for more details, where we discuss the potential stratification of certain Hospital IQR Program outcome measures. Furthermore, we continue to consider options to address equity and disparities in our value-based purchasing programs. We plan to continue working with ASPE, the public, and other key stakeholders on this important issue to identify policy solutions that achieve the goals of attaining health equity for all beneficiaries and minimizing unintended consequences. PO 00000 Frm 00349 Fmt 4701 Sfmt 4702 20511 3. Proposed New Measure Removal Factor for Previously Adopted LTCH QRP Measures As a part of our Meaningful Measures Initiative, discussed in section I.A.2. of the preamble of this proposed rule, we strive to put patients first, ensuring that they, along with their clinicians, are empowered to make decisions about their own healthcare using data-driven information that is increasingly aligned with a parsimonious set of meaningful quality measures. We began reviewing the LTCH QRP’s measures in accordance with the Meaningful Measures Initiative, and we are working to identify how to move the LTCH QRP forward in the least burdensome manner possible, while continuing to incentivize improvement in the quality of care provided to patients. Specifically, we believe the goals of the LTCH QRP and the measures used in the program cover most of the Meaningful Measures Initiative priorities, including making care safer, strengthening person and family engagement, promoting coordination of care, promoting effective prevention and treatment, and making care affordable. We also evaluated the appropriateness and completeness of the LTCH QRP’s current measure removal factors. We have previously finalized that we would use notice and comment rulemaking to remove measures from the LTCH QRP based on the following factors (77 FR 53614 through 53615): 366 • Factor 1. Measure performance among LTCHs is so high and unvarying that meaningful distinctions in improvements in performance can no longer be made. • Factor 2. Performance or improvement on a measure does not result in better patient outcomes. • Factor 3. A measure does not align with current clinical guidelines or practice. • Factor 4. A more broadly applicable measure (across settings, populations, or conditions) for the particular topic is available. • Factor 5. A measure that is more proximal in time to desired patient outcomes for the particular topic is available. • Factor 6. A measure that is more strongly associated with desired patient outcomes for the particular topic is available. • Factor 7. Collection or public reporting of a measure leads to negative 366 We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53614 through 53615) for more information on the factors we consider for removing measures. E:\FR\FM\07MYP2.SGM 07MYP2 20512 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules unintended consequences other than patient harm. We continue to believe that these measure removal factors are appropriate for use in the LTCH QRP. However, even if one or more of the measure removal factors applies, we may nonetheless choose to retain the measure for certain specified reasons. Examples of such instances could include when a particular measure addresses a gap in quality that is so significant that removing the measure could, in turn, result in poor quality, or in the event that a given measure is statutorily required. We note further that, consistent with other quality reporting programs, we apply these factors on a case-by-case basis. We are proposing to adopt an additional factor to consider when evaluating potential measures for removal from the LTCH QRP measure set: Factor 8, the costs associated with a measure outweigh the benefit of its continued use in the program. As we discussed in section I.A.2. of the preamble of this proposed rule, with respect to our new Meaningful Measures Initiative, we are engaging in efforts to ensure that the LTCH QRP measure set continues to promote improved health outcomes for beneficiaries while minimizing the overall costs associated with the program. We believe these costs are multi-faceted and include not only the burden associated with reporting, but also the costs associated with implementing and maintaining the program. We have identified several different types of costs, including, but not limited to: (1) The provider and clinician information collection burden and burden associated with the submission/reporting of quality measures to CMS; (2) the provider and clinician cost associated with complying with other programmatic requirements; (3) the provider and clinician cost associated with participating in multiple quality programs, and tracking multiple similar or duplicative measures within or across those programs; (4) the cost to CMS associated with the program oversight of the measure including measure maintenance and public display; and (5) the provider and clinician cost associated with compliance with other federal and/or state regulations (if applicable). For example, it may be needlessly costly and/or of limited benefit to retain or maintain a measure which our analyses show no longer meaningfully supports program objectives (for example, informing beneficiary choice). It may also be costly for health care providers to track the confidential feedback, preview reports, and publicly reported information on a measure where we use the measure in more than one program. CMS may also have to expend unnecessary resources to maintain the specifications for the measure, as well as the tools we need to collect, validate, analyze, and publicly report the measure data. Furthermore, beneficiaries may find it confusing to see public reporting on the same measure in different programs. When these costs outweigh the evidence supporting the continued use of a measure in the LTCH QRP, we believe it may be appropriate to remove the measure from the program. Although we recognize that one of the main goals of the LTCH QRP is to improve beneficiary outcomes by incentivizing health care providers to focus on specific care issues and making public data related to those issues, we also recognize that those goals can have limited utility where, for example, the publicly reported data is of limited use because it cannot be easily interpreted by beneficiaries and used to influence their choice of providers. In these cases, removing the measure from the LTCH QRP may better accommodate the costs of program administration and compliance without sacrificing improved health outcomes and beneficiary choice. We are proposing that we would remove measures based on this factor on a case-by-case basis. We might, for example, decide to retain a measure that is burdensome for health care providers to report if we conclude that the benefit to beneficiaries justifies the reporting burden. Our goal is to move the program forward in the least burdensome manner possible, while maintaining a parsimonious set of meaningful quality measures and continuing to incentivize improvement in the quality of care provided to patients. We are inviting public comment on our proposal to adopt an additional measure removal Factor 8, the costs associated with a measure outweigh the benefit of its continued use in the program. We also are proposing to codify both the removal factors we previously finalized for the LTCH QRP, as well as the new the measure removal factor that we are proposing to adopt in this rule, at § 412.560(b)(3) of our regulations. We are inviting public comment on these proposals. 4. Quality Measures Currently Adopted for the FY 2020 LTCH QRP The LTCH QRP currently has 19 measures for the FY 2020 program year, which are outlined in the following table: QUALITY MEASURES CURRENTLY ADOPTED FOR THE FY 2020 LTCH QRP Short name Measure name and data source LTCH CARE Data Set Pressure Ulcer ...................................... Pressure Ulcer/Injury ............................ Patient Influenza Vaccine ..................... daltland on DSKBBV9HB2PROD with PROPOSALS2 Application of Falls ............................... Functional Assessment ........................ Application of Functional Assessment Change in Mobility ................................ DRR ...................................................... Compliance with SBT ........................... VerDate Sep<11>2014 20:30 May 04, 2018 Percent of Residents or Patients With Pressure Ulcers That Are New or Worsened (Short Stay) (NQF #0678). * Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury. Percent of Residents or Patients Who Were Assessed and Appropriately Given the Seasonal Influenza Vaccine (Short Stay) (NQF #0680). Application of Percent of Residents Experiencing One or More Falls with Major Injury (Long Stay) (NQF #0674). Percent of Long-Term Care Hospital (LTCH) Patients with an Admission and Discharge Functional Assessment and a Care Plan That Addresses Function (NQF #2631). Application of Percent of Long-Term Care Hospital (LTCH) Patients with an Admission and Discharge Functional Assessment and a Care Plan That Addresses Function (NQF #2631). Functional Outcome Measure: Change in Mobility Among Long-Term Care Hospital (LTCH) Patients Requiring Ventilator Support (NQF #2632). Drug Regimen Review Conducted With Follow-Up for Identified Issues—Post Acute Care (PAC) LongTerm Care Hospital (LTCH) Quality Reporting Program (QRP). Compliance with Spontaneous Breathing Trial (SBT) by Day 2 of the LTCH Stay. Jkt 244001 PO 00000 Frm 00350 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20513 QUALITY MEASURES CURRENTLY ADOPTED FOR THE FY 2020 LTCH QRP—Continued Short name Measure name and data source Ventilator Liberation ............................. Ventilator Liberation Rate. NHSN CAUTI ................................................... CLABSI ................................................. MRSA ................................................... CDI ....................................................... HCP Influenza Vaccine ........................ VAE ...................................................... National Healthcare Safety Network (NHSN) Catheter-Associated Urinary Tract Infection (CAUTI) Outcome Measure (NQF #0138). National Healthcare Safety Network (NHSN) Central Line-associated Bloodstream Infection (CLABSI) Outcome Measure (NQF #0139). National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Methicillin-resistant Staphylococcus aureus (MRSA) Bacteremia Outcome Measure (NQF #1716). National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Clostridium difficile Infection (CDI) Outcome Measure (NQF #1717). Influenza Vaccination Coverage among Healthcare Personnel (NQF #0431). National Healthcare Safety Network (NHSN) Ventilator-Associated Event (VAE) Outcome Measure. Claims-Based MSPB LTCH ......................................... DTC ...................................................... PPR ...................................................... Medicare Spending Per Beneficiary (MSPB)-Post Acute Care (PAC) Long-Term Care Hospital (LTCH) Quality Reporting Program (QRP). Discharge to Community-Post Acute Care (PAC) Long-Term Care Hospital (LTCH) Quality Reporting Program (QRP). Potentially Preventable 30-Day Post-Discharge Readmission Measure for Long-Term Care Hospital (LTCH) Quality Reporting Program (QRP). * The measure will be replaced with the Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury measure, effective July 1, 2018. 5. Proposed Removal of Three LTCH QRP Measures We are proposing to remove three measures from the LTCH QRP measure set. Beginning with the FY 2020 LTCH QRP, we are proposing to remove two measures: (1) National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Methicillin-resistant Staphylococcus aureus (MRSA) Bacteremia Outcome Measure (NQF #1716); and (2) National Healthcare Safety Network (NHSN) VentilatorAssociated Event (VAE) Outcome Measure. We are proposing to remove one measure beginning with the FY 2021 LTCH QRP: Percent of Residents or Patients Who Were Assessed and Appropriately Given the Seasonal Influenza Vaccine (Short Stay) (NQF #0680). We discuss these proposals below. daltland on DSKBBV9HB2PROD with PROPOSALS2 a. Proposed Removal of the National Healthcare Safety Network (NHSN) Facility-Wide Inpatient Hospital-Onset Methicillin-Resistant Staphylococcus aureus (MRSA) Bacteremia Outcome Measure (NQF #1716) We are proposing to remove the measure, National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Methicillin-Resistant Staphylococcus aureus (MRSA) Bacteremia Outcome Measure (NQF #1716), from the LTCH QRP beginning with the FY 2020 LTCH QRP. As discussed in section VIII.C.3. of the preamble of this proposed rule, one of the main goals of our Meaningful VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Measures Initiative is to apply a parsimonious set of the most meaningful measures available to track patient outcomes and impact. We currently collect data on two measures of healthcare-associated bacteremia infections in the LTCH QRP: (1) NHSN Central line-associated Bloodstream Infection (CLABSI) Outcome Measure (NQF #0139); and (2) NHSN Facilitywide Inpatient Hospital-onset Methicillin-resistant Staphylococcus aureus (MRSA) Bacteremia Outcome Measure (NQF #1716). In our review of these measures used in the LTCH QRP, we believe that it is appropriate to remove the NHSN Facility-wide Inpatient Hospital-onset Methicillin-resistant Staphylococcus aureus (MRSA) Bacteremia Outcome Measure (NQF #1716) based on: (1) Factor 6, a measure that is more strongly associated with desired patient outcomes for the particular topic is available; and (2) proposed Factor 8, the costs associated with a measure outweigh the benefit of its continued use in the program. We believe that the NHSN CLABSI Outcome Measure (NQF #0139) is more strongly associated with the desired patient outcome for bloodstream infections than the NHSN Facility-wide Inpatient Hospital-Onset MRSA Bacteremia Outcome Measure (NQF #1716). Bloodstream infections are serious infections typically causing a prolongation of hospital stay and increased cost and risk of mortality. The NHSN CLABSI Outcome Measure (NQF #0139) assesses the results of the quality PO 00000 Frm 00351 Fmt 4701 Sfmt 4702 of care provided to patients, and it is risk-adjusted to compare the infection rate for a particular location or locations in a hospital with an expected infection rate for those locations (which is calculated using national NHSN data for those locations in a predictive model). The NHSN CLABSI Outcome Measure (NQF #0139) is more strongly associated with the desired patient outcome of better results in the quality of care provided to patients because it covers a wide range of blood-stream infections, while the NHSN Facility-wide Inpatient Hospital-Onset MRSA Bacteremia Outcome Measure (NQF #1716) only covers MRSA observed hospital-onset unique blood source MRSA laboratoryidentified events. The NHSN CLABSI Outcome Measure (NQF #0139) also captures the MRSA blood-stream events, creating potential duplicative collection and reporting. We also believe that the costs associated with the NHSN Facility-wide Inpatient Hospital-Onset MRSA Bacteremia Outcome Measure (NQF #1716) outweigh the benefit of its continued use in the LTCH QRP. The NHSN Facility-wide Inpatient HospitalOnset MRSA Bacteremia Outcome Measure (NQF #1716) was adopted to assess MRSA infections caused by a strain of MRSA bacteremia that has become resistant to antibiotics commonly used to treat MRSA infections. The NHSN Facility-wide Inpatient Hospital-Onset MRSA Bacteremia Outcome Measure (NQF #1716) and NHSN CLABSI Outcome Measure (NQF #0139) capture the same E:\FR\FM\07MYP2.SGM 07MYP2 20514 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 type of MRSA infection. This overlap results in the data submission on two measures that cover the same quality issue. We believe that this results in redundant efforts on the part of LTCHs that are costly and burdensome. In addition, the maintenance of these two measures in the LTCH QRP is costly for CMS. Lastly, we believe that the removal of the NHSN Facility-wide Inpatient Hospital-Onset MRSA Bacteremia Outcome Measure (NQF #1716) would benefit the public by eliminating the potential confusion of seeing two different measure rates on LTCH Compare that capture MRSA bacteremia. If finalized, LTCHs would continue to report MRSA bacteremia events associated with central line use as part of the NHSN CLABSI Outcome Measure (NQF #0139), and LTCHs would additionally report as part of that measure other acquired central lineassociated bloodstream infections. As a result, duplication of data submission of the same MRSA bacteremia event for these two measures would be eliminated and only a single bacteremia outcome measure would be publicly reported on LTCH Compare. Therefore, we are proposing to remove the NHSN Facility-wide Inpatient Hospital-onset MRSA Bacteremia Outcome Measure (NQF #1716) from the LTCH QRP beginning with the FY 2020 LTCH QRP under: (1) Factor 6, a measure that is more strongly associated with desired patient outcomes for the particular topic is available; and (2) proposed measure removal Factor 8, the costs associated with a measure outweigh the benefit of its continued use in the program. If finalized as proposed, LTCHs would no longer be required to submit data on this measure for the purposes of the LTCH QRP beginning with October 1, 2018 admissions and discharges. We are inviting public comment on this proposal. b. Proposed Removal of the National Healthcare Safety Network (NHSN) Ventilator-Associated-Event (VAE) Outcome Measure We are proposing to remove the National Healthcare Safety Network (NHSN) Ventilator-Associated Event (VAE) Outcome Measure from the LTCH QRP beginning with the FY 2020 LTCH QRP based on Factor 6, a measure that is more strongly associated with desired patient outcomes for the particular topic is available. We finalized the National Healthcare Safety Network (NHSN) VentilatorAssociated Event (VAE) Outcome Measure in the FY 2015 IPPS/LTCH PPS VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 final rule (79 FR 50301 through 50305) to assess whether LTCHs monitor ventilator use and identify improvements in preventing complications associated with mechanical ventilation. We have also adopted for the LTCH QRP three other assessment-based quality measures on the topic of ventilator support: (1) Functional Outcome Measure: Change in Mobility among Long-Term Care Hospital Patients Requiring Ventilator Support (NQF #2632) (79 FR 50298 through 50301); (2) Compliance with Spontaneous Breathing Trials (SBT) by Day 2 of the LTCH Stay (82 FR 38439 through 38443); and (3) Ventilator Liberation Rate (82 FR 38443 through 38446). We believe that these three other assessment-based quality measures are more strongly associated with desired patient outcomes than the National Healthcare Safety Network (NHSN) Ventilator-Associated Event (VAE) Outcome Measure that we are proposing to remove. The three assessment-based measures assess activities that reduce the potential for serious complications and other adverse events as a result of mechanical ventilation. Specifically, the Functional Outcome Measure: Change in Mobility among Long-Term Care Hospital Patients Requiring Ventilator Support (NQF #2632) focuses on improvement in functional mobility for patients requiring mechanical ventilation. The Compliance with SBT by Day 2 of the LTCH Stay measure focuses on successfully liberating patients from mechanical ventilation as soon as possible, which reduces the risk associated with events as a result of prolonged ventilator support. The Ventilator Liberation Rate measure assesses whether the patient was fully liberated from mechanical ventilation at discharge. Together, these three ventilator-related assessment-based quality measures assess positive outcomes and track patient goals of avoiding adverse outcomes associated with mechanical ventilation and successful ventilator weaning. The inclusion in the LTCH QRP measure set of these three ventilatorrelated assessment-based measures, which focus on quality of care through promotion of positive outcomes, have reduced poor outcomes associated with the complications of ventilator care, which is the same focus of the National Healthcare Safety Network (NHSN) Ventilator-Associated Event (VAE) Outcome Measure (for example, worsening oxygenation, infection or inflammation, ventilator-associated pneumonia, or even death). As a result, we do not believe that it is necessary to PO 00000 Frm 00352 Fmt 4701 Sfmt 4702 retain all four of these measures in the LTCH QRP. By retaining the three ventilator-related assessment-based measures but removing the National Healthcare Safety Network (NHSN) Ventilator-Associated Event (VAE) Outcome Measure, we believe that we can focus our mechanical ventilation topic measures on measures that promote positive outcomes while indirectly promoting a reduction in ventilator support complications. For these reasons, we are proposing to remove the National Healthcare Safety Network (NHSN) Ventilator-Associated Event (VAE) Outcome Measure from the LTCH QRP beginning with the FY 2020 LTCH QRP under Factor 6, the measure that is more strongly associated with desired patient outcomes for the particular topic is available. If finalized as proposed, LTCHs would no longer be required to submit data on this measure for the purposes of the LTCH QRP beginning with October 1, 2018 admissions and discharges. c. Proposed Removal of the Percent of Residents or Patients Who Were Assessed and Appropriately Given the Seasonal Influenza Vaccine (Short Stay) (NQF #0680) Measure We are proposing to remove the process measure, Percent of Residents or Patients Who Were Assessed and Appropriately Given the Seasonal Influenza Vaccine (Short Stay) (NQF #0680), beginning with the FY 2021 LTCH QRP under proposed measure removal Factor 8, the costs associated with a measure outweigh the benefit of its continued use in the program. This process measure reports the percentage of stays in which a patient was assessed and appropriately given the influenza vaccine for the most recent influenza vaccination season and was adopted in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53624 through 53627) to assess vaccination rates among older adults with the goal of reducing the incidence of influenza in this population. Specifically, adoption of the measure in the LTCH QRP was intended to act as a safeguard for patients who did not receive vaccinations prior to admission to an LTCH, since many patients receiving care in the LTCH setting are older adults, those 65 years and older, considered to be the target population for the influenza vaccination. In our evaluation of the LTCH QRP measure set, our analysis of this particular measure revealed that for the 2016–2017 influenza season, nearly every patient was assessed by the LTCH upon admission and that less than 0.04 percent of patients were not assessed for E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 the vaccination. Of those assessed, the data show that most patients who could receive the vaccine had already received the vaccine outside of the LTCH facility, prior to admission. In addition, we have heard from stakeholders that the data collection associated with this measure is administratively costly and burdensome for LTCHs, and that the process of assessing whether vaccination is needed is often a duplicative process for patients who were already screened during their proximal stay at an acute care facility. We believe that removing this measure would reduce provider costs and burden by eliminating duplicative patient assessments across healthcare settings, minimizing data collection and reporting, and avoiding potentially confusing public reporting of other influenza-related quality measures, such as the Influenza Vaccination Coverage Among Healthcare Personnel (NQF #0431) measure. We recognize that influenza is a major public health issue. However, based on our analysis of the Percent of Residents or Patients Who Were Assessed and Appropriately Given the Seasonal Influenza Vaccine (Short Stay) (NQF #0680) measure, including data showing that most LTCH patients are vaccinated before they are admitted to the LTCH, we believe that LTCH patients will continue to be assessed and immunized when appropriate in the absence of this measure. As a result, removal of this measure would alleviate the operational costs and burden that LTCHs currently incur with respect to collecting the data necessary to report this measure. Therefore, we are proposing to remove this measure from the LTCH QRP beginning with the FY 2021 LTCH QRP under proposed measure removal Factor 8, the costs associated with a measure outweigh the benefit of its continued use in the program. If finalized as proposed, LTCHs would no longer be required to report the data elements necessary to calculate this measure beginning with October 1, 2018 367 admissions and discharges. We plan to remove the data elements from the LTCH CARE Data Set as soon as feasible. Beginning with October 1, 2018 admissions and discharges, LTCHs 367 The October 1, 2018 date is proposed as the date in which LTCHs would no longer be required to report the data elements necessary to calculate this measure because the influenza vaccination season for the Percent of Residents or Patients Who Were Assessed and Appropriately Given the Seasonal Influenza Vaccine (Short Stay) (NQF #0680) measure begins October 1, 2018 and ends March 31, 2019, and includes all patients who were in an LTCH for one or more days during the influenza vaccination season. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 should enter a dash ( – ) for O0250A, O0250B, and O0250C until the next LTCH CARE Data Set is released. We are inviting public comment on this proposal. 6. IMPACT Act Implementation Update In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38449), we stated that we intended to specify two measures that would satisfy the domain of accurately communicating the existence and provision of the transfer of health information and care preferences under section 1899B(c)(1)(E) of the Act no later than October 1, 2018, and intended to propose to adopt them for the FY 2021 LTCH QRP with data collection beginning on or about April 1, 2019. As a result of the input provided during a public comment period initiated by our contractor between November 10, 2016 and December 11, 2016, input provided by a technical expert panel (TEP) convened by our contractor, and pilot measure testing conducted in 2017, we are engaging in continued development work on these two measures, including supplementary measure testing and providing the public with an opportunity for comment in 2018. Further, we expect to reconvene a TEP for these measures in mid-2018. We now intend to specify the measures under section 1899B(c)(1)(E) of the Act no later than October 1, 2019 and intend to propose to adopt the measures for the FY 2022 LTCH QRP, with data collection beginning with April 1, 2020 admissions and discharges. For more information on the pilot testing, we refer readers to: https:// www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/Post-Acute-Care-QualityInitiatives/IMPACT-Act-of-2014/ IMPACT-Act-Downloads-andVideos.html. 7. Form, Manner, and Timing of Data Submission Under the LTCH QRP Under our current policy, LTCHs report data on LTCH QRP assessmentbased measures and standardized patient assessment data by reporting the designated data elements for each applicable patient on the LTCH CARE Data Set patient assessment instrument and then submitting the completed instruments to CMS using the Quality Improvement and Evaluation System (QIES) Assessment and Submission Processing (ASAP) system. Data on LTCH QRP measures that are also collected by the Centers for Disease Control and Prevention (CDC) for other purposes are reported by LTCHs to the CDC through the NHSN, and the CDC then transmits the relevant data to CMS. PO 00000 Frm 00353 Fmt 4701 Sfmt 4702 20515 We refer readers to the FY 2018 IPPS/ LTCH PPS final rule (82 FR 38454 through 38456) for the data collection and submission timeframes that we finalized for the LTCH QRP. We are seeking input on whether we should move the implementation date of any new version of the LTCH CARE Data Set from the usual release date of April to October in the future. We are inviting public comment on this topic. 8. Proposed Changes to the LTCH QRP Reconsideration Requirements Section 412.560(d)(1) of our regulations states that CMS will send an LTCH written notification of a decision of noncompliance with the measures data and standardized patient assessment data reporting requirements for a particular fiscal year. It also states that CMS will use the QIES ASAP system to provide notification of noncompliance to the LTCH. We are proposing to revise § 412.560(d)(1) to expand the methods by which we would notify an LTCH of noncompliance with the LTCH QRP requirements for a program year. Revised § 412.560(d)(1) would state that we would notify LTCHs of noncompliance with the LTCH QRP requirements via a letter sent through at least one of the following notification methods: The QIES ASAP system, the United States Postal Service, or via an email from the Medicare Administrative Contractor (MAC). We believe this change will address the feedback from providers requesting additional methods for notification. We are also proposing to revise § 412.560(d)(3) to clarify that we will notify LTCHs, in writing, of our final decision regarding any reconsideration request using the same notification process. We are inviting public comments on these proposals. D. Proposed Changes to the Medicare and Medicaid EHR Incentive Programs (Now Referred to as the Medicare and Medicaid Promoting Interoperability Programs) 1. Background The HITECH Act (Title IV of Division B of the ARRA, together with Title XIII of Division A of the ARRA) authorizes incentive payments under Medicare and Medicaid for the adoption and meaningful use of certified electronic health record technology (CEHRT). Incentive payments under Medicare are available to eligible hospitals and CAHs for certain payment years (as authorized under sections 1886(n) and 1814(l) of E:\FR\FM\07MYP2.SGM 07MYP2 20516 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules the Act, respectively) if they successfully demonstrate meaningful use of CEHRT, which includes reporting on clinical quality measures (CQMs or eCQMs) using CEHRT. Incentive payments are available to Medicare Advantage (MA) organizations under section 1853(m)(3) of the Act for certain affiliated hospitals that meaningfully use CEHRT. Sections 1886(b)(3)(B)(ix) and 1814(l)(4) of the Act also establish downward payment adjustments under Medicare, beginning with FY 2015, for eligible hospitals and CAHs that do not successfully demonstrate meaningful use of CEHRT for certain associated reporting periods. Section 1853(m)(4) of the Act establishes a negative payment adjustment to the monthly prospective payments of a qualifying MA organization if its affiliated eligible hospitals are not meaningful users of certified EHR technology, beginning in 2015. Section 1903(a)(3)(F)(i) of the Act establishes 100 percent Federal financial participation (FFP) to States for providing incentive payments to eligible Medicaid providers (described in section 1903(t)(2) of the Act) to adopt, implement, upgrade and meaningfully use CEHRT. daltland on DSKBBV9HB2PROD with PROPOSALS2 2. Renaming the EHR Incentive Program The Medicare and Medicaid EHR Incentive Programs has historically been broken into three stages primarily focused on data capture and sharing, advanced clinical processes, and improved outcomes. In this proposed rule, we are proposing scoring and measurement policies to move beyond the three stages of meaningful use to a new phase of EHR measurement with an increased focus on interoperability and improving patient access to health information. To better reflect this focus, we are renaming the Medicare and Medicaid EHR Incentive Programs to the Promoting Interoperability (PI) Programs, and the new name will apply for Medicare fee-for-service, Medicare Advantage, and Medicaid. We believe this change will help highlight the enhanced goals of the program and better contextualize the program changes discussed in the following sections. We also note that the former name, Medicare and Medicaid EHR Incentive Programs, does not adequately reflect the current status of the programs, as the incentive payments under Medicare generally have ended (with the exception of subsection (d) Puerto Rico hospitals as discussed in section VIII.D.10. of the preamble of this proposed rule) and will end under Medicaid in 2021. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 3. Certification Requirements Beginning in 2019 In the October 16, 2015 final rule titled ‘‘Medicare and Medicaid Programs; Electronic Health Record Incentive Program—Stage 3 and Modifications to Meaningful Use in 2015 Through 2017; Final Rule’’ (80 FR 62761 through 62955) (hereafter referred to as the ‘‘2015 EHR Incentive Programs final rule’’), we adopted a final policy regarding which Edition of CEHRT must be used by EPs, eligible hospitals, and CAHs for the EHR Incentive Programs, which was reflected in the definition of CEHRT under § 495.4 (80 FR 62871 through 62875). Under this policy, starting with 2018, all EPs, eligible hospitals, and CAHs would be required to use technology certified to the 2015 Edition to demonstrate meaningful use for an EHR reporting period in 2018 and subsequent years (80 FR 62873 through 62875). We subsequently finalized in the FY 2018 IPPS/LTCH PPS final rule certain changes to the policy that would allow for CEHRT flexibility in 2018, allowing health care providers in the Medicare and Medicaid EHR Incentive Programs to use either the 2014 or 2015 Edition of CEHRT, or a combination of both Editions, in 2018 (82 FR 38490 through 38493). This flexibility would give additional time to health care providers who may need to update, implement, and optimize the technology certified to the 2015 Edition and was only allowed for 2018. Beginning with the EHR reporting period in CY 2019, the 2015 Edition of CEHRT is required pursuant to the definition of CEHRT under § 495.4. We are not proposing to change this policy, and, as discussed below, we continue to believe it is appropriate to require the use of 2015 Edition CEHRT beginning in CY 2019. In reviewing the state of health information technology, it is clear the 2014 Edition certification criteria are out of date and insufficient for provider needs in the evolving health IT industry. It would be beneficial to health IT developers and health care providers to move to more up-to-date standards and functions that better support interoperable exchange of health information and improve clinical workflows. The 2014 Edition CEHRT, which was first issued in regulations in 2012, now includes standards that are significantly out of date, which can impose artificial limits on interoperability and the access, exchange, and use of health information. Moving from certifying to the 2014 Edition to certifying to the 2015 Edition would also eliminate the inconsistencies that are inherent with PO 00000 Frm 00354 Fmt 4701 Sfmt 4702 maintaining and implementing two separate certification programs. In the last calendar year, the number of new and unique 2014 Edition products have been declining, showing that the market acknowledges the shift toward newer and more effective technologies. The vast majority of 2014 Edition certifications are for inherited certified status. The resulting legacy systems, while certified to the 2014 Edition, are not the most up-to-date and detract from health information technology’s (IT’s) goal of increasing interoperability and increasing the access, exchange, and use of health data. Prolonging backwards compatibility of newer products to legacy systems causes market fragmentation. Health IT stakeholders noted the impact of system fragmentation on the cost to develop and maintain health IT connectivity to support data exchange, develop products to support specialty clinical care, and integrate software supporting administrative and clinical processes. As previously stated, a large proportion of the sector is ready to solely use the 2015 Edition; maintaining a requirement to keep both certification editions contributes to market fragmentation, which heightens implementation costs for health IT developers, hospitals, and health care providers. Developers and consumers that are required to maintain two different certification editions, spend large amounts of money on the recertification of older products, which diverts resources from the development, maintenance, and implementation of more advanced technologies, including the 2015 Edition of CEHRT. In addition to the monetary savings of the 2015 Edition, there will also be an impactful reduction of burden across many settings. Eligible hospitals and CAHs will see a reduction in burden through relief from being required to certify to a legacy system, and can use the 2015 Edition to better streamline workflows and utilize more comprehensive functions to meet patient safety goals and improve care coordination across the continuum. Maintaining only one edition of certification requirements would also reduce the burden for health IT developers as well as ONC-authorized testing laboratories and certification bodies because they would no longer have to support two, increasingly distant sets of requirements. One of the major improvements in the 2015 Edition is the application programming interface (API) functionality. The API functionality supports health care providers and patient electronic access to health information. These functions allow for E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules patient data to move between systems and assist patients with making key decisions about their health care. The functions also contribute to quality improvement and greater interoperability between systems. The API has the ability to complement a specific provider branded patient portal or could also potentially make one unnecessary if patients are able to use software applications designed to interact with an API that could support their ability to view, download, and transmit their health information to a third party (80 FR 62842). Furthermore, the API allows for third-party application usage with more flexibility and smoother workflow from various systems than what is often found in many current patient portals. The 2015 Edition also includes certification criterion specifying a core set of data that health care providers have noted are critical to interoperable exchange and can be exchanged across a wide variety of other settings and use cases, known as the Common Clinical Data Set (C–CDS) (80 FR 62603). The US Core Data for Interoperability (USCDI) builds off the Common Clinical Data Set definition adopted for the 2015 Edition of certified health IT and referenced in the EHR Incentive Program, for instance as the data which must be included in a summary care record. The USCDI aims to support the goals set forth in the 21st Century Cures Act by specifying a common set of data classes that are required for interoperable exchange and identifying a predictable, transparent, and collaborative process for achieving those goals. The USCDI is referenced by the Draft Trusted Exchange Framework,368 which is intended to enable HINs and Qualified HINs to securely exchange electronic health information in support of a range permitted purposes, including treatment, payment, operations, individual access, public health, and benefits determination. We also note that the Provide Patient Access measure’s technical requirements are updated in the 2015 Edition and support health care providers’ interest in providing patients with access to their data in a manner that is helpful to the patient and aligns with the API requirement in the Promoting Interoperability Program. This includes a new function that supports patient access to their health information through email transmission to any third party the patient chooses and through a second encrypted method of transmission. As discussed above the 368 https://www.healthit.gov/sites/default/files/ draft-trusted-exchange-framework.pdf. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 increased interoperability in this requirement provides patients more control of their health data to inform the decisions that they make regarding their health. The 2015 Edition also includes a revised requirement that products must be able to export data from one patient, a set of patients, or a subset of patients, which is responsive to health care provider feedback that their data is unable to carry over from a previous EHR. The 2014 Edition did not include a requirement that the vendor allow the health care provider to export the data themselves. In the 2015 Edition, the health care provider has the autonomy to export data themselves without intervention by their vendor, resulting in increased interoperability and data exchange in the 2015 Edition. In efforts to track certification readiness for the 2015 Edition, the Office of the National Coordinator for Health Information Technology (ONC) considers the number of health care providers likely to be served by the developers seeking certification under the ONC Health IT Certification Program in real time as the testing and certification process progresses. The ONC considers trends within the industry when projecting for 2015 Edition readiness. This is based on the major developers who have a major share of the market. In working with ONC we are able to identify the percent of eligible clinicians, eligible hospitals and CAHs that have a 2015 Edition available to them based on vendor readiness and information. As of the beginning of the first quarter of CY 2018, ONC confirmed that at least 66 percent of eligible clinicians and 90 percent of eligible hospitals and CAHs have 2015 Edition available based on previous EHR Incentive Programs attestation data. Based on the data, and as compared to the transition from 2011 Edition to 2014 Edition, it appears that the transition from the 2014 Edition to the 2015 Edition is on schedule for the EHR reporting period in CY 2019. We note that this information is current as of the beginning of CY 2018, and based on historical data, we expect readiness to continue to improve as developers and health care providers prepare for program participation using the 2015 Edition in CY 2019. We continue to recognize there is a burden associated with development and deployment of new technology, but we believe requiring use of the most recent version of CEHRT is important in ensuring health care providers use technology that has improved interoperability features and up-to-date standards to collect relevant patient PO 00000 Frm 00355 Fmt 4701 Sfmt 4702 20517 health information. The 2015 Edition includes key updates to functions and standards that support improved interoperability and clinical effectiveness through the use of health IT. 4. Proposed Revisions to the EHR Reporting Period in 2019 and 2020 We continue to receive feedback from EPs, eligible hospitals, hospital associations, and other clinical associations indicating that additional time will be necessary for testing and implementation of the new API functionality requirement for Stage 3. These organizations cite both an inability to meet the required timeframe for implementation of Stage 3 and the complexity of the new functionality and associated requirements for the Patient Electronic Access to Health Information (80 FR 62841 through 62846) and Coordination of Care Through Patient Engagement (80 FR 62846 through 62852) objectives. API functionality supports health care providers and patient electronic access to health information, which is key to improving the free flow of health information, interoperability, quality improvement, and patient engagement. This functionality is included as part of the 2015 Edition base EHR definition (and thus must be part of CEHRT) (80 FR 62675 through 62676), and we believe that the access APIs permit may prove valuable in many ways. For example, APIs may be enabled by a health care provider or organization to facilitate their own use of third party applications within their CEHRT, such as for quality improvement. An API could also be enabled by a health care provider to give patients access to their health information through a third-party application with more flexibility than is often found in many current patient portals. From the health care provider perspective, an API could complement a specific provider branded patient portal or could also potentially make one unnecessary if patients are able to use software applications designed to interact with an API that could support their ability to view, download, and transmit their health information to a third party (80 FR 62842). We want to ensure that health care providers have the opportunity to thoroughly test their systems and make adjustments in order to successfully attest for the EHR reporting periods in CYs 2019 and 2020. In addition, we believe that health care providers may need extra time to fully implement and test workflows with the 2015 Edition of CEHRT, which is required beginning in CY 2019, as well as the current proposal to require use of E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20518 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules an API to incorporate patient data in the Provide Patients Electronic Access to Their Health Information measure discussed in section VIII.D.6.d.(1) of the preamble of this proposed rule. We also are proposing in section VIII.D.5. of the preamble of this proposed rule an updated scoring methodology for eligible hospitals and CAHs that would begin in 2019, as well as two new opioid measures and one new health information exchange measure that we believe eligible hospitals and CAHs will want to report on as soon as those measures are available in their CEHRT. We want to provide flexibility to health care providers as they are becoming familiar with the new scoring methodology and measures that we are proposing, as well as adequate development time for EHR developers and vendors to test and incorporate the new scoring system and measures for deployment and implementation. Therefore, we are proposing changes to the EHR reporting periods in 2019 and 2020 and believe the changes would result in a reduction in burden on health care providers and EHR developers and vendors. We are proposing these changes for 2019 and 2020 as we believe it may take more than one year for eligible hospitals and CAHs to adjust to the new scoring methodology proposed in section VIII.D.5. of the preamble of this proposed rule. For the reasons discussed earlier, we are proposing the EHR reporting periods in 2019 and 2020 for new and returning participants attesting to CMS or their State Medicaid agency would be a minimum of any continuous 90-day period within each of the calendar years 2019 and 2020. This would mean that EPs that attest to a State for the State’s Medicaid Promoting Interoperability Program and eligible hospitals and CAHs attesting to CMS or the State’s Medicaid Promoting Interoperability Program would attest to meaningful use of CEHRT for an EHR reporting period of a minimum of any continuous 90-day period from January 1, 2019 through December 31, 2019 and from January 1, 2020 through December 31, 2020, respectively. The applicable incentive payment year and payment adjustment years for the EHR reporting periods in 2019 and 2020, as well as the deadlines for attestation and other related program requirements, would remain the same as established in prior rulemaking. We are proposing corresponding changes to the definition of ‘‘EHR reporting period’’ and ‘‘EHR reporting period for a payment adjustment year’’ at 42 CFR 495.4. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 We are inviting public comment on our proposal. 5. Proposed Scoring Methodology for Eligible Hospitals and CAHs Attesting Under the Medicare Promoting Interoperability Program a. Background Section 1886(n)(3) of the Act establishes criteria for an eligible hospital or CAH to be considered a meaningful EHR user for the Medicare Promoting Interoperability Program. Prior to the enactment of the Bipartisan Budget Act of 2018 (Pub. L. 115–123), section 1886(n)(3)(A) of the Act required the Secretary to seek to improve the use of electronic health records and health care quality over time by requiring more stringent measures of meaningful use. This resulted in three separate stages of meaningful use requirements, each with increasing stringency of reporting requirements. The July 28, 2010 final rule titled, ‘‘Medicare and Medicaid Programs; Electronic Health Record Incentive Program’’ (75 FR 44313 through 44588), hereafter referred to as the ‘‘Stage 1 final rule,’’ established the foundation for the Medicare and Medicaid EHR Incentive Programs by outlining the applicable meaningful use criteria and finalizing core and menu objectives for EPs, eligible hospitals, and CAHs, including establishing requirements for the electronic capture of clinical data, and providing patients with electronic copies of their health information (75 FR 44313 through 44588). In the September 4, 2012 final rule titled ‘‘Medicare and Medicaid Programs; Electronic Health Record Incentive Program—Stage 2’’ (77 FR 53967 through 54162), hereafter referred to as the ‘‘Stage 2 final rule,’’ we focused on the next goal: The exchange of essential health data among health care providers and patients to improve care coordination. Lastly, the 2015 EHR Incentive Programs final rule established a single set of objectives and measures that increased stringency by requiring patient action measures and increasing measure thresholds, which contributed to the goal of widespread adoption and advanced use of electronic health record technology for Stage 3 in 2017 and subsequent years (80 FR 62762 through 62915). The provision in section 1886(n)(3)(A) of the Act requiring more stringent measures of meaningful use over time was subsequently removed by section 50413 of the Bipartisan Budget Act of 2018. As we considered the future direction of EHR reporting for the Promoting Interoperability Program, we considered how to increase the focus of EHR PO 00000 Frm 00356 Fmt 4701 Sfmt 4702 reporting on interoperability and sharing data with patients. We also considered the history of the program stages, as well as the increased flexibility provided by the Bipartisan Budget Act of 2018. In light of these considerations, we are proposing a new scoring methodology that reduces burden and provides greater flexibility to hospitals while focusing on increased interoperability and patient access. We have received feedback from hospitals and hospital associations that the current meaningful use requirements are not always meaningful to them and detract from their ability to provide care to their patients. They have further suggested, through inquiries and listening sessions, that the requirement to meet all of the measures has been administratively burdensome, particularly those that require patient action. These stakeholders believe there is a critical need for interoperability and have expressed a desire to use CEHRT to further patient outcomes, but believe the current program structure constrains their ability to implement more interoperable practices and deliver quality care. An example of this feedback came from hospitals and hospital associations regarding the View, Download or Transmit (VDT) measure which requires at least one unique patient (or their authorized representative) discharged from the eligible hospital or CAH to access their health information through the use of an API, view, download or transmit their health information to a third party or a combination of both. These hospitals and hospital associations have indicated that, although they can encourage their patients to access their data electronically and through this type of platform, it is beyond their control to require such action. They further indicated that they are unable to require patients to perform actions that patients do not feel accustomed to, and that certain patient populations are not comfortable with such actions. In addition, through our listening sessions we found that certain rural hospitals find it more challenging to meet all of the measure thresholds and requirements due to financial limitations. Many of these rural hospitals expressed an interest in fully participating in the Medicare EHR Incentive Program, but stated they are only able to meet a subset of the objectives and measures. They stated that a new scoring and reporting structure that would allow them to focus on their patient population would help them successfully participate in the program. E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules Based on this feedback and the recent statutory changes, we are proposing a new performance-based scoring methodology with fewer measures, and moving away from the threshold-based methodology that we currently use. We believe this change would provide a more flexible, less burdensome structure, allowing eligible hospitals and CAHs to put their focus back on patients. The introduction of a performance-based scoring methodology would continue to encourage hospitals to push themselves on measures that we continue to hear are most applicable to how they deliver care to patients, instead of increasing thresholds on measures that may not be as applicable to an individual hospital. Our goal is to provide increased flexibility to eligible hospitals and CAHs without compromising the integrity of the Medicare Promoting Interoperability Program and enable them to focus more on patient care and health data exchange through interoperability. We are proposing the performancebased scoring methodology would apply to eligible hospitals and CAHs that submit an attestation to CMS under the Medicare Promoting Interoperability Program beginning with the EHR reporting period in CY 2019. This would include ‘‘Medicare-only’’ eligible hospitals and CAHs (those that are eligible for an incentive payment under Medicare for meaningful use of CEHRT and/or subject to the Medicare payment reduction for failing to demonstrate meaningful use) as well as ‘‘dualeligible’’ eligible hospitals and CAHs (those that are eligible for an incentive payment under Medicare for meaningful use of CEHRT and/or subject to the Medicare payment reduction for failing to demonstrate meaningful use, and are also eligible to earn a Medicaid incentive payment for meaningful use). We are not proposing to apply the performance-based scoring methodology to ‘‘Medicaid-only’’ eligible hospitals (those that are only eligible to earn a Medicaid incentive payment for meaningful use of CEHRT, and are not eligible for an incentive payment under Medicare for meaningful use and/or subject to the Medicare payment reduction for failing to demonstrate meaningful use) that submit an attestation to their State Medicaid agency for the Medicaid Promoting Interoperability Program. Instead, as discussed in section VIII.D.7. of the preamble of this proposed rule, we are proposing to give States the option to adopt the performance-based scoring methodology along with the measure proposals discussed in section VIII.D.6. of the preamble of this proposed rule for their Medicaid Promoting Interoperability Programs through their State Medicaid HIT Plans. To accomplish our goal of a performance-based program that reduces burden while promoting interoperability, and taking into account the feedback from our stakeholders, we outline a proposal using a performance- 20519 based scoring methodology in the following sections of this proposed rule. We believe the proposal promotes interoperability, helps to maintain a focus on patients, reduces burden and provides greater flexibility. The proposal takes an approach that weighs each measure based on performance, and allows eligible hospitals and CAHs to emphasize measures that are most applicable to their care delivery methods, while putting less emphasis on those measures that may be less applicable. If we do not finalize a new scoring methodology, we would maintain the current Stage 3 methodology with the same objectives, measures and requirements, but we would include the two new opioid measures proposed in section VIII.D.6.b. of the preamble of this proposed rule, if finalized. The current structure of the Stage 3 objectives and measures under § 495.24(c) for eligible hospitals and CAHs attesting to CMS requires them to report on six objectives that include 16 measures. This structure requires the eligible hospital or CAH to report on all measures and meet the thresholds for most of the measures or claim an exclusion as part of demonstrating meaningful use to avoid the payment adjustment, or to earn an incentive in the case of subsection (d) Puerto Rico hospitals. A general summary overview of the current objectives, measures, and reporting requirements is included in the table below. EXISTING STAGE 3 OBJECTIVES, MEASURES AND REPORTING REQUIREMENTS FOR THE MEDICARE EHR INCENTIVE PROGRAM FOR ELIGIBLE HOSPITALS AND CAHS Objective Measure (stage 3 threshold) Protect Patient Health Information .. Electronic Prescribing ..................... Patient Electronic Access to Health Information. Coordination of Care Through Patient Engagement. Security Risk Analysis (Yes/No) ............................................................ e-Prescribing (>25%) ............................................................................. Provide Patient Access (>50%) ............................................................. Patient Specific Education (>10%) ........................................................ View, Download or Transmit (at least one patient) ............................... Secure Messaging (>5%) ...................................................................... Patient Generated Health Data (>5%) .................................................. Send a Summary of Care (>10%) ......................................................... Request/Accept Summary of Care (>10%) ........................................... Clinical Information Reconciliation (>50%) ............................................ Immunization Registry Reporting .......................................................... Syndromic Surveillance Reporting Electronic Case Reporting. Public Health Registry Reporting. Clinical Data Registry Reporting. Electronic Reportable Laboratory Result Reporting. Health Information Exchange .......... daltland on DSKBBV9HB2PROD with PROPOSALS2 Public Health and Clinical Data Registry Reporting. b. Proposed Performance-Based Scoring Methodology We are proposing a new scoring methodology to include a combination of new measures, as well as the existing VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Reporting requirement Stage 3 measures of the EHR Incentive Program, broken into a smaller set of four objectives and scored based on performance and participation. We believe this is a significant overhaul of the existing program requirements PO 00000 Frm 00357 Fmt 4701 Sfmt 4702 Report. Report and meet threshold. Report and meet thresholds. Report all, but only meet the threshold for two. Report all, but only meet the threshold for two. Report Yes/No to Three Registries. which include six objectives, scored on a pass/fail basis. The smaller set of objectives would include e-Prescribing, Health Information Exchange, Provider to Patient Exchange, and Public Health and Clinical Data Exchange. We are E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20520 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules proposing these objectives to promote specific HHS priorities. We include the e-Prescribing and Health Information Exchange objectives in part to capture what we believe are core goals for the 2015 Edition in line with section 1886(n)(3)(A) of the Act. These core goals promote interoperability between health care providers and health IT systems to support safer, more coordinated care. The Provider to Patient Exchange objective promotes patient awareness and involvement in their health care through the use of APIs, and ensures patients have access to their medical data. Finally, the Public Health and Clinical Data Exchange objective supports the ongoing systematic collection, analysis, and interpretation of data that may be used in the prevention and controlling of disease through the estimation of health status and behavior. The integration of health IT systems into the national network of health data tracking and promotion improves the efficiency, timeliness, and effectiveness of public health surveillance. We believe it is important to keep these core goals, primarily because these objectives promote interoperability between health care providers and health IT systems to support safer, more coordinated care while ensuring patients have access to their medical data. Under the proposed scoring methodology, eligible hospitals and CAHs would be required to report certain measures from each of the four objectives, with performance-based scoring occurring at the individual measure-level. Each measure would be scored based on the eligible hospital or CAH’s performance for that measure, except for the Public Health and Clinical Data Exchange objective, which requires a yes/no attestation. Each measure would contribute to the eligible hospital or CAH’s total Promoting Interoperability (PI) score. The scores for each of the individual measures would be added together to calculate the total Promoting Interoperability score of up to 100 possible points for each eligible hospital or CAH. A total score of 50 points or more would satisfy the requirement to report on the objectives and measures of meaningful use under § 495.24, which is one of the requirements for an eligible hospital or CAH to be considered a meaningful EHR user under § 495.4 and thus earn an incentive payment and/or avoid a Medicare payment reduction. Eligible hospitals and CAHs scoring below 50 points would not be considered meaningful EHR users. While this approach maintains some of the same requirements of the EHR VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Incentive Program, we note that we are proposing to reduce the overall number of required measures from 16 to 6. We also note that the measures we are proposing to include contribute to the goal of increased interoperability and patient access, and no longer require the burdensome predefined thresholds of the EHR Incentive Program, and thus allow new flexibility for eligible hospitals and CAHs in how they are scored. We believe this proposal allows eligible hospitals and CAHs to achieve high performance in one area where they excel, in order to offset performance in an area where they may need additional improvement. In this manner we believe eligible hospitals and CAHs could still be considered meaningful EHR users while continuing to monitor their progress on each of the measures. This approach also helps further promote interoperability by requiring all measures and thus all forms of interoperability across the three objectives. We also considered an alternative approach in which scoring would occur at the objective level, instead of the individual measure level, and eligible hospitals or CAHs would be required to report on only one measure from each objective to earn a score for that objective. Under this scoring methodology, instead of six required measures, the eligible hospital or CAH’s total Promoting Interoperability score would be based on only four measures, one measure from each objective. Each objective would be weighted similarly to how the objectives are weighted in our proposed methodology, and bonus points would be awarded for reporting any additional measures beyond the required four. We are seeking public comment on this alternative approach, and whether additional flexibilities should be considered, such as allowing eligible hospitals and CAHs to select which measures to report on within an objective and how those objectives should be weighted, as well as whether additional scoring approaches or methodologies should be considered. In our proposed scoring methodology, the e-Prescribing objective would contain three measures each weighted differently to reflect their potential availability and applicability to the hospital community. In addition to the existing e-Prescribing measure, we are proposing to add two new measures to the e-Prescribing objective: Query of Prescription Drug Monitoring Program (PDMP) and Verify Opioid Treatment Agreement. For more information about these two proposed measures, we refer readers to section VIII.D.6.b. of the preamble of this proposed rule. The e- PO 00000 Frm 00358 Fmt 4701 Sfmt 4702 Prescribing measure would be required for reporting and weighted at 10 points because we believe it would be applicable to most eligible hospitals and CAHs. In the event that an eligible hospital or CAH meets the criteria and claims the exclusion for the ePrescribing measure in 2019, the 10 points available for that measure would be redistributed equally among the measures under the Health Information Exchange objective: • Support Electronic Referral Loops By Sending Health Information Measure (25 points) • Support Electronic Referral Loops By Receiving and Incorporating Health Information (25 points) We are seeking public comment on whether this redistribution is appropriate for 2019, or whether the points should be distributed differently. The Query of Prescription Drug Monitoring Program (PDMP) and Verify Opioid Treatment Agreement measures would be optional for EHR reporting periods in 2019. These new measures may not be available to all eligible hospitals and CAHs for an EHR reporting period in 2019 as they may not have been fully developed by their health IT vendor, or not fully implemented in time for data capture and reporting. Therefore, we are not proposing to require these two new measures in 2019, although eligible hospitals and CAHs may choose to report them and earn up to 5 bonus points for each measure. We are proposing to require these measures beginning with the EHR reporting period in 2020, and we are seeking public comment on this proposal. We note that due to varying State requirements, not all eligible hospitals and CAHs would be able to e-prescribe controlled substances, and thus these measures would not be available to them. For these reasons, we are proposing an exclusion for these two measures beginning with the EHR reporting period in 2020. The exclusion would provide that any eligible hospital or CAH that is unable to report the measure in accordance with applicable law would be excluded from reporting the measure, and the 5 points assigned to that measure would be redistributed to the e-Prescribing measure. As the two new opioid measures become more broadly available in CEHRT, we are proposing each of the three measures within the e-Prescribing objective would be worth 5 points beginning in 2020. We note that requiring these two measures would add 10 points to the maximum total score as these measures would no longer be eligible for optional bonus points. To E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules maintain a maximum total score of 100 points, beginning with the EHR reporting period in 2020, we are proposing to reweight the e-Prescribing measure from 10 points down to 5 points, and reweight the Provide Patients Electronic Access to Their Health Information measure from 40 points down to 35 points as illustrated in the table below. We are proposing that if the eligible hospital or CAH qualifies for the e-Prescribing exclusion and is excluded from reporting all three of the measures associated with the ePrescribing objective as described in section VIII.D.6.b. of the preamble of this proposed rule, the 15 points for the e-Prescribing objective would be redistributed evenly among the two measures associated with the Health Information Exchange objective and the Provide Patients Electronic Access to their Health Information measure by adding 5 points to each measure. We are seeking public comment on the proposed distribution of points beginning with the EHR reporting period in 2020. For the Health Information Exchange objective, we are proposing to change the name of the existing Send a Summary of Care measure to Support Electronic Referral Loops by Sending Health Information, and proposing a new measure which combines the functionality of the existing Request/ Accept Summary of Care and Clinical Information Reconciliation measures into a new measure, Support Electronic Referral Loops by Receiving and Incorporating Health Information. For more information about the proposed measure and measure changes, we refer readers to section VIII.D.6.c. of the preamble of this proposed rule. Eligible hospitals and CAHs would be required to report both of these measures, each worth 20 points toward their total Promoting Interoperability score. These measures are weighted heavily to emphasize the importance of sharing health information through interoperable exchange in an effort to promote care coordination and better patient outcomes. Similar to the two new measures in the e-Prescribing objective, the new Support Electronic Referral Loops by Receiving and Incorporating Health Information measure may not be available to all eligible hospitals and CAHs as it may not have been fully developed by their health IT vendor, or not fully implemented in time for an EHR reporting period in 2019. For these reasons, we are proposing an exclusion for the Support Electronic Referral Loops by Receiving and Incorporating Health Information measure: Any VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 eligible hospital or CAH that is unable to implement the measure for an EHR reporting period in 2019 would be excluded from having to report this measure. In the event that an eligible hospital or CAH claims an exclusion for the Support Electronic Referral Loops by Receiving and Incorporating Health Information measure, the 20 points would be redistributed to the Support Electronic Referral Loops by Sending Health Information measure, and that measure would then be worth 40 points. We are seeking public comment on whether this redistribution is appropriate, or whether the points should be redistributed to other measures instead. We are proposing to weigh the one measure in the Provider to Patient Exchange objective, Provide Patients Electronic Access to Their Health Information, at 40 points toward the total Promoting Interoperability score in 2019 and 35 points beginning in 2020. We are proposing that this measure would be weighted at 35 points beginning in 2020 to account for the two new opioid measures, which would be worth 5 points each beginning in 2020 as proposed above. We believe this objective and its associated measure get to the core of improved access and exchange of patient data in promoting interoperability and are the crux of the Medicare Promoting Interoperability Program. This exchange of data between health care provider and patient is imperative in order to continue to improve interoperability, data exchange and improved health outcomes. We believe that it is important for patients to have control over their own health information, and through this highly weighted objective we are aiming to show our dedication to this effort. The measures under the Public Health and Clinical Data Exchange objective are reported using yes/no responses and thus cannot be scored based on performance. We are proposing that for this objective, the eligible hospital or CAH would be required to meet this objective in order to receive a score and be considered a meaningful user of EHR. We are proposing that the eligible hospital or CAH will be required to report the Syndromic Surveillance Reporting measure and one additional measure of the eligible hospital or CAH’s choosing from the following: Immunization Registry Reporting, Electronic Case Reporting, Public Health Registry Reporting, Clinical Data Registry Reporting, Electronic Reportable Laboratory Result Reporting. We are proposing an eligible hospital or CAH would receive 10 points for the PO 00000 Frm 00359 Fmt 4701 Sfmt 4702 20521 objective if they attest a ‘‘yes’’ response for both the Syndromic Surveillance Reporting measure and one additional measure of their choosing. If the eligible hospital or CAH fails to report either one of the two measures required for this objective, the eligible hospital or CAH would receive a score of zero for the objective, and a total score of zero for the Promoting Interoperability Program. We understand that some hospitals may not be able to report the Syndromic Surveillance Reporting measure, or may not be able to report some of the other measures under this objective. Therefore, we are proposing to maintain the current exclusions for these measures that were finalized in previous rulemaking. If an eligible hospital or CAH claims an exclusion for one or both measures required for this objective, we are proposing the 10 points for this objective would be redistributed to the Provide Patients Electronic Access to their Health Information measure under the proposed Provider to Patient Exchange objective, making that measure worth 50 points in 2019 and 45 points beginning in 2020. Reporting more than two measures for this objective would not earn the eligible hospital or CAH any additional points. We refer readers to section VIII.D.6.e. of the preamble of this proposed rule in regards to the proposals for the current Public Health and Clinical Data Exchange objective and its associated measures. The Stage 3 objective, Protect Patient Health Information, and its associated measure, Security Risk Analysis, would remain part of the program, but would no longer be scored as part of the objectives and measures, and would not contribute to the hospital’s total score for the objectives and measures. To earn any score in the Promoting Interoperability Program, we are proposing eligible hospitals and CAHs would have to attest that they completed the actions included in the Security Risk Analysis measure at some point during the calendar year in which the EHR reporting period occurs. We believe the Security Risk Analysis measure involves critical tasks and note that the Health Insurance Portability and Accountability Act (HIPAA) Security Rule requires covered entities to conduct a risk assessment of their health care organization. This risk assessment will help eligible hospitals and CAHs comply with HIPAA’s administrative, physical, and technical safeguards.369 Therefore, we believe that 369 https://www.hhs.gov/hipaa/for-professionals/ security/guidance/. E:\FR\FM\07MYP2.SGM 07MYP2 20522 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules every eligible hospital and CAH should already be meeting the requirements for this objective and measure as they are required by HIPAA. We still believe this objective and its associated measure is imperative in ensuring the safe delivery of patient health data. As a result, we would maintain the Security Risk Analysis measure as part of the Promoting Interoperability Program, but we would not score the measure. We are seeking public comment on whether the Security Risk Analysis measure should remain part of the program as an attestation with no associated score, or whether there should be points associated with this measure. Similar to how eligible hospitals and CAHs currently submit data, the eligible hospital or CAH would submit their numerator and denominator data for each performance measure, and a yes/no response for each of the two reported measures under the proposed Public Health and Clinical Data Exchange objective. To earn a score greater than zero, in addition to completing the activities required by the Security Risk Analysis measure, the hospital would submit their complete numerator and denominator or yes/no data for all required measures. The numerator and denominator for each performance measure would then translate to a performance rate for that measure and would be applied to the total possible points for that measure. For example, the e-Prescribing measure is worth 10 points. A numerator of 200 and denominator of 250 would yield a performance rate of (200/250) = 80 percent. This 80 percent would be applied to the 10 total points available for the e-Prescribing measure to determine the performance score. A performance rate of 80 percent for the ePrescribing measure would equate to a measure score of 8 points (performance rate * total possible measure points = points awarded toward the total PI score; 80 percent*10 = 8 points). These calculations and application to the total Promoting Interoperability score, as well as an example of how they would apply, are set out in the tables below. When calculating the performance rates and measure and objective scores, we would generally round to the nearest whole number. For example if an eligible hospital or CAH received a score of 8.53 the nearest whole number would be 9. Similarly, if the eligible hospital or CAH received a score of 8.33 the nearest whole number would be 8. In the event that the eligible hospital or CAH receives a performance rate or measure score of less than 0.5, as long as the eligible hospital or CAH reported on at least one patient for a given measure, a score of 1 would be awarded for that measure. We believe this is the best method for the issues that might arise with the decimal points and is the easiest for computations. In order to meet statutory requirements and HHS priorities, the eligible hospital or CAH would need to report on all of the required measures across all objectives in order to earn any score at all. Failure to report any required measure, or reporting a ‘‘no’’ response on a yes/no response measure, unless an exclusion applies would result in a score of zero. We acknowledge that, in this way, the program still maintains a certain ‘‘all-ornothing’’ element. However, we are proposing to reduce the total number of required measures from 16 to 6, which we believe reduces burden, and to introduce a performance-based scoring methodology, which provides flexibility not provided under the existing Stage 3 scoring methodology. We are seeking public comment on the proposed requirement to report on all required measures, or whether reporting on a smaller subset of optional measures would be appropriate. As stated earlier, an eligible hospital or CAH would need to earn a total Promoting Interoperability score of 50 points or more in order to satisfy the requirement to report on the objectives and measures of meaningful use under § 495.4. Our aim is that every patient has control of and access to their health data, and we believe that the proposed minimum Promoting Interoperability score is consistent with the current goals of the program that focus on interoperability and providing patients access to their health information. Our vision is for every eligible hospital and CAH to perform at 100 percent for all of the objectives and associated measures. However, we understand the constraints that health care providers face in providing care to patients and seek to provide flexibility for hospitals to create their own score using measures that are best suited to their practice. We also believe it is important to be realistic about what can be achieved. This required score may be adjusted over time as eligible hospitals and CAHs adjust to the new focus and scoring methodology of the Medicare Promoting Interoperability Program. We believe that the 50-point minimum Promoting Interoperability score provides the necessary benchmark to encourage progress in interoperability and also allows us to continue to adjust this benchmark as eligible hospitals and CAHs progress in health IT. We believe that this approach allows eligible hospitals and CAHs to achieve high performance in one area to offset performance in an area where a participant may need additional improvement. We are seeking public comment on whether this minimum score is appropriate, or whether a higher or lower minimum score would be better suited for the first year of this new scoring methodology. We believe our proposal would increase flexibility and help to ease the burden on eligible hospitals and CAHs as well as provide additional options for meeting the required objectives. The proposed changes would allow the eligible hospital or CAH to focus on the measures that are more appropriate for the ways in which they deliver care to patients and types of services that they provide and improve on areas in which an eligible hospital or CAH might need some support. We believe that with this new proposed approach we are reducing administrative burden and allowing health care providers to focus more on their patients. The tables below illustrate our proposal for the new scoring methodology and an example of application of the proposed scoring methodology. daltland on DSKBBV9HB2PROD with PROPOSALS2 PROPOSED PERFORMANCE-BASED SCORING METHODOLOGY FOR EHR REPORTING PERIODS IN 2019 Objectives Measures e-Prescribing ................................... e-Prescribing .......................................................................................... Bonus: Query of Prescription Drug Monitoring Program (PDMP) ........ Bonus: Verify Opioid Treatment Agreement ......................................... Support Electronic Referral Loops by Sending Health Information ...... Support Electronic Referral Loops by Receiving and Incorporating Health Information. Provide Patients Electronic Access to Their Health Information .......... Health Information Exchange .......... Provider to Patient Exchange ......... VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00360 Fmt 4701 Sfmt 4702 Maximum points E:\FR\FM\07MYP2.SGM 10 points. 5 points bonus. 5 points bonus. 20 points. 20 points. 40 points. 07MYP2 20523 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules PROPOSED PERFORMANCE-BASED SCORING METHODOLOGY FOR EHR REPORTING PERIODS IN 2019—Continued Objectives Measures Maximum points Public Health and Clinical Data Exchange. Syndromic Surveillance Reporting (Required) ...................................... Choose one or more additional: Immunization Registry Reporting. Electronic Case Reporting. Public Health Registry Reporting. Clinical Data Registry Reporting. Electronic Reportable Laboratory Result Reporting. 10 points. PROPOSED PERFORMANCE-BASED SCORING METHODOLOGY BEGINNING WITH EHR REPORTING PERIODS IN 2020 Objectives Measures e-Prescribing ................................... e-Prescribing .......................................................................................... Query of Prescription Drug Monitoring Program (PDMP) ..................... Verify Opioid Treatment Agreement ...................................................... Support Electronic Referral Loops by Sending Health Information ...... Support Electronic Referral Loops by Receiving and Incorporating Health Information. Provide Patients Electronic Access to Their Health Information .......... Syndromic Surveillance Reporting (Required) ...................................... Choose one or more additional: Immunization Registry Reporting. Electronic Case Reporting. Public Health Registry Reporting. Clinical Data Registry Reporting. Electronic Reportable Laboratory Result Reporting. Health Information Exchange .......... Provider to Patient Exchange ......... Public Health and Clinical Data Exchange. We are seeking public comment on whether these measures are weighted appropriately, or whether a different weighting distribution, such as equal Maximum points distribution across all measures would be better suited to this program and this proposed scoring methodology. We are also seeking public comment on other 5 points. 5 points. 5 points. 20 points. 20 points. 35 points. 10 points. scoring methodologies such as the alternative we considered and described earlier in this section. PROPOSED SCORING METHODOLOGY EXAMPLE Objective Measures Numerator/ denominator e-Prescribing ........................ e-Prescribing ..................................................................... Query of Prescription Drug Monitoring Program .............. Verify Opioid Treatment Agreement ................................. Support Electronic Referral Loops by Sending Health Information. Support Electronic Referral Loops by Receiving and Incorporating Health Information. Provide Patients Electronic Access to Their Health Information. Syndromic Surveillance Reporting (Required) ................. Choose one or more additional: Immunization Registry Reporting. Electronic Case Reporting. Public Health Registry Reporting. Clinical Data Registry Reporting. Electronic Reportable Laboratory Result Reporting. 200/250 .......... 150/175 .......... N/A ................. 135/185 .......... 80% 86% N/A 73% 8 points. 5 bonus points. 0 points. 15 points. 145/175 .......... 83% 17 points. 350/500 .......... 70% 28 points. Yes ................. N/A 10 points. ........................................................................................... ........................ ........................ 83 points. Health Information Exchange Provider to Patient Exchange Public Health and Clinical Data Exchange. daltland on DSKBBV9HB2PROD with PROPOSALS2 Total Score .................... As discussed earlier, if we do not finalize a new scoring methodology, we would maintain the current Stage 3 methodology with the same objectives, measures and requirements. However, we would include the 2 new opioid VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 measures, if finalized. We refer readers to section VIII.D.6.b. and c. of the preamble of this proposed rule for a discussion of the measure proposals. The table below provides a general summary overview of what the Stage 3 PO 00000 Frm 00361 Fmt 4701 Sfmt 4702 Performance rate Score objectives, measures, and reporting requirements would be if we do not finalize a new scoring methodology but we do finalize the two new opioid measures. E:\FR\FM\07MYP2.SGM 07MYP2 20524 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules STAGE 3 OBJECTIVES, MEASURES, AND REPORTING REQUIREMENTS IF NEW SCORING METHODOLOGY IS NOT FINALIZED BUT TWO OPIOID MEASURES ARE FINALIZED Objective Measure (stage 3 threshold) Reporting requirement Protect Patient Health Information .. Electronic Prescribing ..................... Security Risk Analysis (Yes/No) ............................................................ e-Prescribing (>25%) ............................................................................. Verify Opioid Treatment Agreement (at least one patient) * Query of Prescription Drug Monitoring Program (at least one patient). * Provide Patient Access (>50%) ............................................................. Patient Specific Education (>10%) ........................................................ View, Download or Transmit (at least one patient) ............................... Secure Messaging (>5%). Patient Generated Health Data (>5%). Send a Summary of Care (>10%) ......................................................... Request/Accept Summary of Care (>10%). Clinical Information Reconciliation (>50%). Immunization Registry Reporting .......................................................... Syndromic Surveillance Reporting. Case Reporting. Public Health Registry Reporting. Clinical Data Registry Reporting. Electronic Reportable Laboratory Result Reporting. Report. Report all, but only meet the threshold for one. Patient Electronic Access to Health Information. Coordination of Care Through Patient Engagement. Health Information Exchange .......... Public Health and Clinical Data Registry Reporting. Report and meet thresholds. Report all, but only meet the threshold for two. Report all, but only meet the threshold for two. Report Yes/No to Three Registries. daltland on DSKBBV9HB2PROD with PROPOSALS2 * These measures included only if finalized. We also are seeking public comment on the feasibility of the new scoring methodology in 2019 and whether eligible hospitals and CAHs would be able to implement the new measures and reporting requirements under this performance-based scoring methodology. In addition, we note that in section VIII.D.8. of the preamble of this proposed rule, we are seeking public comment on how the Promoting Interoperability Program should evolve in future years regarding the future of the new scoring methodology and related aspects of the program. We are proposing to codify the proposed new scoring methodology in a new paragraph (e) under § 495.24. We also are proposing to revise the introductory text of § 495.24 and the heading to paragraph (c) of this section to provide that the criteria specified in proposed new paragraph (e) would be applicable for eligible hospitals and CAHs attesting to CMS for 2019 and subsequent years. Further, we are proposing to revise the introductory text of § 495.24 and the heading to paragraph (d) of this section to provide that the criteria specified in paragraph (d) would be applicable for eligible hospitals and CAHs attesting to a State for the Medicaid Promoting Interoperability Program for 2019 and subsequent years. We are inviting public comments on our proposals. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 6. Proposed Measures for Eligible Hospitals and CAHs Attesting Under the Medicare Promoting Interoperability Program a. Measure Proposal Summary Overview As we noted in the preceding section in our discussion of the proposed scoring methodology for eligible hospitals and CAHs, in proposed § 495.24(e) we are proposing to make a number of changes to the Stage 3 measures under § 495.24(c) beginning in CY 2019 and subsequent years. As indicated in the scoring methodology section VIII.D.5. of the preamble of this proposed rule, we are proposing three new measures (Query of PDMP, Verify Opioid Treatment Agreement, and Support Electronic Referral Loops by Receiving and Incorporating Health Information) beginning with the EHR reporting period in CY 2019. We are proposing that the Query of PDMP and Verify Opioid Treatment agreement measures would be optional for EHR reporting periods in 2019 for eligible hospitals and CAHs and bonus points may be earned for reporting on them. We are proposing that the Support Electronic Referral Loops by Receiving and Incorporating Health Information would be required beginning in 2019 with an exclusion available. We are proposing to require the Query of PDMP and Verify Opioid Treatment Agreement measures beginning with the EHR reporting period in 2020, and we are seeking public comment on this proposal. Our intent is to ensure the measures better focus on the effective use of health IT, particularly for interoperability, and to address PO 00000 Frm 00362 Fmt 4701 Sfmt 4702 concerns stakeholders have raised through public forums and in public comments related to the perceived burden associated with the current measures in the program. In addition, we continue to evaluate and consider broader HHS and CMS initiatives and priorities to advance health IT when considering and proposing new measures or changes to existing measures. CMS has identified certain priorities which align with the broader HHS initiatives encouraging increased use of prescription drug monitoring programs (PDMPs) to reduce inappropriate prescriptions, improve patient outcomes and allow for more informed prescribing practices.370 As we noted above, section 50413 of the Bipartisan Budget Act of 2018 amended section 1886(n)(3)(A) of the Act to eliminate the provision requiring more stringent measures of meaningful use. As a result, we can now offer additional flexibilities and burden reduction through various proposed methods including through combining, removing and/or adding measure options that are applicable to other care settings. We are proposing to remove six measures. Two of the measures we are proposing to remove—Request/Accept Summary of Care and Clinical Information Reconciliation—would be replaced by the Support Electronic Referral Loops by Receiving and Incorporating Health Information measure, which combines the functionalities and goals of the two 370 https://www.hhs.gov/opioids/about-theepidemic/; https://www.healthit.gov/ opioids. E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 Stage 3 measures it is replacing. Four of the measures—Patient-Specific Education; Secure Messaging; View, Download or Transmit; and Patient Generated Health Data—would be removed because they have proven burdensome to health care providers in ways that were unintended and detract from health care providers’ progress on current program priorities. While the measures would no longer need to be attested to if we finalize the proposal to remove them, health care providers may still continue to use the standards and functions of those measures based on their preferences and practice needs. We believe that this burden reduction would enable health care providers to focus on measures that further interoperability, the exchange of health care information, and advances of innovation in the use of CEHRT. We also are proposing to add three new measures. For the e-Prescribing objective, we are proposing to add two new measures: Query of Prescription Drug Monitoring Program (PDMP) and Verify Opioid Treatment Agreement, both of which support HHS initiatives related to the treatment of opioid and substance use disorders by helping health care providers avoid inappropriate prescriptions, improving coordination of prescribing amongst health care providers and focusing on the advanced use of CEHRT. For the Health Information Exchange objective, we are proposing to add a new measure: Support Electronic Referral Loops by Receiving and Incorporating Health Information, which builds upon and replaces the existing Request/Accept Summary of Care and Clinical Information Reconciliation measures, while furthering interoperability and the exchange of health information. We are also proposing to rename some of the existing Stage 3 measures and objectives. We are proposing to rename the remaining Health Information Exchange measure, Send a Summary of Care, to Support Electronic Referral Loops by Sending Health Information. In addition, we are proposing to change the name of the Patient Electronic Access to Health Information objective to Provider to Patient Exchange, and proposing to rename the remaining measure, Provide Patient Access to VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Provide Patients Electronic Access to Their Health Information. We are proposing to eliminate the Coordination of Care Through Patient Engagement objective and all of its associated measures as described above. Finally, we are proposing to rename the Public Health and Clinical Data Registry Reporting objective to the Public Health and Clinical Data Exchange objective and are proposing to require attestation to the Syndromic Surveillance Reporting measure and at least one additional measure of the eligible hospital or CAH’s choosing from the following: Immunization Registry Reporting; Electronic Case Reporting; Public Health Registry Reporting; Clinical Data Registry Reporting; and Electronic Reportable Laboratory Result Reporting. Lastly, in connection with the scoring methodology proposed in section VIII.D.5. of the preamble of this proposed rule, we are proposing to remove the exclusion criteria from all of the Stage 3 measures we are retaining, except for the measures associated with the e-Prescribing objective, Public Health and Clinical Data Exchange objective and the new measures, which would include exclusion criteria. We are proposing to remove the exclusion criteria related to broadband availability because the Fixed Broadband Deployment Data from Federal Communications Commission (FCC) form 477 indicate no counties have less than 4 Mbps of broadband availability.371 In addition, upon review of the 2016 Modified Stage 2 attestation data for eligible hospitals and CAHs, we found that no eligible hospital or CAH claimed an exclusion based on broadband availability. In addition, we do not believe that an exclusion based on the number of transitions or referrals received and patient encounters in which the provider has never previously encountered the patient is warranted for any of the measures associated with Health Information Exchange objective. This exclusion applies for the Stage 3 Request/Accept Summary of Care measure and the Clinical Information Reconciliation measure. We reviewed the 2016 Modified Stage 2 attestation 371 https://www.fcc.gov/general/broadband- deployment-data-fcc-form-477. PO 00000 Frm 00363 Fmt 4701 Sfmt 4702 20525 data for the Medication Reconciliation measure, which the Clinical Information Reconciliation measure is based on and found that all eligible hospitals and CAHs who attested successfully reported this measure, although we note an exclusion was not available for this measure.372 In addition, we are seeking public comment on a potential new measure Health Information Exchange Across the Care Continuum under the Health Information Exchange objective. Under this proposed measure, an eligible hospital or CAH would send an electronic summary of care record, or receive and incorporate an electronic summary of care record, for transitions of care and referrals with a provider of care other than an eligible hospital or CAH. The measure would include health care providers in care settings including but not limited to long term care facilities, and post-acute care providers such as skilled nursing facilities, home health, and behavioral health settings. We are proposing that all of the measure proposals in this section VIII.D.6. of the preamble of this proposed rule would apply to eligible hospitals and CAHs that submit an attestation to CMS under the Medicare Promoting Interoperability Program beginning with the EHR reporting period in CY 2019, including Medicareonly and dual-eligible eligible hospitals and CAHs. We are not proposing to apply these measure proposals to Medicaid-only eligible hospitals that submit an attestation to their State Medicaid agency for the Medicaid Promoting Interoperability program. Instead, as discussed in section VIII.D.7. of the preamble of this proposed rule, we are proposing to give States the option to adopt these measure proposals along with the proposed performancebased scoring methodology discussed in section VIII.D.5. of the preamble of this proposed rule for their Medicaid Promoting Interoperability Program through their State Medicaid HIT Plans. The table below provides a summary of these measures proposals. 372 https://www.cms.gov/Regulations-andGuidance/Legislation/EHRIncentivePrograms/ PUF.html. E:\FR\FM\07MYP2.SGM 07MYP2 20526 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules SUMMARY OF MEASURES PROPOSALS Measure status Measure Measures retained from Stage 3 with no modifications * ........ e-Prescribing. Immunization Registry Reporting. Syndromic Surveillance Reporting. Electronic Case Reporting. Public Health Registry Reporting. Clinical Data Registry Reporting. Electronic Reportable Laboratory Result Reporting. Send a Summary of Care (Proposed Name: Supporting Electronic Referral Loops by Sending Health Information). Provide Patient Access (Proposed Name: Provide Patients Electronic Access to Their Health Information). Request/Accept Summary of Care. Clinical Information Reconciliation. Patient-Specific Education. Secure Messaging. View, Download or Transmit. Patient Generated Health Data. Query of Prescription Drug Monitoring Program (PDMP). Verify Opioid Treatment Agreement. Support Electronic Referral Loops by Receiving and Incorporating Health Information. Measures retained from Stage 3 with modifications ................ Removed measures ................................................................. New measures ......................................................................... daltland on DSKBBV9HB2PROD with PROPOSALS2 * Security Risk Analysis is retained, but not included as part of the proposed scoring methodology. We note the proposals under the Health Information Exchange objective require only consolidation of existing workflows and actions, while certification criteria and standards remain the same as finalized in the October 16, 2015 final rule titled ‘‘2015 Edition Health Information Technology (Health IT) Certification Criteria, 2015 Edition Base Electronic Health Record (EHR) Definition, and ONC Health IT Certification Program Modifications’’ (80 FR 62601 through 62759), hereafter referred to as the ‘‘ONC 2015 Edition final rule.’’ Therefore, we believe it would not take the full 18 to 24 months of development and implementation time to transition as indicated in the 2015 EHR Incentive Programs final rule (80 FR 62875) and could potentially be implemented for an EHR reporting period in 2019. As we discussed in section VIII.D.5. of the preamble of this proposed rule, we are proposing that if we do not finalize a new scoring methodology, we would maintain the current Stage 3 methodology with the same objectives, measures and requirements, but we would include the two new opioid measures, if they are finalized. In addition, if we do not finalize a new scoring methodology, the proposals to remove objectives and measures as well as proposals to change objective and measure names would no longer be applicable. We are seeking public comment on these proposals. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 b. Measure Proposals for the ePrescribing Objective In the 2015 EHR Incentive Programs final rule, since electronic prescribing of controlled substances had further matured and was feasible in many States, we allowed eligible hospitals and CAHs to include controlled substances under the definition of permissible prescriptions for the e-Prescribing objective, as long as they were included uniformly across patients and all available schedules and in accordance with applicable law (80 FR 62834). We believe it is important to consider other requirements specific to electronic prescribing of controlled substances for health care providers to take into account and how this may interact with the proposals under this rulemaking. CMS is committed to combatting the opioid epidemic by making it a top priority for the agency and aligning its efforts with the HHS opioid initiative to combat misuse and promote programs that support treatment and recovery support services. The HHS five-point Opioid Strategy aims to: • Improve access to prevention, treatment, and recovery support services to prevent the health, social, and economic consequences associated with opioid addiction and to enable individuals to achieve long-term recovery; • Target the availability and distribution of overdose-reversing drugs to ensure the provision of these drugs to people likely to experience or respond to an overdose, with a particular focus on targeting high-risk populations; PO 00000 Frm 00364 Fmt 4701 Sfmt 4702 • Strengthen public health data reporting and collection to improve the timeliness and specificity of data and to inform a real-time public health response; • Support cutting-edge research that advances our understanding of pain and addiction, leads to the development of new treatments, and identifies effective public health interventions to reduce opioid-related health harms; and • Advance the practice of pain management to enable access to highquality, evidence-based pain care that reduces the burden of pain for individuals, families, and society while also reducing the inappropriate use of opioids and opioid-related harms. CMS’ strategy includes reducing the risk of opioid use disorders, overdoses, inappropriate prescribing practices and drug diversion. We have identified two new measures which align with the broader HHS efforts to increase the use of PDMPs to reduce inappropriate prescriptions, improve patient outcomes and promote more informed prescribing practices. We are proposing to add two new measures to the e-Prescribing objective under § 495.24(5)(iii) that are based on electronic prescribing for controlled substances (EPCS): Query of PDMP, and Verify Opioid Treatment Agreement. These measures build upon the meaningful use of CEHRT as well as the security of electronic prescribing of Schedule II controlled substances while preventing diversion. For both measures, we are proposing to define opioids as Schedule II controlled substances under 21 CFR 1308.12, as E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules they are recognized as having a high potential for abuse with potential for severe psychological or physical dependence. We are also proposing to apply the same policies for the existing e-Prescribing measure under § 495.24(e)(5)(iii) to both the Query of the PDMP and Verify Opioid Treatment Agreement measures, including the requirement to use CEHRT as the sole means of creating the prescription and for transmission to the pharmacy. Eligible hospitals and CAHs have the option to include or exclude controlled substances in the e-Prescribing measure denominator as long as they are treated uniformly across patients and all available schedules and in accordance with applicable law (80 FR 62834; 81 FR 77227). However, because the intent of these two new measures is to improve prescribing practices for controlled substances, eligible hospitals and CAHs would have to include Schedule II opioid prescriptions in the numerator and denominator or claim the applicable exclusion. In the event we finalize the new scoring methodology we are proposing in section VIII.D.5. of the preamble of this proposed rule, that eligible hospitals and CAHs that claim the broader exclusion under the ePrescribing measure would automatically receive an exclusion for all three of the measures under the ePrescribing objective; they would not have to also claim exclusions for the other two measures Query of PDMP and Verify Opioid Treatment Agreement. In the event we do not finalize the new scoring methodology we are proposing in section VIII.D.5. of the preamble of this proposed rule, but we do finalize the proposed measures of Query of Prescription Drug Monitoring Program and Verify Opioid Treatment Agreement under the e-Prescribing objective, we would continue to apply the Stage 3 requirements finalized in previous rulemaking, and we are proposing that eligible hospitals and CAHs would be required to report all three measures under the e-Prescribing objective, but would only be required to meet the threshold for the e-Prescribing measure, or claim an exclusion. In addition, in the event the new scoring methodology we are proposing is not finalized, we would retain the existing e-Prescribing measure threshold of 25 percent under § 495.24(c)(2)(ii). We are requesting public comments on these proposals. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 (1) Proposed Measure: Query of Prescription Drug Monitoring Program (PDMP) A PDMP is an electronic database that tracks prescriptions of controlled substances at the State level. PDMPs play an important role in patient safety by assisting in the identification of patients who have multiple prescriptions for controlled substances or may be misusing or overusing them. Querying the PDMP is important for tracking the prescribed controlled substances and improving prescribing practices. The ONC, the Centers for Disease Control and Prevention (CDC), the Department of Justice (DOJ), and the Substance Abuse and Mental Health Services Administration (SAMHSA) have had integral roles in the integration and expansion of PMDPs with health information technology systems. For example, the ONC and the SAMHSA collaboratively led the ‘‘Enhancing Access’’ project to improve health care provider access to PDMP data utilizing health IT.373 Likewise, the CDC conducted a process and outcome evaluation of the PDMP EHR Integration and Interoperability Expansion (PEHRIIE) program funded by SAMHSA for nine States between FY 2012 and 2016. The PEHRIIE program goals were to integrate PDMPs into health IT and improve the comprehensiveness of PDMPs through initiating and/or improving interstate data exchange.374 In addition, the Bureau of Justice Assistance’s Harold Rogers Prescription Monitoring Program supports Prescription Drug Monitoring Program Information Exchange (PMIX) through funding, and the goal of PMIX is to help States implement a cost-effective solution to facilitate interstate data sharing among PDMPs.375 Integration of the PDMP with health information technology systems supports improves access to PDMP data, minimizes changes to current workflow and overall burden and optimizes prescribing practices. The intent of the Query of the PDMP measure is to build upon the current PDMP initiatives from Federal partners focusing on prescriptions generated and dispensing of opioids. Proposed Measure Description: For at least one Schedule II opioid electronically prescribed using CEHRT during the EHR reporting period, the eligible hospital or CAH uses data from 373 https://www.healthit.gov/PDMP and https:// www.healthit.gov/sites/default/files/work_group_ document_integrated_paper_final_0.pdf. 374 https://www.cdc.gov/drugoverdose/pdf/ pehriie_report-a.pdf. 375 https://www.bja.gov/funding/Category-5awards.pdf. PO 00000 Frm 00365 Fmt 4701 Sfmt 4702 20527 CEHRT to conduct a query of a Prescription Drug Monitoring Program (PDMP) for prescription drug history is conducted, except where prohibited and in accordance with applicable law. CMS recognizes both the utility and value of addressing PDMP EHR integration and further recognizes the majority of States mandate use of State prescription monitoring programs (PMPs) requiring prescribers/dispensers to access PMP.376 According to the CDC, State-level policies that enhance PDMPs or regulate pain clinics helped several States drive down opioid prescriptions and overdose deaths.377 We are also further aware of the varying integration approaches underway including efforts to integrate a State PDMP into a health information exchange or electronic health record (EHR) or other efforts to enhance a user interface of some type, such as risk assessment tools or red flags. We note Federal evaluation resources available to inform integration efforts 378 and believe integration is critical for enhancing provider workflow, access to critical PDMP data, and improving clinical care including prescription management. We are proposing that the query of the PDMP for prescription drug history must be conducted prior to the electronic transmission of the Schedule II opioid prescription. Eligible hospitals and CAHs would have flexibility to query the PDMP using CEHRT in any manner allowed under their State law. Although the query of the PDMP may currently be burdensome for some health care providers as part of their current workflow practice, we believe the query of a PDMP is beneficial to optimal prescribing practices and foresee progression toward fully automated queries of the PDMP building upon the current initiatives at the State level. We are proposing to include in this measure all permissible prescriptions and dispensing of Schedule II opioids regardless of the amount prescribed during an encounter in order for eligible hospitals and CAHs to identify multiple provider episodes (physician shopping), prescriptions of dangerous combinations of drugs, prescribing rates and controlled substances prescribed in high quantities. However, we are proposing that multiple Schedule II opioid prescriptions prescribed on the same date by the same eligible hospital or CAH would not require multiple 376 https://www.namsdl.org/library/14D3122C96F5-F53E-E8F23E906B4DE09D/. 377 https://www.cdc.gov/drugoverdose/policy/ successes.html. 378 https://www.cdc.gov/drugoverdose/pdf/ pehriie_report-a.pdf. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20528 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules queries of the PDMP. For example, if more than one opioid is prescribed by the eligible hospital or CAH, only one query would have to be performed for this measure. We have also considered that in most cases, only one instance of querying the PDMP may be necessary or appropriate for each hospital stay, and querying the PDMP on each day a medication is prescribed may be burdensome for providers. We are requesting comment on whether we should further refine the measure to limit queries of the PDMP to once during the stay regardless of whether multiple eligible medications are prescribed during this time. Denominator: Number of Schedule II opioids electronically prescribed using CEHRT by the eligible hospital or CAH during the EHR reporting period. Numerator: The number of Schedule II opioid prescriptions in the denominator for which data from CEHRT is used to conduct a query of a PDMP for prescription drug history except where prohibited and in accordance with applicable law. Exclusion: Any eligible hospital or CAH that does not have an internal pharmacy that can accept electronic prescriptions for controlled substances and is not located within 10 miles of any pharmacy that accepts electronic prescriptions for controlled substances at the start of their EHR reporting period. We are proposing that the exclusion criteria would be limited to prescriptions of controlled substances as the measure action is specific to prescriptions of Schedule II opioids only and does not include any other types of electronic prescriptions. In the event we finalize the new scoring methodology we are proposing in section VIII.D.5. of the preamble of this proposed rule, an additional exclusion would be available beginning in 2020 for eligible hospitals and CAHs that could not report on this measure in accordance with applicable law. We also understand that PDMP integration is not currently in widespread use for CEHRT, and many eligible hospitals and CAHs may require additional time and workflow changes at the point of care before they can meet this measure without experiencing significant burden. For instance, many eligible hospitals and CAHs will likely need to manually enter data into CEHRT to document the completion of the query of the PDMP action. In addition, some eligible hospitals and CAHs may also need to conduct manual calculation of the measure. Even for those eligible hospitals and CAHs that have achieved successful integration of a PDMP with VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 their EHR, this measure may not be machine calculable, for instance, in cases where the eligible hospital or CAH follows a link within the EHR to a separate PDMP system. For the purposes of meeting this measure, we also understand that there are no existing certification criteria for the query of a PDMP. However, we believe that the use of structured data captured in the CEHRT, can support querying a PDMP through the broader use of health IT. We are seeking public comment on whether ONC should consider adopting standards and certification criteria to support the query of a PDMP, and if such criteria were to be adopted, on what timeline should CMS require their use to meet this measure. We note that the NCPDP SCRIPT 2017071 standard for e-prescribing is now available and can help to support PDMP and EHR integration. We are seeking public comment especially from health care providers and health IT developers on whether they believe use of this standard can support eligible hospitals and CAHs seeking to report on this measure, and whether HHS should encourage use of this standard through separate rulemaking. We are seeking public comment on the challenges associated with querying the PDMP with and without CEHRT integration and whether this proposed measure should require certain standards, methods or functionalities to minimize burden. In including EPCS as a component of the measure we are proposing, we acknowledge and are seeking input on perceived and real technological barriers as part of its effective implementation including but not limited to input on two-factor authentication and on the effective and appropriate uses of technology, including the use of telehealth modalities to support established patient provider relationships subsequent to in-person visit(s) and for prescribing purposes. We also are requesting comment on limiting the exclusion criteria to electronic prescription for controlled substances and whether there are circumstances which may justify any additional exclusions for the Query of PDMP measure and what those circumstances might be. We note that under the new scoring methodology we are proposing in section VIII.D.5. of the preamble of this proposed rule, measures would not have required thresholds for reporting. Therefore, if the proposed scoring methodology and this measure were finalized, this measure would not have a reporting threshold. In the event we PO 00000 Frm 00366 Fmt 4701 Sfmt 4702 do not finalize the proposed scoring methodology, we are proposing a threshold of at least one prescription for this new measure. We believe a threshold of at least one prescription is appropriate because varying State laws related to integration of the PDMP into CEHRT can lead to differing standards for querying. We are also proposing that in order to meet this measure, an eligible hospital or CAH must use the capabilities and standards as defined for CEHRT at 45 CFR 170.315(b)(3) and 170.315(a)(10)(ii). We are proposing to codify the Query of the PDMP measure at § 495.24(e)(5)(iii)(B). We are inviting public comment on the proposals. (2) Proposed Measure: Verify Opioid Treatment Agreement The intent of this measure is for eligible hospitals and CAHs to identify whether there is an existing opioid treatment agreement when they electronically prescribe a Schedule II opioid using CEHRT if the total duration of the patient’s Schedule II opioid prescriptions is at least 30 cumulative days. We believe seeking to identify an opioid treatment agreement will further efforts to coordinate care between health care providers and foster a more informed review of patient therapy. The intent of the treatment agreement is to clearly outline the responsibilities of both patient and health care provider in the treatment plan. Such a treatment plan can be integrated into care coordination and care plan activities and documents as discussed and agreed upon by the patient and health care provider. An opioid treatment agreement is intended to support and to enable further coordination and the sharing of substance use disorder (SUD) data with consent, as may be required of the individual. According to the American Journal of Psychiatry article Prescription Opioid Misuse, Abuse, and Treatment in the United States: An Update,379 patient provider treatment agreements are part of the recommendations to enhance efforts to prevent opioid abuse per the Office of the National Drug Control Policy’s National Drug Control Strategy.380 The article further indicates that the treatment agreement can be 379 Brady KT, McCauley JL, Back SE. Prescription Opioid Misuse, Abuse, and Treatment in the United States: An Update American Journal of Psychiatry, Volume 173, Issue 1, January 01, 2016, pp. 18–26. Available at: https://www.ncbi.nlm.nih.gov/pmc/ articles/PMC4782928/. 380 https://obamawhitehouse.archives.gov/ondcp/ policy-and-research/ndcs. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules beneficial as it provides clear information for the agreed upon pain management plan, preventing misconceptions. An article in Pain Medicine, Universal Precautions in Pain Medicine: A Rational Approach to the Treatment of Chronic Pain also includes treatment agreements as part of the ‘‘Ten Steps of Universal Precautions in Pain Medicine’’ which are stated to be recommended starting points for discussion in the treatment of chronic pain.381 We also understand from stakeholder feedback during listening sessions that there are varied opinions regarding opioid treatment agreements amongst health care providers. Some are supportive of their use, indicating that treatment agreements are an important part of the prescription of opioids for pain management, and help patients understand their role and responsibilities for maintaining compliance with terms of the treatment. Other health care providers object to their use citing ethical concerns, and creation of division and trust issues in the health care provider–patient relationship. Other concerns stem from possible disconnect between the language and terminology used in the agreement and the level of comprehension on the part of the patient. Because of the debate among practitioners, we are requesting comment on the challenges this proposed measure may create for health care providers, how those challenges might be mitigated, and whether this measure should be included as part of the Promoting Interoperability Program. We also acknowledge challenges related to prescribing practices and multiple State laws which may present barriers to the uniform implementation of this proposed measure. We are seeking public comment on the challenges and concerns associated with opioid treatment agreements and how they could impact the feasibility of the proposal. Proposed Measure Description: For at least one unique patient for whom a Schedule II opioid was electronically prescribed by the eligible hospital or CAH using CEHRT during the EHR reporting period, if the total duration of the patient’s Schedule II opioid prescriptions is at least 30 cumulative days within a 6-month look-back period, 381 Gourlay DL, Heit HA, Almahrezi A. ‘‘Universal Precautions in Pain Medicine: A Rational Approach to the Treatment of Chronic Pain.’’ Pain Medicine, Volume 6, Issue 2, 1 March 2005, pp. 107–112. Available at: https:// academic.oup.com/painmedicine/article/6/2/107/ 1819946. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 the eligible hospital or CAH seeks to identify the existence of a signed opioid treatment agreement and incorporates it into CEHRT. We understand from listening sessions with stakeholders that eligible hospitals and CAHs typically do not prescribe opioid medications for more than a few days if at all. In consideration of this low volume of opioid prescriptions, we are proposing this measure would include all Schedule II opioids prescribed for a patient electronically using CEHRT by the eligible hospital or CAH during the EHR reporting period, as well as any Schedule II opioid prescriptions identified in the patient’s medication history request and response transactions during a 6 month look-back period, where the total number of days for which a Schedule II opioid was prescribed for the patient is at least 30 days. There also may be burdens specific to identifying the existence of a treatment agreement which could require additional time and changes to existing workflows, determining what constitutes a treatment agreement due to a lack of a definition, standard or electronic format and manual calculation of the measure. In addition, limitations in the completeness of care team information may limit the ability of an eligible hospital and CAH to identify all potential sources for querying and obtaining information on a treatment agreement for a specific patient. There are currently pilots in development focused on increasing connectivity and data exchange among health care providers to better integrate behavioral health information, for instance, pilots taking place as part of the Federal Demonstration Program for Certified Community Behavioral Health Clinics (CCBHCs) 382 includes criteria on how CCBHCs should use health IT to coordinate services and track data on quality measures. Participants in such pilots would potentially have the means necessary to leverage health IT connectivity to query behavioral health data resources and health care providers within their region to identify the existence of an opioid treatment agreement and to seamlessly integrate patient information received into the care plan for the patient. We are seeking public comment on other similar pathways to facilitate the identification and exchange of treatment agreements and opioid abuse treatment planning. We are proposing that the 6-month look-back period would begin on the date on which the eligible hospital or 382 https://www.samhsa.gov/section-223. PO 00000 Frm 00367 Fmt 4701 Sfmt 4702 20529 CAH electronically transmits its Schedule II opioid prescription using CEHRT. For example, all of the following prescriptions would be counted for this measure: A Schedule II opioid electronically prescribed for a patient for a duration of five days by the eligible hospital or CAH using CEHRT during the EHR reporting period, and four prior prescriptions for any Schedule II opioid prescribed by the patient’s physician (each for a duration of seven days) as identified in the patient’s medication history request and response transactions during the 6month period preceding the date on which the eligible hospital or CAH electronically transmits its Schedule II opioid prescription using CEHRT. In this example, the total number of days for which a Schedule II opioid was prescribed for the patient would equal 33 cumulative days. We are proposing a 6-month lookback period in order to identify more egregious cases of potential overutilization of opioids and to cover timeframes for use outside the EHR reporting period. In addition, we are proposing that the 6-month look-back period would utilize at a minimum the industry standard NCDCP SCRIPT v10.6 medication history request and response transactions codified at 45 CFR 170.205(b)(2). As ONC has stated (80 FR 62642), adoption of the requirements for NCDCP SCRIPT v10.6 does not preclude developers from incorporating and using technology standards or services not required by regulation in their health IT products. We are not proposing to define an opioid treatment agreement as a standardized electronic document; nor are we proposing to define the data elements, content structure, or clinical purpose for a specific document to be considered a ‘‘treatment agreement.’’ For this measure, we are seeking public comment on what characteristics should be included in an opioid treatment agreement and incorporated into CEHRT, such as clinical data, information about the patient’s care team, and patient goals and objectives, as well as which functionalities could be utilized to accomplish the incorporation of this information. We note that a variety of standards available in CEHRT might support the electronic exchange of opioid abuse related treatment data, such as use of the Consolidated Clinical Document Architecture (CCDA) care plan template that is currently optional in CEHRT. We are also seeking public comment on methods or processes for incorporation of the treatment agreement into CEHRT, including which functionalities could E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20530 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules be utilized to accomplish this. We are seeking public comment on whether there are specific data elements that are currently standardized that should be incorporated via reconciliation and if the ‘‘patient health data capture’’ functionality could be used to incorporate a treatment plan that is not a structured document with structured data elements. Denominator: Number of unique patients for whom a Schedule II opioid was electronically prescribed by the eligible hospital or CAH using CEHRT during the EHR reporting period and the total duration of Schedule II opioid prescriptions is at least 30 cumulative days as identified in the patient’s medication history request and response transactions during a 6-month look-back period. Numerator: The number of unique patients in the denominator for whom the eligible hospital or CAH seeks to identify a signed opioid treatment agreement and, if identified, incorporates the agreement in CEHRT. Exclusion: Any eligible hospital or CAH that does not have an internal pharmacy that can accept electronic prescriptions for controlled substances and is not located within 10 miles of any pharmacy that accepts electronic prescriptions for controlled substances at the start of their EHR reporting period. We are proposing that the exclusion criteria would be limited to prescriptions of controlled substances as the measure action is specific to electronic prescriptions of Schedule II opioids only and does not include any other types of electronic prescriptions. In the event we finalize the new scoring methodology we are proposing in section VIII.D.5. of the preamble of this proposed rule, an additional exclusion would be available beginning in 2020 for eligible hospitals and CAHs that could not report on this measure in accordance with applicable law. We are requesting public comment on limiting the exclusion criteria to electronic prescriptions for controlled substances and whether there are circumstances which may require an additional exclusion for the Verify Opioid Treatment Agreement measure and what those circumstances might be. We note that under the new scoring methodology we are proposing in section VIII.D.5. of the preamble of this proposed rule, measures would not have required thresholds for reporting. Therefore, if the proposed scoring methodology and measure were finalized, this measure would not have a reporting threshold. In the event we do not finalize the proposed scoring VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 methodology, but we finalize this proposed measure, we are proposing a threshold of at least one unique patient for this new measure. We believe a threshold of at least one unique patient is appropriate to account for the varying support for the use of opioid treatment agreements and acknowledging that not all patients who receive at least 30 cumulative days of Schedule II opioids would have a treatment agreement in place. We also note there are medical diagnoses and conditions that could necessitate prescribing Schedule II opioids for a cumulative period of more than 30 days. We are also proposing that, in order to meet this measure, an eligible hospital or CAH must use the capabilities and standards as defined for CEHRT at 45 CFR 170.315(b)(3), 170.315(a)(10) and 170.205(b)(2). As discussed above, we recognize that many providers are only beginning to adopt EPCS at this time. While we are proposing two new measures which combine EPCS with other actions, we are requesting comment on whether we should explore adoption of a measure focused only on the number of Schedule II opioids prescribed and the successful use of EPCS for permissible prescriptions electronically prescribed. We are seeking public comment about the feasibility of such a measure, and whether stakeholders believe this would help to encourage broader adoption of EPCS. We are proposing to codify the Verify Opioid Treatment Agreement measure at § 495.24(e)(5)(iii)(C). We are seeking public comment on the proposals for this measure. c. Measure Proposals for the Health Information Exchange (HIE) Objective The Health Information Exchange measures for eligible hospitals and CAHs hold particular importance because of the role they play within the care continuum. In addition, these measures encourage and leverage interoperability on a broader scale and promote health IT-based care coordination. However, through our review of existing measures, we determined that we could potentially improve the measures to further reduce burden and better focus the measures on interoperability in provider to provider exchange. Such modifications would address a number of concerns raised by stakeholders including: • Supporting the implementation of effective health IT supported workflows based on a specific organization’s needs; • Reducing complexity and burden associated with the manual tracking of PO 00000 Frm 00368 Fmt 4701 Sfmt 4702 workflows to support health IT measures; and • Emphasizing within these measures the importance of using health IT to support closing the referral loop to improve care coordination. The Health Information Exchange objective includes three measures under § 495.24(e)(6)(ii), and we believe we can potentially improve each to streamline measurement, remove redundancy, reduce complexity and burden, and address stakeholders’ concerns about the focus and impact of the measures on the interoperable use of health IT. As discussed in section VIII.D.6.a. of the preamble of this proposed rule, we are proposing to remove the exclusions from all three of the measures associated with the Health Information Exchange objective under § 495.24(c)(7)(iii) in proposed § 495.24(e)(6). However, in the event we finalize the new scoring methodology we are proposing, eligible hospitals and CAHs would be able to claim an exclusion under the Support Electronic Referral Loops by Receiving and Incorporating Health Information measure as indicated in section VIII.D.6.c.(4) of the preamble of this proposed rule. We are proposing several changes to the current measures under the Stage 3 Health Information Exchange objective. First, we are proposing to change the name of Send a Summary of Care measure to Support Electronic Referral Loops by Sending Health Information. We also are proposing to remove the current Stage 3 Clinical Information Reconciliation measure and combine it with the Request/Accept Summary of Care measure to create a new measure, Support Electronic Referral Loops by Receiving and Incorporating Health Information. This proposed new measure would include actions from both the current Request/Accept Summary of Care measure and Clinical Information Reconciliation measure and focus on the exchange of the health care information while reducing the administrative burden of reporting on two separate measures. As discussed earlier in the proposed rule, in the event we do not finalize the new scoring methodology we are proposing in section VIII.D.5. of the preamble of this proposed rule, we would maintain the current Health Information Exchange objective, associated measures and exclusions under § 495.24(c)(7) as described in section VIII.D.5. of the preamble of this proposed rule and as outlined in the table in that section which describes Stage 3 objectives and measures if new scoring methodology is not finalized. E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 We are seeking public comment on these proposals. (1) Proposed Modifications To Send a Summary of Care Measure We are proposing to change the name of the Send a Summary of Care measure at 42 CFR 495.24(c)(7)(ii)(A) to Support Electronic Referral Loops by Sending Health Information at 42 CFR 495.24(e)(6)(ii)(A), to better reflect the emphasis on completing the referral loop and improving care coordination. We are proposing to change the measure description only to remove the previously defined threshold from Stage 3, in alignment with our proposed implementation of a performance-based scoring system, to require that the eligible hospital or CAH create a summary of care record using CEHRT and electronically exchange the summary of care record for at least one transition of care or referral. Proposed name and measure description: Support Electronic Referral Loops by Sending Health Information: For at least one transition of care or referral, the eligible hospital or CAH that transitions or refers their patient to another setting of care or provider of care: (1) Creates a summary of care record using CEHRT; and (2) electronically exchanges the summary of care record. Through public comment and stakeholder correspondence, we have become aware that, in the health care industry, there is some misunderstanding of the scope of transitions and referrals which must be included in the denominator of this measure. In the rulemaking for Stages 2 and 3 (77 FR 54013 through 54021, 80 FR 62852 through 62862), we noted the denominator for this measure includes all transitions of care and referrals from an inpatient setting and all transitions or referrals from an emergency department where follow up care is ordered by an authorized provider. In the event that an eligible hospital or CAH is the recipient of a transition of care or referral, and subsequent to providing care the eligible hospital or CAH transitions or refers the patient back to the referring provider of care, this transition of care should be included in the denominator of the measure for the eligible hospital or CAH. We expect this will help build upon the current provider to provider communication via electronic exchange of summary of care records created by CEHRT required under this measure, further promote interoperability and care coordination with additional health care providers, and prevent redundancy in creation of a separate measure. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 In the past, stakeholders have raised concerns that the summary care records shared according to the CCDA standard included excessive information not relevant to immediate care needs, which increased burden on health care providers. Under the ONC Health IT Certification Program, certified EHR technology must have the capability to exchange all of the information in the Common Clinical Data Set (CCDS) as part of a summary care record structured according to the CCDA standard. We previously finalized in the Stage 2 final rule (77 FR 53991 through 53993) that health care providers must transmit all of the CCDS information as part of this summary care record, if known, and that health care providers must always transmit information about the problem list, medications, and medication allergies, or validate that this information is not known. As finalized in the 2015 EHR Incentive Programs final rule (80 FR 62852 through 62861), our policy allows health care providers to constrain the information in the summary care record to support transitions of care. For instance, we encouraged health care providers to send a list of items that he or she believes to be pertinent and relevant to the patient’s care, rather than a list of all problems, whether active or resolved, that have ever populated the problem list. While a current problem list must always be included, the health care provider can use his or her judgment in deciding which items historically present on the problem list, medical history list (if it exists in CEHRT), or surgical history list are relevant given the clinical circumstances. We also wish to encourage eligible hospitals and CAHs to use the document template available within the CCDA which contains the most clinically relevant information that may be required by the recipient of the transition or referral. Accordingly, we are proposing that eligible hospitals and CAHs may use any document template within the CCDA standard for purposes of the measures under the Health Information Exchange objective. While eligible hospitals’ and CAHs’ CEHRT must be capable of sending the full CCDA upon request, we believe this additional flexibility will help support efforts to ensure the information supporting a transition is relevant. For instance, when the eligible hospital or CAH is referring to another health care provider, the recommended document is the ‘‘Referral Note,’’ which is designed to communicate pertinent information from a health care provider who is requesting services of another PO 00000 Frm 00369 Fmt 4701 Sfmt 4702 20531 health care provider of clinical or nonclinical services. When the receiving health care provider sends back the information, the most relevant CCDA document template may be the ‘‘Consultation Note,’’ which is generated by a request from a clinician for an opinion or advice from another clinician. However, eligible hospitals and CAHs may choose to utilize other documents within the CCDA to support transitions, for instance the ‘‘Discharge Summary’’ document. For more information about the CCDA and associated templates, we refer readers to: https://www.hl7.org/documentcenter/ public/standards/dstu/CDAR2_IG_ CCDA_CLINNOTES_R1_DSTUR2.1_ 2015AUG.zip. We note that under the new scoring methodology we are proposing in section VIII.D.5. of the preamble of this proposed rule, measures would not have required thresholds for reporting; therefore, if the new scoring methodology and measure were finalized, this measure would not have a reporting threshold. In the event we do not finalize the proposed scoring methodology, we would maintain the current Stage 3 requirements finalized in previous rulemaking. Therefore, eligible hospitals and CAHs would be required report on the Stage 3 Send a Summary of Care measure under the Health Information Exchange objective codified at § 495.24(c)(7)(ii)(A). We are inviting public comment on the measure proposals. (2) Proposed Removal of the Request/ Accept Summary of Care Measure We are proposing to remove the Request/Accept Summary of Care measure at § 495.24(c)(7)(ii)(B) under the proposed § 495.24(e)(6) based on our analysis of the existing measure and in response to stakeholder input. Through review of implementation practices based on stakeholder feedback, we believe that the existing Request/ Accept Summary of Care measure is not feasible for machine calculation in the majority of cases. The intent of the measure is to identify when health care providers are engaging with other providers of care or care team members to obtain up-to-date patient health information and to subsequently incorporate relevant data into the patient record. However, stakeholders have noted the measure specification does not effectively further this purpose. Specifically, the existing measure specification results in unintended consequences where health care providers implement either: • A burdensome workflow to document the manual action to request E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20532 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules or obtain an electronic record, for example, clicking a check box to document each phone call or similar manual administrative task, or • A workflow which is limited to only querying internal resources for the existence of an electronic document. Neither of these two implementation options is desirable when the intent of the measure is to incentivize and encourage eligible hospitals and CAHs to implement effective workflows to identify, receive, and incorporate patient health information from other providers of care into the patient record. In addition, our analysis identified that the definition of ‘‘incorporate’’ within the Request/Accept Summary of Care measure is insufficient to ensure an interoperable result. In the 2015 EHR Incentive Programs final rule at 80 FR 62860, we did not define ‘‘incorporate’’ as we believed it would vary based on an eligible hospital’s or CAH’s workflows, patient population, and the referring provider of care. In addition, we noted that the information could be included as an attachment, as a link within the EHR, as imported structured data or reconciled within the record and not exclusively performed through use of CEHRT. Further, stakeholder feedback highlights the fact that the requirement to incorporate data is insufficiently clear regarding what data must be incorporated. Our intention was that ‘‘incorporate’’ would relate to the workflows undertaken in the process of clinical information reconciliation further defined in the Clinical Information Reconciliation measure (80 FR 62852 through 62862). Taken together, the three measures under the Health Information Exchange objective were intended to support the referral loop through sending, receiving, and incorporating patient health data into the patient record. However, stakeholder feedback on the measures suggests that the separation between receiving and reconciling patient health information is not reflective of clinical and care coordination workflows. Further, stakeholders noted that when approached separately, the incorporate portion of the Request/Accept Summary of Care measure is both inconsistent with and redundant to the Clinical Information Reconciliation measure which causes unnecessary burden and duplicative measure calculation. We are requesting public comments on our proposal to remove the Request/ Accept Summary of Care measure. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 (3) Proposed Removal of the Clinical Information Reconciliation Measure We are proposing to remove the Clinical Information Reconciliation measure at § 495.24(c)(7)(ii)(C) from the new measures at proposed § 495.24(e)(6) to reduce redundancy, complexity, and provider burden. As discussed in the prior subsection, we believe the Clinical Information Reconciliation measure is redundant in regard to the requirement to ‘‘incorporate’’ electronic summaries of care in light of the requirements of the Request/Accept Summary of Care measure. In addition, the measure is not fully health IT based as the exchange of health care information is not required to complete the measure action and the measure specification is not limited to only the reconciliation of electronic information in health IT supported workflows. We stated in the 2015 EHR Incentive Programs final rule at 80 FR 62861 that the clinical information reconciliation process could involve both automated and manual reconciliation to allow the receiving health care provider to work with both electronic data received as well as the patient to reconcile their health information. Further, stakeholder feedback from hospitals, clinicians, and health IT developers indicates that because the measure is not fully based on the use of health IT to meet the measurement requirements, eligible hospitals and CAHs must engage in burdensome tracking of manual workflows. While the overall activity of clinical information reconciliation supports quality patient care and should be a part of effective clinical workflows, the process to record and track each individual action places unnecessary burden on eligible hospitals and CAHs. We are inviting public comment on our proposal to remove the Clinical Information Reconciliation measure. (4) Proposed New HIE Measure: Support Electronic Referral Loops by Receiving and Incorporating Health Information We are proposing to add the following new measure for inclusion in the Health Information Exchange objective at § 495.24(e)(6)(ii)(B): Support Electronic Referral Loops by Receiving and Incorporating Health Information. This measure would build upon and replace the existing Request/Accept Summary of Care and Clinical Information Reconciliation measures. Proposed measure name and description: Support Electronic Referral Loops by Receiving and Incorporating Health Information: For at least one electronic summary of care record PO 00000 Frm 00370 Fmt 4701 Sfmt 4702 received for patient encounters during the EHR reporting period for which an eligible hospital or CAH was the receiving party of a transition of care or referral, or for patient encounters during the EHR reporting period in which the eligible hospital or CAH has never before encountered the patient, the eligible hospital or CAH conducts clinical information reconciliation for medication, mediation allergy, and current problem list. We are proposing to combine two existing measures, the Request/Accept Summary of Care measure and the Clinical Information Reconciliation measure, in this new Support Electronic Referral Loops by Receiving and Incorporating Health Information measure to focus on the exchange of health care information as the current Clinical Information Reconciliation measure is not reliant on the exchange of health care information nor use of CEHRT to complete the measure action. We are not proposing to change the actions associated with the existing measures; rather, we are proposing to combine the two measures to focus on the exchange of the health care information, reduce administrative burden, and streamline and simplify reporting. CMS and ONC worked together to define the following for this measure: Denominator: Number of electronic summary of care records received using CEHRT for patient encounters during the EHR reporting period for which an eligible hospital or CAH was the receiving party of a transition of care or referral, and for patient encounters during the EHR reporting period in which the eligible hospital or CAH has never before encountered the patient. Numerator: The number of electronic summary of care records in the denominator for which clinical information reconciliation is completed using CEHRT for the following three clinical information sets: (1) Medication—Review of the patient’s medication, including the name, dosage, frequency, and route of each medication; (2) Medication allergy— Review of the patient’s known medication allergies; and (3) Current Problem List—Review of the patient’s current and active diagnoses. For the proposed measure, the denominator would increment on the receipt of an electronic summary of care record after the eligible hospital or CAH engages in workflows to obtain an electronic summary of care record for a transition, referral or patient encounter in which the health care provider has never before encountered the patient. The numerator would increment upon E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules completion of clinical information reconciliation of the electronic summary of care record for medications, medication allergies, and current problems. The eligible hospital or CAH would no longer be required to manually count each individual nonhealth-IT-related action taken to engage with other providers of care and care team members to identify and obtain the electronic summary of care record. Instead, the proposed measure would focus on the result of these actions when an electronic summary of care record is successfully identified, received, and reconciled with the patient record. We believe this approach would allow eligible hospitals and CAHs to determine and implement appropriate workflows supporting efforts to receive the electronic summary of care record consistent with the implementation of effective health IT information exchange at an organizational level. Finally, we are proposing to apply our existing policy for cases in which the eligible hospital or CAH determines no update or modification is necessary within the patient record based on the electronic clinical information received, and the eligible hospital or CAH may count the reconciliation in the numerator without completing a redundant or duplicate update to the record. We welcome public comment on methods by which this specific action could potentially be electronically measured by the provider’s health IT system—such as incrementing on electronic signature or approval by an authorized provider—to mitigate the risk of burden associated with manual tracking of the action. We welcome public comment on these proposals. In addition, we are seeking public comment on methods and approaches to quantify the reduction in burden for eligible hospitals and CAHs implementing streamlined workflows for this proposed measure. We also are seeking public comment on the impact these proposals may have for health IT developers in updating, testing, and implementing new measure calculations related to these proposed changes. Specifically, we are seeking public comment on whether ONC should require developers to recertify their EHR technology as a result of the changes proposed, or whether they should be able to make the changes and engage in testing without recertification. Finally, we are seeking public comment on whether this proposed new measure that combines the Request/Accept Summary of Care and Clinical Information Reconciliation measures should be adopted, or whether VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 either or both of the existing Request/ Accept Summary of Care and Clinical Information Reconciliation measures should be retained in lieu of this proposed new measure. In the event we finalize the new scoring methodology we are proposing in section VIII.D.5. of the preamble of this proposed rule, above, an exclusion would be available for eligible hospitals and CAHs that could not implement the Support Electronic Referral Loops by Receiving and Incorporating Health Information measure for an EHR reporting period in CY 2019. We note that under the new scoring methodology we are proposing in section VIII.D.5. of the preamble of this proposed rule, measures would not have required thresholds for reporting. Therefore, if the proposed scoring methodology and measure were finalized, this measure would not have a reporting threshold. In the event we do not finalize the proposed new scoring methodology, we would maintain the current Stage 3 requirements finalized in previous rulemaking. Therefore, eligible hospitals and CAHs would be required report on the Stage 3 Request/Accept Summary of Care measure and Clinical Information Reconciliation measures under the Health Information Exchange objective codified at § 495.24(c)(7)(ii)(B) and (C). We also are proposing that, in order to meet this measure, an eligible hospital or CAH must use the capabilities and standards as defined for CEHRT at 45 CFR 170.315(g)(1) and (g)(2). d. Measure Proposals for the Provider to Patient Exchange Objective The Provider to Patient Exchange objective for eligible hospitals and CAHs builds upon the goal of improved access and exchange of patient health information, patient centered communication and coordination of care using CEHRT. We are proposing a new scoring methodology in section VIII.D.5. of the preamble of this proposed rule, under which (in section VIII.D.6. of the preamble of this proposed rule) which we are proposing to rename the Patient Electronic Access to Health Information objective to Provider to Patient Exchange, remove the Patient Specific Education measure and rename the Provide Patient Access measure to Provide Patients Electronic Access to Their Health Information. In addition, we are proposing to remove the Coordination of Care through Patient Engagement objective and all associated measures. The existing Stage 3 Patient Electronic Access to Health Information objective includes two measures under PO 00000 Frm 00371 Fmt 4701 Sfmt 4702 20533 § 495.24(c)(5)(ii) and the existing Stage 3 Coordination of Care through Patient Engagement objective includes three measures under § 495.24(c)(6)(ii). We reviewed the existing Stage 3 requirements and determined that the proposals for the Patient Electronic Access to Health Information objective and Coordination of Care through Patient Engagement objective could reduce program complexity and burden and better focus on leveraging the most current health IT functions and standards for patient flexibility of access and exchange of health information. We are proposing the Provider to Patient Exchange objective would include one measure, the existing Stage 3 Provide Patient Access measure, which are proposing to rename to Provide Patients Electronic Access to Their Health Information. In addition, we are proposing to revise the measure description for the Provide Patients Electronic Access to Their Health Information measure to change the threshold from more than 50 percent to at least one unique patient in accordance with the proposed scoring methodology proposed in section VIII.D.5. of the preamble of this proposed rule. As discussed in section VIII.D.6.a. of the preamble of this proposed rule, we are proposing to remove the exclusion for the Provide Patients Electronic Access to Their Health Information measure. As discussed below, if we finalize the new scoring methodology we are proposing in section VIII.D.5. of the preamble of this proposed rule, we are proposing to remove all of the other measures currently associated with the Patient Electronic Access to Health Information objective and the Coordination of Care through Patient Engagement objective. If we do not finalize the new scoring methodology we are proposing in section VIII.D.5. of the preamble of this proposed rule, we would maintain the existing Stage 3 requirements finalized in previous rulemaking as outlined in the table in that section which describes Stage 3 objectives and measures if new scoring methodology is not finalized. Therefore, we would retain the existing Patient Electronic Access to Health Information objective, associated measures and exclusions under § 495.24(c)(5) and the existing Coordination of Care through Patient Engagement objective, associated measures and exclusions under § 495.24(c)(6). E:\FR\FM\07MYP2.SGM 07MYP2 20534 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 (1) Proposed Modifications To Provide Patient Access Measure We are proposing to change the name of the Provide Patient Access measure at 42 CFR 495.24(c)(5)(ii)(A) to Provide Patients Electronic Access to Their Health Information at proposed 42 CFR 495.24(e)(7)(ii)(A) to better reflect the emphasis on patient engagement in their health care and patient’s electronic access of their health information through use of APIs. We are proposing to change the measure description only to remove the previously established threshold from Stage 3, in alignment with our proposed implementation of a performance-based scoring methodology, to require that the eligible hospital or CAH provide timely access for viewing, downloading or transmitting their health information for at least one unique patient discharged using any application of the patient’s choice. Proposed name and measure description: Provide Patients Electronic Access to Their Health Information: For at least one unique patient discharged from the eligible hospital or CAH inpatient or emergency department (POS 21 or 23): • The patient (or the patient authorized representative) is provided timely access to view online, download, and transmit his or her health information; and • The eligible hospital or CAH ensures the patient’s health information is available for the patient (or patientauthorized representative) to access using any application of their choice that is configured to meet the technical specifications of the API in the eligible hospital or CAH’s CEHRT. We are proposing to change the measure name to emphasize electronic access of patient health information as opposed to use of paper based actions in accordance with the 2015 EHR Incentive Programs final rule policy for Stage 3 to discontinue inclusion of paper based formats and limit the focus to only health IT solutions to encourage adoption and innovation in use of CEHRT (80 FR 62783 through 62784). In addition, we are committed to promoting patient engagement with their health care information and ensuring access in an electronic format upon discharge from the eligible hospital or CAH. We note that under the new scoring methodology we are proposing in section VIII.D.5. of the preamble of this proposed rule, measures would not have required thresholds for reporting. Therefore, if the new scoring methodology and measure were VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 finalized, this measure would not have a reporting threshold. In the event we do not finalize the proposed scoring methodology, we would maintain the existing Stage 3 requirements finalized in previous rulemaking. Therefore, eligible hospitals and CAHs would be required report on the Stage 3 Provide Patient Access measure under the Patient Electronic Access to Health Information objective codified at § 495.24(c)(5)(ii)(A). We are inviting public comment on the measure proposal. (2) Proposed Removal of the Patient Generated Health Data Measure We are proposing to remove the Patient Generated Health Data (PGHD) measure at 42 CFR 495.24(c)(6)(ii)(C) at proposed § 495.24(e)(7) to reduce complexity and focus on the goal of using advanced EHR technology and functionalities to advance interoperability and health information exchange. As finalized in the 2015 EHR Incentive Programs final rule at 80 FR 62851, the measure is not fully health IT based as we did not specify the manner in which health care providers would incorporate the data received. Instead, we finalized that health care providers could work with their EHR developers to establish the methods and processes that work best for their practice and needs. We indicated that this could include incorporation of the information using a structured format (such as an existing field in the EHR or maintaining an isolation between the data and the patient record such as incorporation as an attachment, link or text reference which would not require the advanced use of CEHRT. We note that although this measure requires use of the 2015 Edition, it does not require key updates to functions and standards of health IT, therefore, it does not align with the current program goals of improving interoperability, prioritizing actions completed electronically and use of advanced CEHRT functionalities. We are seeking public comment on our proposal to remove the Patient Generated Health Data measure. (3) Proposed Removal of the PatientSpecific Education Measure We are proposing to remove the Patient-Specific Education measure at § 495.24(c)(5)(ii)(B) at proposed § 495.24(e)(7) as it has proven burdensome to eligible hospitals and CAHs in ways that were unintended and detract from health care providers’ progress on current program priorities. The Patient-Specific Education measure was finalized as a Stage 3 PO 00000 Frm 00372 Fmt 4701 Sfmt 4702 measure for eligible hospitals and CAHs in the 2015 EHR Incentive Programs final rule with the intent to build upon the Stage 2 policy goals of using CEHRT for provider-patient communication (80 FR 62841 through 62846). We believe that the Patient-Specific Education measure does not align with the current emphasis of the Medicare Promoting Interoperability Program to increase interoperability, leverage the most current health IT functions and standards or reduce burden for eligible hospitals and CAHs. For example, the Patient-Specific Education measure’s primary focus is on use of CEHRT for patient resources specific to their health care and diagnosis as well as patient centered care. However, the education resources do not need to be maintained within or generated by CEHRT. Therefore, even though the CEHRT identifies the patient educational resources, the process to generate them could take additional time and interrupt health care provider’s workflows. In addition, there could be redundancy in providing educational materials based on resources identified by the CEHRT as CEHRT identifies educational resources using the patient’s medication list and problem list but can also include other elements as well. If there are no changes to a patient’s health status or treatment based on his or her health care information, there would likely be many resources and materials that present the same type of information and could increase burden to the health care provider in seeking additional resources to provide. We are inviting public comment on our proposal to remove the PatientSpecific Education measure. (4) Proposed Removal of the Secure Messaging Measure We are proposing to remove the Secure Messaging measure at § 495.24(c)(6)(ii)(B) at proposed § 495.24(e)(7) as it has proven burdensome to eligible hospitals and CAHs in ways that were unintended and detract from health care providers’ progress on current program priorities. Secure Messaging was finalized as a Stage 3 measures for eligible hospitals and CAHs in the 2015 EHR Incentive Programs final rule with the intent to build upon the Stage 2 policy goals of using CEHRT for provider-patient communication (80 FR 62841 through 62849). As mentioned above, we believe that Secure Messaging does not align with the current emphasis of the Medicare Promoting Interoperability Program to increase interoperability or reduce burden for eligible hospitals and CAHs. E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 In addition, we believe there is burden associated with tracking secure messages, including the unintended consequences of workflows designed for the measure rather than for clinical and administrative effectiveness. We note that Secure Messaging is not part of the EHR Incentive Programs requirements for eligible hospitals and CAHs under Modified Stage 2. This measure was finalized in the 2015 EHR Incentive Programs final rule for Stage 3 (80 FR 62846 through 62852) under the Coordination of Care Through Patient Engagement objective which allows health care providers flexibility by requiring them to report on all three measures but only require them to meet the thresholds of two measures. This allows health care providers the option to choose measure options that best fit their organizational needs and patient population. We believe that because this measure is not currently required, removal would not negatively impact patient engagement nor care coordination and serve to decrease burden. In addition, after further review, we believe that this measure may not be practical for eligible hospitals and CAHs as the patient would likely receive follow up care from another health care provider such as the patient’s primary care physician, a rehabilitation facility, or home health after discharge. The patient would communicate with those health care providers instead of the hospital for information related to their health post-discharge. We are inviting public comment on our proposal to remove the Secure Messaging measure. (5) Proposed Removal of the View, Download or Transmit Measure We are proposing to remove the View, Download or Transmit measure at § 495.24(c)(6)(ii)(A) at proposed § 495.24(e)(7) as it has proven burdensome to eligible hospitals and CAHs in ways that were unintended and detract from eligible hospitals and CAHs progress on current program priorities. We received health care provider and stakeholder feedback through correspondence, public forums, and listening sessions indicating there is ongoing concern with measures which require patient action for successful attestation. We have noted that data analysis on the patient action measures supports stakeholder concerns that barriers exist which impact a provider’s ability to meet them. Health care providers have noted that the demographics of their patient populations which may include lowincome, location in remote, rural areas VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 and an aging population contribute to the barriers as the patients do not have access to computers, internet and/or email. They have also noted that this particular population is concerned with having their health information online. In addition, stakeholders have indicated that successful attestation of the measure is reliant upon the patient, and patient education and engagement may not be enough to overcome the barriers. In the 2015 EHR Incentive Programs final rule at 80 FR 62789, we reduced the thresholds for both patient action measures of VDT and Secure Messaging based on concerns from health care providers and to increase successful attestation on this measure. After additional review, we note that successful attestation predicated solely on a patient’s action has inadvertently created burdens to health care providers and detracts from progress on the Promoting Interoperability Program’s measure goals of focusing on patient care, interoperability and leveraging advanced used of health IT. Therefore, we are proposing to remove the View, Download or Transmit measure. We are inviting public comment on our proposal to remove the View, Download or Transmit measure. e. Proposed Modifications to the Public Health and Clinical Data Registry Reporting Objective and Measures In connection with the new scoring methodology we are proposing in section VIII.D.5. of the preamble of this proposed rule, we are proposing changes to the Public Health and Clinical Data Registry Reporting objective and six associated measures under 42 CFR 495.24(c)(8)(ii)(A) through (F) in proposed 42 CFR 495.24(e)(7). We believe that public health reporting through EHRs will extend the use of electronic reporting solutions to additional events and care processes, increase timeliness and efficiency of reporting and replace manual data entry. We are proposing to change the name of the objective to Public Health and Clinical Data Exchange. Under the new scoring methodology proposed in section VII.D.5. of the preamble of this proposed rule, in aligning with our goal to increase flexibility, improve value, and focus on burden reduction, we are proposing that eligible hospitals and CAHs would be required to attest to the Syndromic Surveillance Reporting measure and at least one additional measure from the following options: Immunization Registry Reporting; Clinical Data Registry Reporting; Electronic Case Reporting; Public Health PO 00000 Frm 00373 Fmt 4701 Sfmt 4702 20535 Registry Reporting; and Electronic Reportable Laboratory Result Reporting. We are proposing to require the Syndromic Surveillance Reporting measure under the Public Health and Clinical Data Exchange objective because the CDC indicates the primary source of data for syndromic surveillance comes from EHRs in emergency care settings. Typically, EHR data transmitted from health care facilities to public health agencies for syndromic surveillance are not filtered or categorized. As a result, public health agencies can use the same data that support delivery of care for an allhazards surveillance approach. The EHR Incentive Program has enabled the growth of syndromic surveillance across the country and in a number of States, such as Illinois and Wisconsin, nearly all of the hospitals with emergency departments are participating. More complete coverage allows public health agencies to monitor trends in emergency department visits with more precision, detect smaller increases in morbidity, identify emerging health threats in smaller geographic areas, and collaborate with healthcare and other State agencies to respond quickly to emerging health threats. In addition, syndromic surveillance reporting via CEHRT leverages the wealth and depth of clinical information that has not been captured before to study emerging health conditions like the rising opioid overdose epidemic. The data will also provide a unique opportunity to examine rare conditions and new procedures. We are seeking public comment on the proposal to require reporting on this measure. We stated in the 2015 EHR Incentive Programs final rule at 80 FR 62771 that one of the program goals was to increase interoperability through public health registry exchange of data. We continue to believe that public health reporting is valuable in terms of health information exchange between health care providers and public health and clinical data registries. For example, when immunization information is directly exchanged between EHRs and registries, patient information may be accessed by all of a patient’s health care providers for improved continuity of care and reduced provider burden, as well as supporting population health monitoring. While we believe that it is important to leverage health IT through advanced use of CEHRT, for public health and clinical data registries reporting, we also want to reduce burden. Through stakeholder feedback, we understand that some of the existing active engagement requirements are E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20536 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules complicated and confusing, and contributed to unintended burden due to issues related to readiness or onboarding for electronic exchange with registries. Therefore, under the new scoring methodology proposed in section VII.D.5. of the preamble of this proposed rule, we are proposing to require attestation to only two measures under the Public Health and Clinical Data Exchange objective instead of three, which is currently required under Stage 3. In addition, we intend to propose in future rulemaking to remove the Public Health and Clinical Data Exchange objective and measures no later than CY 2022, and are seeking public comment on whether hospitals will continue to share such data with public health entities once the Public Health and Clinical Data Exchange objective and measures are removed, as well as other policy levers outside of the Promoting Interoperability Program that could be adopted for continued reporting to public health and clinical data registries, if necessary. As noted above, while we believe that these registries provide the necessary monitoring of public health nationally and contribute to the overall health of the nation, we are also focusing on reducing burden and identifying other appropriate venues in which reporting to public health and clinical data registries could be reported. We are seeking public comment on the role that each of the public health and clinical data registries should have in the future of the Promoting Interoperability Programs and whether the submission of this data should still be required when the incentive payments for meaningful use of CEHRT will end in 2021. Lastly, we are seeking public comment on whether the Promoting Interoperability Programs are the best means for promoting the sharing of clinical data with public health entities. In the event we do not finalize the new scoring methodology we are proposing in section VIII.D.5. of the preamble of this proposed rule, we would maintain the existing Stage 3 requirements finalized in previous rulemaking and outlined in the table in that section which describes Stage 3 objectives and measures if new scoring methodology is not finalized. Therefore, we would retain the existing Public Health and Clinical Data Registry Reporting objective and associated measures and exclusions under § 495.24(c)(8). VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 f. Request for Comment—Potential New Measures for HIE Objective: Health Information Exchange Across the Care Continuum We are working to introduce additional flexibility to allow providers a wider range of options in selecting measures that are most appropriate to their setting, patient population, and clinical practice improvement goals. For this reason, we are seeking public comment on a potential concept for two additional measure options for the Health Information Exchange objective for eligible hospitals and CAHs. The Stage 3 program requirements for health information exchange primarily focused on the exchange between and among eligible hospitals, CAHs and eligible professionals. While these use cases represent a significant portion of the health care industry, the care continuum is much broader and includes a wide range of health care providers and settings of care that have adopted and implemented health IT systems to support patient care and electronic information exchange. Specifically, health care providers in long-term care and post-acute care settings, skilled nursing facilities, and behavioral health settings have made significant advancements in the adoption and use of health IT. Many current Promoting Interoperability Program participants are now engaged in bi-directional exchange of patient health information with these health care providers and settings of care and many more are seeking to incorporate these workflows as part of efforts to improve care team coordination or to support alternative payment models. For these reasons, we are seeking public comment on two potential new measures for inclusion in the program to enable eligible hospitals and CAHs to exchange health information through health IT supported care coordination across a wide range of settings. New Measure Description for Support Electronic Referral Loops by Sending Health Information Across the Care Continuum: For at least one transition of care or referral to a provider of care other than an eligible hospital or CAH, the eligible hospital or CAH creates a summary of care record using CEHRT; and electronically exchanges the summary of care record. New Measure Denominator: Number of transitions of care and referrals during the EHR reporting period for which the eligible hospital or CAH inpatient or emergency department (POS 21 or 23) was the transitioning or referring provider to a provider of care other than an eligible hospital or CAH. PO 00000 Frm 00374 Fmt 4701 Sfmt 4702 New Measure Numerator: The number of transitions of care and referrals in the denominator where a summary of care record was created and exchanged electronically using CEHRT. New Measure Description for Support Electronic Referral Loops By Receiving and Incorporating Health Information Across the Care Continuum: For at least one electronic summary of care record received by an eligible hospital or CAH from a transition of care or referral from a provider of care other than an eligible hospital or CAH, the eligible hospital or CAH conducts clinical information reconciliation for medications, mediation allergies, and problem list. New Measure Denominator: The number of electronic summary of care records received for a patient encounter during the EHR reporting period for which an eligible hospital or CAH was the recipient of a transition of care or referral from a provider of care other than an eligible hospital or CAH. New Measure Numerator: The number of electronic summary of care records in the denominator for which clinical information reconciliation was completed using CEHRT for the following three clinical information sets: (1) Medication—Review of the patient’s medication, including the name, dosage, frequency, and route of each medication; (2) Medication allergy—Review of the patient’s known medication allergies; and (3) Current Problem List—Review of the patient’s current and active diagnoses. We are seeking public comment on whether these two measures should be combined into one measure so that an eligible hospital or CAH that is engaged in exchanging health information across the care continuum may include any such exchange in a single measure. We are seeking public comment on whether the denominators should be combined to a single measure including both transitions of care from a hospital and transitions of care to a hospital. We also are seeking public comment on whether the numerators should be combined to a single measure including both the sending and receiving of electronic patient health information. We are seeking public comment on whether the potential new measures should be considered for inclusion in a future program year or whether stakeholders believe there is sufficient readiness and interest in these measures to adopt them as early as 2019. For the purposes of focusing the denominator, we are seeking public comment regarding whether the potential new measures should be limited to transitions of care and referrals specific to long-term and post-acute care, skilled nursing care, E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 and behavioral health care settings. We also are seeking public comment on whether additional settings of care should be considered for inclusion in the denominators and if a provider should be allowed to limit the denominators to a specific type of care setting based on their organizational needs, clinical improvement goals, or participation in an alternative payment model. Finally, we are seeking public comment on the impact the potential new measures may have for health IT developers to develop, test, and implement a new measure calculation for a future program year. 7. Proposed Application of Proposed Scoring Methodology and Measures Under the Medicaid Promoting Interoperability Program As indicated in sections VIII.D.5. and VIII.D.6. of the preamble of this proposed rule, we are not proposing to require States to adopt the new scoring methodology and measures that we are proposing. Instead, we are proposing to give States the option to adopt the new scoring methodology we are proposing in section VIII.D.5. of the preamble of this proposed rule together with the measures proposals included in section VIII.D.6. of the preamble of this proposed rule for their Medicaid Promoting Interoperability Programs. Any State that wishes to exercise this option must submit a change to its State Medicaid HIT Plan (SMHP) for CMS’ approval, as specified in § 495.332. If a State chooses not to submit such a change, or if the change is not approved, the objectives, measures, and scoring would remain the same as currently specified under § 495.24. We believe that States are unlikely to choose this option due to concerns with burden, time constraints and costs associated with implementing updates to technology and reporting systems, as very few eligible hospitals will be eligible to receive an incentive payment under the Medicaid Promoting Interoperability Program in 2019 and subsequent years. However, our proposal to extend this option to States would allow them flexibility to benefit from the improvements to meaningful use scoring outlined in this proposed rule, if they so choose. Similarly, we also request public comment on whether we should modify the objectives and measures for eligible professionals (EPs) in the Medicaid Promoting Interoperability Program in order to encourage greater interoperability for Medicaid EPs. We are interested in policy options that should be considered, including the benefits of greater alignment with the VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Merit-Based Incentive Payment System requirements for Eligible Clinicians. We also are inviting comments on the burdens and hurdles that such policy changes might create for EPs and States. In connection with these proposals regarding the scoring methodology and measures, we are proposing to require under § 495.40(b)(2)(vii) ‘‘dual-eligible’’ eligible hospitals and CAHs (those that are eligible for an incentive payment under Medicare for meaningful use of CEHRT and/or subject to the Medicare payment reduction for failing to demonstrate meaningful use, and are also eligible to earn a Medicaid incentive payment for meaningful use) to demonstrate meaningful use for the Promoting Interoperability Program to CMS, and not to their respective State Medicaid agency, beginning with the EHR reporting period in CY 2019. This includes all attestation requirements, including the objectives and measures of meaningful use, in addition to reporting clinical quality measures. In the past, we have generally adopted a common definition of meaningful use under Medicare and Medicaid (for example, 77 FR 44324 through 44326). If we adopt the proposals made in this rule, there would not be a common definition of meaningful use, unless a State chooses to exercise the option described above and receives approval from CMS. In light of these changes, we believe it would be more efficient and straightforward in terms of program administration and operations if all dual-eligible eligible hospitals and CAHs demonstrate meaningful use to CMS. If a dual-eligible eligible hospital or CAH instead demonstrates meaningful use to its State Medicaid agency, it would only qualify for an incentive payment under Medicaid (assuming it meets all eligibility and other program requirements), and it would not qualify for an incentive payment under Medicare and/or avoid the Medicare payment reduction. The proposals in this rule would not change the deeming policy under the definition of meaningful EHR user under § 495.4, under which an eligible hospital or CAH that successfully demonstrates meaningful use to CMS would be deemed a meaningful EHR user for purposes of the Medicaid incentive payment. We also are proposing to amend the requirements for State reporting to CMS under the Medicaid Promoting Interoperability Program under § 495.316(g), so that States would not be required to report, for program years after 2018, provider-level attestation data for each eligible hospital that PO 00000 Frm 00375 Fmt 4701 Sfmt 4702 20537 attests to the State to demonstrate meaningful use. We are seeking public comments on these proposals. 8. Promoting Interoperability Program Future Direction In future years of the Promoting Interoperability Program, we will continue to consider changes which support a variety of HHS goals, including: Reducing administrative burden, supporting alignment with the Quality Payment Program, advancing interoperability and the exchange of health information, and promoting innovative uses of health IT. We believe a focus on interoperability and simplification will reduce health care provider burden while allowing flexibility to pursue innovative applications that improve care delivery. One strategy we are exploring is creating a set of priority health IT activities that would serve as alternatives to the traditional EHR Incentive Program measures. For example, we are seeking public comment on whether participation in the Trusted Exchange Framework and Common Agreement (TEFCA) should be considered a health IT activity that could count for credit within the Health Information Exchange objective in lieu of reporting on measures for this objective. The 21st Century Cures Act (Pub. L. 114–255), enacted in 2016, requires HHS to take steps to enable the electronic sharing of health information ensuring interoperability for health care providers and settings across the care continuum. Congress directed ONC to ‘‘develop or support a trusted exchange framework, including a common agreement among health information networks nationally.’’ In January 2018, ONC released a draft version of the Trusted Exchange Framework.383 ONC will revise the draft TEF based on public comment and ultimately release a final version of the Trusted Exchange Framework that will subsequently be available for adoption by HINs and their participants seeking to participate in nationwide health information exchange. By participating in, or serving as, a health information network, health IT developers and other stakeholders can ensure that health care providers have the ability to seamlessly share and receive a core set of data from other network participants in accordance with a set of permitted purposes and 383 The draft version of the Trusted Exchange Framework may be accessed at: https:// beta.healthit.gov/topic/interoperability/trustedexchange-framework-and-common-agreement. E:\FR\FM\07MYP2.SGM 07MYP2 20538 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules applicable privacy and security requirements. To qualify for this activity, an eligible hospital or CAH would demonstrate that they are using CEHRT from a developer who participates in or serves as a health information network which has adopted the TEFCA. Eligible hospitals and CAHs could also be required to demonstrate that they are active participants in a health information network and routinely sharing health information to support care transitions. They could also be required to demonstrate that their CEHRT enables the use of an open API to exchange information with the network. We also are considering a health IT activity in which eligible hospitals and CAHs could obtain credit if they maintain an open API which allows patients to access their health information through a preferred third party. This could be the open API maintained to comply with the terms of the TEFCA or a standalone offering as long as the API offers ongoing persistent access to outside parties. Under this approach, an eligible hospital or CAH that attests to making such an open API available for the purposes of ensuring patients have access to their health information would receive full credit for the Provide Patient Access measure under this objective. Finally, we are considering developing a health IT activity which would allow eligible hospitals and CAHs to obtain credit under the Public Health and Clinical Data Exchange objective for piloting emerging technology standards. A priority outcome for the draft Trusted Exchange Framework is enabling bulk data queries which health care providers and other stakeholders can utilize to conduct effective population health management across their entire attributed population. However, technical infrastructure to support this use case on a widespread basis is still in development. HHS could develop a health IT activity under which an eligible hospital or CAH would participate in a pilot, and eventually implement in production, use of an API based on the emerging update to the FHIR standard which would allow population level data access through an API in lieu of reporting on measures under the Public Health and Clinical Data Exchange objective. We welcome stakeholder comments on the concept of adopting health IT activities, and specifically on the health IT activities described above. We also welcome recommendations for other health IT activities through which eligible hospitals and CAHs could earn credit in lieu of reporting on specific measures, and which add value for patients and health care providers, are relevant to patient care and clinical workflows, support alignment with existing objectives, promote flexibility, are feasible for implementation, are innovative in the use of health IT and promote interoperability. Finally, we specifically are seeking public comments on the following questions: • What health IT activities should CMS consider recognizing in lieu of reporting on objectives that would most effectively advance priorities for nationwide interoperability and spur innovation? What principles should CMS employ to identify health IT activities? • Do stakeholders believe that introducing health IT activities in lieu of reporting on measures would decrease burden associated with the Promoting Interoperability Programs? • If additional measures were added to the program, what measures would be beneficial to add to promote our goals of care coordination and interoperability? • How can the Promoting Interoperability Program for eligible hospitals and CAHs further align with the Quality Payment Program (for example, requirements for eligible clinicians under MIPS and Advanced APMs) to reduce burden for health care providers, especially hospital-based MIPS eligible clinicians? • What other steps can HHS take to further reduce the administrative burden associated with the Promoting Interoperability Program? 9. Clinical Quality Measurement for Eligible Hospitals and Critical Access Hospitals (CAHs) Participating in the Medicare and Medicaid Promoting Interoperability Programs a. Background and Current CQMs Under sections 1814(l)(3)(A), 1886(n)(3)(A), and 1903(t)(6)(C)(i)(II) of the Act and the definition of ‘‘meaningful EHR user’’ under 42 CFR 495.4, eligible hospitals and CAHs must report on clinical quality measures (referred to as CQMs or eCQMs) selected by CMS using CEHRT, as part of being a meaningful EHR user under the Medicare and Medicaid Promoting Interoperability Programs. The table below lists the 16 CQMs available for eligible hospitals and CAHs to report under the Medicare and Medicaid PI Programs beginning in CY 2017 (81 FR 57255). CQMS FOR ELIGIBLE HOSPITALS AND CAHS BEGINNING WITH CY 2017 NQF No. Measure name AMI–8a ........................... ED–3 .............................. CAC–3 ........................... ED–1 .............................. ED–2 .............................. EHDI–1a ......................... PC–01 ............................ daltland on DSKBBV9HB2PROD with PROPOSALS2 Short name Primary PCI Received Within 90 Minutes of Hospital Arrival ................................................................. Median Time from ED Arrival to ED Departure for Discharged ED Patients ......................................... Home Management Plan of Care Document Given to Patient/Caregiver .............................................. Median Time from ED Arrival to ED Departure for Admitted ED Patients ............................................. Admit Decision Time to ED Departure Time for Admitted Patients ....................................................... Hearing Screening Prior to Hospital Discharge ...................................................................................... Elective Delivery (Collected in aggregate, submitted via web-based tool or electronic clinical quality measure). Exclusive Breast Milk Feeding* .............................................................................................................. Discharged on Antithrombotic Therapy .................................................................................................. Anticoagulation Therapy for Atrial Fibrillation/Flutter .............................................................................. Antithrombotic Therapy by the End of Hospital Day Two ...................................................................... Discharged on Statin Medication ............................................................................................................ Stroke Education ..................................................................................................................................... Assessed for Rehabilitation .................................................................................................................... Venous Thromboembolism Prophylaxis ................................................................................................. Intensive Care Unit Venous Thromboembolism Prophylaxis ................................................................. PC–05 ............................ STK–02 .......................... STK–03 .......................... STK–05 .......................... STK–06 .......................... STK–08 .......................... STK–10 .......................... VTE–1 ............................ VTE–2 ............................ + NQF endorsement has been removed. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00376 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 0163 0496 + 0495 0497 1354 0469 0480 0435 0436 0438 0439 + 0441 0371 0372 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20539 daltland on DSKBBV9HB2PROD with PROPOSALS2 * Measure name has been shortened. We refer readers to annually updated measure specifications on the CMS eCQI Resource Center web page for further information at: https://www.healthit.gov/newsroom/ecqi-resource-center. b. Proposed CQMs for Reporting Periods Beginning With CY 2020 As we have stated previously in rulemaking (82 FR 38479), we plan to continue to align the CQM reporting requirements for the PI Programs with the Hospital IQR Program. In order to move the program forward in the least burdensome manner possible, while maintaining a set of the most meaningful quality measures and continuing to incentivize improvement in the quality of care provided to patients, we believe it is appropriate to propose to remove certain eCQMs at this time to develop an even more streamlined set of the most meaningful eCQMs for hospitals. To align with the Hospital IQR Program, we are proposing to reduce the number of eCQMs in the Medicare and Medicaid Promoting Interoperability Programs eCQM measure set from which eligible hospitals and CAHs report, by proposing to remove eight eCQMs (from the 16 eCQMs currently in the measure set) beginning with the reporting period in CY 2020. The eight eCQMs we are proposing to remove are: • Primary PCI Received Within 90 Minutes of Hospital Arrival (NQF #0163) (AMI–8a); • Home Management Plan of Care Document Given to Patient/Caregiver (CAC–3); • Median Time from ED Arrival to ED Departure for Admitted ED Patients (NQF #0495) (ED–1); • Hearing Screening Prior to Hospital Discharge (NQF #1354) (EHDI–1a); • Elective Delivery (NQF #0469) (PC– 01); • Stroke Education (STK–08) (adopted at 78 FR 50807; • Assessed for Rehabilitation (NQF #0441) (STK–10); and • Median Time from ED Arrival to ED Departure for Discharged ED Patients (NQF 0496) (ED–3). We note that the first seven eCQMs on this list are currently included in the Hospital IQR Program, and in section VIII.A.5.(b)(9), we are proposing to remove them from the Hospital IQR Program beginning in CY 2020. For more information on the first seven eCQMs selected for removal, we refer readers to section VIII.A.5.(b)(9) of the preamble of this proposed rule. We believe that a coordinated reduction in the overall number of eCQMs in both the Hospital IQR Program and Medicare and Medicaid EHR Promoting Interoperability will reduce certification burden on hospitals, VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 improve the quality of reported data by enabling eligible hospitals and CAHs to focus on a smaller, more specific subset of CQMs while still allowing eligible hospitals and CAHs some flexibility to select which eCQMs to report that best reflect their patient populations and support internal quality improvement efforts. With respect to the Median Time from ED Arrival to ED Departure for Discharged ED Patients measure (NQF 0496) (ED–3), this is an outpatient measure and is not included as an eCQM in the Hospital IQR Program. We are proposing to remove it so the eCQMs would align completely between the two programs in order to reduce burden and enable eligible hospitals and CAHs to easily report electronically through the Hospital IQR Program submission mechanism. As we stated in section VIII.A.5.(b)(9) with regard to the Hospital IQR Program proposal for the CY 2020 reporting period and subsequent years, we also considered proposing to remove these eCQMs one year earlier, beginning with the CY 2019 reporting period/FY 2021 payment determination. In establishing our eCQM policies, we must balance the needs of eligible hospitals and CAHs with variable preferences and capabilities. Overall, across the range of capabilities and resources for eCQM reporting, stakeholders have expressed that they want more time to prepare for eCQM changes. We recognize that some hospitals and health IT vendors may prefer earlier removal in order to forgo maintenance on those eCQMs proposed for removal. In preparation for this proposed rule, we weighed the relative burdens associated with removing these measures beginning with the CY 2019 reporting period or beginning with the CY 2020 reporting period. In the event we finalize our proposal to remove these eCQMs, we intend to align the timing of the removal for the Medicare and Medicaid Promoting Interoperability Programs with the Hospital IQR Program. We are inviting public comment on our proposal, including the specific measures proposed for removal and the timing of removal from the Medicare and Medicaid Promoting Interoperability Programs. PO 00000 Frm 00377 Fmt 4701 Sfmt 4702 d. Proposed CQM Reporting Periods and Criteria for the Medicare and Medicaid Promoting Interoperability Programs in CY 2019 For CY 2019, we are proposing the same CQM reporting periods and criteria as established in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38479 through 38483) for the Medicare and Medicaid EHR Incentive Programs in CY 2018, which would be as follows: For CY 2019, for eligible hospitals and CAHs that report CQMs electronically, we are proposing the reporting period for the Medicare and Medicaid Promoting Interoperability Programs would be one, self-selected calendar quarter of CY 2019 data, and the submission period for the Medicare Promoting Interoperability Program would be the 2 months following the close of the calendar year, ending February 29, 2020. For eligible hospitals and CAHs that report CQMs by attestation under the Medicare Promoting Interoperability Program as a result of electronic reporting not being feasible, and for eligible hospitals and CAHs that report CQMs by attestation under their State’s Medicaid Promoting Interoperability Program, we previously established a CQM reporting period of the full CY 2019 (consisting of 4 quarterly data reporting periods) (80 FR 62893). We also established an exception to this full-year reporting period for eligible hospitals and CAHs demonstrating meaningful use for the first time under their State’s Medicaid EHR Incentive Program. Under this exception, the CQM reporting period is any continuous 90-day period within CY 2019 (80 FR 62893). We are proposing that the submission period for eligible hospitals and CAHs reporting CQMs by attestation under the Medicare EHR Incentive Program would be the 2 months following the close of the CY 2019 CQM reporting period, ending February 29, 2020. In regard to the Medicaid EHR Incentive Program, we provide States with the flexibility to determine the method of reporting CQMs (attestation or electronic reporting) and the submission periods for reporting CQMs, subject to prior approval by CMS. For the CY 2019 reporting period, we are proposing that the reporting criteria under the Medicare and Medicaid Promoting Interoperability Program for eligible hospitals and CAHs reporting CQMs electronically would be as follows: For eligible hospitals and CAHs participating only in the Promoting E:\FR\FM\07MYP2.SGM 07MYP2 20540 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules Interoperability Program, or participating in both the Promoting Interoperability Program and the Hospital IQR Program, report on at least 4 self-selected CQMs from the set of 16 available CQMs listed in the table above. We are proposing the following reporting criteria for eligible hospitals and CAHs that report CQMs by attestation under the Medicare Promoting Interoperability Program as a result of electronic reporting not being feasible, and for eligible hospitals and CAHs that report CQMs by attestation under their State’s Medicaid Promoting Interoperability Program, for the reporting period in CY 2019—report on all 16 available CQMs listed in the table in section VIII.D.9.a. of the preamble of this proposed rule, above. We are requesting public comments on these proposals. daltland on DSKBBV9HB2PROD with PROPOSALS2 e. CQM Reporting Form and Method for the Medicare Promoting Interoperability Program in CY 2019 As we stated in the FY 2016 IPPS/ LTCH PPS final rule (80 FR 49759 through 49760), for the reporting periods in 2016 and future years, we are requiring QRDA–I for CQM electronic submissions for the Medicare EHR Incentive (now Promoting Interoperability) Program. As noted in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49760), States would continue to have the option, subject to our prior approval, to allow or require QRDA–III for CQM reporting. The form and method of electronic submission are further explained in subregulatory guidance and the certification process. For example, the following documents are updated annually to reflect the most recent CQM electronic specifications: The CMS Implementation Guide for QRDA; program specific performance calculation guidance; and CQM electronic specifications and guidance documents. These documents are located on the eCQI Resource Center web page at: https://ecqi.healthit.gov/. For further information on CQM reporting, we refer readers to the EHR Incentive Program (now Promoting Interoperability Program) website where guides and tip sheets are located at: https://www.cms.gov/ ehrincentiveprograms. For the reporting period in CY 2019 reporting period, we are proposing the following for CQM submission under the Medicare Promoting Interoperability Program: • Eligible hospitals and CAHs participating in the Medicare Promoting Interoperability Program (single VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 program participation)—electronically report CQMs through QualityNet Portal. • Eligible hospital and CAH options for electronic reporting for multiple programs (that is, Promoting Interoperability Program and Hospital IQR Program participation)— electronically report through QualityNet Portal. As noted in the 2015 EHR Incentive Programs final rule (80 FR 62894), starting in 2018, eligible hospitals and CAHs participating in the Medicare EHR Incentive Program must electronically report CQMs where feasible; and attestation to CQMs will no longer be an option except in certain circumstances where electronic reporting is not feasible. For the Medicaid Promoting Interoperability Program, States continue to be responsible for determining whether and how electronic reporting of CQMs would occur, or if they wish to allow reporting through attestation. Any changes that States make to their CQM reporting methods must be submitted through the State Medicaid Health IT Plan (SMHP) process for CMS review and approval prior to being implemented. For CY 2019, we are proposing to continue our policy regarding the electronic submission of CQMs, which requires the use of the most recent version of the CQM electronic specification for each CQM to which the EHR is certified. For the CY 2019 electronic reporting of CQMs, this means eligible hospitals and CAHs are required to use the Spring 2017 version of the CQM electronic specifications and any applicable addenda available on the eCQI Resource Center web page at: https://ecqi.healthit.gov/. In addition, we are proposing that eligible hospitals or CAHs must have their EHR technology certified to all 16 available CQMs listed in the table above. As discussed in section VIII.D.3. of the preamble of this proposed rule, eligible hospitals and CAHs are required to use 2015 Edition CEHRT for the Medicare and Medicaid Promoting Interoperability Programs in CY 2019. We reiterate that an EHR certified for CQMs under the 2015 Edition certification criteria does not have to be recertified each time it is updated to a more recent version of the CQMs (82 FR 38485). We are requesting public comments on these proposals. f. Request for Comment Stakeholders continue to identify areas for improvement in the implementation of eCQMs under a variety of CMS programs, including the Hospital IQR Program and the Medicare PO 00000 Frm 00378 Fmt 4701 Sfmt 4702 and Medicaid EHR Incentive (now Promoting Interoperability) Programs. While effective utilization of eCQMs promises greater efficiency and more timely access to data to support quality improvement activities, various types of burden associated with these measurement approaches detracts from these benefits. Moreover, some providers may have low awareness of the resources and tools available to help address issues that arise in utilizing eCQMs. Program design and operations associated with measurement aspects of these programs can be a significant source of burden for providers. Uncertainty around rapidly shifting timelines and requirements can pose significant financial and operational planning challenges for organizations, while lack of alignment across programs results in further complexity. In addition, the implementation of eCQMs within the EHR is a significant source of burden. Health IT products vary widely in the eCQMs they offer, and incorporating new measure specifications into a product, along with validation and testing of the updates, can be challenging and time-consuming. Lack of transparency from developers around data sources within the EHR, mapping, measure calculations, and reporting schemas, can hinder providers’ ability to implement eCQMs and ensure the accuracy of results. Moreover, challenges in extracting data from the EHR and integrating with other applications can serve as a source of burden for providers seeking to bring together different technology solutions and work with other third party services to complete reporting and quality improvement activities. Stakeholders have expressed support for increasing the availability of new eCQMs, developing eCQMs that focus on patient outcomes and higher impact measurement areas, and exploring how eCQMs can reduce the burden associated with chart-abstracted measures. However, they have also identified barriers which may contribute to a lack of adequate development of eCQMs and limit their potential, including long development timelines, lack of guidelines/prioritization of and participation in eCQM development, limited field testing, and program policies that limit innovation by focusing on ‘‘least common denominator’’ approaches. We are seeking stakeholder feedback on ways that we could address these and other challenges related to eCQM use. Specifically, we are inviting comment on the following: E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20541 • What aspects of the use of eCQMs are most burdensome to hospitals and health IT vendors? • What program and policy changes, such as improved regulatory alignment, would have the greatest impact on addressing eCQM burden? • What are the most significant barriers to the availability and use of new eCQMs today? • What specifically would stakeholders like to see us do to reduce burden and maximize the benefits of eCQMs? • How could we encourage hospitals and health IT vendors to engage in improvements to existing eCQMs? • How could we encourage hospitals and health IT vendors to engage in testing new eCQMs? • Would hospitals and health IT vendors be interested in or willing to participate in pilots or models of alternative approaches to quality measurement that would explore less burdensome ways of approaching quality measurement, such as sharing data with third parties that use machine learning and natural language processing to classify quality of care or other approaches? • What ways could we incentivize or reward innovative uses of health IT that could reduce burden for hospitals? • What additional resources or tools would hospitals and health IT vendors like to have publicly available to support testing, implementation, and reporting of eCQMs? delays in implementation, section 602(d) of the Consolidated Appropriations Act, 2016 adjusted the existing timelines for the incentive payments by five years and payment reductions by 7 years for subsection (d) Puerto Rico hospitals, as further discussed in the sections below. As authorized under section 602(c) of the Consolidated Appropriations Act, 2016, we have previously elected to implement the amendments made by section 602 as applied to subsection (d) Puerto Rico hospitals through program instruction. In doing so we have sought to align the policies for subsection (d) Puerto Rico hospitals with our existing policies for eligible hospitals under the Medicare Promoting Interoperability Program to the greatest extent possible, while taking into account the unique circumstances applicable to hospitals on Puerto Rico. In the following sections of the proposed rule, we are proposing to codify the program instructions we have issued to subsection (d) Puerto Rico hospitals and to amend our regulations under Parts 412 and 495 such that the provisions that apply to eligible hospitals would include subsection (d) Puerto Rico hospitals unless otherwise indicated. We are requesting public comments on the proposals made in the following sections. 10. Participation in the Medicare Promoting Interoperability Program for Subsection (d) Puerto Rico Hospitals We are proposing to define a ‘‘Puerto Rico eligible hospital’’ under § 495.100 as a subsection (d) Puerto Rico hospital as defined in section 1886(d)(9)(A) of the Act. We are proposing to amend the definition of ‘‘eligible hospital’’ under § 495.100 to include Puerto Rico eligible hospitals unless otherwise indicated. We are proposing to amend the general provisions under § 412.200 as related to prospective payment rates for inpatient operating costs for subsection (d) Puerto Rico hospitals. Section 602(d) of the Consolidated Appropriations Act, 2016 provides that the payment reductions under section 1886(b)(3)(B)(ix) of the Act would apply beginning with FY 2022 for subsection (d) Puerto Rico hospitals that are not meaningful EHR users for the applicable EHR reporting period for the payment adjustment year. Because Puerto Rico eligible hospitals would be considered eligible hospitals, the EHR reporting periods for payment adjustment years and related policies, including deadlines and requests for significant hardship exceptions, that we establish for eligible hospitals would also apply to Puerto Rico eligible hospitals beginning with the FY 2022 payment adjustment year. (2) EHR Reporting Period: Subsection (d) Puerto Rico Hospitals (4) Payment Year for Subsection (d) Puerto Rico Hospitals Section 602(d) of the Consolidated Appropriations Act, 2016 provides that for subsection (d) Puerto Rico hospitals, FY 2016 is the first payment year under section 1886(n)(2)(G)(i) of the Act for which an incentive payment could be made to a hospital that is a meaningful EHR user. The definition of ‘‘EHR reporting period’’ under § 495.4 specifies for eligible hospitals for the FY 2016 payment year an EHR reporting period of any continuous 90-day period Section 602(d) of the Consolidated Appropriations Act, 2016 provides that for subsection (d) Puerto Rico hospitals, FY 2016 is the first payment year under section 1886(n)(2)(G)(i) of the Act for which an incentive payment could be made to a hospital that is a meaningful EHR user. We are proposing to amend the definition of ‘‘payment year’’ under § 495.4 to specify for Puerto Rico eligible hospitals, payment year means a Federal FY beginning with 2016. daltland on DSKBBV9HB2PROD with PROPOSALS2 a. Background In the Stage 1 final rule (77 FR 44448), we noted that subsection (d) Puerto Rico hospitals as defined in section 1886(d)(9)(A) of the Act were not ‘‘eligible hospitals’’ as defined in section 1886(n)(6)(B) of the Act, and therefore were not eligible for the incentive payments for the meaningful use of CEHRT under section 1886(n) of the Act. Section 602(a) of the Consolidated Appropriations Act, 2016 (Pub. L. 114–113) subsequently amended section 1886(n)(6)(B) of the Act to include subsection (d) Puerto Rico hospitals in the definition of ‘‘eligible hospital,’’ which made subsection (d) Puerto Rico hospitals eligible for the incentive payments under section 1886(n) of the Act for hospitals that are meaningful EHR users and subject to the payment reductions under section 1886(b)(3)(B)(ix) of the Act for hospitals that are not meaningful EHR users. In order to take into account VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 b. Definitions (1) Eligible Hospital: Subsection (d) Puerto Rico Hospitals PO 00000 Frm 00379 Fmt 4701 Sfmt 4702 in CY 2016, which is consistent with the program instructions we issued to subsection (d) Puerto Rico hospitals, so we do not believe any amendment is necessary. We are proposing to amend the definition of ‘‘EHR reporting period’’ under § 495.4 to specify for Puerto Rico eligible hospitals for the FY 2017 payment year an EHR reporting period of a minimum of any continuous 14-day period in CY 2017, which is consistent with the program instructions we issued to subsection (d) Puerto Rico hospitals. We allowed for a 14-day EHR reporting period in CY 2017 to acknowledge and account for the devastation to Puerto Rico caused by Hurricane Maria. We have not issued program instructions to subsection (d) Puerto Rico hospitals concerning the EHR reporting periods for the payment years after FY 2017. For the FY 2018, 2019, and 2020 payment years, we are proposing an EHR reporting period of a minimum of any continuous 90-day period in CYs 2018, 2019, and 2020 respectively for Puerto Rico eligible hospitals, and we are proposing corresponding amendments to the definition of ‘‘EHR reporting period’’ under § 495.4. (3) EHR Reporting Period for a Payment Adjustment Year for Eligible Hospitals: Subsection (d) Puerto Rico Hospitals E:\FR\FM\07MYP2.SGM 07MYP2 20542 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules (5) Payment Adjustment Year for Subsection (d) Puerto Rico Hospitals Section 602(d) of the Consolidated Appropriations Act, 2016 provides that the payment reductions under section 1886(b)(3)(B)(ix) of the Act will apply beginning with FY 2022 for subsection (d) Puerto Rico hospitals that are not meaningful EHR users for the applicable EHR reporting period for the payment adjustment year. We are proposing to amend the definition of ‘‘payment adjustment year’’ under § 495.4 to specify for Puerto Rico eligible hospitals, payment adjustment year means a Federal fiscal year beginning with 2022. c. Duration and Timing of Incentive Payments for Subsection (d) Puerto Rico Hospitals—Transition Periods and Transition Factors Section 602(d) of the Consolidated Appropriations Act, 2016 provides for a phase down under section 1886(n)(2)(E)(ii) of the Act for subsection (d) Puerto Rico hospitals whose first payment year is after 2018. We are proposing to amend § 495.104(b) to specify the following years for which Puerto Rico eligible hospitals may receive incentive payments under section 1886(n) of the Act: • Puerto Rico eligible hospitals whose first payment year is FY 2016 may receive such payments for FYs 2016 through 2019. • Puerto Rico eligible hospitals whose first payment year is FY 2017 may receive such payments for FYs 2017 through 2020. • Puerto Rico eligible hospitals whose first payment year is FY 2018 may receive such payments for FYs 2018 through 2021. • Puerto Rico eligible hospitals whose first payment year is FY 2019 may receive such payments for FY 2019 through 2021. • Puerto Rico eligible hospitals whose first payment year is FY 2020 may receive such payments for FY 2020 through 2021. We are proposing to amend § 495.104(c)(5) to specify the following transition factors under section 1886(n)(2)(E)(i) of the Act for Puerto Rico eligible hospitals: PROPOSED TRANSITION FACTORS FOR SUBSECTION (d) PUERTO RICO HOSPITALS First Payment Year (FY) 2016 2016 2017 2018 2019 2020 2021 ..................................................................................... ..................................................................................... ..................................................................................... ..................................................................................... ..................................................................................... ..................................................................................... d. Market Basket Adjustment for Subsection (d) Puerto Rico Hospitals Section 602(d) of the Consolidated Appropriations Act, 2016 provides that the payment reductions under section 1886(b)(3)(B)(ix) of the Act would apply beginning with FY 2022 for subsection (d) Puerto Rico hospitals. We are proposing for a subsection (d) Puerto Rico hospital that is not a meaningful EHR user for the EHR reporting period for the FY, three-quarters of the applicable percentage increase otherwise applicable for such FY shall be reduced by 33 1/3 percent for FY 2022, 66 2/3 percent for FY 2023, and 100 percent for FY 2024 and each subsequent FY. We are proposing to amend § 412.64(d)(3) to reflect these proposed reductions. daltland on DSKBBV9HB2PROD with PROPOSALS2 11. Proposed Modifications to the Medicare Advantage Promoting Interoperability Program a. Participation in the Medicare Advantage Promoting Interoperability Program for Subsection (d) Puerto Rico Hospitals Section 1853(m) of the Act provides for incentive payments to qualifying Medicare Advantage (MA) organizations for certain affiliated eligible hospitals (as defined in section 1886(n)(6)(B)) that VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 2017 1.00 0.75 0.50 0.25 ........................ ........................ 1.00 0.75 0.50 0.25 ........................ meaningfully use certified EHR technology, and for application of downward payment adjustments to qualifying MA organizations for their affiliated hospitals that are not meaningful users of certified EHR technology, beginning in FY 2015. As noted in section D.8 of this proposed rule, section 602(a) of the Consolidated Appropriations Act, 2016 amended section 1886(n)(6)(B) of the Act to include subsection (d) Puerto Rico hospitals in the definition of ‘‘eligible hospital.’’ We note that the definition of ‘‘qualifying MA-affiliated hospital’’ in § 495.200 means an eligible hospital under section 1866(n)(6) that meets certain other criteria. Therefore, the amendment to section 1866(n)(6) by the Consolidated Appropriations Act to include subsection (d) Puerto Rico hospitals renders such hospitals potentially eligible as qualifying MAaffiliated hospitals for purposes of the Medicare Advantage EHR/PI incentives and payment adjustments. We are proposing certain changes to our regulations under 42 CFR part 495 so that the incentive payment and payment adjustment provisions that apply to MAaffiliated eligible hospitals are applicable to MA-affiliated eligible hospitals in Puerto Rico. PO 00000 Frm 00380 Fmt 4701 Sfmt 4702 2018 2019 1.00 0.75 0.50 0.25 2020 0.75 0.50 0.25 0.50 0.25 b. Definitions (1) Payment Year for MA-Affiliated Eligible Hospitals in Puerto Rico Section 602(d) of the Consolidated Appropriations Act, 2016 provides that for subsection (d) Puerto Rico hospitals, FY 2016 is the first payment year for which an EHR incentive payment could be made to an eligible hospital that is a meaningful EHR user. We are proposing to amend the definition of ‘‘payment year’’ under § 495.200 to specify that, with respect to MA-affiliated eligible hospitals in Puerto Rico, payment year means a Federal FY beginning with 2016. (2) MA Payment Adjustment Year for MA-Affiliated Eligible Hospitals in Puerto Rico Section 602(d) of the Consolidated Appropriations Act, 2016 provides for payment reductions to subsection (d) Puerto Rico hospitals that are not meaningful EHR users for the applicable EHR reporting period for the payment adjustment year, beginning with FY 2022. We are proposing to amend the definition of ‘‘MA payment adjustment year’’ under § 495.200 to specify that, for qualifying MA organizations that first receive an MA EHR incentive payment for at least 1 payment year for E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 an MA-affiliated eligible hospital in Puerto Rico, payment adjustment year means a calendar year starting with 2022. We are soliciting feedback on whether we should amend the definition of ‘‘MA payment adjustment year’’ to specify that the duration of the reporting period for MA-affiliated eligible hospitals for purposes of determining whether a qualifying MA organization is subject to a payment adjustment should be other than the full federal fiscal year ending in the MA payment adjustment year. We also are requesting comments on an alternative approach under which we would use the same reporting period that is used for the Medicare Promoting Interoperability Program. c. Payment Adjustments Effective for 2015 and Subsequent MA Payment Years With Respect to MA-Affiliated Eligible Hospitals Under § 495.211, beginning for MA payment adjustment year 2015, payment adjustments set are made to prospective payments (issued under section 1853(a)(1)(A) of the Act) of qualifying MA organizations that previously received incentive payments under the MA EHR Incentive (now Promoting Interoperability) Program, if all or a portion of the MA-affiliated eligible hospitals that would meet the definition of qualifying MA-affiliated eligible hospitals (but for their demonstration of meaningful use) are not meaningful EHR users. Section 495.211(e) sets forth the formula for calculating payment adjustments for 2015 and subsequent years with respect to MA-affiliated eligible hospitals. We are proposing to amend paragraph (e) by adding a new subparagraph (4), which specifies that, prior to payment adjustment year 2022, subsection (d) Puerto Rico hospitals are neither qualifying nor potentially qualifying MA-affiliated eligible hospitals for purposes of applying the payment adjustments under § 495.211. We are soliciting comment on whether further regulatory amendments are necessary or appropriate so that the EHR incentive payment and payment adjustment provisions that apply to MAaffiliated eligible hospitals are applicable to MA-affiliated eligible hospitals in Puerto Rico in a manner that is consistent with the Consolidated Appropriations Act, 2016. 12. Proposed Modifications to the Medicaid Promoting Interoperability Program The policies proposed in this section would apply only in the Medicaid EHR Incentive (now Promoting Interoperability) Program. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 a. Proposed Requirements Regarding Prior Approval of Requests for Proposals (RFPs) and Contracts in Support of the Medicaid Promoting Interoperability Program Section 1903(a)(3)(F)(ii) of the Act establishes an enhanced federal matching rate of 90 percent for State expenditures related to the administration of Medicaid Promoting Interoperability Program payments. On July 28, 2010, in the Stage 1 final rule (75 FR 44313, 44507), we established prior approval requirements for State funding, planning documents, proposed budgets, project schedules, and certain implementation activities that a State may wish to pursue in support of the Medicaid Promoting Interoperability Program, as a condition of receipt of the 90 percent FFP available to States under section 1903(a)(3)(F)(ii) of the Act. To minimize the burden on States, we designed the prior approval conditions and prior approval process to mirror what was at the time used in support of acquiring automated data processing (ADP) equipment and services in conjunction with development and operation of States’ Medicaid Management Information Systems (MMIS), which are the States’ automated mechanized claims processing and information retrieval systems approved by CMS. Specifically, at § 495.324(b)(2) we established that, as a condition of receiving 90 percent FFP for administration of their Medicaid Promoting Interoperability programs, States must receive prior approval for requests for proposals and contracts used to complete activities under 42 CFR part 495 subpart D, unless specifically exempted by HHS, before release of the request for proposal or execution of the contract. This was consistent with the requirement then in place for MMIS at 45 CFR 95.611(a)(2). At section 495.324(b)(3) we established that unless specifically exempted by HHS, States must receive prior approval for contract amendments involving contract cost increases exceeding $100,000 or contract time extensions of more than 60 days, prior to execution of the contract amendment. This was consistent with the requirement then in place at 45 CFR 95.611(b)(2)(iv). Subsequently, in the final rule titled ‘‘State Systems Advance Planning Document (APD) Process’’ (75 FR 66319, October 28, 2010), HHS amended 45 CFR 95.611(b)(2)(iii) to establish a $500,000 threshold for prior HHS approval of acquisition solicitation documents and contracts for ADP equipment or services for which States would seek enhanced federal matching PO 00000 Frm 00381 Fmt 4701 Sfmt 4702 20543 funds (75 FR 66331). In the same rule, HHS also established at 45 CFR 95.611(b)(2)(iv) a $500,000 prior approval threshold for contract amendments for which States would seek enhanced Federal match (75 FR 66324). In the final rule titled ‘‘Medicaid Program; Mechanized Claims Processing and Information Retrieval Systems (90/10)’’ (80 FR 75817, 75836 through 75837, December 4, 2015), 45 CFR 95.611(a)(2) was amended to establish a $500,000 threshold for prior approval of acquisitions related to ADP equipment and services matched at the enhanced rate for MMIS authorized under 42 CFR part 433, subpart C. There was previously no threshold dollar amount for prior approvals related to such acquisitions in 45 CFR 95.611(a)(2). We are now proposing to amend 42 CFR 495.324(b)(2) and 495.324(b)(3) to align with current prior approval policy for MMIS and ADP systems at 45 CFR 95.611(a)(2)(ii), and (b)(2)(iii) and (iv), and to minimize burden on States. Specifically, we are proposing that the prior approval dollar threshold in § 495.324(b)(3) would be increased to $500,000, and that a prior approval threshold of $500,000 would be added to § 495.324(b)(2). We also are proposing minor amendments to the language of 495.324(b)(2) and (3) to better align it with the language of 45 CFR 95.611(b)(2)(iii) and (iv). In addition, in light of these proposed changes, we are proposing a conforming amendment to amend the threshold in § 495.324(d) for prior approval of justifications for sole source acquisitions to be the same $500,000 threshold. That threshold is currently aligned with the $100,000 threshold in current § 495.324(b)(3). We believe that amending § 495.324(d) to preserve alignment with § 495.324(b)(3) would reduce burden on States and maintain the consistency of our prior approval requirements. This proposal would not affect the other requirements that States must comply with when making acquisitions in support of the Medicaid Promoting Interoperability Program under the Federal provisions contained in 42 CFR part 495, subpart D, and specifically 42 CFR 495.348, regardless of conditions for prior approval. We believe that this proposal would reduce burden on States by raising the prior approval thresholds and generally aligning them with the thresholds for prior approval of MMIS and ADP acquisitions costs. We are inviting public comments on this proposal. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20544 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules b. Funding Availability to States To Conclude the Medicaid Promoting Interoperability Program Under section 1903(a)(3)(F) and (t) of the Act, State Medicaid programs may receive FFP in expenditures for incentive payments to certain Medicaid providers to adopt, implement, upgrade, and meaningfully use CEHRT. In addition, FFP is available to States for reasonable administrative expenses related to administration of those incentive payments as long as the State meets certain conditions. Specifically, section 1903(a)(3)(F)(i) of the Act establishes 100 percent FFP to States for incentive payments to eligible Medicaid providers (described in section 1903(t)(1) and (2) of the Act) to adopt, implement, upgrade, and meaningfully use CEHRT. Section 1903(a)(3)(F)(ii) of the Act establishes 90 percent FFP to States for administrative expenses related to administration of the incentive payments. In § 495.320 and § 495.322, we provide the general rule that States may receive: (1) 100 Percent FFP in State expenditures for EHR incentive payments; and (2) 90 percent FFP in State expenditures for administrative activities in support of implementing incentive payments to Medicaid eligible providers. Section 495.316 establishes State monitoring and reporting requirements regarding activities required to receive an incentive payment. Subject to § 495.332, the State is responsible for tracking and verifying the activities necessary for a Medicaid EP or eligible hospital to receive an incentive payment for each payment year, as described in § 495.314. To date, we have not established a date beyond which 90 percent FFP is no longer available to States for their expenditures related to administering the Medicaid Promoting Interoperability Program. In the Stage 1 final rule (75 FR 44319), we established that, in accordance with sections 1903(t)(4)(A)(iii) and (5)(D) of the Act, in no case may any Medicaid EP or eligible hospital receive an incentive payment after 2021 (42 CFR 495.310(a)(2)(v) and 495.310(f)). Because December 31, 2021 is the last date that States could make Medicaid Promoting Interoperability incentive payments to Medicaid EPs and eligible hospitals (other than pursuant to a successful appeal related to 2021 or a prior year), we believe it is reasonable for States to conclude most administrative activities related to the Medicaid Promoting Interoperability Program, including submitting final required reports to CMS, by September VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 30, 2022. Therefore, we are proposing to amend § 495.322 to provide that the 90 percent FFP for Medicaid Promoting Interoperability Program administration would no longer be available for most State expenditures incurred after September 30, 2022. We are proposing a later sunset date for the availability of 90 percent enhanced match for State administrative costs related to Medicaid Promoting Interoperability Program audit and appeals activities, as well as costs related to administering incentive payment disbursements and recoupments that might result from those activities. We acknowledge that States have a responsibility to conduct audits of the payments made to Medicaid providers participating in the Medicaid Promoting Interoperability Program, in accordance with § 495.368, in order to combat fraud and abuse, and that States also must provide a process for EHR incentive payment appeals in accordance with § 495.370. We expect that these activities will require administration for some time after, but at most a year, beyond September 30, 2022. Because provider incentive payments could be disbursed up until December 31, 2021, we anticipate that States would need additional time to review provider risk factors, select samples, and conduct audits. Once postpayment audits are completed, States would also need time to work with any providers who choose to appeal their audit findings. Collectively, the postpayment audit process and/or appeals process could take several months, and in some cases might take more than one year. Therefore, we are proposing that the 90 percent FFP would continue to be available for State administrative expenditures related to Medicaid Promoting Interoperability Program audit and appeals activities until September 30, 2023. States would not be able to claim any Medicaid Promoting Interoperability Program administrative match for expenditures incurred after September 30, 2023. States should be aware that under this proposal, they would need to incur the expenditures for which they would claim the 90 percent FFP for Medicaid Promoting Interoperability Program administrative activities no later than the sunset dates of September 30, 2022 or September 30, 2023, as applicable. This means that for States to claim the 90 percent FFP for goods and services related to Medicaid Promoting Interoperability Program administrative activities, States would have to ensure that the goods and services are provided no later than close of business September 30, 2022 or close of business PO 00000 Frm 00382 Fmt 4701 Sfmt 4702 September 30, 2023, as applicable. Thus, for example, if an amount that is related to administration of a Medicaid Promoting Interoperability Program audit or appeal has been obligated by September 30, 2023, but the good or service has not yet been furnished by that date, then the expenditure could not be claimed at the enhanced 90 percent FFP. We are inviting public comments on this proposal, especially on whether the timelines proposed provide States with a reasonable amount of time to wind down their Medicaid Promoting Interoperability Program. IX. Proposed Revisions of the Supporting Documentation Required for Submission of an Acceptable Medicare Cost Report A. Background Sections 1815(a) and 1833(e) of the Act provide that no Medicare payments will be made to a provider unless it has furnished the information, as may be requested by the Secretary, to determine the amount of payments due the provider under the Medicare program. In general, providers submit this information through annual cost reports 384 that cover a 12-month period of time. Under the regulations at 42 CFR 413.20(b) and 413.24(f), providers are required to submit cost reports annually, with the reporting period based on the provider’s accounting year. For cost years beginning on or after October 1, 1989, section 1886(f)(1) of the Act and § 413.24(f)(4) of the regulations require hospitals to submit cost reports in a standardized electronic format, and the same requirement was later imposed for other types of providers. All providers participating in the Medicare program are required under § 413.20(a) to maintain sufficient financial records and statistical data for proper determination of costs payable under the program. Moreover, providers 384 There are currently nine Medicare cost reports: The Hospital and Health Care Complex Cost Report, Form CMS–2552, OMB No. 0938–0050; the Skilled Nursing Facility and Skilled Nursing Facility Health Care Complex Cost Report, Form CMS–2540, OMB No. 0938–0463; the Home Health Agency Cost Report, Form CMS–1728, OMB No. 0938–0022; the Outpatient Rehabilitation Provider Cost Report, Form CMS–2088, OMB No. 0938–0037; the Independent Rural Health Clinic and Freestanding Federally Qualified Health Center Cost Report (prior to October 1, 2014), Form CMS– 222, OMB No. 0938–0107; the Federally Qualified Health Center Cost Report (beginning on or after October 1, 2014), Form CMS–224, OMB No. 0938– 1298; the Organ Procurement Organizations and Histocompatibility Laboratory, Form CMS–216, OMB No. 0938–0102; the Independent Renal Dialysis Facility Cost Report, Form CMS–265, OMB No. 0938–0236; and the Hospice Cost and Data Report, Form CMS–1984, OMB No. 0938–0758. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules must use standardized definitions and follow accounting, statistical, and reporting practices that are widely accepted in the hospital and related fields. Upon receipt of a provider’s cost report, the Medicare Administrative Contractor (herein referred to as ‘‘contractor’’) reviews the cost report to determine its acceptability in accordance with § 413.24(f)(5). Each cost report submission by a provider to its contractor, including an amended cost report, is considered to be a separate cost report submission under § 413.24(f)(5). Each cost report submission requires the supporting documentation specified in § 413.24(f)(5)(i). A cost report submitted without the required supporting documentation is rejected under § 413.24(f)(5)(i). Under § 413.24(f)(5)(iii), when the cost report is rejected, it is deemed an unacceptable submission and treated as if it had never been filed. Several provisions in the regulations requiring supporting documentation for the Medicare cost report to be acceptable need to be updated to reflect current practices, to improve the accuracy of these reports, and to facilitate more efficient contractor review of cost reports. The regulations at § 413.24(f)(5)(i) provides that a provider’s cost report is rejected if the provider does not complete and submit the Provider Cost Reimbursement Questionnaire (a questionnaire independent of the cost report, OMB No. 0938–0301, also known as Form CMS–339). The Form CMS–339 requires the provider to submit supporting documents, as applicable, for items such as Medicare bad debt, approved educational activities, and cost allocation from a home office or chain organization. Beginning in 2011, as cost report forms were updated for various provider types, the Form CMS–339 was incorporated as a worksheet in the Medicare cost report (the worksheet title and placement within the cost report vary by provider type), and is no longer submitted as a separate supporting document. The Form CMS–339 has been incorporated into all Medicare cost reports except for the Organ Procurement Organization (OPO) and Histocompatibility Laboratory cost report, Form CMS–216. In section IX.B. of the preamble of this proposed rule, we are proposing to incorporate the Form CMS–339 into the OPO and Histocompatibility cost report, Form CMS–216. The cost report worksheet that incorporated the Form CMS–339 continues to require the provider to submit supporting documents for VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Medicare bad debt, approved educational activities, and certain cost allocation information from a home office or chain organization, as applicable. However, our regulations at § 413.24(f)(5)(i) do not reflect that the Provider Cost Reimbursement Questionnaire, Form CMS–339, has been incorporated into the Medicare cost report as a worksheet because the regulations require the Form CMS–339 to be submitted as a supporting document to the cost report. Section 413.24(f)(5)(i) also provides that a cost report is rejected for a teaching hospital if a copy of the Intern and Resident Information System (IRIS) diskette is not included as supporting documentation. However, diskettes are no longer used by providers to furnish this data to contractors. Section 413.20 of the regulations requires providers to maintain sufficient financial records and statistical data for the proper determination of costs payable under the program as well as an adequate ongoing system for furnishing records needed to provide accurate cost data and other information capable of verification by qualified auditors. In accordance with § 413.20(d), the provider must furnish such information to the contractor as may be necessary to assure proper payment. Information from the provider relating to Medicaid days used in the calculation of DSH payments, charity care charges, uninsured discounts, and home office cost allocations are necessary to assure proper payment. While our regulations require that these supporting documents be maintained by the provider and furnished to the contractor to assure proper payment, § 413.24(f)(5) does not require submission of supporting documentation for Medicaid days used in the calculation of DSH payments, charity care charges, uninsured discounts, or home office cost allocations reported on a provider’s cost report for the provider to have an acceptable cost report submission. These supporting documents are often subsequently requested by the contractor, and must be submitted by the provider in order to assure proper payment, which can delay payments and prolong audits. Our specific proposals for revising our regulations are discussed below. B. Proposed Revisions to Regulations 1. Provider Cost Reimbursement Questionnaire Section 413.24(f)(5)(i) of the regulations provides that a provider’s Medicare cost report is rejected for lack of supporting documentation if it does PO 00000 Frm 00383 Fmt 4701 Sfmt 4702 20545 not include the Provider Cost Reimbursement Questionnaire (also known as Form CMS–339). As discussed in section IX.A. of the preamble of this proposed rule, beginning in 2011, as cost report forms were updated, the Provider Cost Reimbursement Questionnaire, Form CMS–339, was incorporated into all Medicare cost reports as a worksheet, except the OPO and Histocompatibility Laboratory cost report, Form CMS–216. In this proposed rule, we are proposing to incorporate the Provider Cost Reimbursement Questionnaire, Form CMS–339, into the OPO and Histocompatibility Laboratory cost report, Form CMS–216. The incorporation of the Form CMS–339 into the Form CMS–216 will complete our incorporation of the Form CMS–339 into all Medicare cost reports. In addition, in this proposed rule, we are proposing to revise § 413.24(f)(5)(i) by removing the reference to the Provider Cost Reimbursement Questionnaire so that § 413.24(f)(5)(i) no longer states that a cost report will be rejected for lack of supporting documentation if it does not include a Provider Cost Reimbursement Questionnaire (Form CMS–339). Furthermore, we are proposing to add language to the first sentence of § 413.24(f)(5)(i) to clarify that a provider must submit all necessary supporting documents for its cost report. We believe this proposal is consistent with the recordkeeping requirements in §§ 413.20 and 413.24. 2. Intern and Resident Information System (IRIS) Data Section 413.24(f)(5)(i) also provides that a Medicare cost report for a teaching hospital is rejected for lack of supporting documentation if the cost report does not include a copy of the Intern and Resident Information System (IRIS) diskette. Section 1886(h) of the Act, as added by section 9202 of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), Public Law 99–272, establishes a methodology for determining payments to hospitals for the GME programs (which is currently implemented in the regulations at 42 CFR 413.75 through 413.83). To account for the higher indirect patient care costs of teaching hospitals relative to nonteaching hospitals, section 1886(d)(5)(B) of the Act provides for a payment adjustment known as the IME adjustment under the IPPS for hospitals that have residents in an approved GME program. The regulation regarding the calculation of this additional payment is located at 42 CFR 412.105. (We refer E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20546 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules readers to section IV.E. of the preamble of this proposed rule for additional background on direct GME and IME payments.) In accordance with § 413.78(b) for direct GME and § 412.105(f)(1)(iii)(A) for IME, no individual may be counted as more than one full-time equivalent (FTE). A hospital cannot claim the time spent by residents training at another hospital; if a resident spends time in more than one hospital or in a nonprovider setting, the resident counts as a partial FTE based on the proportion of time worked at the hospital to the total time worked. A part-time resident counts as a partial FTE based on the proportion of allowable time worked compared to the total time necessary to fill a full-time internship or residency slot. In 1990, we established the IRIS, under the authority of sections 1886(d)(5)(B) and 1886(h) of the Act, in order to facilitate proper counting of FTE residents by hospitals that rotate their FTE residents from one hospital or nonprovider setting to another. Teaching hospitals use the IRIS to collect and report information on residents training in approved residency programs. Section 413.24(f)(5)(i) requires teaching hospitals to submit the IRIS data along with their Medicare cost reports in order to have an acceptable cost report submission. The IRIS can be downloaded from CMS’ website at: https://www.cms.gov/ResearchStatistics-Data-and-Systems/ComputerData-and-Systems/IRIS/ index.html?redirect=/iris. We are currently in the process of producing a new Extensible Markup Language (XML)-based IRIS file format that captures FTE resident count data consistent with the manner in which FTEs are reported on the Medicare cost report. After receiving the IRIS data along with each teaching hospital’s cost report, the contractors upload the data to a national database housed at CMS, which can be used to identify ‘‘duplicates,’’ that is, FTE residents being claimed by more than one hospital for the same rotation. Identifying duplicates allows the contractors to approach the hospitals that simultaneously claimed the same FTE, and correct the duplicate reporting on the respective hospitals’ cost reports for direct GME and IME payment purposes. Historically, we would collect the IRIS data from hospitals on a diskette, as referenced in § 413.24(f)(5)(i). Because diskettes are no longer used by providers to furnish these data to contractors, in this proposed rule, we VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 are proposing to remove the reference in the regulations to a diskette and instead reference ‘‘Intern and Resident Information System data.’’ Specifically, we are proposing to amend § 413.24(f)(5)(i) by adding a new paragraph (A) to include this proposed revised language. In addition, to enhance the contractors’ ability to review duplicates and to ensure residents are not being double-counted, we believe it is necessary and appropriate to require that the total unweighted and weighted FTE counts on the IRIS for direct GME and IME respectively, for all applicable allopathic, osteopathic, dental, and podiatric residents that a hospital may train, must equal the same total unweighted and weighted FTE counts for direct GME and IME reported on Worksheet E–4 and Worksheet E, Part A. The need to verify and maintain the integrity of the IRIS data has been the subject of reviews by the Office of the Inspector General (OIG) over the years. An August 2014 OIG report cited the need for CMS to develop procedures to ensure that no resident is counted as more than one FTE in the calculation of Medicare GME payments (OIG Report No. A–02–13–01014, August 2014). More recently, a July 2017 OIG report recommended that procedures be developed to ensure that no resident is counted as more than one FTE in the calculation of Medicare GME payments (OIG Report No. A–02–15–01027, July 2017). Therefore, effective for cost reports filed on or after October 1, 2018, we are proposing to add the requirement that IRIS data contain the same total counts of direct GME FTE residents (unweighted and weighted) and of IME FTE residents as the total counts of direct GME and IME FTE residents reported in the cost report. Specifically, we are proposing to specify in a new paragraph (A) of § 413.24(f)(5)(i) that, effective for cost reports filed on or after October 1, 2018, the IRIS data must contain the same total counts of direct GME FTE residents (unweighted and weighted) and of IME FTE residents as the total counts of direct GME FTE and IME FTE residents reported in the hospital’s cost report, or the cost report will be rejected for lack of supporting documentation. 3. Medicare Bad Debt Reimbursement Under section 1861(v)(1) of the Act and the regulations at § 413.89, Medicare may reimburse a portion of the uncollectible deductible and coinsurance amounts to those entities eligible to receive reimbursement for Medicare bad debt. The Medicare PO 00000 Frm 00384 Fmt 4701 Sfmt 4702 Provider Reimbursement Manual (PRM– 1, CMS Pub. 15–1), Chapter 3, provides guidance to providers that claim Medicare bad debt reimbursement. Section 413.24(f)(5)(i) provides that an acceptable cost report submission requires the provider to submit a Provider Cost Reimbursement Questionnaire, Form CMS–339. The Form CMS–339, which has been incorporated into all Medicare cost reports (except the OPO and Histocompatibility Laboratory cost report, Form CMS–216, which we are now proposing to incorporate into the cost report, as discussed in section IX.B.1. of the preamble of this proposed rule), requires the provider to submit supporting documentation with the cost report to substantiate its claims for Medicare bad debt reimbursement. For example, the hospital cost report, which incorporated the Form CMS–339, instructs hospitals to submit a ‘‘completed Exhibit 2 or internal schedules duplicating the documentation requested on Exhibit 2 to support the bad debts claimed’’ (Section 4004.2 of CMS Pub. 15–2). This ‘‘completed Exhibit 2 or internal schedules duplicating the documentation requested on Exhibit 2 to support the bad debts claimed’’ is also known as the Medicare bad debt listing and requires information such as the patient’s name, dates of service, the beneficiary’s Medicaid status, if applicable, the date that collection effort ceased, and the deductible and coinsurance amounts. Because the Provider Cost Reimbursement Questionnaire is incorporated into the cost report as a worksheet, the bad debt listing continues to be required for an acceptable cost report under § 413.24(f)(5). In this proposed rule, we are proposing to require that the Medicare bad debt listing correspond to the bad debt amount claimed in the provider’s cost report, in order for the provider to have an acceptable cost report submission under § 413.24(f)(5). This is also consistent with a provider’s recordkeeping and cost reporting requirements of §§ 413.20 and 413.24, and will facilitate the contractor’s review and verification of the cost report. Specifically, we are proposing to amend § 413.24(f)(5)(i) by adding a new paragraph (B) to specify that, effective for cost reporting periods beginning on or after October 1, 2018, for providers claiming Medicare bad debt reimbursement, a cost report would be rejected for lack of supporting documentation if it does not include a detailed bad debt listing that E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 corresponds to the bad debt amounts claimed in the provider’s cost report. 4. Disproportionate Share Hospital (DSH) Payment Adjustment The DSH payment adjustment provision under section 1886(d)(5)(F) of the Act was enacted by section 9105 of COBRA and became effective for discharges occurring on or after May 1, 1986. Under section 1886(d)(5)(F) of the Act, the primary method by which a hospital qualifies for a Medicare DSH payment is based on the hospital’s disproportionate patient percentage, which is determined using a statutory formula. This statutory formula incorporates the hospital’s number of patient days for patients who are eligible for Medicaid, but were not entitled to benefits under Medicare Part A (‘‘Medicaid eligible days’’), which hospitals are required to submit on their cost reports. Currently, in order for a DSH eligible hospital to have an acceptable cost report submission, there is no requirement for the hospital to also submit a listing of its Medicaid eligible days that corresponds to the Medicaid eligible days claimed in the hospital’s cost report, as a supporting document. DSH eligible hospitals have always been required to collect and maintain this data for completion of the cost report, and to submit it when requested. However, we are proposing that in order to have an acceptable cost report submission, DSH eligible hospitals must submit this supporting data with their cost reports. To ensure accurate DSH payments, additional information regarding Medicaid eligible days is required in order to validate the number of Medicaid eligible days the hospital reports in its cost report. Currently, when this information regarding Medicaid eligible days is not submitted by the DSH eligible hospitals with the cost report, contractors must request it. An audit may reveal an overstatement of a hospital’s Medicaid eligible days. However, an audit of these data may not take place for more than a year after the cost report has been submitted, and tentative program reimbursement payments are often issued to a provider upon the submission of the cost report. Because the existing burden estimate for a DSH eligible hospital’s cost report already reflects the requirement that these hospitals collect, maintain, and submit this data when requested, there is not additional burden. Requiring a provider to submit, as a supporting document with its cost report, a listing of the provider’s Medicaid eligible days that corresponds to the Medicaid eligible days claimed in VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 the DSH eligible hospital’s cost report would provide contractors with the DSH eligible hospital’s source document listing the Medicaid eligible days claimed on its cost report and would be consistent with the recordkeeping and cost reporting requirements of §§ 413.20 and 413.24, which require a provider to substantiate its costs. A requirement to submit this supporting documentation also would facilitate the contractor’s review and verification of the cost report without the need to request additional data from the provider. This proposal would not affect a hospital’s ability to submit an amended cost report, within 12 months after the hospital’s cost report is due, that reflects updated information on Medicaid eligible patient days after the hospital receives updated Medicaid eligibility information from the State (CY 2016 OPPS/ASC final rule with comment period (80 FR 70560)). Therefore, in this proposed rule, we are proposing that, effective for cost reporting periods beginning on or after October 1, 2018, in order for a hospital eligible for a Medicare DSH payment adjustment to have an acceptable cost report submission in accordance with § 413.24(f)(5), the provider must submit a detailed listing of its Medicaid eligible days that corresponds to the Medicaid eligible days claimed in the provider’s cost report, as a supporting document with the provider’s cost report. In addition, we are proposing that if the provider submits an amended cost report that changes its Medicaid eligible days, an amended listing or an addendum to the original listing of the provider’s Medicaid eligible days that corresponds to the Medicaid eligible days claimed in the provider’s amended cost report would also need to be submitted as a supporting document with the amended cost report. Consistent with this proposal, we are proposing to amend § 413.24(f)(5)(i) by adding a new paragraph (C) to specify that, effective for cost reporting periods beginning on or after October 1, 2018, for hospitals claiming a DSH payment adjustment, a cost report will be rejected for lack of supporting documentation if it does not include a detailed listing of the hospital’s Medicaid eligible days that corresponds to the Medicaid eligible days claimed in the hospital’s cost report. If the hospital submits an amended cost report that changes its Medicaid eligible days, an amended listing or an addendum to the original listing of the hospital’s Medicaid eligible days that corresponds to the Medicaid eligible days claimed in the hospital’s amended cost report would be required. PO 00000 Frm 00385 Fmt 4701 Sfmt 4702 20547 5. Charity Care and Uninsured Discounts Section 3133 of the Affordable Care Act amended the Medicare DSH payment adjustment provision at section 1886(d)(5)(F) of the Act, and established section 1886(r) of the Act which provides for an additional payment that reflects a hospital’s uncompensated care (which includes charity care and discounts given to uninsured patients who qualify under the hospital’s charity care policy or financial assistance policy). In accordance with the FY 2018 IPPS/ LTCH PPS final rule (82 FR 38201 through 38208), starting in FY 2018, Worksheet S–10 of the cost report is used as a data source for calculating uncompensated care payments. Currently there is no requirement for a DSH eligible hospital to submit supporting documentation with its cost report, to substantiate its charity care or discounts given to uninsured patients who qualify under the hospital’s charity care policy or financial assistance policy, in order for its cost report submission to be acceptable in accordance with § 413.24(f)(5). Uncompensated care data reported on a hospital’s cost report did not have an impact on the determination of uncompensated care payments before FY 2018 when the agency first began using Worksheet S–10 data to calculate uncompensated care payments. However, because the Worksheet S–10 data are now utilized to make uncompensated care payments to DSHeligible hospitals, documentation to substantiate charity care or discounts given to uninsured patients who qualify under the hospital’s charity care or financial assistance policy is needed to complete the cost report and to ensure there is no duplication when hospitals report Medicare bad debt, charity care, and uninsured discounts. All hospitals, including DSH eligible hospitals, have always been required to collect and maintain this data for completion of the cost report, and submit it when requested. However, we are now proposing that in order to have an acceptable cost report submission, DSH eligible hospitals must submit this supporting data with their cost reports. To ensure accurate uncompensated care payments, additional supporting information regarding charity care and uninsured discounts is required in order to validate the amounts reported in the cost report. Currently, when the documentation to support the charity care charges and uninsured discounts is not submitted by DSH eligible hospitals with the cost report, contractors must E:\FR\FM\07MYP2.SGM 07MYP2 20548 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 request it. Because the existing burden estimate for a DSH eligible hospital’s cost report already reflects the requirement that these hospitals collect, maintain, and submit this data when requested, there is no additional burden. We believe that requiring a DSH eligible hospital to submit, with its cost report, a detailed listing of its charity care and uninsured discounts that corresponds to the amount claimed in the hospital’s cost report would be consistent with the recordkeeping and cost reporting requirements of §§ 413.20 and 413.24, which require a provider to substantiate its costs. This supporting documentation also would facilitate the contractor’s review and verification of the cost report without the need to request additional data from the provider. Therefore, in this proposed rule, we are proposing that, effective for cost reporting periods beginning on or after October 1, 2018, in order for hospitals reporting charity care and/or uninsured discounts to have an acceptable cost report submission under § 413.24(f)(5), the provider must submit a detailed listing of charity care and/or uninsured discounts that contains information such as the patient name, dates of service, insurer (if applicable), and the amount of charity care and/or uninsured discount given that corresponds to the amount claimed in the hospital’s cost report as a supporting document with the hospital’s cost report. Consistent with this proposal, we are proposing to amend § 413.24(f)(5)(i) by adding a new paragraph (D) to specify that, effective for cost reporting periods beginning on or after October 1, 2018, for hospitals reporting charity care and/ or uninsured discounts, a cost report will be rejected for lack of supporting documentation if it does not include a detailed listing of charity care and/or uninsured discounts that corresponds to the amounts claimed in the provider’s cost report. 6. Home Office Allocations A chain organization consists of a group of two or more health care facilities which are owned, leased, or through any other device, controlled by one organization (Provider Reimbursement Manual 1 (PRM–1), CMS Pub. 15–1, Chapter 21, Section 2150). Chain organizations include, but are not limited to, chains operated by proprietary organizations and chains operated by various religious, charitable, and governmental organizations. A chain organization may also include business organizations which are engaged in other activities not directly related to health care. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 When a provider claims costs on its cost report that are allocated from a home office (also known as a chain home office or chain organization), the Home Office Cost Statement constitutes the documentary support required of the provider to be reimbursed for home office costs in the provider’s cost report as set forth in Section 2153, Chapter 21, of the PRM–1. Section 2153 states that each contractor servicing a provider in a chain must be furnished with a detailed Home Office Cost Statement as a basis for reimbursing the provider for cost allocations from a home office or chain organization. However, many cost reports that have home office costs allocated to them are submitted without a Home Office Cost Statement as a supporting document. In addition, there are home offices or chain organizations that are not completing a Home Office Cost Statement to support the costs they are allocating to the provider cost reports. Lack of this documentation should result in a disallowance of costs. It is our understanding that some providers paid under a PPS mistakenly believe that a Home Office Cost Statement is no longer required. However, the home office costs reported in the provider’s cost report may have an impact on future ratesetting and payment refinement activities. We believe that requiring a home office or chain organization to complete a Home Office Cost Statement and a provider to submit, with its cost report, a copy of the Home Office Cost Statement completed by the home office or chain organization that corresponds to the amounts allocated from the home office or chain organization to the provider’s cost report, is consistent with Section 2153 of the PRM–1 and would be consistent with a provider’s recordkeeping and cost reporting requirements of §§ 413.20 and 413.24, which require a provider to substantiate its costs. Therefore, in this proposed rule, we are proposing that, effective for cost reporting periods beginning on or after October 1, 2018, in order for a provider claiming costs on its cost report that are allocated from a home office or chain organization to have an acceptable cost report submission under § 413.24(f)(5), a Home Office Cost Statement completed by the home office or chain organization that corresponds to the amounts allocated from the home office or chain organization to the provider’s cost report must be submitted as a supporting document with the provider’s cost report. This proposal would facilitate the contractor’s review and verification of the cost report PO 00000 Frm 00386 Fmt 4701 Sfmt 4702 without needing to request additional data from the provider. With our proposal, we anticipate more providers will submit the Home Office Cost Statement to support the amounts reported in their cost reports, in order to have an acceptable cost report submission. Because the existing burden estimate for a provider’s cost report already reflects the requirement that providers collect, maintain, and submit this data, there is no additional burden. Consistent with this proposal, we are proposing to amend § 413.24(f)(5)(i) by adding a new paragraph (E) to specify that, effective for cost reporting periods beginning on or after October 1, 2018, for providers claiming costs on their cost report that are allocated from a home office or chain organization, a cost report will be rejected for lack of supporting documentation if it does not include a Home Office Cost Statement completed by the home office or chain organization that corresponds to the amounts allocated from the home office or chain organization to the provider’s cost report. We are seeking public comment on all of our proposals. X. Requirements for Hospitals To Make Public a List of Their Standard Charges via the Internet In the FY 2015 IPPS/LTCH proposed rule and final rule (79 FR 28169 and 79 FR 50146, respectively), we discussed the implementation of section 2718(e) of the Public Health Service Act, which aims to improve the transparency of hospital charges. We noted that section 2718(e) of the Public Health Service Act, which was enacted as part of the Affordable Care Act, requires that each hospital operating within the United States, for each year, establish (and update) and make public (in accordance with guidelines developed by the Secretary) a list of the hospital’s standard charges for items and services provided by the hospital, including for diagnosis-related groups established under section 1886(d)(4) of the Social Security Act. We reminded hospitals of their obligation to comply with the provisions of section 2718(e) of the Public Health Service Act and provided guidelines for its implementation. We stated that hospitals are required to either make public a list of their standard charges (whether that be the chargemaster itself or in another form of their choice) or their policies for allowing the public to view a list of those charges in response to an inquiry. We encouraged hospitals to undertake efforts to engage in consumer friendly communication of their charges to help patients understand what their potential E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules financial liability might be for services they obtain at the hospital, and to enable patients to compare charges for similar services across hospitals. We also stated that we expect that hospitals will update the information at least annually, or more often as appropriate, to reflect current charges. We further noted that we are confident that hospital compliance with this statutory transparency requirement will greatly improve the public accessibility of charge information. Finally, we stated that we would continue to review and post relevant charge data in a consumerfriendly way, as we previously have done by posting hospital and physician charge information on the CMS website. We are concerned that challenges continue to exist for patients due to insufficient price transparency. Such challenges include patients being surprised by out-of-network bills for physicians, such as anesthesiologists and radiologists, who provide services at in-network hospitals, and patients being surprised by facility fees and physician fees for emergency room visits. We also are concerned that chargemaster data are not helpful to patients for determining what they are likely to pay for a particular service or hospital stay. In order to promote greater price transparency for patients, we are considering ways to improve the accessibility and usability of the charge information that hospitals are required to disclose under section 2718(e) of the Public Health Service Act. As one step to further improve the public accessibility of charge information, effective January 1, 2019, we are updating our guidelines to require hospitals to make available a list of their current standard charges via the internet in a machine readable format and to update this information at least annually, or more often as appropriate. This could be in the form of the chargemaster itself or another form of the hospital’s choice, as long as the information is in machine readable format. We also are considering other potential actions that would be appropriate, either under the authority of section 2718(e) of the Public Health Service Act or under other authority, to further our objective of having hospitals undertake efforts to engage in consumerfriendly communication of their charges to help patients understand what their potential financial liability might be for services they obtain at the hospital, and to enable patients to compare charges for similar services across hospitals. Therefore, we are seeking public comment on the following: VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 • Should ‘‘standard charges’’ be defined to mean: average or median rates for the items on the chargemaster; average or median rates for groups of services commonly billed together (such as for an MS–DRG), as determined by the hospital based on its billing patterns; or the average discount off the chargemaster amount across all payers, either for each item on the chargemaster or for groups of services commonly billed together? Should ‘‘standard charges’’ be defined and reported for both some measure of the average contracted rate and the chargemaster? Or is the best measure of a hospital’s standard charges its chargemaster? • What types of information would be most beneficial to patients, how can hospitals best enable patients to use charge and cost information in their decision-making, and how can CMS and providers help third parties create patient-friendly interfaces with these data? • Should health care providers be required to inform patients how much their out-of- pocket costs for a service will be before those patients are furnished that service? What changes would be needed to support greater transparency around patient obligations for their out-of-pocket costs? What can be done to better inform patients of these obligations? Should health care providers play any role in helping to inform patients of what their out-ofpocket obligations will be? • Should we require health care providers to provide patients with information on what Medicare pays for a particular service performed by a health care provider? If CMS were to finalize a requirement that this information be made available to beneficiaries by health care providers, what changes would need to be made by health care providers? What corresponding regulatory changes would be necessary? CMS is considering making information regarding noncompliance with section 2718(e) of the Public Health Service Act public and intends to consider this as well as additional enforcement mechanisms in future rulemaking. Therefore, we are seeking comment on the following: • What is the most appropriate mechanism for CMS to enforce price transparency requirements? Should CMS require hospitals to attest to meeting requirements in the provider agreement or elsewhere? How should CMS assess hospital compliance? Should CMS publicize complaints regarding access to price information or review hospital compliance and post results? What is the most effective way PO 00000 Frm 00387 Fmt 4701 Sfmt 4702 20549 for CMS to publicize information regarding hospitals that fail to comply? Should CMS impose civil money penalties on hospitals that fail to make standard charges publically available as required by section 2718(e) of the Public Health Service Act? Should CMS use a framework similar to the Federal civil penalties under 45 CFR 158.601, et seq. that apply to issuers that fail to report information and pay rebates related to medical loss ratios, as required by sections 2718(a) and (b) of the Public Health Service Act, or would a different framework be more appropriate? In addition, we are seeking public comment on improving our understanding of out-of-pocket costs for patients with Medigap coverage, especially with respect to the following particular questions: • How does Medigap coverage affect patients’ understanding of their out-ofpocket costs before they receive care? What challenges do providers face in providing information about out-ofpocket costs to patients with Medigap? What changes would be needed to support providers sharing out-of-pocket cost information with patients that reflects the patient’s Medigap coverage? Who is best situated to provide patients with Medigap coverage clear information on their out-of-pocket costs prior to receipt of care? What Statespecific requirements or programs help educate Medigap patients about their out-of-pocket costs prior to receipt of care? We also note that, in the interest of public accessibility, we continue to post charge data for services furnished to Medicare beneficiaries covered under Medicare fee-for-service by diagnosisrelated group for each IPPS hospital on our website. These charge data are based on the MEDPAR short-stay inpatient data and augmented with the providerof-service data and hospital referral regions data to include provider characteristics and hospital referral region. For each hospital-DRG record, the charge data include total discharges for Medicare beneficiaries, average covered charges, average total payments, and average Medicare payments. Data are currently available for FYs 2011 through 2015 for the more than 3,000 IPPS hospitals within the 50 United States and District of Columbia. These data are available at: https:// www.cms.gov/Research-Statistics-Dataand-Systems/Statistics-Trends-andReports/Medicare-Provider-ChargeData/Inpatient.html. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20550 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules XI. Proposed Revisions Regarding Physician Certification and Recertification of Claims Our Medicare regulations at 42 CFR 424.11, which implement sections 1814(a)(2) and 1835(a)(2) of the Act, specify the requirements for physician statements that certify and periodically recertify as to the medical necessity of certain types of covered services provided to Medicare beneficiaries. The regulation provision under § 424.11(c) specifies that when supporting information for the required physician statement is available elsewhere in the records (for example, in the physician’s progress notes), the information need not be repeated in the statement itself. The last sentence of § 424.11(c) further provides that it will suffice for the statement to indicate where the information is to be found. As part of our ongoing initiative to identify Medicare regulations that are unnecessary, obsolete, or excessively burdensome on health care providers and suppliers—and thereby free up resources that could be used to improve or enhance patient care—we have been made aware that the provisions of § 424.11(c) which state that it will suffice for the statement to indicate where the information is to be found may be resulting in unnecessary denials of Medicare claims. As currently worded, this last sentence of § 424.11(c) can result in a claim being denied merely because the physician statement technically fails to identify a specific location in the file for the supporting information, even when that information nevertheless may be readily apparent to the reviewer. We believe that continuing to require the location to be specified in this situation is unnecessary. Certifications and recertifications continue to be based on the criteria for the service being certified, and the medical record must contain adequate documentation of the relevant criteria for which the physician is providing certification or recertification, even if the precise location of the information within the medical record is not included. Moreover, the need for the precise location is becoming increasingly obsolete with the growing utilization of electronic health records (EHRs)— which, by their nature, are readily searchable. Accordingly, in this proposed rule, we are proposing to delete the last sentence of § 424.11(c). In addition, we are proposing to relocate the second sentence of § 424.11(c) (indicating that supporting information contained elsewhere in the provider’s records need not be repeated in the VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 certification or recertification statement itself) to the end of the immediately preceding paragraph (b), which describes similar kinds of flexibility that are currently afforded in terms of completing the required statement. We are inviting public comments on our proposals. XII. Request for Information on Promoting Interoperability and Electronic Healthcare Information Exchange Through Possible Revisions to the CMS Patient Health and Safety Requirements for Hospitals and Other Medicare- and Medicaid-Participating Providers and Suppliers Currently, Medicare- and Medicaidparticipating providers and suppliers are at varying stages of adoption of health information technology (health IT). Many hospitals have adopted electronic health records (EHRs), and CMS has provided incentive payments to eligible hospitals, critical access hospitals (CAHs), and eligible professionals who have demonstrated meaningful use of certified EHR technology (CEHRT) under the Medicare EHR Incentive Program. As of 2015, 96 percent of Medicare- and Medicaidparticipating non-Federal acute care hospitals had adopted certified EHRs with the capability to electronically export a summary of clinical care.385 While both adoption of EHRs and electronic exchange of information have grown substantially among hospitals, significant obstacles to exchanging electronic health information across the continuum of care persist. Routine electronic transfer of information postdischarge has not been achieved by providers and suppliers in many localities and regions throughout the Nation. CMS is firmly committed to the use of certified health IT and interoperable EHR systems for electronic healthcare information exchange to effectively help hospitals and other Medicare- and Medicaid-participating providers and suppliers improve internal care delivery practices, support the exchange of important information across care team members during transitions of care, and enable reporting of electronically specified clinical quality measures (eCQMs). The Office of the National Coordinator for Health Information Technology (ONC) acts as the principal Federal entity charged with coordination of nationwide efforts to implement and use health information technology and the electronic exchange 385 These statistics can be accessed at: https://dashboard.healthit.gov/quickstats/pages/ FIG-Hospital-EHR-Adoption.php. PO 00000 Frm 00388 Fmt 4701 Sfmt 4702 of health information on behalf of the Department of Health and Human Services. In 2015, ONC finalized the 2015 Edition health IT certification criteria (2015 Edition), the most recent criteria for health IT to be certified to under the ONC Health IT Certification Program. The 2015 Edition facilitates greater interoperability for several clinical health information purposes and enables health information exchange through new and enhanced certification criteria, standards, and implementation specifications. CMS requires eligible hospitals and CAHs in the Medicare and Medicaid EHR Incentive Programs and eligible clinicians in the Quality Payment Program (QPP) to use EHR technology certified to the 2015 Edition beginning in CY 2019. In addition, several important initiatives will be implemented over the next several years to provide hospitals and other participating providers and suppliers with access to robust infrastructure that will enable routine electronic exchange of health information. Section 4003 of the 21st Century Cures Act (Pub. L. 114–255), enacted in 2016, and amending section 3000 of the Public Health Service Act (42 U.S.C. 300jj), requires HHS to take steps to advance the electronic exchange of health information and interoperability for participating providers and suppliers in various settings across the care continuum. Specifically, Congress directed that ONC ‘‘. . . for the purpose of ensuring full network-to-network exchange of health information, convene publicprivate and public-public partnerships to build consensus and develop or support a trusted exchange framework, including a common agreement among health information networks nationally.’’ In January 2018, ONC released a draft version of its proposal for the Trusted Exchange Framework and Common Agreement,386 which outlines principles and minimum terms and conditions for trusted exchange to enable interoperability across disparate health information networks (HINs). The Trusted Exchange Framework (TEF) is focused on achieving the following four important outcomes in the longterm: • Professional care providers, who deliver care across the continuum, can access health information about their patients, regardless of where the patient received care. 386 The draft version of the trusted Exchange Framework may be accessed at: https:// beta.healthit.gov/topic/interoperability/trustedexchange-framework-and-common-agreement. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules • Patients can find all of their health information from across the care continuum, even if they do not remember the name of the professional care provider they saw. • Professional care providers and health systems, as well as public and private health care organizations and public and private payer organizations accountable for managing benefits and the health of populations, can receive necessary and appropriate information on groups of individuals without having to access one record at a time, allowing them to analyze population health trends, outcomes, and costs; identify atrisk populations; and track progress on quality improvement initiatives. • The health IT community has open and accessible application programming interfaces (APIs) to encourage entrepreneurial, user-focused innovation that will make health information more accessible and improve EHR usability. ONC will revise the draft TEF based on public comment and ultimately release a final version of the TEF that will subsequently be available for adoption by HINs and their participants seeking to participate in nationwide health information exchange. The goal for stakeholders that participate in, or serve as, a HIN is to ensure that participants will have the ability to seamlessly share and receive a core set of data from other network participants in accordance with a set of permitted purposes and applicable privacy and security requirements. Broad adoption of this framework and its associated exchange standards is intended to both achieve the outcomes described above while creating an environment more conducive to innovation. In light of the widespread adoption of EHRs along with the increasing availability of health information exchange infrastructure predominantly among hospitals, we are interested in hearing from stakeholders on how we could use the CMS health and safety standards that are required for providers and suppliers participating in the Medicare and Medicaid programs (that is, the Conditions of Participation (CoPs), Conditions for Coverage (CfCs), and Requirements for Participation (RfPs) for Long Term Care Facilities) to further advance electronic exchange of information that supports safe, effective transitions of care between hospitals and community providers. Specifically, CMS might consider revisions to the current CMS CoPs for hospitals such as: Requiring that hospitals transferring medically necessary information to another facility upon a patient transfer or discharge do so electronically; VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 requiring that hospitals electronically send required discharge information to a community provider via electronic means if possible and if a community provider can be identified; and requiring that hospitals make certain information available to patients or a specified third-party application (for example, required discharge instructions) via electronic means if requested. On November 3, 2015, we published a proposed rule (80 FR 68126) to implement the provisions of the IMPACT Act and to revise the discharge planning CoP requirements that hospitals (including short-term acute care hospitals, long-term care hospitals (LTCHs), inpatient rehabilitation hospitals (IRFs), inpatient psychiatric hospitals (IPFs), children’s hospitals, and cancer hospitals), critical access hospitals (CAHs), and home health agencies (HHAs) must meet in order to participate in the Medicare and Medicaid programs. This proposed rule has not been finalized yet. However, several of the proposed requirements directly address the issue of communication between providers and between providers and patients, as well as the issue of interoperability: • Hospitals and CAHs would be required to transfer certain necessary medical information and a copy of the discharge instructions and discharge summary to the patient’s practitioner, if the practitioner is known and has been clearly identified; • Hospitals and CAHs would be required to send certain necessary medical information to the receiving facility/post-acute care providers, at the time of discharge; and • Hospitals, CAHs and HHAs, would need to comply with the IMPACT Act requirements that would require hospitals, CAHs, and certain post-acute care providers to use data on quality measures and data on resource use measures to assist patients during the discharge planning process, while taking into account the patient’s goals of care and treatment preferences. We published another proposed rule (81 FR 39448), on June 16, 2016, that updated a number of CoP requirements that hospitals and CAHs must meet in order to participate in the Medicare and Medicaid programs. This proposed rule has not been finalized yet. One of the proposed hospital CoP revisions in that rule directly addresses the issues of communication between providers and patients, patient access to their medical records, and interoperability. We proposed that patients have the right to access their medical records, upon an oral or written request, in the form and PO 00000 Frm 00389 Fmt 4701 Sfmt 4702 20551 format requested by such patients, if it is readily producible in such form and format (including in an electronic form or format when such medical records are maintained electronically); or, if not, in a readable hard copy form or such other form and format as agreed to by the facility and the individual, including current medical records, within a reasonable timeframe. The hospital must not frustrate the legitimate efforts of individuals to gain access to their own medical records and must actively seek to meet these requests as quickly as its record keeping system permits. We also published a final rule (81 FR 68688), on October 4, 2016, that revised the requirements that LTC facilities must meet to participate in the Medicare and Medicaid programs, where we made a number of revisions based on the importance of effective communication between providers during transitions of care, such as transfers and discharges of residents to other facilities or providers, or to home. Among these revisions was a requirement that the transferring LTC facility must provide all necessary information to the resident’s receiving provider, whether it is an acute care hospital, a LTC hospital, a psychiatric facility, another LTC facility, a hospice, a health agency, or another communitybased provider or practitioner. We specified that necessary information must include the following: • Contact information of the practitioner responsible for the care of the resident; • Resident representative information including contact information; • Advance directive information; • Special instructions or precautions for ongoing care; • The resident’s comprehensive care plan goals; and • All other necessary information, including a copy of the resident’s discharge or transfer summary and any other documentation to ensure a safe and effective transition of care. We note that the discharge summary mentioned above must include reconciliation of the resident’s medications, as well as a recapitulation of the resident’s stay, a final summary of the resident’s status, and the postdischarge plan of care. In the preamble to the rule, we encouraged LTC facilities to electronically exchange this information if possible and to identify opportunities to streamline the collection and exchange of resident information by using information that the facility is already capturing electronically. Additionally, we specifically invite stakeholder feedback on the following E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20552 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules questions regarding possible new or revised CoPs/CfCs/RfPs for interoperability and electronic exchange of health information: • If CMS were to propose a new CoP/ CfC/RfP standard to require electronic exchange of medically necessary information, would this help to reduce information blocking as defined in section 4004 of the 21st Century Cures Act? • Should CMS propose new CoPs/ CfCs/RfPs for hospitals and other participating providers and suppliers to ensure a patient’s or resident’s (or his or her caregiver’s or representative’s) right and ability to electronically access his or her health information without undue burden? Would existing portals or other electronic means currently in use by many hospitals satisfy such a requirement regarding patient/resident access as well as interoperability? • Are new or revised CMS CoPs/CfCs/ RfPs for interoperability and electronic exchange of health information necessary to ensure patients/residents and their treating providers routinely receive relevant electronic health information from hospitals on a timely basis or will this be achieved in the next few years through existing Medicare and Medicaid policies, HIPAA, and implementation of relevant policies in the 21st Century Cures Act? • What would be a reasonable implementation timeframe for compliance with new or revised CMS CoPs/CfCs/RfPs for interoperability and electronic exchange of health information if CMS were to propose and finalize such requirements? Should these requirements have delayed implementation dates for specific participating providers and suppliers, or types of participating providers and suppliers (for example, participating providers and suppliers that are not eligible for the Medicare and Medicaid EHR Incentive Programs)? • Do stakeholders believe that new or revised CMS CoPs/CfCs/RfPs for interoperability and electronic exchange of health information would help improve routine electronic transfer of health information as well as overall patient/resident care and safety? • Under new or revised CoPs/CfCs/ RfPs, should non-electronic forms of sharing medically necessary information (for example, printed copies of patient/ resident discharge/transfer summaries shared directly with the patient/resident or with the receiving provider or supplier, either directly transferred with the patient/resident or by mail or fax to the receiving provider or supplier) be permitted to continue if the receiving provider, supplier, or patient/resident VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 cannot receive the information electronically? • Are there any other operational or legal considerations (for example, HIPAA), obstacles, or barriers that hospitals and other providers and suppliers would face in implementing changes to meet new or revised interoperability and health information exchange requirements under new or revised CMS CoPs/CfCs/RfPs if they are proposed and finalized in the future? • What types of exceptions, if any, to meeting new or revised interoperability and health information exchange requirements, should be allowed under new or revised CMS CoPs/CfCs/RfPs if they are proposed and finalized in the future? Should exceptions under the QPP including CEHRT hardship or small practices be extended to new requirements? Would extending such exceptions impact the effectiveness of these requirements? We would also like to directly address the issue of communication between hospitals (as well as the other providers and suppliers across the continuum of patient care) and their patients and caregivers. MyHealthEData is a government-wide initiative aimed at breaking down barriers that contribute to preventing patients from being able to access and control their medical records. Privacy and security of patient data will be at the center of all CMS efforts in this area. CMS must protect the confidentiality of patient data, and CMS is completely aligned with the Department of Veterans Affairs (VA), the National Institutes of Health (NIH), ONC, and the rest of the Federal Government, on this objective. While some Medicare beneficiaries have had, for quite some time, the ability to download their Medicare claims information, in pdf or Excel formats, through the CMS Blue Button platform, the information was provided without any context or other information that would help beneficiaries understand what the data was really telling them. For beneficiaries, their claims information is useless if it is either too hard to obtain or, as was the case with the information provided through previous versions of Blue Button, hard to understand. In an effort to fully contribute to the Federal Government’s MyHealthEData initiative, CMS developed and launched the new Blue Button 2.0, which represents a major step toward giving patients meaningful control of their health information in an easy-to-access and understandable way. Blue Button 2.0 is a developer-friendly, standards-based API that enables Medicare beneficiaries to connect their claims data to secure PO 00000 Frm 00390 Fmt 4701 Sfmt 4702 applications, services, and research programs they trust. The possibilities for better care through Blue Button 2.0 data are exciting, and might include enabling the creation of health dashboards for Medicare beneficiaries to view their health information in a single portal, or allowing beneficiaries to share complete medication lists with their doctors to prevent dangerous drug interactions. To fully understand all of these health IT interoperability issues, initiatives, and innovations through the lens of its regulatory authority, CMS invites members of the public to submit their ideas on how best to accomplish the goal of fully interoperable health IT and EHR systems for Medicare- and Medicaid-participating providers and suppliers, as well as how best to further contribute to and advance the MyHealthEData initiative for patients. We are particularly interested in identifying fundamental barriers to interoperability and health information exchange, including those specific barriers that prevent patients from being able to access and control their medical records. We also welcome the public’s ideas and innovative thoughts on addressing these barriers and ultimately removing or reducing them in an effective way, specifically through revisions to the current CMS CoPs, CfCs, and RfPs for hospitals and other participating providers and suppliers. We have received stakeholder input through recent CMS Listening Sessions on the need to address health IT adoption and interoperability among providers that were not eligible for the Medicare and Medicaid EHR Incentives program, including long-term and postacute care providers, behavioral health providers, clinical laboratories and social service providers, and we would also welcome specific input on how to encourage adoption of certified health IT and interoperability among these types of providers and suppliers as well. We note that this is a Request for Information only. Respondents are encouraged to provide complete but concise and organized responses, including any relevant data and specific examples. However, respondents are not required to address every issue or respond to every question discussed in this Request for Information to have their responses considered. In accordance with the implementing regulations of the Paperwork Reduction Act at 5 CFR 1320.3(h)(4), all responses will be considered, provided they contain information CMS can use to identify and contact the commenter, if needed. This Request for Information is issued solely for information and planning E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20553 purposes; it does not constitute a Request for Proposal (RFP), applications, proposal abstracts, or quotations. This Request for Information does not commit the U.S. Government to contract for any supplies or services or make a grant award. Further, CMS is not seeking proposals through this Request for Information and will not accept unsolicited proposals. Responders are advised that the U.S. Government will not pay for any information or administrative costs incurred in response to this Request for Information; all costs associated with responding to this Request for Information will be solely at the interested party’s expense. We note that not responding to this Request for Information does not preclude participation in any future procurement, if conducted. It is the responsibility of the potential responders to monitor this Request for Information announcement for additional information pertaining to this request. In addition, we note that CMS will not respond to questions about the policy issues raised in this Request for Information. CMS will not respond to comment submissions in response to this Request for Information in the FY 2019 IPPS/LTCH PPS final rule. Rather, CMS will actively consider all input as we develop future regulatory proposals or future subregulatory policy guidance. CMS may or may not choose to contact individual responders. Such communications would be for the sole purpose of clarifying statements in the responders’ written responses. Contractor support personnel may be used to review responses to this Request for Information. Responses to this notice are not offers and cannot be accepted by the Government to form a binding contract or issue a grant. Information obtained as a result of this Request for Information may be used by the Government for program planning on a nonattribution basis. Respondents should not include any information that might be considered proprietary or confidential. This Request for Information should not be construed as a commitment or authorization to incur cost for which reimbursement would be required or sought. All submissions become U.S. Government property and will not be returned. CMS may publically post the public comments received, or a summary of those public comments. section 1886(e)(5) of the Act, the Secretary must publish in the annual proposed and final IPPS rules the Secretary’s recommendations regarding MedPAC’s recommendations. We have reviewed MedPAC’s March 2018 ‘‘Report to the Congress: Medicare Payment Policy’’ and have given the recommendations in the report consideration in conjunction with the proposed policies set forth in this proposed rule. MedPAC recommendations for the IPPS for FY 2019 are addressed in Appendix B to this proposed rule. For further information relating specifically to the MedPAC reports or to obtain a copy of the reports, contact MedPAC at (202) 653–7226, or visit MedPAC’s website at: https:// www.medpac.gov. Periods Available: FY 2007 through FY 2019 IPPS Update. XIV. Other Required Information A. Publicly Available Files IPPS-related data are available on the internet for public use. The data can be found on the CMS website at: https:// www.cms.hhs.gov/Medicare/MedicareFee-for-Service-Payment/ AcuteInpatientPPS/. Following is a listing of the IPPS-related data files that are available. Commenters interested in discussing any data files used in construction of this proposed rule should contact Michael Treitel at (410) 786–4552. 3. Provider Occupational Mix Adjustment Factors for Each Occupational Category Public Use File This file contains each hospital’s occupational mix adjustment factors by occupational category. Two versions of these files are created each year to support the rulemaking. Media: Internet at: https:// www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ AcuteInpatientPPS/Wage-IndexFiles.html. Period Available: FY 2019 IPPS Update. 1. CMS Wage Data Public Use File This file contains the hospital hours and salaries from Worksheet S–3, Parts II and III from FY 2015 Medicare cost reports used to create the proposed FY 2019 IPPS wage index. Multiple versions of this file are created each year. For a discussion of the release of different versions of this file, we refer readers to section III.L. of the preamble of this proposed rule. 4. Other Wage Index Files CMS releases other wage index analysis files after each proposed and final rule. Media: Internet at: https:// www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ AcuteInpatientPPS/Wage-IndexFiles.html. Periods Available: FY 2005 through FY 2019 IPPS Update. XIII. MedPAC Recommendations Under section 1886(e)(4)(B) of the Act, the Secretary must consider MedPAC’s recommendations regarding hospital inpatient payments. Under Media: Internet at: https:// www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ AcuteInpatientPPS/Wage-IndexFiles.html. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Processing year Wage data year PPS fiscal year 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 PO 00000 Frm 00391 Fmt 4701 Sfmt 4702 2. CMS Occupational Mix Data Public Use File This file contains the CY 2016 occupational mix survey data to be used to compute the occupational mix adjusted wage indexes. Multiple versions of this file are created each year. For a discussion of the release of different versions of this file, we refer readers to section III.L. of the preamble of this proposed rule. Media: Internet at: https:// www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ AcuteInpatientPPS/Wage-IndexFiles.html. Period Available: FY 2019 IPPS Update. 5. FY 2019 IPPS SSA/FIPS CBSA State and County Crosswalk This file contains a crosswalk of State and county codes used by the Social Security Administration (SSA) and the Federal Information Processing Standards (FIPS), county name, and a list of Core-Based Statistical Areas (CBSAs). Media: Internet at: https:// www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ AcuteInpatientPPS/Acute-InpatientFiles-for-Download.html. Period Available: FY 2019 IPPS Update. 6. HCRIS Cost Report Data The data included in this file contain cost reports with fiscal years ending on E:\FR\FM\07MYP2.SGM 07MYP2 20554 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules or after September 30, 1996. These data files contain the highest level of cost report status. Media: Internet at: https:// www.cms.gov/Research-Statistics-Dataand-Systems/Downloadable-Public-UseFiles/Cost-Reports/Cost-Reports-byFiscal-Year.html. (We note that data are no longer offered on a CD. All of the data collected are now available free for download from the cited website.) 7. Provider-Specific File This file is a component of the PRICER program used in the MAC’s system to compute DRG/MS–DRG payments for individual bills. The file contains records for all prospective payment system eligible hospitals, including hospitals in waiver States, and data elements used in the prospective payment system recalibration processes and related activities. Beginning with December 1988, the individual records were enlarged to include pass-through per diems and other elements. Media: Internet at: https:// www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ ProspMedicareFeeSvcPmtGen/psf_ text.html. Period Available: Quarterly Update. daltland on DSKBBV9HB2PROD with PROPOSALS2 8. CMS Medicare Case-Mix Index File This file contains the Medicare casemix index by provider number as published in each year’s update of the Medicare hospital inpatient prospective payment system. The case-mix index is a measure of the costliness of cases treated by a hospital relative to the cost of the national average of all Medicare hospital cases, using DRG/MS–DRG weights as a measure of relative costliness of cases. Two versions of this file are created each year to support the rulemaking. Media: Internet at: https:// www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ AcuteInpatientPPS/Acute-InpatientFiles-for-Download.html. Periods Available: FY 1985 through FY 2019. 9. MS–DRG Relative Weights (Also Table 5—MS–DRGs) This file contains a listing of MS– DRGs, MS–DRG narrative descriptions, relative weights, and geometric and arithmetic mean lengths of stay for each fiscal year. Two versions of this file are created each year to support the rulemaking. Media: Internet at: https:// www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 AcuteInpatientPPS/Acute-InpatientFiles-for-Download.html. Periods Available: FY 2005 through FY 2019 IPPS Update AcuteInpatientPPS/Acute-InpatientFiles-for-Download.html. Period Available: FY 2019 IPPS Update. 10. IPPS Payment Impact File 13. Hospital Readmissions Reduction Program Supplemental File This file contains data used to estimate payments under Medicare’s hospital inpatient prospective payment systems for operating and capital-related costs. The data are taken from various sources, including the Provider-Specific File, HCRIS Cost Report Data, MedPAR Limited Data Sets, and prior impact files. The data set is abstracted from an internal file used for the impact analysis of the changes to the prospective payment systems published in the Federal Register. Two versions of this file are created each year to support the rulemaking. Media: Internet at: https:// www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ AcuteInpatientPPS/Historical-ImpactFiles-for-FY-1994-through-Present.html. Periods Available: FY 1994 through FY 2019 IPPS Update. 11. AOR/BOR Tables This file contains data used to develop the MS–DRG relative weights. It contains mean, maximum, minimum, standard deviation, and coefficient of variation statistics by MS–DRG for length of stay and standardized charges. The BOR tables are ‘‘Before Outliers Removed’’ and the AOR is ‘‘After Outliers Removed.’’ (Outliers refer to statistical outliers, not payment outliers.) Two versions of this file are created each year to support the rulemaking. Media: Internet at: https:// www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ AcuteInpatientPPS/Acute-InpatientFiles-for-Download.html. Periods Available: FY 2005 through FY 2019 IPPS Update. 12. Prospective Payment System (PPS) Standardizing File This file contains information that standardizes the charges used to calculate relative weights to determine payments under the hospital inpatient operating and capital prospective payment systems. Variables include wage index, cost-of-living adjustment (COLA), case-mix index, indirect medical education (IME) adjustment, disproportionate share, and the CoreBased Statistical Area (CBSA). The file supports the rulemaking. Media: Internet at: https:// www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ PO 00000 Frm 00392 Fmt 4701 Sfmt 4702 This file contains information on the calculation of the Hospital Readmissions Reduction Program (HRRP) payment adjustment. Variables include the proxy excess readmission ratios for acute myocardial infarction (AMI), pneumonia (PN) and heart failure (HF), coronary obstruction pulmonary disease (COPD), total hip arthroplasty (THA)/total knee arthroplasty (TKA), and coronary artery bypass grafting (CABG) and the proxy readmissions payment adjustment for each provider included in the program. In addition, the file contains information on the number of cases for each of the applicable conditions excluded in the calculation of the readmission payment adjustment factors. It also contains MS–DRG relative weight information to estimate the payment adjustment factors. The file supports the rulemaking. Media: Internet at: https:// www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ AcuteInpatientPPS/Acute-InpatientFiles-for-Download.html. Period Available: FY 2019 IPPS Update. 14. Medicare Disproportionate Share Hospital (DSH) Supplemental File This file contains information on the calculation of the uncompensated care payments for FY 2019. Variables include the data used to determine a hospital’s share of uncompensated care payments, total uncompensated care payments and estimated per claim uncompensated care payment amounts. The file supports the rulemaking. Media: Internet at: https:// www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ AcuteInpatientPPS/Acute-InpatientFiles-for-Download.html. Period Available: FY 2019 IPPS Update. B. Collection of Information Requirements 1. Statutory Requirement for Solicitation of Comments Under the Paperwork Reduction Act of 1995, we are required to provide 60day notice in the Federal Register and solicit public comment before a collection of information requirement is submitted to the Office of Management and Budget (OMB) for review and E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules approval. In order to fairly evaluate whether an information collection should be approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995 requires that we solicit comment on the following issues: • The need for the information collection and its usefulness in carrying out the proper functions of our agency. • The accuracy of our estimate of the information collection burden. • The quality, utility, and clarity of the information to be collected. • Recommendations to minimize the information collection burden on the affected public, including automated collection techniques. In this proposed rule, we are soliciting public comment on each of these issues for the following sections of this document that contain information collection requirements (ICRs). 2. ICRs for Application for GME Resident Slots The information collection requirements associated with the preservation of resident cap positions from close hospitals, addressed in section IV.L.2. of the preamble of this proposed rule, are not subject to the Paperwork Reduction Act, as stated in section 5506 of the Affordable Care Act. daltland on DSKBBV9HB2PROD with PROPOSALS2 3. ICRs for the Hospital Inpatient Quality Reporting (IQR) Program a. Background The Hospital IQR Program (formerly referred to as the Reporting Hospital Quality Data for Annual Payment (RHQDAPU) Program) was originally established to implement section 501(b) of the MMA, Public Law 108–173. The collection of information associated with the original starter set of quality measures was previously approved under OMB control number 0938–0918. All of the information collection requirements previously approved under OMB control number 0938–0918 have been combined with the information collection request currently approved under OMB control number 0938–1022. OMB has currently approved 3,637,282 hours of burden and approximately $133 million under OMB control number 0938–1022, accounting for information collection burden experienced by 3,300 IPPS hospitals and 1,100 non-IPPS hospitals for the FY 2020 payment determination.387 We no 387 The information collection burden associated with submitting data for the HCP and HAI measures (CDI, CAUTI, CLABSI, MRSA Bacteremia, and Colon and Abdominal Hysterectomy SSI) via the CDC’s NHSN system is captured under a separate OMB control number, 0920–0666. The information collection burden associated with submitting data for the HCAHPS Survey measure is captured under OMB control number 0938–0981. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 longer use OMB control number 0938– 0918. Below, we describe the burden changes with regards to collection of information under OMB control number 0938–1022 for IPPS hospitals due to the proposals in this proposed rule. In section VIII.A. of the preamble of this proposed rule, we discuss the following proposals that we expect to affect our collection of information burden estimates: (1) eCQM reporting and submission requirements for the CY 2019 reporting period/FY 2021 payment determination; (2) removal of eight chart-abstracted measures beginning with the CY 2019 reporting period/FY 2021 payment determination; and (3) removal of one chart-abstracted measure beginning with the CY 2020 reporting period/FY 2022 payment determination. Details on these proposals, as well as the expected burden changes, are discussed below. This proposed rule also includes proposals with respect to claims-based measures to: (1) Remove 17 claimsbased measures beginning with the CY 2018 reporting period/FY 2020 payment determination; (2) remove two claimsbased measures beginning with the CY 2019 reporting period/FY 2021 payment determination; (3) remove one claimsbased measure beginning with CY 2020 reporting period/FY 2022 payment determination; (4) remove one claimsbased measure beginning with the CY 2021 reporting period/FY 2023 payment determination; (5) remove two structural measures beginning with the CY 2018 reporting period/FY 2020 payment determination; and (6) remove seven eCQMs beginning with CY 2020 reporting period/FY 2022 payment determination. As discussed further below, we do not expect these proposals to affect our information collection burden estimates. b. Information Collection Burden Estimate for the Proposed Removal of Chart-Abstracted Measures (1) Information Collection Burden Estimate for the Proposed Removal of Eight Chart-Abstracted Measures Beginning With the CY 2019 Reporting Period/FY 2021 Payment Determination In sections VIII.A.5.b(2)(b) and VIII.A.5.b.(8)(b) of the preamble of this proposed rule, we are proposing to remove eight chart-abstracted measures (five National Healthcare Safety Network (NHSN)) hospital-acquired infection (HAI) measures and three clinical process of care measures) beginning with the CY 2019 reporting period/FY 2021 payment determination: • National Healthcare Safety Network Facility-Wide Inpatient Hospital-Onset PO 00000 Frm 00393 Fmt 4701 Sfmt 4702 20555 Clostridium difficile Infection (CDI) Outcome Measure (NQF #1717); • National Healthcare Safety Network Catheter-Associated Urinary Tract Infection (CAUTI) Outcome Measure (NQF #0138); • National Healthcare Safety Network Central Line-Associated Bloodstream Infection (CLABSI) Outcome Measure (NQF #0139); • National Healthcare Safety Network Facility-Wide Inpatient Hospital-Onset Methicillin-Resistant Staphylococcus aureus (MRSA) Bacteremia Outcome Measure (NQF #1716); • American College of Surgeons— Centers for Disease Control and Prevention Harmonized ProcedureSpecific Surgical Site Infection (SSI) Outcome Measure (Colon and Abdominal Hysterectomy SSI) (NQF #0753); • Median Time from ED Arrival to ED Departure for Admitted ED Patients (ED–1) (NQF #0495); • Influenza Immunization (IMM–2) (NQF #1659); and • Incidence of Potentially Preventable Venous Thromboembolism (VTE–6). Because the burden associated with submitting data for the NHSN HAI measures (CDI, CAUTI, CLABSI, MRSA Bacteremia, and Colon and Abdominal Hysterectomy SSI) is captured under separate OMB control number 0920– 0666, we do not provide an independent estimate of the information collection burden associated with these measures for the Hospital IQR Program. Because the NHSN HAI measures will be retained in the HAC Reduction Program, we do not anticipate a reduction in data collection and reporting burden associated with the CDC NHSN’s OMB control number 0920–0666. We note, however, that we anticipate a reduction in burden associated with the Hospital IQR Program validation activities we conduct for these NHSN HAI measures, as discussed further below. We anticipate a reduction in information collection burden for all IPPS hospitals of 741,074 hours, or 225 hours per hospital, as a result of our proposals to remove the ED–1 and IMM–2 chart-abstracted measures beginning with the CY 2019 reporting period/FY 2021 payment determination. This estimate was calculated by considering the previously approved information collection burden estimate for reporting the combined global population set (ED–1, ED–2, and IMM– 2) of 1,599,074 hours, minus the estimated information collection reporting burden for only the ED–2 E:\FR\FM\07MYP2.SGM 07MYP2 20556 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules measure 388 ([15 minutes per record × 260 records per hospital per quarter × 4 quarters]/60 minutes per hour × 3,300 IPPS hospital = 858,000 hours). Through these calculations (1,599,074 hours ¥ 858,000 hours), we estimate a reduction of 741,074 hours, or 225 hours per hospital per year (741,074 hours/3,300 hospitals) across all IPPS hospitals for the CY 2019 reporting period/FY 2021 payment determination if our proposals to remove the ED–1 and IMM–2 measures from the Hospital IQR Program are finalized as proposed. We also anticipate our proposal to remove the VTE–6 measure would result in an information collection burden reduction of 304,997 hours for all IPPS hospitals, or 92 hours per hospital, for the CY 2019 reporting period/FY 2021 payment determination. We have previously estimated a reporting burden of 92 hours (7 minutes per record × 198 records per hospital per quarter × 4 quarters/60 minutes) per hospital per year, or 304,997 hours (92 hours per hospital × 3,300 hospitals) across all hospitals associated with abstracting and reporting VTE–6. Therefore, we estimate an information collection burden decrease of 304,997 hours for the CY 2019 reporting period/ FY 2021 payment determination if our proposal to remove this measure from the Hospital IQR Program is finalized as proposed. In summary, if our proposals in section VIII.A.5.b.(8) of the preamble of this proposed rule to remove IMM–2, ED–1, and VTE–6 are finalized as proposed, we estimate an information collection burden reduction of 1,046,071 hours (¥741,074 hours for ED–1 and IMM–2 removal + ¥304,997 hours for VTE–6 removal) and approximately $38.3 million (1,046,071 hours × $36.58 per hour 389) across all 3,300 IPPS hospitals participating in the Hospital IQR Program for the CY 2019 reporting period/FY 2021 payment determination. daltland on DSKBBV9HB2PROD with PROPOSALS2 (2) Information Collection Burden Estimate for the Proposed Removal of One Chart-Abstracted Measure Beginning With the CY 2020 Reporting Period/FY 2022 Payment Determination In section VIII.A.5.b.(8)(b) of the preamble of this proposed rule, we are 388 Estimated 15 minutes per case for reporting ED–2 measure based on average Clinical Data Abstraction Center abstraction times for 3Q 2016, 4Q 2016, and 1Q 2017 discharge data. 389 In the FY 2017 IPPS/LTCH PPS final rule (82 FR 38501), we finalized an hourly wage estimate of $18.29 per hour, plus 100 percent overhead and fringe benefits, for the Hospital IQR Program. Accordingly, we calculate cost burden to hospitals using a wage plus benefits estimate of $36.58 per hour. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 proposing to remove the ED–2 measure (NQF #0497) beginning with the CY 2020 reporting period/FY 2022 payment determination. We anticipate removing this chart-abstracted measure would reduce the reporting burden for all IPPS hospitals by a total of 858,000 hours, or 260 hours per hospital. As discussed above, we estimate reporting the ED–2 measure takes approximately 260 hours (15 minutes per record × 260 records per hospital per quarter × 4 quarters/60 minutes = 260 hours) per hospital per year, or 858,000 hours (260 hours × 3,300 hospitals) across all IPPS hospitals. We, therefore, estimate an 858,000 hour information collection burden decrease for the CY 2020 reporting period/FY 2022 payment determination as a result of our proposal to remove this measure from the Hospital IQR Program. In summary, if our proposal in section VIII.A.5.b.(8)(b) of the preamble of this proposed rule to remove ED–2 is finalized as proposed, we estimate an information collection burden reduction of 858,000 hours and approximately $31.4 million (858,000 hours × $36.58 per hour 390) across all 3,300 IPPS hospitals participating in the Hospital IQR Program for the CY 2020 reporting period/FY 2022 payment determination. (3) Information Collection Impacts on Data Validation Resulting From ChartAbstracted Measure Removal While we are not proposing any changes to our validation requirements related to chart-abstracted measures, if our proposals in section VIII.A.5.b.(2)(b) and section VIII.A.5.b.(8) of the preamble of this proposed rule to remove five NHSN HAIs and four clinical process of care measures are finalized as proposed, we believe that hospitals would experience an overall reduction in information collection burden associated with chart-abstracted measure validation beginning with the FY 2022 payment determination. As noted in the FY 2016 IPPS/LTCH IPPS final rule (80 FR 49762 and 49763), we reimburse hospitals directly for expenses associated with submission of charts for clinical process of care measure data validation (we reimburse hospitals at 12 cents per photocopied page; for hospitals providing charts digitally via a re-writable disc, such as encrypted CD–ROMs, DVDs, or flash drives, we reimburse hospitals at a rate 390 In the FY 2017 IPPS/LTCH PPS final rule (82 FR 38501), we finalized an hourly wage estimate of $18.29 per hour, plus 100 percent overhead and fringe benefits, for the Hospital IQR Program. Accordingly, we calculate cost burden to hospitals using a wage plus benefits estimate of $36.58 per hour. PO 00000 Frm 00394 Fmt 4701 Sfmt 4702 of 40 cents per disc); we do not believe any additional information collection burden is associated with submitting this information via Web portal or PDF (79 FR 50346). Therefore, because we directly reimburse, we do not anticipate any net change in burden associated with the cost of submission of validation charts as a result of our proposals to remove four clinical process of care measures. Hospitals would no longer be required to submit, or be reimbursed for submitting, these data to CMS. Because we are proposing to remove all of the NHSN HAI measures from the Hospital IQR Program and because hospitals selected for validation currently are required to submit validation templates for the NHSN HAI measures, we anticipate a reduction in information collection burden under the Hospital IQR Program associated with the NHSN HAI data validation effort. We note that the burden associated with data collection for the NHSN HAI measures (CDI, CAUTI, CLABSI, MRSA Bacteremia, and Colon and Abdominal Hysterectomy SSI) is accounted for under the CDC NHSN OMB control number 0920–0666. Because the NHSN HAI measures will be retained in the HAC Reduction Program, we do not anticipate a change in data collection and reporting burden associated with this OMB control number due to our proposals. The data validation activities, however, are conducted by CMS. Since the measures were adopted into the Hospital IQR Program, CMS has validated the data for purposes of the Program. Therefore, this burden has been captured under the Hospital IQR Program’s OMB control number 0938– 1022. We have previously estimated a reporting burden of 80 hours (1,200 minutes per record × 1 record per hospital per quarter × 4 quarters/60 minutes) per hospital selected for chartabstracted measure validation per year to submit the CLABSI and CAUTI templates, and 64 hours (960 minutes per record × 1 record per hospital per quarter × 4 quarters/60 minutes) per hospital selected for chart-abstracted measure validation per year to submit the MRSA and CDI templates. We, therefore, estimate a total validation burden decrease of 43,200 hours ([¥80 hours per hospital to submit CLABSI and CAUTI templates + ¥64 hours per hospital to submit MRSA and CDI templates] × 300 hospitals selected for validation) and approximately $1.6 million (43,200 hours × $36.58 per hour 391) for the FY 2022 payment 391 In the FY 2017 IPPS/LTCH PPS final rule (82 FR 38501), we finalized an hourly wage estimate of E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules determination because of the removal of these measures from the Hospital IQR Program and the secondary effects on validation. We note that we are proposing that the HAC Reduction Program will begin validation of these NHSN HAI measures as discussed in section IV.J. of the preamble of this proposed rule. daltland on DSKBBV9HB2PROD with PROPOSALS2 c. Information Collection Burden Estimate for Proposed Removal of Two Structural Measures In sections VIII.A.5.a. and b.(1) of the preamble of this proposed rule, we are proposing to remove two structural measures (Hospital Survey on Patient Safety Culture and Safe Surgery Checklist Use) beginning with the CY 2018 reporting period/FY 2020 payment determination. We anticipate removing these measures will result in a minimal information collection burden reduction for hospitals. Specifically, we do anticipate a very slight reduction in information collection burden associated with the proposed removal of the Safe Surgery Checklist measure because completion of this measure takes hospitals approximately two minutes each year (77 FR 53666). Similarly, we anticipate a very slight reduction in information collection burden associated with the proposed removal of the Patient Safety Checklist measure (80 FR 49762 through 49873). Consistent with previous years (80 FR 49762), we estimate a collection of information burden of 15 minutes per hospital to report all four previously finalized structural measures and to complete other forms (such as the Extraordinary Circumstances Extension/ Exemption Request Form). Therefore, our information collection burden estimate of 15 minutes per hospital remains unchanged because we believe the reduction in information collection burden associated with removing these two structural measures is sufficiently minimal that it will not substantially impact this estimate, and we want to retain a conservative estimate of the information collection burden associated with the use of our forms. d. Burden Estimate for Proposed Removal of Claims-Based Measures In section VIII.A.5.b.(2)(a), (3), (4), (6), and (7) of the preamble of this proposed rule, we are proposing to remove the following 17 claims-based measures beginning with the CY 2018 reporting period/FY 2020 payment determination: $18.29 per hour, plus 100 percent overhead and fringe benefits, for the Hospital IQR Program. Accordingly, we calculate cost burden to hospitals using a wage plus benefits estimate of $36.58 per hour. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 • Patient Safety and Adverse Events Composite Measure (PSI 90) (NQF #0531); • Hospital 30-Day All-Cause RiskStandardized Readmission Rate Following Acute Myocardial Infarction (AMI) Hospitalization (NQF #0505) (READM–30–AMI); • Hospital 30-Day, All-Cause, RiskStandardized Readmission Rate Following Chronic Obstructive Pulmonary Disease (COPD) Hospitalization (NQF #1891) (READM– 30–COPD); • Hospital 30-Day, All-Cause, Unplanned, Risk-Standardized Readmission Rate Following Coronary Artery Bypass Graft (CABG) Surgery (NQF #2515) (READM–30–CABG); • Hospital 30-Day, All-Cause, RiskStandardized Readmission Rate Following Heart Failure Hospitalization (NQF #0330) (READM–30–HF); • Hospital 30-Day, All-Cause, RiskStandardized Readmission Rate Following Pneumonia Hospitalization (NQF #0506) (READM–30–PN); • 30-day Risk-Standardized Readmission Rate Following Stroke Hospitalization (READ–30–STK; • Hospital-Level 30-Day, All-Cause Risk-Standardized Readmission Rate Following Elective Primary Total Hip Arthroplasty and/or Total Knee Arthroplasty (NQF #1551) (READM–30– THA/TKA); • Hospital 30-day, All-Cause, RiskStandardized Mortality Rate Following Acute Myocardial Infarction (AMI) Hospitalization for Patients 18 and Older (NQF #0230) (MORT–30–AMI); • Hospital 30-Day, All-Cause, RiskStandardized Mortality Rate Following Heart Failure Hospitalization (NQF #0229) (MORT–30–HF); • Medicare Spending Per Beneficiary (MSPB)—Hospital (NQF #2158); • Cellulitis Clinical Episode-Based Payment Measure (Cellulitis Payment); • Gastrointestinal Hemorrhage Clinical Episode-Based Payment Measure (GI Payment); • Kidney/Urinary Tract Infection Clinical Episode-Based Payment Measure (Kidney/UTI Payment); • Aortic Aneurysm Procedure Clinical Episode-Based Payment Measure (AA Payment); • Cholecystectomy and Common Duct Exploration Clinical EpisodeBased Payment Measure (Chole and CDE Payment); and • Spinal Fusion Clinical EpisodeBased Payment Measure (SFusion Payment). In addition, we are proposing to remove two claims-based measures beginning with the CY 2019 reporting period/FY 2021 payment determination: PO 00000 Frm 00395 Fmt 4701 Sfmt 4702 20557 (1) Hospital 30-Day, All-Cause, RiskStandardized Mortality Rate Following Chronic Obstructive Pulmonary Disease (COPD) Hospitalization (NQF #1893); and (2) Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Pneumonia Hospitalization (NQF #0468). We also are proposing to remove one claims-based measure, Hospital 30-Day, All-Cause, RiskStandardized Mortality Rate Following Coronary Artery Bypass Graft (CABG) Surgery measure (NQF #2558), beginning with the CY 2020 reporting period/FY 2022 payment determination, and one claims-based measure, Hospital-Level Risk-Standardized Complication Rate (RSCR) Following Elective Primary Total Hip Arthroplasty and/or Total Knee Arthroplasty, beginning with the CY 2021 reporting period/FY 2023 payment determination. Because these claims-based measures are calculated using only data already reported to the Medicare program for payment purposes, we do not anticipate that removing these measures will affect information collection burden on hospitals. However, we refer readers to section VIII.A.5.b.(2)(a), (3), (4), (6) and (7) of the preamble of this proposed rule for a discussion of the reduction in costs associated with these measures unrelated to the information collection burden. e. Information Collection Burden Estimate for Proposed Removal of eCQMs In section VIII.A.5.b.(9) of the preamble of this proposed rule, we are proposing to remove the following seven eCQMs from the eCQM measure set beginning with the CY 2020 reporting period/FY 2022 payment determination: • Primary PCI Received within 90 Minutes of Hospital Arrival (AMI–8a); • Home Management and Plan of Care Document Given to Patient/ Caregiver (CAC–3); • Median Time from ED Arrival to ED Departure for Admitted ED Patients (ED–1) (NQF #0495); 392 • Hearing Screening Prior to Hospital Discharge (EHDI–1a) (NQF# 1354); • Elective Delivery (PC–01) (NQF #0469); • Stroke Education (STK–08); and • Assessed for Rehabilitation (STK– 10) (NQF #0441). Because these eCQMs being proposed for removal were among a set of 15 eCQMs available for reporting, we believe that reducing the number of 392 Median Time from ED Arrival to ED Departure for Admitted ED Patients (ED–1) is proposed for removal in both chart-abstracted and eCQM forms. E:\FR\FM\07MYP2.SGM 07MYP2 20558 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules eCQMs from which hospitals choose would enable hospitals to focus on and maintain a smaller subset of measures (8 instead of 15), but this would not have an effect on the burden of submitting information to CMS. Hospitals will still be required to submit 4 eCQMs of their choice from the eCQM measure set. While the information collection burden would not change, we refer readers to section VIII.A.4.b. of the preamble of this proposed rule where we acknowledge that costs are multi-faceted and include not only the burden associated with reporting, but also the costs associated with implementing and maintaining Program requirements. f. Information Collection Burden Estimates for the Proposed Updates to the eCQM Reporting Requirements In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38355 through 38361), we finalized eCQM reporting requirements, such that hospitals submit one, selfselected calendar quarter of data for 4 eCQMs in the Hospital IQR Program measure set for the CY 2018 reporting period/FY 2020 payment determination. In section VIII.A.10.d.(2) of the preamble of this proposed rule, we are proposing to require that hospitals continue to submit one, self-selected calendar quarter of data for 4 eCQMs in the Hospital IQR Program measure set for the CY 2019 reporting period/FY 2021 payment determination. Therefore, we believe the burden estimate of 40 minutes per hospital per year (10 minutes per record × 4 eCQMs × 1 quarter) associated with eCQM reporting requirements finalized for the CY 2018 reporting period/FY 2020 payment determination will also apply to the CY 2019 reporting period/FY 2021 payment determination. g. Information Collection Burden Estimate for the Proposed Modifications to EHR Certification Requirements In section VIII.A.10.d.(3) of the preamble of this proposed rule, we are proposing to update the EHR certification requirements by requiring the use of EHR technology certified to the 2015 Edition beginning with the CY 2019 reporting period/FY 2021 payment determination, to align with the Medicare and Medicaid Promoting Interoperability Programs (previously known as the Medicare and Medicaid EHR Incentive Programs) for eligible hospitals and CAHs. We do not expect this proposal to affect our information collection burden estimates because this proposal does not require hospitals to submit new data to CMS. With respect to any costs unrelated to data submission, we refer readers to Appendix I.K. of the preamble of this proposed rule. h. Summary of Information Collection Burden Estimates for the Hospital IQR Program In summary, under OMB control number 0938–1022, we estimate: (1) A total information collection burden reduction of 1,046,138 hours (¥1,046,071 hours due to the proposed removal of ED–1, IMM–2, and VTE–6 measures for the CY 2019 reporting period/FY 2021 payment determination and ¥67 hours for no longer collecting data for the voluntary Hybrid HWR measure 393) and a total cost reduction related to information collection of approximately $38.3 million (¥1,046,138 hours × $36.58 per hour 394) for the CY 2019 reporting period/FY 2021 payment determination; and (2) a total information collection burden reduction of 901,200 hours (¥858,000 hours due to the proposed removal of ED–2—43,200 hours due to no longer needing to validate NHSN HAI measures under the Hospital IQR Program) and a total information collection cost reduction of approximately $33 million (¥901,200 hours × $36.58 per hour 395) for the CY 2020 reporting period/FY 2022 payment determination. These are the total information collection burden reduction estimates for which we are requesting OMB approval under OMB number 0938–1022. HOSPITAL IQR PROGRAM CY 2019 REPORTING PERIOD/FY 2021 PAYMENT DETERMINATION INFORMATION COLLECTION BURDEN ESTIMATES Annual recordkeeping and reporting requirements under OMB control No. 0938–1022 for CY 2019 reporting period/FY 2021 payment Determination Activity Estimated time per record (minutes) Reporting on Emergency department throughput (ED–1)/Immunizations (IMM–2) ............................ Venous thromboembolism (VTE) ..... Voluntary HWR Reporting 396 .......... 13 7 10 Number of IPPS hospitals reporting Number reporting quarters per year 4 4 4 Average number records per hospital per quarter 3,300 3,300 100 260 198 1 Annual burden (hours) per hospital 225 92 0.67 Newly proposed annual burden (hours) across IPPS hospitals 858,000 0 0 Previously finalized annual burden (hours) across IPPS hospitals 1,599,074 304,997 67 Net difference in annual burden hours ¥741,074 ¥304,997 ¥67 daltland on DSKBBV9HB2PROD with PROPOSALS2 Total Change in Information Collection Burden Hours: ¥1,046,138. Total Cost Estimate: Updated Hourly Wage ($36.58) × Change in Burden Hours (¥1,046,138) = ¥$38,267,728. 393 In the FY 2017 IPPS/LTCH PPS final rule (82 FR 38350 through 38355), we finalized our proposal to collect data on a voluntary basis for the Hybrid HWR measure for the CY 2018 reporting period/FY 2020 payment determination. We estimated that approximately 100 hospitals would voluntarily report data for this measure, resulting in a total burden of 67 hours across all hospitals for the CY 2018 reporting period/FY 2020 payment determination (82 FR 38504). Because we only VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 finalized voluntary collection of data for one year, voluntary collection of this data would no longer occur, beginning with the CY 2019 reporting period/FY 2021 payment determination and subsequent years, resulting in a reduction in burden of 67 hours across all hospitals. 394 In the FY 2017 IPPS/LTCH PPS final rule (82 FR 38501), we finalized an hourly wage estimate of $18.29 per hour, plus 100 percent overhead and fringe benefits, for the Hospital IQR Program. PO 00000 Frm 00396 Fmt 4701 Sfmt 4702 Accordingly, we calculate cost burden to hospitals using a wage plus benefits estimate of $36.58 per hour. 395 In the FY 2017 IPPS/LTCH PPS final rule (82 FR 38501), we finalized an hourly wage estimate of $18.29 per hour, plus 100 percent overhead and fringe benefits, for the Hospital IQR Program. Accordingly, we calculate cost burden to hospitals using a wage plus benefits estimate of $36.58 per hour. E:\FR\FM\07MYP2.SGM 07MYP2 20559 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules HOSPITAL IQR PROGRAM CY 2020 REPORTING PERIOD/FY 2022 PAYMENT DETERMINATION INFORMATION COLLECTION BURDEN ESTIMATES Annual recordkeeping and reporting requirements under OMB control No. 0938–1022 for CY 2020 reporting period/FY 2022 payment determination Activity Estimated time per record (minutes) Reporting on Emergency department throughput (ED–2 only) ....... HAI Validation Templates (CLABSI, CAUTI) .......................................... HAI Validation Templates (MRSA, CDI) .............................................. Number reporting quarters per year Number of IPPS hospitals reporting Average number records per hospital per quarter Newly proposed annual burden (hours) across IPPS hospitals Annual burden (hours) per hospital Previously finalized annual burden (hours) across IPPS hospitals Net difference in annual burden hours 15 4 3,300 260 260 0 858,000 ¥858,000 1,200 4 300 1 80 0 24,000 ¥24,000 960 4 300 1 64 0 19,200 ¥19,200 Total Change in Information Collection Burden Hours:¥901,200 Total Cost Estimate: Updated Hourly Wage ($36.58) × Change in Burden Hours (¥901,200) = $32,965,896 4. ICRs for PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program a. Background As discussed in sections VIII.B. of the preamble of this proposed rule, section 1866(k)(1) of the Act requires, for purposes of FY 2014 and each subsequent fiscal year, that a hospital described in section 1886(d)(1)(B)(v) of the Act (a PPS-exempt cancer hospital, or a PCH) submit data in accordance with section 1866(k)(2) of the Act with respect to such fiscal year. There is no financial impact to PCH Medicare payment if a PCH does not participate. Below we discuss only changes in burden that would result from the proposals in this proposed rule. daltland on DSKBBV9HB2PROD with PROPOSALS2 b. Proposed Revision of Time Estimate for Structural and Web-Based Tool Measures for the FY 2021 Program Year and Subsequent Years In this proposed rule, we are proposing a revision to our burden calculation methodology. With all the parameters considered when PCHs submit data on PCHQR Program measures (training of appropriate staff members on National Healthcare Safety Network (NHSN) reporting and the CMS 396 In the FY 2017 IPPS/LTCH PPS final rule (82 FR 38350 through 38355), we finalized our proposal to collect data on a voluntary basis for the Hybrid HWR measure for the CY 2018 reporting period/FY 2020 payment determination. We estimated that approximately 100 hospitals would voluntarily report data for this measure, resulting in a total burden of 67 hours across all hospitals for the CY 2018 reporting period/FY 2020 payment determination (82 FR 38504). Because we only finalized voluntary collection of data for one year, voluntary collection of this data would no longer occur beginning with the CY 2019 reporting period/ FY 2021 payment determination and subsequent years resulting in a reduction in burden of 67 hours across all hospitals. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Web Measures Tool for the reporting of the clinical process/oncology care measures; the time required for collection and aggregation of data; and the time required for reporting of the data by the PCH’s representative), we strive to achieve continuity in how we calculate and analyze burden data. In prior years, we have based our burden estimates on the notion that all 11 PCHs would report on all measures for all cases (78 FR 50958). These assumptions were made in order to be as comprehensive as possible given a lack of PCH-specific data available at the time. However, we believe it is more appropriate to use estimates developed using data available in other quality reporting programs wherever possible, because we believe these estimates will provide a more accurate estimate of burden associated with data collection and reporting. Our proposal to update the estimate the time required to collect and report data for structural measures and measures that use a web-based tool is discussed below. We initially adopted five clinical process/cancer specific treatment measures that utilized a web-based tool for the FY 2016 program year in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50841 through 50844). In that rule, we did not specify burden estimates based on the measure type, but instead provided estimates ‘‘for submitting all quality measure data’’ (78 FR 50958). Since then, we have been able to better understand and differentiate the various levels of effort associated with data abstraction and submission for specific types of measures. Moreover, in understanding that certain measure types prove more burdensome than others (that is, chart-abstracted PO 00000 Frm 00397 Fmt 4701 Sfmt 4702 measures), we believe it is necessary to provide burden estimates that better reflect with the type of measure being discussed. Using historical data from its validation contractor, the Hospital IQR Program has previously estimated that it takes 15 minutes per hospital to report on four structural measures (80 FR 49762). We believe this estimate is appropriate for the PCHQR Program because data submission for measures that utilize a web-based tool is similar to the data submission for a structural measure, in that both types of measures use the same reporting mechanism, the QualityNet Secure Portal. In addition, we wish to account for the time associated with data collection and aggregation for individual measures when considering burden, and believe 15 minutes per measure is an appropriately conservative estimate for the measures submitted via a web-based tool in the PCHQR Program. Therefore, we are proposing to apply this burden estimate to four measures that utilize a web-based tool: (1) Oncology: Radiation Dose Limits to Normal Tissues (PCH– 14/NQF #0382); (2) Oncology: Medical and Radiation—Pain Intensity Quantified (PCH–16/NQF #0384); (3) Prostate Cancer: Adjuvant Hormonal Therapy for High Risk Patients (PCH– 17/NQF #0390); and (4) Prostate Cancer: Avoidance of Overuse of Bone Scan for Staging Low-Risk Patients (PCH–18/ NQF #0389). We are inviting public comment on our proposal to utilize a burden estimate of 15 minutes per measure, per PCH, with respect to the burden estimates we discuss below for the FY 2021 program year and subsequent years. E:\FR\FM\07MYP2.SGM 07MYP2 20560 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 c. Estimated Burden of PCHQR Program Proposals for the FY 2021 Program Year In section VIII.B.3. of the preamble of this proposed rule, we are proposing to remove six measures beginning with the FY 2021 program year—four web-based, structural measures: (1) Oncology: Radiation Dose Limits to Normal Tissues (PCH–14/NQF #0382); (2) Oncology: Medical and Radiation—Pain Intensity Quantified (PCH–16/NQF #0384); (3) Prostate Cancer: Adjuvant Hormonal Therapy for High Risk Patients (PCH–17/NQF #0390); (4) Prostate Cancer: Avoidance of Overuse of Bone Scan for Staging Low-Risk Patients (PCH–18/NQF #0389), and two chart-abstracted, NHSN measures: (5) NHSN Catheter-Associated Urinary Tract Infection (CAUTI) Outcome Measure (PCH–5/NQF #0138) and (6) NHSN Central Line-Associated Bloodstream Infection (CLABSI) Outcome Measure (PCH–4/NQF #0139). In addition, in section VIII.B.4.b. of the preamble of this proposed rule, we are proposing to adopt one claims-based measure, 30-Day Unplanned Readmissions for Cancer Patients (NQF #3188), beginning with the FY 2021 program year. If these proposals are finalized, the PCHQR Program measure set would consist of 13 measures for the FY 2021 program year. We anticipate our proposal to remove four web-based, structural measures will reduce the burden associated with quality reporting on PCHs. If our proposal to apply the burden estimate of 15 minutes per measure to the four webbased, structural measures is finalized as proposed, we estimate a reduction of 1 hour (or 60 minutes) per PCH (15 minutes per measure × 4 measures = 60 minutes), and a total annual reduction of approximately 11 hours for all 11 PCHs (60 minutes × 11 PCHs/60 minutes per hour), due to the proposed removal of these four measures. We anticipate that the proposed removal of the two NHSN measures: (1) Catheter-Associated Urinary Tract Infection (CAUTI) Outcome Measure (PCH–5/NQF #0138) and (2) Central Line-Associated Bloodstream Infection (CLABSI) Outcome Measure (PCH–4/ NQF #0139) will result in a burden decrease. Historically, we have accounted for the burden associated with collecting and reporting data for the Catheter-Associated Urinary Tract Infections (CAUTI) and Central LineAssociated Bloodstream Infection (CLABSI) National Healthcare Safety Network measures as though they were standalone chart-abstracted VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 measures.397 Specifically, in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53667), we originally estimated the burden for reporting three chartabstracted cancer measures and two NHSN CDC measures (CLABSI and CAUTI) at approximately 6,293.5 hours annually for each PCH, or 69,228.5 burden hours annually for all 11 PCHs. Using this estimate, we estimated 1,259 burden hours per measure (6,294 hours/ 5 measures = 1,258.8 hours per measure). As such, if our proposal to remove the CAUTI and CLABSI measures is finalized as proposed, we estimate an annual burden reduction of 2,518 hours per PCH (1,259 hours × 2 measures = 2,518 hours) and an annual burden reduction of 27,698 hours across all eleven PCHs (2,518 hours per PCH × 11 PCHs = 27,698 hours). We do not anticipate any increase in burden on PCHs related to our proposal to adopt the claims-based 30-Day Unplanned Readmissions for Cancer Patients measure (NQF #3188) beginning with the FY 2021 program year. Because this measure is claimsbased and therefore does not require facilities to submit any additional data, we do not believe there is any increase in burden associated with this proposal. In summary, if our proposals to remove six measures and to modify our burden estimation methodology for measures that utilize a web-based submission tool are finalized as proposed, we estimate a total reduction of 27,709 hours of burden per year for all 11 PCHs (¥27,698 hours for the removal of the CAUTI & CLABSI measures¥11 hours for the removal of the four web-based, structural measures = 27,709 total hours) beginning with the FY 2021 program year. Coupled with our estimated salary costs, we estimate that these proposed changes would result in a reduction in annual labor costs of $1,013,595 (27,709 hours × $36.58 hourly labor cost 398) across the 397 We note that the Centers for Disease Control and Prevention (CDC), the owner of the NHSN system, maintains its own OMB control number, 0920–0666, that estimates the burden associated with reporting data for the measures retained in the PCHQR program, that utilize the NHSN system. We have not independently accounted for the burden associated with adopting subsequent measures utilizing the NHSN system (that is, Colon and Abdominal Hysterectomy SSI; CDI; MRSA Bacteremia; and Influenza Vaccination Coverage Among Healthcare Personnel (HCP) measures) because the burden associated with reporting these measures is captured under the aforementioned OMB control number. 398 In the FY 2017 IPPS/LTCH PPS final rule (82 FR 38504 through 38505), we finalized an hourly wage estimate of $18.29 per hour, plus 100 percent overhead and fringe benefits, for the Hospital IQR Program. Accordingly, we calculate cost burden to hospitals using a wage plus benefits estimate of $36.58 per hour. PO 00000 Frm 00398 Fmt 4701 Sfmt 4702 11 PCHs beginning with the FY 2021 PCHQR Program. The burden associated with these reporting requirements is currently approved under OMB control number 0938–1175. The information collection will be revised and submitted to OMB. 5. ICRs for the Hospital Value-Based Purchasing (VBP) Program In section IV.I. of the preamble of this proposed rule, we discuss proposed requirements for the Hospital VBP Program. Specifically, in this proposed rule, with respect to quality measures, we are proposing to remove four claimsbased measures effective with the effective date of the FY 2019 IPPS/LTCH PPS final rule. Because these claimsbased measures are calculated using only data already reported to the Medicare program for payment purposes, we do not anticipate removing these measures will increase or decrease the reporting burden on hospitals. However, we believe removal of these measures from the Hospital VBP Program will reduce other costs associated with the program, such as: (1) Costs for health care providers and clinicians to track the confidential feedback preview reports and publicly reported information on the measures in more than one program; (2) costs for CMS to analyze, and publicly report the measure data in multiple programs; and (3) confusion for beneficiaries to see public reporting on the same measures in different programs. In addition, in this proposed rule, we are proposing to remove six chartabstracted measures beginning with the FY 2021 program year. Because these chart-abstracted measures used data required for and collected under the Hospital IQR Program (OMB control number 0938–1022), there was no additional data collection burden associated these measures under the Hospital VBP Program. Therefore, we do not anticipate removing these measures will increase or decrease the reporting burden on hospitals. However, we believe removal of these measures from the Hospital VBP Program will reduce other costs associated with the program, such as: (1) Costs for health care providers and clinicians to track the confidential feedback preview reports and publicly reported information on the measures in more than one program; (2) costs for CMS to analyze, and publicly report the measures’ data in multiple programs; and (3) confusion for beneficiaries to see public reporting on the same measures in different programs. We note that we are proposing to remove seven claims-based measures from the Hospital IQR E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 Program, which have been finalized previously for, and will remain in, the Hospital VBP Program. However, we do not believe retaining these claims-based measures in the Hospital VBP Program will create any additional burden for hospitals because the measure data will continue to be collected using Medicare FFS claims hospitals are already submitting to the Medicare program for payment purposes. 6. ICRs for the Long-Term Care Hospital Quality Reporting Program (LTCH QRP) As discussed in section VIII.C.5. of the preamble of this proposed rule, we are proposing to remove two measures from the LTCH QRP beginning with the FY 2020 LTCH QRP and to remove one measure from the LTCH QRP beginning with the FY 2021 LTCH QRP. In section VIII.C.5.a. and b. of the preamble of this proposed rule, we are proposing to remove two CDC NHSN measures: National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-Onset Methicillin-Resistant Staphylococcus aureus (MRSA) Bacteremia Outcome Measure (NQF #1716) and National Healthcare Safety Network (NHSN) Ventilator-Associated Event (VAE) Outcome Measure— beginning with the FY 2020 LTCH QRP. LTCHs would no longer be required to submit data on these measures beginning with October 1, 2018 admissions and discharges. As a result, the burden and cost specifically for LTCHs for complying with the requirements of the LTCH QRP would be reduced. While the overall burden estimates are accounted for under OMB control number (0920–0666), to specifically account for burden reductions, the CDC provided more detailed estimates for LTCH reporting on the data for the measures we are proposing to remove. Based on estimates provided by the CDC, which is based on the frequency of actual reporting on such data, we estimate that the removal of the National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Methicillin-resistant Staphylococcus aureus (MRSA) Bacteremia Outcome Measure (NQF #1716) would result in a 3-hour (15 minutes per MRSA submission × 12 estimated submissions per LTCH per year) reduction in clinical staff time annually to report data, which equates to a decrease of 1,260 hours (3 hours burden per LTCH per year × 420 total LTCHs) in burden for all LTCHs. Given 10 minutes of registered nurse time at $69.40 per hour, and 5 minutes of medical records or health information technician time at $39.86 per hour, for VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 the submission of MRSA data to the NHSN per LTCH per year, we estimate that the total cost of complying with the requirements of the LTCH QRP would be reduced by $178.66 per LTCH annually, or $75,037.20 for all LTCHs annually. Applying the same approach on burden reduction estimations, we estimate that the removal of the National Healthcare Safety Network (NHSN) Ventilator-Associated Event (VAE) Outcome Measure from the LTCH QRP would result in a 4.4 hour (22 minutes per VAE submission × 12 estimated submissions per LTCH per year) reduction in clinical staff time to report data, which equates to a decrease of 1,848 hours (4.4 hours burden per LTCH per year × 420 total LTCHs) in burden for all LTCHs. Given the registered nurse hourly rate of $69.40 per hour, and medical records or health information technician rate of $39.86 per hour for the submission of VAE data to the NHSN per LTCH per year, we estimate that the total cost of complying with the LTCH QRP would be reduced by $293.54 per LTCH annually, or $123,288.48 for all LTCHs annually. In addition, in section VIII.C.5.c. of the preamble of this proposed rule, we are proposing to remove the measure, Percent of Residents or Patients Who Were Assessed and Appropriately Given the Seasonal Influenza Vaccine (Short Stay) (NQF #0680), beginning with the FY 2021 LTCH QRP. LTCHs would no longer be required to submit data on this measure beginning with October 1, 2018 admissions and discharges. As a result, the estimated burden and cost for LTCHs for complying with requirements of the LTCH QRP would be reduced. Specifically, we believe that there would be a 1.8 minute reduction in clinical staff time to report data per patient stay. We estimate 136,476 discharges from 420 LTCHs annually. This equates to a decrease of 4,094 hours in burden for all LTCHs (0.03 hours per assessment × 136,476 discharges). Given 1.8 minutes of registered nurse time at $69.40 per hour completing an average of 325 sets of LTCH CARE Data Set assessments per LTCH per year, we estimate that the total cost would be reduced by $676.53 per LTCH annually, or $284,143.03 for all LTCHs annually. This decrease in burden will be accounted for in the information collection under OMB control number 0938–1163. Overall, the cost associated with the proposed changes to the LTCH QRP is estimated at a reduction of $1,148.73 per LTCH annually or $482,468.71 for all LTCHs. PO 00000 Frm 00399 Fmt 4701 Sfmt 4702 20561 7. ICRs Relating to the HospitalAcquired Condition (HAC) Reduction Program In section IV.J. of the preamble of this proposed rule, we discuss proposed requirements for the HAC Reduction Program. In this proposed rule, we are not proposing to adopt any new measures into the HAC Reduction Program. However, the Hospital IQR Program is proposing to remove the claims-based Patient Safety and Adverse Events Composite (PSI 90) and five NHSN HAI measures (CDI, CAUTI, CLABSI, MRSA, and SSI). These measures had been previously adopted for, and will remain in, the HAC Reduction Program. We do not believe that retaining the claims-based PSI 90 measure in the HAC Reduction Program will create any additional burden for hospitals because it will continue to be collected using Medicare FFS claims hospitals are already submitting to the Medicare program for payment purposes. We note the burden associated with collecting and submitting data for the HAI measures (CDI, CAUTI, CLABSI, MRSA, and Colon and Abdominal Hysterectomy SSI) via the NHSN system is captured under a separate OMB control number, 0920–0666, and therefore will not impact our burden estimates. We anticipate the proposed discontinuation of the HAI measure validation process under the Hospital IQR Program will result in a net burden decrease to the Hospital IQR Program, but will result in an off-setting net burden increase to the HAC Reduction Program because hospitals selected for validation will continue to be required to submit validation templates for the HAI measures. Therefore, if our proposals in section VIII.A.5.b.(2)(b) of the preamble of this proposed rule to remove the HAI chart-abstracted measures from the Hospital IQR Program are adopted, data validation for the measures will transfer to the HAC Reduction Program, and this is will result in a net neutral transfer of 43,200 hours and approximately $1.6 million with no overall net increase in burden. Under the Hospital IQR Program, we have previously estimated a reporting burden of 80 hours (1,200 minutes per record × 1 record per hospital per quarter × 4 quarters/60 minutes) per hospital selected for validation per year to submit the CLABSI and CAUTI templates, and 64 hours (960 minutes per record × 1 record per hospital per quarter × 4 quarters/60 minutes) per hospital selected for validation per year to submit the MRSA and CDI templates. E:\FR\FM\07MYP2.SGM 07MYP2 20562 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules We therefore estimate a total burden shift of 43,200 hours ([80 hours per hospital to submit CLABSI and CAUTI templates + 64 hours per hospital to submit MRSA and CDI templates] × 300 hospitals selected for validation) and approximately $1.6 million (43,200 hours × $36.58 per hour 399) as a result of our proposals to discontinue HAI validation under the Hospital IQR Program and begin a validation process under the HAC Reduction Program. 8. ICRs Relating to the Hospital Readmissions Reduction Program In section IV.H. of the preamble of this proposed rule, we discuss proposed requirements for the Hospital Readmissions Reduction Program. In this proposed rule, we are not proposing to adopt any new measures into the Hospital Readmissions Reduction Program. However, we are proposing to remove six claims-based measures from the Hospital IQR Program, which have been finalized previously for, and will remain in, the Hospital Readmissions Reduction Program. We do not believe that these claims-based measures remaining in the Hospital Readmissions Reduction Program will create any additional burden for hospitals because they will continue to be collected using Medicare FFS claims hospitals are already submitting to the Medicare program for payment purposes. 9. ICRs for the Promoting Interoperability Programs a. Background and Proposed Update to Hourly Wage Rate In section VIII.D. of the preamble of this proposed rule, we are proposing a new performance-based scoring methodology and changes to the Stage 3 objectives and measures for eligible hospitals and CAHs that attest to CMS for the Medicare Promoting Interoperability Program. We are also proposing: To change the EHR reporting period in CYs 2019 and 2020; to establish the CQM reporting period and criteria for CY 2019, proposing the removal of eight CQMs beginning in CY 2020; and to codify the policies for subsection (d) Puerto Rico hospitals to participate in the Medicare Promoting Interoperability Program for eligible hospitals, including policies previously implemented through program instruction. We are retaining the requirement for the 2015 Edition of CEHRT to be used beginning in CY 2019. In prior rules (81 FR 57260), we have estimated that the electronic reporting of CQM data could be accomplished by staff with a mean hourly wage of $16.42 per hour.400 Because this wage rate is based on Bureau of Labor Statistics (BLS) data dating to 2012, we are proposing to update the wage rate to the most recent data available from the BLS, which is the 2016 wage rate of $19.93.401 We are calculating the cost of overhead, including fringe benefits, at 100 percent of the mean hourly wage. This is an estimated adjustment, since both fringe benefits and overhead costs vary significantly from employer-toemployer and the methods of estimating such costs vary widely from study-tostudy. Nonetheless, we believe that doubling the hourly wage rate ($19.44 × 2 = $39.86) to estimate total cost is a reasonably accurate estimation method and allows for a conservative estimate of hourly costs. We refer readers to the Hospital IQR Program discussion in section XIV.B.3. of the preamble of this proposed rule, above, for more information regarding the information collection burden related to reporting of CQMs. b. Burden Estimates In sections VIII.D.5. and 6. of the preamble of this proposed rule, we are proposing a new scoring methodology for eligible hospitals and CAHs that attest to CMS for the Promoting Interoperability Program, and the addition of two new opioid measures that would be optional in 2019. This scoring approach would require eligible hospitals and CAHs to report by attestation on only six measures. We consider this scoring methodology to be based more on performance and not solely on whether an eligible hospital or CAH meets the thresholds for measures. We estimate that the new scoring methodology would reduce the necessary response time by .25 hours. This is a reduction to the previous burden estimate provided in the 2015 EHR Incentive Programs final rule (80 FR 62928). We are updating the burden estimate to take into account the reduced burden associated with the proposed new requirements for eligible hospitals and CAHs for Stage 3 of meaningful use. We believe the burden would be different for eligible hospitals that attest to a State for purposes of receiving a Medicaid incentive payment because the existing Stage 3 requirements would continue to apply to them. We note that under section 101(b)(1) of the Medicare Access and CHIP Reauthorization Act of 2015 (Pub. L. 114–10), the Medicare EHR Incentive Program was sunset for EPs in 2018, and now many of these EPs are subject to the requirements of the Quality Payment Program (QPP). Currently the burden is estimated at $388,408,189 annually. We estimate the burden for all participants in the Medicare and Medicaid Promoting Interoperability Programs represents a total cost of $61,113,527.80, which is a reduction of $327,294,661 annually. We also note that the currently approved burden in hours are 4,230,155 and as a result of this proposal we believe it will be reduced to 623,562.19 hours. This burden reduction would occur as a result of the reduced numbers of EPs and the new scoring methodology for eligible hospitals and CAHs proposed in this proposed rule. The burden estimate includes subsection (d) Puerto Rico hospitals. Below is the burden table where we take into account these changes and the burden that would ensue as a result of the changes. Please note that the information collection request (OMB Control number 0938– 1278) is being revised and will be submitted to OMB. BURDEN AND COST ESTIMATES ASSOCIATED WITH INFORMATION COLLECTION Number of respondents daltland on DSKBBV9HB2PROD with PROPOSALS2 Reg section § 495.24(d)—Objectives/Measures (Medicaid EPs) ................................. 80,000 399 In the FY 2017 IPPS/LTCH PPS final rule (82 FR 38501), we finalized an hourly wage estimate of $18.29 per hour, plus 100 percent overhead and fringe benefits, for the Hospital IQR Program. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Number of responses Burden per response (hours) 80,000 7.43 Accordingly, we calculate cost burden to hospitals using a wage plus benefits estimate of $36.58 per hour. PO 00000 Frm 00400 Fmt 4701 Sfmt 4702 Total annual burden (hours) Hourly labor cost of reporting ($) 594,400 100 Total cost ($) $59,440,000 400 Occupational Outlook Handbook. Available at: https://www.bls.gov/oes/2012/may/oes292071.htm. 401 Occupational Outlook Handbook. Available at: https://www.bls.gov/oes/current/oes292071.htm. E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20563 BURDEN AND COST ESTIMATES ASSOCIATED WITH INFORMATION COLLECTION—Continued Number of respondents Reg section § 495.24(d)—Objectives/Measures Medicaid (eligible hospitals/CAHs) ... § 495.24(e)—Objectives/Measures Medicare (eligible hospitals/CAHs) .. § 495.316—Quarterly Reporting (Medicaid) ................................................. daltland on DSKBBV9HB2PROD with PROPOSALS2 20:30 May 04, 2018 Jkt 244001 Total annual burden (hours) Hourly labor cost of reporting ($) Total cost ($) 133 7.43 988.19 67.25 66,455.78 3300 3300 7.18 23,694 67.25 1,593,421.50 56 224 20 4,480 3.047 13,650.56 83,489 There are 3,300 eligible hospitals and CAHs that attest to CMS (Medicare-only and dual-eligible) under the Medicare Promoting Interoperability Program. Therefore, the total estimated annual cost burden for all eligible hospitals and CAHs in the Medicare Promoting Interoperability Program to attest to meaningful use would be $,1,593,421.5 (3,300 eligible hospitals and CAHs × 7 hours 18 minutes × $67.25).402 We are proposing that the new scoring methodology and changes to the Stage 3 objectives and measures for eligible hospitals and CAHs that attest to CMS would be optional for States to implement through changes to their State Medicaid HIT Plans approved by CMS for eligible hospitals participating in their Medicaid Promoting Interoperability Program. If States choose not to align, eligible hospitals in those States would continue to attest to the objectives and measures as currently specified under § 495.24(d). Extending this option to States would allow them flexibility to benefit from the improvements to meaningful use scoring outlined in this proposed rule, if they so choose. If States choose to take this option, we anticipate the same burden reduction for Medicaid eligible hospitals as discussed above, but a significant burden increase for States that would have to overhaul their systems to collect data. If States do not take the option, they would face no burden increase or decrease. In section VIII.D.7. of the preamble of this proposed rule, we are proposing the EHR reporting periods in CYs 2019 and 2020 for new and returning participants attesting to CMS or their State Medicaid agency would be a minimum of any continuous 90-day period within each of the CYs 2019 and 2020. This would mean that EPs that attest to a State for the State’s Medicaid Promoting Interoperability Program and eligible hospitals and CAHs attesting to CMS or VerDate Sep<11>2014 Burden per response (hours) 133 Totals ............................................ 402 https://www.bls.gov/oes/current/ oes231011.htm. Number of responses 83,489 ........................ 623,562.19 ........................ $61,113,527.80 the State’s Medicaid Promoting Interoperability Program would attest to meaningful use of CEHRT for an EHR reporting period of a minimum of any continuous 90-day period from January 1, 2019 through December 31, 2019 and from January 1, 2020 through December 31, 2020, respectively. The applicable incentive payment year and payment adjustment years for the EHR reporting periods in 2019 and 2020, as well as the deadlines for attestation and other related program requirements, would remain the same as established in prior rulemaking. We are proposing corresponding changes to the definition of ‘‘EHR reporting period’’ and ‘‘EHR reporting period for a payment adjustment year’’ at 42 CFR 495.4. We do not expect these proposals to affect our burden estimates because we have never required a different EHR reporting period. In section VIII.D.9. of the preamble of this proposed rule we are proposing that the reporting period for Medicare and Medicaid eligible hospitals and CAHs that report CQMs electronically would be one, self-selected calendar quarter of CY 2019 data. We are proposing that eligible hospitals and CAHs participating in only the EHR Program, or participating in both the Promoting Interoperability Programs and the Hospital IQR Program, report on at least 4 self-selected CQMs. We are also proposing to remove eight CQMs beginning in 2020. We believe to report on the 4 self-selected CQMs electronically would cost ($39.86 × 40 min) 1,594.4 per hospital times 3,300 hospitals results in a total burden of $5,261,520 for all eligible hospitals and CAHs. In section VIII.D.10. of the preamble of this proposed rule, we are proposing to incorporate into our regulations program guidance regarding subsection (d) Puerto Rico hospitals. Because we are not proposing any new requirements, we do not believe that these proposals will affect burden. PO 00000 Frm 00401 Fmt 4701 Sfmt 4702 In section VIII.D.12.a. of the preamble of this proposed rule, we are proposing to amend 45 CFR 495.324(b)(2) and 495.324(b)(3) to align with current prior approval policy for MMIS and ADP systems at 45 CFR 95.611(a)(2)(ii), and (b)(2)(iii) and (iv), and to minimize burden on States. Specifically, we are proposing that the prior approval dollar threshold in § 495.324(b)(3) would be increased to $500,000, and that a prior approval threshold of $500,000 would be added to § 495.324(b)(2). In addition, in light of these proposed changes, we are proposing a conforming amendment to amend the threshold in § 495.324(d) for prior approval of justifications for sole source acquisitions to be the same $500,000 threshold. That threshold is currently aligned with the $100,000 threshold in current § 495.324(b)(3). Amending § 495.324(d) to preserve alignment with § 495.324(b)(3) would reduce burden on States and maintain the consistency of our prior approval requirements. We believe that this proposal would reduce burden on States by raising the prior approval thresholds and generally aligning them with the thresholds for prior approval of MMIS and ADP acquisitions costs. In section VIII.D.12.b. of the preamble of this proposed rule, we are proposing that the 90 percent FFP for Medicaid Promoting Interoperability Program administration would no longer be available for most State expenditures incurred after September 30, 2022. We are proposing a later sunset date, September 30, 2023, for the availability of 90 percent enhanced match for State administrative costs related to Medicaid Promoting Interoperability Program audit and appeals activities, as well as costs related to administering incentive payment disbursements and recoupments that might result from those activities. States would not be able to claim any Medicaid Promoting Interoperability Program administrative match for expenditures incurred after September 30, 2023. We do not believe that these proposals would impose any E:\FR\FM\07MYP2.SGM 07MYP2 20564 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 additional burdens on States, because they only affect the timing of State expenditures. We are requesting public comments on these information collection and recordkeeping requirements. 10. ICRs for Proposed Revisions to the Supporting Documentation Requirements for Medicare Cost Reports In section IX.B.1. of the preamble of this proposed rule, we are proposing to incorporate the Provider Cost Reimbursement Questionnaire, Form CMS–339 (OMB No. 0938–0301) into the Organ Procurement Organization (OPO) and Histocompatibility Laboratory cost report, Form CMS–216 (OMB No. 0938–0102), which would complete our incorporation of the Form CMS–339 into all Medicare cost reports. We also are proposing to update § 413.24(f)(5)(i) to reflect that an acceptable cost report would no longer require the provider to separately submit a Provider Cost Reimbursement Questionnaire, Form CMS–339, by removing the reference to the questionnaire. There are 58 OPOs and 47 histocompatibility laboratories. This proposal would not require additional data collection from OPOs or histocompatibility laboratories. This proposal would benefit OPOs and histocompatibility laboratories because they would no longer be required to complete and submit the Form CMS– 339 as a separate form independent of the Medicare cost report in order to have an acceptable cost report submission under § 413.24(f)(5)(i). Currently, all OPOs and histocompatibility laboratories are required to complete Form CMS–339. The proposal to incorporate the Provider Cost Reimbursement Questionnaire, Form CMS–339, into the OPO and Histocompatibility Laboratory cost report would eliminate the requirement to complete the Form CMS–339. The estimated annual burden associated with Form CMS–339 is 3 hours per respondent. The time required by an OPO or a histocompatibility laboratory to complete the Form CMS– 339 would be reduced if it is incorporated into the cost report. The incorporation of the Form CMS–339 into the cost report as a cost report worksheet would decrease burden upon OPOs and histocompatibility laboratories. These entities would no longer be required to review multiple pages of questions not applicable to them. This proposal would result in an overall burden reduction to the 58 OPOs and 47 histocompatibility laboratories of a total of 289 hours. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Instead, these entities would be required to respond to 5 questions, which we estimate would take 15 minutes per entity. The total estimated burden across all respondents would be 26 hours ((105 respondents) × (0.25 hours/response)). By eliminating the requirement to complete the inapplicable parts of the Form CMS– 339, each OPO or histocompatibility laboratory would experience a net burden decrease of 2.75 hours. Based on the most recent Bureau of Labor Statistics (BLS) 2016 Occupational Outlook Handbook, the mean hourly wage for Category 43–3031 (bookkeeping, accounting, and auditing clerk) is $19.34. We added 100 percent of the mean hourly wage to account for fringe benefits and overhead, which calculates to a total hourly wage of $38.68 ($19.34 + $19.34). The overall decrease in costs to the 58 OPOs and 47 histocompatibility laboratories is $11,178.52 ($38.68 × 289 hours). In section IX.B.6. of the preamble of this proposed rule, we are proposing that, effective for cost reporting periods beginning on or after October 1, 2018, in order for a provider claiming costs on its cost report that are allocated from a home office or chain organization to have an acceptable cost report submission under § 413.24(f)(5), a Home Office Cost Statement completed by the home office or chain organization that corresponds to the amounts allocated from the home office or chain organization to the provider’s cost report must be submitted as a supporting document with the provider’s cost report. With our proposal, we anticipate that more providers claiming costs on their cost reports that are allocated from a home office or chain organization will submit a Home Office Cost Statement with their cost reports in order to have an acceptable cost report submission. Based on the most recent available FY 2016 data in CMS’ System for Tracking Audit and Reimbursement, there were approximately 94 providers that claimed costs on their cost reports that were allocated from approximately 13 home offices or chain organizations, but did not submit a Home Office Cost Statement with their cost reports to substantiate these allocated costs. Because the existing burden estimate for a provider’s cost report already reflects the requirement that providers collect, maintain, and submit this data, there is no additional burden placed upon providers as a result of our proposal to require them to submit these supporting documents along with their cost report in order to have an acceptable cost report submission. To PO 00000 Frm 00402 Fmt 4701 Sfmt 4702 account for the anticipated increase in home office cost statement submissions, we will adjust the number of respondents in the Home Office Cost Statement (OMB Control number 0938– 0202) information collection request that is currently being developed for reinstatement. C. Response to Comments Because of the large number of public comments we normally receive on Federal Register documents, we are not able to acknowledge or respond to them individually. We will consider all comments we receive by the date and time specified in the DATES section of this proposed rule, and, when we proceed with a subsequent document(s), we will respond to those comments in the preamble to that document. List of Subjects 42 CFR Part 412 Administrative practice and procedure, Health facilities, Medicare, Puerto Rico, Reporting and recordkeeping requirements. 42 CFR Part 413 Health facilities, Kidney diseases, Medicare, Puerto Rico, Reporting and recordkeeping requirements. 42 CFR Part 424 Emergency medical services, Health facilities, Health professions, Medicare, Reporting and recordkeeping requirements. 42 CFR Part 495 Administrative practice and procedure, Electronic health records, Health facilities, Health professions, Health maintenance organizations (HMO), Medicaid, Medicare, Penalties, Privacy, Reporting and recordkeeping requirements. For the reasons set forth in the preamble of this proposed rule, the Centers for Medicare and Medicaid Services is proposing to amend 42 CFR chapter IV as set forth below: PART 412—PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL SERVICES 1. The authority citation for part 412 is revised to read as follows: ■ Authority: Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 1395hh); secs. 123 and 124 of subtitle A of Title I of Pub. L. 106–113 (113 Stat. 1501A– 332); sec. 307 of Subtitle A of Title III of Pub. L. 106–554; sec. 114 of 110–173; sec. 4302 of Pub. L. 111–5; secs. 3106 and 10312 of Pub. L. 111–148; sec. 1206 of Pub. L. 113–67; sec. 112 of Pub. L. 113–93; sec. 231 of Pub. L. E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 114–113; secs. 15004, 15006, 15007, 15008, 15009, and 15010 of Pub. L. 114–255; and sec. 51005 of Division E of Title X of Pub. L. 115–123. 2. Section 412.3 is amended by revising paragraph (a) to read as follows: ■ § 412.3 Admissions. (a) For purposes of payment under Medicare Part A, an individual is considered an inpatient of a hospital, including a critical access hospital, if formally admitted as an inpatient pursuant to an order for inpatient admission by a physician or other qualified practitioner in accordance with this section and §§ 482.24(c), 482.12(c), and 485.638(a)(4)(iii) of this chapter for a critical access hospital. In addition, inpatient rehabilitation facilities also must adhere to the admission requirements specified in § 412.622. * * * * * ■ 3. Section 412.4 is amended by adding paragraph (c)(4) to read as follows: § 412.4 Discharges and transfers. * * * * * (c) * * * (4) For discharges occurring on or after October 1, 2018, to hospice care by a hospice program. * * * * * ■ 4. Section 412.22 is amended by adding paragraph (h)(2)(iii)(A)(4) to read as follows: § 412.22 Excluded hospitals and hospital units: General rules. daltland on DSKBBV9HB2PROD with PROPOSALS2 * * * * * (h) * * * (2) * * * (iii) * * * (A) * * * (4) On or after October 1, 2018, a satellite facility that is part of a hospital excluded from the prospective payment systems specified in § 412.1(a)(1) that provides inpatient services in a building also used by another hospital that is excluded from the prospective payment systems specified in § 412.1(a)(1), or in one or more entire buildings located on the same campus as buildings used by another hospital that is excluded from the prospective payment systems specified in § 412.1(a)(1), is not required to meet the criteria specified in paragraphs (h)(2)(iii)(A)(1) through (3) of this section in order to be excluded from the inpatient prospective payment system. A satellite facility that is part of a hospital excluded from the prospective payment systems specified in § 412.1(a)(1) which is located in a building also used by another hospital that is not excluded from the prospective payment systems specified VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 in § 412.1(a)(1), or in one or more entire buildings located on the same campus as buildings used by another hospital that is not excluded from the prospective payment systems specified in § 412.1(a)(1), is required to meet the criteria specified in paragraphs (h)(2)(iii)(A)(1) through (3) of this section in order to be excluded from the prospective payment systems specified in § 412.1(a)(1). * * * * * ■ 5. Section 412.25 is amended by— ■ a. Revising paragraphs (a)(1)(ii), (d), and (e)(2)(iii)(A); and ■ b. Adding paragraph (e)(2)(iv). The revisions and addition read as follows: § 412.25 Excluded hospital units: Common requirements. (a) * * * (1) * * * (ii) Prior to October 1, 2019, is not excluded in its entirety from the prospective payment systems; and * * * * * (d) Number of excluded units. Each hospital may have only one unit of each type (psychiatric or rehabilitation) excluded from the prospective payment systems specified in § 412.1(a)(1). A hospital excluded from the prospective payment systems as specified in § 412.1(a)(1) may not have an excluded unit (psychiatric or rehabilitation) that is excluded on the same basis as the hospital. (e) * * * (2) * * * (iii) * * * (A) Except as provided in paragraph (e)(2)(iv) of this section, it is not under the control of the governing body or chief executive officer of the hospital in which it is located, and it furnishes inpatient care through the use of medical personnel who are not under the control of the medical staff or chief medical officer of the hospital in which it is located. * * * * * (iv) Effective for cost reporting periods beginning on or after October 1, 2019, the requirements of paragraph (e)(2)(iii)(A) of this section do not apply to a satellite facility of a unit that is part of a hospital excluded from the prospective payment systems specified in § 412.1(a)(1) that does not furnish services in a building also used by another hospital that is not excluded from the prospective payment systems specified in § 412.1(a)(1), or in one or more entire buildings located on the same campus as buildings used by another hospital that is not excluded PO 00000 Frm 00403 Fmt 4701 Sfmt 4702 20565 from the prospective payment systems specified in § 412.1(a)(1). * * * * * ■ 6. Section 412.64 is amended by revising paragraphs (d)(1)(vii) and (d)(3) to read as follows: § § 412.64 Federal rates for inpatient operating costs for Federal fiscal year 2005 and subsequent fiscal years. * * * * * (d) * * * (1) * * * (vii) For fiscal years 2017, 2018, and 2019, the percentage increase in the market basket index (as defined in § 413.40(a)(3) of this chapter) for prospective payment hospitals, subject to the provisions of paragraphs (d)(2) and (3) of this section, less a multifactor productivity adjustment (as determined by CMS) and less 0.75 percentage point. * * * * * (3)(i) Beginning fiscal year 2015, in the case of a ‘‘subsection (d) hospital,’’ as defined under section 1886(d)(1)(B) of the Act, that is not a meaningful electronic health record (EHR) user as defined in part 495 of this chapter for the applicable EHR reporting period and does not receive an exception, threefourths of the percentage increase in the market basket index (as defined in § 413.40(a)(3) of this chapter) for prospective payment hospitals is reduced— (A) For fiscal year 2015, by 33 1/3 percent; (B) For fiscal year 2016, by 66 2/3 percent; and (C) For fiscal year 2017 and subsequent fiscal years, by 100 percent. (ii) Beginning fiscal year 2022, in the case of a ‘‘subsection (d) Puerto Rico hospital,’’ as defined under section 1886(d)(9)(A) of the Act, that is not a meaningful EHR user as defined in part 495 of this chapter for the applicable EHR reporting period and does not receive an exception, three-fourths of the percentage increase in the market basket index (as defined in § 413.40(a)(3) of this chapter) for prospective payment hospitals is reduced— (A) For fiscal year 2022, by 33 1/3 percent; (B) For fiscal year 2023, by 66 2/3 percent; and (C) For fiscal year 2024 and subsequent fiscal years, by 100 percent. * * * * * ■ 7. Section 412.90 is amended by revising paragraph (j) to read as follows: § 412.90 General rules. * * * * * (j) Medicare-dependent, small rural hospitals. For cost reporting periods E:\FR\FM\07MYP2.SGM 07MYP2 20566 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules beginning on or after April 1, 1990, and before October 1, 1994, and for discharges occurring on or after October 1, 1997 and before October 1, 2022, CMS adjusts the prospective payment rates for inpatient operating costs determined under subparts D and E of this part if a hospital is classified as a Medicare-dependent, small rural hospital. * * * * * § 412.92 [Amended] 8. Section 412.92 is amended— a. In paragraph (a)(1)(ii) by removing the term ‘‘intermediary’’ and adding the term ‘‘MAC’’ is its place; ■ b. By adding paragraph (a)(4); ■ c. In paragraph (b)(1)(i) by removing the term ‘‘fiscal intermediary’’ and adding the term ‘‘MAC’’ in its place; ■ d. In paragraphs (b)(1)(iii)(B) and ((b)(1)(iv) by removing the term ‘‘intermediary’’ and adding the term ‘‘MAC’’ in its place; ■ e. In paragraph (b)(1)(v) by removing the term ‘‘intermediary’s’’ and adding the term ‘‘MAC’s’’ in its place, and removing the term ‘‘intermediary’’ and adding the term ‘‘MAC’’ in its place; ■ f. By revising paragraphs (b)(2)(i) and (ii) introductory text and (b)(2)(ii)(B); ■ g. By adding paragraph (b)(2)(ii)(C); ■ h. By revising paragraph (b)(2)(iv); ■ i. In paragraphs (b)(3)(i), (ii) and (iii) by removing the term ‘‘fiscal intermediary’’ and adding the term ‘‘MAC’’ in its place; ■ j. In paragraph (b)(3)(iv) by removing the phrase ‘‘fiscal intermediary or’’; ■ k. In paragraph (d)(2) introductory text, (e)(1) and (e)(3) introductory text by removing the term ‘‘intermediary’’ wherever it appears and adding the term ‘‘MAC’’ in its place; ■ l. In paragraph (e)(2) introductory text by removing the term ‘‘intermediary’s’’ and adding the term ‘‘MAC’s’’ in its place; ■ m. In paragraph (e)(2)(i) by removing the term ‘‘intermediary’’ and adding the term ‘‘MAC’’ in its place; and ■ n. In paragraphs (e)(3)(i) introductory text, and (e)(3)(ii) and (iii) by removing the term ‘‘intermediary’’ and adding the term ‘‘MAC’’ in its place. The revisions and addition read as follows: daltland on DSKBBV9HB2PROD with PROPOSALS2 ■ ■ § 412.92 Special treatment: sole community hospitals. (a) * * * (4) For a hospital with a main campus and one or more remote locations under a single provider agreement where services are provided and billed under the inpatient hospital prospective payment system and that meets the provider-based criteria at § 413.65 of VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 this chapter as a main campus and a remote location of a hospital, combined data from the main campus and its remote location(s) are required to demonstrate that the criteria specified in paragraphs (a)(1)(i) and (ii) of this section are met. For the mileage and rural location criteria in paragraph (a) of this section and the mileage, accessibility, and travel time criteria specified in paragraphs (a)(1) through (3) of this section, the hospital must demonstrate that the main campus and its remote location(s) each independently satisfy those requirements. (b) * * * (2) * * * (i) For applications received on or before September 30, 2018, sole community hospital status is effective 30 days after the date of CMS’ written notification of approval, except as provided in paragraph (b)(2)(v) of this section. For applications received on or after October 1, 2018, sole community hospital status is effective as of the date CMS receives the complete application, except as provided in paragraph (b)(2)(v) of this section. (ii) When a court order or a determination by the Provider Reimbursement Review Board (PRRB) reverses a CMS denial of sole community hospital status and no further appeal is made, the sole community hospital status is effective as follows: * * * * * (B) If the hospital’s application for sole community hospital status was received on or after October 1, 1983 and on or before September 30, 2018, the effective date is 30 days after the date of CMS’ original written notification of denial. (C) If the hospital’s application for sole community hospital status was received on or after October 1, 2018, the effective date is the date CMS receives the complete application. * * * * * (iv) For applications received on or before September 30, 2018, a hospital classified as a sole community hospital receives a payment adjustment, as described in paragraph (d) of this section, effective with discharges occurring on or after 30 days after the date of CMS’ approval of the classification. For applications received on or after October 1, 2018, a hospital classified as a sole community hospital receives a payment adjustment, as described in paragraph (d) of this section, effective with discharges PO 00000 Frm 00404 Fmt 4701 Sfmt 4702 occurring on or after the date CMS receives the complete application. * * * * * ■ 9. Section 412.96 is amended by redesignating paragraph (d) as paragraph (e) and adding a new paragraph (d) to read as follows: § 412.96 Special treatment: Referral centers. * * * * * (d) Criteria for hospitals that have remote location(s). For a hospital with a main campus and one or more remote locations under a single provider agreement where services are provided and billed under the inpatient hospital prospective payment system and that meets the provider-based criteria at § 413.65 of this chapter as a main campus and a remote location of a hospital, combined data from the main campus and its remote location(s) are required to demonstrate that the criteria specified in paragraphs (b)(1) and (2) and (c)(1) through (5) of this section are met. For the rural location criteria specified in paragraphs (b)(1) and (c) of this section and the mileage criteria specified in paragraphs (b)(2)(ii) and (c)(4) of this section, the hospital must demonstrate that the main campus and its remote locations each independently satisfy those requirements. * * * * * ■ 10. Section 412.101 is amended by— ■ a. Revising paragraph (b)(2); ■ b. Revising paragraphs (c)(1) and (2) introductory text; ■ c. Adding paragraph (c)(3); and ■ d. Revising paragraph (d). The revisions and addition read as follows: § 412.101 Special treatment: Inpatient hospital payment adjustment for lowvolume hospitals. * * * * * (b) * * * (2) In order to qualify for this adjustment, a hospital must meet the following criteria, subject to the provisions of paragraph (e) of this section: (i) For FY 2005 through FY 2010 and FY 2023 and subsequent fiscal years, a hospital must have fewer than 200 total discharges, which includes Medicare and non-Medicare discharges, during the fiscal year, based on the hospital’s most recently submitted cost report, and be located more than 25 road miles (as defined in paragraph (a) of this section) from the nearest ‘‘subsection (d)’’ (section 1886(d) of the Act) hospital. (ii) For FY 2011 through FY 2018, a hospital must have fewer than 1,600 Medicare discharges, as defined in paragraph (a) of this section, during the E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules fiscal year, based on the hospital’s Medicare discharges from the most recently available MedPAR data as determined by CMS, and be located more than 15 road miles, as defined in paragraph (a) of this section, from the nearest ‘‘subsection (d)’’ (section 1886(d) of the Act) hospital. (iii) For FY 2019 through FY 2022, a hospital must have fewer than 3,800 total discharges, which includes Medicare and non-Medicare discharges, during the fiscal year, based on the hospital’s most recently submitted cost report, and be located more than 15 road miles (as defined in paragraph (a) of this section) from the nearest ‘‘subsection (d)’’ (section 1886(d) of the Act) hospital. * * * * * (c) * * * (1) For FY 2005 through FY 2010 and FY 2023 and subsequent fiscal years, the adjustment is an additional 25 percent for each Medicare discharge. (2) For FY 2011 through FY 2018, the adjustment is as follows: * * * * * (3) For FY 2019 through FY 2022, the adjustment is as follows: (i) For low-volume hospitals with 500 or fewer total discharges, which includes Medicare and non-Medicare discharges, during the fiscal year, based on the hospital’s most recently submitted cost report, the adjustment is an additional 25 percent for each Medicare discharge. (ii) For low-volume hospitals with more than 500 and fewer than 3,800 total discharges, which includes Medicare and non-Medicare discharges, during the fiscal year, based on the hospital’s most recently submitted cost report, the adjustment for each Medicare discharge is an additional percent calculated using the formula [(95/330)— (number of total discharges/13,200)]. ‘‘Total discharges’’ is determined as described in paragraph (b)(2)(iii) of this section. (d) Eligibility of new hospitals for the adjustment. For FYs 2005 through 2010 and FY 2019 and subsequent fiscal years, a new hospital will be eligible for a low-volume adjustment under this section once it has submitted a cost report for a cost reporting period that indicates that it meets discharge requirements during the applicable fiscal year and has provided its Medicare administrative contractor with sufficient evidence that it meets the distance requirement, as specified in paragraph (b)(2) of this section. * * * * * VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 11. Section 412.103 is amended by adding paragraph (a)(7) and revising paragraph (b)(6) to read as follows: ■ § 412.103 Special treatment: Hospitals located in urban areas and that apply for reclassification as rural. (a) * * * (7) For a hospital with a main campus and one or more remote locations under a single provider agreement where services are provided and billed under the inpatient hospital prospective payment system and that meets the provider-based criteria at § 413.65 of this chapter as a main campus and a remote location of a hospital, the hospital is required to demonstrate that the main campus and its remote location(s) each independently satisfy the location conditions specified in paragraphs (a)(1), (2), and (6) of this section. (b) * * * (6) Lock-in date for the wage index calculation and budget neutrality. In order for a hospital to be treated as rural in the wage index and budget neutrality calculations under § 412.64(e)(1)(ii), (2), and (4) and (h) for the payment rates for the next Federal fiscal year, the hospital’s application must be approved by the CMS Regional Office in accordance with the requirements of this section no later than 60 days after the public display date at the Office of the Federal Register of the inpatient prospective payment system proposed rule for the next Federal fiscal year. * * * * * § 412.105 [Amended] 12. Section 412.105 is amended in paragraph (f)(1)(vii) by removing the reference ‘‘§§ 413.79(e)(1) through (e)(4)’’ and adding in its place the reference ‘‘§ 413.79(e)’’. ■ 13. Section 412.106 is amended by adding paragraph (g)(1)(iii)(C)(5) to read as follows: ■ § 412.106 Special treatment: Hospitals that serve a disproportionate share of lowincome patients. * * * * * (g) * * * (1) * * * (iii) * * * (C) * * * (5) For fiscal year 2019, CMS will base its estimates of the amount of hospital uncompensated care on utilization data for Medicaid and Medicare SSI patients, as determined by CMS in accordance with paragraphs (b)(2)(i) and (4) of this section, using data on Medicaid utilization from 2013 cost reports from the most recent HCRIS database extract and the most recent available year of PO 00000 Frm 00405 Fmt 4701 Sfmt 4702 20567 data on Medicare SSI utilization (or, for Puerto Rico hospitals, a proxy for Medicare SSI utilization data), and for hospitals other than Puerto Rico hospitals, IHS or Tribal hospitals, and all-inclusive rate providers, data on uncompensated care costs, defined as charity care costs plus non-Medicare bad debt costs from 2014 and 2015 cost reports from the most recent HCRIS database extract. * * * * * § 412.108 [Amended] 14. Section 412.108 is amended— a. By revising paragraph (a)(1); b. By adding paragraph (a)(3); c. By revising paragraph (b)(4) introductory text; ■ d. In paragraphs (b)(1) and (3), and (b)(4)(i), (ii), and (iii), (b)(5), (6), (7), (8), and (9), and (d)(1), (d)(2)(i), (d)(3) introductory text, and (d)(3)(i), (ii), and (iii) by removing the terms ‘‘fiscal intermediary’’ and ‘‘intermediary’’ wherever they appear and adding the term ‘‘MAC’’ in their place; ■ e. In paragraph (b)(8) and (9) and (d)(2) introductory text by removing the terms ‘‘fiscal intermediary’s’’ and ‘‘intermediary’s’’ and adding the term ‘‘MAC’s’’ in their place; and ■ f. By revising paragraph (c)(2)(iii) introductory text. The revisions and additions read as follows: ■ ■ ■ ■ § 412.108 Special treatment: Medicaredependent, small rural hospitals. (a) * * * (1) General considerations. For cost reporting periods beginning on or after April 1, 1990, and ending before October 1, 1994, or for discharges occurring on or after October 1, 1997, and before October 1, 2022, a hospital is classified as a Medicare-dependent, small rural hospital if it meets all of the following conditions: (i) It is located in a rural area (as defined in subpart D of this part) or it is located in a State with no rural area and satisfies any of the criteria under § 412.103(a)(1) or (3) or under § 412.103(a)(2) as of January 1, 2018. (ii) The hospital has 100 or fewer beds as defined in § 412.105(b) during the cost reporting period. (iii) The hospital is not also classified as a sole community hospital under § 412.92. (iv) At least 60 percent of the hospital’s inpatient days or discharges were attributable to individuals entitled to Medicare Part A benefits during the hospital’s cost reporting period or periods as follows, subject to the provisions of paragraph (a)(1)(v) of this section: E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20568 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules (A) The hospital’s cost reporting period ending on or after September 30, 1987 and before September 30, 1988. (B) If the hospital does not have a cost reporting period that meets the criterion set forth in paragraph (a)(1)(iv)(A) of this section, the hospital’s cost reporting period beginning on or after October 1, 1986, and before October 1, 1987. (C) At least two of the last three most recent audited cost reporting periods for which the Secretary has a settled cost report. (v) If the cost reporting period determined under paragraph (a)(1)(iv) of this section is for less than 12 months, the hospital’s most recent 12-month or longer cost reporting period before the short period is used. * * * * * (3) Criteria for hospitals that have remote location(s). For a hospital with a main campus and one or more remote locations under a single provider agreement where services are provided and billed under the inpatient hospital prospective payment system and that meets the provider-based criteria at § 413.65 as a main campus and a remote location of a hospital, combined data from the main campus and its remote location(s) are required to demonstrate that the criteria in paragraphs (a)(1) and (2) of this section are met. For the location requirement specified in paragraph (a)(1)(i) of this section, the hospital must demonstrate that the main campus and its remote locations each independently satisfy this requirement. (b) * * * (4) For applications received on or before September 30, 2018, a determination of MDH status made by the MAC is effective 30 days after the date the MAC provides written notification to the hospital. For applications received on or after October 1, 2018, a determination of MDH status made by the MAC is effective as of the date CMS receives the complete application. An approved MDH status determination remains in effect unless there is a change in the circumstances under which the status was approved. * * * * * (c) * * * (2) * * * (iii) For discharges occurring during cost reporting periods (or portions thereof) beginning on or after October 1, 2006, and before October 1, 2022, 75 percent of the amount that the Federal rate determined under paragraph (c)(1) of this section is exceeded by the highest of the following: * * * * * ■ 15. Section 412.152 is amended by adding, in alphabetical order, VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 definitions of ‘‘Applicable period for dual-eligibility’’, ‘‘Dual-eligible’’, and ‘‘Proportion of dual-eligibles’’ to read as follows: 18. Section 412.230 is amended by revising paragraph (d)(5) to read as follows: ■ § 412.152 Definitions for the Hospital Readmissions Reduction Program. § 412.230 Criteria for an individual hospital seeking redesignation to another rural area or an urban area. * * * * * * Applicable period for dual-eligibility is the 3-year data period corresponding to the applicable period as established by the Secretary for the Hospital Readmissions Reduction Program. * * * * * Dual-eligible is a patient beneficiary who has been identified as having full benefit status in both the Medicare and Medicaid programs in the State Medicare Modernization Act (MMA) files for the month the beneficiary was discharged from the hospital. * * * * * Proportion of dual-eligibles is the number of dual-eligible patients among all Medicare Fee-for-Service and Medicare Advantage stays during the applicable period. * * * * * ■ 16. Section 412.164 is amended by revising paragraph (a) to read as follows: § 412.164 Measure selection under the Hospital Value-Based Purchasing (VBP) Program. (a) CMS will select measures, other than measures of readmissions, for purposes of the Hospital VBP Program. The measures will be selected from the measures specified under section 1886(b)(3)(B)(viii) of the Act (the Hospital Inpatient Quality Reporting Program). * * * * * ■ 17. Section 412.200 is revised to read as follows: § 412.200 Frm 00406 Fmt 4701 Sfmt 4702 § 412.500 Basis and scope of subpart. (a) * * * (9) Section 51005(a) of Public Law 115–123 which extended the blended payment rate for the site neutral payment rate cases to apply to discharges occurring in cost reporting periods beginning in FYs 2018 and 2019. (10) Section 51005(b) of Public Law which reduces the IPPS comparable amount for the site neutral payment rate cases by 4.6 percent for FYs 2018 through 2026. * * * * * ■ 20. Section 412.522 is amended by— ■ a. Adding paragraph (c)(1)(iii); ■ b. Removing paragraph (c)(2)(v); and ■ c. Revising paragraph (c)(3) introductory text. The addition and revision read as follows: § 412.522 Application of site neutral payment rate. * General provisions. Beginning with discharges occurring on or after October 1, 1987, hospitals located in Puerto Rico are subject to the rules governing the prospective payment system for inpatient operating costs. Except as provided in this subpart, the provisions of subparts A, B, C, F, G, and H of this part apply to hospitals located in Puerto Rico. Except for § 412.60, which deals with DRG classification and weighting factors, or as otherwise specified, the provisions of subparts D and E, which describe the methodology used to determine prospective payment rates for inpatient operating costs for hospitals, do not apply to hospitals located in Puerto Rico. Instead, the methodology for determining prospective payment rates for inpatient operating costs for these hospitals is set forth in §§ 412.204 through 412.212. PO 00000 * * * * (d) * * * (5) Single hospital MSA exception. The requirements of paragraph (d)(1)(iii) of this section do not apply if a hospital is the single hospital in its MSA with published 3-year average hourly wage data included in the current fiscal year inpatient prospective payment system final rule. ■ 19. Section 412.500 is amended by adding paragraphs (a)(9) and (10) to read as follows: * * * * (c) * * * (1) * * * (iii) For discharges occurring in fiscal years 2018 through 2026, the amount in paragraph (c)(1)(i) of this section is reduced by 4.6 percent. * * * * * (3) Transition. For discharges occurring in cost reporting periods beginning on or after October 1, 2015 and on or before September 30, 2019, payment for discharges under paragraph (c)(1) of this section are made using a blended payment rate, which is determined as— * * * * * ■ 21. Section 412.523 is amended by adding paragraphs (c)(3)(xv) and (d)(6) to read as follows: § 412.523 Methodology for calculating the Federal prospective payment rates. * E:\FR\FM\07MYP2.SGM * * 07MYP2 * * Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules (c) * * * (3) * * * (xv) For long-term care hospital prospective payment system fiscal year beginning October 1, 2018, and ending September 30, 2019. The LTCH PPS standard Federal payment rate for the long-term care hospital prospective payment system beginning October 1, 2018, and ending September 30, 2019, is the standard Federal payment rate for the previous long-term care hospital prospective payment system fiscal year updated by 1.15 percent and further adjusted, as appropriate, as described in paragraph (d) of this section. * * * * * (d) * * * (6) Adjustment for the elimination of the limitation on long-term care hospital admissions from referring hospitals. The standard Federal payment rate determined in paragraph (c)(3) of this section for discharges occurring on or after October 1, 2018 is permanently adjusted by a one-time factor so that estimated aggregate payments to LTCH PPS standard Federal rate cases in FY 2019 are projected to equal estimated aggregate payments that would have been paid for such cases without regard to the elimination of the limitation on long-term care hospital admissions from referring hospitals. * * * * * § 412.525 [Amended] 22. Section 412.525 is amended by removing paragraph (d)(6). ■ § 412.538 [Removed and reserved] 23. Section 412.538 is removed and reserved. ■ 24. Section 412.560 is amended by— ■ a. Adding paragraph (b)(3); and ■ b. Revising paragraphs (d)(1) and (3). The addition and revisions read as follows: ■ § 412.560 Requirements under the LongTerm Care Hospital Quality Reporting Program (LTCH QRP). daltland on DSKBBV9HB2PROD with PROPOSALS2 * * * * * (b) * * * (3) CMS may remove a quality measure from the LTCH QRP based on one or more of the following factors: (i) Measure performance among longterm care hospitals is so high and unvarying that meaningful distinctions in improvements in performance can no longer be made. (ii) Performance or improvement on a measure does not result in better patient outcomes. (iii) A measure does not align with current clinical guidelines or practice. (iv) A more broadly applicable measure (across settings, populations, or VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 conditions) for the particular topic is available. (v) A measure that is more proximal in time to desired patient outcomes for the particular topic is available. (vi) A measure that is more strongly associated with desired patient outcomes for the particular topic is available. (vii) Collection or public reporting of a measure leads to negative, unintended consequences other than patient harm. (viii) The costs associated with a measure outweigh the benefit of its continued use in the program. * * * * * (d) * * * (1) Written letter of noncompliance decision. Long-term care hospitals that do not meet the requirement in paragraph (b) of this section for a program year will receive a notification of noncompliance sent through at least one of the following methods: Quality Improvement and Evaluation System (QIES) Assessment Submission and Processing (ASAP) system, the United States Postal Service, or via an email from the MAC. * * * * * (3) CMS decision on reconsideration request. CMS will notify long-term care hospitals, in writing, of its final decision regarding any reconsideration request through at least one of the following methods: The QIES ASAP system, the United States Postal Service, or via an email from the MAC. * * * * * PART 413—PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR END-STAGE RENAL DISEASE SERVICES; PROSPECTIVELY DETERMINED PAYMENT RATES FOR SKILLED NURSING FACILITIES; PAYMENT FOR ACUTE KIDNEY INJURY DIALYSIS 25. The authority citation for part 413 continues to read as follows: ■ Authority: Secs. 1102, 1812(d), 1814(b), 1815, 1833(a), (i), and (n), 1861(v), 1871, 1881, 1883 and 1886 of the Social Security Act (42 U.S.C. 1302, 1395d(d), 1395f(b), 1395g, 1395l(a), (i), and (n), 1395x(v), 1395hh, 1395rr, 1395tt, and 1395ww); and sec. 124 of Public Law 106–113, 113 Stat. 1501A–332; sec. 3201 of Public Law 112–96, 126 Stat. 156; sec. 632 of Public Law 112– 240, 126 Stat. 2354; sec. 217 of Public Law 113–93, 129 Stat. 1040; and sec. 204 of Public Law 113–295, 128 Stat. 4010; and sec. 808 of Public Law 114–27, 129 Stat. 362. 26. Section 413.24 is amended by revising paragraph (f)(5)(i) to read as follows: ■ PO 00000 Frm 00407 Fmt 4701 Sfmt 4702 § 413.24 finding. 20569 Adequate cost data and cost * * * * * (f) * * * (5) * * * (i) All providers—The provider must accurately complete and submit the required cost reporting forms, including all necessary signatures and supporting documents. A cost report is rejected for lack of supporting documentation if it does not include the following: (A) Teaching hospitals—For teaching hospitals, the Intern and Resident Information System (IRIS) data. Effective for cost reports filed on or after October 1, 2018, the IRIS data must contain the same total counts of direct GME FTE residents (unweighted and weighted) and IME FTE residents as the total counts of direct GME FTE and IME FTE residents reported in the provider’s cost report. (B) Bad debt—Effective for cost reporting periods beginning on or after October 1, 2018, for providers claiming Medicare bad debt reimbursement, a detailed bad debt listing that corresponds to the amount of bad debt claimed in the provider’s cost report. (C) DSH eligible hospitals—Effective for cost reporting periods beginning on or after October 1, 2018, for hospitals claiming a disproportionate share hospital payment adjustment, a detailed listing of the hospital’s Medicaid eligible days that corresponds to the Medicaid eligible days claimed in the hospital’s cost report. If the hospital submits an amended cost report that changes its Medicaid eligible days, the hospital must submit an amended listing or an addendum to the original listing of the hospital’s Medicaid eligible days that corresponds to the Medicaid eligible days claimed in the hospital’s amended cost report. (D) Charity care and uninsured discounts—Effective for cost reporting periods beginning on or after October 1, 2018, for DSH eligible hospitals reporting charity care and/or uninsured discounts, a detailed listing of charity care and/or uninsured discounts that corresponds to the amounts claimed in the DSH eligible hospital’s cost report. (E) Home office cost allocation— Effective for cost reporting periods beginning on or after October 1, 2018, for providers claiming costs on their cost report that are allocated from a home office or chain organization, a home office cost statement completed by the home office or chain organization that corresponds to the amounts allocated from the home office or chain organization to the provider’s cost report. * * * * * E:\FR\FM\07MYP2.SGM 07MYP2 20570 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 27. Section 413.79 is amended by revising paragraph (e)(1)(iv) to read as follows: ■ § 413.79 Direct GME Payments: Determination of the weighted number of FTE residents. * * * * * (e) * * * (1) * * * (iv)(A) Effective for Medicare GME affiliation agreements entered into on or after October 1, 2005, an urban hospital that qualifies for an adjustment to its FTE cap under paragraph (e)(1) of this section is permitted to be part of a Medicare GME affiliated group for purposes of establishing an aggregate FTE cap only if the adjustment that results from the affiliation is an increase to the urban hospital’s FTE cap. (B) Effective for Medicare GME affiliation agreements entered into on or after July 1, 2019, an urban hospital that qualifies for an adjustment to its FTE cap under paragraph (e)(1) of this section is permitted to be part of a Medicare GME affiliated group for purposes of establishing an aggregate FTE cap and receive an adjustment that is a decrease to the urban hospital’s FTE cap only if the decrease results from a Medicare GME affiliated group consisting solely of two or more urban hospitals that qualify to receive adjustments to their FTE caps under paragraph (e)(1) of this section. * * * * * 28. The authority citation for part 424 continues to read as follows: ■ Authority: Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 1395hh). 29. Section 424.11 is amended by revising paragraphs (b) and (c) to read as follows: ■ General procedures. daltland on DSKBBV9HB2PROD with PROPOSALS2 * * * * * (b) Obtaining the certification and recertification statements. No specific procedures or forms are required for certification and recertification statements. The provider may adopt any method that permits verification. The certification and recertification statements may be entered on forms, notes, or records that the appropriate individual signs, or on a special separate form. Except as provided in paragraph (d) of this section for delayed certifications, there must be a separate signed statement for each certification or recertification. If supporting information for the signed statement is VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PART 495—STANDARDS FOR THE ELECTRONIC HEALTH RECORD TECHNOLOGY INCENTIVE PROGRAM 30. The authority citation for part 495 continues to read as follows: ■ Authority: Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 1395hh). 31. Section 495.4 is amended— a. In the definition of ‘‘EHR reporting period’’ by revising paragraph (1)(iii), adding paragraph (1)(iv), revising paragraphs (2)(ii)(C) and (D) and (2)(iii), and adding paragraph (2)(iv); ■ b. In the definition of ‘‘EHR reporting period for a payment adjustment year’’ by revising paragraph (2)(iii) and adding paragraph (2)(iv), revising paragraph (3)(iii), and adding paragraph (3)(iv); and ■ c. By revising the definitions of ‘‘Payment adjustment year’’ and ‘‘Payment year’’. The revisions and additions read as follows: ■ ■ § 495.4 Definitions. * PART 424—CONDITIONS FOR MEDICARE PAYMENT § 424.11 contained in other provider records (such as physicians’ progress notes), it need not be repeated in the statement itself. (c) Required information. The succeeding sections of this subpart set forth specific information required for different types of services. * * * * * * * * * EHR reporting period. * * * (1) * * * (iii) For the CY 2019 payment year under the Medicaid Promoting Interoperability Program: (A) For the EP first demonstrating he or she is a meaningful EHR user, any continuous 90-day period within CY 2019. (B) For the EP who has successfully demonstrated he or she is a meaningful EHR user in any prior year, any continuous 90-day period within CY 2019. (iv) For the CY 2020 payment year under the Medicaid Promoting Interoperability Program: (A) For the EP first demonstrating he or she is a meaningful EHR user, any continuous 90-day period within CY 2020. (B) For the EP who has successfully demonstrated he or she is a meaningful EHR user in any prior year, any continuous 90-day period within CY 2020. (2) * * * (ii) * * * (C) For the FY 2017 payment year as follows: PO 00000 Frm 00408 Fmt 4701 Sfmt 4702 (1) Under the Medicaid EHR Incentive Program: (i) For the eligible hospital or CAH first demonstrating it is a meaningful EHR user, any continuous 90-day period within CY 2017. (ii) For the eligible hospital or CAH that has successfully demonstrated it is a meaningful EHR user in any prior year, any continuous 90-day period within CY 2017. (iii) For the eligible hospital or CAH demonstrating the Stage 3 objectives and measures at § 495.24, any continuous 90-day period within CY 2017. (2) Under the Medicare EHR Incentive Program, for a Puerto Rico eligible hospital, any continuous 14-day period within CY 2017. (D) For the FY 2018 payment year as follows: (1) Under the Medicaid Promoting Interoperability Program: (i) For the eligible hospital or CAH first demonstrating it is a meaningful EHR user, any continuous 90-day period within CY 2018. (ii) For the eligible hospital or CAH that has successfully demonstrated it is a meaningful EHR user in any prior year, any continuous 90-day period within CY 2018. (2) Under the Medicare Promoting Interoperability Program, for a Puerto Rico eligible hospital, any continuous 90-day period within CY 2018. (iii) For the FY 2019 payment year as follows: (A) Under the Medicaid Promoting Interoperability Program: (1) For the eligible hospital or CAH first demonstrating it is a meaningful EHR user, any continuous 90-day period within CY 2019. (2) For the eligible hospital or CAH that has successfully demonstrated it is a meaningful EHR user in any prior year, any continuous 90-day period within CY 2019. (B) Under the Medicare Promoting Interoperability Program, for a Puerto Rico eligible hospital, any continuous 90-day period within CY 2019. (iv) For the FY 2020 payment year as follows: (A) Under the Medicaid Promoting Interoperability Program: (1) For the eligible hospital or CAH first demonstrating it is a meaningful EHR user, any continuous 90-day period within CY 2020. (2) For the eligible hospital or CAH that has successfully demonstrated it is a meaningful EHR user in any prior year, any continuous 90-day period within CY 2020. (B) Under the Medicare Promoting Interoperability Program, for a Puerto E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules Rico eligible hospital, any continuous 90-day period within CY 2020. * * * * * EHR reporting period for a payment adjustment year. * * * (2) * * * (iii) The following are applicable for 2019: (A) If an eligible hospital has not successfully demonstrated it is a meaningful EHR user in a prior year, the EHR reporting period is any continuous 90-day period within CY 2019 and applies for the FY 2020 and 2021 payment adjustment years. For the FY 2020 payment adjustment year, the EHR reporting period must end before and the eligible hospital must successfully register for and attest to meaningful use no later than October 1, 2019. (B) If in a prior year an eligible hospital has successfully demonstrated it is a meaningful EHR user, the EHR reporting period is any continuous 90day period within CY 2019 and applies for the FY 2021 payment adjustment year. (iv) The following are applicable for 2020: (A) If an eligible hospital has not successfully demonstrated it is a meaningful EHR user in a prior year, the EHR reporting period is any continuous 90-day period within CY 2020 and applies for the FY 2021 and 2022 payment adjustment years. For the FY 2021 payment adjustment year, the EHR reporting period must end before and the eligible hospital must successfully register for and attest to meaningful use no later than October 1, 2020. (B) If in a prior year an eligible hospital has successfully demonstrated it is a meaningful EHR user, the EHR reporting period is any continuous 90day period within CY 2020 and applies for the FY 2022 payment adjustment year. (3) * * * (iii) The following are applicable for 2019: (A) If a CAH has not successfully demonstrated it is a meaningful EHR user in a prior year, the EHR reporting period is any continuous 90-day period within CY 2019 and applies for the FY 2019 payment adjustment year. (B) If in a prior year a CAH has successfully demonstrated it is a meaningful EHR user, the EHR reporting period is any continuous 90-day period within CY 2019 and applies for the FY 2019 payment adjustment year. (iv) The following are applicable for 2020: (A) If a CAH has not successfully demonstrated it is a meaningful EHR user in a prior year, the EHR reporting VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 period is any continuous 90-day period within CY 2020 and applies for the FY 2020 payment adjustment year. (B) If in a prior year a CAH has successfully demonstrated it is a meaningful EHR user, the EHR reporting period is any continuous 90-day period within CY 2020 and applies for the FY 2020 payment adjustment year. * * * * * Payment adjustment year means the following: (1) For an EP, a calendar year beginning with CY 2015. (2) For a CAH or an eligible hospital, a Federal fiscal year beginning with FY 2015. (3) For a Puerto Rico eligible hospital, a Federal fiscal year beginning with FY 2022. Payment year means the following: (1) For an EP, a calendar year beginning with CY 2011. (2) For a CAH or an eligible hospital, a Federal fiscal year beginning with FY 2011. (3) For a Puerto Rico eligible hospital, a Federal fiscal year beginning with FY 2016. * * * * * ■ 32. Section 495.24 is amended by revising the introductory text, paragraphs (c) and (d) headings and adding paragraph (e) to read as follows: § 495.24 Stage 3 meaningful use objectives and measures for EPs, eligible hospitals and CAHs for 2019 and subsequent years. The criteria specified in paragraphs (c) and (d) of this section are optional for 2017 and 2018 for EPs, eligible hospitals, and CAHs that have successfully demonstrated meaningful use in a prior year. The criteria specified in paragraph (d) of this section are applicable for all EPs for 2019 and subsequent years, and for eligible hospitals and CAHs attesting to a State for the Medicaid Promoting Interoperability Program for 2019 and subsequent years. The criteria specified in paragraph (e) of this section are applicable for eligible hospitals and CAHs attesting to CMS for 2019 and subsequent years. * * * * * (c) Stage 3 objectives and measures for eligible hospitals and CAHs attesting to CMS— * * * * * (d) Stage 3 objectives and measures for all EPs for 2019 and subsequent years, and for eligible hospitals and CAHs attesting to a State for the Medicaid Promoting Interoperability Program for 2019 and subsequent years— * * * * * PO 00000 Frm 00409 Fmt 4701 Sfmt 4702 20571 (e) Stage 3 objectives and measures for eligible hospitals and CAHs attesting to CMS for 2019 and subsequent years— (1) General rule. Except as specified in paragraph (e)(2) of this section, eligible hospitals and CAHs must meet all objectives and associated measures of the Stage 3 criteria specified in this paragraph (e) and earn a total score of at least 50 points to meet the definition of a meaningful EHR user. (2) Exclusion for nonapplicable measures. (i) An eligible hospital or CAH may exclude a particular measure that includes an option for exclusion contained in this paragraph (e) if the eligible hospital or CAH meets the following requirements: (A) Meets the criteria in the applicable measure that would permit the exclusion. (B) Attests to the exclusion. (ii) Distribution of points for nonapplicable measures. For eligible hospitals or CAHs that claim such exclusion, the points assigned to the excluded measure will be distributed to other measures as outlined in this paragraph (e). (3) Objectives and associated measures in this paragraph (e) that rely on measures that count unique patients or actions. (i) If a measure (or associated objective) in this paragraph (e) references paragraph (e)(3) of this section, the measure may be calculated by reviewing only the actions for patients whose records are maintained using CEHRT. A patient’s record is maintained using CEHRT if sufficient data were entered in the CEHRT to allow the record to be saved, and not rejected due to incomplete data. (ii) If the objective and associated measure does not reference this paragraph (e)(3), the measure must be calculated by reviewing all patient records, not just those maintained using CEHRT. (4) Protect patient health information—(i) Objective. Protect electronic protected health information (ePHI) created or maintained by the CEHRT through the implementation of appropriate technical, administrative, and physical safeguards. (ii) Measure scoring. Eligible hospitals and CAHs are required to report on the security risk analysis measure in paragraph (e)(4)(iii) of this section, but no points are available for this measure. (iii) Security risk analysis measure. Conduct or review a security risk analysis in accordance with the requirements under 45 CFR 164.308(a)(1), including addressing the security (including encryption) of data created or maintained by CEHRT in accordance with requirements under 45 E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20572 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules CFR 164.312(a)(2)(iv) and 45 CFR 164.306(d)(3), implement security updates as necessary, and correct identified security deficiencies as part of the provider’s risk management process. (5) Electronic prescribing—(i) Objective. Generate and transmit permissible discharge prescriptions electronically (eRx). (ii) Measures scoring. (A) In 2019, eligible hospitals and CAHs must meet the e-Prescribing measure in paragraph (e)(5)(iii)(A) of this section and have the option to report on the query of PDMP measure and verify opioid treatment agreement measure in paragraphs (e)(5)(iii)(B) and (C) of this section. The electronic prescribing objective in paragraph (e)(5)(i) of this section is worth up to 20 points. (B) In 2020 and subsequent years, eligible hospitals and CAHs must meet each of the measures in paragraphs (e)(5)(iii)(A), (B) and (C) of this section. The electronic prescribing objective in paragraph (e)(5)(i) of this section is worth up to 15 points. (iii) Measures. (A) e-Prescribing measure. Subject to paragraph (e)(3) of this section, at least one hospital discharge medication order for permissible prescriptions (for new and changed prescriptions) is queried for a drug formulary and transmitted electronically using CEHRT. This performance-based measure is worth up to 10 points in 2019 and up to 5 points in 2020 and subsequent years. (B) Query of prescription drug monitoring program (PDMP) measure. Subject to paragraph (e)(3) of this section, for at least one Schedule II opioid electronically prescribed using CEHRT during the EHR reporting period, the eligible hospital or CAH uses data from CEHRT to conduct a query of a Prescription Drug Monitoring Program (PDMP) for prescription drug history, except where prohibited and in accordance with applicable law. This performance-based measure is worth up to 5 bonus points in 2019 and up to 5 points in 2020 and subsequent years. (C) Verify opioid treatment agreement measure. Subject to paragraph (e)(4) of this section, f or at least one unique patient for whom a Schedule II opioid was electronically prescribed by the eligible hospital or CAH using CEHRT during the EHR reporting period, if the total duration of the patient’s Schedule II opioid prescriptions is at least 30 cumulative days within a 6-month lookback period, the eligible hospital or CAH seeks to identify the existence of a signed opioid treatment agreement and incorporates it into the patient’s electronic health record using CEHRT. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 This performance-based measure is worth up to 5 bonus points in 2019 and up to 5 points in 2020 and subsequent years. (iv) Exclusion for an EHR reporting period in CY 2019 in accordance with paragraph (e)(2) of this section. An exclusion claimed under paragraph (e)(5)(vi)(A) of this section will redistribute 10 points equally among the measures associated with the health information exchange objective under paragraph (e)(6) of this section. (v) Exclusions beginning with an EHR reporting period in CY 2020 in accordance with paragraph (e)(2) of this section. An exclusion claimed under paragraph (e)(5)(vi)(A) of this section will redistribute 15 points equally among the measures associated with the health information exchange objective under paragraph (e)(6) of this section and the provide patients electronic access to their health information measure under paragraph (e)(7)(ii) of this section. An exclusion claimed under paragraph (e)(5)(vi)(B) or (C) of this section will redistribute 5 points for each excluded measure to the ePrescribing measure under paragraph (e)(5)(iii)(A) of this section. (vi) Exclusions in accordance with paragraph (e)(2) of this section. (A) Any eligible hospital or CAH that does not have an internal pharmacy that can accept electronic prescriptions and there are no pharmacies that accept electronic prescriptions within 10 miles at the start of the eligible hospital or CAH’s EHR reporting period may be excluded from the measure specified in paragraph (e)(5)(iii)(A) of this section for an EHR reporting period in CY 2019 and may be excluded from the measures specified in paragraphs (e)(5)(iii)(A) through (C) of this section beginning with an EHR reporting period in CY 2020. (B) Any eligible hospital or CAH that does not have an internal pharmacy that can accept electronic prescriptions for controlled substances and is not located within 10 miles of any pharmacy that accepts electronic prescriptions for controlled substances at the start of their EHR reporting period may be excluded from the measures specified in paragraphs (e)(5)(iii)(B) and (C) of this section beginning with an EHR reporting period in CY 2020. (C) Any eligible hospital or CAH that is unable to report the measure in accordance with applicable law may be excluded from the measures specified in paragraphs (e)(5)(iii)(B) and (C) of this section beginning with an EHR reporting period in CY 2020. (6) Health information exchange—(i) Objective. The eligible hospital or CAH PO 00000 Frm 00410 Fmt 4701 Sfmt 4702 provides a summary of care record when transitioning or referring their patient to another setting of care, receives or retrieves a summary of care record upon the receipt of a transition or referral or upon the first patient encounter with a new patient, and incorporates summary of care information from other providers into their EHR using the functions of CEHRT. (ii) Measures. Eligible hospitals and CAHs must meet both of the following measures (each worth up to 20 points), and could receive up to 40 points for this objective. (A) Support electronic referral loops by sending health information measure: Subject to paragraph (e)(3) of this section, for at least one transition of care or referral, the eligible hospital or CAH that transitions or refers its patient to another setting of care or provider of care— (1) Creates a summary of care record using CEHRT; and (2) Electronically exchanges the summary of care record. (B) Support electronic referral loops by receiving and incorporating health information measure: Subject to paragraph (e)(3) of this section, for at least one electronic summary of care record received for patient encounters during the EHR reporting period for which an eligible hospital or CAH was the receiving party of a transition of care or referral, or for patient encounters during the EHR reporting period in which the eligible hospital or CAH has never before encountered the patient, the eligible hospital or CAH conducts clinical information reconciliation for medication, mediation allergy, and current problem list. (iii) Exclusions in accordance with paragraph (e)(2) of this section. Claiming the exclusion will redistribute 20 points to the support electronic referral loops by sending health information measure under paragraph (e)(6)(ii)(A). Any eligible hospital or CAH that is unable to implement the measure for an EHR reporting period in 2019 may be excluded from the measure specified in paragraph (e)(6)(ii)(B) of this section. (7) Provider to Patient Exchange—(i) Objective. The eligible hospital or CAH provides patients (or patient-authorized representative) with timely electronic access to their health information. (ii) Provide patients electronic access to their health information measure. Eligible hospitals and CAHs must meet the following measure, and could receive up to 40 points for this objective in 2019 and up to 35 points for this objective in 2020 and subsequent years. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules For at least one unique patient discharged from the eligible hospital or CAH inpatient or emergency department (POS 21 or 23)— (A) The patient (or patient-authorized representative) is provided timely access to view online, download, and transmit his or her health information; and (B) The eligible hospital or CAH ensures the patient’s health information is available for the patient (or patientauthorized representative) to access using any application of their choice that is configured to meet the technical specifications of the API in the eligible hospital or CAH’s CEHRT. This performance-based measure is worth up to 40 points in 2019 and up to 35 points in 2020 and subsequent years. (8) Public health and clinical data exchange—(i) Objective. The eligible hospital or CAH is in active engagement with a public health agency (PHA) or clinical data registry (CDR) to submit electronic public health data in a meaningful way using CEHRT, except where prohibited, and in accordance with applicable law and practice. (ii) Measures. In order to meet the objective under paragraph (e)(8)(i) of this section, an eligible hospital or CAH must meet the syndromic surveillance reporting measure in paragraph (e)(8)(ii)(A) of this section and one additional measure from paragraphs (e)(8)(ii)(B) through (F) of this section. Eligible hospitals and CAHs could receive a total of 10 points for this objective. (A) Syndromic surveillance reporting measure. The eligible hospital or CAH is in active engagement with a public health agency to submit syndromic surveillance data from an urgent care setting. (B) Immunization registry reporting measure. The eligible hospital or CAH is in active engagement with a public health agency to submit immunization data and receive immunization forecasts and histories from the public health immunization registry/immunization information system (IIS). (C) Electronic case reporting measure. The eligible hospital or CAH is in active engagement with a public health agency to submit case reporting of reportable conditions. (D) Public health registry reporting measure. The eligible hospital or CAH is in active engagement with a public health agency to submit data to public health registries. (E) Clinical data registry reporting measure. The eligible hospital or CAH is in active engagement to submit data to a clinical data registry. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 (F) Electronic reportable laboratory result reporting measure. The eligible hospital or CAH is in active engagement with a public health agency to submit electronic reportable laboratory results. (iii) Exclusions in accordance with paragraph (e)(2) of this section. An exclusion claimed under paragraphs (e)(8)(iii)(A) through (F) of this section will redistribute 10 points to the provide patients electronic access to their health information measure under paragraph (e)(7)(ii) of this section. (A) Any eligible hospital or CAH meeting one or more of the following criteria may be excluded from the syndromic surveillance reporting measure specified in paragraph (e)(8)(ii)(A) of this section if the eligible hospital or CAH— (1) Does not have an emergency or urgent care department. (2) Operates in a jurisdiction for which no public health agency is capable of receiving electronic syndromic surveillance data in the specific standards required to meet the CEHRT definition at the start of the EHR reporting period. (3) Operates in a jurisdiction where no public health agency has declared readiness to receive syndromic surveillance data from eligible hospitals or CAHs as of 6 months prior to the start of the EHR reporting period. (B) Any eligible hospital or CAH meeting one or more of the following criteria may be excluded from to the immunization registry reporting measure specified in paragraph (e)(8)(ii)(B) of this section if the eligible hospital or CAH— (1) Does not administer any immunizations to any of the populations for which data is collected by its jurisdiction’s immunization registry or immunization information system during the EHR reporting period. (2) Operates in a jurisdiction for which no immunization registry or immunization information system is capable of accepting the specific standards required to meet the CEHRT definition at the start of the EHR reporting period. (3) Operates in a jurisdiction where no immunization registry or immunization information system has declared readiness to receive immunization data as of 6 months prior to the start of the EHR reporting period. (C) Any eligible hospital or CAH meeting one or more of the following criteria may be excluded from the electronic case reporting measure specified in paragraph (e)(8)(ii)(C) of this section if the eligible hospital or CAH— PO 00000 Frm 00411 Fmt 4701 Sfmt 4702 20573 (1) Does not treat or diagnose any reportable diseases for which data is collected by their jurisdiction’s reportable disease system during the EHR reporting period. (2) Operates in a jurisdiction for which no public health agency is capable of receiving electronic case reporting data in the specific standards required to meet the CEHRT definition at the start of their EHR reporting period. (3) Operates in a jurisdiction where no public health agency has declared readiness to receive electronic case reporting data as of 6 months prior to the start of the EHR reporting period. (D) Any eligible hospital or CAH meeting at least one of the following criteria may be excluded from the public health registry reporting measure specified in paragraph (e)(8)(ii)(D) of this section if the eligible hospital or CAH— (1) Does not diagnose or directly treat any disease or condition associated with a public health registry in its jurisdiction during the EHR reporting period. (2) Operates in a jurisdiction for which no public health agency is capable of accepting electronic registry transactions in the specific standards required to meet the CEHRT definition at the start of the EHR reporting period. (3) Operates in a jurisdiction where no public health registry for which the eligible hospital or CAH is eligible has declared readiness to receive electronic registry transactions as of 6 months prior to the start of the EHR reporting period. (E) Any eligible hospital or CAH meeting at least one of the following criteria may be excluded from the clinical data registry reporting measure specified in paragraph (e)(8)(ii)(E) of this section if the eligible hospital or CAH— (1) Does not diagnose or directly treat any disease or condition associated with a clinical data registry in their jurisdiction during the EHR reporting period. (2) Operates in a jurisdiction for which no clinical data registry is capable of accepting electronic registry transactions in the specific standards required to meet the CEHRT definition at the start of the EHR reporting period. (3) Operates in a jurisdiction where no clinical data registry for which the eligible hospital or CAH is eligible has declared readiness to receive electronic registry transactions as of 6 months prior to the start of the EHR reporting period. (F) Any eligible hospital or CAH meeting one or more of the following E:\FR\FM\07MYP2.SGM 07MYP2 20574 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules criteria may be excluded from the electronic reportable laboratory result reporting measure specified in paragraph (e)(8)(ii)(F) of this section if the eligible hospital or CAH— (1) Does not perform or order laboratory tests that are reportable in its jurisdiction during the EHR reporting period. (2) Operates in a jurisdiction for which no public health agency that is capable of accepting the specific ELR standards required to meet the CEHRT definition at the start of the EHR reporting period. (3) Operates in a jurisdiction where no public health agency has declared readiness to receive electronic reportable laboratory results from an eligible hospital or CAH as of 6 months prior to the start of the EHR reporting period. ■ 33. Section 495.40 is amended by adding paragraph (b)(2)(vii) to read as follows: § 495.40 criteria. Demonstration of meaningful use daltland on DSKBBV9HB2PROD with PROPOSALS2 * * * * * (b) * * * (2) * * * (vii) Exception for dual-eligible eligible hospitals and CAHs beginning in CY 2019. (A) Beginning with the EHR reporting period in CY 2019, dualeligible eligible hospitals and CAHs (those that are eligible for an incentive payment under Medicare for meaningful use of CEHRT and/or subject to the Medicare payment reduction for failing to demonstrate meaningful use, and are also eligible to earn a Medicaid incentive payment for meaningful use) must satisfy the requirements under paragraph (b)(2) of this section by attestation and reporting information to CMS, not to their respective state Medicaid agency. (B) Dual-eligible eligible hospitals and CAHs that demonstrate meaningful use to their state Medicaid agency may only qualify for an incentive payment under Medicaid and will not qualify for an incentive payment under Medicare and/ or avoid the Medicare payment reduction. * * * * * ■ 34. Section 495.100 is amended by revising the definition of ‘‘Eligible hospital’’ and adding a definition of ‘‘Puerto Rico eligible hospital’’ in alphabetical order to read as follows: § 495.100 Definitions. * * * * * Eligible hospital means a hospital subject to the prospective payment system specified in § 412.1(a)(1) of this chapter, excluding those hospitals VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 specified in § 412.23 of this chapter, excluding those hospital units specified in § 412.25 of this chapter, and including Puerto Rico eligible hospitals unless otherwise indicated. * * * * * Puerto Rico eligible hospital means a subsection (d) Puerto Rico hospital as defined in section 1886(d)(9)(A) of the Social Security Act. * * * * * ■ 35. Section 495.104 is amended by adding paragraphs (b)(6) through (10) and (c)(5)(vi) through (x) to read as follows: § 495.104 Incentive payments to eligible hospitals. * * * * * (b) * * * (6) Puerto Rico eligible hospitals whose first payment year is FY 2016 may receive such payments for FYs 2016 through 2019. (7) Puerto Rico eligible hospitals whose first payment year is FY 2017 may receive such payments for FYs 2017 through 2020. (8) Puerto Rico eligible hospitals whose first payment year is FY 2018 may receive such payments for FYs 2018 through 2021. (9) Puerto Rico eligible hospitals whose first payment year is FY 2019 may receive such payments for FYs 2019 through 2021. (10) Puerto Rico eligible hospitals whose first payment year is FY 2020 may receive such payments for FYs 2020 through 2021. (c) * * * (5) * * * (vi) For Puerto Rico eligible hospitals whose first payment year is FY 2016— (A) 1 for FY 2016; (B) 3/4 for FY 2017; (C) 1/2 for FY 2018; and (D) 1/4 for FY 2019. (vii) For Puerto Rico eligible hospitals whose first payment year is FY 2017— (A) 1 for FY 2017; (B) 3/4 for FY 2018; (C) 1/2 for FY 2019; and (D) 1/4 for FY 2020; (viii) For Puerto Rico eligible hospitals whose first payment year is FY 2018— (A) 1 for FY 2018; (B) 3/4 for FY 2018; (C) 1/2 for FY 2019; and (D) 1/4 for FY 2020. (ix) For Puerto Rico eligible hospitals whose first payment year is FY 2019— (A) 3/4 for FY 2019; (B) 1/2 for FY 2020; and (C) 1/4 for FY 2021. (x) For Puerto Rico eligible hospitals whose first payment year is FY 2020— (A) 1/2 for FY 2020; and PO 00000 Frm 00412 Fmt 4701 Sfmt 4702 (B) 1/4 for FY 2021. * * * * ■ 36. Section 495.200 is amended by revising the definitions of ‘‘MA payment adjustment year’’ and ‘‘Payment year’’ to read as follows: * § 495.200 Definitions. * * * * * MA payment adjustment year means— (1) Except as provided in paragraph (2) of this definition, for qualifying MA organizations that receive an MA EHR incentive payment for at least 1 payment year, calendar years beginning with CY 2015. (2) For qualifying MA organizations that receive an MA EHR incentive payment for a qualifying MA-affiliated eligible hospital in Puerto Rico for at least 1 payment year, and that have not previously received an MA EHR incentive payment for a qualifying MAaffiliated eligible hospital not in Puerto Rico, calendar years beginning with CY 2022. (3) For MA-affiliated eligible hospitals, the applicable EHR reporting period for purposes of determining whether the MA organization is subject to a payment adjustment is the Federal fiscal year ending in the MA payment adjustment year. (4) For MA EPs, the applicable EHR reporting period for purposes of determining whether the MA organization is subject to a payment adjustment is the calendar year concurrent with the payment adjustment year. * * * * * Payment year means— (1) For a qualifying MA EP, a calendar year beginning with CY 2011 and ending with CY 2016; and (2) For an eligible hospital, a Federal fiscal year beginning with FY 2011 and ending with FY 2016; and (3) For an eligible hospital in Puerto Rico, a Federal fiscal year beginning with FY 2016 and ending with FY 2021. * * * * * ■ 37. Section 495.211 is amended by adding paragraph (e)(4) to read as follows: § 495.211 Payment adjustments effective for 2015 and subsequent MA payment years with respect to MA EPs and MA-affiliated eligible hospitals. * * * * * (e) * * * (4) For MA payment adjustment years prior to 2022, subsection (d) Puerto Rico hospitals are neither potentially qualifying MA-affiliated eligible hospitals nor qualifying MA-affiliated eligible hospitals for purposes of E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules FFP under this subpart if the total State and Federal acquisition cost is more than $500,000. applying the payment adjustments under paragraph (e) of this section. ■ 38. Section 495.316 is amended by revising paragraph (g)(2) to read as follows: § 495.316 State monitoring and reporting regarding activities required to receive an incentive payment. * * * * * (g) * * * (2) Subject to paragraph (h)(2) of this section, provider-level attestation data for each eligible hospital that attests to demonstrating meaningful use for each payment year beginning with 2013 and ending after 2018. * * * * * ■ 39. Section 495.322 is revised to read as follows: § 495.322 FFP for reasonable administrative expenses. (a) Subject to prior approval conditions at § 495.324, FFP is available at 90 percent in State expenditures for administrative activities in support of implementing incentive payments to Medicaid eligible providers. (b) FFP available under paragraph (a) of this section is available only for expenditures incurred on or before September 30, 2022, except for expenditures related to audit and appeal activities required under this subpart, which must be incurred on or before September 30, 2023. ■ 40. Section 495.324 is amended by revising paragraphs (b)(2) and (3) and (d) to read as follows: § 495.324 Prior approval conditions. daltland on DSKBBV9HB2PROD with PROPOSALS2 * * * * * (b) * * * (2) For the acquisition solicitation documents and any contract that a State may utilize to complete activities under this subpart, unless specifically exempted by the Department of Health and Human Services, prior to release of the acquisition solicitation documents or prior to execution of the contract, when the contract is anticipated to or will exceed $500,000. (3) For contract amendments, unless specifically exempted by the Department of Health and Human Services, prior to execution of the contract amendment, involving contract cost increases exceeding $500,000 or contract time extensions of more than 60 days. * * * * * (d) A State must obtain prior written approval from HHS of its justification for a sole source acquisition, when it plans to acquire noncompetitively from a nongovernmental source HIT equipment or services, with proposed VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Dated: March 29, 2018. Seema Verma, Administrator, Centers for Medicare and Medicaid Services. Dated: April 2, 2018. Alex M. Azar II, Secretary, Department of Health and Human Services. Note: The following Addendum and Appendixes will not appear in the Code of Federal Regulations. Addendum—Proposed Schedule of Standardized Amounts, Update Factors, Rate-of-Increase Percentages Effective With Cost Reporting Periods Beginning on or After October 1, 2018, and Payment Rates for LTCHs Effective for Discharges Occurring on or After October 1, 2018 I. Summary and Background In this Addendum, we are setting forth a description of the methods and data we used to determine the proposed prospective payment rates for Medicare hospital inpatient operating costs and Medicare hospital inpatient capital-related costs for FY 2019 for acute care hospitals. We also are setting forth the rate-of-increase percentage for updating the target amounts for certain hospitals excluded from the IPPS for FY 2019. We note that, because certain hospitals excluded from the IPPS are paid on a reasonable cost basis subject to a rate-of-increase ceiling (and not by the IPPS), these hospitals are not affected by the proposed figures for the standardized amounts, offsets, and budget neutrality factors. Therefore, in this proposed rule, we are setting forth the rate-of-increase percentage for updating the target amounts for certain hospitals excluded from the IPPS that will be effective for cost reporting periods beginning on or after October 1, 2018. In addition, we are setting forth a description of the methods and data we used to determine the proposed LTCH PPS standard Federal payment rate that would be applicable to Medicare LTCHs for FY 2019. In general, except for SCHs and MDHs, for FY 2019, each hospital’s payment per discharge under the IPPS is based on 100 percent of the Federal national rate, also known as the national adjusted standardized amount. This amount reflects the national average hospital cost per case from a base year, updated for inflation. Section 205 of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (Pub. L. 114–10, enacted on April 16, 2015) extended the MDH program (which, under previous law, was to be in effect for discharges on or before March 31, 2015 only) for discharges occurring on or after April 1, 2015, through FY 2017 (that is, for discharges occurring on or before September 30, 2017). Section 50205 of the Bipartisan Budget Act of 2018, enacted February 9, 2018, extended the MDH PO 00000 Frm 00413 Fmt 4701 Sfmt 4702 20575 program for discharges on or after October 1, 2017 through September 30, 2022. SCHs are paid based on whichever of the following rates yields the greatest aggregate payment: The Federal national rate (including, as discussed in section IV.G. of the preamble of this proposed rule, uncompensated care payments under section 1886(r)(2) of the Act); the updated hospitalspecific rate based on FY 1982 costs per discharge; the updated hospital-specific rate based on FY 1987 costs per discharge; the updated hospital-specific rate based on FY 1996 costs per discharge; or the updated hospital-specific rate based on FY 2006 costs per discharge. Under section 1886(d)(5)(G) of the Act, MDHs historically were paid based on the Federal national rate or, if higher, the Federal national rate plus 50 percent of the difference between the Federal national rate and the updated hospital-specific rate based on FY 1982 or FY 1987 costs per discharge, whichever was higher. However, section 5003(a)(1) of Public Law 109–171 extended and modified the MDH special payment provision that was previously set to expire on October 1, 2006, to include discharges occurring on or after October 1, 2006, but before October 1, 2011. Under section 5003(b) of Public Law 109–171, if the change results in an increase to an MDH’s target amount, we must rebase an MDH’s hospital specific rates based on its FY 2002 cost report. Section 5003(c) of Public Law 109– 171 further required that MDHs be paid based on the Federal national rate or, if higher, the Federal national rate plus 75 percent of the difference between the Federal national rate and the updated hospital specific rate. Further, based on the provisions of section 5003(d) of Public Law 109–171, MDHs are no longer subject to the 12-percent cap on their DSH payment adjustment factor. As discussed in section IV.B. of the preamble of this proposed rule, in accordance with section 1886(d)(9)(E) of the Act as amended by section 601 of the Consolidated Appropriations Act, 2016 (Pub. L. 114–113), for FY 2019, subsection (d) Puerto Rico hospitals will continue to be paid based on 100 percent of the national standardized amount. Because Puerto Rico hospitals are paid 100 percent of the national standardized amount and are subject to the same national standardized amount as subsection (d) hospitals that receive the full update, our discussion below does not include references to the Puerto Rico standardized amount or the Puerto Ricospecific wage index. As discussed in section II. of this Addendum, we are proposing to make changes in the determination of the prospective payment rates for Medicare inpatient operating costs for acute care hospitals for FY 2019. In section III. of this Addendum, we discuss our proposed policy changes for determining the prospective payment rates for Medicare inpatient capitalrelated costs for FY 2019. In section IV. of this Addendum, we are setting forth the rateof-increase percentage for determining the rate-of-increase limits for certain hospitals excluded from the IPPS for FY 2019. In section V. of this Addendum, we discuss E:\FR\FM\07MYP2.SGM 07MYP2 20576 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules proposed policy changes for determining the LTCH PPS standard Federal rate for LTCHs paid under the LTCH PPS for FY 2019. The tables to which we refer in the preamble of this proposed rule are listed in section VI. of this Addendum and are available via the internet on the CMS website. II. Proposed Changes to Prospective Payment Rates for Hospital Inpatient Operating Costs for Acute Care Hospitals for FY 2019 The basic methodology for determining prospective payment rates for hospital inpatient operating costs for acute care hospitals for FY 2005 and subsequent fiscal years is set forth under § 412.64. The basic methodology for determining the prospective payment rates for hospital inpatient operating costs for hospitals located in Puerto Rico for FY 2005 and subsequent fiscal years is set forth under §§ 412.211 and 412.212. Below we discuss the factors we are proposing to use for determining the proposed prospective payment rates for FY 2019. In summary, the proposed standardized amounts set forth in Tables 1A, 1B, and 1C that are listed and published in section VI. of this Addendum (and available via the internet on the CMS website) reflect— • Equalization of the standardized amounts for urban and other areas at the level computed for large urban hospitals during FY 2004 and onward, as provided for under section 1886(d)(3)(A)(iv)(II) of the Act. • The labor-related share that is applied to the standardized amounts to give the hospital Hospital submitted quality data and is a meaningful EHR user FY 2019 daltland on DSKBBV9HB2PROD with PROPOSALS2 Proposed Market Basket Rate-of-Increase ..................................................... Proposed Adjustment for Failure to Submit Quality Data under Section 1886(b)(3)(B)(viii) of the Act ........................................................................ Proposed Adjustment for Failure to be a Meaningful EHR User under Section 1886(b)(3)(B)(ix) of the Act ................................................................... Proposed MFP Adjustment under Section 1886(b)(3)(B)(xi) of the Act .......... Statutory Adjustment under Section 1886(b)(3)(B)(xii) of the Act ................... Proposed Applicable Percentage Increase Applied to Standardized Amount We note that section 1886(b)(3)(B)(viii) of the Act, which specifies the adjustment to the applicable percentage increase for ‘‘subsection (d)’’ hospitals that do not submit quality data under the rules established by the Secretary, is not applicable to hospitals located in Puerto Rico. In addition, section 602 of Public Law 114– 113 amended section 1886(n)(6)(B) of the Act to specify that Puerto Rico hospitals are eligible for incentive payments for the meaningful use of certified EHR technology, effective beginning FY 2016, and also to apply the adjustments to the applicable percentage increase under section 1886(b)(3)(B)(ix) of the Act to Puerto Rico hospitals that are not meaningful EHR users, effective FY 2022. Accordingly, because the provisions of section 1886(b)(3)(B)(ix) of the Act are not applicable to hospitals located in Puerto Rico until FY 2022, the adjustments under this provision are not applicable for FY 2019. • An adjustment to the standardized amount to ensure budget neutrality for DRG recalibration and reclassification, as provided for under section 1886(d)(4)(C)(iii) of the Act. • An adjustment to ensure the wage index and labor-related share changes (depending on the fiscal year) are budget neutral, as provided for under section 1886(d)(3)(E)(i) of the Act (as discussed in the FY 2006 IPPS final rule (70 FR 47395) and the FY 2010 IPPS final rule (74 FR 44005). We note that section 1886(d)(3)(E)(i) of the Act requires that when we compute such budget neutrality, we assume that the provisions of section 1886(d)(3)(E)(ii) of the Act (requiring a 62-percent labor-related share in certain circumstances) had not been enacted. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Frm 00414 Fmt 4701 Sfmt 4702 Hospital submitted quality data and is NOT a meaningful EHR user Hospital did NOT submit quality data and is a meaningful EHR user Hospital did NOT submit quality data and is NOT a meaningful EHR user 2.8 2.8 2.8 2.8 0.0 0.0 ¥0.7 ¥0.7 0.0 ¥0.8 ¥0.75 1.25 ¥2.1 ¥0.8 ¥0.75 ¥0.85 0.0 ¥0.8 ¥0.75 0.55 ¥2.1 ¥0.8 ¥0.75 ¥1.55 • An adjustment to ensure the effects of geographic reclassification are budget neutral, as provided for under section 1886(d)(8)(D) of the Act, by removing the FY 2017 budget neutrality factor and applying a revised factor. • A positive adjustment of 0.5 percent in FYs 2019 through 2023 as required under section 414 of the MACRA. • An adjustment to ensure the effects of the Rural Community Hospital Demonstration program required under section 410A of Public Law 108–173, as amended by sections 3123 and 10313 of Public Law 111–148, which extended the demonstration program for an additional 5 years, as amended by section 15003 of Public Law 114–255 which amended section 410A of Public Law 108–173 to provide for a 10year extension of the demonstration program (in place of the 5-year extension required by the Affordable Care Act) beginning on the date immediately following the last day of the initial 5-year period under section 410A(a)(5) of Public Law 108–173, are budget neutral as required under section 410A(c)(2) of Public Law 108–173. • An adjustment to remove the FY 2018 outlier offset and apply an offset for FY 2019, as provided for in section 1886(d)(3)(B) of the Act. For FY 2019, consistent with current law, we are proposing to apply the rural floor budget neutrality adjustment to hospital wage indexes. Also, consistent with section 3141 of the Affordable Care Act, instead of applying a State-level rural floor budget neutrality adjustment to the wage index, we are proposing to apply a uniform, national budget neutrality adjustment to the FY 2019 PO 00000 the highest payment, as provided for under sections 1886(d)(3)(E) and 1886(d)(9)(C)(iv) of the Act. For FY 2019, depending on whether a hospital submits quality data under the rules established in accordance with section 1886(b)(3)(B)(viii) of the Act (hereafter referred to as a hospital that submits quality data) and is a meaningful EHR user under section 1886(b)(3)(B)(ix) of the Act (hereafter referred to as a hospital that is a meaningful EHR user), there are four possible applicable percentage increases that can be applied to the national standardized amount. We refer readers to section IV.B. of the preamble of this proposed rule for a complete discussion on the proposed FY 2019 inpatient hospital update. Below is a table with these four options: wage index for the rural floor. We note that, in section III.H.2.b. of the preamble to this proposed rule, we are proposing not to extend the imputed floor policy (both the original methodology and alternative methodology) for FY 2019. Therefore, for FY 2019, in this proposed rule, we are proposing to not include the imputed floor (calculated under the original methodology and alternative methodology) in calculating the uniform, national rural floor budget neutrality adjustment, which is reflected in the proposed FY 2019 wage index. A. Calculation of the Proposed Adjusted Standardized Amount 1. Standardization of Base-Year Costs or Target Amounts In general, the national standardized amount is based on per discharge averages of adjusted hospital costs from a base period (section 1886(d)(2)(A) of the Act), updated and otherwise adjusted in accordance with the provisions of section 1886(d) of the Act. The September 1, 1983 interim final rule (48 FR 39763) contained a detailed explanation of how base-year cost data (from cost reporting periods ending during FY 1981) were established for urban and rural hospitals in the initial development of standardized amounts for the IPPS. Sections 1886(d)(2)(B) and 1886(d)(2)(C) of the Act require us to update base-year per discharge costs for FY 1984 and then standardize the cost data in order to remove the effects of certain sources of cost variations among hospitals. These effects include case-mix, differences in area wage levels, cost-of-living adjustments for Alaska E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules and Hawaii, IME costs, and costs to hospitals serving a disproportionate share of lowincome patients. For FY 2019, we are proposing to continue to use the national labor-related and nonlabor-related shares (which are based on the 2014-based hospital market basket) that were used in FY 2018. Specifically, under section 1886(d)(3)(E) of the Act, the Secretary estimates, from time to time, the proportion of payments that are labor-related and adjusts the proportion (as estimated by the Secretary from time to time) of hospitals’ costs which are attributable to wages and wage-related costs of the DRG prospective payment rates. We refer to the proportion of hospitals’ costs that are attributable to wages and wagerelated costs as the ‘‘labor-related share.’’ For FY 2019, as discussed in section III. of the preamble of this proposed rule, we are proposing to continue to use a labor-related share of 68.3 percent for the national standardized amounts for all IPPS hospitals (including hospitals in Puerto Rico) that have a wage index value that is greater than 1.0000. Consistent with section 1886(d)(3)(E) of the Act, we are proposing to apply the wage index to a labor-related share of 62 percent of the national standardized amount for all IPPS hospitals (including hospitals in Puerto Rico) whose wage index values are less than or equal to 1.0000. The proposed standardized amounts for operating costs appear in Tables 1A, 1B, and 1C that are listed and published in section VI. of the Addendum to this proposed rule and are available via the internet on the CMS website. 2. Computing the National Average Standardized Amount Section 1886(d)(3)(A)(iv)(II) of the Act requires that, beginning with FY 2004 and thereafter, an equal standardized amount be computed for all hospitals at the level computed for large urban hospitals during FY 2003, updated by the applicable percentage update. Accordingly, we are proposing to calculate the FY 2019 national average standardized amount irrespective of whether a hospital is located in an urban or rural location. 3. Updating the National Average Standardized Amount Section 1886(b)(3)(B) of the Act specifies the applicable percentage increase used to update the standardized amount for payment for inpatient hospital operating costs. We note that, in compliance with section 404 of the MMA, in this proposed rule, we are proposing to use the 2014-based IPPS operating and capital market baskets for FY 2019. As discussed in section IV.B. of the preamble of this proposed rule, in accordance with section 1886(b)(3)(B) of the Act, as amended by section 3401(a) of the Affordable Care Act, we are proposing to reduce the FY 2019 applicable percentage increase (which is based on IGI’s fourth quarter 2017 forecast of the 2014-based IPPS market basket) by the MFP adjustment (the 10-year moving average of MFP for the period ending FY 2019) of 0.8 percentage point, which is also calculated based on IGI’s fourth quarter 2017 forecast. In addition, in accordance with section 1886(b)(3)(B)(i) of the Act, as amended by VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 sections 3401(a) and 10319(a) of the Affordable Care Act, we are proposing to further update the standardized amount for FY 2019 by the estimated market basket percentage increase less 0.75 percentage point for hospitals in all areas. Sections 1886(b)(3)(B)(xi) and (xii) of the Act, as added and amended by sections 3401(a) and 10319(a) of the Affordable Care Act, further state that these adjustments may result in the applicable percentage increase being less than zero. The percentage increase in the market basket reflects the average change in the price of goods and services required as inputs to provide hospital inpatient services. Based on IGI’s 2017 fourth quarter forecast of the hospital market basket increase (as discussed in Appendix B of this proposed rule), the forecast of the hospital market basket increase for FY 2019 for this proposed rule is 2.8 percent. As discussed earlier, for FY 2019, depending on whether a hospital submits quality data under the rules established in accordance with section 1886(b)(3)(B)(viii) of the Act and is a meaningful EHR user under section 1886(b)(3)(B)(ix) of the Act, there are four possible applicable percentage increases that can be applied to the standardized amount. We refer readers to section IV.B. of the preamble of this proposed rule for a complete discussion on the FY 2019 inpatient hospital update to the standardized amount. We also refer readers to the table above for the four possible applicable percentage increases that would be applied to update the national standardized amount. The proposed standardized amounts shown in Tables 1A through 1C that are published in section VI. of this Addendum and that are available via the internet on the CMS website reflect these differential amounts. Although the update factors for FY 2019 are set by law, we are required by section 1886(e)(4) of the Act to recommend, taking into account MedPAC’s recommendations, appropriate update factors for FY 2019 for both IPPS hospitals and hospitals and hospital units excluded from the IPPS. Section 1886(e)(5)(A) of the Act requires that we publish our recommendations in the Federal Register for public comment. Our recommendation on the update factors is set forth in Appendix B of this proposed rule. 4. Methodology for Calculation of the Average Standardized Amount The methodology we used to calculate the proposed FY 2019 standardized amount is as follows: • To ensure we are only including hospitals paid under the IPPS in the calculation of the standardized amount, we apply the following inclusion and exclusion criteria: Include hospitals whose last four digits fall between 0001 and 0879 (section 2779A1 of Chapter 2 of the State Operations Manual on the CMS website at: https:// www.cms.gov/Regulations-and-Guidance/ Guidance/Manuals/Downloads/ som107c02.pdf); exclude CAHs at the time of this proposed rule; exclude hospitals in Maryland (because these hospitals are paid under an all payer model under section 1115A of the Act); and remove PPS-excluded cancer hospitals that have a ‘‘V’’ in the fifth PO 00000 Frm 00415 Fmt 4701 Sfmt 4702 20577 position of their provider number or a ‘‘E’’ or ‘‘F’’ in the sixth position. • As in the past, we are proposing to adjust the FY 2019 standardized amount to remove the effects of the FY 2018 geographic reclassifications and outlier payments before applying the FY 2019 updates. We then apply budget neutrality offsets for outliers and geographic reclassifications to the standardized amount based on proposed FY 2019 payment policies. • We do not remove the prior year’s budget neutrality adjustments for reclassification and recalibration of the DRG relative weights and for updated wage data because, in accordance with sections 1886(d)(4)(C)(iii) and 1886(d)(3)(E) of the Act, estimated aggregate payments after updates in the DRG relative weights and wage index should equal estimated aggregate payments prior to the changes. If we removed the prior year’s adjustment, we would not satisfy these conditions. Budget neutrality is determined by comparing aggregate IPPS payments before and after making changes that are required to be budget neutral (for example, changes to MS–DRG classifications, recalibration of the MS–DRG relative weights, updates to the wage index, and different geographic reclassifications). We include outlier payments in the simulations because they may be affected by changes in these parameters. • Consistent with our methodology established in the FY 2011 IPPS/LTCH PPS final rule (75 FR 50422 through 50433), because IME Medicare Advantage payments are made to IPPS hospitals under section 1886(d) of the Act, we believe these payments must be part of these budget neutrality calculations. However, we note that it is not necessary to include Medicare Advantage IME payments in the outlier threshold calculation or the outlier offset to the standardized amount because the statute requires that outlier payments be not less than 5 percent nor more than 6 percent of total ‘‘operating DRG payments,’’ which does not include IME and DSH payments. We refer readers to the FY 2011 IPPS/LTCH PPS final rule for a complete discussion on our methodology of identifying and adding the total Medicare Advantage IME payment amount to the budget neutrality adjustments. • Consistent with the methodology in the FY 2012 IPPS/LTCH PPS final rule, in order to ensure that we capture only fee-for-service claims, we are only including claims with a ‘‘Claim Type’’ of 60 (which is a field on the MedPAR file that indicates a claim is an FFS claim). • Consistent with our methodology established in the FY 2017 IPPS/LTCH PPS final rule (81 FR 57277), in order to further ensure that we capture only FFS claims, we are excluding claims with a ‘‘GHOPAID’’ indicator of 1 (which is a field on the MedPAR file that indicates a claim is not an FFS claim and is paid by a Group Health Organization). • Consistent with our methodology established in the FY 2011 IPPS/LTCH PPS final rule (75 FR 50422 through 50423), we examine the MedPAR file and remove pharmacy charges for anti-hemophilic blood E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20578 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules factor (which are paid separately under the IPPS) with an indicator of ‘‘3’’ for blood clotting with a revenue code of ‘‘0636’’ from the covered charge field for the budget neutrality adjustments. We also remove organ acquisition charges from the covered charge field for the budget neutrality adjustments because organ acquisition is a pass-through payment not paid under the IPPS. • For FY 2019, the Bundled Payments for Care Improvement (BPCI) Initiative will have ended and a new model, the BPCI Advanced model will have begun. The BPCI Advanced model, tested under the authority of section 3021 of the Affordable Care Act (codified at section 1115A of the Act), is comprised of a single payment and risk track, which bundles payments for multiple services beneficiaries receive during a Clinical Episode. Acute care hospitals may participate in the BPCI Advanced model in one of two capacities: As a model Participant or as a downstream Episode Initiator. Regardless of the capacity in which they participate in the BPCI Advanced model, participating acute care hospitals will continue to receive IPPS payments under section 1886(d) of the Act. Acute care hospitals that are Participants also assume financial and quality performance accountability for Clinical Episodes in the form of a reconciliation payment. For additional information on the BPCI Advanced model, we refer readers to the BPCI Advanced web page on the CMS Center for Medicare and Medicaid Innovation’s website at: https://innovation.cms.gov/ initiatives/bpci-advanced/. In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53341 through 53343), for FY 2013 and subsequent fiscal years, we finalized a methodology to treat hospitals that participate in the BPCI Initiative the same as prior fiscal years for the IPPS payment modeling and ratesetting process (which includes recalibration of the MS–DRG relative weights, ratesetting, calculation of the budget neutrality factors, and the impact analysis) without regard to a hospital’s participation within these bundled payment models (that is, as if they are not participating in those models under the BPCI initiative). For FY 2019, consistent with how we have treated hospitals that participated in the BPCI Initiative, we are proposing to include all applicable data from subsection (d) hospitals participating in the BPCI Advanced model in our IPPS payment modeling and ratesetting calculations. We believe it is appropriate to include all applicable data from the subsection (d) hospitals participating in the BPCI Advanced model in our IPPS payment modeling and ratesetting calculations because these hospitals are still receiving IPPS payments under section 1886(d) of the Act. • Consistent with our methodology established in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53687 through 53688), we believe that it is appropriate to include adjustments for the Hospital Readmissions Reduction Program and the Hospital VBP Program (established under the Affordable Care Act) within our budget neutrality calculations. Both the hospital readmissions payment adjustment (reduction) and the hospital VBP VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 payment adjustment (redistribution) are applied on a claim-by-claim basis by adjusting, as applicable, the base-operating DRG payment amount for individual subsection (d) hospitals, which affects the overall sum of aggregate payments on each side of the comparison within the budget neutrality calculations. In order to properly determine aggregate payments on each side of the comparison, consistent with the approach we have taken in prior years, for FY 2019 and subsequent years, we are proposing to continue to apply a proxy hospital readmissions payment adjustment and a proxy hospital VBP payment adjustment on each side of the comparison, consistent with the methodology that we adopted in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53687 through 53688). That is, we are proposing to apply a proposed proxy readmissions payment adjustment factor and a proposed proxy hospital VBP payment adjustment factor on both sides of our comparison of aggregate payments when determining all budget neutrality factors described in section II.A.4. of this Addendum. For the purpose of calculating the proposed proxy FY 2019 readmissions payment adjustment factors, for both this proposed rule and the final rule, as discussed in section IV.H. of the preamble of this proposed rule, we are proposing to use the proportion of dually-eligible Medicare beneficiaries, excess readmission ratios, and aggregate payments for excess readmissions from the prior fiscal year’s applicable period because, at this time and at the time of the development of the final rule, hospitals will not yet have had the opportunity to review and correct the data (program calculations based on the proposed FY 2019 applicable period of July 1, 2014 to June 30, 2017) before the data are made public under our policy regarding the reporting of hospital-specific readmission rates, consistent with section 1886(q)(6) of the Act. (For additional information on our general policy for the reporting of hospital-specific readmission rates, consistent with section 1886(q)(6) of the Act, we refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53399 through 53400) and section IV.H. of the preamble of this proposed rule.) In addition, for FY 2019, for the purpose of modeling aggregate payments when determining all budget neutrality factors, we are proposing to use proxy hospital VBP payment adjustment factors for FY 2019 that are based on data from a historical period because hospitals have not yet had an opportunity to review and submit corrections for their data from the FY 2019 performance period. (For additional information on our policy regarding the review and correction of hospital-specific measure rates under the Hospital VBP Program, consistent with section 1886(o)(10)(A)(ii) of the Act, we refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53578 through 53581), the CY 2012 OPPS/ASC final rule with comment period (76 FR 74544 through 74547), and the Hospital Inpatient VBP final rule (76 FR 26534 through 26536).) • The Affordable Care Act also established section 1886(r) of the Act, which modifies PO 00000 Frm 00416 Fmt 4701 Sfmt 4702 the methodology for computing the Medicare DSH payment adjustment beginning in FY 2014. Beginning in FY 2014, IPPS hospitals receiving Medicare DSH payment adjustments receive an empirically justified Medicare DSH payment equal to 25 percent of the amount that would previously have been received under the statutory formula set forth under section 1886(d)(5)(F) of the Act governing the Medicare DSH payment adjustment. In accordance with section 1886(r)(2) of the Act, the remaining amount, equal to an estimate of 75 percent of what otherwise would have been paid as Medicare DSH payments, reduced to reflect changes in the percentage of individuals who are uninsured and an additional statutory adjustment, will be available to make additional payments to Medicare DSH hospitals based on their share of the total amount of uncompensated care reported by Medicare DSH hospitals for a given time period. In order to properly determine aggregate payments on each side of the comparison for budget neutrality, prior to FY 2014, we included estimated Medicare DSH payments on both sides of our comparison of aggregate payments when determining all budget neutrality factors described in section II.A.4. of this Addendum. To do this for FY 2019 (as we did for the last 5 fiscal years), we are proposing to include estimated empirically justified Medicare DSH payments that will be paid in accordance with section 1886(r)(1) of the Act and estimates of the additional uncompensated care payments made to hospitals receiving Medicare DSH payment adjustments as described by section 1886(r)(2) of the Act. That is, we are proposing to consider estimated empirically justified Medicare DSH payments at 25 percent of what would otherwise have been paid, and also the estimated additional uncompensated care payments for hospitals receiving Medicare DSH payment adjustments on both sides of our comparison of aggregate payments when determining all budget neutrality factors described in section II.A.4. of this Addendum. • When calculating total payments for budget neutrality, to determine total payments for SCHs, we model total hospitalspecific rate payments and total Federal rate payments and then include whichever one of the total payments is greater. As discussed in section IV.F. of the preamble to this proposed rule and below, we are proposing to continue to use the FY 2014 finalized methodology under which we take into consideration uncompensated care payments in the comparison of payments under the Federal rate and the hospital-specific rate for SCHs. Therefore, we are proposing to include estimated uncompensated care payments in this comparison. Similarly, for MDHs, as discussed in section IV.F. of the preamble of this proposed rule, when computing payments under the Federal national rate plus 75 percent of the difference between the payments under the Federal national rate and the payments under the updated hospital-specific rate, we are proposing to continue to take into consideration uncompensated care payments in the computation of payments under the E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules Federal rate and the hospital-specific rate for MDHs. • We are proposing to include an adjustment to the standardized amount for those hospitals that are not meaningful EHR users in our modeling of aggregate payments for budget neutrality for FY 2019. Similar to FY 2018, we are including this adjustment based on data on the prior year’s performance. Payments for hospitals will be estimated based on the proposed applicable standardized amount in Tables 1A and 1B for discharges occurring in FY 2019. • In our determination of all proposed budget neutrality factors described in section II.A.4. of this Addendum, we use transferadjusted discharges. Specifically, we calculated the transfer-adjusted discharges using the statutory expansion of the postacute care transfer policy to include discharges to hospice care by a hospice program as discussed in section IV.A.2.b. of the preamble of this proposed rule. a. Proposed Recalibration of MS–DRG Relative Weights Section 1886(d)(4)(C)(iii) of the Act specifies that, beginning in FY 1991, the annual DRG reclassification and recalibration of the relative weights must be made in a manner that ensures that aggregate payments to hospitals are not affected. As discussed in section II.G. of the preamble of this proposed rule, we normalized the recalibrated MS– DRG relative weights by an adjustment factor so that the average case relative weight after recalibration is equal to the average case relative weight prior to recalibration. However, equating the average case relative weight after recalibration to the average case relative weight before recalibration does not necessarily achieve budget neutrality with respect to aggregate payments to hospitals because payments to hospitals are affected by factors other than average case relative weight. Therefore, as we have done in past years, we are proposing to make a budget neutrality adjustment to ensure that the requirement of section 1886(d)(4)(C)(iii) of the Act is met. For FY 2019, to comply with the requirement that MS–DRG reclassification and recalibration of the relative weights be budget neutral for the standardized amount and the hospital-specific rates, we used FY 2017 discharge data to simulate payments and compared the following: • Aggregate payments using the FY 2018 labor-related share percentages, the FY 2018 relative weights, and the FY 2018 prereclassified wage data, and applied the proposed FY 2019 hospital readmissions payment adjustments and estimated FY 2019 hospital VBP payment adjustments; and • Aggregate payments using the FY 2018 labor-related share percentages, the proposed FY 2019 relative weights, and the FY 2018 pre-reclassified wage data, and applied the proposed FY 2019 hospital readmissions payment adjustments and estimated FY 2019 hospital VBP payment adjustments applied above. Based on this comparison, we computed a proposed budget neutrality adjustment factor equal to 0.997896 and applied this factor to the standardized amount. As discussed in section IV. of this Addendum, we also are VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 proposing to apply the MS–DRG reclassification and recalibration budget neutrality factor of 0.997896 to the hospitalspecific rates that are effective for cost reporting periods beginning on or after October 1, 2018. b. Updated Wage Index—Budget Neutrality Adjustment Section 1886(d)(3)(E)(i) of the Act requires us to update the hospital wage index on an annual basis beginning October 1, 1993. This provision also requires us to make any updates or adjustments to the wage index in a manner that ensures that aggregate payments to hospitals are not affected by the change in the wage index. Section 1886(d)(3)(E)(i) of the Act requires that we implement the wage index adjustment in a budget neutral manner. However, section 1886(d)(3)(E)(ii) of the Act sets the laborrelated share at 62 percent for hospitals with a wage index less than or equal to 1.0000, and section 1886(d)(3)(E)(i) of the Act provides that the Secretary shall calculate the budget neutrality adjustment for the adjustments or updates made under that provision as if section 1886(d)(3)(E)(ii) of the Act had not been enacted. In other words, this section of the statute requires that we implement the updates to the wage index in a budget neutral manner, but that our budget neutrality adjustment should not take into account the requirement that we set the labor-related share for hospitals with wage indexes less than or equal to 1.0000 at the more advantageous level of 62 percent. Therefore, for purposes of this budget neutrality adjustment, section 1886(d)(3)(E)(i) of the Act prohibits us from taking into account the fact that hospitals with a wage index less than or equal to 1.0000 are paid using a labor-related share of 62 percent. Consistent with current policy, for FY 2019, we are proposing to adjust 100 percent of the wage index factor for occupational mix. We describe the occupational mix adjustment in section III.E. of the preamble of this proposed rule. To compute a proposed budget neutrality adjustment factor for wage index and laborrelated share percentage changes, we used FY 2017 discharge data to simulate payments and compared the following: • Aggregate payments using the proposed FY 2019 relative weights and the FY 2018 pre-reclassified wage indexes, applied the FY 2018 labor-related share of 68.3 percent to all hospitals (regardless of whether the hospital’s wage index was above or below 1.0000), and applied the proposed FY 2019 hospital readmissions payment adjustment and the estimated FY 2019 hospital VBP payment adjustment; and • Aggregate payments using the proposed FY 2019 relative weights and the proposed FY 2019 pre-reclassified wage indexes, applied the proposed labor-related share for FY 2019 of 68.3 percent to all hospitals (regardless of whether the hospital’s wage index was above or below 1.0000), and applied the same proposed FY 2019 hospital readmissions payment adjustments and estimated FY 2019 hospital VBP payment adjustments applied above. In addition, we applied the proposed MS– DRG reclassification and recalibration budget PO 00000 Frm 00417 Fmt 4701 Sfmt 4702 20579 neutrality adjustment factor (derived in the first step) to the proposed payment rates that were used to simulate payments for this comparison of aggregate payments from FY 2018 to FY 2019. By applying this methodology, we determined a proposed budget neutrality adjustment factor of 1.001182 for proposed changes to the wage index. c. Reclassified Hospitals—Proposed Budget Neutrality Adjustment Section 1886(d)(8)(B) of the Act provides that certain rural hospitals are deemed urban. In addition, section 1886(d)(10) of the Act provides for the reclassification of hospitals based on determinations by the MGCRB. Under section 1886(d)(10) of the Act, a hospital may be reclassified for purposes of the wage index. Under section 1886(d)(8)(D) of the Act, the Secretary is required to adjust the standardized amount to ensure that aggregate payments under the IPPS after implementation of the provisions of sections 1886(d)(8)(B) and (C) and 1886(d)(10) of the Act are equal to the aggregate prospective payments that would have been made absent these provisions. We note that the wage index adjustments provided for under section 1886(d)(13) of the Act are not budget neutral. Section 1886(d)(13)(H) of the Act provides that any increase in a wage index under section 1886(d)(13) shall not be taken into account in applying any budget neutrality adjustment with respect to such index under section 1886(d)(8)(D) of the Act. To calculate the proposed budget neutrality adjustment factor for FY 2019, we used FY 2017 discharge data to simulate payments and compared the following: • Aggregate payments using the proposed FY 2019 labor-related share percentages, the proposed FY 2019 relative weights, and the proposed FY 2019 wage data prior to any reclassifications under sections 1886(d)(8)(B) and (C) and 1886(d)(10) of the Act, and applied the proposed FY 2019 hospital readmissions payment adjustments and the estimated FY 2019 hospital VBP payment adjustments; and • Aggregate payments using the proposed FY 2019 labor-related share percentages, the proposed FY 2019 relative weights, and the proposed FY 2019 wage data after such reclassifications, and applied the same proposed FY 2019 hospital readmissions payment adjustments and the estimated FY 2019 hospital VBP payment adjustments applied above. We note that the reclassifications applied under the second simulation and comparison are those listed in Table 2 associated with this proposed rule, which is available via the internet on the CMS website. This table reflects reclassification crosswalks proposed for FY 2019, and apply the proposed policies explained in section III. of the preamble of this proposed rule. Based on these simulations, we calculated a proposed budget neutrality adjustment factor of 0.987084 to ensure that the effects of these provisions are budget neutral, consistent with the statute. The proposed FY 2019 budget neutrality adjustment factor was applied to the proposed standardized amount after removing the effects of the FY 2018 budget E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20580 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules neutrality adjustment factor. We note that the proposed FY 2019 budget neutrality adjustment reflects FY 2019 wage index reclassifications approved by the MGCRB or the Administrator at the time of development of this proposed rule. d. Rural Floor Budget Neutrality Adjustment Under § 412.64(e)(4), we make an adjustment to the wage index to ensure that aggregate payments after implementation of the rural floor under section 4410 of the BBA (Pub. L. 105–33) is equal to the aggregate prospective payments that would have been made in the absence of this provision. Consistent with section 3141 of the Affordable Care Act and as discussed in section III.G. of the preamble of this proposed rule and codified at § 412.64(e)(4)(ii), the budget neutrality adjustment for the rural floor is a national adjustment to the wage index. As noted above and as discussed in section III.G.2. of the preamble of this proposed rule, the imputed floor is set to expire effective October 1, 2018, and we are not proposing to extend the imputed floor policy. Similar to our calculation in the FY 2015 IPPS/LTCH PPS final rule (79 FR 50369 through 50370), for FY 2019, we are proposing to calculate a national rural Puerto Rico wage index. Because there are no rural Puerto Rico hospitals with established wage data, our calculation of the proposed FY 2019 rural Puerto Rico wage index is based on the policy adopted in the FY 2008 IPPS final rule with comment period (72 FR 47323). That is, we use the unweighted average of the wage indexes from all CBSAs (urban areas) that are contiguous (share a border with) to the rural counties to compute the rural floor (72 FR 47323; 76 FR 51594). Under the OMB labor market area delineations, except for Arecibo, Puerto Rico (CBSA 11640), all other Puerto Rico urban areas are contiguous to a rural area. Therefore, based on our existing policy, the proposed FY 2019 rural Puerto Rico wage index is calculated based on the average of the proposed FY 2019 wage indexes for the following urban areas: Aguadilla-Isabela, PR (CBSA 10380); Guayama, PR (CBSA 25020); Mayaguez, PR (CBSA 32420); Ponce, PR (CBSA 38660); San German, PR (CBSA 41900); and San Juan-Carolina-Caguas, PR (CBSA 41980). To calculate the proposed national rural floor budget neutrality adjustment factor, we used FY 2017 discharge data to simulate payments and the proposed post-reclassified national wage indexes and compared the following: • National simulated payments without the proposed national rural floor; and • National simulated payments with the proposed national rural floor. Based on this comparison, we determined a proposed national rural floor budget neutrality adjustment factor of 0.994733. The national adjustment was applied to the national wage indexes to produce a proposed national rural floor budget neutral wage index. e. Proposed Rural Community Hospital Demonstration Program Adjustment In section IV.L. of the preamble of this proposed rule, we discuss the Rural VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Community Hospital Demonstration program, which was originally authorized for a 5-year period by section 410A of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108–173), and extended for another 5-year period by sections 3123 and 10313 of the Affordable Care Act (Pub. L. 111–148). Subsequently, section 15003 of the 21st Century Cures Act (Pub. L. 114–255), enacted December 13, 2016, amended section 410A of Public Law 108–173 to require a 10-year extension period (in place of the 5-year extension required by the Affordable Care Act, as further discussed below). We make an adjustment to the standardized amount to ensure the effects of the Rural Community Hospital Demonstration program are budget neutral as required under section 410A(c)(2) of Public Law 108–173. We refer the reader to section IV.L. of the preamble of this proposed rule for complete details regarding the Rural Community Hospital Demonstration. With regard to budget neutrality, as mentioned earlier, we make an adjustment to the standardized amount to ensure the effects of the Rural Community Hospital Demonstration are budget neutral, as required under section 410A(c)(2) of Public Law 108–173. For FY 2019, the total amount that we are proposing to apply to make an adjustment to the standardized amounts to ensure the effects of the Rural Community Hospital Demonstration program are budget neutral is $73,191,887. Accordingly, using the most recent data available to account for the estimated costs of the demonstration program, for FY 2019, we computed a proposed factor of 0.999325 for the Rural Community Hospital Demonstration budget neutrality adjustment that will be applied to the IPPS standard Federal payment rate. We refer readers to section IV.L. of the preamble of this proposed rule on complete details regarding the calculation of the amount we are applying to make an adjustment to the standardized amount. We note, as discussed in section IV.L. of the preamble of this proposed rule, if updated or additional data become available prior to issuance of the FY 2019 IPPS/LTCH PPS final rule, we would use those data to the extent appropriate to determine the budget neutrality offset amount for FY 2019. We refer readers to section IV.L. of the preamble of this proposed rule on complete details regarding the availability of additional data prior to the FY 2019 IPPS/LTCH PPS final rule. f. Proposed Adjustment for FY 2019 Required Under Section 414 of Public Law 114–10 (MACRA) As stated in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56785), once the recoupment required under section 631 of the ATRA was complete, we had anticipated making a single positive adjustment in FY 2018 to offset the reductions required to recoup the $11 billion under section 631 of the ATRA. However, section 414 of the MACRA (which was enacted on April 16, 2015) replaced the single positive adjustment we intended to make in FY 2018 with a 0.5 percent positive adjustment for each of FYs 2018 through 2023. (As noted in the FY 2018 PO 00000 Frm 00418 Fmt 4701 Sfmt 4702 IPPS/LTCH PPS proposed and final rules, section 15005 of the 21st Century Cures Act (Pub. L. 114–255), which was enacted December 13, 2016, reduced the adjustment for FY 2018 from 0.5 percentage points to 0.4588 percentage points.) Therefore, for FY 2019, we are proposing to implement the required +0.5 percent adjustment to the standardized amount. This is a permanent adjustment to the payment rates. g. Proposed Outlier Payments Section 1886(d)(5)(A) of the Act provides for payments in addition to the basic prospective payments for ‘‘outlier’’ cases involving extraordinarily high costs. To qualify for outlier payments, a case must have costs greater than the sum of the prospective payment rate for the MS–DRG, any IME and DSH payments, uncompensated care payments, any new technology add-on payments, and the ‘‘outlier threshold’’ or ‘‘fixed-loss’’ amount (a dollar amount by which the costs of a case must exceed payments in order to qualify for an outlier payment). We refer to the sum of the prospective payment rate for the MS–DRG, any IME and DSH payments, uncompensated care payments, any new technology add-on payments, and the outlier threshold as the outlier ‘‘fixed-loss cost threshold.’’ To determine whether the costs of a case exceed the fixed-loss cost threshold, a hospital’s CCR is applied to the total covered charges for the case to convert the charges to estimated costs. Payments for eligible cases are then made based on a marginal cost factor, which is a percentage of the estimated costs above the fixed-loss cost threshold. The marginal cost factor for FY 2019 is 80 percent, or 90 percent for burn MS–DRGs 927, 928, 929, 933, 934 and 935. We have used a marginal cost factor of 90 percent since FY 1989 (54 FR 36479 through 36480) for designated burn DRGs as well as a marginal cost factor of 80 percent for all other DRGs since FY 1995 (59 FR 45367). In accordance with section 1886(d)(5)(A)(iv) of the Act, outlier payments for any year are projected to be not less than 5 percent nor more than 6 percent of total operating DRG payments (which does not include IME and DSH payments) plus outlier payments. When setting the outlier threshold, we compute the 5.1 percent target by dividing the total operating outlier payments by the total operating DRG payments plus outlier payments. We do not include any other payments such as IME and DSH within the outlier target amount. Therefore, it is not necessary to include Medicare Advantage IME payments in the outlier threshold calculation. Section 1886(d)(3)(B) of the Act requires the Secretary to reduce the average standardized amount by a factor to account for the estimated proportion of total DRG payments made to outlier cases. More information on outlier payments may be found on the CMS website at: https://www.cms.gov/Medicare/ Medicare-Fee-for-Service-Payment/ AcuteInpatientPPS/outlier.htm. (1) Proposed FY 2019 Outlier Fixed-Loss Cost Threshold In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50977 through 50983), in response to E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules Quarter using the following methodology to calculate the charge inflation factor for FY 2019: • To produce the most stable measure of charge inflation, we applied the following inclusion and exclusion criteria of hospitals claims in our measure of charge inflation: Include hospitals whose last four digits fall between 0001 and 0899 (section 2779A1 of Chapter 2 of the State Operations Manual on the CMS website at https://www.cms.gov/ Regulations-and-Guidance/Guidance/ Manuals/Downloads/som107c02.pdf); include CAHs that were IPPS hospitals for the time period of the MedPAR data being used to calculate the charge inflation factor; include hospitals in Maryland; and remove PPS-excluded cancer hospitals who have a ‘‘V’’ in the fifth position of their provider number or a ‘‘E’’ or ‘‘F’’ in the sixth position. • We excluded Medicare Advantage IME claims for the reasons described in section I.A.4. of this Addendum. We refer readers to the FY 2011 IPPS/LTCH PPS final rule for a complete discussion on our methodology of identifying and adding the total Medicare Advantage IME payment amount to the budget neutrality adjustments. • In order to ensure that we capture only FFS claims, we included claims with a ‘‘Claim Type’’ of 60 (which is a field on the MedPAR file that indicates a claim is an FFS claim). • In order to further ensure that we capture only FFS claims, we excluded claims with a ‘‘GHOPAID’’ indicator of 1 (which is a field on the MedPAR file that indicates a claim is not an FFS claim and is paid by a Group Health Organization). • We examined the MedPAR file and removed pharmacy charges for antihemophilic blood factor (which are paid separately under the IPPS) with an indicator of ‘‘3’’ for blood clotting with a revenue code of ‘‘0636’’ from the covered charge field. We also removed organ acquisition charges from the covered charge field because organ acquisition is a pass-through payment not paid under the IPPS. In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49779 through 49780), we stated that commenters were concerned that they were unable to replicate the calculation of the charge inflation factor that CMS used in the proposed rule. In response to those comments, we stated that we continue to believe that it is optimal to use the most recent period of charge data available to measure charge inflation. In response to those comments, similar to FY 2016, FY 2017, and FY 2018, for FY 2019, we grouped claims data by quarter in the table below in order that the public would be able to replicate the claims summary for the claims with discharge dates through September 30, 2017, that are available under the current limited data set (LDS) structure. In order to provide even more information in response to the commenters’ request, similar to FY 2016, FY 2017, and FY 2018, for FY 2019, we are making available on the CMS website at: https://www.cms.gov/Medicare/MedicareFee-for-Service-Payment/AcuteInpatientPPS/ index.html (click on the links on the left titled ‘‘FY 2019 IPPS Proposed Rule Home Page’’ and then click the link ‘‘FY 2019 Proposed Rule Data Files’’) more detailed summary tables by provider with the monthly charges that were used to compute the charge inflation factor. We continue to work with our systems teams and privacy office to explore expanding the information available in the current LDS, perhaps through the provision of a supplemental data file for future rulemaking. Covered charges (January 1, 2016, through December 31, 2016) public comments on the FY 2013 IPPS/LTCH PPS proposed rule, we made changes to our methodology for projecting the outlier fixedloss cost threshold for FY 2014. We refer readers to the FY 2014 IPPS/LTCH PPS final rule for a detailed discussion of the changes. As we have done in the past, to calculate the proposed FY 2019 outlier threshold, we simulated payments by applying proposed FY 2019 payment rates and policies using cases from the FY 2017 MedPAR file. As noted in section II.C. of this Addendum, we specify the formula used for actual claim payment which is also used by CMS to project the outlier threshold for the upcoming fiscal year. The difference is the source of some of the variables in the formula. For example, operating and capital CCRs for actual claim payment are from the PSF while CMS uses an adjusted CCR (as described below) to project the threshold for the upcoming fiscal year. In addition, charges for a claim payment are from the bill while charges to project the threshold are from the MedPAR data with an inflation factor applied to the charges (as described earlier). In order to determine the proposed FY 2019 outlier threshold, we inflated the charges on the MedPAR claims by 2 years, from FY 2017 to FY 2019. As discussed in the FY 2015 IPPS/LTCH PPS final rule, we believe a methodology that is based on 1-year of charge data will provide a more stable measure to project the average charge per case because our prior methodology used a 6-month measure, which inherently uses fewer claims than a 1-year measure and makes it more susceptible to fluctuations in the average charge per case as a result of any significant charge increases or decreases by hospitals. As finalized in the FY 2017 IPPS/ LTCH PPS final rule (81 FR 57282), we are Covered charges (January 1, 2017, through December 31, 2017) Cases (January 1, 2016, through December 31, 2016) Cases (January 1, 2017, through December 31, 2017) ....................................................................... ....................................................................... ....................................................................... ....................................................................... $140,753,065,878 135,409,469,345 132,239,610,957 138,440,787,173 2,506,525 2,414,710 2,356,131 2,412,708 $149,358,509,178 140,445,911,726 135,004,161,478 108,175,925,297 2,551,065 2,397,110 2,293,958 1,821,225 Total .......................................................... daltland on DSKBBV9HB2PROD with PROPOSALS2 1 2 3 4 20581 546,842,933,353 9,690,074 532,984,507,679 9,063,358 Under this methodology, to compute the 1year average annualized rate-of-change in charges per case for FY 2019, we compared the average covered charge per case of $56,433 ($546,842,933,353/9,690,074) from the second quarter of FY 2016 through the first quarter of FY 2017 (January 1, 2016, through December 31, 2016) to the average covered charge per case of $58,806.52 ($532,984,507,679/9,063,358) from the second quarter of FY 2017 through the first quarter of FY 2018 (January 1, 2017, through December 31, 2017). This rate-of-change was 4.2 percent (1.04205) or 9.5 percent (1.085868) over 2 years. The billed charges are obtained from the claim from the MedPAR file and inflated by the inflation factor specified above. As we have done in the past, in this proposed rule, we are proposing to establish VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 the proposed FY 2019 outlier threshold using hospital CCRs from the December 2017 update to the Provider-Specific File (PSF)— the most recent available data at the time of the development of this proposed rule. We are proposing to apply the following edits to providers’ CCRs in the PSF. We believe these edits are appropriate in order to accurately model the outlier threshold. We first search for Indian Health Service providers and those providers assigned the statewide average CCR from the current fiscal year. We then replace these CCRs with the statewide average CCR for the upcoming fiscal year. We also assign the statewide average CCR (for the upcoming fiscal year) to those providers that have no value in the CCR field in the PSF or whose CCRs exceed the ceilings described later in this section (3.0 standard deviations from the mean of the log distribution of CCRs for all PO 00000 Frm 00419 Fmt 4701 Sfmt 4702 hospitals). We do not apply the adjustment factors described below to hospitals assigned the statewide average CCR. For FY 2019, we also are proposing to continue to apply an adjustment factor to the CCRs to account for cost and charge inflation (as explained below). We are proposing that, if more recent data became available, we would use that data to calculate the final FY 2019 outlier threshold. In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50979), we adopted a new methodology to adjust the CCRs. Specifically, we finalized a policy to compare the national average case-weighted operating and capital CCR from the most recent update of the PSF to the national average case-weighted operating and capital CCR from the same period of the prior year. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20582 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules Therefore, as we have done since FY 2014, we are proposing to adjust the CCRs from the December 2017 update of the PSF by comparing the percentage change in the national average case-weighted operating CCR and capital CCR from the December 2016 update of the PSF to the national average case-weighted operating CCR and capital CCR from the December 2017 update of the PSF. We note that we used total transfer-adjusted cases from FY 2017 to determine the national average case-weighted CCRs for both sides of the comparison. As stated in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50979), we believe that it is appropriate to use the same case count on both sides of the comparison because this will produce the true percentage change in the average case-weighted operating and capital CCR from one year to the next without any effect from a change in case count on different sides of the comparison. Using the proposed methodology above, for the proposed rule, we calculated a proposed December 2016 operating national average case-weighted CCR of 0.266065 and a proposed December 2017 operating national average case-weighted CCR of 0.262830. We then calculated the percentage change between the two national operating caseweighted CCRs by subtracting the December 2016 operating national average caseweighted CCR from the December 2017 operating national average case-weighted CCR and then dividing the result by the December 2016 national operating average case-weighted CCR. This resulted in a proposed national operating CCR adjustment factor of 0.987842. We used the same methodology proposed above to adjust the capital CCRs. Specifically, we calculated a December 2016 capital national average case-weighted CCR of 0.023104 and a December 2017 capital national average case-weighted CCR of 0.022076. We then calculated the percentage change between the two national capital case-weighted CCRs by subtracting the December 2016 capital national average caseweighted CCR from the December 2017 capital national average case-weighted CCR and then dividing the result by the December 2016 capital national average case-weighted CCR. This resulted in a proposed national capital CCR adjustment factor of 0.955517. As discussed in section III.B.3. of the preamble of the FY 2011 IPPS/LTCH PPS final rule (75 FR 50160 and 50161) and in section III.G.3. of the preamble of this proposed rule, in accordance with section 10324(a) of the Affordable Care Act, we created a wage index floor of 1.0000 for all hospitals located in States determined to be frontier States. We note that the frontier State floor adjustments were applied after rural floor budget neutrality adjustments were applied for all labor market areas, in order to ensure that no hospital in a frontier State would receive a wage index less than 1.0000 due to the proposed rural floor adjustment. In accordance with section 10324(a) of the Affordable Care Act, the frontier State adjustment will not be subject to budget neutrality, and will only be extended to hospitals geographically located within a frontier State. However, for purposes of VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 estimating the proposed outlier threshold for FY 2019, it was necessary to adjust the proposed wage index of those eligible hospitals in a frontier State when calculating the proposed outlier threshold that results in outlier payments being 5.1 percent of total payments for FY 2019. If we did not take the above into account, our estimate of total FY 2019 payments would be too low, and, as a result, our proposed outlier threshold would be too high, such that estimated outlier payments would be less than our projected 5.1 percent of total payments. As we did in establishing the FY 2009 outlier threshold (73 FR 57891), in our projection of FY 2019 outlier payments, we are proposing not to make any adjustments for the possibility that hospitals’ CCRs and outlier payments may be reconciled upon cost report settlement. We continue to believe that, due to the policy implemented in the June 9, 2003 Outlier Final Rule (68 FR 34494), CCRs will no longer fluctuate significantly and, therefore, few hospitals will actually have these ratios reconciled upon cost report settlement. In addition, it is difficult to predict the specific hospitals that will have CCRs and outlier payments reconciled in any given year. We note that we have instructed MACs to identify for CMS any instances where: (1) A hospital’s actual CCR for the cost reporting period fluctuates plus or minus 10 percentage points compared to the interim CCR used to calculate outlier payments when a bill is processed; and (2) the total outlier payments for the hospital exceeded $500,000.00 for that period. Our simulations assume that CCRs accurately measure hospital costs based on information available to us at the time we set the outlier threshold. For these reasons, we are proposing not to make any assumptions regarding the effects of reconciliation on the outlier threshold calculation. As described in sections IV.H. and IV.I., respectively, of the preamble of this proposed rule, sections 1886(q) and 1886(o) of the Act establish the Hospital Readmissions Reduction Program and the Hospital VBP Program, respectively. We do not believe that it is appropriate to include the proposed hospital VBP payment adjustments and the estimated hospital readmissions payment adjustments in the proposed outlier threshold calculation or the proposed outlier offset to the standardized amount. Specifically, consistent with our definition of the base operating DRG payment amount for the Hospital Readmissions Reduction Program under § 412.152 and the Hospital VBP Program under § 412.160, outlier payments under section 1886(d)(5)(A) of the Act are not affected by these payment adjustments. Therefore, outlier payments would continue to be calculated based on the unadjusted base DRG payment amount (as opposed to using the base-operating DRG payment amount adjusted by the hospital readmissions payment adjustment and the hospital VBP payment adjustment). Consequently, we are proposing to exclude the proposed hospital VBP payment adjustments and the estimated hospital readmissions payment adjustments from the calculation of the proposed outlier fixed-loss cost threshold. PO 00000 Frm 00420 Fmt 4701 Sfmt 4702 We note that, to the extent section 1886(r) of the Act modifies the DSH payment methodology under section 1886(d)(5)(F) of the Act, the uncompensated care payment under section 1886(r)(2) of the Act, like the empirically justified Medicare DSH payment under section 1886(r)(1) of the Act, may be considered an amount payable under section 1886(d)(5)(F) of the Act such that it would be reasonable to include the payment in the outlier determination under section 1886(d)(5)(A) of the Act. As we have done since the implementation of uncompensated care payments in FY 2014, for FY 2019, we also are proposing to allocate an estimated per-discharge uncompensated care payment amount to all cases for the hospitals eligible to receive the uncompensated care payment amount in the calculation of the outlier fixedloss cost threshold methodology. We continue to believe that allocating an eligible hospital’s estimated uncompensated care payment to all cases equally in the calculation of the outlier fixed-loss cost threshold would best approximate the amount we would pay in uncompensated care payments during the year because, when we make claim payments to a hospital eligible for such payments, we would be making estimated per-discharge uncompensated care payments to all cases equally. Furthermore, we continue to believe that using the estimated per-claim uncompensated care payment amount to determine outlier estimates provides predictability as to the amount of uncompensated care payments included in the calculation of outlier payments. Therefore, consistent with the methodology used since FY 2014 to calculate the outlier fixed-loss cost threshold, for FY 2019, we are proposing to include estimated FY 2019 uncompensated care payments in the computation of the proposed outlier fixedloss cost threshold. Specifically, we are proposing to use the estimated per-discharge uncompensated care payments to hospitals eligible for the uncompensated care payment for all cases in the calculation of the proposed outlier fixed-loss cost threshold methodology. Using this methodology, we used the formula described in section I.C.1 of this Addendum to simulate and calculate the Federal payment rate and outlier payments for all claims. We used a threshold of $27,545 and calculated total operating Federal payments of $92,908,351,672 and total outlier payments of $4,738,377,622. We then divided total outlier payments by total operating Federal payments plus total outlier payments and determined that this threshold met the 5.1 percent target. As a result, we are proposing an outlier fixed-loss cost threshold for FY 2019 equal to the prospective payment rate for the MS–DRG, plus any IME, empirically justified Medicare DSH payments, estimated uncompensated care payment, and any add-on payments for new technology, plus $27,545. (2) Other Proposed Changes Concerning Outliers As stated in the FY 1994 IPPS final rule (58 FR 46348), we establish an outlier threshold that is applicable to both hospital inpatient operating costs and hospital inpatient E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules capital-related costs. When we modeled the combined operating and capital outlier payments, we found that using a common threshold resulted in a lower percentage of outlier payments for capital-related costs than for operating costs. We project that the thresholds for FY 2019 will result in outlier payments that will equal 5.1 percent of operating DRG payments and 5.06 percent of capital payments based on the Federal rate. In accordance with section 1886(d)(3)(B) of the Act, we are proposing to reduce the FY 2019 standardized amount by the same percentage to account for the projected proportion of payments paid as outliers. The proposed outlier adjustment factors that would be applied to the standardized amount based on the proposed FY 2019 outlier threshold are as follows: Operating standardized amounts daltland on DSKBBV9HB2PROD with PROPOSALS2 National ......... Capital federal rate 0.948999 0.949367 We are proposing to apply the outlier adjustment factors to the proposed FY 2019 payment rates after removing the effects of the FY 2018 outlier adjustment factors on the standardized amount. To determine whether a case qualifies for outlier payments, we currently apply hospital-specific CCRs to the total covered charges for the case. Estimated operating and capital costs for the case are calculated separately by applying separate operating and capital CCRs. These costs are then combined and compared with the outlier fixed-loss cost threshold. Under our current policy at § 412.84, we calculate operating and capital CCR ceilings and assign a statewide average CCR for hospitals whose CCRs exceed 3.0 standard deviations from the mean of the log distribution of CCRs for all hospitals. Based on this calculation, for hospitals for which the MAC computes operating CCRs greater than 1.167 or capital CCRs greater than 0.154, or hospitals for which the MAC is unable to calculate a CCR (as described under § 412.84(i)(3) of our regulations), statewide average CCRs are used to determine whether a hospital qualifies for outlier payments. Table 8A listed in section VI. of this Addendum (and available only via the internet on the CMS website) contains the proposed statewide average operating CCRs for urban hospitals and for rural hospitals for which the MAC is unable to compute a hospital-specific CCR within the above range. These statewide average ratios would be effective for discharges occurring on or after October 1, 2018 and would replace the statewide average ratios from the prior fiscal year. Table 8B listed in section VI. of this Addendum (and available via the internet on the CMS website) contains the comparable proposed statewide average capital CCRs. As previously stated, the proposed CCRs in Tables 8A and 8B would be used during FY 2019 when hospital-specific CCRs based on the latest settled cost report either are not available or are outside the range noted above. Table 8C listed in section VI. of this Addendum (and available via the internet on VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 the CMS website) contains the proposed statewide average total CCRs used under the LTCH PPS as discussed in section V. of this Addendum. We finally note that we published a manual update (Change Request 3966) to our outlier policy on October 12, 2005, which updated Chapter 3, Section 20.1.2 of the Medicare Claims Processing Manual. The manual update covered an array of topics, including CCRs, reconciliation, and the time value of money. We encourage hospitals that are assigned the statewide average operating and/or capital CCRs to work with their MAC on a possible alternative operating and/or capital CCR as explained in Change Request 3966. Use of an alternative CCR developed by the hospital in conjunction with the MAC can avoid possible overpayments or underpayments at cost report settlement, thereby ensuring better accuracy when making outlier payments and negating the need for outlier reconciliation. We also note that a hospital may request an alternative operating or capital CCR at any time as long as the guidelines of Change Request 3966 are followed. In addition, as mentioned above, we published an additional manual update (Change Request 7192) to our outlier policy on December 3, 2010, which also updated Chapter 3, Section 20.1.2 of the Medicare Claims Processing Manual. The manual update outlines the outlier reconciliation process for hospitals and Medicare contractors. To download and view the manual instructions on outlier reconciliation, we refer readers to the CMS website: https:// www.cms.hhs.gov/manuals/downloads/ clm104c03.pdf. (3) Alternative Considered for a Potential Change to the CCRs Used for Outliers, New Technology Add-On Payments, and Payments to IPPS-Excluded Cancer Hospitals for Chimeric Antigen Receptor (CAR) T-Cell Therapy As discussed in section II.F.2.d. of the preamble of this proposed rule, we have received many inquiries from the public regarding payment of CAR T-cell therapy. For FY 2019, one suggestion from the public was to allow hospitals to utilize a CCR specific to the ICD–10–PCS procedure codes used to report the performance of procedures involving the use of CAR T-cell therapy drugs, for example a CCR of 1.0, when determining whether an individual case qualifies for FY 2019 outlier payments and to determine the cost of an individual case for FY 2019 for purposes of a new technology add-on payment, if approved. As previously discussed, procedures involving the use of CAR T-cell therapy drugs are currently identified with ICD–10–PCS procedure codes XW033C3 (Introduction of engineered autologous chimeric antigen receptor t-cell immunotherapy into peripheral vein, percutaneous approach, new technology group 3) and XW043C3 (Introduction of engineered autologous chimeric antigen receptor t-cell immunotherapy into central vein, percutaneous approach, new technology group 3), which both became effective October 1, 2017. Two CAR T-cell therapy drugs received FDA approval in 2017. KYMRIAHTM (manufactured by Novartis Pharmaceuticals PO 00000 Frm 00421 Fmt 4701 Sfmt 4702 20583 Corporation) was approved for the use in the treatment of patients up to 25 years of age with B-cell precursor acute lymphoblastic leukemia (ALL) that is refractory or in second or later relapse. YESCARTATM (manufactured by Kite Pharma, Inc.) was approved for the use in the treatment of adult patients with certain types of large B-cell lymphoma and who have not responded to or who have relapsed after at least two other kinds of treatment. As discussed in greater detail in section II.H.5.a. of the preamble of this proposed rule, the manufacturer of KYMRIAHTM and the manufacturer of YESCARTATM submitted separate applications for new technology add-on payments for FY 2019. We believe that, in the context of these pending new technology add-on payment applications, there may also be merit in the suggestion from the public to allow hospitals to utilize a CCR specific to procedures involving the ICD–10–PCS procedures codes describing CAR T-cell therapy drugs for FY 2019 as part of the determination of the cost of a case for purposes of calculating outlier payments for individual FY 2019 cases, new technology add-on payments, if approved, for individual FY 2019 cases, and payments to IPPSexcluded cancer hospitals beginning in FY 2019. For example, a CCR of 1.0 could be used for charges associated with ICD–10–PCS procedure codes XW033C3 and XW043C3, as many public inquirers believed hospitals would be unlikely to set charges different from costs for the use of KYMRIAHTM and YESCARTATM. Such a change would result in a higher outlier payment, higher new technology add-on payment, or the determination of higher costs for IPPSexcluded cancer hospital cases. For example, if a hospital charged $400,000 for the procedure described by ICD–10–PCS procedure code XW033C3, the application of a hypothetical CCR of 0.25 results in a cost of $100,000 (= $400,000 * 0.25) while the application of a hypothetical CCR of 1.00 results in a cost of $400,000 (= $400,000 * 1.0). We are inviting public comments on this alternative approach for FY 2019. We also are inviting comments on how this payment alternative would affect access to care, as well as how it affects incentives to encourage lower drug prices, which is a high priority for this Administration. In addition, we are considering alternative approaches and authorities to encourage value-based care and lower drug prices. We solicit comments on how the payment methodology alternatives may intersect and affect future participation in any such alternative approaches. (4) FY 2017 Outlier Payments Our current estimate, using available FY 2017 claims data, is that actual outlier payments for FY 2017 were approximately 5.53 percent of actual total MS–DRG payments. Therefore, the data indicate that, for FY 2017, the percentage of actual outlier payments relative to actual total payments is higher than we projected for FY 2017. Consistent with the policy and statutory interpretation we have maintained since the inception of the IPPS, we do not make retroactive adjustments to outlier payments E:\FR\FM\07MYP2.SGM 07MYP2 20584 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules to ensure that total outlier payments for FY 2017 are equal to 5.1 percent of total MS– DRG payments. As explained in the FY 2003 Outlier Final Rule (68 FR 34502), if we were to make retroactive adjustments to all outlier payments to ensure total payments are 5.1 percent of MS–DRG payments (by retroactively adjusting outlier payments), we would be removing the important aspect of the prospective nature of the IPPS. Because such an across-the-board adjustment would either lead to more or less outlier payments for all hospitals, hospitals would no longer be able to reliably approximate their payment for a patient while the patient is still hospitalized. We believe it would be neither necessary nor appropriate to make such an aggregate retroactive adjustment. Furthermore, we believe it is consistent with the statutory language at section 1886(d)(5)(A)(iv) of the Act not to make retroactive adjustments to outlier payments. This section states that outlier payments be equal to or greater than 5 percent and less than or equal to 6 percent of projected or estimated (not actual) MS–DRG payments. We believe that an important goal of a PPS is predictability. Therefore, we believe that the fixed-loss outlier threshold should be projected based on the best available historical data and should not be adjusted retroactively. A retroactive change to the fixed-loss outlier threshold would affect all hospitals subject to the IPPS, thereby undercutting the predictability of the system as a whole. We note that, because the MedPAR claims data for the entire FY 2018 will not be available until after September 30, 2018, we are unable to provide an estimate of actual outlier payments for FY 2018 based on FY 2018 claims data in this proposed rule. We will provide an estimate of actual FY 2018 outlier payments in the FY 2020 IPPS/LTCH PPS proposed rule. 5. Proposed FY 2019 Standardized Amount The adjusted standardized amount is divided into labor-related and nonlaborrelated portions. Tables 1A and 1B listed and published in section VI. of this Addendum (and available via the internet on the CMS website) contain the national standardized amounts that we are proposing to apply to all hospitals, except hospitals located in Puerto Rico, for FY 2019. The proposed standardized amount for hospitals in Puerto Rico is shown in Table 1C listed and published in section VI. of this Addendum (and available via the internet on the CMS website). The proposed amounts shown in Tables 1A and 1B differ only in that the labor-related share applied to the standardized amounts in Table 1A is 68.3 percent, and the labor-related share applied to the standardized amounts in Table 1B is 62 percent. In accordance with sections 1886(d)(3)(E) and 1886(d)(9)(C)(iv) of the Act, we are proposing to apply a labor-related share of 62 percent, unless application of that percentage would result in lower payments to a hospital than would otherwise be made. In effect, the statutory provision means that we will apply a labor-related share of 62 percent for all hospitals whose wage indexes are less than or equal to 1.0000. In addition, Tables 1A and 1B include the proposed standardized amounts reflecting the proposed applicable percentage increases for FY 2019. The proposed labor-related and nonlaborrelated portions of the national average standardized amounts for Puerto Rico hospitals for FY 2019 are set forth in Table 1C listed and published in section VI. of this Addendum (and available via the internet on the CMS website). Similar to above, section 1886(d)(9)(C)(iv) of the Act, as amended by section 403(b) of Public Law 108–173, provides that the labor-related share for hospitals located in Puerto Rico be 62 percent, unless the application of that percentage would result in lower payments to the hospital. The following table illustrates the changes from the FY 2018 national standardized amount to the proposed FY 2019 national standardized amount. The second through fifth columns display the changes from the FY 2018 standardized amounts for each applicable proposed FY 2019 standardized amount. The first row of the table shows the updated (through FY 2018) average standardized amount after restoring the FY 2018 offsets for outlier payments and the geographic reclassification budget neutrality. The MS–DRG reclassification and recalibration and wage index budget neutrality adjustment factors are cumulative. Therefore, those FY 2018 adjustment factors are not removed from this table. CHANGES FROM FY 2018 STANDARDIZED AMOUNTS TO THE PROPOSED FY 2019 STANDARDIZED AMOUNTS Hospital submitted quality data and is a meaningful EHR user daltland on DSKBBV9HB2PROD with PROPOSALS2 FY 2018 Base Rate after removing: 1. FY 2018 Geographic Reclassification Budget Neutrality (0.987985). 2. FY 2018 Operating Outlier Offset (0.948998). Proposed FY 2019 Update Factor .................. Proposed FY 2019 MS–DRG Recalibration Budget Neutrality Factor. Proposed FY 2019 Wage Index Budget Neutrality Factor. Proposed FY 2019 Reclassification Budget Neutrality Factor. Proposed FY 2019 Operating Outlier Factor .. Proposed FY 2019 Rural Demonstration Budget Neutrality Factor. Adjustment for FY 2019 Required under Section 414 of Public Law 114–10 (MACRA). Proposed National Standardized Amount for FY 2019 if Wage Index is Greater Than 1.0000; Labor/Non-Labor Share Percentage (68.3/31.7). Proposed National Standardized Amount for FY 2019 if Wage Index is Less Than or Equal to 1.0000; Labor/Non-Labor Share Percentage (62/0;38). VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Hospital submitted quality data and is NOT a meaningful EHR user Hospital did NOT submit quality data and is a meaningful EHR user Hospital did NOT submit quality data and is NOT a meaningful EHR user If Wage Index is Greater Than 1.0000: Labor (68.3%): $4,059.36 Nonlabor (30.4%): $1,884.07 If Wage Index is less Than or Equal to 1.0000: Labor (62%): $3,684.92 Nonlabor (38%): $2,258.50 1.0125 ................................ 0.997896 ............................ If Wage Index is Greater Than 1.0000: Labor (68.3%): $4,059.36 Nonlabor (30.4%): $1,884.07 If Wage Index is less Than or Equal to 1.0000: Labor (62%): $3,684.92 Nonlabor (38%): $2,258.50 0.9915 ................................ 0.997896 ............................ If Wage Index is Greater Than 1.0000: Labor (68.3%): $4,059.36 Nonlabor (30.4%): $1,884.07 If Wage Index is less Than or Equal to 1.0000: Labor (62%): $3,684.92 Nonlabor (38%): $2,258.50 1.0055 ................................ 0.997896 ............................ If Wage Index is Greater Than 1.0000: Labor (68.3%): $4,059.36 Nonlabor (30.4%): $1,884.07 If Wage Index is less Than or Equal to 1.0000: Labor (62%): $3,684.92 Nonlabor (38%): $2,258.50 0.9845 0.997896 1.001182 ............................ 1.001182 ............................ 1.001182 ............................ 1.001182 0.987084 ............................ 0.987084 ............................ 0.987084 ............................ 0.987084 0.948999 ............................ 0.999325 ............................ 0.948999 ............................ 0.999325 ............................ 0.948999 ............................ 0.999325 ............................ 0.948999 0.999325 1.005 .................................. 1.005 .................................. 1.005 .................................. 1.005 Labor: $3,863.17 Nonlabor: $1,793.01 Labor: $3,783.04 Nonlabor: $1,755.82 Labor: $3,836.46 Nonlabor: $1,780.61 Labor: $3,756.34 Nonlabor: $1,743.43 Labor: $3,506.83 Nonlabor: $2,149.35 Labor: $3,434.09 Nonlabor: $2,104.77 Labor: $3,482.58 Nonlabor: $2,134.49 Labor: $3,409.86 Nonlabor: $2,089.91 PO 00000 Frm 00422 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules B. Proposed Adjustments for Area Wage Levels and Cost-of-Living Tables 1A through 1C, as published in section VI. of this Addendum (and available via the internet on the CMS website), contain the proposed labor-related and nonlaborrelated shares that we are proposing to use to calculate the prospective payment rates for hospitals located in the 50 States, the District of Columbia, and Puerto Rico for FY 2019. This section addresses two types of adjustments to the standardized amounts that are made in determining the proposed prospective payment rates as described in this Addendum. 1. Proposed Adjustment for Area Wage Levels Sections 1886(d)(3)(E) and 1886(d)(9)(C)(iv) of the Act require that we make an adjustment to the labor-related portion of the national prospective payment rate to account for area differences in hospital wage levels. This adjustment is made by multiplying the labor-related portion of the adjusted standardized amounts by the appropriate wage index for the area in which the hospital is located. For FY 2019, as discussed in section IV.B.3. of the preamble of this proposed rule, we are proposing to apply a labor-related share of 68.3 percent for the national standardized amounts for all IPPS hospitals (including hospitals in Puerto Rico) that have a wage index value that is greater than 1.0000. Consistent with section 1886(d)(3)(E) of the Act, we are proposing to apply the wage index to a labor-related share of 62 percent of the national standardized amount for all IPPS hospitals (including hospitals in Puerto Rico) whose wage index values are less than or equal to 1.0000. In section III. of the preamble of this proposed rule, we discuss the data and methodology for the proposed FY 2019 wage index. 2. Proposed Adjustment for Cost-of-Living in Alaska and Hawaii Section 1886(d)(5)(H) of the Act provides discretionary authority to the Secretary to make adjustments as the Secretary deems appropriate to take into account the unique circumstances of hospitals located in Alaska and Hawaii. Higher labor-related costs for these two States are taken into account in the adjustment for area wages described above. To account for higher nonlabor-related costs for these two States, we multiply the nonlabor-related portion of the standardized amount for hospitals in Alaska and Hawaii by an adjustment factor. 20585 In the FY 2013 IPPS/LTCH PPS final rule, we established a methodology to update the COLA factors for Alaska and Hawaii that were published by the U.S. Office of Personnel Management (OPM) every 4 years (at the same time as the update to the laborrelated share of the IPPS market basket), beginning in FY 2014. We refer readers to the FY 2013 IPPS/LTCH PPS proposed and final rules for additional background and a detailed description of this methodology (77 FR 28145 through 28146 and 77 FR 53700 through 53701, respectively). For FY 2018, in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38530 through 38531), we updated the COLA factors published by OPM for 2009 (as these are the last COLA factors OPM published prior to transitioning from COLAs to locality pay) using the methodology that we finalized in the FY 2013 IPPS/LTCH PPS final rule. Based on the policy finalized in the FY 2013 IPPS/LTCH PPS final rule, we are proposing to continue to use the same COLA factors in FY 2019 that were used in FY 2018 to adjust the nonlabor-related portion of the standardized amount for hospitals located in Alaska and Hawaii. Below is a table listing the proposed COLA factors for FY 2019. PROPOSED FY2019 COST-OF-LIVING ADJUSTMENT FACTORS: ALASKA AND HAWAII HOSPITALS Cost of living adjustment factor Area Alaska: City of Anchorage and 80-kilometer (50-mile) radius by road ..................................................................................................... City of Fairbanks and 80-kilometer (50-mile) radius by road ...................................................................................................... City of Juneau and 80-kilometer (50-mile) radius by road .......................................................................................................... Rest of Alaska .............................................................................................................................................................................. 1.25 1.25 1.25 1.25 City and County of Honolulu ........................................................................................................................................................ County of Hawaii .......................................................................................................................................................................... County of Kauai ............................................................................................................................................................................ County of Maui and County of Kalawao ...................................................................................................................................... 1.25 1.21 1.25 1.25 daltland on DSKBBV9HB2PROD with PROPOSALS2 Based on the policy finalized in the FY 2013 IPPS/LTCH PPS final rule, the next update to the COLA factors for Alaska and Hawaii would occur at the same time as the update to the labor-related share of the IPPS market basket (no later than FY 2022). C. Calculation of the Proposed Prospective Payment Rates General Formula for Calculation of the Prospective Payment Rates for FY 2019 In general, the operating prospective payment rate for all hospitals (including hospitals in Puerto Rico) paid under the IPPS, except SCHs and MDHs, for FY 2019 equals the Federal rate (which includes uncompensated care payments). Section 205 of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (Pub. L. 114–10, enacted on April 16, 2015) extended the MDH program (which, under previous law, was to be in effect for discharges on or before March 31, 2015 only) for discharges occurring on or after April 1, 2015, through FY 2017 (that is, for discharges occurring on or before September 30, 2017). VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Section 50205 of the Bipartisan Budget Act of 2018 (Pub. L. 115–123), enacted February 9, 2018, extended the MDH program for discharges on or after October 1, 2017 through September 30, 2022. SCHs are paid based on whichever of the following rates yields the greatest aggregate payment: The Federal national rate (which, as discussed in section V.G. of the preamble of this proposed rule, includes uncompensated care payments); the updated hospital-specific rate based on FY 1982 costs per discharge; the updated hospital-specific rate based on FY 1987 costs per discharge; the updated hospital-specific rate based on FY 1996 costs per discharge; or the updated hospital-specific rate based on FY 2006 costs per discharge to determine the rate that yields the greatest aggregate payment. The prospective payment rate for SCHs for FY 2019 equals the higher of the applicable Federal rate, or the hospital-specific rate as described below. The prospective payment rate for MDHs for FY 2019 equals the higher of the Federal rate, or the Federal rate plus 75 percent of the difference between the PO 00000 Frm 00423 Fmt 4701 Sfmt 4702 Federal rate and the hospital-specific rate as described below. For MDHs, the updated hospital-specific rate is based on FY 1982, FY 1987, or FY 2002 costs per discharge, whichever yields the greatest aggregate payment. 1. Operating and Capital Federal Payment Rate and Outlier Payment Calculation Note: The formula below is used for actual claim payment and is also used by CMS to project the outlier threshold for the upcoming fiscal year. The difference is the source of some of the variables in the formula. For example, operating and capital CCRs for actual claim payment are from the PSF while CMS uses an adjusted CCR (as described above) to project the threshold for the upcoming fiscal year. In addition, charges for a claim payment are from the bill while charges to project the threshold are from the MedPAR data with an inflation factor applied to the charges (as described earlier). Step 1—Determine the MS–DRG and MS– DRG relative weight for each claim based on E:\FR\FM\07MYP2.SGM 07MYP2 20586 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules the ICD–10–CM procedure and diagnosis codes on the claim. Step 2—Select the applicable average standardized amount depending on whether the hospital submitted qualifying quality data and is a meaningful EHR user, as described above. Step 3—Compute the operating and capital Federal payment rate: —Federal Payment Rate for Operating Costs = MS–DRG Relative Weight × [(LaborRelated Applicable Standardized Amount × Applicable CBSA Wage Index) + (Nonlabor-Related Applicable Standardized Amount × Cost-of-Living Adjustment)] × (1 + IME + (DSH * 0.25)) —Federal Payment for Capital Costs = MS– DRG Relative Weight × Federal Capital Rate × Geographic Adjustment Fact × (l + IME + DSH) Step 4—Determine operating and capital costs: —Operating Costs = (Billed Charges × Operating CCR) —Capital Costs = (Billed Charges × Capital CCR). Step 5—Compute operating and capital outlier threshold (CMS applies a geographic adjustment to the operating and capital outlier threshold to account for local cost variation): —Operating CCR to Total CCR = (Operating CCR)/(Operating CCR + Capital CCR) —Operating Outlier Threshold = [Fixed Loss Threshold × ((Labor-Related Portion × CBSA Wage Index) + Nonlabor-Related portion)] × Operating CCR to Total CCR + Federal Payment with IME, DSH + Uncompensated Care Payment + New Technology Add-On Payment Amount —Capital CCR to Total CCR = (Capital CCR)/ (Operating CCR + Capital CCR) —Capital Outlier Threshold = (Fixed Loss Threshold × Geographic Adjustment Factor × Capital CCR to Total CCR) + Federal Payment with IME and DSH Step 6—Compute operating and capital outlier payments: —Marginal Cost Factor = 0.80 or 0.90 (depending on the MS–DRG) —Operating Outlier Payment = (Operating Costs¥Operating Outlier Threshold) × Marginal Cost Factor —Capital Outlier Payment = (Capital Costs¥ Capital Outlier Threshold) × Marginal Cost Factor The payment rate may then be further adjusted for hospitals that qualify for a lowvolume payment adjustment under section 1886(d)(12) of the Act and 42 CFR 412.101(b). The base-operating DRG payment amount may be further adjusted by the hospital readmissions payment adjustment and the hospital VBP payment adjustment as described under sections 1886(q) and 1886(o) of the Act, respectively. Payments also may be reduced by the 1-percent adjustment under the HAC Reduction Program as described in section 1886(p) of the Act. We also make new technology add-on payments in accordance with section 1886(d)(5)(K) and (L) of the Act. Finally, we add the uncompensated care payment to the total claim payment amount. As noted in the formula above, we take uncompensated care payments and new technology add-on payments into consideration when calculating outlier payments. 2. Hospital-Specific Rate (Applicable Only to SCHs and MDHs) a. Calculation of Hospital-Specific Rate Section 1886(b)(3)(C) of the Act provides that SCHs are paid based on whichever of the following rates yields the greatest aggregate payment: The Federal rate; the updated hospital-specific rate based on FY 1982 costs per discharge; the updated hospital-specific rate based on FY 1987 costs per discharge; the updated hospital-specific rate based on FY 1996 costs per discharge; or the updated hospital-specific rate based on FY 2006 costs per discharge to determine the rate that yields the greatest aggregate payment. As noted above, as discussed in section IV.G. of the preamble of this FY 2019 IPPS/ LTCH PPS proposed rule, section 205 of the Hospital submitted quality data and is a meaningful EHR user FY 2019 daltland on DSKBBV9HB2PROD with PROPOSALS2 Proposed Market Basket Rate-of-Increase ..................................................... Proposed Adjustment for Failure to Submit Quality Data under Section 1886(b)(3)(B)(viii) of the Act ........................................................................ Proposed Adjustment for Failure to be a Meaningful EHR User under Section 1886(b)(3)(B)(ix) of the Act ................................................................... Proposed MFP Adjustment under Section 1886(b)(3)(B)(xi) of the Act .......... Statutory Adjustment under Section 1886(b)(3)(B)(xii) of the Act ................... Proposed Applicable Percentage Increase Applied to Standardized Amount For a complete discussion of the applicable percentage increase applied to the hospitalspecific rates for SCHs and MDHs, we refer readers to section IV.B. of the preamble of this proposed rule. In addition, because SCHs and MDHs use the same MS–DRGs as other hospitals when they are paid based in whole or in part on the hospital-specific rate, the hospital- VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Frm 00424 Fmt 4701 Sfmt 4702 b. Updating the FY 1982, FY 1987, FY 1996, FY 2002 and FY 2006 Hospital-Specific Rate for FY 2019 Section 1886(b)(3)(B)(iv) of the Act provides that the applicable percentage increase applicable to the hospital-specific rates for SCHs and MDHs equals the applicable percentage increase set forth in section 1886(b)(3)(B)(i) of the Act (that is, the same update factor as for all other hospitals subject to the IPPS). Because the Act sets the update factor for SCHs and MDHs equal to the update factor for all other IPPS hospitals, the update to the hospital-specific rates for SCHs and MDHs is subject to the amendments to section 1886(b)(3)(B) of the Act made by sections 3401(a) and 10319(a) of the Affordable Care Act. Accordingly, the proposed applicable percentage increases to the hospital-specific rates applicable to SCHs and MDHs are the following: Hospital submitted quality data and is NOT a Meaningful EHR user Hospital did NOT submit quality data and is a meaningful EHR user Hospital did NOT submit quality data and is NOT a Meaningful EHR user 2.8 2.8 2.8 2.8 0.0 0.0 ¥0.7 ¥0.7 0.0 ¥0.8 ¥0.75 1.25 ¥2.1 ¥0.8 ¥0.75 ¥0.85 0.0 ¥0.8 ¥0.75 0.55 ¥2.1 ¥0.8 ¥0.75 ¥1.55 specific rate is adjusted by a budget neutrality factor to ensure that changes to the MS–DRG classifications and the recalibration of the MS–DRG relative weights are made in a manner so that aggregate IPPS payments are unaffected. Therefore, the proposed hospitalspecific rate for an SCH or an MDH is adjusted by the proposed MS–DRG reclassification and recalibration budget PO 00000 Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (Pub. L. 114–10, enacted on April 16, 2015) extended the MDH program (which, under previous law, was to be in effect for discharges on or before March 31, 2015 only) for discharges occurring on or after April 1, 2015, through FY 2017 (that is, for discharges occurring on or before September 30, 2017). Section 50205 of the Bipartisan Budget Act of 2018, enacted February 9, 2018, extended the MDH program for discharges on or after October 1, 2017 through September 30, 2022. For MDHs, the updated hospital-specific rate is based on FY 1982, FY 1987, or FY 2002 costs per discharge, whichever yields the greatest aggregate payment. For a more detailed discussion of the calculation of the hospital-specific rates, we refer readers to the FY 1984 IPPS interim final rule (48 FR 39772); the April 20, 1990 final rule with comment period (55 FR 15150); the FY 1991 IPPS final rule (55 FR 35994); and the FY 2001 IPPS final rule (65 FR 47082). neutrality factor of 0.997896, as discussed in section III. of this Addendum. The resulting rate is used in determining the payment rate that an SCH or MDH would receive for its discharges beginning on or after October 1, 2018. We note that, in this proposed rule, for FY 2019, we are not making a documentation and coding adjustment to the hospitalspecific rate. We refer readers to section II.D. E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules of the preamble of this proposed rule for a complete discussion regarding our proposed policies and previously finalized policies (including our historical adjustments to the payment rates) relating to the effect of changes in documentation and coding that do not reflect real changes in case-mix. daltland on DSKBBV9HB2PROD with PROPOSALS2 III. Proposed Changes to Payment Rates for Acute Care Hospital Inpatient CapitalRelated Costs for FY 2019 The PPS for acute care hospital inpatient capital-related costs was implemented for cost reporting periods beginning on or after October 1, 1991. The basic methodology for determining Federal capital prospective rates is set forth in the regulations at 42 CFR 412.308 through 412.352. Below we discuss the factors that we used to determine the proposed capital Federal rate for FY 2019, which would be effective for discharges occurring on or after October 1, 2018. All hospitals (except ‘‘new’’ hospitals under § 412.304(c)(2)) are paid based on the capital Federal rate. We annually update the capital standard Federal rate, as provided in § 412.308(c)(1), to account for capital input price increases and other factors. The regulations at § 412.308(c)(2) also provide that the capital Federal rate be adjusted annually by a factor equal to the estimated proportion of outlier payments under the capital Federal rate to total capital payments under the capital Federal rate. In addition, § 412.308(c)(3) requires that the capital Federal rate be reduced by an adjustment factor equal to the estimated proportion of payments for exceptions under § 412.348. (We note that, as discussed in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53705), there is generally no longer a need for an exceptions payment adjustment factor.) However, in limited circumstances, an additional payment exception for extraordinary circumstances is provided for under § 412.348(f) for qualifying hospitals. Therefore, in accordance with § 412.308(c)(3), an exceptions payment adjustment factor may need to be applied if such payments are made. Section 412.308(c)(4)(ii) requires that the capital standard Federal rate be adjusted so that the effects of the annual DRG reclassification and the recalibration of DRG weights and changes in the geographic adjustment factor (GAF) are budget neutral. Section 412.374 provides for payments to hospitals located in Puerto Rico under the IPPS for acute care hospital inpatient capitalrelated costs, which currently specifies capital IPPS payments to hospitals located in Puerto Rico are based on 100 percent of the Federal rate. A. Determination of the Federal Hospital Inpatient Capital-Related Prospective Payment Rate Update for FY 2019 In the discussion that follows, we explain the factors that we used to determine the proposed capital Federal rate for FY 2019. In particular, we explain why the proposed FY 2019 capital Federal rate would increase approximately 1.28 percent, compared to the FY 2018 capital Federal rate. As discussed in the impact analysis in Appendix A to this proposed rule, we estimate that capital VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 payments per discharge will increase approximately 1.7 percent during that same period. Because capital payments constitute approximately 10 percent of hospital payments, a 1-percent change in the capital Federal rate yields only approximately a 0.1 percent change in actual payments to hospitals. 1. Projected Capital Standard Federal Rate Update a. Description of the Update Framework Under § 412.308(c)(1), the capital standard Federal rate is updated on the basis of an analytical framework that takes into account changes in a capital input price index (CIPI) and several other policy adjustment factors. Specifically, we adjust the projected CIPI rate of change as appropriate each year for casemix index-related changes, for intensity, and for errors in previous CIPI forecasts. The proposed update factor for FY 2019 under that framework is 1.2 percent based on a projected 1.2 percent increase in the 2014based CIPI, a proposed 0.0 percentage point adjustment for intensity, a proposed 0.0 percentage point adjustment for case-mix, a proposed 0.0 percentage point adjustment for the DRG reclassification and recalibration, and a forecast error correction of 0.0 percentage point. As discussed in section III.C. of this Addendum, we continue to believe that the CIPI is the most appropriate input price index for capital costs to measure capital price changes in a given year. We also explain the basis for the FY 2019 CIPI projection in that same section of this Addendum. Below we describe the policy adjustments that we are proposing to apply in the update framework for FY 2019. The case-mix index is the measure of the average DRG weight for cases paid under the IPPS. Because the DRG weight determines the prospective payment for each case, any percentage increase in the case-mix index corresponds to an equal percentage increase in hospital payments. The case-mix index can change for any of several reasons: • The average resource use of Medicare patient changes (‘‘real’’ case-mix change); • Changes in hospital documentation and coding of patient records result in higherweighted DRG assignments (‘‘coding effects’’); and • The annual DRG reclassification and recalibration changes may not be budget neutral (‘‘reclassification effect’’). We define real case-mix change as actual changes in the mix (and resource requirements) of Medicare patients as opposed to changes in documentation and coding behavior that result in assignment of cases to higher-weighted DRGs, but do not reflect higher resource requirements. The capital update framework includes the same case-mix index adjustment used in the former operating IPPS update framework (as discussed in the May 18, 2004 IPPS proposed rule for FY 2005 (69 FR 28816)). (We no longer use an update framework to make a recommendation for updating the operating IPPS standardized amounts as discussed in section II. of Appendix B to the FY 2006 IPPS final rule (70 FR 47707).) For FY 2019, we are projecting a 0.5 percent total increase in the case-mix index. PO 00000 Frm 00425 Fmt 4701 Sfmt 4702 20587 We estimated that the real case-mix increase would equal 0.5 percent for FY 2019. The net adjustment for change in case-mix is the difference between the projected real increase in case-mix and the projected total increase in case-mix. Therefore, the proposed net adjustment for case-mix change in FY 2019 is 0.0 percentage point. The capital update framework also contains an adjustment for the effects of DRG reclassification and recalibration. This adjustment is intended to remove the effect on total payments of prior year’s changes to the DRG classifications and relative weights, in order to retain budget neutrality for all case-mix index-related changes other than those due to patient severity of illness. Due to the lag time in the availability of data, there is a 2-year lag in data used to determine the adjustment for the effects of DRG reclassification and recalibration. For example, we have data available to evaluate the effects of the FY 2017 DRG reclassification and recalibration as part of our proposed update for FY 2019. We assume, for purposes of this adjustment, that the estimate of FY 2017 DRG reclassification and recalibration resulted in no change in the case-mix when compared with the case-mix index that would have resulted if we had not made the reclassification and recalibration changes to the DRGs. Therefore, we are proposing to make a 0.0 percentage point adjustment for reclassification and recalibration in the update framework for FY 2019. The capital update framework also contains an adjustment for forecast error. The input price index forecast is based on historical trends and relationships ascertainable at the time the update factor is established for the upcoming year. In any given year, there may be unanticipated price fluctuations that may result in differences between the actual increase in prices and the forecast used in calculating the update factors. In setting a prospective payment rate under the framework, we make an adjustment for forecast error only if our estimate of the change in the capital input price index for any year is off by 0.25 percentage point or more. There is a 2-year lag between the forecast and the availability of data to develop a measurement of the forecast error. Historically, when a forecast error of the CIPI is greater than 0.25 percentage point in absolute terms, it is reflected in the update recommended under this framework. A forecast error of 0.0 percentage point was calculated for the FY 2017 update, for which there are historical data. That is, current historical data indicate that the forecasted FY 2017 CIPI (1.2 percent) used in calculating the FY 2017 update factor was 0.0 percentage point higher than actual realized price increases (1.2 percent). As this does not exceed the 0.25 percentage point threshold, we are not proposing to make an adjustment for forecast error in the update for FY 2019. Under the capital IPPS update framework, we also make an adjustment for changes in intensity. Historically, we calculated this adjustment using the same methodology and data that were used in the past under the framework for operating IPPS. The intensity E:\FR\FM\07MYP2.SGM 07MYP2 20588 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules factor for the operating update framework reflected how hospital services are utilized to produce the final product, that is, the discharge. This component accounts for changes in the use of quality-enhancing services, for changes within DRG severity, and for expected modification of practice patterns to remove noncost-effective services. Our intensity measure is based on a 5-year average. We calculate case-mix constant intensity as the change in total cost per discharge, adjusted for price level changes (the CPI for hospital and related services) and changes in real case-mix. Without reliable estimates of the proportions of the overall annual intensity changes that are due, respectively, to ineffective practice patterns and the combination of quality-enhancing new technologies and complexity within the DRG system, we assume that one-half of the annual change is due to each of these factors. The capital update framework thus provides an add-on to the input price index rate of increase of one-half of the estimated annual increase in intensity, to allow for increases within DRG severity and the adoption of quality-enhancing technology. In this proposed rule, we are proposing to continue to use a Medicare-specific intensity measure that is based on a 5-year adjusted average of cost per discharge for FY 2019 (we refer readers to the FY 2011 IPPS/LTCH PPS final rule (75 FR 50436) for a full description of our Medicare-specific intensity measure). Specifically, for FY 2019, we are proposing to use an intensity measure that is based on an average of cost per discharge data from the 5-year period beginning with FY 2012 and extending through FY 2016. Based on these data, we estimated that case-mix constant intensity declined during FYs 2012 through 2016. In the past, when we found intensity to be declining, we believed a zero (rather than a negative) intensity adjustment was appropriate. Consistent with this approach, because we estimate that intensity will decline during that 5-year period, we believe it is appropriate to continue to apply a zero intensity adjustment for FY 2019. Therefore, we are proposing to make a 0.0 percentage point adjustment for intensity in the update for FY 2019. Above, we described the basis of the components we used to develop the proposed 1.2 percent capital update factor under the capital update framework for FY 2019 as shown in the following table. PROPOSED CMS FY 2019 UPDATE FACTOR TO THE CAPITAL FEDERAL RATE daltland on DSKBBV9HB2PROD with PROPOSALS2 Capital Input Price Index * ............ Intensity ........................................ 1.2 0.0 Case-Mix Adjustment Factors Real Across DRG Change ........... Projected Case-Mix Change ........ 0.5 0.5 Subtotal ..................................... Effect of FY 2017 Reclassification and Recalibration ...................... Forecast Error Correction ............. 1.2 VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 0.0 0.0 PROPOSED CMS FY 2019 UPDATE FACTOR TO THE CAPITAL FEDERAL RATE—Continued Proposed Total Update ............. 1.2 * The capital input price index represents the 2014-based CIPI. b. Comparison of CMS and MedPAC Update Recommendation In its March 2018 Report to Congress, MedPAC did not make a specific update recommendation for capital IPPS payments for FY 2019. (We refer readers to MedPAC’s Report to the Congress: Medicare Payment Policy, March 2018, Chapter 3, available on the website at: https://www.medpac.gov.) 2. Proposed Outlier Payment Adjustment Factor Section 412.312(c) establishes a unified outlier payment methodology for inpatient operating and inpatient capital-related costs. A single set of thresholds is used to identify outlier cases for both inpatient operating and inpatient capital-related payments. Section 412.308(c)(2) provides that the standard Federal rate for inpatient capital-related costs be reduced by an adjustment factor equal to the estimated proportion of capital-related outlier payments to total inpatient capitalrelated PPS payments. The outlier thresholds are set so that operating outlier payments are projected to be 5.1 percent of total operating IPPS DRG payments. For FY 2018, we estimated that outlier payments for capital would equal 5.17 percent of inpatient capital-related payments based on the capital Federal rate in FY 2018. Based on the thresholds as set forth in section II.A. of this Addendum, we estimate that outlier payments for capital-related costs would equal 5.06 percent for inpatient capital-related payments based on the proposed capital Federal rate in FY 2019. Therefore, we are proposing to apply an outlier adjustment factor of 0.9494 in determining the capital Federal rate for FY 2019. Thus, we estimate that the percentage of capital outlier payments to proposed total capital Federal rate payments for FY 2019 would be lower than the percentage for FY 2018. The outlier reduction factors are not built permanently into the capital rates; that is, they are not applied cumulatively in determining the capital Federal rate. The proposed FY 2019 outlier adjustment of 0.9494 is a 0.12 percent change from the FY 2018 outlier adjustment of 0.9483. Therefore, the proposed net change in the outlier adjustment to the capital Federal rate for FY 2019 is 1.0012(0.9494/0.9483) so that the proposed outlier adjustment would increase the FY 2019 capital Federal rate by 0.12 percent compared to the FY 2018 outlier adjustment. 3. Proposed Budget Neutrality Adjustment Factor for Changes in DRG Classifications and Weights and the GAF Section 412.308(c)(4)(ii) requires that the capital Federal rate be adjusted so that aggregate payments for the fiscal year based on the capital Federal rate after any changes resulting from the annual DRG PO 00000 Frm 00426 Fmt 4701 Sfmt 4702 reclassification and recalibration and changes in the GAF are projected to equal aggregate payments that would have been made on the basis of the capital Federal rate without such changes. The budget neutrality factor for DRG reclassifications and recalibration nationally is applied in determining the capital IPPS Federal rate, and is applicable for all hospitals, including those hospitals located in Puerto Rico. To determine the proposed factors for FY 2019, we compared estimated aggregate capital Federal rate payments based on the FY 2018 MS–DRG classifications and relative weights and the FY 2018 GAF to estimated aggregate capital Federal rate payments based on the FY 2018 MS–DRG classifications and relative weights and the proposed FY 2019 GAFs. To achieve budget neutrality for the changes in the GAFs, based on calculations using updated data, we are proposing to apply an incremental budget neutrality adjustment factor of 1.000094 for FY 2019 to the previous cumulative FY 2018 adjustment factor. We then compared estimated aggregate capital Federal rate payments based on the FY 2018 MS–DRG relative weights and the proposed FY 2019 GAFs to estimate aggregate capital Federal rate payments based on the cumulative effects of the proposed FY 2019 MS–DRG classifications and relative weights and the proposed FY 2019 GAFs. The proposed incremental adjustment factor for DRG classifications and changes in relative weights is 0.9996. The proposed incremental adjustment factors for MS–DRG classifications and proposed changes in relative weights and for proposed changes in the GAFs through FY 2019 is 0.9997. We note that all the values are calculated with unrounded numbers. The GAF/DRG budget neutrality adjustment factors are built permanently into the capital rates; that is, they are applied cumulatively in determining the capital Federal rate. This follows the requirement under § 412.308(c)(4)(ii) that estimated aggregate payments each year be no more or less than they would have been in the absence of the annual DRG reclassification and recalibration and changes in the GAFs. The methodology used to determine the recalibration and geographic adjustment factor (GAF/DRG) budget neutrality adjustment is similar to the methodology used in establishing budget neutrality adjustments under the IPPS for operating costs. One difference is that, under the operating IPPS, the budget neutrality adjustments for the effect of geographic reclassifications are determined separately from the effects of other changes in the hospital wage index and the MS–DRG relative weights. Under the capital IPPS, there is a single GAF/DRG budget neutrality adjustment factor for changes in the GAF (including geographic reclassification) and the MS–DRG relative weights. In addition, there is no adjustment for the effects that geographic reclassification has on the other payment parameters, such as the payments for DSH or IME. The proposed incremental adjustment factor of 0.9997 (the product of the proposed incremental national GAF budget neutrality E:\FR\FM\07MYP2.SGM 07MYP2 20589 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules adjustment factor of 1.00009 and the proposed incremental DRG budget neutrality adjustment factor of 0.9996) accounts for the MS–DRG reclassifications and recalibration and for changes in the GAFs. It also incorporates the effects on the GAFs of FY 2019 geographic reclassification decisions made by the MGCRB compared to FY 2018 decisions. However, it does not account for changes in payments due to changes in the DSH and IME adjustment factors. 4. Proposed Capital Federal Rate for FY 2019 For FY 2018, we established a capital Federal rate of $453.95 (82 FR 46144 through 46145). We are proposing to establish an update of 1.2 percent in determining the FY 2019 capital Federal rate for all hospitals. As a result of this proposed update and the proposed budget neutrality factors discussed earlier, we are proposing to establish a national capital Federal rate of $459.78 for FY 2019. The proposed national capital Federal rate for FY 2019 was calculated as follows: • The proposed FY 2019 update factor is 1.012; that is, the proposed update is 1.2 percent. • The proposed FY 2019 budget neutrality adjustment factor that is applied to the capital Federal rate for changes in the MS– DRG classifications and relative weights and changes in the GAFs is 0.9997. • The proposed FY 2019 outlier adjustment factor is 0.9494. We are providing the following chart that shows how each of the proposed factors and adjustments for FY 2019 affects the computation of the proposed FY 2019 national capital Federal rate in comparison to the FY 2018 national capital Federal rate as presented in the FY 2018 IPPS/LTCH PPS Correction Notice (82 FR 46144 through 46145). The proposed FY 2019 update factor has the effect of increasing the capital Federal rate by 1.2 percent compared to the FY 2018 capital Federal rate. The proposed GAF/DRG budget neutrality adjustment factor has the effect of decreasing the capital Federal rate by 0.03 percent. The proposed FY 2019 outlier adjustment factor has the effect of increasing the capital Federal rate by 0.12 percent compared to the FY 2018 capital Federal rate. The combined effect of all the proposed changes would increase the national capital Federal rate by approximately 1.28 percent compared to the FY 2018 national capital Federal rate. COMPARISON OF FACTORS AND ADJUSTMENTS: FY 2018 CAPITAL FEDERAL RATE AND PROPOSED FY 2019 CAPITAL FEDERAL RATE FY 2018 Update Factor 1 ................................................................................................ GAF/DRG Adjustment Factor 1 ........................................................................ Outlier Adjustment Factor 2 .............................................................................. Capital Federal Rate ........................................................................................ 1.0130 0.9987 0.9483 $453.95 Proposed FY 2019 1.012 0.9997 0.9494 $459.78 Proposed change 1.012 .09997 1.0012 1.0128 Proposed percent change 1.20 ¥0.03 0.12 3 1.28 1 The update factor and the GAF/DRG budget neutrality adjustment factors are built permanently into the capital Federal rates. Thus, for example, the incremental change from FY 2018 to FY 2019 resulting from the application of the proposed 0.9997 GAF/DRG budget neutrality adjustment factor for FY 2019 is a net change of 0.9997 (or –0.03 percent). 2 The outlier reduction factor is not built permanently into the capital Federal rate; that is, the factor is not applied cumulatively in determining the capital Federal rate. Thus, for example, the net change resulting from the application of the proposed FY 2019 outlier adjustment factor is 0.9494/0.9483 or 1.0012 (or 0.12 percent). 3 Percent change may not sum due to rounding. daltland on DSKBBV9HB2PROD with PROPOSALS2 B. Calculation of the Inpatient CapitalRelated Prospective Payments for FY 2019 For purposes of calculating payments for each discharge during FY 2019, the capital Federal rate is adjusted as follows: (Standard Federal Rate) × (DRG weight) × (GAF) × (COLA for hospitals located in Alaska and Hawaii) × (1 + DSH Adjustment Factor + IME Adjustment Factor, if applicable). The result is the adjusted capital Federal rate. Hospitals also may receive outlier payments for those cases that qualify under the thresholds established for each fiscal year. Section 412.312(c) provides for a single set of thresholds to identify outlier cases for both inpatient operating and inpatient capitalrelated payments. The proposed outlier thresholds for FY 2019 are in section II.A. of this Addendum. For FY 2019, a case would qualify as a cost outlier if the cost for the case plus the (operating) IME and DSH payments (including both the empirically justified Medicare DSH payment and the estimated uncompensated care payment, as discussed in section II.A.4.g.(1) of this Addendum) is greater than the prospective payment rate for the MS–DRG plus the proposed fixed-loss amount of $27,545. Currently, as provided under § 412.304(c)(2), we pay a new hospital 85 percent of its reasonable costs during the first 2 years of operation unless it elects to receive payment based on 100 percent of the capital Federal rate. Effective with the third year of operation, we pay the hospital based on 100 VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 percent of the capital Federal rate (that is, the same methodology used to pay all other hospitals subject to the capital PPS). C. Capital Input Price Index 1. Background Like the operating input price index, the capital input price index (CIPI) is a fixedweight price index that measures the price changes associated with capital costs during a given year. The CIPI differs from the operating input price index in one important aspect—the CIPI reflects the vintage nature of capital, which is the acquisition and use of capital over time. Capital expenses in any given year are determined by the stock of capital in that year (that is, capital that remains on hand from all current and prior capital acquisitions). An index measuring capital price changes needs to reflect this vintage nature of capital. Therefore, the CIPI was developed to capture the vintage nature of capital by using a weighted-average of past capital purchase prices up to and including the current year. We periodically update the base year for the operating and capital input price indexes to reflect the changing composition of inputs for operating and capital expenses. For this FY 2019 IPPS/LTCH PPS proposed rule, we are using the rebased and revised IPPS operating and capital market baskets that reflect a 2014 base year. For a complete discussion of this rebasing, we refer readers to section IV. of the preamble of the FY 2018 IPPS/LTCH PPS final rule. PO 00000 Frm 00427 Fmt 4701 Sfmt 4702 2. Forecast of the CIPI for FY 2019 Based on IGI’s fourth quarter 2017 forecast, for this proposed rule, we are forecasting the 2014-based CIPI to increase 1.2 percent in FY 2019. This reflects a projected 1.6 percent increase in vintage-weighted depreciation prices (building and fixed equipment, and movable equipment), and a projected 3.0 percent increase in other capital expense prices in FY 2019, partially offset by a projected 1.3 percent decline in vintageweighted interest expense prices in FY 2019. The weighted average of these three factors produces the forecasted 1.2 percent increase for the 2014-based CIPI in FY 2019. IV. Proposed Changes to Payment Rates for Excluded Hospitals: Rate-of-Increase Percentages for FY 2019 Payments for services furnished in children’s hospitals, 11 cancer hospitals, and hospitals located outside the 50 States, the District of Columbia and Puerto Rico (that is, short-term acute care hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa) that are excluded from the IPPS are made on the basis of reasonable costs based on the hospital’s own historical cost experience, subject to a rate-of-increase ceiling. A per discharge limit (the target amount, as defined in § 413.40(a) of the regulations) is set for each hospital, based on the hospital’s own cost experience in its base year, and updated annually by a rate-of-increase percentage specified in § 413.40(c)(3). In addition, as E:\FR\FM\07MYP2.SGM 07MYP2 20590 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules specified in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38536), effective for cost reporting periods beginning during FY 2018, the annual update to the target amount for extended neoplastic disease care hospitals (hospitals described in § 412.22(i) of the regulations) also is the rate-of-increase percentage specified in § 413.40(c)(3). (We note that, in accordance with § 403.752(a), religious nonmedical health care institutions (RNHCIs) are also subject to the rate-ofincrease limits established under § 413.40 of the regulations.) The proposed FY 2019 rate-of-increase percentage for updating the target amounts for the 11 cancer hospitals, children’s hospitals, the short-term acute care hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa, RNHCIs, and extended neoplastic disease care hospitals is the estimated percentage increase in the IPPS operating market basket for FY 2019, in accordance with applicable regulations at § 413.40. Based on IGI’s 2017 fourth quarter forecast, we estimated that the 2014-based IPPS operating market basket update for FY 2019 is 2.8 percent (that is, the estimate of the market basket rate-of-increase). However, we are proposing that if more recent data become available for the final rule, we would use them to calculate the IPPS operating market basket update for FY 2019. Therefore, for children’s hospitals, the 11 cancer hospitals, hospitals located outside the 50 States, the District of Columbia, and Puerto Rico (that is, short-term acute care hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa), extended neoplastic disease care hospitals, and RNHCIs, the FY 2019 rate-of-increase percentage that would be applied to the FY 2018 target amounts, in order to determine the proposed FY 2019 target amounts is 2.8 percent. The IRF PPS, the IPF PPS, and the LTCH PPS are updated annually. We refer readers to section VII. of the preamble of this proposed rule and section V. of the Addendum to this proposed rule for the proposed update changes to the Federal payment rates for LTCHs under the LTCH PPS for FY 2019. The annual updates for the IRF PPS and the IPF PPS are issued by the agency in separate Federal Register documents. daltland on DSKBBV9HB2PROD with PROPOSALS2 V. Proposed Changes to the Payment Rates for the LTCH PPS for FY 2019 A. Proposed LTCH PPS Standard Federal Payment Rate for FY 2019 1. Overview In section VII. of the preamble of this proposed rule, we discuss our proposed annual updates to the payment rates, factors, and specific policies under the LTCH PPS for FY 2019. Under § 412.523(c)(3) of the regulations, for LTCH PPS FYs 2012 through 2017, we updated the standard Federal payment rate by the most recent estimate of the LTCH PPS market basket at that time, including additional statutory adjustments required by sections 1886(m)(3)(A)(i) (citing sections 1886(b)(3)(B)(xi)(II), 1886(m)(3)(A)(ii), and VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 1886(m)(4) of the Act as set forth in the regulations at § 412.523(c)(3)(viii) through (c)(3)(xiii)). (For a summary of the payment rate development prior to FY 2012, we refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38310 through 38312).) Sections 1886(m)(3)(A) and 1886(m)(3)(C) of the Act specify that, for rate year 2010 and each subsequent rate year, except FY 2018, any annual update to the standard Federal payment rate shall be reduced: • For rate year 2010 through 2019, by the ‘‘other adjustment’’ specified in section 1886(m)(3)(A)(ii) and (m)(4) of the Act; and • For rate year 2012 and each subsequent year, by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act (which we refer to as ‘‘the multifactor productivity (MFP) adjustment’’) as discussed in section VII.D.2. of the preamble of this proposed rule. This section of the Act further provides that the application of section 1886(m)(3) of the Act may result in the annual update being less than zero for a rate year, and may result in payment rates for a rate year being less than such payment rates for the preceding rate year. (As noted in section VII.D.2.a. of the preamble of this proposed rule, the annual update to the LTCH PPS occurs on October 1 and we have adopted the term ‘‘fiscal year’’ (FY) rather than ‘‘rate year’’ (RY) under the LTCH PPS beginning October 1, 2010. Therefore, for purposes of clarity, when discussing the annual update for the LTCH PPS, including the provisions of the Affordable Care Act, we use the term ‘‘fiscal year’’ rather than ‘‘rate year’’ for 2011 and subsequent years.) For LTCHs that fail to submit the required quality reporting data in accordance with the LTCH QRP, the annual update is reduced by 2.0 percentage points as required by section 1886(m)(5) of the Act. 2. Development of the Proposed FY 2019 LTCH PPS Standard Federal Payment Rate Consistent with our historical practice, for FY 2019, we are proposing to apply the annual update to the LTCH PPS standard Federal payment rate from the previous year. Furthermore, in determining the proposed LTCH PPS standard Federal payment rate for FY 2019, we also are proposing to make certain regulatory adjustments, consistent with past practices. Specifically, in determining the proposed FY 2019 LTCH PPS standard Federal payment rate, we are proposing to apply a budget neutrality adjustment factor for the changes related to the area wage adjustment (that is, changes to the wage data and labor-related share) in accordance with § 412.523(d)(4) and a proposed budget neutrality adjustment factor for the proposed elimination of the 25percent threshold policy (discussed in VII.D. of the preamble of this proposed rule). In this FY 2019 IPPS/LTCH PPS proposed rule, we are proposing an annual update to the LTCH PPS standard Federal payment rate of 1.15 percent. Accordingly, under proposed § 412.523(c)(3)(xv), we are proposing to apply a factor of 1.0115 to the FY 2018 LTCH PPS standard Federal payment rate of $41,415.11 to determine the proposed FY 2019 LTCH PPS standard Federal payment rate. Also, under proposed § 412.523(c)(3)(xv), applied PO 00000 Frm 00428 Fmt 4701 Sfmt 4702 in conjunction with the provisions of § 412.523(c)(4), we are proposing an annual update to the LTCH PPS standard Federal payment rate of -0.85 percent (that is, a proposed update factor of 0.9915) for FY 2019 for LTCHs that fail to submit the required quality reporting data for FY 2019 as required under the LTCH QRP. Consistent with § 412.523(d)(4), we also are proposing to apply an area wage level budget neutrality factor to the proposed FY 2019 LTCH PPS standard Federal payment rate of 0.999713 based on the best available data at this time, to ensure that any proposed changes to the area wage level adjustment (that is, the proposed annual update of the wage index values and labor-related share) would not result in any change (increase or decrease) in estimated aggregate LTCH PPS standard Federal rate payments. Finally, we are proposing to apply a one-time, permanent budget neutrality adjustment of 0.990535 for our proposed elimination of the 25-percent threshold policy (discussed in VII.E. of the preamble of this proposed rule). Accordingly, we are proposing an LTCH PPS standard Federal payment rate of $41,482.98 (calculated as $41,415.11 × 1.0115 × 0.999713 × 0.990535) for FY 2019 (calculations performed on rounded numbers). For LTCHs that fail to submit quality reporting data for FY 2019, in accordance with the requirements of the LTCH QRP under section 1866(m)(5) of the Act, we are proposing an LTCH PPS standard Federal payment rate of $40,662.75 (calculated as $41,415.11 × 0.9915 × 0.999713 × 0.990535) (calculations performed on rounded numbers) for FY 2019. B. Proposed Adjustment for Area Wage Levels Under the LTCH PPS for FY 2019 1. Background Under the authority of section 123 of the BBRA, as amended by section 307(b) of the BIPA, we established an adjustment to the LTCH PPS standard Federal payment rate to account for differences in LTCH area wage levels under § 412.525(c). The labor-related share of the LTCH PPS standard Federal payment rate is adjusted to account for geographic differences in area wage levels by applying the applicable LTCH PPS wage index. The applicable LTCH PPS wage index is computed using wage data from inpatient acute care hospitals without regard to reclassification under section 1886(d)(8) or section 1886(d)(10) of the Act. 2. Proposed Geographic Classifications (Labor Market Areas) for the LTCH PPS Standard Federal Payment Rate In adjusting for the differences in area wage levels under the LTCH PPS, the laborrelated portion of an LTCH’s Federal prospective payment is adjusted by using an appropriate area wage index based on the geographic classification (labor market area) in which the LTCH is located. Specifically, the application of the LTCH PPS area wage level adjustment under existing § 412.525(c) is made based on the location of the LTCH— either in an ‘‘urban area,’’ or a ‘‘rural area,’’ as defined in § 412.503. Under § 412.503, an ‘‘urban area’’ is defined as a Metropolitan Statistical Area (MSA) (which includes a Metropolitan division, where applicable), as E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules defined by the Executive OMB and a ‘‘rural area’’ is defined as any area outside of an urban area. (Information on OMB’s MSA delineations based on the 2010 standards can be found at: https:// obamawhitehouse.archives.gov/sites/default/ files/omb/assets/fedreg_2010/06282010_ metro_standards-Complete.pdf.) The CBSA-based geographic classifications (labor market area definitions) currently used under the LTCH PPS, effective for discharges occurring on or after October 1, 2014, are based on the OMB labor market area delineations based on the 2010 Decennial Census data. The current statistical areas (which were implemented beginning with FY 2015) are based on revised OMB delineations issued on February 28, 2013, in OMB Bulletin No. 13–01. We adopted these labor market area delineations because they are based on the best available data that reflect the local economies and area wage levels of the hospitals that are currently located in these geographic areas. We also believe that these OMB delineations will ensure that the LTCH PPS area wage level adjustment most appropriately accounts for and reflects the relative hospital wage levels in the geographic area of the hospital as compared to the national average hospital wage level. We noted that this policy was consistent with the IPPS policy adopted in FY 2015 under § 412.64(b)(1)(ii)(D) of the regulations (79 FR 49951 through 49963). (For additional information on the CBSA-based labor market area (geographic classification) delineations currently used under the LTCH PPS and the history of the labor market area definitions used under the LTCH PPS, we refer readers to the FY 2015 IPPS/LTCH PPS final rule (79 FR 50180 through 50185).) In general, it is our historical practice to update the CBSA-based labor market area delineations annually based on the most recent updates issued by OMB. Generally, OMB issues major revisions to statistical areas every 10 years, based on the results of the decennial census. However, OMB occasionally issues minor updates and revisions to statistical areas in the years between the decennial censuses. On July 15, 2015, OMB issued OMB Bulletin No. 15–01, which provided updates to and superseded OMB Bulletin No. 13–01 that was issued on February 28, 2013. The attachment to OMB Bulletin No. 15–01 provided detailed information on the update to statistical areas since February 28, 2013. We adopted the updates contained in OMB Bulletin No. 15– 01, as discussed in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56913 through 56914). On August 15, 2017, OMB issued OMB Bulletin No. 17–01 that updated and superseded Bulletin No. 15–01. As discussed in section III.A.2. of the preamble of this proposed rule, OMB Bulletin No. 17–01 and its attachments provide detailed information on the update to statistical areas since the July 15, 2015 release of Bulletin No. 15–01 and are based on the application of the 2010 Standards for Delineating Metropolitan and Micropolitan Statistical Areas to Census Bureau population estimates for July 1, 2014, and July 1, 2015. A copy of this bulletin may be obtained on the website at: https:// www.whitehouse.gov/sites/whitehouse.gov/ files/omb/bulletins/2017/b-17-01.pdf. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 OMB Bulletin No. 17–01 made the following change that is relevant to the LTCH PPS CBSA-based labor market area (geographic classification) delineations: • Twin Falls, ID, with principal city Twin Falls, ID and consisting of counties Jerome County, ID and Twin Falls County, ID, which was a Micropolitan (geographically rural) area, now qualifies as an urban area under new CBSA 46300 entitled Twin Falls, ID. This change affects all providers located in CBSA 46300, but our database shows no LTCHs located in CBSA 46300. We believe that this revision to the CBSAbased labor market area delineations will ensure that the LTCH PPS area wage level adjustment most appropriately accounts for and reflects the relative hospital wage levels in the geographic area of the hospital as compared to the national average hospital wage level based on the best available data that reflect the local economies and area wage levels of the hospitals that are currently located in these geographic areas (81 FR 57298). Therefore, we are proposing to adopt this revision under the LTCH PPS, effective October 1, 2018. Accordingly, the proposed FY 2019 LTCH PPS wage index values in Tables 12A and 12B listed in section VI. of the Addendum to this proposed rule (which are available via the internet on the CMS website) reflect the revision to the CBSAbased labor market area delineations described above. We note that, as discussed in section III.A.2. of the preamble of this proposed rule, the revision to the CBSAbased delineations also is being proposed under the IPPS. 3. Proposed Labor-Related Share for the LTCH PPS Standard Federal Payment Rate Under the payment adjustment for the differences in area wage levels under § 412.525(c), the labor-related share of an LTCH’s standard Federal payment rate payment is adjusted by the applicable wage index for the labor market area in which the LTCH is located. The LTCH PPS labor-related share currently represents the sum of the labor-related portion of operating costs and a labor-related portion of capital costs using the applicable LTCH PPS market basket. Additional background information on the historical development of the labor-related share under the LTCH PPS can be found in the RY 2007 LTCH PPS final rule (71 FR 27810 through 27817 and 27829 through 27830) and the FY 2012 IPPS/LTCH PPS final rule (76 FR 51766 through 51769 and 51808). For FY 2013, we rebased and revised the market basket used under the LTCH PPS by adopting a 2009-based LTCH-specific market basket. In addition, beginning in FY 2013, we determined the labor-related share annually as the sum of the relative importance of each labor-related cost category of the 2009-based LTCH-specific market basket for the respective fiscal year based on the best available data. (For more details, we refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53477 through 53479).) As noted previously, we rebased and revised the 2009based LTCH-specific market basket to reflect a 2013 base year. In conjunction with that policy, as discussed in section VII.D. of the preamble of this FY 2019 IPPS/LTCH PPS proposed rule, we are proposing to establish PO 00000 Frm 00429 Fmt 4701 Sfmt 4702 20591 that the LTCH PPS labor-related share for FY 2019 is the sum of the FY 2019 relative importance of each labor-related cost category in the 2013-based LTCH market basket using the most recent available data. Specifically, we are proposing to establish that the labor-related share for FY 2019 includes the sum of the labor-related portion of operating costs from the 2013-based LTCH market basket (that is, the sum of the FY 2019 relative importance share of Wages and Salaries; Employee Benefits; Professional Fees: Labor-Related; Administrative and Facilities Support Services; Installation, Maintenance, and Repair Services; All Other: Labor-related Services) and a portion of the Capital-Related cost weight from the 2013based LTCH PPS market basket. Based on IGI’s fourth quarter 2017 forecast of the 2013based LTCH market basket, we are proposing to establish a labor-related share under the LTCH PPS for FY 2019 of 66.2 percent. This labor-related share is determined using the same methodology as employed in calculating all previous LTCH PPS laborrelated shares. Consistent with our historical practice, we also are proposing that if more recent data become available, we would use that data, if appropriate, to determine the final FY 2019 labor-related share in the final rule. (We note that a labor-related share of 66.2 percent is the same as the labor-related share for FY 2018. Although the relative importance of some components of the market basket have changed, the proposed labor-related share remains at 66.2 percent when aggregating these components and rounding to one decimal.) The proposed labor-related share for FY 2019 is the sum of the FY 2019 relative importance of each labor-related cost category, and would reflect the different rates of price change for these cost categories between the base year (2013) and FY 2019. The sum of the relative importance for FY 2019 for operating costs (Wages and Salaries; Employee Benefits; Professional Fees: LaborRelated; Administrative and Facilities Support Services; Installation, Maintenance, and Repair Services; All Other: Labor-Related Services) is 62.0 percent. The portion of capital-related costs that is influenced by the local labor market is estimated to be 46 percent (the same percentage applied to the 2009-based LTCH-specific market basket). Because the relative importance for capitalrelated costs under our policies is 9.1 percent of the 2013-based LTCH market basket in FY 2019, we are proposing to take 46 percent of 9.1 percent to determine the labor-related share of capital-related costs for FY 2019 (0.46 x 9.1). The result is 4.2 percent, which we added to 62.0 percent for the operating cost amount to determine the total proposed labor-related share for FY 2019. Therefore, we are proposing that the labor-related share under the LTCH PPS for FY 2019 is 66.2 percent. 4. Proposed Wage Index for FY 2019 for the LTCH PPS Standard Federal Payment Rate Historically, we have established LTCH PPS area wage index values calculated from acute care IPPS hospital wage data without taking into account geographic reclassification under sections 1886(d)(8) and 1886(d)(10) of the Act (67 FR 56019). The E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20592 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules area wage level adjustment established under the LTCH PPS is based on an LTCH’s actual location without regard to the ‘‘urban’’ or ‘‘rural’’ designation of any related or affiliated provider. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38538 through 38539), we calculated the FY 2018 LTCH PPS area wage index values using the same data used for the FY 2018 acute care hospital IPPS (that is, data from cost reporting periods beginning during FY 2014), without taking into account geographic reclassification under sections 1886(d)(8) and 1886(d)(10) of the Act, as these were the most recent complete data available at that time. In that same final rule, we indicated that we computed the FY 2018 LTCH PPS area wage index values, consistent with the urban and rural geographic classifications (labor market areas) that were in place at that time and consistent with the pre-reclassified IPPS wage index policy (that is, our historical policy of not taking into account IPPS geographic reclassifications in determining payments under the LTCH PPS). As with the IPPS wage index, wage data for multicampus hospitals with campuses located in different labor market areas (CBSAs) are apportioned to each CBSA where the campus (or campuses) are located. We also continued to use our existing policy for determining area wage index values for areas where there are no IPPS wage data. Consistent with our historical methodology, as discussed in this FY 2019 IPPS/LTCH PPS proposed rule, to determine the applicable area wage index values for the FY 2019 LTCH PPS standard Federal payment rate, under the broad authority of section 123 of the BBRA, as amended by section 307(b) of the BIPA, we are proposing to use wage data collected from cost reports submitted by IPPS hospitals for cost reporting periods beginning during FY 2015, without taking into account geographic reclassification under sections 1886(d)(8) and 1886(d)(10) of the Act because these data are the most recent complete data available. We also note that these are the same data we are using to compute the FY 2019 acute care hospital inpatient wage index, as discussed in section III. of the preamble of this proposed rule. We are proposing to compute the proposed FY 2019 LTCH PPS standard Federal payment rate area wage index values consistent with the ‘‘urban’’ and ‘‘rural’’ geographic classifications (that is, labor market area delineations, including the proposed updates, as previously discussed in section V.B. of this Addendum) and our historical policy of not taking into account IPPS geographic reclassifications under sections 1886(d)(8) and 1886(d)(10) of the Act in determining payments under the LTCH PPS. We also are proposing to continue to apportion wage data for multicampus hospitals with campuses located in different labor market areas to each CBSA where the campus or campuses are located, consistent with the IPPS policy. Lastly, consistent with our existing methodology for determining the LTCH PPS wage index values, for FY 2019, we are proposing to continue to use our existing policy for determining area wage index values for areas where there are no IPPS wage VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 data. Under our existing methodology, the LTCH PPS wage index value for urban CBSAs with no IPPS wage data would be determined by using an average of all of the urban areas within the State, and the LTCH PPS wage index value for rural areas with no IPPS wage data would be determined by using the unweighted average of the wage indices from all of the CBSAs that are contiguous to the rural counties of the State. Based on the FY 2015 IPPS wage data that we are proposing to use to determine the proposed FY 2019 LTCH PPS standard Federal payment rate area wage index values in this proposed rule, there are no IPPS wage data for the urban area of Hinesville, GA (CBSA 25980). Consistent with the methodology discussed above, we calculated the proposed FY 2019 wage index value for CBSA 25980 as the average of the wage index values for all of the other urban areas within the State of Georgia (that is, CBSAs 10500, 12020, 12060, 12260, 15260, 16860, 17980, 19140, 23580, 31420, 40660, 42340, 46660 and 47580), as shown in Table 12A, which is listed in section VI. of the Addendum to this proposed rule and available via the internet on the CMS website). We note that, as IPPS wage data are dynamic, it is possible that urban areas without IPPS wage data will vary in the future. Based on the FY 2015 IPPS wage data that we are proposing to use to determine the proposed FY 2019 LTCH PPS standard Federal payment rate area wage index values in this proposed rule, there are no rural areas without IPPS hospital wage data. Therefore, it is not necessary to use our established methodology to calculate a proposed LTCH PPS standard Federal payment rate wage index value for proposed rural areas with no IPPS wage data for FY 2019. We note that, as IPPS wage data are dynamic, it is possible that the number of rural areas without IPPS wage data will vary in the future. The proposed FY 2019 LTCH PPS standard Federal payment rate wage index values that would be applicable for LTCH PPS standard Federal payment rate discharges occurring on or after October 1, 2018, through September 30, 2019, are presented in Table 12A (for urban areas) and Table 12B (for rural areas), which are listed in section VI. of the Addendum to this proposed rule and available via the internet on the CMS website. 5. Proposed Budget Neutrality Adjustment for Changes to the LTCH PPS Standard Federal Payment Rate Area Wage Level Adjustment Historically, the LTCH PPS wage index and labor-related share are updated annually based on the latest available data. Under § 412.525(c)(2), any changes to the area wage index values or labor-related share are to be made in a budget neutral manner such that estimated aggregate LTCH PPS payments are unaffected; that is, will be neither greater than nor less than estimated aggregate LTCH PPS payments without such changes to the area wage level adjustment. Under this policy, we determine an area wage-level adjustment budget neutrality factor that will be applied to the standard Federal payment rate to ensure that any changes to the area wage level adjustments are budget neutral PO 00000 Frm 00430 Fmt 4701 Sfmt 4702 such that any changes to the area wage index values or labor-related share would not result in any change (increase or decrease) in estimated aggregate LTCH PPS payments. Accordingly, under § 412.523(d)(4), we apply an area wage level adjustment budget neutrality factor in determining the standard Federal payment rate, and we also established a methodology for calculating an area wage level adjustment budget neutrality factor. (For additional information on the establishment of our budget neutrality policy for changes to the area wage level adjustment, we refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51771 through 51773 and 51809).) In this proposed rule, for FY 2019 LTCH PPS standard Federal payment rate cases, in accordance with § 412.523(d)(4), we are proposing to apply an area wage level adjustment budget neutrality factor to adjust the LTCH PPS standard Federal payment rate to account for the estimated effect of the proposed adjustments or updates to the area wage level adjustment under § 412.525(c)(1) on estimated aggregate LTCH PPS payments using a methodology that is consistent with the methodology we established in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51773). Specifically, we are proposing to determine an area wage level adjustment budget neutrality factor that would be applied to the LTCH PPS standard Federal payment rate under § 412.523(d)(4) for FY 2019 using the following methodology: Step 1—We simulated estimated aggregate LTCH PPS standard Federal payment rate payments using the FY 2018 wage index values and the FY 2018 labor-related share of 66.2 percent (as established in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38314 and 38315)). Step 2—We simulated estimated aggregate LTCH PPS standard Federal payment rate payments using the proposed FY 2019 wage index values (as shown in Tables 12A and 12B listed in the Addendum to this proposed rule and available via the internet on the CMS website) and the proposed FY 2019 labor-related share of 66.2 percent (based on the latest available data as previously discussed in this Addendum). Step 3—We calculated the ratio of these estimated total LTCH PPS standard Federal payment rate payments by dividing the estimated total LTCH PPS standard Federal payment rate payments using the FY 2018 area wage level adjustments (calculated in Step 1) by the estimated total LTCH PPS standard Federal payment rate payments using the proposed FY 2019 area wage level adjustments (calculated in Step 2) to determine the proposed area wage level adjustment budget neutrality factor for FY 2019 LTCH PPS standard Federal payment rate payments. Step 4—We then applied the proposed FY 2019 area wage level adjustment budget neutrality factor from Step 3 to determine the proposed FY 2019 LTCH PPS standard Federal payment rate after the application of the proposed FY 2019 annual update (discussed previously in section V.A. of this Addendum). We note that, with the exception of cases subject to the transitional blend payment rate E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 provisions and certain temporary exemptions for certain spinal cord specialty hospitals and certain severe wound cases, under the dual rate LTCH PPS payment structure, only LTCH PPS cases that meet the statutory criteria to be excluded from the site neutral payment rate (that is, LTCH PPS standard Federal payment rate cases) are paid based on the LTCH PPS standard Federal payment rate. Because the area wage level adjustment under § 412.525(c) is an adjustment to the LTCH PPS standard Federal payment rate, we only used data from claims that would have qualified for payment at the LTCH PPS standard Federal payment rate if such rate had been in effect at the time of discharge to calculate the FY 2019 LTCH PPS standard Federal payment rate area wage level adjustment budget neutrality factor described above. For this proposed rule, using the steps in the methodology previously described, we determined a proposed FY 2019 LTCH PPS standard Federal payment rate area wage level adjustment budget neutrality factor of 0.999713. Accordingly, in section V.A. of the Addendum to this proposed rule, to determine the proposed FY 2019 LTCH PPS standard Federal payment rate, we are proposing to apply an area wage level adjustment budget neutrality factor of 0.999713, in accordance with § 412.523(d)(4). The proposed FY 2019 LTCH PPS standard Federal payment rate shown in Table 1E of the Addendum to this proposed rule reflects this adjustment factor. this proposed rule for FY 2019, under the broad authority conferred upon the Secretary by section 123 of the BBRA, as amended by section 307(b) of the BIPA, to determine appropriate payment adjustments under the LTCH PPS, we are proposing to continue to use the COLA factors based on the 2009 OPM COLA factors updated through 2016 by the comparison of the growth in the CPIs for Anchorage, Alaska, and Honolulu, Hawaii, relative to the growth in the CPI for the average U.S. city as established in the FY 2018 IPPS/LTCH PPS final rule. (For additional details on our current methodology for updating the COLA factors for Alaska and Hawaii and for a discussion on the FY 2018 COLA factors, we refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38539 through 38540).) Consistent with our historical practice, we are proposing to establish that the COLA factors shown in the following table will be used to adjust the nonlabor-related portion of the LTCH PPS standard Federal payment rate for LTCHs located in Alaska and Hawaii under § 412.525(b). C. Proposed LTCH PPS Cost-of-Living Adjustment (COLA) for LTCHs Located in Alaska and Hawaii Under § 412.525(b), a cost-of-living adjustment (COLA) is provided for LTCHs located in Alaska and Hawaii to account for the higher costs incurred in those States. Specifically, we apply a COLA to payments to LTCHs located in Alaska and Hawaii by multiplying the nonlabor-related portion of the standard Federal payment rate by the applicable COLA factors established annually by CMS. Higher labor-related costs for LTCHs located in Alaska and Hawaii are taken into account in the adjustment for area wage levels previously described. The methodology used to determine the COLA factors for Alaska and Hawaii is based on a comparison of the growth in the Consumer Price Indexes (CPIs) for Anchorage, Alaska, and Honolulu, Hawaii, relative to the growth in the CPI for the average U.S. city as published by the Bureau of Labor Statistics (BLS). It also includes a 25-percent cap on the CPI-updated COLA factors. Under our current policy, we update the COLA factors using the methodology described above every 4 years (at the same time as the update to the labor-related share of the IPPS market basket), and we last updated the COLA factors for Alaska and Hawaii published by OPM for 2009 in FY 2018 (82 FR 38539 through 38540). We continue to believe that determining updated COLA factors using this methodology would appropriately adjust the nonlabor-related portion of the LTCH PPS standard Federal payment rate for LTCHs located in Alaska and Hawaii. Therefore, in Alaska: City of Anchorage and 80kilometer (50-mile) radius by road ................... City of Fairbanks and 80kilometer (50-mile) radius by road ................... City of Juneau and 80-kilometer (50-mile) radius by road .......................... Rest of Alaska ................... City and County of Honolulu ................................. County of Hawaii ............... County of Kauai ................ County of Maui and County of Kalawao ................. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PROPOSED COST-OF-LIVING ADJUSTMENT FACTORS FOR ALASKA AND HAWAII UNDER THE LTCH PPS FOR FY 2019 FY 2018 and proposed FY 2019 Area 1.25 1.25 1.25 1.25 1.25 1.21 1.25 1.25 D. Proposed Adjustment for LTCH PPS High Cost Outlier (HCO) Cases 1. HCO Background From the beginning of the LTCH PPS, we have included an adjustment to account for cases in which there are extraordinarily high costs relative to the costs of most discharges. Under this policy, additional payments are made based on the degree to which the estimated cost of a case (which is calculated by multiplying the Medicare allowable covered charge by the hospital’s overall hospital CCR) exceeds a fixed-loss amount. This policy results in greater payment accuracy under the LTCH PPS and the Medicare program, and the LTCH sharing the financial risk for the treatment of extraordinarily high-cost cases. We retained the basic tenets of our HCO policy in FY 2016 when we implemented the dual rate LTCH PPS payment structure under PO 00000 Frm 00431 Fmt 4701 Sfmt 4702 20593 section 1206 of Public Law 113–67. LTCH discharges that meet the criteria for exclusion from the site neutral payment rate (that is, LTCH PPS standard Federal payment rate cases) are paid at the LTCH PPS standard Federal payment rate, which includes, as applicable, HCO payments under § 412.523(e). LTCH discharges that do not meet the criteria for exclusion are paid at the site neutral payment rate, which includes, as applicable, HCO payments under § 412.522(c)(2)(i). In the FY 2016 IPPS/LTCH PPS final rule, we established separate fixedloss amounts and targets for the two different LTCH PPS payment rates. Under this bifurcated policy, the historic 8-percent HCO target was retained for LTCH PPS standard Federal payment rate cases, with the fixedloss amount calculated using only data from LTCH cases that would have been paid at the LTCH PPS standard Federal payment rate if that rate had been in effect at the time of those discharges. For site neutral payment rate cases, we adopted the operating IPPS HCO target (currently 5.1 percent) and set the fixed-loss amount for site neutral payment rate cases at the value of the IPPS fixed-loss amount. Under the HCO policy for both payment rates, an LTCH receives 80 percent of the difference between the estimated cost of the case and the applicable HCO threshold, which is the sum of the LTCH PPS payment for the case and the applicable fixed-loss amount for such case. In order to maintain budget neutrality, consistent with the budget neutrality requirement for HCO payments to LTCH PPS standard Federal rate payment cases, we also adopted a budget neutrality requirement for HCO payments to site neutral payment rate cases by applying a budget neutrality factor to the LTCH PPS payment for those site neutral payment rate cases. (We refer readers to § 412.522(c)(2)(i) of the regulations for further details.) We note that, during the 2year transitional period, the site neutral payment rate HCO budget neutrality factor did not apply to the LTCH PPS standard Federal payment rate portion of the blended payment rate at § 412.522(c)(3) payable to site neutral payment rate cases. (For additional details on the HCO policy adopted for site neutral payment rate cases under the dual rate LTCH PPS payment structure, including the budget neutrality adjustment for HCO payments to site neutral payment rate cases, we refer readers to the FY 2016 IPPS/LTCH PPS final rule (80 FR 49617 through 49623).) 2. Determining LTCH CCRs Under the LTCH PPS a. Background As noted above, CCRs are used to determine payments for HCO adjustments for both payment rates under the LTCH PPS and also are used to determine payments for site neutral payment rate cases. As noted earlier, in determining HCO and the site neutral payment rate payments (regardless of whether the case is also an HCO), we generally calculate the estimated cost of the case by multiplying the LTCH’s overall CCR by the Medicare allowable charges for the case. An overall CCR is used because the LTCH PPS uses a single prospective payment per discharge that covers both inpatient E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20594 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules operating and capital-related costs. The LTCH’s overall CCR is generally computed based on the sum of LTCH operating and capital costs (as described in Section 150.24, Chapter 3, of the Medicare Claims Processing Manual (Pub. 100–4)) as compared to total Medicare charges (that is, the sum of its operating and capital inpatient routine and ancillary charges), with those values determined from either the most recently settled cost report or the most recent tentatively settled cost report, whichever is from the latest cost reporting period. However, in certain instances, we use an alternative CCR, such as the statewide average CCR, a CCR that is specified by CMS, or one that is requested by the hospital. (We refer readers to § 412.525(a)(4)(iv) of the regulations for further details regarding HCO adjustments for either LTCH PPS payment rate and § 412.522(c)(1)(ii) for the site neutral payment rate.) The LTCH’s calculated CCR is then compared to the LTCH total CCR ceiling. Under our established policy, an LTCH with a calculated CCR in excess of the applicable maximum CCR threshold (that is, the LTCH total CCR ceiling, which is calculated as 3 standard deviations from the national geometric average CCR) is generally assigned the applicable statewide CCR. This policy is premised on a belief that calculated CCRs above the LTCH total CCR ceiling are most likely due to faulty data reporting or entry, and CCRs based on erroneous data should not be used to identify and make payments for outlier cases. b. LTCH Total CCR Ceiling Consistent with our historical practice, we are proposing to use the most recent data to determine the LTCH total CCR ceiling for FY 2019 in this proposed rule. Specifically, in this proposed rule, using our established methodology for determining the LTCH total CCR ceiling based on IPPS total CCR data from the December 2017 update of the Provider Specific File (PSF), which is the most recent data available, we are proposing to establish an LTCH total CCR ceiling of 1.28 under the LTCH PPS for FY 2019 in accordance with § 412.525(a)(4)(iv)(C)(2) for HCO cases under either payment rate and § 412.522(c)(1)(ii) for the site neutral payment rate. (For additional information on our methodology for determining the LTCH total CCR ceiling, we refer readers to the FY 2007 IPPS final rule (71 FR 48118 through 48119).) c. LTCH Statewide Average CCRs Our general methodology for determining the statewide average CCRs used under the LTCH PPS is similar to our established methodology for determining the LTCH total CCR ceiling because it is based on ‘‘total’’ IPPS CCR data. (For additional information on our methodology for determining statewide average CCRs under the LTCH PPS, we refer readers to the FY 2007 IPPS final rule (71 FR 48119 through 48120).) Under the LTCH PPS HCO policy for cases paid under either payment rate at § 412.525(a)(4)(iv)(C)(2), the current SSO policy at § 412.529(f)(4)(iii)(B), and the site neutral payment rate at § 412.522(c)(1)(ii), the MAC may use a statewide average CCR, VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 which is established annually by CMS, if it is unable to determine an accurate CCR for an LTCH in one of the following circumstances: (1) New LTCHs that have not yet submitted their first Medicare cost report (a new LTCH is defined as an entity that has not accepted assignment of an existing hospital’s provider agreement in accordance with § 489.18); (2) LTCHs whose calculated CCR is in excess of the LTCH total CCR ceiling; and (3) other LTCHs for whom data with which to calculate a CCR are not available (for example, missing or faulty data). (Other sources of data that the MAC may consider in determining an LTCH’s CCR include data from a different cost reporting period for the LTCH, data from the cost reporting period preceding the period in which the hospital began to be paid as an LTCH (that is, the period of at least 6 months that it was paid as a short-term, acute care hospital), or data from other comparable LTCHs, such as LTCHs in the same chain or in the same region.) Consistent with our historical practice of using the best available data, in this proposed rule, using our established methodology for determining the LTCH statewide average CCRs, based on the most recent complete IPPS ‘‘total CCR’’ data from the December 2017 update of the PSF, we are proposing to establish LTCH PPS statewide average total CCRs for urban and rural hospitals that will be effective for discharges occurring on or after October 1, 2018, through September 30, 2019, in Table 8C listed in section VI. of the Addendum to this proposed rule (and available via the internet on the CMS website). Consistent with our historical practice, we also are proposing that if more recent data become available, we would use that data to determine the LTCH PPS statewide average total CCRs for FY 2019 in the final rule. Under the current LTCH PPS labor market areas, all areas in Delaware, the District of Columbia, New Jersey, and Rhode Island are classified as urban. Therefore, there are no rural statewide average total CCRs listed for those jurisdictions in Table 8C. This policy is consistent with the policy that we established when we revised our methodology for determining the applicable LTCH statewide average CCRs in the FY 2007 IPPS final rule (71 FR 48119 through 48121) and is the same as the policy applied under the IPPS. In addition, although Connecticut has areas that are designated as rural, in our calculation of the LTCH statewide average CCRs, there was no data available from shortterm, acute care IPPS hospitals to compute a rural statewide average CCR or there were no short-term, acute care IPPS hospitals or LTCHs located in that area as of December 2017. Therefore, consistent with our existing methodology, we are proposing to use the national average total CCR for rural IPPS hospitals for rural Connecticut in Table 8C. While Massachusetts also has rural areas, the statewide average CCR for rural areas in Massachusetts is based on one provider whose CCR is an atypical 1.215. Because this is much higher than the statewide urban average and furthermore implies costs exceeded charges, as with Connecticut, we are proposing to use the national average PO 00000 Frm 00432 Fmt 4701 Sfmt 4702 total CCR for rural hospitals for hospitals located in rural Massachusetts. Furthermore, consistent with our existing methodology, in determining the urban and rural statewide average total CCRs for Maryland LTCHs paid under the LTCH PPS, we are proposing to continue to use, as a proxy, the national average total CCR for urban IPPS hospitals and the national average total CCR for rural IPPS hospitals, respectively. We are using this proxy because we believe that the CCR data in the PSF for Maryland hospitals may not be entirely accurate (as discussed in greater detail in the FY 2007 IPPS final rule (71 FR 48120)). d. Reconciliation of HCO Payments Under the HCO policy for cases paid under either payment rate at § 412.525(a)(4)(iv)(D), the payments for HCO cases are subject to reconciliation. Specifically, any such payments are reconciled at settlement based on the CCR that was calculated based on the cost report coinciding with the discharge. For additional information on the reconciliation policy, we refer readers to Sections 150.26 through 150.28 of the Medicare Claims Processing Manual (Pub. 100–4), as added by Change Request 7192 (Transmittal 2111; December 3, 2010), and the RY 2009 LTCH PPS final rule (73 FR 26820 through 26821). 3. High-Cost Outlier Payments for LTCH PPS Standard Federal Payment Rate Cases a. Proposed Changes to High-Cost Outlier Payments for LTCH PPS Standard Federal Payment Rate Cases Under the regulations at § 412.525(a)(2)(ii) and as required by section 1886(m)(7) of the Act, the fixed-loss amount for HCO payments is set each year so that the estimated aggregate HCO payments for LTCH PPS standard Federal payment rate cases are 99.6875 percent of 8 percent (that is, 7.975 percent) of estimated aggregate LTCH PPS payments for LTCH PPS standard Federal payment rate cases. (For more details on the requirements for high-cost outlier payments in FY 2018 and subsequent years under section 1886(m)(7) of the Act and additional information regarding high-cost outlier payments prior to FY 2018, we refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38542 through 38544).) b. Establishment of the Proposed Fixed-Loss Amount for LTCH PPS Standard Federal Payment Rate Cases for FY 2019 When we implemented the LTCH PPS, we established a fixed-loss amount so that total estimated outlier payments are projected to equal 8 percent of total estimated payments under the LTCH PPS (67 FR 56022 through 56026). When we implemented the dual rate LTCH PPS payment structure beginning in FY 2016, we established that, in general, the historical LTCH PPS HCO policy would continue to apply to LTCH PPS standard Federal payment rate cases. That is, the fixed-loss amount and target for LTCH PPS standard Federal payment rate cases would be determined using the LTCH PPS HCO policy adopted when the LTCH PPS was first implemented, but we limited the data used under that policy to LTCH cases that would have been LTCH PPS standard Federal payment rate cases if the statutory changes E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules had been in effect at the time of those discharges. To determine the applicable fixed-loss amount for LTCH PPS standard Federal payment rate cases, we estimate outlier payments and total LTCH PPS payments for each LTCH PPS standard Federal payment rate case (or for each case that would have been a LTCH PPS standard Federal payment rate case if the statutory changes had been in effect at the time of the discharge) using claims data from the MedPAR files. In accordance with § 412.525(a)(2)(ii), the applicable fixed-loss amount for LTCH PPS standard Federal payment rate cases results in estimated total outlier payments being projected to be equal to 7.975 percent of projected total LTCH PPS payments for LTCH PPS standard Federal payment rate cases. We use MedPAR claims data and CCRs based on data from the most recent PSF (or from the applicable statewide average CCR if an LTCH’s CCR data are faulty or unavailable) to establish an applicable fixed-loss threshold amount for LTCH PPS standard Federal payment rate cases. In this FY 2019 IPPS/LTCH PPS proposed rule, we are proposing to continue to use our current methodology to calculate an applicable fixed-loss amount for LTCH PPS standard Federal payment rate cases for FY 2019 using the best available data that would maintain estimated HCO payments at the projected 7.975 percent of total estimated LTCH PPS payments for LTCH PPS standard Federal payment rate cases (based on the proposed payment rates and policies for these cases presented in this proposed rule). Specifically, based on the most recent complete LTCH data available at this time (that is, LTCH claims data from the December 2017 update of the FY 2017 MedPAR file and CCRs from the December 2017 update of the PSF), we are proposing to determine a proposed fixed-loss amount for LTCH PPS standard Federal payment rate cases for FY 2019 of $30,639 that would result in estimated outlier payments projected to be equal to 7.975 percent of estimated FY 2019 payments for such cases. Under this proposal, we would continue to make an additional HCO payment for the cost of an LTCH PPS standard Federal payment rate case that exceeds the HCO threshold amount that is equal to 80 percent of the difference between the estimated cost of the case and the outlier threshold (the sum of the proposed adjusted LTCH PPS standard Federal payment rate payment and the proposed fixed-loss amount for LTCH PPS standard Federal payment rate cases of $30,639). We note that the proposed fixed-loss amount for HCO cases paid under the LTCH PPS standard Federal payment rate in FY 2019 of $30,639 is higher than the FY 2018 fixed-loss amount of $27,381 for LTCH PPS standard Federal payment rate cases. However, based on the most recent available data at the time of the development of this FY 2019 IPPS/LTCH PPS proposed rule, we found that the current FY 2018 HCO threshold of $27,381 results in estimated HCO payments for LTCH PPS standard Federal payment rate cases of approximately 7.988 percent of the estimated total LTCH VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PPS payments in FY 2018, which exceeds the 7.975 percent target by 0.01 percentage points. We continue to believe, as discussed in detail in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38542 through 38543), this increase is largely attributable to the rate-ofchange (that is, increase) in the Medicare allowable charges on the claims data in addition to updates to CCRs from the December 2016 update of the PSF to the March 2017 update of the PSF. Consistent with our historical practice of using the best data available, we are proposing that, when determining the fixed-loss amount for LTCH PPS standard Federal payment rate cases for FY 2019 in the final rule, we would use the most recent available LTCH claims data and CCR data at the time. 3. Proposed High-Cost Outlier Payments for Site Neutral Payment Rate Cases Under § 412.525(a), site neutral payment rate cases receive an additional HCO payment for costs that exceed the HCO threshold that is equal to 80 percent of the difference between the estimated cost of the case and the applicable HCO threshold (80 FR 49618 through 49629). In the following discussion, we note that the statutory transitional payment method for cases that are paid the site neutral payment rate for LTCH discharges occurring in cost reporting periods beginning during FY 2016 through FY 2019 uses a blended payment rate, which is determined as 50 percent of the site neutral payment rate amount for the discharge and 50 percent of the LTCH PPS standard Federal payment rate amount for the discharge (§ 412.522(c)(3)). As such, for FY 2019 discharges paid under the transitional payment method, the discussion below pertains only to the site neutral payment rate portion of the blended payment rate under § 412.522(c)(3)(i). When we implemented the application of the site neutral payment rate in FY 2016, in examining the appropriate fixed-loss amount for site neutral payment rate cases issue, we considered how LTCH discharges based on historical claims data would have been classified under the dual rate LTCH PPS payment structure and the CMS’ Office of the Actuary projections regarding how LTCHs will likely respond to our implementation of policies resulting from the statutory payment changes. We again relied on these considerations and actuarial projections in FY 2017 and FY 2018 because the historical claims data available in each of these years were not all subject to the LTCH PPS dual rate payment system. Similarly, for FY 2019, we continue to rely on these considerations and actuarial projections because, due to the transitional blended payment policy for site neutral payment rate cases, FY 2017 claims for these cases were not subject to the full effect of the site neutral payment rate. For FYs 2016 through 2018, at that time our actuaries projected that the proportion of cases that would qualify as LTCH PPS standard Federal payment rate cases versus site neutral payment rate cases under the statutory provisions would remain consistent with what is reflected in the historical LTCH PPS claims data. Although our actuaries did not project an immediate change in the proportions found in the historical data, they PO 00000 Frm 00433 Fmt 4701 Sfmt 4702 20595 did project cost and resource changes to account for the lower payment rates. Our actuaries also projected that the costs and resource use for cases paid at the site neutral payment rate would likely be lower, on average, than the costs and resource use for cases paid at the LTCH PPS standard Federal payment rate and would likely mirror the costs and resource use for IPPS cases assigned to the same MS–DRG, regardless of whether the proportion of site neutral payment rate cases in the future remains similar to what is found based on the historical data. As discussed in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49619), this actuarial assumption is based on our expectation that site neutral payment rate cases would generally be paid based on an IPPS comparable per diem amount under the statutory LTCH PPS payment changes that began in FY 2016, which, in the majority of cases, is much lower than the payment that would have been paid if these statutory changes were not enacted. In light of these projections and expectations, we discussed that we believed that the use of a single fixed-loss amount and HCO target for all LTCH PPS cases would be problematic. In addition, we discussed that we did not believe that it would be appropriate for comparable LTCH PPS site neutral payment rate cases to receive dramatically different HCO payments from those cases that would be paid under the IPPS (80 FR 49617 through 49619 and 81 FR 57305 through 57307). For those reasons, we stated that we believed that the most appropriate fixed-loss amount for site neutral payment rate cases for FYs 2016 through 2018 would be equal to the IPPS fixed-loss amount for that particular fiscal year. Therefore, we established the fixed-loss amount for site neutral payment rate cases as the corresponding IPPS fixed-loss amounts for FYs 2016 through 2018. In particular, in FY 2018, we established the fixed-loss amount for site neutral payment rate cases as the FY 2018 IPPS fixed-loss amount of $26,537 (82 FR 46145). As noted earlier, because not all claims in the data used for this proposed rule were subject to the site neutral payment rate, we continue to rely on the same considerations and actuarial projections used in FYs 2016 through 2018 when developing a proposed fixed-loss amount for site neutral payment rate cases for FY 2019. Because our actuaries continue to project that site neutral payment rate cases in FY 2019 will continue to mirror an IPPS case paid under the same MS–DRG, we continue to believe that it would be inappropriate for comparable LTCH PPS site neutral payment rate cases to receive dramatically different HCO payments from those cases that would be paid under the IPPS. More specifically, as with FYs 2016 through 2018, our actuaries project that the costs and resource use for FY 2019 cases paid at the site neutral payment rate would likely be lower, on average, than the costs and resource use for cases paid at the LTCH PPS standard Federal payment rate and will likely mirror the costs and resource use for IPPS cases assigned to the same MS–DRG, regardless of whether the proportion of site neutral payment rate cases in the future remains similar to what is found based on the E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20596 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules historical data. (Based on the most recent FY 2017 LTCH claims data, approximately 64 percent of LTCH cases would have been paid the LTCH PPS standard Federal payment rate and approximately 36 percent of LTCH cases would have been paid the site neutral payment rate for discharges occurring in FY 2017.) For these reasons, we continue to believe that the most appropriate proposed fixed-loss amount for site neutral payment rate cases for FY 2019 is the proposed IPPS fixed-loss amount for FY 2019. Therefore, consistent with past practice, in this FY 2019 IPPS/ LTCH PPS proposed rule, for FY 2019, we are proposing that the applicable HCO threshold for site neutral payment rate cases is the sum of the site neutral payment rate for the case and the proposed IPPS fixed-loss amount. That is, we are proposing a fixed-loss amount for site neutral payment rate cases of $27,545, which is the same proposed FY 2019 IPPS fixed-loss amount discussed in section II.A.4.g.(1) of the Addendum to this proposed rule. We continue to believe that this policy would reduce differences between HCO payments for similar cases under the IPPS and site neutral payment rate cases under the LTCH PPS and promote fairness between the two systems. Accordingly, for FY 2019, we are proposing to calculate a HCO payment for site neutral payment rate cases with costs that exceed the HCO threshold amount that is equal to 80 percent of the difference between the estimated cost of the case and the outlier threshold (the sum of the proposed site neutral payment rate payment and the proposed fixed-loss amount for site neutral payment rate cases of $27,545). In establishing a HCO policy for site neutral payment rate cases, we established a budget neutrality adjustment under § 412.522(c)(2)(i). We established this requirement because we believed, and continue to believe, that the HCO policy for site neutral payment rate cases should be budget neutral, just as the HCO policy for LTCH PPS standard Federal payment rate cases is budget neutral, meaning that estimated site neutral payment rate HCO payments should not result in any change in estimated aggregate LTCH PPS payments. To ensure that estimated HCO payments payable to site neutral payment rate cases in FY 2019 would not result in any increase in estimated aggregate FY 2019 LTCH PPS payments, under the budget neutrality requirement at § 412.522(c)(2)(i), it is necessary to reduce site neutral payment rate payments (or the portion of the blended payment rate payment for FY 2018 discharges occurring in LTCH cost reporting periods beginning before October 1, 2017) by 5.1 percent to account for the estimated additional HCO payments payable to those cases in FY 2019. In order to achieve this, for FY 2019, in general, we are proposing to continue to use the policy adopted for FY 2018. As discussed earlier, consistent with the IPPS HCO payment threshold, we estimate our proposed fixed-loss threshold of $27,545 results in HCO payments for site neutral payment rate cases to equal 5.1 percent of the site neutral payment rate payments that are based on the IPPS comparable per diem VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 amount. As such, to ensure estimated HCO payments payable for site neutral payment rate cases in FY 2019 would not result in any increase in estimated aggregate FY 2019 LTCH PPS payments, under the budget neutrality requirement at § 412.522(c)(2)(i), it is necessary to reduce the site neutral payment rate amount paid under § 412.522(c)(1)(i) by 5.1 percent to account for the estimated additional HCO payments payable for site neutral payment rate cases in FY 2019. In order to achieve this, for FY 2019, we are proposing to apply a budget neutrality factor of 0.949 (that is, the decimal equivalent of a 5.1 percent reduction, determined as 1.0¥5.1/100 = 0.949) to the site neutral payment rate for those site neutral payment rate cases paid under § 412.522(c)(1)(i). We note that, consistent with the policy adopted for FY 2018, this proposed HCO budget neutrality adjustment would not be applied to the HCO portion of the site neutral payment rate amount (81 FR 57309). E. Proposed Update to the IPPS Comparable/ Equivalent Amounts To Reflect the Statutory Changes to the IPPS DSH Payment Adjustment Methodology In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50766), we established a policy to reflect the changes to the Medicare IPPS DSH payment adjustment methodology made by section 3133 of the Affordable Care Act in the calculation of the ‘‘IPPS comparable amount’’ under the SSO policy at § 412.529 and the ‘‘IPPS equivalent amount’’ under the 25percent threshold payment adjustment policy at § 412.534 and § 412.536. Historically, the determination of both the ‘‘IPPS comparable amount’’ and the ‘‘IPPS equivalent amount’’ includes an amount for inpatient operating costs ‘‘for the costs of serving a disproportionate share of low-income patients.’’ Under the statutory changes to the Medicare DSH payment adjustment methodology that began in FY 2014, in general, eligible IPPS hospitals receive an empirically justified Medicare DSH payment equal to 25 percent of the amount they otherwise would have received under the statutory formula for Medicare DSH payments prior to the amendments made by the Affordable Care Act. The remaining amount, equal to an estimate of 75 percent of the amount that otherwise would have been paid as Medicare DSH payments, reduced to reflect changes in the percentage of individuals who are uninsured, is made available to make additional payments to each hospital that qualifies for Medicare DSH payments and that has uncompensated care. The additional uncompensated care payments are based on the hospital’s amount of uncompensated care for a given time period relative to the total amount of uncompensated care for that same time period reported by all IPPS hospitals that receive Medicare DSH payments. To reflect the statutory changes to the Medicare DSH payment adjustment methodology in the calculation of the ‘‘IPPS comparable amount’’ and the ‘‘IPPS equivalent amount’’ under the LTCH PPS, we stated that we will include a reduced Medicare DSH payment amount that reflects PO 00000 Frm 00434 Fmt 4701 Sfmt 4702 the projected percentage of the payment amount calculated based on the statutory Medicare DSH payment formula prior to the amendments made by the Affordable Care Act that will be paid to eligible IPPS hospitals as empirically justified Medicare DSH payments and uncompensated care payments in that year (that is, a percentage of the operating Medicare DSH payment amount that has historically been reflected in the LTCH PPS payments that is based on IPPS rates). We also stated that the projected percentage will be updated annually, consistent with the annual determination of the amount of uncompensated care payments that will be made to eligible IPPS hospitals. We believe that this approach results in appropriate payments under the LTCH PPS and is consistent with our intention that the ‘‘IPPS comparable amount’’ and the ‘‘IPPS equivalent amount’’ under the LTCH PPS closely resemble what an IPPS payment would have been for the same episode of care, while recognizing that some features of the IPPS cannot be translated directly into the LTCH PPS (79 FR 50766 through 50767). For FY 2019, as discussed in greater detail in section IV.F.3. of the preamble of this proposed rule, based on the most recent data available, our estimate of 75 percent of the amount that would otherwise have been paid as Medicare DSH payments (under the methodology outlined in section 1886(r)(2) of the Act) is adjusted to 67.51 percent of that amount to reflect the change in the percentage of individuals who are uninsured. The resulting amount is then used to determine the amount available to make uncompensated care payments to eligible IPPS hospitals in FY 2018. In other words, the amount of the Medicare DSH payments that would have been made prior to the amendments made by the Affordable Care Act will be adjusted to 50.63 percent (the product of 75 percent and 67.51 percent) and the resulting amount will be used to calculate the uncompensated care payments to eligible hospitals. As a result, for FY 2019, we project that the reduction in the amount of Medicare DSH payments pursuant to section 1886(r)(1) of the Act, along with the payments for uncompensated care under section 1886(r)(2) of the Act, will result in overall Medicare DSH payments of 75.63 percent of the amount of Medicare DSH payments that would otherwise have been made in the absence of the amendments made by the Affordable Care Act (that is, 25 percent + 50.63 percent = 75.63 percent). In this FY 2019 IPPS/LTCH PPS proposed rule, for FY 2019, we are proposing to establish that the calculation of the ‘‘IPPS comparable amount’’ under § 412.529 would include an applicable operating Medicare DSH payment amount that is equal to 75.63 percent of the operating Medicare DSH payment amount that would have been paid based on the statutory Medicare DSH payment formula absent the amendments made by the Affordable Care Act. Furthermore, consistent with our historical practice, we are proposing that if more recent data became available, if appropriate, we will use that data to determine this factor in the final rule. E:\FR\FM\07MYP2.SGM 07MYP2 20597 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules F. Computing the Proposed Adjusted LTCH PPS Federal Prospective Payments for FY 2019 Section 412.525 sets forth the adjustments to the LTCH PPS standard Federal payment rate. Under the dual rate LTCH PPS payment structure, only LTCH PPS cases that meet the statutory criteria to be excluded from the site neutral payment rate are paid based on the LTCH PPS standard Federal payment rate. Under § 412.525(c), the LTCH PPS standard Federal payment rate is adjusted to account for differences in area wages by multiplying the proposed labor-related share of the LTCH PPS standard Federal payment rate for a case by the applicable LTCH PPS wage index (the proposed FY 2019 values are shown in Tables 12A through 12B listed in section VI. of the Addendum to this proposed rule and are available via the internet on the CMS website). The LTCH PPS standard Federal payment rate is also adjusted to account for the higher costs of LTCHs located in Alaska and Hawaii by the applicable COLA factors (the proposed FY 2019 factors are shown in the chart in section V.C. of this Addendum) in accordance with § 412.525(b). In this daltland on DSKBBV9HB2PROD with PROPOSALS2 Proposed Proposed Proposed Proposed Proposed Proposed Proposed Proposed Proposed proposed rule, we are proposing to establish an LTCH PPS standard Federal payment rate for FY 2019 of $41,482.98, as discussed in section V.A. of the Addendum to this proposed rule. We illustrate the methodology to adjust the proposed LTCH PPS standard Federal payment rate for FY 2019 in the following example: Example: During FY 2019, a Medicare discharge that meets the criteria to be excluded from the site neutral payment rate, that is, an LTCH PPS standard Federal payment rate case, is from an LTCH that is located in Chicago, Illinois (CBSA 16974). The proposed FY 2019 LTCH PPS wage index value for CBSA 16974 is 1.0511 (obtained from Table 12A listed in section VI. of the Addendum to this proposed rule and available via the internet on the CMS website). The Medicare patient case is classified into MS–LTC–DRG 189 (Pulmonary Edema & Respiratory Failure), which has a proposed relative weight for FY 2019 of 0.9595 (obtained from Table 11 listed in section VI. of the Addendum to this proposed rule and available via the internet on the CMS website). The LTCH submitted quality reporting data for FY 2019 in accordance with the LTCH QRP under section 1886(m)(5) of the Act. To calculate the LTCH’s total adjusted Federal prospective payment for this Medicare patient case in FY 2019, we computed the wage-adjusted proposed Federal prospective payment amount by multiplying the unadjusted proposed FY 2019 LTCH PPS standard Federal payment rate ($41,482.98) by the proposed laborrelated share (66.2 percent) and the wage index value (1.0511). This wage-adjusted amount was then added to the proposed nonlabor-related portion of the unadjusted proposed LTCH PPS standard Federal payment rate (33.8 percent; adjusted for cost of living, if applicable) to determine the adjusted proposed LTCH PPS standard Federal payment rate, which is then multiplied by the proposed MS–LTC–DRG relative weight (0.9595) to calculate the total adjusted proposed LTCH PPS standard Federal prospective payment for FY 2019 ($41,149.38). The table below illustrates the components of the calculations in this example. Unadjusted LTCH PPS Standard Federal Prospective Payment Rate ............................................................................ Labor-Related Share ........................................................................................................................................................... Labor-Related Portion of the LTCH PPS Standard Federal Payment Rate ..................................................................... Wage Index (CBSA 16974) ................................................................................................................................................ Wage-Adjusted Labor Share of LTCH PPS Standard Federal Payment Rate ................................................................. Nonlabor-Related Portion of the LTCH PPS Standard Federal Payment Rate ($41,482.98 x 0.338) ............................ Adjusted LTCH PPS Standard Federal Payment Amount .............................................................................................. MS–LTC–DRG 189 Relative Weight ................................................................................................................................. Total Adjusted LTCH PPS Standard Federal Prospective Payment ............................................................................... VI. Tables Referenced in This Proposed Rule Generally Available Only Through the Internet on the CMS Website This section lists the tables referred to throughout the preamble of this proposed rule and in this Addendum. In the past, a majority of these tables were published in the Federal Register as part of the annual proposed and final rules. However, similar to FYs 2012 through 2018, for the FY 2019 rulemaking cycle, the IPPS and LTCH PPS tables will not be published in the Federal Register in the annual IPPS/LTCH PPS proposed and final rules and will be available only through the internet. Specifically, all IPPS tables listed below, with the exception of IPPS Tables 1A, 1B, 1C, and 1D, and LTCH PPS Table 1E will generally only be available through the internet. IPPS Tables 1A, 1B, 1C, and 1D, and LTCH PPS Table 1E are displayed at the end of this section and will continue to be published in the Federal Register as part of the annual proposed and final rules. As discussed in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49807), we streamlined and consolidated the wage index tables for FY 2016 and subsequent fiscal years. As discussed in section III.J. of the preamble to this proposed rule, we are adding a new Table 4, ‘‘List of Counties Eligible for the Out-Migration Adjustment under Section 1886(d)(13) of the Act—FY 2019,’’ associated with this proposed rule. This table consists of the following: A list of counties that would be eligible for the out- VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 migration adjustment for FY 2019 identified by FIPS county code, the proposed FY 2019 out-migration adjustment, and the number of years the adjustment would be in effect. We believe this new table would make this information more transparent and provide the public with easier access to this information. We intend to make the information available annually via Table 4 in the IPPS/LTCH PPS proposed and final rules, and are including it among the tables associated with this FY 2019 IPPS/LTCH PPS proposed rule that are available via the internet on the CMS website. As discussed in sections II.F.13., II.F.15.b. and d., II.F.16., and II.F.18. of the preamble of this proposed rule, we developed the following ICD–10–CM and ICD–10–PCS code tables for FY 2019: Table 6A.—New Diagnosis Codes; Table 6B.—New Procedure Codes; Table 6C.—Invalid Diagnosis Codes; Table 6D.—Invalid Procedure Codes; Table 6E.—Revised Diagnosis Code Titles; Table 6F.—Revised Procedure Code Titles; Table 6G.1.—Proposed Secondary Diagnosis Order Additions to the CC Exclusion List; Table 6G.2.—Proposed Principal Diagnosis Order Additions to the CC Exclusion List; Table 6H.1.—Proposed Secondary Diagnosis Order Deletions to the CC Exclusion List; Table 6H.2.—Proposed Principal Diagnosis Order Deletions to the CC Exclusion List; Table 6I.1.—Proposed Additions to the MCC List; Table 6I.2.—Proposed Deletions to the MCC List; Table 6J.1.—Proposed Additions to the CC List; Table 6J.2.—Proposed Deletions to PO 00000 Frm 00435 Fmt 4701 Sfmt 4702 = = + = = $41,482.98 × 0.662 $27,461.73 × 1.0511 $28,865.02 $14,021.25 $42,886.27 × 0.9595 $41,149.38 the CC List; and Table 6P.— ICD–10–CM and ICD–10–PCS Codes for Proposed MS–DRG Changes. Table 6P contains multiple tables, 6P.1 through 6P.1k, that include the ICD–10– CM and ICD–10–PCS code lists relating to specific proposed MS–DRG changes. In addition, under the HAC Reduction Program established by section 3008 of the Affordable Care Act, a hospital’s total payment may be reduced by 1 percent if it is in the lowest HAC performance quartile. However, as discussed in section IV.K. of the preamble of this proposed rule, we are not providing the hospital-level data as a table associated with this proposed rule. The hospital-level data for the FY 2019 HAC Reduction Program will be made publicly available once it has undergone the review and corrections process. As discussed in section II.H.1. of the preamble of this proposed rule, Table 10 that we have released in prior fiscal years contained the thresholds that we use to evaluate applications for new medical service and technology add-on payments for the fiscal year that follows the fiscal year that is otherwise the subject of the rulemaking. In an effort to clarify for the public that the listed thresholds will be used for new technology add-on payment applications for the next fiscal year (in this case, for FY 2020) rather than the fiscal year that is otherwise the subject of the rulemaking (in this case, for FY 2019), we are proposing to provide the thresholds previously included in Table 10 as one of our publicly available data files E:\FR\FM\07MYP2.SGM 07MYP2 20598 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 posted via the internet on the CMS website for the rulemaking for the upcoming fiscal year at: https://www.cms.hhs.gov/Medicare/ Medicare-Fee-for-Service-Payment/ AcuteInpatientPPS/, which is the same URL where the impact data files associated with the rulemaking for the applicable fiscal year are posted. We refer readers to section II.H.1. of the preamble of this proposed rule regarding our proposal to include the thresholds previously included in Table 10 as one of our public data files. As discussed in section VII.B of the preamble of this proposed rule, in previous fiscal years, Table 13A.—Composition of Low-Volume Quintiles for MS–LTC–DRGs (which was listed in section VI. of the Addendum to the proposed and final rules and available via the internet on the CMS website) listed the composition of the lowvolume quintiles for MS–LTC–DRGs for the respective year, and Table 13B.—No Volume MS–LTC–DRG Crosswalk (also listed in section VI. of the Addendum to the proposed and final rules and available via the internet on the CMS website) listed the no-volume MS–LTC–DRGs and the MS–LTC–DRGs to which each was cross-walked (that is, the cross-walked MS–LTC–DRGs). The information contained in Tables 13A and 13B is used in the development of Table 11.— MS–LTC–DRGs, Relative Weights, Geometric Average Length of Stay, and Short-Stay Outlier (SSO) Threshold for LTCH PPS Discharges, which contains the proposed MS–LTC–DRGs and their respective proposed relative weights, geometric mean length of stay, and five-sixths of the geometric mean length of stay (used to identify SSO cases) for the respective fiscal year (and also is listed in section VI. of the Addendum to this proposed rule and available via the internet on the CMS website). Because the information contained in Tables 13A and 13B does not contain proposed payment rates or factors for the applicable payment year, we are proposing to generally provide the data previously published in Tables 13A and 13B for each annual proposed rule and final rule as one of our supplemental data files via the internet on the CMS website for the respective rule and fiscal year (that is, FY 2019 and subsequent fiscal years) at: https:// www.cms.gov/Medicare/Medicare-Fee-forService-Payment/LongTermCareHospitalPPS/ index.html (that is, the same URL address where the impact data files associated with the rule are posted). To streamline the information made available to the public that is used in the annual development of Table 11, we believe that this proposed change in the presentation of the information contained in Tables 13A and 13B will make it easier for the public to navigate and find the relevant VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 data and information used for the development of proposed payment rates or factors for the applicable payment year, while continuing to furnish the same information contained in the tables provided in previous fiscal years. In addition, Table 18 associated with this proposed rule contains the proposed Factor 3 for purposes of determining the FY 2019 uncompensated care payment for all hospitals and identifies whether or not a hospital is projected to receive Medicare DSH payments and, therefore, eligible to receive the additional payment for uncompensated care for FY 2019. A hospital’s Factor 3 determines the proportion of the aggregate amount available for uncompensated care payments that a Medicare DSH eligible hospital will receive under section 3133 of the Affordable Care Act. Readers who experience any problems accessing any of the tables that are posted on the CMS websites identified below should contact Michael Treitel at (410) 786–4552. The following IPPS tables for this FY 2019 proposed rule are generally only available through the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatientPPS/ index.html. Click on the link on the left side of the screen titled, ‘‘FY 2019 IPPS Proposed Rule Home Page’’ or ‘‘Acute Inpatient—Files for Download.’’ Table 2.—Proposed Case-Mix Index and Wage Index Table by CCN—FY 2019 Table 3.—Proposed Wage Index Table by CBSA—FY 2019 Table 4.—Proposed List of Counties Eligible for the Out-Migration Adjustment under Section 1886(d)(13) of the Act—FY 2019 Table 5.—Proposed List of Medicare Severity Diagnosis-Related Groups (MS–DRGs), Relative Weighting Factors, and Geometric and Arithmetic Mean Length of Stay—FY 2019 Table 6A.—New Diagnosis Codes—FY 2019 Table 6B.—New Procedure Codes—FY 2019 Table 6C.—Invalid Diagnosis Codes—FY 2019 Table 6D.—Invalid Procedure Codes—FY 2019 Table 6E.—Revised Diagnosis Code Titles— FY 2019 Table 6F.—Revised Procedure Code Titles— FY 2019 Table 6G.1.—Proposed Secondary Diagnosis Order Additions to the CC Exclusions List—FY 2019 Table 6G.2.—Proposed Principal Diagnosis Order Additions to the CC Exclusions List—FY 2019 Table 6H.1.—Proposed Secondary Diagnosis Order Deletions to the CC Exclusions List—FY 2019 PO 00000 Frm 00436 Fmt 4701 Sfmt 4702 Table 6H.2.—Proposed Principal Diagnosis Order Deletions to the CC Exclusions List—FY 2019 Table 6I.1.—Proposed Additions to the MCC List—FY 2019 Table 6I.2.—Proposed Deletions to the MCC List—FY 2019 Table 6J.1.—Proposed Additions to the CC List—FY 2019 Table 6J.2.—Proposed Deletions to the CC List—FY 2019 Table 6P.—ICD–10–CM and ICD–10–PCS Codes for Proposed MS–DRG Changes—FY 2019 Table 7A.—Proposed Medicare Prospective Payment System Selected Percentile Lengths of Stay: FY 2017 MedPAR Update—September 2017 GROUPER V35.0 MS–DRGs Table 7B.—Proposed Medicare Prospective Payment System Selected Percentile Lengths of Stay: FY 2017 MedPAR Update— September 2017 GROUPER V36.0 MS–DRGs Table 8A.—Proposed FY 2019 Statewide Average Operating Cost-to-Charge Ratios (CCRs) for Acute Care Hospitals (Urban and Rural) Table 8B.—Proposed FY 2019 Statewide Average Capital Cost-to-Charge Ratios (CCRs) for Acute Care Hospitals Table 15.—Proposed Proxy FY 2019 Readmissions Adjustment Factors Table 16.—Proposed Proxy Hospital ValueBased Purchasing (VBP) Program Adjustment Factors for FY 2019 Table 18.—Proposed FY 2019 Medicare DSH Uncompensated Care Payment Factor 3 The following LTCH PPS tables for this FY 2019 proposed rule are available only through the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ LongTermCareHospitalPPS/ under the list item for Regulation Number CMS– 1694–P: Table 8C.—Proposed FY 2019 Statewide Average Total Cost-to-Charge Ratios (CCRs) for LTCHs (Urban and Rural) Table 11.—Proposed MS–LTC–DRGs, Relative Weights, Geometric Average Length of Stay, and Short-Stay Outlier (SSO) Threshold for LTCH PPS Discharges Occurring from October 1, 2018 through September 30, 2019 Table 12A.—Proposed LTCH PPS Wage Index for Urban Areas for Discharges Occurring from October 1, 2018 through September 30, 2019 Table 12B.—Proposed LTCH PPS Wage Index for Rural Areas for Discharges Occurring from October 1, 2018 through September 30, 2019 E:\FR\FM\07MYP2.SGM 07MYP2 20599 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules TABLE 1A—PROPOSED NATIONAL ADJUSTED OPERATING STANDARDIZED AMOUNTS, LABOR/NONLABOR [(68.3 percent labor share/31.7 percent nonlabor share if wage index is greater than 1)—FY 2019] Hospital submitted quality data and is a meaningful EHR user (Update = 1.25 Percent) Hospital submitted quality data and is NOT a meaningful EHR user (update = ¥0.85 percent) Hospital did NOT submit quality data and is a meaningful EHR user (update = 0.550 percent) Hospital did NOT submit quality data and is NOT a meaningful EHR user (update = ¥1.55 percent) Labor Nonlabor Labor Nonlabor Labor Nonlabor Labor Nonlabor $3,863.17 $1,793.01 $3,783.04 $1,755.82 $3,836.46 $1,780.61 $3,756.34 $1,743.43 TABLE 1B—PROPOSED NATIONAL ADJUSTED OPERATING STANDARDIZED AMOUNTS, LABOR/NONLABOR [(62 percent labor share/38 percent nonlabor share if wage index is less than or equal to 1)—FY 2019] Hospital submitted quality data and is a meaningful EHR User (update = 1.25 percent) Hospital submitted quality data and is NOT a meaningful EHR user (update = ¥0.85 percent) Hospital did NOT submit quality data and is a meaningful EHR user (update = 0.550 percent) Hospital did NOT submit quality data and is NOT a meaningful EHR user (update = ¥1.55 percent) Labor Nonlabor Labor Nonlabor Labor Nonlabor Labor Nonlabor $3,506.83 $2,149.35 $3,434.09 $2,104.77 $3,482.58 $2,134.49 $3,409.86 $2,089.91 TABLE 1C—PROPOSED ADJUSTED OPERATING STANDARDIZED AMOUNTS FOR HOSPITALS IN PUERTO RICO, LABOR/ NONLABOR [(National: 62 percent labor share/38 percent nonlabor share because wage index is less than or equal to 1)—FY 2019] Rates if wage index is greater than 1 Standardized amount Rates if wage index is less than or equal to 1 Labor National 1 ........................................ 1 For Nonlabor Labor Not Applicable ................................ Not Applicable ................................ Nonlabor $3,506.83 $2,149.35 FY 2019, there are no CBSAs in Puerto Rico with a national wage index greater than 1. TABLE 1D—PROPOSED CAPITAL STANDARD FEDERAL PAYMENT RATE [FY 2019] Rate National ................................................................................................................................................................................................ $459.78 TABLE 1E—PROPOSED LTCH PPS STANDARD FEDERAL PAYMENT RATE [FY 2019] Full update (1.15 percent) Standard Federal Rate ................................................................................................................................ Reduced update * (¥0.85 percent) $41,482.98 $40,662.75 * For LTCHs that fail to submit quality reporting data for FY 2019 in accordance with the LTCH Quality Reporting Program (LTCH QRP), the annual update is reduced by 2.0 percentage points as required by section 1886(m)(5) of the Act. Appendix A: Economic Analyses B. Overall Impact I. Regulatory Impact Analysis We have examined the impacts of this proposed rule as required by Executive Order 12866 on Regulatory Planning and Review (September 30, 1993), Executive Order 13563 on Improving Regulation and Regulatory Review (January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96–354), section 1102(b) of the Social Security Act, section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104–4), Executive Order 13132 on Federalism (August 4, 1999), the Congressional Review Act (5 U.S.C. 804(2), and Executive Order 13771 on Reducing daltland on DSKBBV9HB2PROD with PROPOSALS2 A. Statement of Need This proposed rule is necessary in order to make payment and policy changes under the Medicare IPPS for Medicare acute care hospital inpatient services for operating and capital-related costs as well as for certain hospitals and hospital units excluded from the IPPS. This proposed rule also is necessary to make payment and policy changes for Medicare hospitals under the LTCH PPS. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00437 Fmt 4701 Sfmt 4702 Regulation and Controlling Regulatory Costs (January 30, 2017). Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Section 3(f) of Executive Order 12866 defines a ‘‘significant regulatory action’’ as an action that is likely to result in a rule: (1) (Having an annual effect on the economy of $100 million or more in any 1 year, or adversely and materially affecting a sector of the E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20600 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules economy, productivity, competition, jobs, the environment, public health or safety, or state, local or tribal governments or communities (also referred to as ‘‘economically significant’’); (2) creating a serious inconsistency or otherwise interfering with an action taken or planned by another agency; (3) materially altering the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raising novel legal or policy issues arising out of legal mandates, the President’s priorities, or the principles set forth in the Executive Order. We have determined that this proposed rule is a major rule as defined in 5 U.S.C. 804(2). We estimate that the proposed changes for FY 2019 acute care hospital operating and capital payments would redistribute amounts in excess of $100 million to acute care hospitals. The applicable percentage increase to the IPPS rates required by the statute, in conjunction with other proposed payment changes in this proposed rule, would result in an estimated $4.1 billion increase in FY 2019 payments, primarily driven by a combined $4.0 billion increase in FY 2019 operating payments and uncompensated care payments, and a combined $0.1 billion increase in FY 2019 capital payments and low-volume hospital payments. These proposed changes are relative to payments made in FY 2018. The impact analysis of the proposed capital payments can be found in section I.I. of this Appendix. In addition, as described in section I.J. of this Appendix, LTCHs are expected to experience a decrease in payments by $5 million in FY 2019 relative to FY 2018. Our operating impact estimate includes the proposed 0.5 percent adjustment required under section 414 of the MACRA applied to the IPPS standardized amount, as discussed in section II.D. of the preamble of this proposed rule. In addition, our operating payment impact estimate includes the proposed 1.25 percent hospital update to the standardized amount (which includes the estimated 2.8 percent market basket update less 0.8 percentage point for the proposed multifactor productivity adjustment and less 0.75 percentage point required under the Affordable Care Act). The estimates of proposed IPPS operating payments to acute care hospitals do not reflect any changes in hospital admissions or real case-mix intensity, which would also affect overall payment changes. The analysis in this Appendix, in conjunction with the remainder of this document, demonstrates that this proposed rule is consistent with the regulatory philosophy and principles identified in Executive Orders 12866 and 13563, the RFA, and section 1102(b) of the Act. This proposed rule would affect payments to a substantial number of small rural hospitals, as well as other classes of hospitals, and the effects on some hospitals may be significant. Finally, in accordance with the provisions of Executive Order 12866, the Executive Office of Management and Budget has reviewed this proposed rule. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 C. Objectives of the IPPS and the LTCH PPS The primary objective of the IPPS and the LTCH PPS is to create incentives for hospitals to operate efficiently and minimize unnecessary costs, while at the same time ensuring that payments are sufficient to adequately compensate hospitals for their legitimate costs in delivering necessary care to Medicare beneficiaries. In addition, we share national goals of preserving the Medicare Hospital Insurance Trust Fund. We believe that the changes in this proposed rule would further each of these goals while maintaining the financial viability of the hospital industry and ensuring access to high quality health care for Medicare beneficiaries. We expect that these proposed changes will ensure that the outcomes of the prospective payment systems are reasonable and equitable, while avoiding or minimizing unintended adverse consequences. Because this proposed rule contains a range of policies, we refer readers to the section of the proposed rule where each policy is discussed. These sections include the rational for our decisions, including the need for the proposed policy. D. Limitations of Our Analysis The following quantitative analysis presents the projected effects of our proposed policy changes, as well as statutory changes effective for FY 2019, on various hospital groups. We estimate the effects of individual proposed policy changes by estimating payments per case, while holding all other payment policies constant. We use the best data available, but, generally, we do not attempt to make adjustments for future changes in such variables as admissions, lengths of stay, or case-mix. In addition, we discuss limitations of our analysis for specific proposed policies in the discussion of those proposed policies as needed. E. Hospitals Included in and Excluded From the IPPS The prospective payment systems for hospital inpatient operating and capitalrelated costs of acute care hospitals encompass most general short-term, acute care hospitals that participate in the Medicare program. There were 29 Indian Health Service hospitals in our database, which we excluded from the analysis due to the special characteristics of the prospective payment methodology for these hospitals. Among other short-term, acute care hospitals, hospitals in Maryland are paid in accordance with the Maryland All-Payer Model, and hospitals located outside the 50 States, the District of Columbia, and Puerto Rico (that is, 5 short-term acute care hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa) receive payment for inpatient hospital services they furnish on the basis of reasonable costs, subject to a rate-of-increase ceiling. As of March 2018, there were 3,257 IPPS acute care hospitals included in our analysis. This represents approximately 54 percent of all Medicare-participating hospitals. The majority of this impact analysis focuses on this set of hospitals. There also are PO 00000 Frm 00438 Fmt 4701 Sfmt 4702 approximately 1,395 CAHs. These small, limited service hospitals are paid on the basis of reasonable costs, rather than under the IPPS. IPPS-excluded hospitals and units, which are paid under separate payment systems, include IPFs, IRFs, LTCHs, RNHCIs, children’s hospitals, 11 cancer hospitals, extended neoplastic disease care hospitals, and 5 short-term acute care hospitals located in the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa. Changes in the prospective payment systems for IPFs and IRFs are made through separate rulemaking. Payment impacts of proposed changes to the prospective payment systems for these IPPS-excluded hospitals and units are not included in this proposed rule. The impact of the proposed update and policy changes to the LTCH PPS for FY 2019 is discussed in section I.J. of this Appendix. F. Effects on Hospitals and Hospital Units Excluded From the IPPS As of March 2018, there were 98 children’s hospitals, 11 cancer hospitals, 5 short-term acute care hospitals located in the Virgin Islands, Guam, the Northern Mariana Islands and American Samoa, 1 extended neoplastic disease care hospital, and 18 RNHCIs being paid on a reasonable cost basis subject to the rate-of-increase ceiling under § 413.40. (In accordance with § 403.752(a) of the regulation, RNHCIs are paid under § 413.40.) Among the remaining providers, 280 rehabilitation hospitals and 844 rehabilitation units, and approximately 409 LTCHs, are paid the Federal prospective per discharge rate under the IRF PPS and the LTCH PPS, respectively, and 538 psychiatric hospitals and 1,098 psychiatric units are paid the Federal per diem amount under the IPF PPS. As stated previously, IRFs and IPFs are not affected by the rate updates discussed in this proposed rule. The impacts of the proposed changes on LTCHs are discussed in section I.J. of this Appendix. For children’s hospitals, the 11 cancer hospitals, the 5 short-term acute care hospitals located in the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa, extended neoplastic disease care hospitals, and RNHCIs, the update of the rate-of-increase limit (or target amount) would be the estimated FY 2019 percentage increase in the 2014-based IPPS operating market basket, consistent with section 1886(b)(3)(B)(ii) of the Act, and §§ 403.752(a) and 413.40 of the regulations. Consistent with current law, based on IGI’s 2017 fourth quarter forecast of the 2014-based IPPS market basket increase, we are estimating the FY 2019 update to be 2.8 percent (that is, the estimate of the market basket rate-ofincrease). We are proposing that if more recent data become available for the final rule, we would use them to calculate the IPPS operating market basket update for FY 2019. However, the Affordable Care Act requires an adjustment for multifactor productivity (currently proposed at 0.8 percentage point for FY 2019) and a 0.75 percentage point reduction to the market basket update, resulting in a proposed 1.25 percent applicable percentage increase for IPPS hospitals that submit quality data and are meaningful EHR users, as discussed in E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 section IV.B. of the preamble of this proposed rule. Children’s hospitals, the 11 cancer hospitals, the 5 short-term acute care hospitals located in the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa, extended neoplastic disease care hospitals, and RNHCIs that continue to be paid based on reasonable costs subject to rate-of-increase limits under § 413.40 of the regulations are not subject to the reductions in the applicable percentage increase required under the Affordable Care Act. Therefore, for those hospitals paid under § 413.40 of the regulations, the proposed update is the percentage increase in the 2014based IPPS operating market basket for FY 2019, estimated at 2.8 percent, without the reductions described previously under the Affordable Care Act. The impact of the proposed update in the rate-of-increase limit on those excluded hospitals depends on the cumulative cost increases experienced by each excluded hospital since its applicable base period. For excluded hospitals that have maintained their cost increases at a level below the rateof-increase limits since their base period, the major effect is on the level of incentive payments these excluded hospitals receive. Conversely, for excluded hospitals with cost increases above the cumulative update in their rate-of-increase limits, the major effect is the amount of excess costs that would not be paid. We note that, under § 413.40(d)(3), an excluded hospital that continues to be paid under the TEFRA system and whose costs exceed 110 percent of its rate-of-increase limit receives its rate-of-increase limit plus the lesser of: (1) 50 percent of its reasonable costs in excess of 110 percent of the limit; or (2) 10 percent of its limit. In addition, under the various provisions set forth in § 413.40, hospitals can obtain payment adjustments for justifiable increases in operating costs that exceed the limit. G. Quantitative Effects of the Proposed Policy Changes Under the IPPS for Operating Costs 1. Basis and Methodology of Estimates In this proposed rule, we are announcing proposed policy changes and payment rate updates for the IPPS for FY 2019 for operating costs of acute care hospitals. The proposed FY 2019 updates to the capital payments to acute care hospitals are discussed in section I.I. of this Appendix. Based on the overall percentage change in payments per case estimated using our payment simulation model, we estimate that proposed total FY 2019 operating payments would increase by 2.1 percent, compared to FY 2018. In addition to the applicable percentage increase, this amount reflects the proposed 0.5 percent permanent adjustment to the standardized amount required under section 414 of the MACRA. The impacts do not reflect changes in the number of hospital admissions or real case-mix intensity, which would also affect overall payment changes. We have prepared separate impact analyses of the proposed changes to each system. This section deals with the proposed changes to the operating inpatient prospective payment system for acute care hospitals. Our payment simulation model relies on the most recent VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 available data to enable us to estimate the impacts on payments per case of certain proposed changes in this proposed rule. However, there are other proposed changes for which we do not have data available that would allow us to estimate the payment impacts using this model. For those proposed changes, we have attempted to predict the payment impacts based upon our experience and other more limited data. The data used in developing the quantitative analyses of proposed changes in payments per case presented in this section are taken from the FY 2017 MedPAR file and the most current Provider-Specific File (PSF) that is used for payment purposes. Although the analyses of the proposed changes to the operating PPS do not incorporate cost data, data from the most recently available hospital cost reports were used to categorize hospitals. Our analysis has several qualifications. First, in this analysis, we do not make adjustments for future changes in such variables as admissions, lengths of stay, or underlying growth in real case-mix. Second, due to the interdependent nature of the IPPS payment components, it is very difficult to precisely quantify the impact associated with each proposed change. Third, we use various data sources to categorize hospitals in the tables. In some cases, particularly the number of beds, there is a fair degree of variation in the data from the different sources. We have attempted to construct these variables with the best available source overall. However, for individual hospitals, some miscategorizations are possible. Using cases from the FY 2017 MedPAR file, we simulate payments under the operating IPPS given various combinations of payment parameters. As described previously, Indian Health Service hospitals and hospitals in Maryland were excluded from the simulations. The impact of proposed payments under the capital IPPS, and the impact of proposed payments for costs other than inpatient operating costs, are not analyzed in this section. Estimated payment impacts of the capital IPPS for FY 2019 are discussed in section I.I. of this Appendix. We discuss the following proposed changes: • The effects of the proposed application of the adjustment required under section 414 of the MACRA and the applicable percentage increase (including the proposed market basket update, the proposed multifactor productivity adjustment, and the applicable percentage reduction in accordance with the Affordable Care Act) to the standardized amount and hospital-specific rates. • The effects of the proposed changes to the relative weights and MS–DRG GROUPER. • The effects of the proposed changes in hospitals’ wage index values reflecting updated wage data from hospitals’ cost reporting periods beginning during FY 2015, compared to the FY 2014 wage data, to calculate the proposed FY 2019 wage index. • The effects of the geographic reclassifications by the MGCRB (as of publication of this proposed rule) that would be effective for FY 2019. • The effects of the proposed rural floor with the application of the national budget PO 00000 Frm 00439 Fmt 4701 Sfmt 4702 20601 neutrality factor to the wage index, and the proposed expiration of the imputed floor. • The effects of the proposed frontier State wage index adjustment under the statutory provision that requires hospitals located in States that qualify as frontier States to not have a wage index less than 1.0. This provision is not budget neutral. • The effects of the proposed implementation of section 1886(d)(13) of the Act, as added by section 505 of Public Law 108–173, which provides for an increase in a hospital’s wage index if a threshold percentage of residents of the county where the hospital is located commute to work at hospitals in counties with higher wage indexes for FY 2019. This provision is not budget neutral. • The total estimated change in proposed payments based on the proposed FY 2019 policies relative to payments based on FY 2018 policies that include the proposed applicable percentage increase of 1.25 percent (or proposed 2.8 percent market basket update with a proposed reduction of 0.8 percentage point for the multifactor productivity adjustment, and a 0.75 percentage point reduction, as required under the Affordable Care Act). To illustrate the impact of the proposed FY 2019 changes, our analysis begins with a FY 2018 baseline simulation model using: The FY 2018 applicable percentage increase of 1.35 percent, the 0.4588 percent adjustment to the Federal standardized amount, and the adjustment factor of (1/1.006) to both the national standardized amount and the hospitals specific rate; the FY 2018 MS–DRG GROUPER (Version 35); the FY 2018 CBSA designations for hospitals based on the OMB definitions from the 2010 Census; the FY 2018 wage index; and no MGCRB reclassifications. Outlier payments are set at 5.1 percent of total operating MS–DRG and outlier payments for modeling purposes. Section 1886(b)(3)(B)(viii) of the Act, as added by section 5001(a) of Pub. L. 109–171, as amended by section 4102(b)(1)(A) of the ARRA (Public Law 111–5) and by section 3401(a)(2) of the Affordable Care Act (Pub. L. 111–148), provides that, for FY 2007 and each subsequent year through FY 2014, the update factor will include a reduction of 2.0 percentage points for any subsection (d) hospital that does not submit data on measures in a form and manner, and at a time specified by the Secretary. Beginning in FY 2015, the reduction is one-quarter of such applicable percentage increase determined without regard to section 1886(b)(3)(B)(ix), (xi), or (xii) of the Act, or one-quarter of the market basket update. Therefore, for FY 2019, we are proposing that hospitals that do not submit quality information under rules established by the Secretary and that are meaningful EHR users under section 1886(b)(3)(B)(ix) of the Act would receive an applicable percentage increase of 0.55 percent. At the time this impact was prepared, 54 hospitals are estimated to not receive the full market basket rate-of-increase for FY 2019 because they failed the quality data submission process or did not choose to participate, but are meaningful EHR users. For purposes of the simulations shown later in this section, we modeled the proposed E:\FR\FM\07MYP2.SGM 07MYP2 20602 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 payment changes for FY 2019 using a reduced update for these hospitals. For FY 2019, in accordance with section 1886(b)(3)(B)(ix) of the Act, a hospital that has been identified as not a meaningful EHR user will be subject to a reduction of threequarters of such applicable percentage increase determined without regard to section 1886(b)(3)(B)(ix), (xi), or (xii) of the Act. Therefore, for FY 2019, we are proposing that hospitals that are identified as not meaningful EHR users and do submit quality information under section 1886(b)(3)(B)(viii) of the Act would receive an applicable percentage increase of ¥0.85 percent. At the time this impact analysis was prepared, 148 hospitals are estimated to not receive the full market basket rate-of-increase for FY 2019 because they are identified as not meaningful EHR users that do submit quality information under section 1886(b)(3)(B)(viii) of the Act. For purposes of the simulations shown in this section, we modeled the proposed payment changes for FY 2019 using a reduced update for these hospitals. Hospitals that are identified as not meaningful EHR users under section 1886(b)(3)(B)(ix) of the Act and also do not submit quality data under section 1886(b)(3)(B)(viii) of the Act would receive a proposed applicable percentage increase of ¥1.55 percent, which reflects a one-quarter reduction of the market basket update for failure to submit quality data and a threequarter reduction of the market basket update for being identified as not a meaningful EHR user. At the time this impact was prepared, 43 hospitals are estimated to not receive the full market basket rate-of-increase for FY 2019 because they are identified as not meaningful EHR users that do not submit quality data under section 1886(b)(3)(B)(viii) of the Act. Each proposed policy change, statutory or otherwise, is then added incrementally to this baseline, finally arriving at an FY 2019 model incorporating all of the proposed changes. This simulation allows us to isolate the effects of each proposed change. Our comparison illustrates the proposed percent change in payments per case from FY 2018 to FY 2019. Two factors not discussed separately have significant impacts here. The first factor is the proposed update to the standardized amount. In accordance with section 1886(b)(3)(B)(i) of the Act, we are proposing to update the standardized amounts for FY 2019 using a proposed applicable percentage increase of 1.25 percent. This includes our forecasted IPPS VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 operating hospital market basket increase of 2.8 percent with a proposed 0.8 percentage point reduction for the multifactor productivity adjustment and a 0.75 percentage point reduction, as required, under the Affordable Care Act. Hospitals that fail to comply with the quality data submission requirements and are meaningful EHR users would receive a proposed update of 0.55 percent. This proposed update includes a reduction of one-quarter of the market basket update for failure to submit these data. Hospitals that do comply with the quality data submission requirements but are not meaningful EHR users would receive a proposed update of ¥0.85 percent, which includes a reduction of three-quarters of the market basket update. Furthermore, hospitals that do not comply with the quality data submission requirements and also are not meaningful EHR users would receive an proposed update of ¥1.55 percent. Under section 1886(b)(3)(B)(iv) of the Act, the proposed update to the hospital-specific amounts for SCHs and MDHs is also equal to the applicable percentage increase, or 1.25 percent, if the hospital submits quality data and is a meaningful EHR user. A second significant factor that affects the proposed changes in hospitals’ payments per case from FY 2018 to FY 2019 is the change in hospitals’ geographic reclassification status from one year to the next. That is, payments may be reduced for hospitals reclassified in FY 2018 that would no longer be reclassified in FY 2019. Conversely, payments may increase for hospitals not reclassified in FY 2018 that were reclassified in FY 2019. 2. Analysis of Table I Table I displays the results of our analysis of the proposed changes for FY 2019. The table categorizes hospitals by various geographic and special payment consideration groups to illustrate the varying impacts on different types of hospitals. The top row of the table shows the proposed overall impact on the 3,257 acute care hospitals included in the analysis. The next four rows of Table I contain hospitals categorized according to their geographic location: All urban, which is further divided into large urban and other urban; and rural. There are 2,480 hospitals located in urban areas included in our analysis. Among these, there are 1,310 hospitals located in large urban areas (populations over 1 million), and 1,170 hospitals in other urban areas (populations of PO 00000 Frm 00440 Fmt 4701 Sfmt 4702 1 million or fewer). In addition, there are 777 hospitals in rural areas. The next two groupings are by bed-size categories, shown separately for urban and rural hospitals. The last groupings by geographic location are by census divisions, also shown separately for urban and rural hospitals. The second part of Table I shows hospital groups based on hospitals’ FY 2019 payment classifications, including any reclassifications under section 1886(d)(10) of the Act. For example, the rows labeled urban, large urban, other urban, and rural show that the numbers of hospitals paid based on these categorizations after consideration of geographic reclassifications (including reclassifications under sections 1886(d)(8)(B) and 1886(d)(8)(E) of the Act that have implications for capital payments) are 2,281, 1,325, 956, and 976, respectively. The next three groupings examine the impacts of the proposed changes on hospitals grouped by whether or not they have GME residency programs (teaching hospitals that receive an IME adjustment) or receive Medicare DSH payments, or some combination of these two adjustments. There are 2,162 nonteaching hospitals in our analysis, 846 teaching hospitals with fewer than 100 residents, and 249 teaching hospitals with 100 or more residents. In the DSH categories, hospitals are grouped according to their DSH payment status, and whether they are considered urban or rural for DSH purposes. The next category groups together hospitals considered urban or rural, in terms of whether they receive the IME adjustment, the DSH adjustment, both, or neither. The next three rows examine the impacts of the proposed changes on rural hospitals by special payment groups (SCHs, MDHs and RRCs). There were 328 RRCs, 311 SCHs, 135 MDHs, 133 hospitals that are both SCHs and RRCs, and 14 hospitals that are both MDHs and RRCs. The next series of groupings are based on the type of ownership and the hospital’s Medicare utilization expressed as a percent of total patient days. These data were taken from the FY 2015 or FY 2014 Medicare cost reports. The next two groupings concern the geographic reclassification status of hospitals. The first grouping displays all urban hospitals that were reclassified by the MGCRB for FY 2019. The second grouping shows the MGCRB rural reclassifications. BILLING CODE 4120–01–P E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 VerDate Sep<11>2014 Proposed FY 2019 Weights andDRG Changes with Application of Recalibration Budget Neutrality (2) 3 Proposed FY 2019 Wage Data with Application of Wage Budget Neutrality (3) 4 All Hospitals By Geographic Location: 3,257 1.7 0 Urban hospitals 2,480 1.7 Large urban areas 1,310 1.7 Other urban areas Jkt 244001 Number of Hospitals 1 Proposed Hospital Rate Update and Adjustment under MACRA (1)2 PO 00000 Frm 00441 Fmt 4701 FY 2019 MGCRB Reclassifications (4) 5 Proposed Rural Floor with Application of National Rural Floor Budget Neutrality (5) 6 Proposed Application of the Frontier Wage Index and Outmigration Adjustment (6) 7 All Proposed FY 2019 Changes (7) 8 0 0 0 0.1 2.1 0 0 -0.1 0 0.1 2.1 0.1 0 -0.7 -0.1 0 2.1 Sfmt 4725 0 0 0.5 0.1 0.2 2.1 1.4 -0.3 -0.1 1.4 -0.2 0.1 1.1 0-99 beds 638 1.6 -0.3 0 -0.7 0 0.2 1.4 100-199 beds 763 1.7 0 0 -0.2 0.1 0.2 1.7 200-299 beds 438 1.7 0 0 0.2 0 0.1 2.1 300-499 beds 427 1.7 0 0 0 -0.1 0.1 2.1 500 or more beds 214 1.7 0.1 0 -0.2 0 0 2.5 299 1.2 -0.8 0.1 0.5 -0.1 0.3 0.8 50-99 beds 279 1.4 -0.5 -0.1 0.7 -0.1 0.2 1 100-149 beds 116 1.4 -0.3 0.2 1 -0.1 0 1 150-199 beds 07MYP2 1.7 777 0-49 beds E:\FR\FM\07MYP2.SGM 1,170 Rural hospitals Bed Size (Urban): 44 1.5 -0.2 -0.4 1.9 -0.2 0.2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20:30 May 04, 2018 TABLE I.-IMPACT ANALYSIS OF PROPOSED CHANGES TO THE IPPS FOR OPERATING COSTS FOR FY 2019 1 Bed Size (Rural): 20603 EP07MY18.019</GPH> daltland on DSKBBV9HB2PROD with PROPOSALS2 20604 VerDate Sep<11>2014 Proposed FY 2019 Wage Data with Application of Wage Budget Neutrality (3) 4 FY 2019 MGCRB Reclassifications (4) 5 Proposed Rural Floor with Application of National Rural Floor Budget Neutrality (5) 6 Proposed Application of the Frontier Wage Index and Outmigration Adjustment (6) 7 All Proposed FY 2019 Changes (7) 8 39 1.6 0 -0.1 2.8 -0.2 -0.1 1.5 New England 113 1.7 0 -0.5 1.3 2.2 0.1 2.8 Middle Atlantic 310 1.7 0.1 0 0.2 -0.3 0.1 1.9 South Atlantic 401 1.7 0 -0.1 -0.4 -0.2 0 1.9 East North Central 385 1.7 0.1 -0.3 -0.3 -0.3 0 1.9 East South Central West North Central West South Central 147 1.7 0.1 0 -0.2 -0.3 0 2.2 158 1.7 0 0 -0.7 -0.2 0.6 2 378 1.7 0 0.2 -0.6 -0.2 0 2.1 Mountain 163 1.7 -0.1 -0.6 -0.1 0.1 0.3 1.2 Pacific 374 1.7 0 0.8 0.2 0.3 0.1 3.1 51 1.8 -0.3 -1.2 -1.1 0.2 0.1 0.5 New England 20 1.4 0 -0.5 1.7 -0.2 0 0.7 Middle Atlantic 53 1.3 -0.2 0 0.8 -0.1 0 1.2 Jkt 244001 PO 00000 200 or more beds Urban by Region: Frm 00442 Fmt 4701 Sfmt 4725 E:\FR\FM\07MYP2.SGM Puerto Rico Rural by Region: 07MYP2 122 1.5 -0.3 0.1 2 -0.2 0.1 1.1 114 1.4 -0.4 0.1 0.9 -0.1 0 1 East South Central West North Central West South Central EP07MY18.020</GPH> South Atlantic East North Central 150 1.6 -0.1 -0.3 2.7 -0.2 0 1.6 94 1.2 -0.6 0.1 0.1 -0.1 0.2 0.7 147 1.6 -0.5 0.3 1.6 -0.2 0.1 1.2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules Proposed FY 2019 Weights andDRG Changes with Application of Recalibration Budget Neutrality (2) 3 20:30 May 04, 2018 Number of Hospitals 1 Proposed Hospital Rate Update and Adjustment under MACRA (1)2 daltland on DSKBBV9HB2PROD with PROPOSALS2 VerDate Sep<11>2014 Proposed FY 2019 Wage Data with Application of Wage Budget Neutrality (3) 4 FY 2019 MGCRB Reclassifications (4) 5 Proposed Rural Floor with Application of National Rural Floor Budget Neutrality (5) 6 Proposed Application of the Frontier Wage Index and Outmigration Adjustment (6) 7 All Proposed FY 2019 Changes (7) 8 Mountain 54 1.1 -0.5 -0.8 0.1 -0.1 0.8 0.8 Pacific By Payment Classification: 23 1.2 -0.4 -0.3 1 -0.1 0 0.9 Urban hospitals 2,281 1.7 0 0 -0.5 0 0.1 2 Large urban areas 1,325 1.7 0.1 0 -0.6 -0.1 0 2.1 Other urban areas 956 1.7 0 -0.1 -0.2 0.2 0.2 1.9 Rural areas 976 1.6 -0.1 0 1.7 -0.1 0.1 2.1 2,162 1.7 -0.1 0.1 0.2 0 0.1 1.7 846 1.7 0 0 -0.2 0 0.2 1.9 249 1.7 0.1 0 0 0 0 2.6 520 1.7 -0.2 -0.1 -0.3 -0.2 0.2 1.6 1,483 1.7 0.1 0 -0.5 0 0.1 2.1 365 1.7 -0.2 0.2 -0.5 0.1 0.1 1.7 SCH 258 1.2 -0.6 0 0 0 0 0.7 RRC 367 1.6 0 0.1 2.1 0 0.1 2.5 27 1.7 -0.1 -0.1 1 -0.3 0.1 1.6 127 1.6 -0.1 0.1 0.8 -0.3 0.6 1.9 Jkt 244001 PO 00000 Frm 00443 Fmt 4701 Sfmt 4725 Teaching Status: E:\FR\FM\07MYP2.SGM Nonteaching Fewer than 100 residents 100 or more residents UrbanDSH: Non-DSH 07MYP2 100 or more beds Less than 100 beds RuralDSH: 100 or more beds Less than 100 beds Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules Proposed FY 2019 Weights andDRG Changes with Application of Recalibration Budget Neutrality (2) 3 20:30 May 04, 2018 Number of Hospitals 1 Proposed Hospital Rate Update and Adjustment under MACRA (1)2 20605 EP07MY18.021</GPH> daltland on DSKBBV9HB2PROD with PROPOSALS2 20606 VerDate Sep<11>2014 Proposed FY 2019 Wage Data with Application of Wage Budget Neutrality 818 1.7 0.1 0 -0.5 0 0.1 2.2 88 1.8 0 -0.1 -0.6 -0.2 0 1.8 1,030 1.7 0 0.1 -0.2 0.1 0.1 1.9 345 1.7 -0.2 -0.2 -0.5 -0.2 0.2 1.6 RRC 328 1.7 0 0.1 2.3 -0.1 0.2 2.8 SCH 311 1.2 -0.4 0 -0.1 0 0 0.9 MDH 135 1.4 -0.5 0 0.8 -0.1 0.2 0.9 SCHandRRC 133 1.2 -0.2 -0.1 0.5 -0.1 0 1.1 MDHandRRC Type of Ownership: 14 1.4 -0.5 0.1 0.9 -0.1 0 1.1 1,901 1.7 0 0 0 0 0.1 2.1 Proprietary 854 1.7 0 -0.1 1.7 501 1.6 0 -0.1 0 0.1 Government Medicare Utilization as a Percent of Inpatient Days: -0.1 0.2 0 2.2 Jkt 244001 PO 00000 Frm 00444 Fmt 4701 Sfmt 4725 E:\FR\FM\07MYP2.SGM 07MYP2 EP07MY18.022</GPH> Urban teaching and DSH: Both teaching and DSH Teaching and no DSH No teaching and DSH No teaching and noDSH Special Hospital Types: Voluntary (3) 4 FY 2019 MGCRB Reclassifications (4) 5 -0.1 Proposed Rural Floor with Application of National Rural Floor Budget Neutrality Proposed Application of the Frontier Wage Index and Outmigration Adjustment (5) 6 (6) 7 All Proposed FY 2019 Changes (7) 8 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules Proposed FY 2019 Weights andDRG Changes with Application of Recalibration Budget Neutrality (2) 3 20:30 May 04, 2018 Number of Hospitals 1 Proposed Hospital Rate Update and Adjustment under MACRA (1)2 daltland on DSKBBV9HB2PROD with PROPOSALS2 VerDate Sep<11>2014 Proposed FY 2019 Wage Data with Application of Wage Budget Neutrality (3) 4 546 1.7 0.1 25-50 2,121 1.7 50-65 477 Jkt 244001 0-25 PO 00000 Frm 00445 Fmt 4701 Sfmt 4725 E:\FR\FM\07MYP2.SGM 07MYP2 Over65 FY 2019 Reclassifications by the Medicare Geographic Classification Review Board: All Reclassified Hospitals Non-Reclassified Hospitals Urban Hospitals Reclassified Urban Nonreclassified Hospitals Rural Hospitals Reclassified Full Year Rural Nonreclassified Hospitals Full Year All Section 401 Reclassified FY 2019 MGCRB Reclassifications (4) 5 Proposed Rural Floor with Application of National Rural Floor Budget Neutrality (5) 6 Proposed Application of the Frontier Wage Index and Outmigration Adjustment (6) 7 All Proposed FY 2019 Changes (7) 8 0 -0.4 -0.1 0 1.9 0 0 0 0 0.1 2.2 1.6 -0.2 0 0.3 0 0.2 1.3 73 1.1 0.1 0 -0.3 -0.2 0.1 2 911 1.7 0 0.1 2 -0.1 0.1 2.3 2,346 1.7 0 -0.1 -1 0.1 0.1 1.9 633 1.7 0 0.2 1.9 -0.1 0.1 2.5 1,795 1.7 0 -0.1 -1 0.1 0.1 2 278 1.5 -0.2 -0.1 2.3 -0.2 0.1 1.3 452 1.3 -0.5 -0.1 -0.4 -0.1 0.2 0.7 246 1.7 0 0.1 1.9 0 0.1 2.7 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules Proposed FY 2019 Weights andDRG Changes with Application of Recalibration Budget Neutrality (2) 3 20:30 May 04, 2018 Number of Hospitals 1 Proposed Hospital Rate Update and Adjustment under MACRA (1)2 20607 EP07MY18.023</GPH> daltland on DSKBBV9HB2PROD with PROPOSALS2 20608 VerDate Sep<11>2014 Jkt 244001 PO 00000 Proposed FY 2019 Weights andDRG Changes with Application of Recalibration Budget Neutrality (2) 3 Proposed FY 2019 Wage Data with Application of Wage Budget Neutrality (3) 4 FY 2019 MGCRB Reclassifications (4) 5 Proposed Rural Floor with Application of National Rural Floor Budget Neutrality (5) 6 Proposed Application of the Frontier Wage Index and Outmigration Adjustment (6) 7 All Proposed FY 2019 Changes (7) 8 Hospitals: Frm 00446 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 Other Reclassified Hospitals (Section 1 1886(d)(8)(B)) 47 1.6 -0.3 0 2.5 -0.2 0 Because data necessary to classify some hospitals by category were missing, the total number of hospitals in each category may not equal the national total. Discharge data are from FY 2017, and hospital cost report data are from reporting periods beginning in FY 2015 and FY 2014. 2 This column displays the payment impact of the proposed hospital rate update and other adjustments, including the proposed 1.25 percent adjustment to the national standardized amount and the hospital-specific rate (the estimated 2.8 percent market basket update reduced by 0.8 percentage point for the multifactor productivity adjustment and the 0.75 percentage point reduction under the Affordable Care Act), and the 0.5 percent adjustment to the national standardized amount required under section 414 of the MACRA. 3 This column displays the payment impact of the proposed changes to the Version 36 GROUPER, the proposed changes to the relative weights and the recalibration of the MS-DRG weights based on FY 2017 MedPAR data in accordance with section 1886( d)( 4)(C)(iii) of the Act. This colunm displays the application of the proposed recalibration budget neutrality factor of 0. 997896 in accordance with section 1886( d)(4 )(C)(iii) of the Act. 4 This column displays the payment impact of the proposed update to wage index data using FY 2015 and 2014 cost report data and the OMB labor market area delineations based on 2010 Decennial Census data. This colunm displays the payment impact of the application of the proposed wage budget neutrality factor, which is calculated separately from the recalibration budget neutrality factor, and is calculated in accordance with section 1886( d)(3 )(E)(i) of the Act. The proposed wage budget neutrality factor is 1.001182. 5 Shown here are the effects of geographic reclassifications by the Medicare Geographic Classification Review Board (MGCRB). The effects demonstrate the FY 2019 payment impact of going from no reclassifications to the reclassifications scheduled to be in effect for FY 2019. Reclassification for prior years has no bearing on the payment impacts shown here. This colunm reflects the proposed geographic budget neutrality factor of0.987084. 6 This colunm displays the effects of the proposed rural floor and proposed expiration of the imputed floor. The Affordable Care Act requires the rural floor budget neutrality adjustment to be 100 percent national level adjustment. The proposed rural floor budget neutrality factor applied to the wage index is 0. 994 733. 7 This colunm shows the combined impact of the policy required under section 10324 of the Affordable Care Act that hospitals located in frontier States have a wage index no less than 1.0 and of section 1886(d)(l3) of the Act, as added by section 505 of Pub. L. 108-173, which provides for an increase in a hospital's wage index if a threshold percentage of residents of the county where the hospital is located commute to work at hospitals in counties with higher wage indexes. These are not budget neutral policies. 8 This colunm shows the estimated proposed change in payments from FY 2018 to FY 2019. Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20:30 May 04, 2018 EP07MY18.024</GPH> Number of Hospitals 1 Proposed Hospital Rate Update and Adjustment under MACRA (1)2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 BILLING CODE 4120–01–C a. Effects of the Proposed Hospital Update and Other Proposed Adjustments (Column 1) As discussed in section IV.B. of the preamble of this proposed rule, this column includes the proposed hospital update, including the proposed 2.8 percent market basket update, the reduction of proposed 0.8 percentage point for the multifactor productivity adjustment, and the 0.75 percentage point reduction, in accordance with the Affordable Care Act. In addition, as discussed in section II.D. of the preamble of this proposed rule, this column includes the FY 2018 +0.5 percent adjustment required under section 414 of the MACRA. As a result, we are proposing to make a 1.75 percent update to the national standardized amount. This column also includes the proposed update to the hospital-specific rates which includes the proposed 2.8 percent market basket update, the proposed reduction of 0.8 percentage point for the multifactor productivity adjustment, and the 0.75 percentage point reduction in accordance with the Affordable Care Act. As a result, we are proposing to make a 1.25 percent update to the hospital-specific rates. Overall, hospitals would experience a 1.7 percent increase in payments primarily due to the combined effects of the proposed hospital update to the national standardized amount and the proposed hospital update to the hospital-specific rate. Hospitals that are paid under the hospital-specific rate would experience a 1.25 percent increase in payments; therefore, hospital categories containing hospitals paid under the hospital specific rate would experience a lower than average increase in payments. b. Effects of the Proposed Changes to the MS– DRG Reclassifications and Relative CostBased Weights With Recalibration Budget Neutrality (Column 2) Column 2 shows the effects of the proposed changes to the MS–DRGs and relative weights with the application of the proposed recalibration budget neutrality factor to the standardized amounts. Section 1886(d)(4)(C)(i) of the Act requires us annually to make appropriate classification changes in order to reflect changes in treatment patterns, technology, and any other factors that may change the relative use of hospital resources. Consistent with section 1886(d)(4)(C)(iii) of the Act, we calculated a proposed recalibration budget neutrality factor to account for the changes in MS– DRGs and relative weights to ensure that the overall payment impact is budget neutral. As discussed in section II.E. of the preamble of this proposed rule, the proposed FY 2019 MS–DRG relative weights would be 100 percent cost-based and 100 percent MS– DRGs. For FY 2019, the MS–DRGs are calculated using the FY 2017 MedPAR data grouped to the Version 36 (FY 2019) MS– DRGs. The methodology to calculate the proposed relative weights and the reclassification changes to the GROUPER are described in more detail in section II.G. of the preamble of this proposed rule. The ‘‘All Hospitals’’ line in Column 2 indicates that proposed changes due to the MS–DRGs and relative weights would result VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 in a 0.0 percent change in payments with the application of the proposed recalibration budget neutrality factor of 0.997896 to the standardized amount. Hospital categories that generally treat more medical cases than surgical cases would experience a decrease in their payments under the relative weights. For example, rural hospitals would experience a 0.3 percent decrease in payments in part because rural hospitals tend to treat fewer surgical cases than medical cases. Conversely, teaching hospitals with more than 100 residents would experience an increase in payments of 0.1 percent as those hospitals treat more surgical cases than medical cases. c. Effects of the Proposed Wage Index Changes (Column 3) Column 3 shows the impact of updated wage data using FY 2015 cost report data, with the application of the proposed wage budget neutrality factor. The wage index is calculated and assigned to hospitals on the basis of the labor market area in which the hospital is located. Under section 1886(d)(3)(E) of the Act, beginning with FY 2005, we delineate hospital labor market areas based on the Core Based Statistical Areas (CBSAs) established by OMB. The current statistical standards used in FY 2019 are based on OMB standards published on February 28, 2013 (75 FR 37246 and 37252), and 2010 Decennial Census data (OMB Bulletin No. 13–01), as updated in OMB Bulletin Nos. 15–01 and 17–01. (We refer readers to the FY 2015 IPPS/LTCH PPS final rule (79 FR 49951 through 49963) for a full discussion on our adoption of the OMB labor market area delineations, based on the 2010 Decennial Census data, effective beginning with the FY 2015 IPPS wage index, to section III.A.2. of the preamble of the FY 2017 IPPS/ LTCH PPS final rule (81 FR 56913) for a discussion of our adoption of the CBSA updates in OMB Bulletin No. 15–01, which were effective beginning with the FY 2017 wage index, and to section III.A.2. of this proposed rule for a discussion of our proposed adoption of the CBSA update in OMB Bulletin No. 17–01 for the FY 2019 wage index.) Section 1886(d)(3)(E) of the Act requires that, beginning October 1, 1993, we annually update the wage data used to calculate the wage index. In accordance with this requirement, the proposed wage index for acute care hospitals for FY 2019 is based on data submitted for hospital cost reporting periods, beginning on or after October 1, 2014 and before October 1, 2015. The estimated impact of the updated wage data using the FY 2015 cost report data and the OMB labor market area delineations on hospital payments is isolated in Column 3 by holding the other proposed payment parameters constant in this simulation. That is, Column 3 shows the proposed percentage change in payments when going from a model using the FY 2018 wage index, based on FY 2014 wage data, the labor-related share of 68.3 percent, under the OMB delineations and having a 100-percent occupational mix adjustment applied, to a model using the proposed FY 2019 pre-reclassification wage index based on FY 2015 wage data with the labor-related share of 68.3 percent, under the PO 00000 Frm 00447 Fmt 4701 Sfmt 4702 20609 OMB delineations, also having a 100-percent occupational mix adjustment applied, while holding other payment parameters, such as use of the Version 36 MS–DRG GROUPER constant. The proposed FY 2019 occupational mix adjustment is based on the CY 2016 occupational mix survey. In addition, the column shows the impact of the application of the proposed wage budget neutrality to the national standardized amount. In FY 2010, we began calculating separate wage budget neutrality and recalibration budget neutrality factors, in accordance with section 1886(d)(3)(E) of the Act, which specifies that budget neutrality to account for wage index changes or updates made under that subparagraph must be made without regard to the 62 percent labor-related share guaranteed under section 1886(d)(3)(E)(ii) of the Act. Therefore, for FY 2019, we are proposing to calculate the wage budget neutrality factor to ensure that payments under updated wage data and the labor-related share of 68.3 percent are budget neutral, without regard to the lower laborrelated share of 62 percent applied to hospitals with a wage index less than or equal to 1.0. In other words, the wage budget neutrality is calculated under the assumption that all hospitals receive the higher laborrelated share of the standardized amount. The proposed FY 2019 wage budget neutrality factor is 1.001182, and the overall proposed payment change is 0 percent. Column 3 shows the impacts of updating the wage data using FY 2015 cost reports. Overall, the proposed new wage data and the labor-related share, combined with the proposed wage budget neutrality adjustment, would lead to no change for all hospitals, as shown in Column 3. In looking at the wage data itself, the national average hourly wage would increase 1.02 percent compared to FY 2018. Therefore, the only manner in which to maintain or exceed the previous year’s wage index was to match or exceed the proposed 1.02 percent increase in the national average hourly wage. Of the 3,226 hospitals with wage data for both FYs 2018 and 2019, 1,445 or 44.8 percent would experience an average hourly wage increase of 1.02 percent or more. The following chart compares the shifts in wage index values for hospitals due to proposed changes in the average hourly wage data for FY 2019 relative to FY 2018. Among urban hospitals, 10 would experience a decrease of 10 percent or more, and 6 urban hospitals would experience an increase of 10 percent or more. One hundred urban hospitals would experience an increase or decrease of at least 5 percent or more but less than 10 percent. Among rural hospitals, 5 would experience an increase of increase of 10 percent or more, and 2 would experience a decrease of 10 percent or more. Nine rural hospitals would experience an increase or decrease of at least 5 percent or more but less than 10 percent. However, 748 rural hospitals would experience increases or decreases of less than 5 percent, while 2,346 urban hospitals would experience increases or decreases of less than 5 percent. No urban hospitals and no rural hospitals would experience no change to their wage index. These figures reflect proposed changes in the E:\FR\FM\07MYP2.SGM 07MYP2 20610 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules ‘‘pre-reclassified, occupational mix-adjusted wage index,’’ that is, the wage index before the application of geographic reclassification, the rural floor, the out-migration adjustment, and other wage index exceptions and adjustments. (We refer readers to sections III.G. through III.L. of the preamble of this proposed rule for a complete discussion of the exceptions and adjustments to the proposed wage index.) We note that the ‘‘post-reclassified wage index’’ or ‘‘payment wage index,’’ which is the wage index that includes all such exceptions and adjustments (as reflected in Tables 2 and 3 associated with this proposed rule, which are available via the internet on the CMS website) is used to adjust the labor-related share of a hospital’s standardized amount, either 68.3 percent or 62 percent, depending upon whether a hospital’s wage index is greater than 1.0 or less than or equal to 1.0. Therefore, the proposed pre-reclassified wage index figures in the following chart may illustrate a somewhat larger or smaller change than would occur in a hospital’s payment wage index and total payment. The following chart shows the projected impact of proposed changes in the area wage index values for urban and rural hospitals. Number of hospitals Proposed FY 2019 percentage change in area wage index values Urban Increase 10 percent or more ................................................................................................................................... Increase greater than or equal to 5 percent and less than 10 percent .................................................................. Increase or decrease less than 5 percent ............................................................................................................... Decrease greater than or equal to 5 percent and less than 10 percent ................................................................ Decrease 10 percent or more ................................................................................................................................. Unchanged ............................................................................................................................................................... daltland on DSKBBV9HB2PROD with PROPOSALS2 d. Effects of MGCRB Reclassifications (Column 4) Our impact analysis to this point has assumed acute care hospitals are paid on the basis of their actual geographic location (with the exception of ongoing policies that provide that certain hospitals receive payments on bases other than where they are geographically located). The proposed changes in Column 4 reflect the per case payment impact of moving from this baseline to a simulation incorporating the MGCRB decisions for FY 2019. By spring of each year, the MGCRB makes reclassification determinations that will be effective for the next fiscal year, which begins on October 1. The MGCRB may approve a hospital’s reclassification request for the purpose of using another area’s wage index value. Hospitals may appeal denials of MGCRB decisions to the CMS Administrator. Further, hospitals have 45 days from the date the IPPS proposed rule is issued in the Federal Register to decide whether to withdraw or terminate an approved geographic reclassification for the following year (we refer readers to the discussion of our clarification of this policy in section III.I.2. of the preamble to this proposed rule). The overall effect of geographic reclassification is required by section 1886(d)(8)(D) of the Act to be budget neutral. Therefore, for purposes of this impact analysis, we are proposing to apply an adjustment of 0.987084 to ensure that the effects of the reclassifications under sections 1886(d)(8)(B) and (C) and 1886(d)(10) of the Act are budget neutral (section II.A. of the Addendum to this proposed rule). Geographic reclassification generally benefits hospitals in rural areas. We estimate that the geographic reclassification would increase payments to rural hospitals by an average of 1.4 percent. By region, all the rural hospital categories would experience increases in payments due to MGCRB reclassifications. Table 2 listed in section VI. of the Addendum to this proposed rule and available via the internet on the CMS website reflects the reclassifications for FY 2019. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 e. Effects of the Proposed Rural Floor, Including Application of National Budget Neutrality (Column 5) As discussed in section III.B. of the preamble of the FY 2009 IPPS final rule, the FY 2010 IPPS/RY 2010 LTCH PPS final rule, the FYs 2011 through 2018 IPPS/LTCH PPS final rules, and this FY 2019 proposed rule, section 4410 of Public Law 105–33 established the rural floor by requiring that the wage index for a hospital in any urban area cannot be less than the wage index received by rural hospitals in the same State. We would apply a uniform budget neutrality adjustment to the wage index. As discussed in section III.G. of the preamble of this proposed rule, we are not proposing to extend the imputed floor policy. Therefore, column 6 shows the effects of the proposed rural floor only. The Affordable Care Act requires that we apply one rural floor budget neutrality factor to the wage index nationally. We have calculated a proposed FY 2019 rural floor budget neutrality factor to be applied to the wage index of 0.994733, which would reduce wage indexes by 0.53 percent. Column 5 shows the projected impact of the rural floor with the national rural floor budget neutrality factor applied to the wage index based on the OMB labor market area delineations. The column compares the proposed post-reclassification FY 2019 wage index of providers before the proposed rural floor adjustment and the post-reclassification FY 2019 wage index of providers with the rural floor adjustment based on the OMB labor market area delineations. Only urban hospitals can benefit from the rural floors. Because the provision is budget neutral, all other hospitals (that is, all rural hospitals and those urban hospitals to which the adjustment is not made) would experience a decrease in payments due to the budget neutrality adjustment that is applied nationally to their wage index. We estimate that 255 hospitals would receive the rural floor in FY 2019. All IPPS hospitals in our model would have their wage index reduced by the proposed rural floor budget neutrality adjustment of 0.994733. We project that, in aggregate, rural hospitals would experience a ¥0.2 percent PO 00000 Frm 00448 Fmt 4701 Sfmt 4702 6 55 2,346 45 10 0 Rural 5 3 748 6 2 0 decrease in payments as a result of the application of the proposed rural floor budget neutrality because the rural hospitals do not benefit from the rural floor, but have their wage indexes downwardly adjusted to ensure that the application of the rural floor is budget neutral overall. We project hospitals located in urban areas would experience no change in payments because proposed increases in payments by hospitals benefitting from the rural floor offset decreases in payments by nonrural floor urban hospitals whose wage index is downwardly adjusted by the rural floor budget neutrality factor. Urban hospitals in the New England region would experience a 2.2 percent increase in payments primarily due to the application of the rural floor in Massachusetts. Thirty-five urban providers in Massachusetts are expected to receive the rural floor wage index value, including the proposed rural floor budget neutrality adjustment, increasing payments overall to Massachusetts by an estimated $49 million. We estimate that Massachusetts hospitals would receive approximately a 1.4 percent increase in IPPS payments due to the application of the proposed rural floor in FY 2019. Urban Puerto Rico hospitals are expected to experience a 0 percent increase in payments as a result of the application of the proposed rural floor. In response to a public comment addressed in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51593), we are providing the payment impact of the rural floor with budget neutrality at the State level. Column 1 of the following table displays the number of IPPS hospitals located in each State. Column 2 displays the number of hospitals in each State that would receive the rural floor wage index for FY 2019. Column 3 displays the percentage of total payments each State would receive or contribute to fund the rural floor with national budget neutrality. The column compares the proposed postreclassification FY 2019 wage index of providers before the rural floor adjustment and the proposed post-reclassification FY 2019 wage index of providers with the rural floor adjustment. Column 4 displays the estimated payment amount that each State E:\FR\FM\07MYP2.SGM 07MYP2 20611 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules would gain or lose due to the application of the rural floor with national budget neutrality. PROPOSED FY 2019 IPPS ESTIMATED PAYMENTS DUE TO PROPOSED RURAL FLOOR WITH NATIONAL BUDGET NEUTRALITY Number of hospitals that would receive the rural floor (1) daltland on DSKBBV9HB2PROD with PROPOSALS2 Number of hospitals Proposed percent change in payments due to application of rural floor with budget neutrality (2) (3) Alabama ........................................................................................................... Alaska .............................................................................................................. Arizona ............................................................................................................. Arkansas .......................................................................................................... California .......................................................................................................... Colorado .......................................................................................................... Connecticut ...................................................................................................... Delaware .......................................................................................................... Washington, DC ............................................................................................... Florida .............................................................................................................. Georgia ............................................................................................................ Hawaii .............................................................................................................. Idaho ................................................................................................................ Illinois ............................................................................................................... Indiana ............................................................................................................. Iowa ................................................................................................................. Kansas ............................................................................................................. Kentucky .......................................................................................................... Louisiana .......................................................................................................... Maine ............................................................................................................... Massachusetts ................................................................................................. Michigan ........................................................................................................... Minnesota ........................................................................................................ Mississippi ........................................................................................................ Missouri ............................................................................................................ Montana ........................................................................................................... Nebraska .......................................................................................................... Nevada ............................................................................................................. New Hampshire ............................................................................................... New Jersey ...................................................................................................... New Mexico ..................................................................................................... New York ......................................................................................................... North Carolina .................................................................................................. North Dakota .................................................................................................... Ohio ................................................................................................................. Oklahoma ......................................................................................................... Oregon ............................................................................................................. Pennsylvania .................................................................................................... Puerto Rico ...................................................................................................... Rhode Island .................................................................................................... South Carolina ................................................................................................. South Dakota ................................................................................................... Tennessee ....................................................................................................... Texas ............................................................................................................... Utah ................................................................................................................. Vermont ........................................................................................................... Virginia ............................................................................................................. Washington ...................................................................................................... West Virginia .................................................................................................... Wisconsin ......................................................................................................... Wyoming .......................................................................................................... f. Effects of the Application of Proposed the Frontier State Wage Index and Proposed OutMigration Adjustment (Column 6) This column shows the combined effects of the application of section 10324(a) of the VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 84 6 56 45 297 46 30 6 7 168 101 12 14 125 85 34 51 64 90 17 56 94 49 59 72 13 23 22 13 64 25 149 84 6 129 79 34 150 51 11 54 17 90 311 31 6 74 48 29 66 10 Affordable Care Act, which requires that we establish a minimum post-reclassified wageindex of 1.00 for all hospitals located in ‘‘frontier States,’’ and the effects of section 1886(d)(13) of the Act, as added by section 505 of Public Law 108–173, which provides PO 00000 Frm 00449 Fmt 4701 Sfmt 4702 2 1 4 0 63 9 17 1 0 8 0 0 0 2 0 0 0 0 0 0 35 0 0 0 0 2 0 3 4 10 2 18 0 5 7 1 1 3 11 10 6 0 6 14 0 0 1 4 2 1 2 (4) ¥0.3 ¥0.2 ¥0.2 ¥0.3 0.4 0.6 5.5 ¥0.3 ¥0.3 ¥0.2 ¥0.3 ¥0.2 ¥0.2 ¥0.3 ¥0.3 ¥0.3 ¥0.2 ¥0.2 ¥0.3 ¥0.3 1.4 ¥0.3 ¥0.2 ¥0.3 ¥0.2 ¥0.2 ¥0.2 0.4 0.7 ¥0.4 ¥0.2 ¥0.2 ¥0.2 1.2 ¥0.2 ¥0.3 ¥0.2 ¥0.3 0.2 ¥0.3 0 ¥0.2 ¥0.3 ¥0.2 ¥0.2 ¥0.2 ¥0.2 ¥0.3 ¥0.1 ¥0.3 0.4 Difference (in $ millions) ¥$4 0 ¥3 ¥3 48 8 90 ¥1 ¥2 ¥17 ¥7 ¥1 ¥1 ¥12 ¥7 ¥3 ¥2 ¥4 ¥4 ¥1 49 ¥12 ¥5 ¥3 ¥6 ¥1 ¥2 4 4 ¥13 ¥1 ¥16 ¥9 4 ¥9 ¥4 ¥2 ¥14 0 ¥1 ¥1 ¥1 ¥6 ¥12 ¥1 0 ¥5 ¥6 ¥1 ¥5 1 for an increase in the wage index for hospitals located in certain counties that have a relatively high percentage of hospital employees who reside in the county, but work in a different area with a higher wage index. These two wage index provisions are E:\FR\FM\07MYP2.SGM 07MYP2 20612 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules not budget neutral and would increase payments overall by 0.1 percent compared to the provisions not being in effect. The term ‘‘frontier States’’ is defined in the statute as States in which at least 50 percent of counties have a population density less than 6 persons per square mile. Based on these criteria, 5 States (Montana, Nevada, North Dakota, South Dakota, and Wyoming) are considered frontier States and 50 hospitals located in those States would receive a frontier wage index of 1.0000. Overall, this provision is not budget neutral and is estimated to increase IPPS operating payments by approximately $61 million. Rural and urban hospitals located in the West North Central region would experience an increase in payments by 0.2 and 0.6 percent, respectively, because many of the hospitals located in this region are frontier State hospitals. In addition, section 1886(d)(13) of the Act, as added by section 505 of Public Law 108– 173, provides for an increase in the wage index for hospitals located in certain counties that have a relatively high percentage of hospital employees who reside in the county, but work in a different area with a higher wage index. Hospitals located in counties that qualify for the payment adjustment would receive an increase in the wage index that is equal to a weighted average of the difference between the wage index of the resident county, postreclassification and the higher wage index work area(s), weighted by the overall percentage of workers who are employed in an area with a higher wage index. There are an estimated 220 providers that would receive the out-migration wage adjustment in FY 2019. Rural hospitals generally would qualify for the adjustment, resulting in a 0.1 percent increase in payments. This provision appears to benefit section 401 hospitals and RRCs in that they would each experience a 0.1 and 0.2 percent increase in payments, respectively. (We note that there has been an increase in the number of RRCs as a result of the decision by the Court of Appeals for the Third Circuit in Geisinger Community Medical Center vs. Secretary, United States Department of Health and Human Services, 794 F.3d 383 (3d Cir. 2015) and subsequent regulatory changes (81 FR 23428).) This outmigration wage adjustment also is not budget neutral, and we estimate the impact of these providers receiving the proposed outmigration increase would be approximately $36 million. g. Effects of All Proposed FY 2019 Changes (Column 7) Column 7 shows our estimate of the proposed changes in payments per discharge from FY 2018 and FY 2019, resulting from all proposed changes reflected in this proposed rule for FY 2019. It includes combined effects of the year-to-year change of the previous columns in the table. The proposed average increase in payments under the IPPS for all hospitals is approximately 2.1 percent for FY 2019 relative to FY 2018 and for this row is primarily driven by the proposed changes reflected in Column 1. Column 7 includes the proposed annual hospital update of 1.25 percent to the national standardized amount. This proposed annual hospital update includes the proposed 2.8 percent market basket update, the proposed 0.8 percentage point reduction for the multifactor productivity adjustment, and the 0.75 percentage point reduction under section 3401 of the Affordable Care Act. As discussed in section II.D. of the preamble of this proposed rule, this column also includes the +0.5 percent adjustment required under section 414 of the MACRA. Hospitals paid under the hospital-specific rate would receive a 1.25 percent hospital update. As described in Column 1, the proposed annual hospital update with the proposed +0.5 percent adjustment for hospitals paid under the national standardized amount, combined with the proposed annual hospital update for hospitals paid under the hospital-specific rates, would result in a 2.1 percent increase in payments in FY 2019 relative to FY 2018. There are also interactive effects among the various factors comprising the payment system that we are not able to isolate, which contribute to our estimate of the proposed changes in payments per discharge from FY 2018 and FY 2019 in Column 7. Overall payments to hospitals paid under the IPPS due to the proposed applicable percentage increase and changes to policies related to MS–DRGs, geographic adjustments, and outliers are estimated to increase by 2.1 percent for FY 2019. Hospitals in urban areas would experience a 2.1 percent increase in payments per discharge in FY 2019 compared to FY 2018. Hospital payments per discharge in rural areas are estimated to increase by 1.1 percent in FY 2019. 3. Impact Analysis of Table II Table II presents the projected impact of the proposed changes for FY 2019 for urban and rural hospitals and for the different categories of hospitals shown in Table I. It compares the estimated average payments per discharge for FY 2018 with the estimated proposed average payments per discharge for FY 2019, as calculated under our models. Therefore, this table presents, in terms of the average dollar amounts paid per discharge, the combined effects of the proposed changes presented in Table I. The estimated percentage changes shown in the last column of Table II equal the estimated percentage changes in average payments per discharge from Column 7 of Table I. TABLE II—IMPACT ANALYSIS OF PROPOSED CHANGES FOR FY 2019 ACUTE CARE HOSPITAL OPERATING PROSPECTIVE PAYMENT SYSTEM [Payments per discharge] Estimated proposed average FY 2019 payment per discharge Proposed FY 2019 changes (1) daltland on DSKBBV9HB2PROD with PROPOSALS2 Number of hospitals Estimated average FY 2018 payment per discharge (2) (3) (4) All Hospitals ..................................................... By Geographic Location .................................. Urban hospitals ......................................... Large urban areas .................................... Other urban areas .................................... Rural hospitals .......................................... Bed Size (Urban) ............................................. 0–99 beds ................................................. 100–199 beds ........................................... 200–299 beds ........................................... 300–499 beds ........................................... 500 or more beds ..................................... Bed Size (Rural) .............................................. 0–49 beds ................................................. 50–99 beds ............................................... 100–149 beds ........................................... 150–199 beds ........................................... 200 or more beds ..................................... VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 3,257 0 2,480 1,310 1,170 777 0 638 763 438 427 214 0 299 279 116 44 39 Frm 00450 Fmt 4701 12,167 0 12,514 13,078 11,958 9,115 0 9,985 10,422 11,356 12,635 15,498 0 7,793 8,630 9,057 9,611 10,713 Sfmt 4702 E:\FR\FM\07MYP2.SGM 12,418 0 12,782 13,356 12,215 9,215 0 10,129 10,598 11,598 12,902 15,887 0 7,853 8,717 9,149 9,712 10,876 07MYP2 2.1 0 2.1 2.1 2.1 1.1 0 1.4 1.7 2.1 2.1 2.5 0 0.8 1 1 1 1.5 20613 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules TABLE II—IMPACT ANALYSIS OF PROPOSED CHANGES FOR FY 2019 ACUTE CARE HOSPITAL OPERATING PROSPECTIVE PAYMENT SYSTEM—Continued [Payments per discharge] Estimated proposed average FY 2019 payment per discharge Proposed FY 2019 changes (1) daltland on DSKBBV9HB2PROD with PROPOSALS2 Number of hospitals Estimated average FY 2018 payment per discharge (2) (3) (4) Urban by Region .............................................. New England ............................................ Middle Atlantic .......................................... South Atlantic ........................................... East North Central .................................... East South Central ................................... West North Central ................................... West South Central .................................. Mountain ................................................... Pacific ....................................................... Puerto Rico ............................................... Rural by Region ............................................... New England ............................................ Middle Atlantic .......................................... South Atlantic ........................................... East North Central .................................... East South Central ................................... West North Central ................................... West South Central .................................. Mountain ................................................... Pacific ....................................................... By Payment Classification ............................... Urban hospitals ......................................... Large urban areas .................................... Other urban areas .................................... Rural areas ............................................... Teaching Status ............................................... Nonteaching .............................................. Fewer than 100 residents ......................... 100 or more residents .............................. Urban DSH ...................................................... Non-DSH .................................................. 100 or more beds ..................................... Less than 100 beds .................................. Rural DSH ........................................................ SCH .......................................................... RRC .......................................................... 100 or more beds ..................................... Less than 100 beds .................................. Urban teaching and DSH ................................ Both teaching and DSH ............................ Teaching and no DSH .............................. No teaching and DSH .............................. No teaching and no DSH ......................... Special Hospital Types .................................... RRC .......................................................... SCH .......................................................... MDH .......................................................... SCH and RRC .......................................... MDH and RRC ......................................... Type of Ownership .......................................... Voluntary ................................................... Proprietary ................................................ Government .............................................. Medicare Utilization as a Percent of Inpatient Days ............................................................. 0–25 .......................................................... 25–50 ........................................................ 50–65 ........................................................ Over 65 ..................................................... Invalid/Missing Data ................................. FY 2019 Reclassifications by the Medicare Geographic Classification Review Board ..... VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 0 113 310 401 385 147 158 378 163 374 51 0 20 53 122 114 150 94 147 54 23 0 2,281 1,325 956 976 0 2,162 846 249 0 520 1,483 365 0 258 367 27 127 0 818 88 1,030 345 0 328 311 135 133 14 0 1,901 854 501 0 13,843 14,369 11,338 12,055 10,759 12,487 11,569 13,090 16,354 9,161 0 12,564 9,155 8,545 9,428 8,242 9,969 7,876 10,993 12,669 0 12,600 13,343 11,591 11,786 0 10,215 11,856 18,227 0 10,698 12,983 9,429 0 9,899 12,653 11,409 7,298 0 14,165 11,633 10,565 10,138 0 12,798 11,064 7,672 11,449 9,708 0 12,574 10,821 13,710 0 2.8 1.9 1.9 1.9 2.2 2 2.1 1.2 3.1 0.5 0 0.7 1.2 1.1 1 1.6 0.7 1.2 0.8 0.9 0 2 2.1 1.9 2.1 0 1.7 1.9 2.6 0 1.6 2.1 1.7 0 0.7 2.5 1.6 1.9 0 2.2 1.8 1.9 1.6 0 2.8 0.9 0.9 1.1 1.1 0 2.1 1.7 2.2 0 546 2,121 477 73 39 0 15,419 12,023 9,798 7,321 9,508 0 15,705 12,287 9,922 7,465 9,867 0 1.9 2.2 1.3 2 3.8 0 Frm 00451 0 13,465 14,104 11,125 11,828 10,527 12,238 11,327 12,940 15,865 9,113 0 12,473 9,046 8,448 9,332 8,111 9,900 7,786 10,907 12,555 0 12,348 13,065 11,375 11,541 0 10,041 11,630 17,766 0 10,534 12,717 9,273 0 9,830 12,346 11,231 7,161 0 13,863 11,427 10,372 9,983 0 12,447 10,970 7,604 11,324 9,606 0 12,315 10,643 13,411 0 0 0 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 20614 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules TABLE II—IMPACT ANALYSIS OF PROPOSED CHANGES FOR FY 2019 ACUTE CARE HOSPITAL OPERATING PROSPECTIVE PAYMENT SYSTEM—Continued [Payments per discharge] Number of hospitals Estimated average FY 2018 payment per discharge Estimated proposed average FY 2019 payment per discharge Proposed FY 2019 changes (1) (2) (3) (4) daltland on DSKBBV9HB2PROD with PROPOSALS2 All Reclassified Hospitals ......................... Non-Reclassified Hospitals ....................... Urban Hospitals Reclassified ................... Urban Nonreclassified Hospitals .............. Rural Hospitals Reclassified Full Year ..... Rural Nonreclassified Hospitals Full Year All Section 401 Reclassified Hospitals: .... Other Reclassified Hospitals (Section 1886(d)(8)(B)) ....................................... H. Effects of Other Proposed Policy Changes In addition to those proposed policy changes discussed previously that we are able to model using our IPPS payment simulation model, we are proposing to make various other changes in this proposed rule. Generally, we have limited or no specific data available with which to estimate the impacts of these proposed changes. Our estimates of the likely impacts associated with these other proposed changes are discussed in this section. 1. Effects of Proposed Policy Relating to New Medical Service and Technology Add-On Payments In section II.H. of the preamble to this proposed rule, we discuss 15 technologies for which we received applications for add-on payments for new medical services and technologies for FY 2019, as well as the status of the new technologies that were approved to receive new technology add-on payments in FY 2018. As explained in the preamble to this proposed rule, add-on payments for new medical services and technologies under section 1886(d)(5)(K) of the Act are not required to be budget neutral. As discussed in section II.H.6. of the preamble of this proposed rule, we have not yet determined whether any of the 15 technologies for which we received applications for consideration for new technology add-on payments for FY 2019 will meet the specified criteria. Consequently, it is premature to estimate the potential payment impact of these 15 technologies for any potential new technology add-on payments for FY 2019. We note that if any of the 15 technologies are found to be eligible for new technology addon payments for FY 2019, in the FY 2019 IPPS/LTCH PPS final rule, we would discuss the estimated payment impact for FY 2019. In section II.H.5. of the preamble of this proposed rule, we are proposing to discontinue new technology add-on payments for Idarucizumab, GORE® EXCLUDER® Iliac Branch Endoprosthesis (IBE), Edwards/Perceval Sutureless Valves, and VistogardTM (Uridine Triacetate) for FY VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 911 2,346 633 1,795 278 452 246 12,230 12,137 12,818 12,382 9,469 8,662 13,340 12,514 12,371 13,134 12,632 9,596 8,723 13,694 2.3 1.9 2.5 2 1.3 0.7 2.7 47 8,579 8,665 1 2019 because these technologies will have been on the U.S. market for 3 years. We also are proposing to continue to make new technology add-on payments for Defitelio® (Defibrotide), Ustekinumab (Stelara®) and Bezlotoxumab (ZinplavaTM) in FY 2019 because these technologies would still be considered new. We note that new technology add-on payments for each case are limited to the lesser of (1) 50 percent of the costs of the new technology or (2) 50 percent of the amount by which the costs of the case exceed the standard MS–DRG payment for the case. Because it is difficult to predict the actual new technology add-on payment for each case, our estimates below are based on the increase in new technology add-on payments for FY 2019 as if every claim that would qualify for a new technology add-on payment would receive the maximum add-on payment. The following are estimates for FY 2019 for the three technologies for which we are proposing to continue to make new technology add-on payments in FY 2019: • Based on the applicant’s estimate from FY 2017, we currently estimate that new technology add-on payments for Defitelio® would increase overall FY 2019 payments by $5,161,200 (maximum add-on payment of $75,900 * 68 patients). • Based on the applicant’s estimate from FY 2018, we currently estimate that new technology add-on payments for Ustekinumab (Stelara®) would increase overall FY 2019 payments by $400,800 (maximum add-on payment of $2,400 * 167 patients). • Based on the applicant’s estimate for FY 2018, we currently estimate that new technology add-on payments for Bezlotoxumab (ZinplavaTM) would increase overall FY 2019 payments by $2,857,600 (maximum add-on payment of $1,900 * 1,504 patients). 2. Effects of Proposed Changes to MS–DRGs Subject to the Postacute Care Transfer Policy and the MS–DRG Special Payment Policy In section IV.A. of the preamble of this proposed rule, we discuss our proposed changes to the list of MS–DRGs subject to the PO 00000 Frm 00452 Fmt 4701 Sfmt 4702 postacute care transfer policy and the MS– DRG special payment policy. As reflected in Table 5 listed in section VI. of the Addendum to this proposed rule (which is available via the internet on the CMS website), using criteria set forth in regulations at 42 CFR 412.4, we evaluated MS–DRG charge, discharge, and transfer data to determine which proposed new or revised MS–DRGs would qualify for the postacute care transfer and MS–DRG special payment policies. As a result of our proposals to revise the MS–DRG classifications for FY 2019, which are discussed in section II.F. of the preamble of this proposed rule, we are proposing additions to the list of MS–DRGs subject to the MS–DRG special payment policy. Column 4 of Table I in this Appendix A shows the effects of the proposed changes to the MS–DRGs and the proposed relative payment weights and the application of the proposed recalibration budget neutrality factor to the standardized amounts. Section 1886(d)(4)(C)(i) of the Act requires us annually to make appropriate DRG classification changes in order to reflect changes in treatment patterns, technology, and any other factors that may change the relative use of hospital resources. The analysis and methods for determining the changes due to the MS–DRGs and relative payment weights account for and include changes as a result of the proposed changes to the MS–DRGs subject to the MS–DRG postacute care transfer and MS–DRG special payment policies. We refer readers to section I.G. of this Appendix A for a detailed discussion of payment impacts due to the proposed MS–DRG reclassification policies for FY 2019. In section IV.A.2.b. of the preamble of this proposed rule, we discuss our proposed conforming changes to the regulations at § 412.4(c) to reflect the amendments to section 1886(d)(5)(J) of the Act made by section 53109 of the Bipartisan Budget Act of 2018. Section 53109 of the Bipartisan Budget Act of 2018 amended section 1886(d)(5)(J) of the Act to include discharges to hospice services provided by a hospice program as a ‘‘qualified discharge’’ under the postacute E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules care transfer policy, effective for discharges occurring on or after October 1, 2018. To implement this change, we are proposing that discharges using Patient Discharge Status code of 50 (Discharged/Transferred to Hospice—Routine or Continuous Home Care) or 51 (Discharged/Transferred to Hospice, General Inpatient Care or Inpatient Respite) would be subject to the postacute care transfer policy, effective for discharges occurring on or after October 1, 2018. Our actuaries estimate that this change in the postacute care transfer policy would generate an annual savings of approximately $240 million in Medicare payments in FY 2019, and up to $540 million annually by FY 2028. 3. Effects of Proposed Changes to LowVolume Hospital Payment Adjustment Policy In section IV.D. of the preamble of this proposed rule, we discuss the proposed changes to the low-volume hospital payment policy for FY 2019 to implement the provisions of section 50204 of the Bipartisan Budget Act of 2018. Specifically, for FY 2019, qualifying hospitals must have less than 3,800 combined Medicare and non-Medicare discharges (instead of 1,600 Medicare discharges) and must be located more than 15 road miles from another subsection (d) hospital. Section 50204 of the Bipartisan Budget Act of 2018 also modified the methodology for calculating the payment adjustment for low-volume hospitals for FYs 2019 through 2022. To implement these requirements, we are proposing that the lowvolume hospital payment adjustment would be determined as follows: • For low-volume hospitals with 500 or fewer total discharges during the fiscal year, an additional 25 percent for each Medicare discharge. • For low-volume hospitals with total discharges during the fiscal year of more than 500 and fewer than 3,800, an additional percent calculated using the formula [(95/ 330) × (number of total discharges/13,200)] for each Medicare discharge. Based upon the best available data at this time, we estimate the changes to the lowvolume hospital payment adjustment policy that we are proposing to implement in accordance with section 50204 of the Bipartisan Budget Act of 2018 would increase Medicare payments by $72 million in FY 2019 as compared to FY 2018. More specifically, in FY 2019, we estimate that 622 providers would receive approximately $417 million compared to our estimate of 606 providers receiving approximately $345 million in FY 2018. These payment estimates were determined by identifying providers that, based on the best available data, are expected to qualify under the criteria that will apply in FY 2019 (that is, are located at least 15 miles from the nearest subsection (d) hospital and have less than 3,800 total discharges), and were determined from the VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 same data used in developing the quantitative analyses of proposed changes in payments per case discussed previously in section I.G. of this Appendix A. 4. Effects of the Proposed Changes to Medicare DSH and Uncompensated Care Payments for FY 2019 As discussed in section IV.F. of the preamble of this proposed rule, under section 3133 of the Affordable Care Act, hospitals that are eligible to receive Medicare DSH payments will receive 25 percent of the amount they previously would have received under the statutory formula for Medicare DSH payments under section 1886(d)(5)(F) of the Act. The remainder, equal to an estimate of 75 percent of what formerly would have been paid as Medicare DSH payments (Factor 1), reduced to reflect changes in the percentage of uninsured individuals and additional statutory adjustments (Factor 2), is available to make additional payments to each hospital that qualifies for Medicare DSH payments and that has uncompensated care. Each hospital eligible for Medicare DSH payments will receive an additional payment based on its estimated share of the total amount of uncompensated care for all hospitals eligible for Medicare DSH payments. The uncompensated care payment methodology has redistributive effects based on the proportion of a hospital’s amount of uncompensated care relative to the aggregate amount of uncompensated care of all hospitals eligible for Medicare DSH payments (Factor 3). The change to Medicare DSH payments under section 3133 of the Affordable Care Act is not budget neutral. In this proposed rule, we are proposing to establish the amount to be distributed as uncompensated care payments to DSH eligible hospitals, which for FY 2019 is $8,250,415,972.16. This figure represents 75 percent of the amount that otherwise would have been paid for Medicare DSH payment adjustments adjusted by a proposed Factor 2 of 67.51 percent. For FY 2018, the amount available to be distributed for uncompensated care was $6,766,695,163.56, or 75 percent of the amount that otherwise would have been paid for Medicare DSH payment adjustments adjusted by a Factor 2 of 58.01 percent. To calculate proposed Factor 3 for FY 2019, we used an average of data computed using Medicaid days from hospitals’ 2013 cost reports from the HCRIS database as updated through February 15, 2018, uncompensated care costs from hospitals’ 2014 and 2015 cost reports from the same extract of HCRIS, and SSI days from the FY 2016 SSI ratios. For each eligible hospital, with the exception of Puerto Rico hospitals, all-inclusive rate providers, and Indian Health Service and Tribal hospitals, we calculated a proposed Factor 3 using information from cost reports for FYs 2013, 2014, and 2015. To calculate Factor 3 for PO 00000 Frm 00453 Fmt 4701 Sfmt 4702 20615 Puerto Rico hospitals, all-inclusive rate providers, and Indian Health Service and Tribal hospitals, we used data regarding lowincome insured days for FY 2013. For a complete discussion of the proposed methodology for calculating Factor 3, we refer readers to section IV.F.4. of the preamble of this proposed rule. To estimate the impact of the combined effect of proposed changes in Factors 1 and 2, as well as the proposed changes to the data used in determining Factor 3, on the calculation of Medicare uncompensated care payments (UCP), we compared total UCP estimated in the FY 2018 IPPS/LTCH PPS final rule to total UCP estimated in this FY 2019 IPPS/LTCH PPS proposed rule. For FY 2018, for each hospital, we calculated 75 percent of the estimated amount that would have been paid as Medicare DSH payments in the absence of section 3133 of the Affordable Care Act, adjusted by a Factor 2 of 58.01 percent and multiplied by a Factor 3 calculated, as described in the FY 2018 IPPS/LTCH PPS final rule. For FY 2019, we calculate 75 percent of the estimated amount that would be paid as Medicare DSH payments absent section 3133 of the Affordable Care Act, adjusted by a Factor 2 of 67.51 percent and multiplied by a Factor 3 calculated using the methodology described previously. Our analysis included 2,485 hospitals that are projected to be eligible for DSH in FY 2019. It did not include hospitals that terminated their participation from the Medicare program as of January 1, 2018, Maryland hospitals, new hospitals, MDHs, and SCHs that are expected to be paid based on their hospital-specific rates. Hospitals participating in the Rural Community Hospital Demonstration Program were inadvertently included in the current impact analysis, but will be excluded in the final rule, as participating hospitals are not eligible to receive empirically justified Medicare DSH payments and uncompensated care payments. Roughly $6.6 million in total uncompensated care payments was estimated for 13 of the 30 participating hospitals. However, in the final rule, uncompensated care payments will be distributed only to eligible hospitals projected to receive Medicare DSH payments. In addition, lowincome insured days and uncompensated care costs from merged or acquired hospitals were combined into the surviving hospital’s CMS certification number (CCN), and the nonsurviving CCN was excluded from the analysis. The estimated impact of the proposed changes in Factors 1, 2, and 3 on uncompensated care payments across all hospitals projected to be eligible for DSH payments in FY 2019, by hospital characteristic, is presented in the following table. E:\FR\FM\07MYP2.SGM 07MYP2 20616 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules MODELED UNCOMPENSATED CARE PAYMENTS FOR ESTIMATED FY 2019 DSHS BY HOSPITAL TYPE: MODEL UCP $ (IN MILLIONS) FROM FY 2018 TO FY 2019 Number of estimated DSHs daltland on DSKBBV9HB2PROD with PROPOSALS2 FY 2019 proposed rule estimated UCP $ (in millions) Dollar difference: FY 2019– FY 2018 (in millions) Percent change ** (1) Total ..................................................................................... By Geographic Location: Urban Hospitals ............................................................ Large Urban Areas ....................................................... Other Urban Areas ....................................................... Rural Hospitals ............................................................. Bed Size (Urban): 0 to 99 Beds ................................................................. 100 to 249 Beds ........................................................... 250+ Beds .................................................................... Bed Size (Rural): 0 to 99 Beds ................................................................. 100 to 249 Beds ........................................................... 250+ Beds .................................................................... Urban by Region: New England ................................................................ Middle Atlantic .............................................................. South Atlantic ................................................................ East North Central ........................................................ East South Central ....................................................... West North Central ....................................................... West South Central ...................................................... Mountain ....................................................................... Pacific ........................................................................... Puerto Rico ................................................................... Rural by Region: New England ................................................................ Middle Atlantic .............................................................. South Atlantic ................................................................ East North Central ........................................................ East South Central ....................................................... West North Central ....................................................... West South Central ...................................................... Mountain ....................................................................... Pacific ........................................................................... By Payment Classification: Urban Hospitals ............................................................ Large Urban Areas ....................................................... Other Urban Areas ....................................................... Rural Hospitals ............................................................. Teaching Status: Nonteaching .................................................................. Fewer than 100 residents ............................................. 100 or more residents .................................................. Type of Ownership: Voluntary ....................................................................... Proprietary .................................................................... Government .................................................................. Medicare Utilization Percent: 0 to 25 ........................................................................... 25 to 50 ......................................................................... 50 to 65 ......................................................................... Greater than 65 ............................................................ FY 2018 final rule CN estimated UCP $ (in millions) (2) (3) (4) (5) 2,485 $6,767 $8,250 $1,484 21.93 1,962 1,050 912 522 6,422 3,847 2,575 345 7,793 4,624 3,169 457 1,371 777 594 112 21.35 20.20 23.06 32.50 351 860 751 177 1,519 4,726 246 1,862 5,685 68 343 959 38.53 22.59 20.30 388 121 13 164 146 34 232 185 40 67 39 6 41.01 26.77 16.21 92 247 316 325 134 104 257 125 320 42 259 1,004 1,343 864 389 312 981 313 874 82 289 1,057 1,829 1,019 464 379 1,396 365 894 99 30 53 486 155 75 67 415 52 20 17 11.65 5.30 36.17 17.96 19.36 21.46 42.28 16.58 2.29 21.23 12 26 90 72 135 39 112 29 7 14 19 79 40 93 16 66 14 4 18 20 109 55 101 32 91 24 6 4 1 30 15 8 16 25 10 3 30.09 3.55 38.63 37.19 8.80 99.17 38.01 73.48 67.46 1,879 1,062 817 605 5,917 3,855 2,062 850 7,245 4,634 2,610 1,005 1,328 780 548 155 22.44 20.23 26.59 18.25 1,545 695 244 2,020 2,246 2,501 2,522 2,695 3,033 503 448 532 24.90 19.96 21.27 1,468 566 450 4,137 1,015 1,615 4,813 1,258 2,179 676 243 564 16.35 23.98 34.93 470 1,691 281 39 2,255 4,290 215 7 2,663 5,299 279 9 408 1,009 63 3 18.07 23.53 29.42 40.26 Source: Dobson √ DaVanzo analysis of 2013–2015 Hospital Cost Reports. * Dollar UCP calculated by [0.75 * estimated section 1886(d)(5)(F) payments * Factor 2 * Factor 3]. When summed across all hospitals projected to receive DSH payments, uncompensated care payments are estimated to be $6,767 million in FY 2018 and $8,250 million in FY 2018. ** Percentage change is determined as the difference between Medicare UCP payments modeled for the FY 2019 IPPS/LTCH PPS proposed rule (column 3) and Medicare UCP payments modeled for the FY 2018 IPPS/LTCH PPS final rule correction notice (column 2) divided by Medicare UCP payments modeled for the FY 2018 final rule correction notice (column 2) times 100 percent. *** Hospitals with Missing or Unknown Medicare Utilization are not shown in table. Changes in projected FY 2019 uncompensated care payments from payments in FY 2018 are driven by increases VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 in Factor 1 and Factor 2, as well as by an increase in the number of hospitals eligible to receive DSH in FY 2019 relative to FY PO 00000 Frm 00454 Fmt 4701 Sfmt 4702 2018. Factor 1 has increased from $11.665 billion to $12.221 billion, and the percent change in the percent of individuals who are E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 uninsured (Factor 2) has increased from 58.01 percent to 67.51 percent. Based on the proposed increases in these two factors, the proposed impact analysis found that, across all projected DSH eligible hospitals, FY 2019 uncompensated care payments are estimated at approximately $8.250 billion, or an increase of approximately 21.9 percent from FY 2018 uncompensated care payments (approximately $6.767 billion). While these proposed changes would result in a net increase in the amount available to be distributed in uncompensated care payments, the projected payment increases vary by hospital type. This redistribution of uncompensated care payments is caused by changes in Factor 3. As seen in the above table, percent increases smaller than 21.93 percent indicate that hospitals within the specified category are projected to experience a smaller increase in uncompensated care payments, on average, compared to the universe of projected FY 2019 DSH hospitals. Conversely, percent increases that are greater than 21.93 percent indicate a hospital type is projected to have a larger increase than the overall average. The variation in the distribution of payments by hospital characteristic is largely dependent on a given hospital’s number of Medicaid days and SSI days, as well as its uncompensated care costs as reported in the Worksheet S–10, used in the Factor 3 computation. Many rural hospitals are projected to experience a larger increase in uncompensated care payments than their urban counterparts. Overall, rural hospitals are projected to receive a 32.50 percent increase in uncompensated care payments, while urban hospitals are projected to receive a 21.35 percent increase in uncompensated care payments. By bed size, smaller hospitals are projected to receive larger increases in uncompensated care payments than larger hospitals, in both rural and urban settings. Rural hospitals with 0–99 beds are projected to receive a 41.01 percent payment increase, and rural hospitals with 100–249 beds are projected to see a 26.77 percent increase. Larger rural hospitals with 250+ beds are projected to experience a 16.21 percent payment increase, which is smaller than the overall average. This trend is consistent with urban hospitals, in which the smallest urban hospitals (0–99 beds) are projected to receive an increase in uncompensated care payments of 38.53 percent. Urban hospitals with 100–250 beds are projected to receive an increase of 22.59 percent, which is consistent with the overall average, while larger urban hospitals with and 250+ beds are projected to receive a 20.30 percent increase in uncompensated care payments, which is somewhat smaller VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 than the overall average but larger than the increase projected for their rural counterparts. By region, rural hospitals in the West North Central region are expected to receive a large increase in uncompensated care payments, as are rural hospitals in the Mountain, Pacific, South Atlantic, West South Central, East North Central, and New England regions. Rural hospitals in the Middle Atlantic and East South Central regions are projected to receive smaller than average payment increases. Regionally, urban hospitals are projected to receive a wide range of payment changes. Small increases in uncompensated care payments are projected in the Pacific and Middle Atlantic regions. Smaller than average increases in payments are also projected in the New England, Mountain, East North Central, and East South Central regions. Hospitals in the South Atlantic and West South Central regions are projected to receive a larger than average increase in uncompensated payments, while the projected increase in the West North Central region and in Puerto Rico is generally consistent with the overall average increase of 21.93 percent. Nonteaching hospitals are projected to receive a larger than average payment increase of 24.90 percent. Teaching hospitals with fewer than 100 residents are projected to receive payment increases of 19.96 percent, which is slightly below average, while those teaching hospitals with 100+ residents have a projected payment increase of 21.27 percent, consistent with the overall average. Government and proprietary hospitals are projected to receive larger than average increases (34.93 percent and 23.98 percent, respectively), while voluntary hospitals are expected to receive increases lower than the overall average at 16.35 percent. Hospitals with 0 to 25 percent Medicare utilization are projected to receive increases in uncompensated care payments slightly below the overall average, while all other hospitals are projected to receive larger increases. 5. Effects of Proposed Reduction Under the Hospital Readmissions Reduction Program for FY 2019 In section IV.H. of the preamble of this proposed rule, we discuss proposed requirements for the Hospital Readmissions Reduction Program. This program requires a reduction to a hospital’s base operating DRG payment to account for excess readmissions of selected applicable conditions. The table and analysis below illustrate the estimated financial impact of the Hospital Readmissions Reduction Program payment adjustment methodology, as outlined in this FY 2019 IPPS/LTCH PPS proposed rule. In this table, we are presenting the estimated PO 00000 Frm 00455 Fmt 4701 Sfmt 4702 20617 impact of the FY 2019 Hospital Readmissions Reduction Program on hospitals by hospital characteristic. The table presents results of hospitals stratified into quintiles based on the proportion of dual-eligible stays among Medicare fee-for-service (FFS) and managed care stays between July 1, 2013 and June 30, 2016 (that is, the FY 2018 Hospital Readmissions Reduction Program performance period). Hospitals’ performance on the excess readmission ratios (ERRs) are assessed relative to their peer group median and a neutrality modifier is applied in the payment adjustment factor calculation to maintain budget neutrality. To analyze the results by hospital characteristic, we used the FY 2018 Inpatient Prospective Payment System (IPPS) Final Rule Impact File. This table includes 3,064 non-Maryland hospitals eligible to receive a penalty during the performance period. Hospitals are eligible to receive a penalty if they have 25 or more eligible discharges for at least one measure between July 1, 2013 and June 30, 2016. The second column in the table indicates the total number of penalty eligible non-Maryland hospitals (that is, have an estimated payment adjustment factor less than 1) with available data for each characteristic. The third column in the table indicates the percentage of penalized hospitals among those eligible to receive a penalty for each characteristic. For example, with regards to teaching status, 81.90 percent of eligible hospitals characterized as non-teaching hospitals would be penalized. Among teaching hospitals, 90.05 percent of eligible hospitals with fewer than 100 residents and 96.37 percent of eligible hospitals with 100 or more residents would be penalized. The fourth column in the table estimates the financial impact on hospitals by hospital characteristics. The table shows the share of payment adjustments as a percentage of all base operating DRG payments for each characteristic. This is calculated as the sum of penalties for all hospitals with that characteristic over the sum of all base operating DRG payments for those hospitals between October 1, 2015 and September 30, 2016 (FY 2016). For example, the penalty as a share of payments for urban hospitals is 0.69 percent. This means that total penalties for all urban hospitals are 0.69 percent of total payments for urban hospitals. Measuring the financial impact on hospitals as a proportion of total base operating DRG payments allows us to account for differences in the amount of base operating DRG payments for hospitals within the characteristic when comparing the financial impact of the program on different groups of hospitals. E:\FR\FM\07MYP2.SGM 07MYP2 20618 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules ESTIMATED PERCENTAGE OF HOSPITALS PENALIZED AND PENALTY AS SHARE OF PAYMENT FOR FY 2019 HOSPITAL READMISSIONS REDUCTION PROGRAM [By hospital characteristic] Number of eligible hospitals a Hospital characteristic daltland on DSKBBV9HB2PROD with PROPOSALS2 All Hospitals ..................................................................................................... By Geographic Location (n=3,064): e Urban hospitals ......................................................................................... 1–99 beds .......................................................................................... 100–199 beds .................................................................................... 200–299 beds .................................................................................... 300–399 beds .................................................................................... 400–499 beds .................................................................................... 500 or more beds .............................................................................. Rural hospitals .......................................................................................... 1–49 beds .......................................................................................... 50–99 beds ........................................................................................ 100–149 beds .................................................................................... 150–199 beds .................................................................................... 200 or more beds .............................................................................. By Teaching Status f (n=3,064): Non-teaching ............................................................................................ Fewer than 100 Residents ....................................................................... 100 or more Residents ............................................................................. By Ownership Type (n=3,064): Government .............................................................................................. Proprietary ................................................................................................ Voluntary ................................................................................................... By Safety-net Status g (n=3,064): Safety-net hospitals .................................................................................. Non-safety-net hospitals ........................................................................... By DSH Patient Percentage h (n=3,064): 0–24 .......................................................................................................... 25–49 ........................................................................................................ 50–64 ........................................................................................................ 65 and over .............................................................................................. By Medicare Cost Report (MCR) Percent: i (n=3,061): 0–24 .......................................................................................................... 25–49 ........................................................................................................ 50–64 ........................................................................................................ 65 and over .............................................................................................. By Region (n=3,064): New England ............................................................................................ Middle Atlantic .......................................................................................... South Atlantic ........................................................................................... East North Central .................................................................................... East South Central ................................................................................... West North Central ................................................................................... West South Central .................................................................................. Mountain ................................................................................................... Pacific ....................................................................................................... Number of penalized hospitals b Percentage of hospitals penalized c (%) Penalty as a share of payments d (%) 3,064 2,610 85.18 0.70 2,291 530 711 419 273 145 213 773 292 283 115 44 39 1,991 375 645 387 255 137 192 619 208 231 104 40 36 86.91 70.75 90.72 92.36 93.41 94.48 90.14 80.08 71.23 81.63 90.43 90.91 92.31 0.69 0.80 0.81 0.77 0.69 0.55 0.62 0.71 0.61 0.67 0.76 0.59 0.86 2,022 794 248 1,656 715 239 81.90 90.05 96.37 0.80 0.70 0.53 481 768 1,815 397 616 1,597 82.54 80.21 87.99 0.58 0.96 0.66 619 2,445 541 2,069 87.40 84.62 0.57 0.73 1,246 1,452 200 166 1,021 1,269 182 138 81.94 87.40 91.00 83.13 0.78 0.66 0.64 0.59 433 2,100 468 60 368 1,819 381 41 84.99 86.62 81.41 68.33 0.46 0.71 0.89 1.25 129 352 511 480 288 247 476 218 363 114 327 469 417 258 196 373 163 293 88.37 92.90 91.78 86.88 89.58 79.35 78.36 74.77 80.72 0.82 0.85 0.84 0.65 0.87 0.46 0.63 0.56 0.42 Source: Results based on July 1, 2013 through June 30, 2016 discharges among subsection (d) and Maryland hospitals only. Although data from all subsection (d) and Maryland hospitals are used in calculations of each hospital’s ERR, this table does not include results for Maryland hospitals since Maryland hospitals are not eligible for a penalty under the program. Hospitals are stratified into five peer groups based on the proportion of FFS and managed care dual-eligible stays for the 3-year FY 2018 performance period. Hospital characteristics are from the FY 2018 Hospital Inpatient Prospective Payment System (IPPS) Final Rule Impact File. a This column is the number of applicable hospitals within the characteristic that are eligible for a penalty (that is, they have 25 or more eligible discharges for at least one measure). b This column is the number of applicable hospitals that are penalized (i.e., they have 25 or more eligible discharges for at least one measure and an estimated payment adjustment factor less than 1) within the characteristic. c This column is the percentage of applicable hospitals that are penalized among hospitals that are eligible to receive a penalty. d The penalty as a share of payments is calculated as the sum of all penalties for the group of hospitals with that characteristic divided by total base operating DRG payments for all hospitals with that characteristic. MedPAR data from October 1, 2015 through September 30, 2016 (FY 2016), are used to calculate the total base operating DRG payments, which are used to estimate total penalties. e The total number of hospitals with hospital characteristics data may not add up to the total number of hospitals because not all hospitals have data for all characteristics. All hospitals had information for: Geographic location, bed size, teaching status, ownership type, safety-net status, DSH patient percentage, and region (n=3,064). Not all hospitals had data for MCR percent (n=3,061). f A hospital is considered a teaching hospital if it has an IME adjustment factor for Operation PPS (TCHOP) greater than zero. g A hospital is considered a safety-net hospital if they are in the top DSH quintile. h DSH [Disproportionate Share Hospital] patient percentage is the sum of the percentage of Medicare inpatient days attributable to patients eligible for both Medicare Part A and Supplemental Security Income (SSI), and the percentage of total inpatient days attributable to patients eligible for Medicaid but not Medicare Part A. i MCR [Medicare Cost Report] percent is the percentage of total inpatient stays from Medicare patients. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00456 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 20619 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 6. Effects of Proposed Changes Under the FY 2019 Hospital Value-Based Purchasing (VBP) Program a. Effects of Proposed Changes for FY 2019 In section IV.I. of the preamble of this proposed rule, we discuss the Hospital VBP Program under which the Secretary makes value-based incentive payments to hospitals based on their performance on measures during the performance period with respect to a fiscal year. These incentive payments will be funded for FY 2019 through a reduction to the FY 2019 base operating DRG payment amount for the discharge for the hospital for such fiscal year, as required by section 1886(o)(7)(B) of the Act. The applicable percentage for FY 2019 and subsequent years is 2 percent. The total amount available for value-based incentive payments must be equal to the total amount of reduced payments for all hospitals for the fiscal year, as estimated by the Secretary. In section IV.I.1.b. of the preamble of this proposed rule, we estimate the available pool of funds for value-based incentive payments in the FY 2019 program year, which, in accordance with section 1886(o)(7)(C)(v) of the Act, will be 2.00 percent of base operating DRG payments, or a total of approximately $1.9 billion. This estimated available pool for FY 2019 is based on the historical pool of hospitals that were eligible to participate in the FY 2018 program year and the payment information from the December 2017 update to the FY 2017 MedPAR file. The proposed estimated impacts of the FY 2019 program year by hospital characteristic, found in the table below, are based on historical TPSs. We used the FY 2018 program year’s TPSs to calculate the proxy adjustment factors used for this impact analysis. These are the most recently available scores that hospitals were given an opportunity to review and correct. The proxy adjustment factors use estimated annual base operating DRG payment amounts derived from the December 2017 update to the FY 2017 MedPAR file. The proxy adjustment factors can be found in Table 16 associated with this proposed rule (available via the internet on the CMS website). The impact analysis shows that, for the FY 2019 program year, the number of hospitals that would receive an increase in their base operating DRG payment amount is higher than the number of hospitals that would receive a decrease. On average, urban hospitals in the West North Central region and rural hospitals in Mountain region would have the highest positive percent change in base operating DRG. Urban Middle Atlantic, urban South Atlantic, and urban East South Central regions would experience an average decrease in base operating DRG. All other regions, both urban and rural, would have an average increase in base operating DRG. As DSH percent increases, the average percent change in base operating DRG would decrease. With respect to hospitals’ Medicare utilization as a percent of inpatient days (MCR), as the MCR percent increases, the percent change in base operating DRG would tend to increase. On average, teaching hospitals would have a decrease in base operating DRG, while non-teaching hospitals would have an increase in base operating DRG. IMPACT ANALYSIS OF BASE OPERATING DRG PAYMENT AMOUNTS RESULTING FROM THE FY 2019 HOSPITAL VBP PROGRAM daltland on DSKBBV9HB2PROD with PROPOSALS2 Number of hospitals By Geographic Location: All Hospitals ...................................................................................................................................................... Large Urban .............................................................................................................................................. Other Urban ............................................................................................................................................... Rural Area ................................................................................................................................................. Urban hospitals .................................................................................................................................. 0–99 beds ................................................................................................................................... 100–199 beds ............................................................................................................................. 200–299 beds ............................................................................................................................. 300–499 beds ............................................................................................................................. 500 or more beds ....................................................................................................................... Rural hospitals ................................................................................................................................... 0–49 beds ................................................................................................................................... 50–99 beds ................................................................................................................................. 100–149 beds ............................................................................................................................. 150–199 beds ............................................................................................................................. 200 or more beds ....................................................................................................................... By Region: Urban By Region .............................................................................................................................................. New England ............................................................................................................................................. Middle Atlantic ........................................................................................................................................... South Atlantic ............................................................................................................................................ East North Central ..................................................................................................................................... East South Central .................................................................................................................................... West North Central .................................................................................................................................... West South Central ................................................................................................................................... Mountain .................................................................................................................................................... Pacific ........................................................................................................................................................ Rural By Region ............................................................................................................................................... New England ............................................................................................................................................. Middle Atlantic ........................................................................................................................................... South Atlantic ............................................................................................................................................ East North Central ..................................................................................................................................... East South Central .................................................................................................................................... West North Central .................................................................................................................................... West South Central ................................................................................................................................... Mountain .................................................................................................................................................... Pacific ........................................................................................................................................................ By MCR Percent: 0–25 .................................................................................................................................................................. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00457 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 Average net percentage payment adjustment 2,808 1,146 994 668 2,140 375 708 429 416 212 668 201 272 114 43 38 0.163 0.067 0.070 0.465 0.068 0.475 0.120 ¥0.037 ¥0.185 ¥0.117 0.465 0.675 0.526 0.306 0.048 ¥0.125 2,140 107 288 376 348 131 137 265 144 344 668 20 51 108 108 123 82 109 46 21 0.068 0.191 ¥0.101 ¥0.024 0.178 ¥0.101 0.315 0.011 0.027 0.189 0.465 0.739 0.397 0.489 0.489 0.214 0.628 0.349 0.785 0.562 434 0.122 20620 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules IMPACT ANALYSIS OF BASE OPERATING DRG PAYMENT AMOUNTS RESULTING FROM THE FY 2019 HOSPITAL VBP PROGRAM—Continued Number of hospitals 25–50 ................................................................................................................................................................ 50–65 ................................................................................................................................................................ Over 65 ............................................................................................................................................................. Missing .............................................................................................................................................................. By DSH Percent: 0–25 .................................................................................................................................................................. 25–50 ................................................................................................................................................................ 50–65 ................................................................................................................................................................ Over 65 ............................................................................................................................................................. By Teaching Status: Non-Teaching ................................................................................................................................................... Teaching ........................................................................................................................................................... Actual FY 2019 program year’s TPSs will not be reviewed and corrected by hospitals until after the FY 2019 IPPS/LTCH PPS final rule has been published. Therefore, the same historical universe of eligible hospitals and corresponding TPSs from the FY 2018 program year will be used for the updated impact analysis in that final rule. b. Effects of Proposed Domain Weighting and Alternative Considered Beginning With the FY 2021 Program Year In section IV.I.4.b. of the preamble of this proposed rule, we discuss our proposed changes to the Hospital VBP Program domain weighting beginning with the FY 2021 program year. We note that we are not proposing to make any changes to the domain weighting for the FY 2019 or FY 2020 program years. The estimated impacts of the proposed domain weighting and alternative considered for three domains beginning with the FY 2021 program year, by hospital characteristic found in the table below, are based on historical TPSs. This analysis uses the same data set as the proposed estimated impacts for the FY 2019 program year above, and is intended to expand upon the analysis of the proposed domain weighting and alternative considered discussed in section IV.I.4.b. of the preamble of this proposed rule. This impact analysis shows that under the proposed domain weighting to increase the Clinical Outcomes domain (proposed domain name; previously referred to as the Clinical Care domain) from 25 percent to 50 percent of each hospital’s TPS, we estimate that on average, urban hospitals in the East South Central region and rural hospitals in New England region would have the highest positive percent change in base operating DRG. We estimate that four of the urban regions would have a decrease in base operating DRG, on average. We estimate that rural hospitals in East South Central and West South Central would have a decrease in base operating DRG, on average, while rural hospitals in the other regions would have an increase. We estimate that hospitals with a DSH percent 0–25 would have a positive percent change in base operating DRG, while hospitals with higher DSH percentages would have negative percent change in base operating DRG, on average. We estimate that hospitals with MCR percent over 65 would have a positive percent change in base operating DRG, while hospitals with lower MCR percentages would have negative percent change in base operating DRG, on average. We estimate that both teaching and non-teaching hospitals would have a negative percent change in base operating DRG. Average net percentage payment adjustment 1,958 389 27 ........................ 0.152 0.250 0.350 ........................ 1,082 1,381 196 149 0.254 0.126 0.005 0.046 1,763 1,045 0.278 ¥0.032 Under the alternative domain weighting we considered of equally weighting each of the three domains to constitute one-third of each hospital’s TPS, we estimate that rural hospitals in New England region would have the highest positive percent change in base operating DRG, with all rural hospitals estimated to have a positive percent change in base operating DRG. We estimate that on average urban hospitals in four regions would have a positive percent change in base operating DRG, while urban hospitals in five of the regions would have a negative percent change in base operating DRG. We estimate that hospitals with a DSH percent of 0–25 and 25–50 would have a positive percent change in base operating DRG, while hospitals with higher DSH percentages would have negative percent change in base operating DRG, on average. We estimate that hospitals with MCR percent 0–25 would have a negative percent change in base operating DRG, while hospitals with higher MCR percentages would have positive percent change in base operating DRG, on average. We estimate that teaching hospitals would have a negative percent change in base operating DRG, on average, while nonteaching hospitals would have a positive percent change in base operating DRG. IMPACT ANALYSIS OF BASE OPERATING DRG PAYMENT AMOUNTS RESULTING FROM PROPOSED AND ALTERNATIVE DOMAIN WEIGHTING CONSIDERED FOR THREE DOMAINS BEGINNING WITH THE FY 2021 HOSPITAL VBP PROGRAM daltland on DSKBBV9HB2PROD with PROPOSALS2 Number of hospitals By Geographic Location: All Hospitals .......................................................................................................................... Large Urban .................................................................................................................. Other Urban ................................................................................................................... Rural Area ..................................................................................................................... Urban hospitals ..................................................................................................................... 0–99 beds ...................................................................................................................... 100–199 beds ................................................................................................................ 200–299 beds ................................................................................................................ 300–499 beds ................................................................................................................ VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00458 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 2,701 1,087 963 651 2,050 341 682 407 409 07MYP2 Average percentage payment adjustment (proposed domain weighting) ¥0.071 ¥0.019 ¥0.152 ¥0.040 ¥0.081 0.051 ¥0.106 ¥0.118 ¥0.186 Average percentage payment adjustment (alternative domain weighting) 0.059 ¥0.015 ¥0.032 ¥0.318 ¥0.023 0.379 ¥0.040 ¥0.120 ¥0.233 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules 20621 IMPACT ANALYSIS OF BASE OPERATING DRG PAYMENT AMOUNTS RESULTING FROM PROPOSED AND ALTERNATIVE DOMAIN WEIGHTING CONSIDERED FOR THREE DOMAINS BEGINNING WITH THE FY 2021 HOSPITAL VBP PROGRAM— Continued Average percentage payment adjustment (proposed domain weighting) Number of hospitals By By By daltland on DSKBBV9HB2PROD with PROPOSALS2 By 500 or more beds .......................................................................................................... Rural hospitals ...................................................................................................................... 0–49 beds ...................................................................................................................... 50–99 beds .................................................................................................................... 100–149 beds ................................................................................................................ 150–199 beds ................................................................................................................ 200 or more beds .......................................................................................................... Region: Urban By Region .................................................................................................................. New England ................................................................................................................. Middle Atlantic ............................................................................................................... South Atlantic ................................................................................................................ East North Central ......................................................................................................... East South Central ........................................................................................................ West North Central ........................................................................................................ West South Central ....................................................................................................... Mountain ........................................................................................................................ Pacific ............................................................................................................................ Rural By Region ................................................................................................................... New England ................................................................................................................. Middle Atlantic ............................................................................................................... South Atlantic ................................................................................................................ East North Central ......................................................................................................... East South Central ........................................................................................................ West North Central ........................................................................................................ West South Central ....................................................................................................... Mountain ........................................................................................................................ Pacific ............................................................................................................................ MCR Percent: 0–25 ...................................................................................................................................... 25–50 .................................................................................................................................... 50–65 .................................................................................................................................... Over 65 ................................................................................................................................. Missing .................................................................................................................................. DSH Percent: 0–25 ...................................................................................................................................... 25–50 .................................................................................................................................... 50–65 .................................................................................................................................... Over 65 ................................................................................................................................. Teaching Status: Non-Teaching ....................................................................................................................... Teaching ............................................................................................................................... 7. Effects of Proposed Changes to the HAC Reduction Program for FY 2019 In section IV.J. of the preamble of this proposed rule, we discuss proposed requirements for the HAC Reduction Program. In this proposed rule, we are not proposing to adopt any new measures into the HAC Reduction Program. However, the Hospital IQR Program is proposing to remove the claims-based Patient Safety and Adverse Events Composite (PSI–90) and five NHSN HAI measures. These measures had been previously adopted for, and will remain in, the HAC Reduction Program. We are proposing to begin validation of these HAI measures under the HAC Reduction Program beginning in FY 2020. We note the burden associated with collecting and submitting data via the NHSN VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 211 651 188 268 114 43 38 0.058 ¥0.040 0.044 0.024 ¥0.155 ¥0.298 ¥0.262 ¥0.026 ¥0.318 0.573 0.379 0.105 ¥0.148 ¥0.203 2,050 105 284 373 342 127 133 248 137 301 651 19 51 106 108 122 82 102 40 21 ¥0.081 0.203 ¥0.166 ¥0.178 0.061 0.384 0.127 ¥0.189 ¥0.147 0.013 ¥0.040 0.317 0.066 0.039 0.011 ¥0.283 0.088 ¥0.219 0.185 0.079 ¥0.023 0.172 ¥0.191 ¥0.119 0.109 ¥0.248 0.344 ¥0.148 ¥0.074 0.093 0.318 0.661 0.314 0.379 0.398 0.031 0.557 0.077 0.658 0.563 350 1,937 387 27 ........................ ¥0.189 ¥0.063 ¥0.029 0.238 ........................ ¥0.119 0.058 0.188 0.579 ........................ 1,031 1,359 185 126 0.021 ¥0.127 ¥0.184 ¥0.058 0.182 0.012 ¥0.156 ¥0.119 1,702 999 ¥0.056 ¥0.097 0.151 ¥0.098 system is captured under a separate OMB control number, 0920–0666, and therefore will not impact our burden estimates. We anticipate the proposed removal of the NHSN HAI measures from the Hospital IQR Program will result in a net burden decrease to the Hospital IQR Program, but will result in an off-setting net burden increase to the HAC Reduction Program because hospitals selected for validation will continue to be required to submit validation templates for the HAI measures. Therefore, if the proposals found in section VIII.A.5.b.(1) and IV.J.4.e. of the preamble of this proposed rule to remove HAI chart-abstracted measures from the Hospital IQR Program and adopt validation process for the HAC Reduction Program are finalized, then we anticipate a shift in burden associated with this data validation effort to PO 00000 Frm 00459 Fmt 4701 Sfmt 4702 Average percentage payment adjustment (alternative domain weighting) the HAC Reduction Program beginning in FY 2020. We discuss the associated burden hours in section XV.B.7. of this proposed rule, and note the burden associated with these requirements is captured in an information collection request currently available for review and comment, OMB control number 0938—NEW. The table below presents the estimated proportion of hospitals in the FY 2019 worstperforming quartile of the Total HAC Scores by hospital characteristic. These FY 2019 HAC Reduction Program results were calculated using the Winsorized z-score methodology finalized in the 2017 IPPS/ LTCH PPS final rule (80 FR 57022 through 57025). Each hospital’s Total HAC Score was calculated as the weighted average of the hospital’s Domain 1 score (15 percent) and E:\FR\FM\07MYP2.SGM 07MYP2 20622 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules Domain 2 score (85 percent). Non-Maryland hospitals with a Total HAC Score above the 75th percentile Total HAC Score were identified as being in the worst-performing quartile. We used the modified Recalibrated Patient Safety Indicator (PSI) 90 Composite measure results based on Medicare fee-for-service (FFS) discharges from October 1, 2015 through June 30, 2017 and ICD–10 recalibrated version 8.0 of the CMS PSI software to estimate the impact of the FY 2019 HAC Reduction Program. For the CDC Central Line-Associated Bloodstream Infection (CLABSI), Catheter-Associated Urinary Tract Infection (CAUTI), Colon and Abdominal Hysterectomy Surgical Site Infection (SSI), Methicillin-resistant Staphylococcus aureus (MRSA) bacteremia, and Clostridium difficile Infection (CDI) measure results, we used standardized infection ratios (SIRs) calculated with hospital surveillance data reported to the National Healthcare Safety Network (NHSN) for infections occurring between January 1, 2015 through December 31, 2016.403 To analyze the results by hospital characteristic, we used the FY 2018 Final Rule Impact File. This table includes 3,216 non-Maryland hospitals with an FY 2019 Total HAC Score. Of these, 3,201 hospitals had information for geographic location and bed size, Disproportionate Share Hospital (DSH) percent, teaching status, ownership status, and safety-net status; 404 3,188 had information for Medicare Cost Report (MCR) percent; and 3,214 had information for their geographic region. Maryland hospitals and hospitals without a Total HAC Score are not included in the table below. The second column in the table indicates the total number of non-Maryland hospitals with available data for each characteristic that have a Total HAC Score for the FY 2019 HAC Reduction Program. For example, with regard to teaching status, 2,131 hospitals are characterized as non-teaching hospitals, 822 are characterized as teaching hospitals with fewer than 100 residents, and 248 are characterized as teaching hospitals with at least 100 residents. This only represents a total of 3,201 hospitals because the other 15 hospitals have missing data for teaching status. The third column in the table indicates the number of hospitals for each characteristic that would be in the worstperforming quartile of Total HAC Scores. These hospitals would receive a payment reduction under the FY 2019 HAC Reduction Program. For example, with regard to teaching status, 475 out of 2,131 hospitals characterized as non-teaching hospitals would be subject to a payment reduction. Among teaching hospitals, 199 out of 822 hospitals with fewer than 100 residents and 116 out of 248 hospitals with 100 or more residents would be subject to a payment reduction. The fourth column in the table indicates the proportion of hospitals for each characteristic that would be in the worstperforming quartile of Total HAC Scores and would receive a payment reduction under the FY 2019 HAC Reduction Program. For example, 22.3 percent of the 2,131 hospitals characterized as non-teaching hospitals, 24.2 percent of the 822 teaching hospitals with fewer than 100 residents, and 46.8 percent of the 248 hospitals with 100 or more residents would be subject to a payment reduction. ESTIMATED PROPORTION OF HOSPITALS IN THE WORST-PERFORMING QUARTILE (>75TH PERCENTILE) OF THE TOTAL HAC SCORES FOR THE FY 2019 HAC REDUCTION PROGRAM [By hospital characteristic] Number of hospitals daltland on DSKBBV9HB2PROD with PROPOSALS2 Hospital characteristic Total c ........................................................................................................................................... By Geographic Location (n=3,201): d Urban hospitals ..................................................................................................................... 1–99 beds ...................................................................................................................... 100–199 beds ................................................................................................................ 200–299 beds ................................................................................................................ 300–399 beds ................................................................................................................ 400–499 beds ................................................................................................................ 500 or more beds .......................................................................................................... Rural hospitals ...................................................................................................................... 1–49 beds ...................................................................................................................... 50–99 beds .................................................................................................................... 100–149 beds ................................................................................................................ 150–199 beds ................................................................................................................ 200 or more beds .......................................................................................................... By Safety-Net Status e (n=3,201): Non-safety net ...................................................................................................................... Safety-net ............................................................................................................................. By DSH Percent f (n=3,201): 0–24 ...................................................................................................................................... 25–49 .................................................................................................................................... 50–64 .................................................................................................................................... 65 and over .......................................................................................................................... By Teaching Status g (n=3,201): Non-teaching ........................................................................................................................ Fewer than 100 residents ..................................................................................................... 100 or more residents .......................................................................................................... By Ownership (n=3,201): Voluntary ............................................................................................................................... Proprietary ............................................................................................................................ Government .......................................................................................................................... By MCR Percent h (n=3,188): 0–24 ...................................................................................................................................... 25–49 .................................................................................................................................... 50–64 .................................................................................................................................... 403 Updated FY 2019 data for the CDC NHSN measures (1/1/2016 through 12/31/2017) was not VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 available at the time of publishing this proposed rule. PO 00000 Frm 00460 Fmt 4701 Sfmt 4702 Number of hospitals in the worstperforming quartile a Percent of hospitals in the worstperforming quartile b 3,216 804 25.0 2,415 624 724 432 275 147 213 786 304 283 116 44 39 630 125 190 116 77 48 74 160 56 68 21 8 7 26.1 20.0 26.2 26.9 28.0 32.7 34.7 20.4 18.4 24.0 18.1 18.2 17.9 2,557 644 570 220 22.3 34.2 1,340 1,472 210 179 285 358 76 71 21.3 24.3 36.2 39.7 2,131 822 248 475 199 116 22.3 24.2 46.8 1,866 838 497 474 166 150 25.4 19.8 30.2 515 2,128 471 148 513 109 28.7 24.1 23.1 404 A hospital is considered a Safety-net hospital if it is in the top quintile for DSH percent. E:\FR\FM\07MYP2.SGM 07MYP2 20623 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules ESTIMATED PROPORTION OF HOSPITALS IN THE WORST-PERFORMING QUARTILE (>75TH PERCENTILE) OF THE TOTAL HAC SCORES FOR THE FY 2019 HAC REDUCTION PROGRAM—Continued [By hospital characteristic] Number of hospitals Hospital characteristic 65 and over .......................................................................................................................... By Region (n=3,214): i New England ........................................................................................................................ Mid-Atlantic ........................................................................................................................... South Atlantic ....................................................................................................................... East North Central ................................................................................................................ East South Central ............................................................................................................... West North Central ............................................................................................................... West South Central .............................................................................................................. Mountain ............................................................................................................................... Pacific ................................................................................................................................... Number of hospitals in the worstperforming quartile a Percent of hospitals in the worstperforming quartile b 74 15 20.3 133 364 524 497 299 256 516 227 398 36 119 140 101 75 50 98 61 122 27.1 32.7 26.7 20.3 25.1 19.5 19.0 26.9 30.7 daltland on DSKBBV9HB2PROD with PROPOSALS2 Source: FY 2019 HAC Reduction Program Proposed Rule Results are based on Recalibrated PSI 90 Composite data from October 2015 through June 2017 and CDC CLABSI, CAUTI, SSI, CDI, and MRSA results from January 2015 through December 2016. Hospital Characteristics are based on the FY 2018 Hospital Inpatient Prospective Payment System (IPPS) Final Rule Impact File. a This column is the number of non-Maryland hospitals with a Total HAC Score within the corresponding characteristic that are estimated to be in the worst-performing quartile. b This column is the percent of non-Maryland hospitals within each characteristic that are estimated to be in the worst-performing quartile. The percentages are calculated by dividing the number of non-Maryland hospitals with a Total HAC Score in the worst-performing quartile by the total number of non-Maryland hospitals with a Total HAC Score within that characteristic. c The number of non-Maryland hospitals with a FY 2019 Total HAC Score (N=3,216). Note that not all hospitals have data for all hospital characteristics. d The number of hospitals that had information for geographic location with bed size, Safety-net status, Disproportionate Share Hospital (DSH) percent, teaching status, and ownership status (n=3,201). e A hospital is considered a Safety-net hospital if it is in the top quintile for DSH percent. f The DSH patient percentage is equal to the sum of (1) the percentage of Medicare inpatient days attributable to patients eligible for both Medicare Part A and Supplemental Security Income and (2) the percentage of total inpatient days attributable to patients eligible for Medicaid but not Medicare Part A. g A hospital is considered a teaching hospital if it has an IME adjustment factor for Operation PPS (TCHOP) greater than zero. h Not all hospitals had data for MCR percent (n=3,188). i Not all hospitals had data for Region (n=3,214). 8. Effects of Proposed Changes Relating to Medicare GME Agreements for New Urban Teaching Hospitals In section IV.K.2. of the preamble of this proposed rule, we discuss our proposal to provide new urban teaching hospitals with greater flexibility under the regulation governing Medicare GME affiliation agreements. Currently, if a new urban teaching hospital participates in a Medicare GME affiliation agreement, it can only receive an increase in its cap(s) as part of that agreement. That is, if a hospital with IME or direct GME FTE resident caps established under § 412.105(f)(1)(iv) or § 413.79(c)(2), or both, based on training occurring in 1996, is part of the Medicare GME affiliated group, § 413.79(e)(1)(iv) provides that the new urban teaching hospital(s) would only be permitted to receive in increase in its cap(s). We are proposing to revise the regulation to specify that, effective for Medicare GME affiliation agreements entered into on or after July 1, 2019, a new urban teaching hospital (that is, a hospital that qualifies for an adjustment under § 412.105(f)(1)(vii) or § 413.79(e)(1), or both) may participate in a Medicare GME affiliated group composed solely of new urban teaching hospitals and be eligible to receive a decrease to its FTE caps as a result of participation in that affiliated group. Rather than create new FTE cap slots to cross train residents, Medicare GME affiliation agreements use existing cap slots to allow residents to rotate to various hospitals. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Because Medicare GME affiliation agreements use existing FTE cap slots, we do not anticipate any significant cost impact associated with this proposal. 9. Effects of Proposed Implementation of the Rural Community Hospital Demonstration Program in FY 2019 In section IV.L. of the preamble of this proposed rule for FY 2019, we discussed our implementation and budget neutrality methodology for section 410A of Public Law 108–173, as amended by sections 3123 and 10313 of Public Law 111–148, and more recently, by section 15003 of Public Law 114–255, which requires the Secretary to conduct a demonstration that would modify payments for inpatient services for up to 30 rural hospitals. Section 15003 of Public Law 114–255 requires the Secretary to conduct the Rural Community Hospital Demonstration for a 10year extension period (in place of the 5-year extension period required by the Affordable Care Act), beginning on the date immediately following the last day of the initial 5-year period under section 410A(a)(5) of Public Law 108–173. In the preamble to this proposed rule, we described the terms of participation for the extension period authorized by Public Law 114–255. In the FY 2018 IPPS/LTCH PPS final rule, we finalized our policy with regard to the effective date for the application of the reasonable costbased payment methodology under the PO 00000 Frm 00461 Fmt 4701 Sfmt 4702 demonstration for those among the hospitals that had previously participated and were choosing to participate in the second 5-year extension period. According to our finalized policy, each of these previously participating hospitals began the second 5 years of the 10year extension period on the date immediately after the date the period of performance under the 5-year extension period ended. However, by the time of the FY 2018 IPPS/LTCH PPS final rule, we had not been able to verify which among the previously participating hospitals would be continuing participation, and thus were not able to estimate the costs of the demonstration for that year’s final rule. We stated in the final rule that we would instead include the estimated costs of the demonstration for all participating hospitals for FY 2018, along with those for FY 2019, in the budget neutrality offset amount for the FY 2019 proposed and final rules. Seventeen of the 21 hospitals that completed their periods of participation under the extension period authorized by the Affordable Care Act have elected to continue in the second 5-year extension period, while 13 additional hospitals have been selected to participate. Each of these newly participating hospitals will begin its 5-year period of participation effective the start of the first cost reporting period on or after October 1, 2017. Thus, 30 hospitals are participating in the demonstration during FY 2018. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20624 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules In the FY 2018 IPPS/LTCH PPS final rule, we finalized the budget neutrality methodology in accordance with our policies for implementing the demonstration, adopting the general methodology used in previous years, whereby we estimated the additional payments made by the program for each of the participating hospitals as a result of the demonstration. In order to achieve budget neutrality, we adjusted the national IPPS rates by an amount sufficient to account for the added costs of this demonstration. In other words, we have applied budget neutrality across the payment system as a whole rather than across the participants of this demonstration. The language of the statutory budget neutrality requirement permits the agency to implement the budget neutrality provision in this manner. The statutory language requires that aggregate payments made by the Secretary do not exceed the amount which the Secretary would have paid if the demonstration was not implemented, but does not identify the range across which aggregate payments must be held equal. Because we were unable to confirm the hospitals that would be participating in the second extension period in time for including the estimates of the cost of the demonstration in FY 2018 in the FY 2018 final rule, we indicated that we will include this estimate in the FY 2019 IPPS/LTCH proposed and final rules. For this proposed rule, the resulting amounts applicable to FYs 2018 and 2019, respectively, are $33,254,247 and $78,409,842, which we are proposing to include in the budget neutrality offset adjustment for FY 2019. These estimated amounts are based on the specific assumptions regarding the data sources used, that is, recently available ‘‘as submitted’’ cost reports and historical and proposed update factors for cost, payment, and volume. If updated data become available prior to the FY 2019 IPPS/LTCH PPS final rule, we will use them to the extent appropriate to estimate the costs of the demonstration program. In addition, we will determine the costs of the demonstration for the previously participating hospitals for the period from when their period of performance ended for the first 5-year extension period and the start of the cost report year in FY 2018 when finalized cost reports for this period are available. We will include these costs for the demonstration in future rulemaking. In previous years, we have incorporated a second component into the budget neutrality offset amounts identified in the final IPPS rules. As finalized cost reports became available, we determined the amount by which the actual costs of the demonstration for an earlier, given year differed from the estimated costs for the demonstration set forth in the final IPPS rule for the corresponding fiscal year, and we incorporated that amount into the budget neutrality offset amount for the upcoming fiscal year. We have calculated this difference for FYs 2005 through 2010 between the actual costs of the demonstration as determined from finalized cost reports once available, and estimated costs of the demonstration as identified in the applicable IPPS final rules for these years. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 With the extension of the demonstration for another 5-year period, as authorized by section 15003 of Public Law 114–255, we will continue this general procedure. Currently, finalized cost reports are now available for the 16 hospitals that completed a cost reporting period beginning in FY 2011 according to the demonstration cost-based payment methodology, as well as for the 23 hospitals that completed such a cost reporting period beginning in FY 2012. The actual costs of the demonstration for FY 2011 as determined from the finalized cost reports fell short of the estimated amount that was finalized in the FY 2011 IPPS/LTCH PPS final rule for FY 2011 by $29,971,829; the actual costs of the demonstration for FY 2012 fell short of the amount that was finalized in the FY 2012 final rule by $8,500,373. We note that, for this proposed rule, the amounts identified for the actual costs of the demonstration for each of FYs 2011 and 2012 (determined from current finalized cost reports) are less than the amounts that were identified in the final rule for each these fiscal years. Therefore, in keeping with previous policy finalized in similar situations when the costs of the demonstration fell short of the amount estimated in the corresponding year’s final rule, we will be including this component as a negative adjustment to the budget neutrality offset amount for the current fiscal year. Therefore, for FY 2019, the total amount that we are proposing to apply to the national IPPS rates is $73,191,887. If updated data become available prior to the FY 2019 IPPS/ LTCH PPS final rule, we would use them to the extent appropriate to determine the budget neutrality offset amount for FY 2019. Furthermore, if the needed cost reports are available in time for the FY 2019 IPPS/LTCH PPS final rule, we will also identify the difference between the total cost of the demonstration based on finalized FY 2013 cost reports and the estimate of the costs of the demonstration for that year, and incorporate that amount into the budget neutrality offset amount for FY 2019. In addition, when finalized cost reports for FYs 2014 through 2016 are available, we will include the difference between the actual costs as reflected on these cost reports and the amounts included in the budget neutrality offset amounts for these fiscal years in a future final rule. 10. Effect of Proposed Revision of the Hospital Inpatient Admission Order Documentation Requirements In section IV.M. of the preamble of this proposed rule, we discuss our proposal to revise the admission order documentation requirements. Specifically, we are proposing to revise the inpatient admission order policy to no longer require the presence of a written inpatient admission order in the medical record as a specific condition of Medicare Part A payment. Our actuaries estimate that any increase in Medicare payments due to the proposed change would be negligible, given the anticipated low volume of claims that would be payable under this proposed policy that would not have been paid under the current policy. PO 00000 Frm 00462 Fmt 4701 Sfmt 4702 11. Effect of Proposed Policy Changes Relating to Satellite Facilities and Excluded Units In section VI.B. of the preamble of this proposed rule, we discuss our proposal to revise the regulations applicable to satellite facilities so that the separateness and control requirements would only apply to IPPSexcluded satellite facilities that are colocated with IPPS hospitals beginning in FY 2019. This proposed policy change is premised on the belief that the policy concerns that underlie our existing satellite facility regulations (that is, inappropriate patient shifting and hospitals acting as illegal de facto units) are sufficiently moderated in situations where IPPS-excluded hospitals are co-located with each other but not IPPS hospitals, in large part due to the payment system changes that have occurred over the intervening years for IPPS-excluded hospitals, the requirements in the hospital conditions of participation (CoPs) (which are still present regardless of these proposed changes), and because such changes would be consistent with the revisions to our HwH policy that were finalized in the FY 2018 IPPS/LTCH PPS final rule, which was estimated to have a de minimus effect on Medicare payments due to the administrative nature of the changes. We also are proposing to revise our regulations to allow IPPSexcluded hospitals to operate as IPPSexcluded units, as discussed in section VI.C. of the preamble to this proposed rule, effective with cost reporting periods beginning on or after October 1, 2019. We believe that this proposal is also consistent with the revisions to our HwH policy that were finalized in the FY 2018 IPPS/LTCH PPS final rule and the proposed changes to the satellite regulation discussed previously. We do not expect any significant payment impact as a result of either of these proposed policies because these policies are primarily administrative in nature and are not expected to result in additional Medicare expenditures that would have been made, regardless of our changes, because IPPS hospital co-location is already allowed under existing regulations. 12. Effects of Continued Implementation of the Frontier Community Health Integration Project (FCHIP) Demonstration In section VI.D.2. of the preamble of this proposed rule, we discuss the implementation of the FCHIP demonstration, which allows eligible entities to develop and test new models for the delivery of health care services in eligible counties in order to improve access to and better integrate the delivery of acute care, extended care, and other health care services to Medicare beneficiaries in no more than four States. Budget neutrality estimates for the demonstration will be based on the demonstration period of August 1, 2016 through July 31, 2019. The demonstration includes three intervention prongs, under which specific waivers of Medicare payment rules will allow for enhanced payment: Telehealth, skilled nursing facility/nursing facility services, and ambulance services. These waivers are being implemented with the goal of increasing access to care with no net increase in costs. (We initially addressed E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules this demonstration in the FY 2017 IPPS/ LTCH PPS final rule (81 FR 57064 through 57065).) We specified the payment enhancements for the demonstration and selected CAHs for participation with the goal of maintaining the budget neutrality of the demonstration on its own terms (that is, the demonstration will produce savings from reduced transfers and admissions to other health care providers, thus offsetting any increase in payments resulting from the demonstration). However, because of the small size of this demonstration program and uncertainty associated with projected Medicare utilization and costs, in the FY 2017 IPPS/ LTCH PPS final rule we adopted a contingency plan (81 FR 57064 through 57065) to ensure that the budget neutrality requirement in section 123 of Public Law 110–275 is met. Accordingly, if analysis of claims data for the Medicare beneficiaries receiving services at each of the participating CAHs, as well as of other data sources, including cost reports, shows that increases in Medicare payments under the demonstration during the 3-year period are not sufficiently offset by reductions elsewhere, we will recoup the additional expenditures attributable to the demonstration through a reduction in payments to all CAHs nationwide. The demonstration is projected to impact payments to participating CAHs under both Medicare Part A and Part B. Thus, in the event that we determine that aggregate payments under the demonstration exceed the payments that would otherwise have been made, CMS will recoup payments through reductions of Medicare payments to all CAHs under both Medicare Part A and Part B. Because of the small scale of the demonstration, it would not be feasible to implement budget neutrality by reducing payments only to the participating CAHs. Therefore, we will make the reduction to payments to all CAHs, not just those participating in the demonstration, because the FCHIP demonstration is specifically designed to test innovations that affect delivery of services by this provider category. As we explained in the FY 2017 IPPS/LTCH PPS final rule (81 FR 57065), we believe that the language of the statutory budget neutrality requirement at section 123(g)(1)(B) of the Act permits the agency to implement the budget neutrality provision in this manner. The statutory language merely refers to ensuring that aggregate payments made by the Secretary do not exceed the amount which the Secretary estimates would have been paid if the demonstration project was not implemented, and does not identify the range across which aggregate payments must be held equal. Given the 3-year period of performance of the FCHIP demonstration and the time needed to conduct the budget neutrality analysis, in the event the demonstration is found not to have been budget neutral, we plan to recoup any excess costs over a period of three cost report periods, beginning in CY 2020. Therefore, this policy has no impact for any national payment system for FY 2019. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 13. Effects of Proposed Revisions of the Supporting Documentation Required for Submission of an Acceptable Medicare Cost Report In section IX.B.1. of the preamble of this proposed rule, we are proposing to incorporate the Provider Cost Reimbursement Questionnaire, Form CMS–339 (OMB No. 0938–0301), into the Organ Procurement Organization (OPO) and Histocompatibility Laboratory cost report, Form CMS–216 (OMB No. 0938–0102), which would complete our incorporation of the Form CMS–339 into all Medicare cost reports. We also are proposing to update § 413.24(f)(5)(i) to reflect that an acceptable cost report will no longer require the provider to separately submit a Provider Cost Reimbursement Questionnaire, Form CMS–339, by removing the reference to the questionnaire. There are 58 OPOs and 47 histocompatibility laboratories. This proposal would not require additional data collection from OPOs or histocompatibility laboratories. This proposal would benefit OPOs and histocompatibility laboratories because they would no longer be required to complete and submit the Form CMS–339 as a separate form independent of the Medicare cost report in order to have an acceptable cost report submission under § 413.24(f)(5)(i). As discussed in detail in section IX.B.10. of the preamble of this proposed rule, this proposal would decrease overall costs to the 58 OPOs and 47 histocompatibility laboratories by $11,178.52. In section IX.B.2. of the preamble of this proposed rule, we also are proposing that, effective for cost reports filed on or after October 1, 2018, a cost report is rejected for teaching hospitals for lack of supporting documentation if it does not include the IRIS data that contains the same total counts of direct GME FTE residents (unweighted and weighted) and of IME FTE residents as the total counts of direct GME FTE and IME FTE residents reported in the teaching hospital’s cost report. This proposal would continue to require all teaching hospitals to submit the IRIS data under § 413.24(f)(5) to have an acceptable cost report submission. However, this proposal would require that this data must correspond to the same total counts of direct GME FTE residents (unweighted and weighted) and of IME FTE residents as the total counts of direct GME FTE and IME FTE residents reported in the teaching hospital’s cost report. Providers are required under §§ 413.20 and 413.24 to maintain data that substantiates their costs. IRIS is the source document for reporting FTEs in all teaching hospitals’ cost reports. To enhance the contractors’ ability to review duplicates and to ensure residents are not being doublecounted, we believe it is necessary and appropriate to require that the total unweighted and weighted FTE counts on the IRIS for direct GME and IME respectively, for all applicable allopathic, osteopathic, dental, and podiatric residents that a hospital may train, must equal the same total unweighted and weighted FTE counts for direct GME and IME reported on Worksheet E–4 and Worksheet E, Part A. Because all teaching hospitals are already required to submit the IRIS data under § 413.24(f)(5) to have an acceptable cost report submission, there are PO 00000 Frm 00463 Fmt 4701 Sfmt 4702 20625 no additional burdens or expenses placed upon teaching hospitals as a result of our proposal to require that the supporting documents submitted (the IRIS data) correspond to the amounts reported in the cost report in order to have an acceptable cost report submission. In section IX.B.3. of the preamble of this proposed rule, we are proposing that, effective for cost reporting periods beginning on or after October 1, 2018, for providers claiming Medicare bad debt reimbursement, a cost report is rejected for lack of supporting documentation if it does not include a Medicare bad debt listing that corresponds to the bad debt amounts claimed in the provider’s Medicare cost report. This proposal would not require providers claiming Medicare bad debt reimbursement to collect additional data. Providers are required under §§ 413.20 and 413.24 to maintain data that substantiates their costs. The cost report worksheet that incorporated Form CMS–339 continues to require providers who claim Medicare bad debt reimbursement to submit a bad debt listing with the cost report in order to have an acceptable cost report submission. Because of the existing requirement, there are no additional burdens or expenses placed upon providers to ensure that the supporting documentation, the bad debt listing, corresponds to the amounts reported in the cost report in order to have an acceptable cost report submission. In section IX.B.4. of the preamble of this proposed rule, we are proposing that, effective for cost reporting periods beginning on or after October 1, 2018, for hospitals claiming a disproportionate share hospital payment adjustment, a cost report is rejected for lack of supporting documentation if it does not include a detailed listing of the hospital’s Medicaid eligible days that corresponds to the Medicaid eligible days claimed in the hospital’s cost report. Providers are required under §§ 413.20 and 413.24 to maintain data that substantiates their costs. The provider must furnish such information to the contractor as may be necessary to assure proper payment by the program. Currently, when the supporting documentation regarding Medicaid eligible days is not submitted by DSH eligible hospitals with their cost report, contractors must request it. Tentative program reimbursement payments are often issued to providers upon the submission of the cost report, and a subsequent submission of supporting documentation may reveal an overstatement of a hospital’s Medicaid eligible days with a resulting overpayment to the provider. Requiring a provider to submit, as a supporting document with its cost report, a listing of the provider’s Medicaid eligible days that corresponds to the Medicaid eligible days claimed in the DSH eligible hospital’s cost report would be consistent with the recordkeeping and cost reporting requirements of §§ 413.20 and 413.24, which require providers to maintain data that substantiates their costs. This proposal to require providers to submit the supporting documentation with the cost report would also facilitate accurate provider payment and E:\FR\FM\07MYP2.SGM 07MYP2 20626 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules the contractor’s review and verification of the cost report. This proposal would not require hospitals claiming a DSH payment adjustment to collect additional data. Hospitals claiming a DSH payment adjustment are already collecting the data in order to report the hospital’s Medicaid eligible days in the hospital’s cost report. Because the existing burden estimate for a DSH eligible hospital’s cost report already reflects the requirement that these hospitals collect, maintain, and submit this data when requested, there is no additional burden placed upon hospitals as a result of our proposal to require them to submit these supporting documents along with their cost report, and to ensure the supporting documentation corresponds to the amounts reported in the cost report in order to have an acceptable cost report submission. In section IX.B.5. of the preamble of this proposed rule, we are proposing that, effective for cost reporting periods beginning on or after October 1, 2018, for DSH eligible hospitals reporting charity care and/or uninsured discounts, a cost report is rejected for lack of supporting documentation if it does not include a detailed listing of charity care and/or uninsured discounts that corresponds to the amounts claimed in the provider’s cost report. Providers are required under §§ 413.20 and 413.24 to maintain data that substantiates their costs. The provider must furnish such information to the contractor as may be necessary to assure proper payment by the program. Contractors regularly request that hospitals claiming charity care and/or uninsured discounts submit documentation to support their charity care and/or uninsured discounts reported in their cost report. This proposal to require providers to submit this supporting documentation with the cost report would facilitate accurate payment to the provider and the contractor’s review and verification of the cost report. This proposal would not require DSH eligible hospitals reporting charity care and/ or uninsured discounts to collect additional data but would require them to submit the supporting documentation with the cost report rather than at a later time. Because the existing burden estimate for a DSH eligible hospital’s cost report already reflects the requirement that these hospitals collect, maintain, and submit this data when requested, there is no additional burden placed upon DSH eligible hospitals as a result of our proposal to require them to submit these supporting documents along with their cost report and to ensure the supporting documentation corresponds to the amounts reported in the cost report in order to have an acceptable cost report submission. In section IX.B.6. of the preamble of this proposed rule, we are proposing that, effective for cost reporting periods beginning on or after October 1, 2018, for a provider reporting costs on its cost report that are allocated from a home office or chain organization, a cost report is rejected for lack of supporting documentation if it does not include a copy of the Home Office Cost Statement completed by the home office or chain organization that corresponds to the amounts allocated from the home office or chain organization to the provider’s cost report. This proposal would not require providers reporting costs on their cost report that are allocated from a home office or chain organization to collect additional data. Instead, this proposal would codify our longstanding policy requiring costs allocated from a home office or chain organization to a provider be substantiated on the provider’s cost report. Providers are required under §§ 413.20 and 413.24 to maintain data that substantiates their costs. With our proposal, we anticipate more providers will submit the Home Office Cost Statement to support the amounts reported in their cost reports, in order to have an acceptable cost report submission. Because the existing burden estimate for a provider’s cost report already reflects the requirement that providers collect, maintain, and submit this data, there is no additional burden placed upon providers as a result of our proposal to require them to submit these supporting documents along with their cost report, in order to have an acceptable cost report submission. 14. Effect of Proposed Revisions Regarding Physician Certification and Recertification of Claims In section XI. of the preamble of this proposed rule, we discuss our proposal to remove from the regulations the requirement that a physician statement of certification or recertification must itself indicate where that supporting information is to be found in the medical record. While moving this provision would have no substantive impact, we have examined the impact of eliminating the Projected dollars in error Label SNF .............................................. SNF .............................................. daltland on DSKBBV9HB2PROD with PROPOSALS2 Provider type ELON Claims in Error ................. ELON Claims Not in Error ........... Overall, there is a 1.4 percentage point reduction in the improper payment rate in the SNF setting alone. The impact on the SNF setting is significant. Yet, if this 1.4 percentage point is considered uniformly across all provider settings, the magnitude of this provision and its impact on the Medicare Trust funds is extensive. Moreover, by eliminating these denials and subsequent VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 $3,259,219,132 2,776,135,742 Projected dollars paid $34,949,922,572 34,949,922,572 appeals, MACS would have more time to dedicate to other more pertinent appeal issues. I. Effects of Proposed Changes in the Capital IPPS 1. General Considerations For the impact analysis presented below, we used data from the December 2017 update PO 00000 Frm 00464 Fmt 4701 Sfmt 4702 provision pertaining to where the supporting information is to be found and believe that substantial time and money would be saved by physicians when completing both certification and recertification statements. On average, we estimate that it requires approximately 9 minutes for the precise location of the various elements to be identified and recorded in the statements. This time currently is expended not only with the completion of an initial certification statement but each time a recertification statement is completed. While the proposed elimination of this provision would benefit physicians in terms of reducing the amount of time expended in completing certification and recertification statements, it would also benefit physicians whose claims have been denied either because the physician failed to include this information in the certification and/or recertification statement or failed to accurately account for the information in the statements. In fact, these claims are routinely denied even in situations where the location of the information within a paper medical record is readily apparent to the reviewer. Given the improved capabilities of searchable electronic health records, these types of denials are increasingly unnecessary. We also expect a positive impact for beneficiaries because beneficiaries would no longer receive notices that these claims were denied, which inevitably caused confusion given the nature of these denials. Moreover, the denial of claims due to the failure to include the location of information within a paper medical record results in appeals. As an example, these denials are significant for skilled nursing facility (SNF) claims. In the SNF setting, a required element of the certification and recertification statement is the required estimated length of need (ELON) element. The table below shows in Row 1 the SNF improper payment rates for claims in error (certification statement does not indicate where in the medical record the required information of ELON is to be found; however the medical record contains the missing information); and in Row 2, the error rate if these claims are no longer considered to be erroneous (due to removal of the provision in the regulations). The data shown in the table are from the 2017 CERT reporting period and includes claims from July 1, 2015 through June 30, 2016. Improper payment rate (%) 9.3 7.9 95 percent confidence interval 7.6–11.0 6.3–9.5 of the FY 2017 MedPAR file and the December 2017 update of the ProviderSpecific File (PSF) that is used for payment purposes. Although the analyses of the proposed changes to the capital prospective payment system do not incorporate cost data, we used the December 2017 update of the most recently available hospital cost report data (FYs 2015 and 2016) to categorize E:\FR\FM\07MYP2.SGM 07MYP2 20627 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules hospitals. Our analysis has several qualifications. We use the best data available and make assumptions about case-mix and beneficiary enrollment as described later in this section. Due to the interdependent nature of the IPPS, it is very difficult to precisely quantify the impact associated with each change. In addition, we draw upon various sources for the data used to categorize hospitals in the tables. In some cases (for instance, the number of beds), there is a fair degree of variation in the data from different sources. We have attempted to construct these variables with the best available sources overall. However, it is possible that some individual hospitals are placed in the wrong category. Using cases from the December 2017 update of the FY 2017 MedPAR file, we simulated payments under the capital IPPS for FY 2018 and proposed payments for FY 2019 for a comparison of total payments per case. Any short-term, acute care hospitals not paid under the general IPPS (for example, hospitals in Maryland) are excluded from the simulations. The methodology for determining a capital IPPS payment is set forth at § 412.312. The basic methodology for calculating the proposed capital IPPS payments in FY 2019 is as follows: (Standard Federal Rate) × (DRG weight) × (GAF) × (COLA for hospitals located in Alaska and Hawaii) × (1 + DSH Adjustment Factor + IME adjustment factor, if applicable). In addition to the other adjustments, hospitals may receive outlier payments for those cases that qualify under the threshold established for each fiscal year. We modeled payments for each hospital by multiplying the capital Federal rate by the GAF and the hospital’s case-mix. We then added estimated payments for indirect medical education, disproportionate share, and outliers, if applicable. For purposes of this impact analysis, the model includes the following assumptions: • We estimate that the Medicare case-mix index would increase by 0.5 percent in both FYs 2018 and 2019. • We estimate that Medicare discharges would be approximately 11.0 million in FY 2018 and 11.1 million in FY 2019. • The capital Federal rate was updated beginning in FY 1996 by an analytical framework that considers changes in the prices associated with capital-related costs and adjustments to account for forecast error, changes in the case-mix index, allowable changes in intensity, and other factors. As discussed in section III.A.1.a. of the Addendum to this proposed rule, the proposed update is 1.2 percent for FY 2019. • In addition to the proposed FY 2019 update factor, the proposed FY 2019 capital Federal rate was calculated based on a proposed GAF/DRG budget neutrality adjustment factor of 0.9997 and a proposed outlier adjustment factor of 0.9494. 2. Results We used the actuarial model previously described in section I.I. of Appendix A of this proposed rule to estimate the potential impact of our proposed changes for FY 2019 on total capital payments per case, using a universe of 3,257 hospitals. As previously described, the individual hospital payment parameters are taken from the best available data, including the December 2017 update of the FY 2017 MedPAR file, the December 2017 update to the PSF, and the most recent cost report data from the December 2017 update of HCRIS. In Table III, we present a comparison of estimated total payments per case for FY 2018 and estimated proposed total payments per case for FY 2019 based on the proposed FY 2019 payment policies. Column 2 shows estimates of payments per case under our model for FY 2018. Column 3 shows estimates of proposed payments per case under our model for FY 2019. Column 4 shows the total percentage change in payments from FY 2018 to FY 2019. The change represented in Column 4 includes the proposed 1.2 percent update to the capital Federal rate and other proposed changes in the adjustments to the capital Federal rate. The comparisons are provided by: (1) Geographic location; (2) region; and (3) payment classification. The simulation results show that, on average, capital payments per case in FY 2019 are expected to increase as compared to capital payments per case in FY 2018. This expected increase overall is largely due to the proposed 1.2 percent update to the capital Federal rate for FY 2019. Hospitals within both rural and urban regions may experience an increase or a decrease in capital payments per case due to proposed changes in the GAFs. These regional effects of the proposed changes to the GAFs on capital payments are consistent with the projected changes in payments due to proposed changes in the wage index (and policies affecting the wage index) as shown in Table I in section I.G. of this Appendix A. The net impact of these proposed changes is an estimated 1.7 percent change in capital payments per case from FY 2018 to FY 2019 for all hospitals (as shown in Table III). The geographic comparison shows that, on average, hospitals in urban classifications would experience an increase in capital IPPS payments per case in FY 2019 as compared to FY 2018, while those hospitals in rural classifications would experience a decrease in capital IPPS payments. Capital IPPS payments per case would increase by an estimated 2.9 percent for hospitals in large urban areas and by 1.0 for hospitals in other urban areas, while payments to hospitals in rural areas would decrease by 1.4 percent, from FY 2018 to FY 2019. The comparisons by region show that the estimated increases in capital payments per case from FY 2018 to FY 2019 in urban areas would range from a 0.3 percent increase for the Mountain urban region to a 3.7 percent increase for the Pacific urban region. For rural regions, the Mountain rural region is projected to experience the largest increase in capital IPPS payments per case of 0.9 percent, while the East South Central rural region is projected to experience a decrease in capital IPPS payments per case of 2.9 percent. Hospitals of all types of ownership (that is, voluntary hospitals, government hospitals, and proprietary hospitals) are expected to experience an increase in capital payments per case from FY 2018 to FY 2019. The proposed increase in capital payments for voluntary hospitals is estimated to be 1.5 percent. Government hospitals and proprietary hospitals are expected to experience an increase in capital IPPS payments of 2.9 and 1.8 percent, respectively. Section 1886(d)(10) of the Act established the MGCRB. Hospitals may apply for reclassification for purposes of the wage index for FY 2019. Reclassification for wage index purposes also affects the GAFs because that factor is constructed from the hospital wage index. To present the effects of the hospitals being reclassified as of the publication of this proposed rule for FY 2019, we show the average capital payments per case for reclassified hospitals for FY 2019. Urban reclassified hospitals are expected to experience an increase in capital payments of 0.7 percent; urban nonreclassified hospitals are expected to experience an increase in capital payments of 2.7 percent. The estimated percentage decrease for rural reclassified hospitals is 2.3 percent, and for rural nonreclassified hospitals, the estimated percentage decrease in capital payments is 0.1 percent. TABLE III—COMPARISON OF TOTAL PAYMENTS PER CASE daltland on DSKBBV9HB2PROD with PROPOSALS2 [FY 2018 payments compared to proposed FY 2019 payments] Number of hospitals By Geographic Location: All hospitals .............................................................................................. Large urban areas (populations over 1 million) ....................................... Other urban areas (populations of 1 million of fewer) ............................. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00465 Fmt 4701 Sfmt 4702 Average FY 2018 payments/ case 3,257 1,310 1,170 E:\FR\FM\07MYP2.SGM 948 1,021 938 07MYP2 Proposed average FY 2019 payments/ case 964 1,051 947 Change 1.7 2.9 1.0 20628 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules TABLE III—COMPARISON OF TOTAL PAYMENTS PER CASE—Continued [FY 2018 payments compared to proposed FY 2019 payments] daltland on DSKBBV9HB2PROD with PROPOSALS2 Number of hospitals Urban hospitals ......................................................................................... 0–99 beds .......................................................................................... 100–199 beds .................................................................................... 200–299 beds .................................................................................... 300–499 beds .................................................................................... 500 or more beds .............................................................................. Rural hospitals .......................................................................................... 0–49 beds .......................................................................................... 50–99 beds ........................................................................................ 100–149 beds .................................................................................... 150–199 beds .................................................................................... 200 or more beds .............................................................................. By Region: Urban by Region ...................................................................................... New England ..................................................................................... Middle Atlantic ................................................................................... South Atlantic .................................................................................... East North Central ............................................................................. East South Central ............................................................................ West North Central ............................................................................ West South Central ........................................................................... Mountain ............................................................................................ Pacific ................................................................................................ Puerto Rico ........................................................................................ Rural by Region ........................................................................................ New England ..................................................................................... Middle Atlantic ................................................................................... South Atlantic .................................................................................... East North Central ............................................................................. East South Central ............................................................................ West North Central ............................................................................ West South Central ........................................................................... Mountain ............................................................................................ Pacific ................................................................................................ By Payment Classification: All hospitals .............................................................................................. Large urban areas (populations over 1 million) ....................................... Other urban areas (populations of 1 million of fewer) ............................. Rural areas ............................................................................................... Teaching Status: Non-teaching ............................................................................................ Fewer than 100 Residents ....................................................................... 100 or more Residents ............................................................................. Urban DSH: Non-DSH ........................................................................................... 100 or more beds .............................................................................. Less than 100 beds ........................................................................... Rural DSH: Sole Community (SCH/EACH) .......................................................... Referral Center (RRC/EACH) ............................................................ Other Rural: 100 or more beds ....................................................................... Less than 100 beds ................................................................... Urban teaching and DSH: Both teaching and DSH .................................................................... Teaching and no DSH ....................................................................... No teaching and DSH ....................................................................... No teaching and no DSH .................................................................. Rural Hospital Types: RRC/EACH ............................................................................................... SCH/EACH ............................................................................................... SCH, RRC and EACH .............................................................................. Hospitals Reclassified by the Medicare Geographic Classification Review Board: FY2018 Reclassifications:. All Urban Reclassified ....................................................................... All Urban Non-Reclassified ............................................................... VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00466 Fmt 4701 Sfmt 4702 Average FY 2018 payments/ case Proposed average FY 2019 payments/ case Change 2,480 638 763 438 427 214 777 299 279 116 44 39 979 795 843 903 989 1,175 669 548 605 680 731 815 999 818 860 918 1,008 1,200 660 559 616 655 705 786 2.0 2.9 2.0 1.7 1.9 2.1 ¥1.4 2.0 1.8 ¥3.7 ¥3.5 ¥3.6 2,480 113 310 401 385 147 158 378 163 374 51 777 20 53 122 114 150 94 147 54 23 979 1,070 1,074 871 942 825 963 887 1,021 1,244 448 669 927 643 622 679 623 710 594 741 865 999 1,093 1,091 886 953 843 980 912 1,024 1,291 452 660 919 637 609 672 605 704 588 748 858 2.0 2.1 1.6 1.7 1.1 2.1 1.8 2.8 0.3 3.7 1.0 ¥1.4 ¥0.9 ¥0.9 ¥2.1 ¥1.0 ¥2.9 ¥0.9 ¥1.0 0.9 ¥0.8 3,257 1,325 956 976 948 1,020 903 869 964 1,050 924 852 1.7 2.9 2.3 ¥1.9 2,162 846 249 804 916 1,316 816 930 1,346 1.5 1.5 2.4 520 1,483 365 870 993 724 888 1,020 748 2.1 2.7 3.4 258 367 663 941 660 919 ¥0.5 ¥2.4 27 127 892 537 855 550 ¥4.2 2.5 818 88 1,030 345 1,064 917 842 852 1,095 933 861 874 2.9 1.7 2.3 2.6 328 311 133 975 750 807 964 752 792 ¥1.1 0.2 ¥1.9 633 1,795 999 972 1,006 998 0.7 2.7 E:\FR\FM\07MYP2.SGM 07MYP2 20629 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules TABLE III—COMPARISON OF TOTAL PAYMENTS PER CASE—Continued [FY 2018 payments compared to proposed FY 2019 payments] Number of hospitals daltland on DSKBBV9HB2PROD with PROPOSALS2 All Rural Reclassified ........................................................................ All Rural Non-Reclassified ................................................................. All Section 401 Reclassified Hospitals .............................................. Other Reclassified Hospitals (Section 1886(d)(8)(B)) ....................... Type of Ownership: Voluntary ........................................................................................... Proprietary ......................................................................................... Government ....................................................................................... Medicare Utilization as a Percent of Inpatient Days: 0–25 ................................................................................................... 25–50 ................................................................................................. 50–65 ................................................................................................. Over 65 .............................................................................................. Invalid/Missing Data .......................................................................... J. Effects of Proposed Payment Rate Changes and Proposed Policy Changes Under the LTCH PPS 1. Introduction and General Considerations In section VII. of the preamble of this proposed rule and section V. of the Addendum to this proposed rule, we set forth the proposed annual update to the payment rates for the LTCH PPS for FY 2019. In the preamble of this proposed rule, we specify the statutory authority for the provisions that are presented, identify the proposed policies, and present rationales for our decisions as well as alternatives that were considered. In this section of Appendix A to this proposed rule, we discuss the impact of the proposed changes to the payment rate, factors, and other payment rate policies related to the LTCH PPS that are presented in the preamble of this proposed rule in terms of their estimated fiscal impact on the Medicare budget and on LTCHs. There are 409 LTCHs included in this impact analysis. We note that, although there are currently approximately 417 LTCHs, for purposes of this impact analysis, we excluded the data of all-inclusive rate providers consistent with the development of the proposed FY 2019 MS–LTC–DRG relative weights (discussed in section VII.B.3.c. of the preamble of this proposed rule. Moreover, in the claims data used for this proposed rule, 1 of these 409 LTCHs only have claims for site neutral payment rate cases and are thus not included in our impact analysis for LTCH PPS standard Federal payment rate cases.) In the impact analysis, we used the proposed payment rate, factors, and policies presented in this proposed rule, the proposed 1.0115 percent annual update to the LTCH PPS standard Federal payment rate, the proposed update to the MS–LTC–DRG classifications and relative weights, the proposed update to the wage index values and labor-related share, the proposed elimination of the 25pecent threshold policy and corresponding proposed one-time permanent budget neutrality adjustment (discussed in VII.E. of the preamble of this proposed rule), and the best available claims and CCR data to VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Frm 00467 Fmt 4701 Sfmt 4702 Proposed average FY 2019 payments/ case Change 278 452 246 47 708 612 1,018 654 692 611 996 660 ¥2.3 ¥0.1 ¥2.1 0.9 1,901 854 501 963 856 985 978 872 1,013 1.5 1.8 2.9 546 2,121 477 73 39 1,105 948 781 547 1,108 1,128 965 786 558 1,311 2.0 1.8 0.6 2.2 18.4 estimate the proposed change in payments for FY 2019. Under the dual rate LTCH PPS payment structure, payment for LTCH discharges that meet the criteria for exclusion from the site neutral payment rate (that is, LTCH PPS standard Federal payment rate cases) is based on the LTCH PPS standard Federal payment rate. Consistent with the statute, the site neutral payment rate is the lower of the IPPS comparable per diem amount as determined under § 412.529(d)(4), including any applicable outlier payments as specified in § 412.525(a); or 100 percent of the estimated cost of the case as determined under existing § 412.529(d)(2). In addition, there are two separate HCO targets—one for LTCH PPS standard Federal payment rate cases and one for site neutral payment rate cases. The statute also establishes a transitional payment method for cases that are paid the site neutral payment rate for LTCH discharges occurring in cost reporting periods beginning during FY 2016 through FY 2019. The transitional payment amount for site neutral payment rate cases is a blended payment rate, which is calculated as 50 percent of the applicable site neutral payment rate amount for the discharge as determined under § 412.522(c)(1) and 50 percent of the applicable LTCH PPS standard Federal payment rate for the discharge determined under § 412.523. Based on the best available data for the 409 LTCHs in our database that were considered in the analyses used for this proposed rule, we estimate that overall LTCH PPS payments in FY 2019 would decrease by approximately 0.1 percent (or approximately $5 million) based on the proposed rates and factors presented in section VII. of the preamble and section V. of the Addendum to this proposed rule. Based on the FY 2017 LTCH cases that were used for the analyses in this proposed rule, approximately 36 percent of those cases were classified as site neutral payment rate cases (that is, 36 percent of LTCH cases did not meet the patient-level criteria for exclusion from the site neutral payment rate). Our Office of the Actuary estimates that the PO 00000 Average FY 2018 payments/ case percent of LTCH PPS cases that will be paid at the site neutral payment rate in FY 2018 will not change significantly from the most recent historical data. Taking into account the transitional blended payment rate and other changes that will apply to the site neutral payment rate cases in FY 2019, we estimate that aggregate LTCH PPS payments for these site neutral payment rate cases will decrease by approximately 1.1 percent (or approximately $11 million). Approximately 64 percent of LTCH cases are expected to meet the patient-level criteria for exclusion from the site neutral payment rate in FY 2019, and would be paid based on the LTCH PPS standard Federal payment rate for the full year. We estimate that total LTCH PPS payments for these LTCH PPS standard Federal payment rate cases in FY 2019 would increase approximately 0.2 percent (or approximately $6 million). This estimated increase in LTCH PPS payments for LTCH PPS standard Federal payment rate cases in FY 2019 is primarily due to the proposed 1.15 percent annual update to the LTCH PPS standard Federal payment rate for FY 2019 (discussed in section V.A. of the Addendum to this proposed rule) and the proposed ¥0.9 percent one-time permanent budget neutrality adjustment under our proposal to eliminate the 25-percent threshold policy. Based on the 409 LTCHs that were represented in the FY 2017 LTCH cases that were used for the analyses in this proposed rule presented in this Appendix, we estimate that aggregate FY 2019 LTCH PPS payments would be approximately $4.510 billion, as compared to estimated aggregate FY 2018 LTCH PPS payments of approximately $4.515 billion, resulting in an estimated overall decrease in LTCH PPS payments of approximately $5 million. We note that the estimated $5 million decrease in LTCH PPS payments in FY 2019 does not reflect changes in LTCH admissions or case-mix intensity, which would also affect the overall payment effects of the proposed policies in this proposed rule. The LTCH PPS standard Federal payment rate for FY 2018 is $41,415.11. For FY 2019, we are proposing to establish an LTCH PPS E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20630 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules standard Federal payment rate of $41,482.98 which reflects the proposed 1.15 percent annual update to the LTCH PPS standard Federal payment rate, the proposed area wage budget neutrality factor of 0.999713 to ensure that the changes in the wage indexes and labor-related share do not influence aggregate payments, and the proposed onetime permanent budget neutrality adjustment of 0.990535 to ensure that our proposed elimination of the 25-percent threshold policy (discussed in VII.E. of the preamble of this proposed rule) do not influence aggregate LTCH PPS payments. For LTCHs that fail to submit data for the LTCH QRP, in accordance with section 1886(m)(5)(C) of the Act, we are proposing to establish an LTCH PPS standard Federal payment rate of $40,662.75. This proposed LTCH PPS standard Federal payment rate reflects the proposed updates and factors previously described as well as the required 2.0 percentage point reduction to the annual update for failure to submit data under the LTCH QRP. We note that the factors previously described to determine the proposed FY 2019 LTCH PPS standard Federal payment rate are applied to the FY 2018 LTCH PPS standard Federal rate set forth under § 412.523(c)(3)(xiv) (that is, $41,415.11). Table IV shows the estimated impact for LTCH PPS standard Federal payment rate cases. The estimated change attributable solely to the proposed annual update of 1.15 percent to the LTCH PPS standard Federal payment rate is projected to result in an increase of 1.1 percent in payments per discharge for LTCH PPS standard Federal payment rate cases from FY 2018 to FY 2019, on average, for all LTCHs (Column 6). In addition to the proposed annual update to the LTCH PPS standard Federal payment rate for FY 2019, the estimated increase of 1.1 percent shown in Column 6 of Table IV also includes estimated payments for SSO cases that would be paid using methodologies that are not affected by the annual update to the LTCH PPS standard Federal payment rate, as well as the reduction that is applied to the annual update of LTCHs that do not submit the required LTCH QRP data. Therefore, for all hospital categories, the projected increase in payments based on the proposed LTCH PPS standard Federal payment rate to LTCH PPS standard Federal payment rate cases is somewhat less than the 1.15 percent annual update for FY 2019. For FY 2019, we are proposing to update the wage index values based on the most recent available data, and we are proposing to continue to use labor market areas based on the OMB CBSA delineations (as discussed in section V.B. of the Addendum to this proposed rule). In addition, we are proposing to maintain the labor-related share at 66.2 percent under the LTCH PPS for FY 2019, based on the most recent available data on the relative importance of the labor-related share of operating and capital costs of the 2013-based LTCH market basket. We also are proposing to apply a proposed area wage level budget neutrality factor of 0.999713 to ensure that the changes to the wage data and labor-related share do not result in any change in estimated aggregate LTCH PPS VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 payments to LTCH PPS standard Federal payment rate cases. As we discuss in VII.E. of the preamble of this proposed rule, we are proposing to eliminate the 25-percent threshold policy in a budget neutral manner. Therefore, for FY 2019, we are proposing to apply a one-time permanent budget neutrality factor of 0.990535 to ensure the proposed elimination of the 25-percent threshold policy does not result in any change in estimated aggregate LTCH PPS payments. We currently estimate total HCO payments for LTCH PPS standard Federal payment rate cases would decrease from FY 2018 to FY 2019. Based on the FY 2017 LTCH cases that were used for the analyses in this proposed rule, we estimate that the FY 2018 HCO threshold of $27,381 (as established in the FY 2018 IPPS/LTCH PPS final rule) would result in estimated HCO payments for LTCH PPS standard Federal payment rate cases in FY 2018 that are above the 7.975 percent target. Specifically, we currently estimate that HCO payments for LTCH PPS standard Federal payment rate cases would be approximately 7.988 percent of the estimated total LTCH PPS standard Federal payment rate payments in FY 2018. Combined with our estimate that FY 2019 HCO payments for LTCH PPS standard Federal payment rate cases would be 7.975 percent of estimated total LTCH PPS standard Federal payment rate payments in FY 2019, this would result in a negligible estimated decrease in HCO payments of less than 0.1 percent between FY 2018 and FY 2019. We note that, consistent with past practice, in calculating these estimated HCO payments, we increased estimated costs by our actuaries’ projected market basket percentage increase factor. Table IV shows the estimated impact of the proposed payment rate and proposed policy changes on LTCH PPS payments for LTCH PPS standard Federal payment rate cases for FY 2019 by comparing estimated FY 2018 LTCH PPS payments to estimated FY 2019 LTCH PPS payments. (As noted earlier, our analysis does not reflect changes in LTCH admissions or case-mix intensity.) We note that these impacts do not include LTCH PPS site neutral payment rate cases for the reasons discussed in section I.J.4. of this Appendix. As we discuss in detail throughout this proposed rule, based on the most recent available data, we believe that the provisions of this proposed rule relating to the LTCH PPS, which are projected to result in an overall decrease in estimated aggregate LTCH PPS payments, and the resulting LTCH PPS payment amounts would result in appropriate Medicare payments that are consistent with the statute. 2. Impact on Rural Hospitals For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of an urban area and has fewer than 100 beds. As shown in Table IV, we are projecting no change in estimated payments for LTCH PPS standard Federal payment rate cases for LTCHs located in a rural area. This estimated impact is based on the FY 2017 data for the 21 rural LTCHs (out of 409 LTCHs) that were used for the impact analyses shown in Table IV. PO 00000 Frm 00468 Fmt 4701 Sfmt 4702 3. Anticipated Effects of Proposed LTCH PPS Payment Rate Changes and Policy Changes a. Budgetary Impact Section 123(a)(1) of the BBRA requires that the PPS developed for LTCHs ‘‘maintain budget neutrality.’’ We believe that the statute’s mandate for budget neutrality applies only to the first year of the implementation of the LTCH PPS (that is, FY 2003). Therefore, in calculating the FY 2003 standard Federal payment rate under § 412.523(d)(2), we set total estimated payments for FY 2003 under the LTCH PPS so that estimated aggregate payments under the LTCH PPS were estimated to equal the amount that would have been paid if the LTCH PPS had not been implemented. Section 1886(m)(6)(A) of the Act establishes a dual rate LTCH PPS payment structure with two distinct payment rates for LTCH discharges beginning in FY 2016. Under this statutory change, LTCH discharges that meet the patient-level criteria for exclusion from the site neutral payment rate (that is, LTCH PPS standard Federal payment rate cases) are paid based on the LTCH PPS standard Federal payment rate. LTCH discharges paid at the site neutral payment rate are generally paid the lower of the IPPS comparable per diem amount, including any applicable HCO payments, or 100 percent of the estimated cost of the case. The statute also establishes a transitional payment method for cases that are paid at the site neutral payment rate for LTCH discharges occurring in cost reporting periods beginning during FY 2016 through FY 2019, under which the site neutral payment rate cases are paid based on a blended payment rate calculated as 50 percent of the applicable site neutral payment rate amount for the discharge and 50 percent of the applicable LTCH PPS standard Federal payment rate for the discharge. As discussed in section I.J. of this Appendix, we project a decrease in aggregate LTCH PPS payments in FY 2019 of approximately $5 million. This estimated decrease in payments reflects the projected increase in payments to LTCH PPS standard Federal payment rate cases of approximately $6 million and the projected decrease in payments to site neutral payment rate cases of approximately $11 million under the dual rate LTCH PPS payment rate structure required by the statute beginning in FY 2016. As discussed in section V.D. of the Addendum to this proposed rule, our actuaries project cost and resource changes for site neutral payment rate cases due to the site neutral payment rates required under the statute. Specifically, our actuaries project that the costs and resource use for cases paid at the site neutral payment rate will likely be lower, on average, than the costs and resource use for cases paid at the LTCH PPS standard Federal payment rate, and will likely mirror the costs and resource use for IPPS cases assigned to the same MS–DRG. While we are able to incorporate this projection at an aggregate level into our payment modeling, because the historical claims data that we are using in this proposed rule to project estimated FY 2019 E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules LTCH PPS payments (that is, FY 2017 LTCH claims data) do not reflect this actuarial projection, we are unable to model the impact of the proposed change in LTCH PPS payments for site neutral payment rate cases at the same level of detail with which we are able to model the impacts of the proposed changes to LTCH PPS payments for LTCH PPS standard Federal payment rate cases. Therefore, Table IV only reflects proposed changes in LTCH PPS payments for LTCH PPS standard Federal payment rate cases and, unless otherwise noted, the remaining discussion in section I.J.4. of this Appendix refers only to the impact on proposed LTCH PPS payments for LTCH PPS standard Federal payment rate cases. In the following section, we present our provider impact analysis for the proposed changes that affect LTCH PPS payments for LTCH PPS standard Federal payment rate cases. b. Impact on Providers The basic methodology for determining a per discharge payment for LTCH PPS standard Federal payment rate cases is currently set forth under §§ 412.515 through 412.538. In addition to adjusting the LTCH PPS standard Federal payment rate by the MS–LTC–DRG relative weight, we make adjustments to account for area wage levels and SSOs. LTCHs located in Alaska and Hawaii also have their payments adjusted by a COLA. Under our application of the dual rate LTCH PPS payment structure, the LTCH PPS standard Federal payment rate is generally only used to determine payments for LTCH PPS standard Federal payment rate cases (that is, those LTCH PPS cases that meet the statutory criteria to be excluded from the site neutral payment rate). LTCH discharges that do not meet the patient-level criteria for exclusion are paid the site neutral payment rate, which we are calculating as the lower of the IPPS comparable per diem amount as determined under § 412.529(d)(4), including any applicable outlier payments, or 100 percent of the estimated cost of the case as determined under existing § 412.529(d)(2). In addition, when certain thresholds are met, LTCHs also receive HCO payments for both LTCH PPS standard Federal payment rate cases and site neutral payment rate cases that are paid at the IPPS comparable per diem amount. To understand the impact of the proposed changes to the LTCH PPS payments for LTCH PPS standard Federal payment rate cases presented in this proposed rule on different categories of LTCHs for FY 2019, it is necessary to estimate payments per discharge for FY 2018 using the rates, factors, and the policies established in the FY 2018 IPPS/ LTCH PPS final rule and estimate payments per discharge for FY 2019 using the proposed rates, factors, and the policies in this FY 2019 IPPS/LTCH PPS proposed rule (as discussed in section VII. of the preamble of this proposed rule and section V. of the Addendum to this proposed rule). As discussed elsewhere in this proposed rule, VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 these estimates are based on the best available LTCH claims data and other factors, such as the application of inflation factors to estimate costs for HCO cases in each year. The resulting analyses can then be used to compare how our policies applicable to LTCH PPS standard Federal payment rate cases affect different groups of LTCHs. For the following analysis, we group hospitals based on characteristics provided in the OSCAR data, cost report data in HCRIS, and PSF data. Hospital groups included the following: • Location: Large urban/other urban/rural. • Participation date. • Ownership control. • Census region. • Bed size. c. Calculation of Proposed LTCH PPS Payments for LTCH PPS Standard Federal Payment Rate Cases For purposes of this impact analysis, to estimate the per discharge payment effects of our proposed policies on proposed payments for LTCH PPS standard Federal payment rate cases, we simulated FY 2018 and proposed FY 2019 payments on a case-by-case basis using historical LTCH claims from the FY 2017 MedPAR files that met or would have met the criteria to be paid at the LTCH PPS standard Federal payment rate if the statutory patient-level criteria had been in effect at the time of discharge for all cases in the FY 2017 MedPAR files. For modeling FY 2018 LTCH PPS payments, we used the FY 2018 standard Federal payment rate of $41,415.11 (or $ 40,595.02 for LTCHs that failed to submit quality data as required under the requirements of the LTCH QRP). Similarly, for modeling payments based on the proposed FY 2019 LTCH PPS standard Federal payment rate, we used the proposed FY 2019 standard Federal payment rate of $41,482.98 (or $40,662.75 for LTCHs that failed to submit quality data as required under the requirements of the LTCH QRP). In each case, we applied the applicable adjustments for area wage levels and the COLA for LTCHs located in Alaska and Hawaii. Specifically, for modeling FY 2018 LTCH PPS payments, we used the current FY 2018 labor-related share (66.2 percent), the wage index values established in the Tables 12A and 12B listed in the Addendum to the FY 2018 IPPS/LTCH PPS final rule (which are available via the internet on the CMS website), the FY 2018 HCO fixed-loss amount for LTCH PPS standard Federal payment rate cases of $27,381 (as discussed in section V.D. of the Addendum to that final rule), and the FY 2018 COLA factors (shown in the table in section V.C. of the Addendum to that final rule) to adjust the FY 2018 nonlabor-related share (33.8 percent) for LTCHs located in Alaska and Hawaii. Similarly, for modeling proposed FY 2019 LTCH PPS payments, we used the proposed FY 2019 LTCH PPS labor-related share (66.2 percent), the proposed FY 2019 wage index values from Tables 12A and 12B listed in PO 00000 Frm 00469 Fmt 4701 Sfmt 4702 20631 section VI. of the Addendum to this proposed rule (which are available via the internet on the CMS website), the proposed FY 2019 fixed-loss amount for LTCH PPS standard Federal payment rate cases of $30,639 (as discussed in section V.D.3. of the Addendum to this proposed rule), and the proposed FY 2019 COLA factors (shown in the table in section V.C. of the Addendum to this proposed rule) to adjust the FY 2019 nonlabor-related share (33.8 percent) for LTCHs located in Alaska and Hawaii. The impacts that follow reflect the estimated ‘‘losses’’ or ‘‘gains’’ among the various classifications of LTCHs from FY 2018 to FY 2019 based on the proposed payment rates and proposed policy changes applicable to LTCH PPS standard Federal payment rate cases presented in this proposed rule. Table IV illustrates the estimated aggregate impact of the proposed change in LTCH PPS payments for LTCH PPS standard Federal payment rate cases among various classifications of LTCHs. (As discussed previously, these impacts do not include LTCH PPS site neutral payment rate cases.) • The first column, LTCH Classification, identifies the type of LTCH. • The second column lists the number of LTCHs of each classification type. • The third column identifies the number of LTCH cases expected to meet the LTCH PPS standard Federal payment rate criteria. • The fourth column shows the estimated FY 2018 payment per discharge for LTCH cases expected to meet the LTCH PPS standard Federal payment rate criteria (as described previously). • The fifth column shows the estimated FY 2019 payment per discharge for LTCH cases expected to meet the LTCH PPS standard Federal payment rate criteria (as described previously). • The sixth column shows the percentage change in estimated payments per discharge for LTCH cases expected to meet the LTCH PPS standard Federal payment rate criteria from FY 2018 to FY 2019 due to the proposed annual update to the standard Federal rate (as discussed in section V.A.2. of the Addendum to this proposed rule). • The seventh column shows the percentage change in estimated payments per discharge for LTCH PPS standard Federal payment rate cases from FY 2018 to FY 2019 for proposed changes to the area wage level adjustment (that is, the wage indexes and the labor-related share), including the application of the proposed area wage level budget neutrality factor (as discussed in section V.B. of the Addendum to this proposed rule). • The eighth column shows the percentage change in estimated payments per discharge for LTCH PPS standard Federal payment rate cases from FY 2018 (Column 4) to FY 2019 (Column 5) for all proposed changes. E:\FR\FM\07MYP2.SGM 07MYP2 20632 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules TABLE IV—IMPACT OF PROPOSED PAYMENT RATE AND PROPOSED POLICY CHANGES TO LTCH PPS PAYMENTS FOR LTCH PPS STANDARD FEDERAL PAYMENT RATE CASES FOR FY 2019 [Estimated FY 2018 payments compared to estimated FY 2019 payments] Number of LTCHS (1) (2) (3) All Providers .................................................. By Location: Rural ....................................................... Urban ..................................................... Large ............................................... Other ............................................... By Participation Date: Before Oct. 1983 .................................... Oct. 1983–Sept. 1993 ............................ Oct. 1993–Sept. 2002 ............................ After October 2002 ................................ By Ownership Type: Voluntary ................................................ Proprietary .............................................. Government ........................................... By Region: New England .......................................... Middle Atlantic ........................................ South Atlantic ......................................... East North Central ................................. East South Central ................................. West North Central ................................ West South Central ................................ Mountain ................................................ Pacific ..................................................... By Bed Size: Beds: 0–24 ............................................. Beds: 25–49 ........................................... Beds: 50–74 ........................................... Beds: 75–124 ......................................... Beds: 125–199 ....................................... Beds: 200+ ............................................. Proposed percent change due to change to the proposed annual update to the standard federal rate 2 Proposed percent change due to proposed changes to area wage adjustment with wage budget neutrality 3 Proposed percent change due to all proposed standard payment rate changes 4 (4) LTCH classification Number of LTCH PPS standard payment rate cases Average FY 2018 LTCH PPS payment per standard payment rate Average proposed FY 2019 LTCH PPS payment per standard payment rate 1 (5) (6) (7) (8) 409 74,978 $47,125 $47,205 1.1 0.0 0.2 21 388 196 192 2,494 72,484 40,272 32,212 39,412 47,390 50,584 43,398 39,405 47,473 50,738 43,392 1.1 1.1 1.1 1.1 ¥0.2 0.0 0.0 0.0 0.0 0.2 0.3 0.0 11 42 169 187 1,910 9,584 31,176 32,308 43,040 52,189 45,745 47,195 42,764 52,476 45,783 47,276 1.1 1.1 1.1 1.1 ¥0.5 0.2 0.0 0.0 ¥0.6 0.5 0.1 0.2 77 319 13 10,529 62,700 1,749 49,341 46,608 52,316 49,513 46,670 52,503 1.1 1.1 1.1 0.2 0.0 0.0 0.3 0.1 0.4 12 24 66 68 36 28 120 29 26 2,684 5,929 13,670 11,782 6,335 4,390 18,278 4,048 7,862 43,020 50,944 48,296 46,537 45,480 45,904 41,768 48,082 58,460 42,791 51,276 48,379 46,446 45,581 45,807 41,750 48,022 59,090 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.2 ¥0.3 0.1 ¥0.2 ¥0.4 ¥0.1 ¥0.2 0.1 ¥0.3 0.8 ¥0.5 0.7 0.2 ¥0.2 0.2 ¥0.2 0.0 ¥0.1 1.1 43 187 105 42 23 9 5,094 26,483 19,580 10,938 7,944 4,939 47,085 44,734 48,176 50,444 47,519 47,834 47,049 44,782 48,274 50,649 47,442 48,112 1.1 1.1 1.1 1.1 1.1 1.1 ¥0.2 0.0 0.0 0.1 ¥0.3 0.5 ¥0.1 0.1 0.2 0.4 ¥0.2 0.6 daltland on DSKBBV9HB2PROD with PROPOSALS2 1 Estimated FY 2019 LTCH PPS payments for LTCH PPS standard Federal payment rate criteria based on the proposed payment rate and factor changes applicable to such cases presented in the preamble of and the Addendum to this proposed rule. 2 Percent change in estimated payments per discharge for LTCH PPS standard Federal payment rate cases from FY 2018 to FY 2019 for the proposed annual update to the LTCH PPS standard Federal payment rate. 3 Proposed percent change in estimated payments per discharge for LTCH PPS standard Federal payment rate cases from FY 2018 to FY 2019 for proposed changes to the area wage level adjustment under § 412.525(c) (as discussed in section V.B. of the Addendum to this proposed rule). 4 Proposed percent change in estimated payments per discharge for LTCH PPS standard Federal payment rate cases from FY 2018 (shown in Column 4) to FY 2019 (shown in Column 5), including all of the proposed changes to the rates and factors applicable to such cases presented in the preamble and the Addendum to this proposed rule. We note that this column, which shows the proposed percent change in estimated payments per discharge for all proposed changes, does not equal the sum of the proposed percent changes in estimated payments per discharge for the proposed annual update to the LTCH PPS standard Federal payment rate (Column 6) and the proposed changes to the area wage level adjustment with budget neutrality (Column 7) due to the effect of estimated changes in estimated payments to aggregate HCO payments for LTCH PPS standard Federal payment rate cases (as discussed in this impact analysis), as well as other interactive effects that cannot be isolated. d. Results Based on the FY 2017 LTCH cases (from 409 LTCHs) that were used for the analyses in this proposed rule, we have prepared the following summary of the impact (as shown in Table IV) of the proposed LTCH PPS payment rate and proposed policy changes for LTCH PPS standard Federal payment rate cases presented in this proposed rule. The impact analysis in Table IV shows that estimated payments per discharge for LTCH PPS standard Federal payment rate cases are projected to increase 0.2 percent, on average, for all LTCHs from FY 2018 to FY 2019 as a result of the proposed payment rate and proposed policy changes applicable to LTCH PPS standard Federal payment rate cases presented in this proposed rule. This VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 estimated 0.2 percent increase in LTCH PPS payments per discharge was determined by comparing estimated FY 2019 LTCH PPS payments (using the proposed payment rates and factors discussed in this proposed rule) to estimated FY 2018 LTCH PPS payments for LTCH discharges which will be LTCH PPS standard Federal payment rate cases if the dual rate LTCH PPS payment structure was or had been in effect at the time of the discharge (as described in section I.J.4. of this Appendix). As stated previously, we are proposing to update the LTCH PPS standard Federal payment rate for FY 2019 by 1.15 percent. For LTCHs that fail to submit quality data under the requirements of the LTCH QRP, as required by section 1886(m)(5)(C) of the Act, PO 00000 Frm 00470 Fmt 4701 Sfmt 4702 a 2.0 percentage point reduction is applied to the annual update to the LTCH PPS standard Federal payment rate. Consistent with § 412.523(d)(4), we also are proposing to apply an area wage level budget neutrality factor to the proposed FY 2019 LTCH PPS standard Federal payment rate of 0.999713, based on the best available data at this time, to ensure that any proposed changes to the area wage level adjustment (that is, the proposed annual update of the wage index values and labor-related share) would not result in any change (increase or decrease) in estimated aggregate LTCH PPS standard Federal payment rate payments. Finally, we are proposing to make a budget neutrality adjustment of 0.990535 for our proposed elimination of the 25-percent threshold E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules policy (discussed in VII.E. of the preamble of this proposed rule). As we also explained earlier in this section, for most categories of LTCHs (as shown in Table IV, Column 6), the estimated payment increase due to the proposed 1.15 percent annual update to the LTCH PPS standard Federal payment rate is projected to result in approximately a 1.1 percent increase in estimated payments per discharge for LTCH PPS standard Federal payment rate cases for all LTCHs from FY 2018 to FY 2019. This is because our estimate of the proposed changes in payments due to the proposed update to the LTCH PPS standard Federal payment rate also reflects estimated payments for SSO cases that are paid using a methodology that is not entirely affected by the update to the LTCH PPS standard Federal payment rate. Consequently, for certain hospital categories, we estimate that payments to LTCH PPS standard Federal payment rate cases may increase by less than 1.1 percent due to the proposed annual update to the LTCH PPS standard Federal payment rate for FY 2019. (1) Location Based on the most recent available data, the vast majority of LTCHs are located in urban areas. Only approximately 5 percent of the LTCHs are identified as being located in a rural area, and approximately 3 percent of all LTCH PPS standard Federal payment rate cases are expected to be treated in these rural hospitals. The impact analysis presented in Table IV shows that the proposed overall average percent increase in estimated payments per discharge for LTCH PPS standard Federal payment rate cases from FY 2018 to FY 2019 for all hospitals is 0.2 percent. However, for rural LTCHs, estimated payments for LTCH PPS standard Federal payment rate cases are expected to remain constant. This is primarily driven by a projected decrease resulting from changes to the proposed changes to the area wage index adjustment. For urban LTCHs, we estimate an increase of 0.2 percent from FY 2018 to FY 2019. Among the urban LTCHs, large urban LTCHs are projected to experience an increase of 0.3 percent in estimated payments per discharge for LTCH PPS standard Federal payment rate cases from FY 2018 to FY 2019, and such payments for the remaining urban LTCHs are projected to remain constant from FY 2018 to FY 2019, as shown in Table IV. (2) Participation Date LTCHs are grouped by participation date into four categories: (1) Before October 1983; (2) between October 1983 and September 1993; (3) between October 1993 and September 2002; and (4) October 2002 and after. Based on the most recent available data, the categories of LTCHs with the largest expected percentage of LTCH PPS standard Federal payment rate cases (approximately 43 percent) are in LTCHs that began participating in the Medicare program after October 2002, and they are projected to experience a 0.2 percent increase in estimated payments per discharge for LTCH PPS standard Federal payment rate cases from FY 2018 to FY 2019, as shown in Table IV. Approximately 3 percent of LTCHs began participating in the Medicare program before VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 October 1983, and these LTCHs are projected to experience an average percent decrease of 0.6 percent in estimated payments per discharge for LTCH PPS standard Federal payment rate cases from FY 2018 to FY 2019. Approximately 10 percent of LTCHs began participating in the Medicare program between October 1983 and September 1993, and these LTCHs are projected to experience an increase of 0.5 percent in estimated payments for LTCH PPS standard Federal payment rate cases from FY 2018 to FY 2019. LTCHs that began participating in the Medicare program between October 1993 and October 1, 2002, which treat approximately 41 percent of all LTCH PPS standard Federal payment rate cases, are projected to experience a 0.1 percent increase in estimated payments from FY 2018 to FY 2019. (3) Ownership Control LTCHs are grouped into four categories based on ownership control type: Voluntary, proprietary, government and unknown. Based on the most recent available data, approximately 19 percent of LTCHs are identified as voluntary (Table IV). The majority (approximately 78 percent) of LTCHs are identified as proprietary, while government owned and operated LTCHs represent approximately 3 percent of LTCHs. Based on ownership type, voluntary LTCHs are expected to experience a 0.3 percent increase in payments to LTCH PPS standard Federal payment rate cases, while proprietary LTCHs are expected to experience an average increase of 0.1 percent in payments to LTCH PPS standard Federal payment rate cases. Government owned and operated LTCHs, meanwhile, are expected to experience a 0.4 percent increase in payments to LTCH PPS standard Federal payment rate cases from FY 2018 to FY 2019. (4) Census Region Estimated payments per discharge for LTCH PPS standard Federal payment rate cases for FY 2019 are projected to increase across 4 of the 9 census regions. LTCHs located in the East and West North Central regions and the Mountain region are projected to experience a slight decrease of 0.1 and 0.2 percent, respectively, while LTCHs located New England are expected to experience a 0.5 decrease in payments. All other regions are projected to experience constant or increased payments per discharge for FY 2019 in comparison to FY 2018. Of the 9 census regions, we project that the increase in estimated payments per discharge to LTCH PPS standard Federal payment rate cases will have the largest positive impact on LTCHs in the Pacific region (1.1 percent) and the Middle Atlantic region (0.7 percent) as shown in Table IV. These regional variations are largely due to proposed updates in the wage index. (5) Bed Size LTCHs are grouped into six categories based on bed size: 0–24 beds; 25–49 beds; 50–74 beds; 75–124 beds; 125–199 beds; and greater than 200 beds. We project that LTCHs with 0–24 beds would experience a decrease in payments for LTCH PPS standard Federal payment rate cases of 0.1 percent, while PO 00000 Frm 00471 Fmt 4701 Sfmt 4702 20633 LTCHs with 125–199 beds are expected to experience a decrease of 0.2 percent. We expect the remaining categories to experience an increase in payments of 0.1 and 0.2 percent for LTCHs with 25–49 and 50–74 beds, respectively, a 0.4 percent increase in payments for LTCHs with 75–124 beds, and a 0.6 increase for LTCHs with 200 or more beds. 4. Effect on the Medicare Program As stated previously, we project that the provisions of this proposed rule would result in an increase in estimated aggregate LTCH PPS payments to LTCH PPS standard Federal payment rate cases in FY 2019 relative to FY 2018 of approximately 6 million (or approximately 0.2 percent) for the 409 LTCHs in our database. Although, as stated previously, the hospital-level impacts do not include LTCH PPS site neutral payment rate cases, we estimate that the provisions of this proposed rule would result in a decrease in estimated aggregate LTCH PPS payments to site neutral payment rate cases in FY 2019 relative to FY 2018 of approximately $11 million (or approximately 1.1 percent) for the 409 LTCHs in our database. Therefore, we project that the provisions of this proposed rule would result in a decrease in estimated aggregate LTCH PPS payments to all LTCH cases in FY 2019 relative to FY 2018 of approximately $5 million (or approximately 0.1 percent) for the 409 LTCHs in our database. 5. Effect on Medicare Beneficiaries Under the LTCH PPS, hospitals receive payment based on the average resources consumed by patients for each diagnosis. We do not expect any changes in the quality of care or access to services for Medicare beneficiaries as a result of this proposed rule, but we continue to expect that paying prospectively for LTCH services will enhance the efficiency of the Medicare program. As discussed above, we do not expect the continued implementation of the site neutral payment system to have a negative impact access to or quality of care, as demonstrated in areas where there is little or no LTCH presence, general short-term acute care hospitals are effectively providing treatment for the same types of patients that are treated in LTCHs. K. Effects of Proposed Requirements for the Hospital Inpatient Quality Reporting (IQR) Program 1. Background In section VIII.A. of the preamble of this proposed rule, we discuss our current and proposed requirements for hospitals to report quality data under the Hospital IQR Program in order to receive the full annual percentage increase for the FY 2021 payment determination. In this proposed rule, we are proposing to: (1) Extend eCQM reporting requirements to the CY 2019 reporting period/FY 2021 payment determination; (2) require the 2015 Edition of CEHRT for eCQMs beginning with the CY 2019 reporting period/FY 2021 payment determination; (3) remove 17 claims-based measures beginning with the CY 2018 reporting period/FY 2020 payment determination; (4) remove two structural E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20634 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules measures beginning with the CY 2018 reporting period/FY 2020 payment determination; (5) remove two claims-based measures beginning with the CY 2019 reporting period/FY 2021 payment determination; (6) remove eight chartabstracted measures beginning with the CY 2019 reporting period/FY 2021 payment determination; (7) remove one claims-based measure beginning with the CY 2020 reporting period/FY 2022 payment determination; (8) remove one chartabstracted measure beginning with the CY 2020 reporting period/FY 2022 payment determination; (9) remove seven eCQMs beginning with CY 2020 reporting period/FY 2022 payment determination; (10) remove one claims-based measure beginning with the CY 2021 reporting period/FY 2023 payment determination; and (11) adopt a new measure removal factor. We do not believe our proposal to adopt a new measure removal factor will directly affect burden. However, as further explained in section XIV.B.3. of the preamble of this proposed rule, we believe that there will be an overall decrease in the estimated information collection burden for hospitals due to the other proposed policies. We refer readers to section XIV.B.3. of the preamble of this proposed rule for a summary of our information collection burden estimate calculations. The effects of these proposals are discussed in more detail below. 2. Impact of Proposed Extension of eCQM Reporting Requirements In the FY 2018 IPPS/LTCH PPS final rule, we finalized policies to require hospitals to submit one, self-selected calendar quarter of data for four eCQMs in the Hospital IQR Program measure set for the CY 2018 reporting period/FY 2020 payment determination (82 FR 38355 through 38361). In section VIII.A.11.d.(2) of the preamble of this proposed rule, we are proposing to extend those reporting requirements for the CY 2019 reporting period/FY 2021 payment determination, such that hospitals would be required to submit one, self-selected calendar quarter of data for four eCQMs in the Hospital IQR Program measure set. Therefore, we believe our burden estimate of 40 minutes per hospital per year (10 minutes per record × 4 eCQMs × 1 quarter) associated with eCQM reporting requirements finalized for the CY 2018 reporting period/FY 2020 payment determination will also apply to the CY 2019 reporting period/FY 2021 payment determination. 3. Impact of Proposed Requirement To Certify EHR to the 2015 Edition In section VIII.A.11.d.(3) of the preamble of this proposed rule, we discuss our proposal to require use of EHR technology certified to the 2015 Edition beginning with the CY 2019 reporting period/FY 2021 payment determination, which aligns with previously established requirements in the Medicare and Medicaid Promoting Interoperability Programs (previously known as the Medicare and Medicaid EHR Incentive Programs). As described in section XIV.B.3.g. of the preamble of this proposed rule, we expect this proposal to have no impact on information collection burden for the VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Hospital IQR Program because this proposal does not require hospitals to submit new data to CMS. With respect to any costs unrelated to data submission, although this proposal would require some investment in systems updates, the Medicare and Medicaid Promoting Interoperability Programs (previously known as the Medicare and Medicaid EHR Incentive Programs) previously finalized a requirement that hospitals use the 2015 Edition of CEHRT beginning with the CY 2019 reporting period/ FY 2021 payment determination (80 FR 62761 through 62955). Because all hospitals participating in the Hospital IQR Program are subsection (d) hospitals that also participate in the Medicare and Medicaid Promoting Interoperability Programs (previously known as the Medicare and Medicaid EHR Incentive Programs), we do not anticipate any additional costs as a result of this proposal. 4. Impact of Proposed Removal of ChartAbstracted Measures In sections VIII.A.5.b.(2)(b) and VIII.A.5.b.(8) of the preamble of this proposed rule, beginning with the CY 2019 reporting period/FY 2021 payment determination, we are proposing to remove eight chart-abstracted measures—five National Health and Safety Network (NHSN) hospital-acquired infection (HAI) measures (CDI (NQF #1717), CAUTI (NQF #0138), CLABSI (NQF #0139), MRSA Bacteremia (NQF #1716), Colon and Abdominal Hysterectomy SSI (NQF #0753)) and three clinical process of care measures (ED–1 (NQF #0495), IMM–2 (NQF #1659), VTE–6 405). In section VIII.A.5.b.(8)(b) of the preamble of this proposed rule, beginning with the CY 2020 reporting period/FY 2022 payment determination, we also are proposing to remove one chart-abstracted clinical process of care measure (ED–2). As described in detail in section XIV.B.3. of the preamble of this proposed rule, we expect our proposals to remove the clinical process of care chart-abstracted measures would reduce the information collection burden by 1,046,071 hours and approximately $38.3 million for the CY 2019 reporting period/FY 2021 payment determination, and an additional 901,200 hours and approximately $33 million for the CY 2020 reporting period/FY 2022 payment determination for the Hospital IQR Program. We note that the burden of data collection for the NHSN HAI measures (CDI, CAUTI, CLABSI, MRSA Bacteremia, and Colon and Abdominal Hysterectomy SSI) is accounted for under the Centers for Disease Control and Prevention (CDC) National Health and Safety Network (NHSN) OMB control number 0920– 0666. Because burden associated with submitting data for the NHSN HAI measures is captured under a separate OMB control number, we do not provide an independent estimate of the information collection burden associated with these measures for the Hospital IQR Program. The data validation activities, however, are conducted by CMS. Since the measures were adopted into the Hospital IQR Program, CMS has validated the data for purposes of the 405 NQF PO 00000 endorsement has been removed. Frm 00472 Fmt 4701 Sfmt 4702 Program. Therefore, this burden has been captured under the Hospital IQR Program’s OMB control number 0938–1022. While we did not propose any changes directly to the validation process related to chart-abstracted measures, if our proposals to remove five NHSN HAI and four clinical process of care chart-abstracted measures (in section VIII.A.5.b.(2)(b) and section VIII.A.5.b.(8) of the preamble of this proposed rule) are finalized as proposed, we believe that hospitals will experience an overall reduction in burden associated with validation of chart-abstracted measures beginning with the FY 2022 payment determination because hospitals selected for validation are currently required to submit validation templates for the NHSN HAI measures for the Hospital IQR Program. In addition, if our proposals to remove the NHSN HAI measures are finalized, the information collection burden associated with submission of these validation templates would be eliminated from the Hospital IQR Program. As described in detail in section XIV.B.3. of the preamble of this proposed rule, we estimate a total decrease of 43,200 hours and approximately $1.6 million as a result of discontinuing submission of NHSN HAI validation templates under the Hospital IQR Program as described in section IV.K.4.e. of the preamble of this proposed rule. The proposed removal of NHSN HAI measures from the Hospital IQR Program, the subsequent cessation of validation processes for the NHSN HAI measures, the retention of these measures in the HAC Reduction Program, and the proposed implementation of a validation process for these measures under the HAC Reduction Program, represent no net change in information collection burden for the NHSN HAI measures across CMS hospital quality programs. Therefore, we do not anticipate any change under the CDC NHSN’s OMB control number 0920–0666 due to our proposals. Furthermore, we anticipate that the costs to hospitals participating in the Hospital IQR Program, beyond that associated with information collection, will be reduced because hospitals would no longer need to review multiple feedback reports for the NHSN HAI measures from three different hospital quality programs (the Hospital IQR, Hospital VBP, and HAC Reduction Programs) that use three different reporting periods, which result in interpreting slightly different measure rates for the same measures (under the Hospital IQR Program, a rolling four quarters of data are used to update the Hospital Compare website; under the Hospital VBP Program, 1-year periods are used for each of the baseline period and the performance period; and under the HAC Reduction Program, a 2-year performance period is used). 5. Impact of Proposed Removal of Two Structural Measures In section VIII.A.5.a. and VII.A.5.b.(1) of the preamble of this proposed rule, we are proposing to remove two structural measures, Hospital Survey on Patient Safety Culture and Safe Surgery Checklist, beginning with the CY 2018 reporting period/FY 2020 payment determination. We believe these E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules proposals will result in a minimal information collection burden reduction, which is addressed in section XIV.B.3. of the preamble of this proposed rule. In addition, we refer readers to VIII.A.4.b. of the preamble of this proposed rule, where we acknowledge that costs are multi-faceted and include not only the burden associated with reporting, but also the costs associated with implementing and maintaining Program requirements. We believe it may be unnecessarily costly and/or of limited benefit to retain or maintain a measure which our analyses show no longer meaningfully supports program objectives (for example, informing beneficiary choice or payment scoring). As discussed in sections VIII.A.5.a. and VIII.A.5.b.(1) of the preamble of this proposed rule, we believe these measure are of limited utility for internal hospital quality improvement efforts because they do not provide individual patient level data or any information on patient outcomes. In addition, our analyses show that use of patient safety culture surveys and safe surgery checklists is widely in practice among hospitals. Therefore, we do not believe that these measures support the program objectives of facilitating internal hospital quality improvement efforts or informing beneficiary choice. 6. Impact of the Proposed Removal of ClaimsBased Measures In sections VIII.A.5.b.(2)(a), (3), (4), (6), and (7) of the preamble of this proposed rule, we are proposing to remove 17 claims-based measures PSI–90 (NQF #0531), READM–30– AMI (NQF #0505), READM–30–CABG (NQF #2515), READM–30–COPD (NQF #1891), READM–30–HF (NQF #0330), READM–30– PN (NQF #0506), READM–30–THA/TKA (NQF #1551), READM–30–STK, MORT–30– AMI (NQF #0230), MORT–30–HF (NQF #0229), MSPB (NQF #2158), Cellulitis Payment, GI Payment, Kidney/UTI Payment, AA Payment, Chole and CDE Payment, and SFusion Payment) beginning with the CY 2018 reporting period/CY 2020 payment determination. In addition, in section VIII.A.5.b.(4) of the preamble of this proposed rule, we are proposing to remove two claims-based measures (MORT–30– COPD (NQF #1893) and MORT–30–PN (NQF #0468)) beginning with the CY 2019 reporting period/FY 2021 payment determination. Furthermore, in sections VIII.A.5.b.(4) and VIII.A.5.b.(5), respectively, of the preamble of this proposed rule, we are proposing to remove one-claims based measure (MORT–30–CABG (NQF #2558)) beginning with the CY 2020 reporting period/ FY 2022 payment determination and one claims-based measure (Hip/Knee Complications (NQF #1550)) beginning with the CY 2021 reporting period/FY 2023 payment determination. These claims-based measures are calculated using only data already reported to the Medicare program for payment purposes, therefore, we do not believe removing these measures will impact the information collection burden on hospitals. Nonetheless, we anticipate that hospitals will experience a general cost reduction associated with these proposals stemming from no longer having to review and track VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 various program requirements or measure information in multiple confidential feedback and preview reports from multiple programs that reflect multiple measure rates due to varying scoring methodologies and reporting periods. 7. Impact of the Proposed Removal of eCQMs In section VIII.A.5.b.(9) of the preamble of this proposed rule, we are proposing to remove seven eCQMs from the Hospital IQR Program eCQM measure set beginning with the CY 2020 reporting period/FY 2022 payment determination. As described in section XIV.B.3. of this proposed rule, we do not anticipate that removal of these seven eCQMs will affect the information collection burden for hospitals. However, as discussed in section VIII.A.4.b. of the preamble of this proposed rule, we believe costs are multifaceted and include not only the burden associated with reporting, but also the costs associated with implementing and maintaining Program requirements, such as maintaining measure specifications in hospitals’ EHR systems for all of the eCQMs available for use in the Hospital IQR Program. We further discuss costs unrelated to information collection associated with eCQM removal in section VIII.A.5.b.(9) of the preamble of this proposed rule. 8. Summary of Effects In summary, we estimate: (1) A total information collection burden reduction of 1,046,138 hours (¥1,046,071 hours due to the proposed removal of ED–1 (NQF #0495), IMM–2 (NQF #1659), and VTE–6 406 measures for the CY 2019 reporting period/ FY 2021 payment determination and ¥67 hours for no longer collecting data for the voluntary Hybrid HWR measure 407) and a total cost reduction related to information collection of approximately $38.3 million (¥1,046,138 hours × $36.58 per hour 408) for the CY 2019 reporting period/FY 2021 payment determination; and (2) a total information collection burden reduction of 901,200 hours (¥858,000 hours due to the proposed removal of ED–2 ¥43,200 hours due to the proposed discontinuation of the NHSN HAI measure validation process under the Hospital IQR Program) and a total cost reduction related to information collection of 406 NQF Endorsement has been removed. the FY 2017 IPPS/LTCH PPS final rule (82 FR 38350 through 38355), we finalized our proposal to collect data on a voluntary basis for the Hybrid HWR measure for the CY 2018 reporting period/FY 2020 payment determination. We estimated that approximately 100 hospitals would voluntarily report data for this measure, resulting in a total burden of 67 hours across all hospitals for the CY 2018 reporting period/FY 2020 payment determination (82 FR 38504). Because we only finalized voluntary collection of data for one year, voluntary collection of this data would no longer occur beginning with the CY 2019 reporting period/ FY 2021 payment determination and subsequent years resulting in a reduction in burden of 67 hours across all hospitals. 408 In the FY 2017 IPPS/LTCH PPS final rule (82 FR 38501), we finalized an hourly wage estimate of $18.29 per hour, plus 100 percent overhead and fringe benefits, for the Hospital IQR Program. Accordingly, we calculate cost burden to hospitals using a wage plus benefits estimate of $36.58 per hour. 407 In PO 00000 Frm 00473 Fmt 4701 Sfmt 4702 20635 approximately $33 million (¥901,200 hours × $36.58 per hour 409) for the CY 2020 reporting period/FY 2022 payment determination. As stated earlier, we also anticipate additional cost reductions unrelated to the information collection burden associated with our proposals, including, for example, no longer having to review and track measure information in multiple feedback reports from multiple programs and maintaining measure specifications in hospitals’ EHR systems for all eCQMs available for use in the program. Historically, 100 hospitals, on average, that participate in the Hospital IQR Program do not receive the full annual percentage increase in any fiscal year due to the failure to meet all requirements of this Program. We anticipate that the number of hospitals not receiving the full annual percentage increase will be approximately the same as in past years or slightly decrease. We believe that reducing the number of chart-abstracted measures used in the Hospital IQR Program would, at least in part, help increase hospitals’ chances to meet all Program requirements and receive their full annual percentage increase. We refer readers to section XIV.B.3. of the preamble of this proposed rule (information collection requirements) for a detailed discussion of the burden of the requirements for submitting data to the Hospital IQR Program. L. Effects of Proposed Requirements for the PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program In section VIII.B. of the preamble of this proposed rule, we discuss our proposed policies for the quality data reporting program for PPS-exempt cancer hospitals (PCHs), which we refer to as the PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program. The PCHQR Program is authorized under section 1866(k) of the Act, which was added by section 3005 of the Affordable Care Act. There is no financial impact to PCH Medicare reimbursement if a PCH does not submit data. In section VIII.B.3.b. of the preamble of this proposed rule, we are proposing to remove four web-based, structural measures: (1) Oncology: Radiation Dose Limits to Normal Tissues (PCH–14/NQF #0382); (2) Oncology: Medical and Radiation—Pain Intensity Quantified (PCH–16/NQF #0384); (3) Prostate Cancer: Adjuvant Hormonal Therapy for High Risk Patients (PCH–17/NQF #0390); and (4) Prostate Cancer: Avoidance of Overuse of Bone Scan for Staging Low-Risk Patients (PCH–18/NQF #0389), and two chartabstracted, NHSN measures: (5) CatheterAssociated Urinary Tract Infection (CAUTI) Outcome Measure (PCH–5/NQF #0138) and (6) Central Line-Associated Bloodstream Infection (CLABSI) Outcome Measure (PCH– 4/NQF #0139) beginning with the FY 2021 program year. In addition, in section VIII.B.4. of the preamble of this proposed rule, we are proposing to adopt one claims-based measure for the FY 2021 program year and subsequent years: 30-Day Unplanned Readmissions for Cancer Patients measure (NQF #3188). If 409 Ibid. E:\FR\FM\07MYP2.SGM 07MYP2 daltland on DSKBBV9HB2PROD with PROPOSALS2 20636 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules finalized, the PCHQR Program measure set would consist of 13 measures for the FY 2021 program. Further, in section XIV.B.4.b. of the preamble of this proposed rule, we are proposing to adopt a new time burden estimate, to be applied to structural and webbased tool measures for the FY 2021 program year and subsequent years. Specifically, we are proposing to adopt the estimate of 15 minutes for reporting these types of measures, which is the time estimate utilized by the Hospital IQR Program (80 FR 49762). As explained in section XIV.B.4.c. of the preamble of this proposed rule, we anticipate that these proposed new requirements would reduce the overall burden on participating PCHs. If our proposal to apply 15 minutes per measure as a burden estimate for structural measures and web-based tool measures and our proposal to remove the following web-based structural measures: (1) Oncology: Radiation Dose Limits to Normal Tissues (PCH–14/NQF #0382); (2) Oncology: Medical and Radiation—Pain Intensity Quantified (PCH–16/NQF #0384); (3) Prostate Cancer: Adjuvant Hormonal Therapy for High Risk Patients (PCH–17/NQF #0390); and (4) Prostate Cancer: Avoidance of Overuse of Bone Scan for Staging Low-Risk Patients (PCH–18/NQF #0389)) are finalized as proposed, we estimate a reduction of 1 hour (or 60 minutes) per PCH (15 minutes per measure × 4 measures = 60 minutes), and a total annual reduction of approximately 11 hours for all 11 PCHs (60 minutes × 11 PCHs/ 60 minutes per hour), as a result of the proposed removal of these four measures. We further anticipate that the proposed removal of the two NHSN measures: (1) Catheter-Associated Urinary Tract Infection (CAUTI) Outcome Measure (PCH–5/NQF #0138) and (2) Central Line-Associated Bloodstream Infection (CLABSI) Outcome Measure (PCH–4/NQF #0139) will result in a net burden decrease. If our proposal to remove the CAUTI and CLABSI measures is finalized as proposed, we estimate an annual burden reduction of 2,518 hours per PCH (1,259 hours × 2 measures = 2,518 hours) and an annual burden reduction of 27,698 hours across all 11 PCHs (2,518 hours × 11 PCHs = 27,698 hours). We do not anticipate any increase in burden on the PCHs associated with our proposal to adopt a claims-based measure into the PCHQR Program beginning with the FY 2021 program year. This measure is claims-based and does not require facilities to report any additional data beyond that already submitted on Medicare administrative claims for payment purposes. Therefore, we do not believe that there is any associated burden with this proposal. In summary, if our proposals to remove 6 measures are finalized as proposed, we estimate a total burden reduction of 27,709 hours of burden per year for all 11 PCHs (27,698 hours for the removal of the CAUTI & CLABSI measures + 11 hours for the removal of the 4 web-based, structural measures = 27,709 total hours), beginning with the FY 2021 program year. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 M. Effects of Proposed Requirements for the Long-Term Care Hospital Quality Reporting Program (LTCH QRP) Under the LTCH QRP, the Secretary reduces by 2 percentage points the annual update to the LTCH PPS standard Federal rate for discharges for an LTCH during a fiscal year if the LTCH has not complied with the LTCH QRP requirements specified for that fiscal year. Information is not available to determine the precise number of LTCHs that will not meet the requirements to receive the full annual update for the FY 2019 payment determination. We believe that the burden and costs associated with the LTCH QRP is the time and effort associated with complying with the requirements of the LTCH QRP. We intend to closely monitor the effects of this quality reporting program on LTCHs and to help facilitate successful reporting outcomes through ongoing stakeholder education, national trainings, and help desks. We refer readers to section XIV.B.6. of the preamble of this proposed rule for details discussing information collection requirements for the LTCH QRP. N. Effects of Proposed Requirements Regarding the Promoting Interoperability Programs In section VIII.D. of the preamble of this proposed rule, we are proposing a new performance-based scoring methodology and changes to the Stage 3 objectives and measures for eligible hospitals and CAHs that attest to CMS under the Medicare Promoting Interoperability Program. We also are proposing changes to the EHR reporting period in CYs 2019 and 2020; the CQM reporting period and criteria for CY 2019; and to codify the policies for subsection (d) Puerto Rico hospitals to participate in the Medicare Promoting Interoperability Program for eligible hospitals, including policies previously implemented through program instruction. We believe that, overall, these proposals would reduce burden. We refer readers to section XIV.B.9. of the preamble of this proposed rule for additional discussion on the information collection effects associated with these proposals. In section VIII.D.12.a. of the preamble of this proposed rule, we are proposing to amend 42 CFR 495.324(b)(2) and 495.324(b)(3) to align with current prior approval policy for MMIS and ADP systems at 45 CFR 95.611(a)(2)(ii), and (b)(2)(iii) and (iv), and to minimize burden on States. Specifically, we are proposing that the prior approval dollar threshold in § 495.324(b)(3) would be increased to $500,000, and that a prior approval threshold of $500,000 would be added to § 495.324(b)(2). In addition, in light of these proposed changes, we are proposing a conforming amendment to amend the threshold in § 495.324(d) for prior approval of justifications for sole source acquisitions to be the same $500,000 threshold. That threshold is currently aligned with the $100,000 threshold in current 495.324(b)(3). Amending § 495.324(d) to preserve alignment with § 495.324(b)(3) maintain the consistency of our prior approval requirements. We believe that these proposals also would reduce burden on PO 00000 Frm 00474 Fmt 4701 Sfmt 4702 States by raising the prior approval thresholds and generally aligning them with the thresholds for prior approval of MMIS and ADP acquisitions costs. In section VIII.D.12.b. of the preamble of this proposed rule, we are proposing to amend 42 CFR 495.322 to provide that the 90 percent FFP for Medicaid Promoting Interoperability Program administration would no longer be available for most State expenditures incurred after September 30, 2022. We are proposing a later sunset date, September 30, 2023, for the availability of 90 percent enhanced match for State administrative costs related to Medicaid Promoting Interoperability Program audit and appeals activities, as well as costs related to administering incentive payment disbursements and recoupments that might result from those activities. States would not be able to claim any Medicaid Promoting Interoperability Program administrative match for expenditures incurred after September 30, 2023. We do not believe that these proposals would impose any additional burdens on States. We refer readers to section XIV.B.9. of the preamble of this proposed rule for additional discussion on the information collection effects associated with these proposals. O. Alternatives Considered This proposed rule contains a range of policies. It also provides descriptions of the statutory provisions that are addressed, identifies the proposed policies, and presents rationales for our decisions and, where relevant, alternatives that were considered. For example, as discussed in section II.F.2.d. of the preamble of this proposed rule, section II.H.5.a. of the preamble of this proposed rule, and section II.A.4.g. of the Addendum to this proposed rule, we believe that, in the context of the pending new technology add-on payment applications for two CAR T-cell therapy drugs, there may be merit in the suggestions from the public to create a new MS–DRG for the assignment of procedures involving the utilization of CAR T-cell therapy drugs and cases representing patients who receive treatment involving CAR T-cell therapy as an alternative to our proposed MS–DRG assignment to MS–DRG 016 for FY 2019, or the suggestions to allow hospitals to utilize an alternative CCR specific to procedures involving CAR T-cell therapy drugs for purposes of outlier payments, new technology add-on payments, if approved, and payments to IPPS excluded cancer hospitals. We are considering these alternatives for FY 2019 and are seeking public comment on them. We also are inviting comments on how these payment alternatives would affect access to care, as well as how they affect incentives to encourage lower drug prices, which is a high priority for this Administration. In addition, we are considering alternative approaches and authorities to encourage value-based care and lower drug prices. We solicit comments on how the payment methodology alternatives may intersect and affect future participation in any such alternative approaches. As discussed in section II.A.4.g. of the Addendum to this proposed rule, the impact E:\FR\FM\07MYP2.SGM 07MYP2 20637 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules of an alternative CCR specific to procedures involving CAR T-cell therapy drugs is dependent on the relationship between the CCR that would otherwise be used and the alternative CCR used. For illustrative purposes, we discussed an example where if a hospital charged $400,000 for a procedure involving the utilization of the CAR T-cell therapy drug described by ICD–10–PCS code XW033C3, the application of a hypothetical CCR of 0.25 results in a cost of $100,000 (=$400,000 * 0.25), while the application of a hypothetical CCR of 1.00 results in a cost of $400,000 (=$400,000 * 1.0). The impact of the creation of a separate MS–DRG for procedures involving the utilization of CAR T-cell therapy drugs and cases representing patients receiving treatment involving CAR T-cell therapy would be dependent on the relative weighting factor determined for the separate MS–DRG. We are inviting public comments on the most appropriate approach for determining the relative weighting factor under this alternative, such as an approach based on taking into account an appropriate portion of the average sales price (ASP) for these drugs, or other approaches. We note that our proposed relative weighting factor for MS–DRG 016 for FY 2019 can be found in Table 5 associated with this proposed rule (which is available via the internet on the CMS website). As discussed in section VIII.A.5.b.(9) of the preamble of this proposed rule, in the context of removing seven eCQMs from the Hospital IQR Program for the CY 2020 reporting period/FY 2022 payment determination and subsequent years, we considered proposing to remove these seven eCQMs 1 year earlier, beginning with the CY 2019 reporting period/ FY 2021 payment determination. Our analyses indicated no estimated change in average reporting burden between these two options. We interpret the lack of difference is due to very few hospitals choosing the seven eCQMs proposed for removal. Because the alternatives considered do not impact the collection of information for hospitals, we do not expect these alternatives to affect the reporting burden on hospitals associated with the Hospital IQR Program. We considered these alternatives and are seeking public comment on them. As discussed in section IV.I.4.b. of the preamble of this proposed rule, in the context of scoring hospitals for purposes of the Hospital VBP Program for the FY 2021 program year and subsequent years, we analyzed two domain weighting options based on our proposals to remove 10 measures and the Safety domain from the Hospital VBP Program. As an alternative to our proposal to weight the three remaining domains as Clinical Outcomes domain (proposed name change)—50 percent; Person and Community Engagement domain—25 percent; and Efficiency and Cost Reduction domain—25 percent, we considered weighting each of the three remaining domains equally, meaning each of the three domains would be weighted as one-third of a hospital’s Total Performance Score (TPS), beginning with the FY 2021 program year. As discussed in section IV.I.4.b. of the preamble of this proposed rule, we also considered keeping the current domain weighting (25 percent for each of the four domains—Safety, Clinical Outcomes (proposed name change), Person and Community Engagement, and Efficiency and Cost Reduction—with proportionate reweighting if a hospital has sufficient data on only three domains), which would require keeping at least one or more of the measures in the Safety domain and the Safety domain itself. As summarized in section IV.I.4.b.(3) of the preamble of this proposed rule, to understand the potential impacts of the proposed domain weighting on hospitals’ TPSs, we conducted analyses using FY 2018 program data that estimated the potential impacts of our proposed domain weighting policy to increase the weight of the Clinical Outcomes domain from 25 percent to 50 percent of a hospital’s TPS and an alternative weighting policy we considered of equal weights whereby each domain would constitute one-third (1/3) of a hospital’s TPS. The table below provides an overview of the estimated impact on hospitals’ TPS by certain hospital characteristics and as they would compare to actual FY 2018 TPSs, which include scoring on four domains, including the Safety domain, and applying proportionate reweighting if a hospital has sufficient data on only three domains. COMPARISON OF ESTIMATED AVERAGE TPSS AND UNWEIGHTED DOMAIN SCORES * Actual FY 2018 average clinical care domain score Hospital characteristic daltland on DSKBBV9HB2PROD with PROPOSALS2 All Hospitals ** ........................................ Bed Size: 1–99 ................................................ 100–199 .......................................... 200–299 .......................................... 300–399 .......................................... 400+ ................................................ Geographic Location: Urban .............................................. Rural ............................................... Safety Net Status ***: Non-Safety Net ............................... Safety Net ....................................... Teaching Status: Non-Teaching ................................. Teaching ......................................... Actual FY 2018 average person and community engagement domain score Actual FY 2018 average efficiency and cost reduction domain score Actual FY 2018 average TPS (4 domains) + Proposed increased weighting of clinical care domain: estimated average TPS Alternative weighting: estimated average TPS 43.2 33.5 18.8 37.4 34.6 31.8 33.4 42.2 44.5 48.2 50.9 46.0 34.5 27.9 27.3 26.9 35.7 21.0 12.9 10.0 7.6 44.6 39.2 34.4 33.3 31.9 37.2 35.0 32.4 33.4 34.1 38.4 32.6 28.4 28.5 28.5 46.8 33.7 30.7 40.5 13.7 31.7 35.7 41.9 34.5 34.9 30.4 35.3 42.7 45.1 35.4 25.7 19.0 18.1 37.9 35.6 34.9 33.5 32.4 29.6 39.9 48.7 36.7 27.9 22.9 11.8 39.4 34.1 34.9 34.3 33.2 29.5 * Analysis based on FY 2018 Hospital VBP Program data. ** Only eligible hospitals are included in this analysis. Excluded hospitals (for example, hospitals not meeting the minimum domains required for calculation, hospitals receiving three or more immediate jeopardy citations in the FY 2018 performance period, hospitals subject to payment reductions under the Hospital IQR Program in FY 2018, and hospitals located in the state of Maryland) were removed from this analysis. + Based on current policies, which includes the Safety domain, and proportionate reweighting for hospitals with sufficient data on only three domains. *** For purposes of this analysis, ‘safety net’ status is defined as those hospitals with top 10 percentile of Disproportionate Share Hospital (DSH) patient percentage from the FY 2018 IPPS/LTCH PPS final rule impact file: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-Items/FY2018-IPPS-Final-Rule-DataFiles.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00475 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 20638 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules The table below provides a summary of the estimated impacts on average TPSs and payment adjustments for all hospitals,410 including as they would compare to actual FY 2018 program results under current domain weighting policies. Summary of estimated impacts on average TPS and payment adjustments using FY 2018 program data Actual (4 domains) ∂ Proposed increased weight for clinical outcomes (3 domains) Total number of hospitals with a payment adjustment ............................................ Number of hospitals receiving a positive payment adjustment (percent) ................ Average positive payment adjustment percentage .................................................. Estimated average positive payment adjustment .................................................... Number of hospitals receiving a negative payment adjustment (percent) .............. Average negative payment adjustment percentage ................................................ Estimated average negative payment adjustment ................................................... Number of hospitals receiving a positive payment adjustment with a composite quality score * below the median (percent). Average TPS ............................................................................................................ Lowest TPS receiving a positive payment adjustment ............................................ Slope of the linear exchange function ..................................................................... 2,808 ............................... 1,597 (57 percent) .......... 0.60 percent .................... $128,161 ......................... 1,211 (43 percent) .......... ¥0.41 percent ................ $169,011 ......................... 341 (21 percent) ............. 2,701 ............................... 1,209 (45 percent) .......... 0.58 percent .................... $233,620 ......................... 1,492 (55 percent) .......... ¥0.60 percent ................ $189,307 ......................... 134 (11 percent) ............. 2,701. 1,337 (50 percent). 0.70 percent. $204,038. 1,364 (50 percent). ¥0.57 percent. $200,000. 266 (20 percent). 37.4 ................................. 34.6 ................................. 2.8908851882 ................. 34.6 ................................. 35.9 ................................. 2.7849297316 ................. 31.8. 30.9. 3.2405954322. Equal weighting alternative (3 domains) ∂ Based on current policies, which includes the Safety domain, and proportionate reweighting for hospitals with sufficient data on only three domains. * ‘‘Composite quality score’’ is defined as a hospital’s TPS minus the hospital’s weighted Efficiency and Cost Reduction domain score. We also refer readers to section I.H.6.b. of Appendix A of this proposed rule for a detailed discussion regarding the estimated impacts of the proposed domain weighting and equal weighting alternative on hospital percentage payment adjustments. Because the alternatives considered do not impact the collection of information for hospitals, we do not expect these alternatives to affect the reporting burden on hospitals. We considered these alternatives and are seeking public comment on them. As discussed in section IV.J.5. of the preamble of this proposed rule, in the context of scoring hospitals for the purposes of the HAC Reduction Program, we analyzed two alternative scoring options to the current methodology for the FY 2020 program year and subsequent years. The alternative scoring methodologies considered are an Equal Measure Weights methodology, which would remove the domains and assign equal weight to each measure for which a hospital has a score, and a Variable Domain Weighting methodology, which would vary the weighting of Domain 1 and 2 based on the number of measures in each domain. We are considering these alternative approaches to allow the HAC Reduction Program to continue to fairly assess all hospitals’ performance under the Program. We simulated results under each scoring approach using FY 2018 HAC Reduction Program data. We compared the percentage of hospitals in the worst-performing quartile in FY 2018 to the percentage that would be in the worst-performing quartile under each scoring approach. The table below provides a high-level overview of the estimated impact of these approaches on several key groups of hospitals. Equal measure weights (percent) Hospital group a Teaching hospitals: 100 or more residents (N=248) ............................................................................................... Safety-net b (N=644) ................................................................................................................................................ Urban hospitals: 400 or more beds (N=360) ........................................................................................................... Hospitals with 100 or fewer beds (N=1,169) ........................................................................................................... Hospitals with a measure score for: Zero Domain 2 measures (N=188) .................................................................................................................. One Domain 2 measure (N=269) ..................................................................................................................... Two Domain 2 measures (N=225) ................................................................................................................... Three Domain 2 measures (N=198) ................................................................................................................ Four Domain 2 measures (N=253) .................................................................................................................. Five Domain 2 measures (N=2,022) ................................................................................................................ a The Variable domain weights (percent) 2.4 0.6 2.2 ¥1.8 1.6 0.8 1.1 ¥0.9 0.0 ¥4.2 ¥0.8 ¥2.5 ¥0.4 1.0 0.0 ¥1.9 ¥0.4 ¥2.5 0.4 0.5 number of hospitals in the given hospital group for FY 2018 is specified in parenthesis in this column (for example, N=248). are considered safety-net hospitals if they are in the top quintile for DSH percent. daltland on DSKBBV9HB2PROD with PROPOSALS2 b Hospitals As shown in the table above, the Equal Measure Weights approach generally has a larger impact than the Variable Domain Weights approach. Under the Equal Measure Weights Approach, as compared to the current methodology using FY2018 HAC Reduction Program data, the percentage of hospitals in the worst-performing quartile decreases by 1.8 percent for small hospitals (that is, 100 or fewer beds), 4.2 percent for hospitals with one Domain 2 measure, 0.8 percent for hospitals with two Domain 2 measures, while it increases by 2.2 percent for large urban hospitals (that is, 400 or more beds) and 2.4 percent for large teaching hospitals (that is, 100 or more residents). The Variable Domain Weights approach changes the percentage of hospitals in the worstperforming quartile by less than two percent for these groups of hospitals. To understand the potential impacts of these alternatives on hospitals’ Total HAC Reduction Program Penalty Amount, we conducted an analysis that estimated the potential impacts of these alternatives using FY 2013 payment data annualized by a factor to estimate in FY 2019 payment dollars. Based on this analysis, we expect that aggregate penalty amounts would slightly increase under both alternative methodologies proposed in this rule. We also expect an increase in the penalty amount under both methodologies because some larger hospitals may move into the worstperforming quartile and smaller hospitals may move out of the worst-performing quartile. Because the 1 percent penalty applies uniformly to hospitals in the worstperforming quartile, we anticipate that overall program penalties would rise slightly if more larger hospitals move into the penalty quartile. The alternative weighting approach considered, variable weighting, would increase estimated total penalties by approximately $7,585,812. The proposed 410 Only eligible hospitals are included in this analysis. Excluded hospitals (for example, hospitals not meeting the minimum domains required for calculation, hospitals receiving three or more immediate jeopardy citations in the FY 2018 performance period, hospitals subject to payment reductions under the Hospital IQR Program in FY 2018, and hospitals located in the state of Maryland) were removed from this analysis. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00476 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules weighting approach would increase estimated total penalties by $19,061,086, over $11 million more than the alternative weighting approach considered. The table below displays the results of our analysis in Total HAC reduction program penalty amount (FY 2019 dollars) * Scenario FY 2018 HAC Reduction Program—Before Proposed Weighting Change ................................................................................................. Variable Domain Weights ........................................................................ Equal Measure Weights .......................................................................... 20639 FY 2013 dollars, FY 2019 dollars, and as a percentage difference. Percentage difference from FY 2018 $441,684,337 449,270,149 460,745,424 N/A 1.7 4.3 Difference from FY 2018 (FY 2019 dollars) * N/A $7,585,812 19,061,086 * Estimated change in total penalties applied using FY 2013 payments annualized to FY 2019 payment dollars. After consideration of the current policy, Equal Measure Weights and Variable Domain Weighting methodologies, we are seeking public comment on these approaches. Because the alternatives considered do not impact the collection of information for hospitals, we do not expect these alternatives to affect the reporting burden on hospitals associated with the HAC Reduction Program. P. Reducing Regulation and Controlling Regulatory Costs Executive Order 13771, titled Reducing Regulation and Controlling Regulatory Costs, was issued on January 30, 2017. This proposed rule, if finalized, is considered an E.O. 13771 deregulatory action. We estimate that this rule generates $72 million in annualized cost savings, discounted at 7 percent relative to fiscal year 2016, over a perpetual time horizon. We discuss the estimated burden and cost reductions for the Hospital IQR Program in section XIV.B.3. of the preamble of the proposed rule, and estimate that the impact of these proposed changes is a reduction in costs of approximately $21,585 per hospital annually or approximately $71,233,624 for all hospitals annually. We note that in section VIII.A.5.c.(1). of the preamble of this proposed rule, we are proposing to remove the hospital-acquired infection (HAI) measures from the Hospital IQR Program and, therefore, discontinue validation of these measures under the Hospital IQR Program. However, these measures will remain in the HAC Reduction Program and, therefore, we are proposing to begin validation of these measures under the HAC Reduction Program using the same processes and information collection requirements previously used under the Hospital IQR Program. As a result, the net costs reflected in the table below for the HAC Reduction Program do not constitute a new information collection requirement on participating hospitals, but a transition of the HAI measure validation process from one program to another based on our efforts to reduce measure duplication across programs. We Section of the proposed rule Section Section Section Section XIV.B.3. XIV.B.4. XIV.B.6. XIV.B.7. of of of of the the the the preamble preamble preamble preamble discuss the estimated burden and cost impacts for the proposed transition of HAI data validation from the Hospital IQR Program to the HAC Reduction Program in section XIV.B.7. of the preamble of the proposed rule. We discuss the estimated burden and cost reductions for the PCHQR Program in section XIV.B.4. of the preamble of this proposed rule, and estimate that the impact of these proposed changes is a reduction in costs of approximately $92,145 per PCH annually or approximately $1,013,595 for all participating PCHs annually. We discuss the estimated burden and cost reductions for the proposed LTCH QRP measure removals in section XIV.B.6. of the preamble of this proposed rule, and estimate that the impact of these proposed changes is a reduction in costs of approximately $1,148 per LTCH annually or approximately $482,469 for all LTCHs annually. Also, as noted in section I.R. of this Appendix, the regulatory review cost for this proposed rule is $8,809,182. Amount of costs or savings Description ............................................ ............................................ ............................................ ............................................ Total .................................................................................. ICRs ICRs ICRs ICRs for for for for the the the the Hospital IQR Program ........................................ PCHQR Program ................................................ LTCH QRP ......................................................... HAC Reduction Program * .................................. ($71,233,624) (1,013,595) (482,469) 1,580,256 .................................................................................................. (72 million) * We note that the net costs reflected in this table for the HAC Reduction Program do not constitute a new information collection requirement on participating hospitals, but a transition of the HAI measure validation process from one program to another based on our efforts to reduce measure duplication across programs. Q. Overall Conclusion daltland on DSKBBV9HB2PROD with PROPOSALS2 1. Acute Care Hospitals Overall, acute care hospitals are estimated to experience an increase of 3.4 percent, or approximately $4.1 billion, in their combined operating and capital payments as modeled for this proposed rule. Approximately 3.2 percentage points of this estimated increase is due to the proposed change in operating payments, including uncompensated care payments (discussed in sections I.G. and I.H. of this Appendix), approximately 0.1 percentage points is due to the proposed change in capital payments (discussed in section I.I of this Appendix), and approximately 0.1 percentage points is due to the proposed change in low-volume hospital VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 payments (discussed in section I.H of this Appendix). Table I of section I.G. of this Appendix also demonstrates the estimated redistributional impacts of the IPPS budget neutrality requirements for the proposed MS–DRG and wage index changes, and for the proposed wage index reclassifications under the MGCRB. We estimate that hospitals would experience a 1.7 percent increase in capital payments per case, as shown in Table III of section I.I. of this Appendix. We project that there would be a $146 million increase in capital payments in FY 2019 compared to FY 2018. The discussions presented in the previous pages, in combination with the remainder of PO 00000 Frm 00477 Fmt 4701 Sfmt 4702 this proposed rule, constitute a regulatory impact analysis. 2. LTCHs Overall, LTCHs are projected to experience a decrease in estimated payments per discharge in FY 2019. In the impact analysis, we are using the proposed rates, factors, and policies presented in this proposed rule based on the best available claims and CCR data to estimate the change in payments under the LTCH PPS for FY 2019. Accordingly, based on the best available data for the 409 LTCHs in our database, we estimate that overall FY 2019 LTCH PPS payments would decrease approximately $5 million relative to FY 2018 as a result of the proposed payment rates and factors presented in this proposed rule. E:\FR\FM\07MYP2.SGM 07MYP2 20640 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules R. Regulatory Review Costs If regulations impose administrative costs on private entities, such as the time needed to read and interpret a rule, we should estimate the cost associated with regulatory review. Due to the uncertainty involved with accurately quantifying the number of entities that would review the proposed rule, we assumed that the total number of timely pieces of correspondence on last year’s proposed rule would be the number of reviewers of the proposed rule. We acknowledge that this assumption may understate or overstate the costs of reviewing the rule. It is possible that not all commenters reviewed last year’s rule in detail, and it is also possible that some reviewers chose not to comment on the proposed rule. For those reasons, and consistent with our approach in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38585), we believe that the number of past commenters would be a fair estimate of the number of reviewers of the proposed rule. We welcome any public comments on the approach in estimating the number of entities that will review this proposed rule. We also recognized that different types of entities are in many cases affected by mutually exclusive sections of the proposed rule. Therefore, for the purposes of our estimate, and consistent with our approach in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38585), we assume that each reviewer read approximately 50 percent of the proposed rule. We welcome public comments on this assumption. We have used the number of timely pieces of correspondence on the FY 2018 proposed rule as our estimate for the number of reviewers of this proposed rule. We continue to acknowledge the uncertainty involved with using this number, but we believe it is a fair estimate due to the variety of entities affected and the likelihood that some of them choose to rely (in full or in part) on press releases, newsletters, fact sheets, or other sources rather than the comprehensive review of preamble and regulatory text. Using the wage information from the BLS for medical and health service managers (Code 11–9111), we estimate that the cost of reviewing the proposed rule is $105.16 per hour, including overhead and fringe benefits (https://www.bls.gov/oes/current/oes_ nat.htm). Assuming an average reading speed, we estimate that it would take approximately 19 hours for the staff to review half of the proposed rule. For each IPPS hospital or LTCH that reviews this proposed rule, the estimated cost is $1,998 (19 hours × $105.16). Therefore, we estimate that the total cost of reviewing this proposed rule is $8,809,182 ($1,998 × 4,409 reviewers). daltland on DSKBBV9HB2PROD with PROPOSALS2 II. Accounting Statements and Tables A. Acute Care Hospitals As required by OMB Circular A–4 (available at https://obamawhitehouse. archives.gov/omb/circulars_a-004_a-4/ and https://georgewbushwhitehouse.archives.gov/omb/circulars/ a004/a-4.html), in the following Table V., we have prepared an accounting statement showing the classification of the VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 expenditures associated with the provisions of this proposed rule as they relate to acute care hospitals. This table provides our best estimate of the change in Medicare payments to providers as a result of the proposed changes to the IPPS presented in this proposed rule. All expenditures are classified as transfers to Medicare providers. As shown below in Table V., the net costs to the Federal Government associated with the proposed policies in this proposed rule are estimated at $4.1 billion. TABLE V—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED EXPENDITURES UNDER THE IPPS FROM FY 2018 TO FY 2019 Category Transfers Annualized Monetized Transfers. From Whom to Whom .... $4.1 billion. Federal Government to IPPS Medicare Providers. B. LTCHs As discussed in section I.J. of this Appendix, the impact analysis of the proposed payment rates and factors presented in this proposed rule under the LTCH PPS is projected to result in a decrease in estimated aggregate LTCH PPS payments in FY 2019 relative to FY 2018 of approximately $5 million based on the data for 409 LTCHs in our database that are subject to payment under the LTCH PPS. Therefore, as required by OMB Circular A– 4 (available at https://obamawhitehouse. archives.gov/omb/circulars_a004_a-4/ and https://georgewbush-whitehouse. archives.gov/omb/circulars/a004/a-4.html), in Table VI., we have prepared an accounting statement showing the classification of the expenditures associated with the provisions of this proposed rule as they relate to the changes to the LTCH PPS. Table VI. provides our best estimate of the estimated change in Medicare payments under the LTCH PPS as a result of the proposed payment rates and factors and other provisions presented in this proposed rule based on the data for the 409 LTCHs in our database. All expenditures are classified as transfers to Medicare providers (that is, LTCHs). As shown in Table VI. below, the net savings to the Federal Government associated with the policies for LTCHs in this proposed rule are estimated at $5 million. TABLE VI—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED EXPENDITURES FROM THE FY 2018 LTCH PPS TO THE FY 2019 LTCH PPS Category Transfers Annualized Monetized Transfers. From Whom to Whom .... PO 00000 Frm 00478 Fmt 4701 ¥$5 million. Federal Government to LTCH Medicare Providers. Sfmt 4702 III. Regulatory Flexibility Act (RFA) Analysis The RFA requires agencies to analyze options for regulatory relief of small entities. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small government jurisdictions. We estimate that most hospitals and most other providers and suppliers are small entities as that term is used in the RFA. The great majority of hospitals and most other health care providers and suppliers are small entities, either by being nonprofit organizations or by meeting the SBA definition of a small business (having revenues of less than $7.5 million to $38.5 million in any 1 year). (For details on the latest standards for health care providers, we refer readers to page 36 of the Table of Small Business Size Standards for NAIC 622 found on the SBA website at: https://www.sba.gov/ sites/default/files/files/Size_Standards_ Table.pdf.) For purposes of the RFA, all hospitals and other providers and suppliers are considered to be small entities. Individuals and States are not included in the definition of a small entity. We believe that the provisions of this proposed rule relating to acute care hospitals will have a significant impact on small entities as explained in this Appendix. For example, because all hospitals are considered to be small entities for purposes of the RFA, the hospital impacts described in this proposed rule are impacts on small entities. For example, we refer readers to ‘‘Table I.— Impact Analysis of Proposed Changes to the IPPS for Operating Costs for FY 2019.’’ Because we lack data on individual hospital receipts, we cannot determine the number of small proprietary LTCHs. Therefore, we are assuming that all LTCHs are considered small entities for the purpose of the analysis in section I.J. of this Appendix. MACs are not considered to be small entities because they do not meet the SBA definition of a small business. Because we acknowledge that many of the affected entities are small entities, the analysis discussed throughout the preamble of this proposed rule constitutes our regulatory flexibility analysis. This proposed rule contains a range of proposed policies. It provides descriptions of the statutory provisions that are addressed, identifies the proposed policies, and presents rationales for our decisions and, where relevant, alternatives that were considered. In this proposed rule, we are soliciting public comments on our estimates and analysis of the impact of our proposals on those small entities. Any public comments that we receive and our responses will be presented throughout the final rule. IV. Impact on Small Rural Hospitals Section 1102(b) of the Social Security Act requires us to prepare a regulatory impact analysis for any proposed or final rule that may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. With the exception of hospitals located in certain New England counties, for purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is E:\FR\FM\07MYP2.SGM 07MYP2 20641 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules located outside of an urban area and has fewer than 100 beds. Section 601(g) of the Social Security Amendments of 1983 (Pub. L. 98–21) designated hospitals in certain New England counties as belonging to the adjacent urban area. Thus, for purposes of the IPPS and the LTCH PPS, we continue to classify these hospitals as urban hospitals. (We refer readers to Table I in section I.G. of this Appendix for the quantitative effects of the policy changes under the IPPS for operating costs.) V. Unfunded Mandates Reform Act Analysis Section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4) also requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. In 2019, that threshold level is approximately $146 million. This proposed rule would not mandate any requirements for State, local, or tribal governments, nor would it affect private sector costs. VI. Executive Order 13175 Executive Order 13175 directs agencies to consult with Tribal officials prior to the formal promulgation of regulations having tribal implications. This proposed rule contains provisions applicable to hospitals and facilities operated by the Indian Health Service or Tribes or Tribal organizations under the Indian Self-Determination and Education Assistance Act and, thus, has tribal implications. Therefore, in accordance with Executive Order 13175 and the CMS Tribal Consultation Policy (December 2015), CMS will consult with Tribal officials on these Indian-specific provisions of the proposed rule prior to the formal promulgation of this rule. VII. Executive Order 12866 In accordance with the provisions of Executive Order 12866, the Executive Office of Management and Budget reviewed this proposed rule. Appendix B: Recommendation of Update Factors for Operating Cost Rates of Payment for Inpatient Hospital Services I. Background Section 1886(e)(4)(A) of the Act requires that the Secretary, taking into consideration the recommendations of MedPAC, recommend update factors for inpatient hospital services for each fiscal year that take into account the amounts necessary for the efficient and effective delivery of medically appropriate and necessary care of high quality. Under section 1886(e)(5) of the Act, we are required to publish update factors recommended by the Secretary in the proposed and final IPPS rules. Accordingly, this Appendix provides the recommendations for the update factors for the IPPS national standardized amount, the hospital-specific rate for SCHs, and the rateof-increase limits for certain hospitals excluded from the IPPS, as well as LTCHs. In prior years, we made a recommendation in the IPPS proposed rule and final rule for the update factors for the payment rates for IRFs and IPFs. However, for FY 2019, consistent with our approach for FY 2018, we are including the Secretary’s recommendation for the update factors for IRFs and IPFs in separate Federal Register documents at the time that we announce the annual updates for IRFs and IPFs. We also discuss our response to MedPAC’s recommended update factors for inpatient hospital services. II. Inpatient Hospital Update for FY 2019 A. Proposed FY 2019 Inpatient Hospital Update As discussed in section IV.B. of the preamble to this proposed rule, for FY 2019, consistent with section 1886(b)(3)(B) of the Act, as amended by sections 3401(a) and 10319(a) of the Affordable Care Act, we are setting the applicable percentage increase by applying the following adjustments in the following sequence. Specifically, the applicable percentage increase under the IPPS is equal to the rate-of-increase in the hospital market basket for IPPS hospitals in all areas, subject to a reduction of one-quarter of the applicable percentage increase (prior to the application of other statutory adjustments; also referred to as the market basket update or rate-of-increase (with no adjustments)) for hospitals that fail to submit quality information under rules established by the Secretary in accordance with section 1886(b)(3)(B)(viii) of the Act and a reduction of three-quarters of the applicable percentage increase (prior to the application of other statutory adjustments; also referred to as the market basket update or rate-of-increase (with no adjustments)) for hospitals not considered to be meaningful electronic Hospital submitted quality data and is a meaningful EHR user daltland on DSKBBV9HB2PROD with PROPOSALS2 FY 2019 Proposed Market Basket Rate-of-Increase ............................................. Proposed Adjustment for Failure to Submit Quality Data under Section 1886(b)(3)(B)(viii) of the Act ................................................................ Proposed Adjustment for Failure to be a Meaningful EHR User under Section 1886(b)(3)(B)(ix) of the Act ..................................................... Proposed MFP Adjustment under Section 1886(b)(3)(B)(xi) of the Act .. Statutory Adjustment under Section 1886(b)(3)(B)(xii) of the Act ........... Proposed Applicable Percentage Increase Applied to Standardized Amount ................................................................................................. VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 PO 00000 Frm 00479 Fmt 4701 health record (EHR) users in accordance with section 1886(b)(3)(B)(ix) of the Act, and then subject to an adjustment based on changes in economy-wide productivity (the multifactor productivity (MFP) adjustment), and an additional reduction of 0.75 percentage point as required by section 1886(b)(3)(B)(xii) of the Act. Sections 1886(b)(3)(B)(xi) and (b)(3)(B)(xii) of the Act, as added by section 3401(a) of the Affordable Care Act, state that application of the MFP adjustment and the additional FY 2019 adjustment of 0.75 percentage point may result in the applicable percentage increase being less than zero. We note that, in compliance with section 404 of the MMA, in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38587), we replaced the FY 2010-based IPPS operating and capital market baskets with the rebased and revised 2014-based IPPS operating and capital market baskets effective with FY 2018. In this FY 2019 IPPS/LTCH PPS proposed rule, in accordance with section 1886(b)(3)(B) of the Act, we are proposing to base the proposed FY 2019 market basket update used to determine the applicable percentage increase for the IPPS on IGI’s fourth quarter 2017 forecast of the 2014-based IPPS market basket rate-of-increase with historical data through third quarter 2017, which is estimated to be 2.8 percent. In accordance with section 1886(b)(3)(B) of the Act, as amended by section 3401(a) of the Affordable Care Act, in section IV.B. of the preamble of this FY 2019 IPPS/LTCH PPS proposed rule, based on IGI’s fourth quarter 2017 forecast, we are proposing an MFP adjustment of 0.8 percent for FY 2019. We also are proposing that if more recent data subsequently become available, we would use such data, if appropriate, to determine the FY 2019 market basket update and MFP adjustment for the final rule. Therefore, based on IGI’s fourth quarter 2017 forecast of the 2014-based IPPS market basket and the MFP adjustment, depending on whether a hospital submits quality data under the rules established in accordance with section 1886(b)(3)(B)(viii) of the Act (hereafter referred to as a hospital that submits quality data) and is a meaningful EHR user under section 1886(b)(3)(B)(ix) of the Act (hereafter referred to as a hospital that is a meaningful EHR user), we are proposing four possible applicable percentage increases that could be applied to the standardized amount, as shown in the table below. Hospital submitted quality data and is not a meaningful EHR user Hospital did NOT submit quality data and is a meaningful EHR user Hospital did NOT submit quality data and is NOT a meaningful EHR User 2.8 2.8 2.8 0.0 0.0 ¥0.7 ¥0.7 0.0 ¥0.8 ¥0.75 ¥2.1 ¥0.8 ¥0.75 0.0 ¥0.8 ¥0.75 ¥2.1 ¥0.8 ¥0.75 1.25 Sfmt 4702 2.8 ¥0.85 0.55 ¥1.55 E:\FR\FM\07MYP2.SGM 07MYP2 20642 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules B. Proposed Update for SCHs and MDHs for FY 2019 Section 1886(b)(3)(B)(iv) of the Act provides that the FY 2019 applicable percentage increase in the hospital-specific rate for SCHs and MDHs equals the applicable percentage increase set forth in section 1886(b)(3)(B)(i) of the Act (that is, the same update factor as for all other hospitals subject to the IPPS). As discussed in section IV.G. of the preamble of this proposed rule, section 205 of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (Pub. L. 114–10) extended the MDH program through FY 2017 (that is, for discharges occurring on or before September 30, 2017). Section 50205 of the Bipartisan Budget Act of 2018 (Pub. L. 115–123), enacted on February 9, 2018, extended the MDH program for discharges on or after October 1, 2017 through September 30, 2022. As previously mentioned, the update to the hospital specific rate for SCHs and MDHs is subject to section 1886(b)(3)(B)(i) of the Act, as amended by sections 3401(a) and 10319(a) of the Affordable Care Act. Accordingly, depending on whether a hospital submits quality data and is a meaningful EHR user, we are proposing the same four possible applicable percentage increases in the table above for the hospital-specific rate applicable to SCHs and MDHs. daltland on DSKBBV9HB2PROD with PROPOSALS2 C. Proposed FY 2019 Puerto Rico Hospital Update As discussed in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56939), prior to January 1, 2016, Puerto Rico hospitals were paid based on 75 percent of the national standardized amount and 25 percent of the Puerto Rico-specific standardized amount. Section 601 of Public Law 114–113 amended section 1886(d)(9)(E) of the Act to specify that the payment calculation with respect to operating costs of inpatient hospital services of a subsection (d) Puerto Rico hospital for inpatient hospital discharges on or after January 1, 2016, shall use 100 percent of the national standardized amount. Because Puerto Rico hospitals are no longer paid with a Puerto Rico-specific standardized amount under the amendments to section 1886(d)(9)(E) of the Act, there is no longer a need for us to make an update to the Puerto Rico standardized amount. Hospitals in Puerto Rico are now paid 100 percent of the national standardized amount and, therefore, are subject to the same update to the national standardized amount discussed under section IV.B.1. of the preamble of this proposed rule. Accordingly, for FY 2019, we are proposing an applicable percentage increase of 1.25 percent to the standardized amount for hospitals located in Puerto Rico. D. Proposed Update for Hospitals Excluded From the IPPS for FY 2019 Section 1886(b)(3)(B)(ii) of the Act is used for purposes of determining the percentage increase in the rate-of-increase limits for children’s hospitals, cancer hospitals, and hospitals located outside the 50 States, the District of Columbia, and Puerto Rico (that is, short-term acute care hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and America Samoa). VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 Section 1886(b)(3)(B)(ii) of the Act sets the percentage increase in the rate-of-increase limits equal to the market basket percentage increase. In accordance with § 403.752(a) of the regulations, RNHCIs are paid under the provisions of § 413.40, which also use section 1886(b)(3)(B)(ii) of the Act to update the percentage increase in the rate-of-increase limits. Currently, children’s hospitals, PPSexcluded cancer hospitals, RNHCIs, and short-term acute care hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa are among the remaining types of hospitals still paid under the reasonable cost methodology, subject to the rate-of-increase limits. In addition, in accordance with § 412.526(c)(3) of the regulations, extended neoplastic disease care hospitals (described in § 412.22(i) of the regulations) also are subject to the rate-of-increase limits. As discussed in section VI. of the preamble of this proposed rule, in the FY 2018 IPPS/LTCH PPS final rule, we finalized the use of the percentage increase in the 2014-based IPPS operating market basket to update the target amounts for children’s hospitals, PPS-excluded cancer hospitals, RNHCIs, and short-term acute care hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa for FY 2018 and subsequent fiscal years. In addition, as discussed in section IV.A. of the preamble of this proposed rule, the update to the target amount for extended neoplastic disease care hospitals for FY 2019 would be the percentage increase in the 2014-based IPPS operating market basket. Accordingly, for FY 2019, the rate-of-increase percentage to be applied to the target amount for these children’s hospitals, cancer hospitals, RNHCIs, neoplastic disease care hospitals, and short-term acute care hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa would be the FY 2019 percentage increase in the 2014-based IPPS operating market basket. For this proposed rule, the current estimate of the IPPS operating market basket percentage increase for FY 2019 is 2.8 percent. E. Proposed Update for LTCHs for FY 2019 Section 123 of Public Law 106–113, as amended by section 307(b) of Public Law 106–554 (and codified at section 1886(m)(1) of the Act), provides the statutory authority for updating payment rates under the LTCH PPS. As discussed in section V.A. of the Addendum to this proposed rule, we are proposing to update the LTCH PPS standard Federal payment rate by 1.15 percent for FY 2019, consistent with the amendments to section 1886(m)(3) of the Act provided by section 411 of MACRA. In accordance with the LTCHQR Program under section 1886(m)(5) of the Act, we are proposing to reduce the annual update to the LTCH PPS standard Federal rate by 2.0 percentage points for failure of a LTCH to submit the required quality data. Accordingly, we are proposing to establish an update factor of 1.0115 in determining the LTCH PPS standard Federal rate for FY 2019. For LTCHs that fail to submit quality data for FY 2019, PO 00000 Frm 00480 Fmt 4701 Sfmt 4702 we are proposing to apply an annual update to the LTCH PPS standard Federal rate of ¥0.85 percent (that is, the proposed annual update for FY 2019 of 1.15 percent less 2.0 percentage points for failure to submit the required quality data in accordance with section 1886(m)(5)(C) of the Act and our rules) by applying a proposed update factor of 0.9915 in determining the LTCH PPS standard Federal rate for FY 2019. (We note that, as discussed in section VII.D. of the preamble of this proposed rule, the proposed update to the LTCH PPS standard Federal payment rate of 1.15 percent for FY 2019 does not reflect any proposed budget neutrality factors, such as the proposed offset for the elimination of the LTCH PPS 25percent threshold policy.) III. Secretary’s Recommendations MedPAC is recommending an inpatient hospital update in the amount specified in current law for FY 2019. MedPAC’s rationale for this update recommendation is described in more detail below. As mentioned above, section 1886(e)(4)(A) of the Act requires that the Secretary, taking into consideration the recommendations of MedPAC, recommend update factors for inpatient hospital services for each fiscal year that take into account the amounts necessary for the efficient and effective delivery of medically appropriate and necessary care of high quality. Consistent with current law, depending on whether a hospital submits quality data and is a meaningful EHR user, we are recommending the four applicable percentage increases to the standardized amount listed in the table under section II. of this Appendix B. We are recommending that the same applicable percentage increases apply to SCHs and MDHs. In addition to making a recommendation for IPPS hospitals, in accordance with section 1886(e)(4)(A) of the Act, we are recommending update factors for certain other types of hospitals excluded from the IPPS. Consistent with our policies for these facilities, we are recommending an update to the target amounts for children’s hospitals, cancer hospitals, RNHCIs, short-term acute care hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa and extended neoplastic disease care hospitals of 2.8 percent. For FY 2019, consistent with policy set forth in section VII. of the preamble of this proposed rule, for LTCHs that submit quality data, we are recommending an update of 1.15 percent to the LTCH PPS standard Federal rate. For LTCHs that fail to submit quality data for FY 2019, we are recommending an annual update to the LTCH PPS standard Federal rate of ¥0.85 percent. IV. MedPAC Recommendation for Assessing Payment Adequacy and Updating Payments in Traditional Medicare In its March 2018 Report to Congress, MedPAC assessed the adequacy of current payments and costs, and the relationship between payments and an appropriate cost base. MedPAC recommended an update to the hospital inpatient rates in the amount specified in current law. We refer readers to E:\FR\FM\07MYP2.SGM 07MYP2 Federal Register / Vol. 83, No. 88 / Monday, May 7, 2018 / Proposed Rules daltland on DSKBBV9HB2PROD with PROPOSALS2 the March 2018 MedPAC report, which is available for download at www.medpac.gov, for a complete discussion on this recommendation. Response: We agree with MedPAC, and consistent with current law, we are proposing to apply an applicable percentage VerDate Sep<11>2014 20:30 May 04, 2018 Jkt 244001 increase for FY 2019 of 1.25 percent, provided the hospital submits quality data and is a meaningful EHR user, consistent with statutory requirements. We note that, because the operating and capital prospective payment systems remain separate, we are proposing to continue to use PO 00000 Frm 00481 Fmt 4701 Sfmt 9990 20643 separate updates for operating and capital payments. The proposed update to the capital rate is discussed in section III. of the Addendum to this proposed rule. [FR Doc. 2018–08705 Filed 4–24–18; 4:15 pm] BILLING CODE 4120–01–P E:\FR\FM\07MYP2.SGM 07MYP2

Agencies

[Federal Register Volume 83, Number 88 (Monday, May 7, 2018)]
[Proposed Rules]
[Pages 20164-20643]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-08705]

[[Page 20163]]

Vol. 83

Monday,

No. 88

May 7, 2018

Part II

Book 2 of 2 Books

Pages 20163-20706

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Parts 412, 413, 424, et al.

Medicare Program; Hospital Inpatient Prospective Payment Systems for
Acute Care Hospitals and the Long[dash]Term Care Hospital Prospective
Payment System and Proposed Policy Changes and Fiscal Year 2019 Rates;
Proposed Quality Reporting Requirements for Specific Providers;
Proposed Medicare and Medicaid Electronic Health Record (EHR) Incentive
Programs (Promoting Interoperability Programs) Requirements for
Eligible Hospitals, Critical Access Hospitals, and Eligible
Professionals; Medicare Cost Reporting Requirements; and Physician
Certification and Recertification of Claims; Proposed Rule

Federal Register / Vol. 83 , No. 88 / Monday, May 7, 2018 / Proposed
Rules

[[Page 20164]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 412, 413, 424, and 495

[CMS-1694-P]
RIN 0938-AT27

Medicare Program; Hospital Inpatient Prospective Payment Systems
for Acute Care Hospitals and the Long[dash]Term Care Hospital
Prospective Payment System and Proposed Policy Changes and Fiscal Year
2019 Rates; Proposed Quality Reporting Requirements for Specific
Providers; Proposed Medicare and Medicaid Electronic Health Record
(EHR) Incentive Programs (Promoting Interoperability Programs)
Requirements for Eligible Hospitals, Critical Access Hospitals, and
Eligible Professionals; Medicare Cost Reporting Requirements; and
Physician Certification and Recertification of Claims

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Proposed rule.

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SUMMARY: We are proposing to revise the Medicare hospital inpatient
prospective payment systems (IPPS) for operating and capital-related
costs of acute care hospitals to implement changes arising from our
continuing experience with these systems for FY 2019. Some of these
proposed changes implement certain statutory provisions contained in
the 21st Century Cures Act and the Bipartisan Budget Act of 2018, and
other legislation. We also are proposing to make changes relating to
Medicare graduate medical education (GME) affiliation agreements for
new urban teaching hospitals. In addition, we are proposing to provide
the market basket update that would apply to the
rate[dash]of[dash]increase limits for certain hospitals excluded from
the IPPS that are paid on a reasonable cost basis subject to these
limits for FY 2019. We are proposing to update the payment policies and
the annual payment rates for the Medicare prospective payment system
(PPS) for inpatient hospital services provided by long-term care
hospitals (LTCHs) for FY 2019.
In addition, we are proposing to establish new requirements or
revise existing requirements for quality reporting by specific Medicare
providers (acute care hospitals, PPS[dash]exempt cancer hospitals, and
LTCHs). We also are proposing to establish new requirements or revise
existing requirements for eligible professionals (EPs), eligible
hospitals, and critical access hospitals (CAHs) participating in the
Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs
(now referred to as the Promoting Interoperability Programs). In
addition, we are proposing changes to the requirements that apply to
States operating Medicaid Promoting Interoperability Prrograms. We are
proposing to update policies for the Hospital Value-Based Purchasing
(VBP) Program, the Hospital Readmissions Reduction Program, and the
Hospital-Acquired Condition (HAC) Reduction Program.
We also are proposing to make changes relating to the required
supporting documentation for an acceptable Medicare cost report
submission and the supporting information for physician certification
and recertification of claims.

DATES: Comment Period: To be assured consideration, comments must be
received at one of the addresses provided in the ADDRESSES section, no
later than 5 p.m. on June 25, 2018.

ADDRESSES: In commenting, please refer to file code CMS-1694-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may submit electronic comments on this
regulation to https://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1694-P, P.O. Box 8011,
Baltimore, MD 21244-1850.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-1694-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, we refer readers to the
beginning of the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Donald Thompson, (410) 786-4487, and
Michele Hudson, (410) 786-4487, Operating Prospective Payment, MS-DRGs,
Wage Index, New Medical Service and Technology Add-On Payments,
Hospital Geographic Reclassifications, Graduate Medical Education,
Capital Prospective Payment, Excluded Hospitals, Sole Community
Hospitals, Medicare Disproportionate Share Hospital (DSH) Payment
Adjustment, Medicare[dash]Dependent Small Rural Hospital (MDH) Program,
and Low-Volume Hospital Payment Adjustment Issues.
Michele Hudson, (410) 786-4487, Mark Luxton, (410) 786-4530, and
Emily Lipkin, (410) 786-3633, Long[dash]Term Care Hospital Prospective
Payment System and MS-LTC-DRG Relative Weights Issues.
Siddhartha Mazumdar, (410) 786-6673, Rural Community Hospital
Demonstration Program Issues.
Jeris Smith, (410) 786-0110, Frontier Community Health Integration
Project Demonstration Issues.
Cindy Tourison, (410) 786-1093, Hospital Readmissions Reduction
Program--Readmission Measures for Hospitals Issues.
James Poyer, (410) 786-2261, Hospital Readmissions Reduction
Program--Administration Issues.
Elizabeth Bainger, (410) 786-0529, Hospital-Acquired Condition
Reduction Program Issues.
Joseph Clift, (410) 786-4165, Hospital-Acquired Condition Reduction
Program--Measures Issues.
Grace Snyder, (410) 786-0700 and James Poyer, (410) 786-2261,
Hospital Inpatient Quality Reporting and Hospital Value-Based
Purchasing--Program Administration, Validation, and Reconsideration
Issues.
Reena Duseja, (410) 786-1999 and Cindy Tourison, (410) 786-1093,
Hospital Inpatient Quality Reporting--Measures Issues Except Hospital
Consumer Assessment of Healthcare Providers and Systems Issues; and
Readmission Measures for Hospitals Issues.
Kim Spalding Bush, (410) 786-3232, Hospital Value-Based Purchasing
Efficiency Measures Issues.
Elizabeth Goldstein, (410) 786-6665, Hospital Inpatient Quality
Reporting--Hospital Consumer Assessment of Healthcare Providers and
Systems Measures Issues.
Joel Andress, (410) 786-5237 and Caitlin Cromer, (410) 786-3106,
PPS-Exempt Cancer Hospital Quality Reporting Issues.
Mary Pratt, (410) 786-6867, Long-Term Care Hospital Quality Data
Reporting Issues.

[[Page 20165]]

Elizabeth Holland, (410) 786-1309, Promoting Interoperability
Programs Clinical Quality Measure Related Issues.
Kathleen Johnson, (410) 786-3295 and Steven Johnson (410) 786-3332,
Promoting Interoperability Programs Nonclinical Quality Measure Related
Issues.
Kellie Shannon, (410) 786-0416, Acceptable Medicare Cost Report
Submissions Issues.
Thomas Kessler, (410) 786-1991, Physician Certification and
Recertification of Claims.

SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following
website as soon as possible after they have been received: https://www.regulations.gov. Follow the search instructions on that website to
view public comments.

Electronic Access

This Federal Register document is available from the Federal
Register online database through Federal Digital System (FDsys), a
service of the U.S. Government Printing Office. This database can be
accessed via the Internet at: https://www.gpo.gov/fdsys.

Tables Available Only Through the Internet on the CMS Website

In the past, a majority of the tables referred to throughout this
preamble and in the Addendum to the proposed rule and the final rule
were published in the Federal Register as part of the annual proposed
and final rules. However, beginning in FY 2012, the majority of the
IPPS tables and LTCH PPS tables are no longer published in the Federal
Register. Instead, these tables generally will be available only
through the Internet. The IPPS tables for this proposed rule are
available through the Internet on the CMS website at: https://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/. Click on the link on the left side of the
screen titled, ``FY 2019 IPPS Proposed Rule Home Page'' or ``Acute
Inpatient--Files for Download''. The LTCH PPS tables for this FY 2019
proposed rule are available through the Internet on the CMS website at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/LongTermCareHospitalPPS/ under the list item for Regulation
Number CMS-1694-P. For further details on the contents of the tables
referenced in this proposed rule, we refer readers to section VI. of
the Addendum to this proposed rule.
Readers who experience any problems accessing any of the tables
that are posted on the CMS websites identified above should contact
Michael Treitel at (410) 786-4552.

Table of Contents

I. Executive Summary and Background
A. Executive Summary
B. Background Summary
C. Summary of Provisions of Recent Legislation Proposed To Be
Implemented in This Proposed Rule
D. Summary of Provisions of This Proposed Rule
II. Proposed Changes to Medicare Severity Diagnosis-Related Group
(MS-DRG) Classifications and Relative Weights
A. Background
B. MS-DRG Reclassifications
C. Adoption of the MS-DRGs in FY 2008
D. Proposed FY 2019 MS-DRG Documentation and Coding Adjustment
E. Refinement of the MS-DRG Relative Weight Calculation
F. Proposed Changes to Specific MS-DRG Classifications
G. Recalibration of the Proposed FY 2019 MS-DRG Relative Weights
H. Proposed Add-On Payments for New Services and Technologies
for FY 2019
III. Proposed Changes to the Hospital Wage Index for Acute Care
Hospitals
A. Background
B. Worksheet S-3 Wage Data for the Proposed FY 2019 Wage Index
C. Verification of Worksheet S-3 Wage Data
D. Method for Computing the Proposed FY 2019 Unadjusted Wage
Index
E. Proposed Occupational Mix Adjustment to the FY 2019 Wage
Index
F. Analysis and Implementation of the Proposed Occupational Mix
Adjustment and the Proposed FY 2019 Occupational Mix Adjusted Wage
Index
G. Proposed Application of the Rural, Imputed, and Frontier
Floors
H. Proposed FY 2019 Wage Index Tables
I. Proposed Revisions to the Wage Index Based on Hospital
Redesignations and Reclassifications
J. Proposed Out-Migration Adjustment Based on Commuting Patterns
of Hospital Employees
K. Reclassification From Urban to Rural Under Section
1886(d)(8)(E) of the Act Implemented at 42 CFR 412.103 and Proposed
Change to Lock-In Date
L. Process for Requests for Wage Index Data Corrections
M. Proposed Labor-Related Share for the Proposed FY 2019 Wage
Index
N. Request for Public Comments on Wage Index Disparities
IV. Other Decisions and Proposed Changes to the IPPS for Operating
System
A. Proposed Changes to MS-DRGs Subject to Postacute Care
Transfer Policy and MS-DRG Special Payment Policies (Sec. 412.4)
B. Proposed Changes in the Inpatient Hospital Updates for FY
2019 (Sec. 412.64(d))
C. Rural Referral Centers (RRCs) Proposed Annual Updates to
Case-Mix Index and Discharge Criteria (Sec. 412.96)
D. Proposed Payment Adjustment for Low-Volume Hospitals (Sec.
412.101)
E. Indirect Medical Education (IME) Payment Adjustment Factor
(Sec. 412.105)
F. Proposed Payment Adjustment for Medicare Disproportionate
Share Hospitals (DSHs) for FY 2019 (Sec. 412.106)
G. Sole Community Hospitals (SCHs) and Medicare-Dependent, Small
Rural Hospitals (MDHs) (Sec. Sec. 412.90, 412.92, and 412.108)
H. Hospital Readmissions Reduction Program: Proposed Updates and
Changes (Sec. Sec. 412.150 Through 412.154)
I. Hospital Value-Based Purchasing (VBP) Program: Proposed
Policy Changes
J. Hospital-Acquired Condition (HAC) Reduction Program
K. Payments for Indirect and Direct Graduate Medical Education
Costs (Sec. Sec. 412.105 and 413.75 Through 413.83)
L. Rural Community Hospital Demonstration Program
M. Proposed Revision of Hospital Inpatient Admission Orders
Documentation Requirements Under Medicare Part A
V. Proposed Changes to the IPPS for Capital-Related Costs
A. Overview
B. Additional Provisions
C. Proposed Annual Update for FY 2019
VI. Proposed Changes for Hospitals Excluded From the IPPS
A. Proposed Rate-of-Increase in Payments to Excluded Hospitals
for FY 2019
B. Proposed Changes to Regulations Governing Satellite
Facilities
C. Proposed Changes to Regulations Governing Excluded Units of
Hospitals
D. Critical Access Hospitals (CAHs)
VII. Proposed Changes to the Long-Term Care Hospital Prospective
Payment System (LTCH PPS) for FY 2019
A. Background of the LTCH PPS
B. Proposed Medicare Severity Long-Term Care Diagnosis-Related
Group (MS-LTC-DRG) Classifications and Relative Weights for FY 2019
C. Proposed Modifications to the Application of the Site Neutral
Payment Rate (Sec. 412.522)
D. Proposed Changes to the LTCH PPS Payment Rates and Other
Proposed Changes to the LTCH PPS for FY 2019
E. Proposed Elimination of the ``25-Percent Threshold Policy''
Adjustment (Sec. 412.538)
VIII. Quality Data Reporting Requirements for Specific Providers and
Suppliers
A. Hospital Inpatient Quality Reporting (IQR) Program
B. PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program
C. Long-Term Care Hospital Quality Reporting Program (LTCH QRP)
D. Proposed Changes to the Medicare and Medicaid EHR Incentive
Programs (Now Referred to as the Medicare and Medicaid Promoting
Interoperability Programs)

[[Page 20166]]

IX. Proposed Revisions of the Supporting Documentation Required for
Submission of an Acceptable Medicare Cost Report
X. Requirements for Hospitals To Make Public a List of Their
Standard Charges via the Internet
XI. Proposed Revisions Regarding Physician Certification and
Recertification of Claims
XII. Request for Information on Promoting Interoperability and
Electronic Healthcare Information Exchange Through Possible
Revisions to the CMS Patient Health and Safety Requirements for
Hospitals and Other Medicare- and Medicaid-Participating Providers
and Suppliers
XIII. MedPAC Recommendations
XIV. Other Required Information
A. Publicly Available Data
B. Collection of Information Requirements
C. Response to Public Comments
Regulation Text
Addendum--Proposed Schedule of Proposed Standardized Amounts, Update
Factors, Rate[dash]of[dash]Increase Percentages Effective With Cost
Reporting Periods Beginning on or After October 1, 2018, and Payment
Rates for LTCHs Effective for Discharges Occurring on or After
October 1, 2018
I. Summary and Background
II. Proposed Changes to the Prospective Payment Rates for Hospital
Inpatient Operating Costs for Acute Care Hospitals for FY 2019
A. Calculation of the Adjusted Standardized Amount
B. Proposed Adjustments for Area Wage Levels and Cost-of-Living
C. Calculation of the Prospective Payment Rates
III. Proposed Changes to Payment Rates for Acute Care Hospital
Inpatient Capital[dash]Related Costs for FY 2019
A. Determination of Federal Hospital Inpatient
Capital[dash]Related Prospective Payment Rate Update for FY 2019
B. Calculation of the Inpatient Capital[dash]Related Prospective
Payments for FY 2019
C. Capital Input Price Index
IV. Proposed Changes to Payment Rates for Excluded Hospitals:
Rate[dash]of[dash]Increase Percentages for FY 2019
V. Proposed Changes to the Payment Rates for the LTCH PPS for FY
2019
A. Proposed LTCH PPS Standard Federal Payment Rate for FY 2019
B. Proposed Adjustment for Area Wage Levels Under the LTCH PPS
for FY 2019
C. Proposed LTCH PPS Cost-of-Living Adjustment (COLA) for LTCHs
Located in Alaska and Hawaii
D. Proposed Adjustment for LTCH PPS High-Cost Outlier (HCO)
Cases
E. Proposed Update to the IPPS Comparable/Equivalent Amounts To
Reflect the Statutory Changes to the IPPS DSH Payment Adjustment
Methodology
F. Computing the Proposed Adjusted LTCH PPS Federal Prospective
Payments for FY 2019
VI. Tables Referenced in This Proposed Rule Generally Available Only
Through the Internet on the CMS Website
Appendix A--Economic Analyses
I. Regulatory Impact Analysis
A. Statement of Need
B. Overall Impact
C. Objectives of the IPPS and the LTCH PPS
D. Limitations of Our Analysis
E. Hospitals Included in and Excluded From the IPPS
F. Effects on Hospitals and Hospital Units Excluded From the
IPPS
G. Quantitative Effects of the Proposed Policy Changes Under the
IPPS for Operating Costs
H. Effects of Other Proposed Policy Changes
I. Effects of Proposed Changes in the Capital IPPS
J. Effects of Proposed Payment Rate Changes and Policy Changes
Under the LTCH PPS
K. Effects of Proposed Requirements for Hospital Inpatient
Quality Reporting (IQR) Program
L. Effects of Proposed Requirements for the PPS-Exempt Cancer
Hospital Quality Reporting (PCHQR) Program
M. Effects of Proposed Requirements for the Long-Term Care
Hospital Quality Reporting Program (LTCH QRP)
N. Effects of Proposed Requirements Regarding the Promoting
Interoperability Programs
O. Alternatives Considered
P. Reducing Regulation and Controlling Regulatory Costs
Q. Overall Conclusion
R. Regulatory Review Costs
II. Accounting Statements and Tables
A. Acute Care Hospitals
B. LTCHs
III. Regulatory Flexibility Act (RFA) Analysis
IV. Impact on Small Rural Hospitals
V. Unfunded Mandate Reform Act (UMRA) Analysis
VI. Executive Order 13175
VII. Executive Order 12866
Appendix B--Recommendation of Update Factors for Operating Cost
Rates of Payment for Inpatient Hospital Services
I. Background
II. Inpatient Hospital Update for FY 2019
A. Proposed FY 2019 Inpatient Hospital Update
B. Proposed Update for SCHs and MDHs for FY 2019
C. Proposed FY 2019 Puerto Rico Hospital Update
D. Proposed Update for Hospitals Excluded From the IPPS for FY
2019
E. Proposed Update for LTCHs for FY 2019
III. Secretary's Recommendation
IV. MedPAC Recommendation for Assessing Payment Adequacy and
Updating Payments in Traditional Medicare

I. Executive Summary and Background

A. Executive Summary

1. Purpose and Legal Authority
This proposed rule would make payment and policy changes under the
Medicare inpatient prospective payment systems (IPPS) for operating and
capital[dash]related costs of acute care hospitals as well as for
certain hospitals and hospital units excluded from the IPPS. In
addition, it would make payment and policy changes for inpatient
hospital services provided by long-term care hospitals (LTCHs) under
the long[dash]term care hospital prospective payment system (LTCH PPS).
This proposed rule also would make policy changes to programs
associated with Medicare IPPS hospitals, IPPS-excluded hospitals, and
LTCHs.
We are proposing to establish new requirements and revise existing
requirements for quality reporting by specific providers (acute care
hospitals, PPS[dash]exempt cancer hospitals, and LTCHs) that are
participating in Medicare. We also are proposing to establish new
requirements and revise existing requirements for eligible
professionals (EPs), eligible hospitals, and CAHs participating in the
Medicare and Medicaid Promoting Interoperability Programs. We are
proposing to update policies for the Hospital Value[dash]Based
Purchasing (VBP) Program, the Hospital Readmissions Reduction Program,
and the Hospital-Acquired Condition (HAC) Reduction Program.
We also are proposing to make changes relating to the supporting
documentation required for an acceptable Medicare cost report
submission and the supporting information for physician certification
and recertification of claims.
Under various statutory authorities, we are proposing to make
changes to the Medicare IPPS, to the LTCH PPS, and to other related
payment methodologies and programs for FY 2019 and subsequent fiscal
years. These statutory authorities include, but are not limited to, the
following:
Section 1886(d) of the Social Security Act (the Act),
which sets forth a system of payment for the operating costs of acute
care hospital inpatient stays under Medicare Part A (Hospital
Insurance) based on prospectively set rates. Section 1886(g) of the Act
requires that, instead of paying for capital-related costs of inpatient
hospital services on a reasonable cost basis, the Secretary use a
prospective payment system (PPS).
Section 1886(d)(1)(B) of the Act, which specifies that
certain hospitals and hospital units are excluded from the IPPS. These
hospitals and units are: Rehabilitation hospitals and units; LTCHs;
psychiatric hospitals and units; children's hospitals; cancer
hospitals; extended neoplastic disease care hospitals, and hospitals
located outside the 50 States, the District of Columbia, and Puerto
Rico (that is, hospitals located in the U.S. Virgin Islands,

[[Page 20167]]

Guam, the Northern Mariana Islands, and American Samoa). Religious
nonmedical health care institutions (RNHCIs) are also excluded from the
IPPS.
Sections 123(a) and (c) of the BBRA (Pub. L. 106[dash]113)
and section 307(b)(1) of the BIPA (Pub. L. 106[dash]554) (as codified
under section 1886(m)(1) of the Act), which provide for the development
and implementation of a prospective payment system for payment for
inpatient hospital services of LTCHs described in section
1886(d)(1)(B)(iv) of the Act.
Sections 1814(l), 1820, and 1834(g) of the Act, which
specify that payments are made to critical access hospitals (CAHs)
(that is, rural hospitals or facilities that meet certain statutory
requirements) for inpatient and outpatient services and that these
payments are generally based on 101 percent of reasonable cost.
Section 1866(k) of the Act, as added by section 3005 of
the Affordable Care Act, which establishes a quality reporting program
for hospitals described in section 1886(d)(1)(B)(v) of the Act,
referred to as ``PPS-exempt cancer hospitals.''
Section 1886(a)(4) of the Act, which specifies that costs
of approved educational activities are excluded from the operating
costs of inpatient hospital services. Hospitals with approved graduate
medical education (GME) programs are paid for the direct costs of GME
in accordance with section 1886(h) of the Act.
Section 1886(b)(3)(B)(viii) of the Act, which requires the
Secretary to reduce the applicable percentage increase that would
otherwise apply to the standardized amount applicable to a subsection
(d) hospital for discharges occurring in a fiscal year if the hospital
does not submit data on measures in a form and manner, and at a time,
specified by the Secretary.
Section 1886(o) of the Act, which requires the Secretary
to establish a Hospital Value-Based Purchasing (VBP) Program under
which value-based incentive payments are made in a fiscal year to
hospitals meeting performance standards established for a performance
period for such fiscal year.
Section 1886(p) of the Act, as added by section 3008 of
the Affordable Care Act, which establishes a Hospital-Acquired
Condition (HAC) Reduction Program, under which payments to applicable
hospitals are adjusted to provide an incentive to reduce hospital-
acquired conditions.
Section 1886(q) of the Act, as added by section 3025 of
the Affordable Care Act and amended by section 10309 of the Affordable
Care Act and section 15002 of the 21st Century Cures Act, which
establishes the ``Hospital Readmissions Reduction Program.'' Under the
program, payments for discharges from an ``applicable hospital'' under
section 1886(d) of the Act will be reduced to account for certain
excess readmissions. Section 15002 of the 21st Century Cures Act
requires the Secretary to compare cohorts of hospitals to each other in
determining the extent of excess readmissions.
Section 1886(r) of the Act, as added by section 3133 of
the Affordable Care Act, which provides for a reduction to
disproportionate share hospital (DSH) payments under section
1886(d)(5)(F) of the Act and for a new uncompensated care payment to
eligible hospitals. Specifically, section 1886(r) of the Act requires
that, for fiscal year 2014 and each subsequent fiscal year, subsection
(d) hospitals that would otherwise receive a DSH payment made under
section 1886(d)(5)(F) of the Act will receive two separate payments:
(1) 25 percent of the amount they previously would have received under
section 1886(d)(5)(F) of the Act for DSH (``the empirically justified
amount''), and (2) an additional payment for the DSH hospital's
proportion of uncompensated care, determined as the product of three
factors. These three factors are: (1) 75 percent of the payments that
would otherwise be made under section 1886(d)(5)(F) of the Act; (2) 1
minus the percent change in the percent of individuals who are
uninsured (minus 0.2 percentage point for FY 2018 through FY 2019); and
(3) a hospital's uncompensated care amount relative to the
uncompensated care amount of all DSH hospitals expressed as a
percentage.
Section 1886(m)(6) of the Act, as added by section 1206(c)
of the Pathway for Sustainable Growth Rate (SGR) Reform Act of 2013
(Pub. L. 113-67) and amended by section 51005(a) of the Bipartisan
Budget Act of 2018 (Pub. L. 115-123), which provided for the
establishment of site neutral payment rate criteria under the LTCH PPS
with implementation beginning in FY 2016, and provides for a 4-year
transitional blended payment rate for discharges occurring in LTCH cost
reporting periods beginning in FYs 2016 through 2019. Section 51005(b)
of the Bipartisan Budget Act of 2018 amended section 1886(m)(6)(B)(ii)
by adding new clause (iv), which specifies that the IPPS comparable
amount defined in subclause (I) shall be reduced by 4.6 percent for FYs
2018 through 2026.
Section 1886(m)(6) of the Act, as amended by section 15009
of the 21st Century Cures Act (Pub. L. 114-255), which provides for a
temporary exception to the application of the site neutral payment rate
under the LTCH PPS for certain spinal cord specialty hospitals for
discharges in cost reporting periods beginning during FYs 2018 and
2019.
Section 1886(m)(6) of the Act, as amended by section 15010
of the 21st Century Cures Act (Pub. L. 114-255), which provides for a
temporary exception to the application of the site neutral payment rate
under the LTCH PPS for certain LTCHs with certain discharges with
severe wounds occurring in cost reporting periods beginning during FY
2018.
Section 1886(m)(5)(D)(iv) of the Act, as added by section
1206(c) of the Pathway for Sustainable Growth Rate (SGR) Reform Act of
2013 (Pub. L. 113-67), which provides for the establishment of a
functional status quality measure in the LTCH QRP for change in
mobility among inpatients requiring ventilator support.
Section 1899B of the Act, as added by section 2(a) of the
Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT
Act, Pub. L. 113-185), which provides for the establishment of
standardized data reporting for certain post-acute care providers,
including LTCHs.
2. Improving Patient Outcomes and Reducing Burden Through Meaningful
Measures
Regulatory reform and reducing regulatory burden are high
priorities for CMS. To reduce the regulatory burden on the healthcare
industry, lower health care costs, and enhance patient care, in October
2017, we launched the Meaningful Measures Initiative.\1\ This
initiative is one component of our agency-wide Patients Over Paperwork
Initiative,\2\ which is aimed at evaluating and streamlining
regulations with a goal to reduce unnecessary cost and burden, increase
efficiencies, and improve beneficiary experience. The Meaningful
Measures Initiative is aimed at identifying the highest priority areas
for quality measurement and quality improvement in order to assess the
core quality of care issues that are most vital

[[Page 20168]]

to advancing our work to improve patient outcomes. The Meaningful
Measures Initiative represents a new approach to quality measures that
will foster operational efficiencies and will reduce costs, including
collection and reporting burden while producing quality measurement
that is more focused on meaningful outcomes.
---------------------------------------------------------------------------

\1\ Meaningful Measures webpage: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/MMF/General-info-Sub-Page.html.
\2\ Remarks by Administrator Seema Verma at the Health Care
Payment Learning and Action Network (LAN) Fall Summit, as prepared
for delivery on October 30, 2017. Available at: https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2017-Fact-Sheet-items/2017-10-30.html.
---------------------------------------------------------------------------

The Meaningful Measures framework has the following objectives:
Address high-impact measure areas that safeguard public
health;
Patient-centered and meaningful to patients;
Outcome-based where possible;
Fulfill each program's statutory requirements;
Minimize the level of burden for health care providers
(for example, through a preference for EHR-based measures where
possible, such as electronic clinical quality measures; \3\
---------------------------------------------------------------------------

\3\ Refer to section VIII.A.9.c.of the preamble of this proposed
rule where we are seeking public comment on the potential future
development and adoption of eCQMs.
---------------------------------------------------------------------------

Significant opportunity for improvement;
Address measure needs for population based payment through
alternative payment models; and
Align across programs and/or with other payers.
In order to achieve these objectives, we have identified 19
Meaningful Measures areas and mapped them to six overarching quality
priorities as shown in the following table:

------------------------------------------------------------------------
Quality priority Meaningful measure area
------------------------------------------------------------------------
Making Care Safer by Reducing Harm Healthcare-Associated
Caused in the Delivery of Care. Infections
Preventable Healthcare Harm
Strengthen Person and Family Engagement Care is Personalized and
as Partners in Their Care. Aligned with Patient's Goals
End of Life Care According to
Preferences
Patient's Experience of Care
Patient Reported Functional
Outcomes
Promote Effective Communication and Medication Management
Coordination of Care. Admissions and Readmissions to
Hospitals
Transfer of Health Information
and Interoperability
Promote Effective Prevention and Preventive Care
Treatment of Chronic Disease. Management of Chronic
Conditions
Prevention, Treatment, and
Management of Mental Health
Prevention and Treatment of
Opioid and Substance Use
Disorders
Risk Adjusted Mortality
Work with Communities to Promote Best Equity of Care
Practices of Healthy Living. Community Engagement
Make Care Affordable................... Appropriate Use of Healthcare
Patient-focused Episode of Care
Risk Adjusted Total Cost of
Care
------------------------------------------------------------------------

By including Meaningful Measures in our programs, we believe that
we can also address the following cross-cutting measure criteria:
Eliminating disparities;
Tracking measurable outcomes and impact;
Safeguarding public health;
Achieving cost savings;
Improving access for rural communities; and
Reducing burden.
We believe that the Meaningful Measures Initiative will improve
outcomes for patients, their families, and health care providers while
reducing burden and costs for clinicians and providers as well as
promoting operational efficiencies.
3. Summary of the Major Provisions
Below we provide a summary of the major provisions in this proposed
rule. In general, these major provisions are being proposed as part of
the annual update to the payment policies and payment rates, consistent
with the applicable statutory provisions. A general summary of the
proposed changes included in this proposed rule is presented below in
section I.D. of this preamble.
a. MS-DRG Documentation and Coding Adjustment
Section 631 of the American Taxpayer Relief Act of 2012 (ATRA, Pub.
L. 112-240) amended section 7(b)(1)(B) of Public Law 110-90 to require
the Secretary to make a recoupment adjustment to the standardized
amount of Medicare payments to acute care hospitals to account for
changes in MS-DRG documentation and coding that do not reflect real
changes in case-mix, totaling $11 billion over a 4-year period of FYs
2014, 2015, 2016, and 2017. The FY 2014 through FY 2017 adjustments
represented the amount of the increase in aggregate payments as a
result of not completing the prospective adjustment authorized under
section 7(b)(1)(A) of Public Law 110-90 until FY 2013. Prior to the
ATRA, this amount could not have been recovered under Public Law 110-
90. Section 414 of the Medicare Access and CHIP Reauthorization Act of
2015 (MACRA) (Pub. L. 114-10) replaced the single positive adjustment
we intended to make in FY 2018 with a 0.5 percent positive adjustment
to the standardized amount of Medicare payments to acute care hospitals
for FYs 2018 through 2023. (The FY 2018 adjustment was subsequently
adjusted to 0.4588 percent by section 15005 of the 21st Century Cures
Act.) Therefore, for FY 2019, we are proposing to make an adjustment of
+0.5 percent to the standardized amount.
b. Expansion of the Postacute Care Transfer Policy
Section 53109 of the Bipartisan Budget Act of 2018 amended section
1886(d)(5)(J)(ii) of the Act to also include discharges to hospice care
by a hospice program as a qualified discharge, effective for discharges
occurring on or after October 1, 2018. Accordingly, we are proposing to
make conforming amendments to Sec. 412.4(c) of the regulation,
effective for discharges on or after October 1, 2018, to specify that
if a discharge is assigned to one of the MS-DRGs subject to the
postacute care transfer policy and the individual is transferred to
hospice care by a hospice program, the discharge would be subject to
payment as a transfer case.
c. DSH Payment Adjustment and Additional Payment for Uncompensated Care
Section 3133 of the Affordable Care Act modified the Medicare

[[Page 20169]]

disproportionate share hospital (DSH) payment methodology beginning in
FY 2014. Under section 1886(r) of the Act, which was added by section
3133 of the Affordable Care Act, starting in FY 2014, DSHs receive 25
percent of the amount they previously would have received under the
statutory formula for Medicare DSH payments in section 1886(d)(5)(F) of
the Act. The remaining amount, equal to 75 percent of the amount that
otherwise would have been paid as Medicare DSH payments, is paid as
additional payments after the amount is reduced for changes in the
percentage of individuals that are uninsured. Each Medicare DSH will
receive an additional payment based on its share of the total amount of
uncompensated care for all Medicare DSHs for a given time period.
In this proposed rule, we are proposing to update our estimates of
the three factors used to determine uncompensated care payments for FY
2019. We are continuing to use uninsured estimates produced by CMS'
Office of the Actuary (OACT) as part of the development of the National
Health Expenditure Accounts (NHEA) in the calculation of Factor 2. We
also are continuing to incorporate data from Worksheet S-10 in the
calculation of hospitals' share of the aggregate amount of
uncompensated care by combining data on uncompensated care costs from
Worksheet S-10 for FYs 2014 and 2015 with proxy data regarding a
hospital's share of low-income insured days for FY 2013 to determine
Factor 3 for FY 2019. In addition, we are proposing to use only data
regarding low-income insured days for FY 2013 to determine the amount
of uncompensated care payments for Puerto Rico hospitals, Indian Health
Service and Tribal hospitals, and all-inclusive rate providers. For
this proposed rule, we also are proposing the following policies: (1)
For providers with multiple cost reports beginning in the same fiscal
year, to use the longest cost report and annualize Medicaid data and
uncompensated care data if a hospital's cost report does not equal 12
months of data; (2) in the rare case where a provider has multiple cost
reports beginning in the same fiscal year, but one report also spans
the entirety of the following fiscal year such that the hospital has no
cost report for that fiscal year, the cost report that spans both
fiscal years would be used for the latter fiscal year; and (3) to apply
statistical trim methodologies to potentially aberrant cost-to-charge
ratios (CCRs) and potentially aberrant uncompensated care costs
reported on the Worksheet S-10.
d. Proposed Changes to the LTCH PPS
In this proposed rule, we set forth proposed changes to the LTCH
PPS Federal payment rates, factors, and other payment rate policies
under the LTCH PPS for FY 2019. In addition, we are proposing to
eliminate the 25-percent threshold policy, and under this proposal we
would apply a one-time permanent adjustment of approximately -0.9
percent to the LTCH PPS standard Federal payment rate to ensure this
proposed elimination of the 25-percent threshold policy is budget
neutral.
e. Reduction of Hospital Payments for Excess Readmissions
We are proposing to make changes to policies for the Hospital
Readmissions Reduction Program, which is established under section
1886(q) of the Act, as added by section 3025 of the Affordable Care
Act, as amended by section 10309 of the Affordable Care Act and further
amended by section 15002 of the 21st Century Cures Act. The Hospital
Readmissions Reduction Program requires a reduction to a hospital's
base operating DRG payment to account for excess readmissions of
selected applicable conditions. For FY 2018 and subsequent years, the
reduction is based on a hospital's risk-adjusted readmission rate
during a 3-year period for acute myocardial infarction (AMI), heart
failure (HF), pneumonia, chronic obstructive pulmonary disease (COPD),
total hip arthroplasty/total knee arthroplasty (THA/TKA), and coronary
artery bypass graft (CABG). In this proposed rule, we are proposing to
establish the applicable periods for FY 2019, FY 2020, and FY 2021. We
are also proposing to codify the definitions of dual-eligible patients,
the proportion of dual-eligibles, and the applicable period for dual-
eligibility.
f. Hospital Value-Based Purchasing (VBP) Program
Section 1886(o) of the Act requires the Secretary to establish a
Hospital VBP Program under which value-based incentive payments are
made in a fiscal year to hospitals based on their performance on
measures established for a performance period for such fiscal year. As
part of agency-wide efforts under the Meaningful Measures Initiative to
use a parsimonious set of the most meaningful measures for patients,
clinicians, and providers in our quality programs and the Patients Over
Paperwork Initiative to reduce costs and burden and program complexity
as discussed in section I.A.2. of the preamble of this proposed rule,
we are proposing to remove a total of 10 measures from the Hospital VBP
Program, all of which would continue to be used in the Hospital IQR
Program or the HAC Reduction Program, in order to reduce the costs and
complexity of tracking these measures in multiple programs. We also are
proposing to adopt measure removal factors for the Hospital VBP
Program. Specifically, we are proposing to remove six measures
beginning with the FY 2021 program year: (1) Elective Delivery (NQF
#0469) (PC-01); (2) National Healthcare Safety Network (NHSN) Catheter-
Associated Urinary Tract Infection (CAUTI) Outcome Measure (NQF #0138);
(3) National Healthcare Safety Network (NHSN) Central Line-Associated
Bloodstream Infection (CLABSI) Outcome Measure (NQF #0139); (4)
American College of Surgeons-Centers for Disease Control and Prevention
(ACS-CDC) Harmonized Procedure Specific Surgical Site Infection (SSI)
Outcome Measure (NQF #0753); (5) National Healthcare Safety Network
(NHSN) Facility-wide Inpatient Hospital-onset Methicillin-resistant
Staphylococcus aureus Bacteremia (MRSA) Outcome Measure (NQF #1716);
and (6) National Healthcare Safety Network (NHSN) Facility-wide
Inpatient Hospital-onset Clostridium difficile Infection (CDI) Outcome
Measure (NQF #1717). We are also proposing to remove four measures from
the Hospital VBP Program effective with the effective date of the FY
2019 IPPS/LTCH PPS final rule: (1) Patient Safety and Adverse Events
(Composite) (NQF #0531) (PSI 90); (2) Hospital-Level, Risk-Standardized
Payment Associated With a 30-Day Episode-of-Care for Acute Myocardial
Infarction (NQF #2431) (AMI Payment); (3) Hospital-Level, Risk-
Standardized Payment Associated With a 30-Day Episode-of-Care for Heart
Failure (NQF #2436) (HF Payment); and (4) Hospital-Level, Risk-
Standardized Payment Associated With a 30-Day Episode-of-Care for
Pneumonia (PN Payment) (NQF #2579). In addition, we are proposing to
rename the Clinical Care domain as the Clinical Outcomes domain
beginning with the FY 2020 program year; we are proposing to remove the
Safety domain from the Hospital VBP Program, if our proposals to
removal all of the measures in this domain are finalized, and to weight
the three remaining domains as follows: Clinical Outcomes domain--50
percent; Person and Community Engagement domain--25 percent; and
Efficiency and Cost Reduction domain--25 percent.

[[Page 20170]]

g. Hospital-Acquired Condition (HAC) Reduction Program
Section 1886(p) of the Act, as added under section 3008(a) of the
Affordable Care Act, establishes an incentive to hospitals to reduce
the incidence of hospital-acquired conditions by requiring the
Secretary to make an adjustment to payments to applicable hospitals
effective for discharges beginning on October 1, 2014. This 1-percent
payment reduction applies to a hospital whose ranking in the worst-
performing quartile (25 percent) of all applicable hospitals, relative
to the national average, of conditions acquired during the applicable
period and on all of the hospital's discharges for the specified fiscal
year. As part of our agency-wide Patients over Paperwork and Meaningful
Measures Initiatives, discussed in section I.A.2. of the preamble of
this proposed rule, we are proposing that the measures currently
included in the HAC Reduction Program should be retained because the
measures address a performance gap in patient safety and reducing harm
caused in the delivery of care. In this proposed rule, we are proposing
to: (1) Establish administrative policies to collect, validate, and
publicly report NHSN healthcare-associated infection (HAI) quality
measure data that facilitate a seamless transition, independent of the
Hospital IQR Program, beginning with January 1, 2019 infectious events;
(2) change the scoring methodology by removing domains and assigning
equal weighting to each measure for which a hospital has a measure; and
(3) establish the applicable period for FY 2021. In addition, we are
seeking stakeholder comment regarding the potential future inclusion of
additional measures, including eCQMs.
h. Hospital Inpatient Quality Reporting (IQR) Program
Under section 1886(b)(3)(B)(viii) of the Act, subsection (d)
hospitals are required to report data on measures selected by the
Secretary for a fiscal year in order to receive the full annual
percentage increase that would otherwise apply to the standardized
amount applicable to discharges occurring in that fiscal year.
In this proposed rule, we are proposing several changes. As part of
agency-wide efforts under the Meaningful Measures Initiative to use a
parsimonious set of the most meaningful measures for patients and
clinicians in our quality programs and the Patients Over Paperwork
initiative to reduce burden, cost, and program complexity as discussed
in section I.A.2. of the preamble of this proposed rule, we are
proposing to add a new measure removal factor and to remove a total of
39 measures from the Hospital IQR Program. For a full list of measures
proposed for removal, we refer readers to section VIII.A.4.b. of the
preamble of this proposed rule. Beginning with the CY 2018 reporting
period/FY 2020 payment determination and subsequent years, we are
proposing to remove 17 claims-based measures and two structural
measures. Beginning with the CY 2019 reporting period/FY 2021 payment
determination and subsequent years, we are proposing to remove eight
chart-abstracted measures and two claims-based measures. Beginning with
the CY 2020 reporting period/FY 2022 payment determination and
subsequent years, we are proposing to remove one chart-abstracted
measure, one claims[dash]based measure, and seven eCQMs from the
Hospital IQR Program measure set. Beginning with the CY 2021 reporting
period/FY 2023 payment determination, we are proposing to remove one
claims-based measure.
In addition, for the CY 2019 reporting period/FY 2021 payment
determination, we are proposing to: (1) Require the same eCQM reporting
requirements that were adopted for the CY 2018 reporting period/FY 2020
payment determination (82 FR 38355 through 38361), such that hospitals
submit one, self-selected calendar quarter of 2019 discharge data for 4
eCQMs in the Hospital IQR Program measure set; and (2) require that
hospitals use the 2015 Edition certification criteria for CEHRT. These
proposals are in alignment with proposals or current established
policies under the Medicare and Medicaid Promoting Interoperability
Programs (previously known as the Medicare and Medicaid EHR Incentive
Programs). In addition, we are seeking public comment on two measures
for potential future inclusion in the Hospital IQR Program, as well as
the potential future development and adoption of electronic clinical
quality measures generally.
i. Long-Term Care Hospital Quality Reporting Program (LTCH QRP)
The LTCH QRP is authorized by section 1886(m)(5) of the Act and
applies to all hospitals certified by Medicare as long-term care
hospitals (LTCHs). Under the LTCH QRP, the Secretary reduces by 2
percentage points the annual update to the LTCH PPS standard Federal
rate for discharges for an LTCH during a fiscal year if the LTCH fails
to submit data in accordance with the LTCH QRP requirements specified
for that fiscal year. As part of agency-wide efforts under the
Meaningful Measures Initiative to use a parsimonious set of the most
meaningful measures for patients and clinicians in our quality programs
and the Patients Over Paperwork Initiative to reduce cost and burden
and program complexity as discussed in section I.A.2. of the preamble
of this proposed rule, we are proposing to remove three measures from
the LTCH QRP. We also are proposing to adopt a new measure removal
factor and are proposing to codify the measure removal factors in our
regulations. In addition, we are proposing to update our regulations to
change methods by which an LTCH is notified of noncompliance with the
requirements of the LTCH QRP for a program year; and how CMS will
notify an LTCH of a reconsideration decision.
4. Summary of Costs and Benefits
Adjustment for MS-DRG Documentation and Coding Changes.
Section 414 of the MACRA replaced the single positive adjustment we
intended to make in FY 2018 once the recoupment required by section 631
of the ATRA was complete with a 0.5 percent positive adjustment to the
standardized amount of Medicare payments to acute care hospitals for
FYs 2018 through 2023. (The FY 2018 adjustment was subsequently
adjusted to 0.4588 percent by section 15005 of the 21st Century Cures
Act.) For FY 2019, we are proposing to make an adjustment of +0.5
percent to the standardized amount consistent with the MACRA.
Expansion of the Postacute Care Transfer Policy. Section
53109 of the Bipartisan Budget Act of 2018 amended section
1886(d)(5)(J)(ii) of the Act to also include discharges to hospice care
by a hospice program as a qualified discharge, effective for discharges
occurring on or after October 1, 2018. Accordingly, we are proposing to
make conforming amendments to Sec. 412.4(c) of the regulation to
specify that, effective for discharges on or after October 1, 2018, if
a discharge is assigned to one of the MS-DRGs subject to the postacute
care transfer policy and the individual is transferred to hospice care
by a hospice program, the discharge would be subject to payment as a
transfer case. We estimate that this statutory expansion to the
postacute care transfer policy will reduce Medicare payments under the
IPPS by approximately $240 million in FY 2019.
Proposed Medicare DSH Payment Adjustment and Additional
Payment for Uncompensated Care. Under section 1886(r) of the Act (as
added by section 3133 of the Affordable Care Act), DSH payments to
hospitals under section

[[Page 20171]]

1886(d)(5)(F) of the Act are reduced and an additional payment for
uncompensated care is made to eligible hospitals beginning in FY 2014.
Hospitals that receive Medicare DSH payments receive 25 percent of the
amount they previously would have received under the statutory formula
for Medicare DSH payments in section 1886(d)(5)(F) of the Act. The
remainder, equal to an estimate of 75 percent of what otherwise would
have been paid as Medicare DSH payments, is the basis for determining
the additional payments for uncompensated care after the amount is
reduced for changes in the percentage of individuals that are uninsured
and additional statutory adjustments. Each hospital that receives
Medicare DSH payments will receive an additional payment for
uncompensated care based on its share of the total uncompensated care
amount reported by Medicare DSHs. The reduction to Medicare DSH
payments is not budget neutral.
For FY 2019, we are proposing to update our estimates of the three
factors used to determine uncompensated care payments. We are
continuing to use uninsured estimates produced by OACT as part of the
development of the NHEA in the calculation of Factor 2. We also are
continuing to incorporate data from Worksheet S-10 in the calculation
of hospitals' share of the aggregate amount of uncompensated care by
combining data on uncompensated care costs from Worksheet S-10 for FY
2014 and FY 2015 with proxy data regarding a hospital's share of low-
income insured days for FY 2013 to determine Factor 3 for FY 2019. To
determine the amount of uncompensated care for Puerto Rico hospitals,
Indian Health Service and Tribal hospitals, and all-inclusive rate
providers, we are proposing to use only the data regarding low-income
insured days for FY 2013. In addition, in this proposed rule, we are
proposing the following policies: (1) For providers with multiple cost
reports beginning in the same fiscal year, to use the longest cost
report and annualize Medicaid data and uncompensated care data if a
hospital's cost report does not equal 12 months of data; (2) in the
rare case where a provider has multiple cost reports beginning in the
same fiscal year, but one report also spans the entirety of the
following fiscal year such that the hospital has no cost report for
that fiscal year, the cost report that spans both fiscal years would be
used for the latter fiscal year; and (3) to apply statistical trim
methodologies to potentially aberrant CCRs and potentially aberrant
uncompensated care costs.
We are projecting that proposed estimated Medicare DSH payments,
and additional payments for uncompensated care made for FY 2019, would
increase payments overall by approximately 1.3 percent as compared to
the estimate of overall payments, including Medicare DSH payments and
uncompensated care payments that will be distributed in FY 2018. The
additional payments have redistributive effects based on a hospital's
uncompensated care amount relative to the uncompensated care amount for
all hospitals that are estimated to receive Medicare DSH payments, and
the calculated payment amount is not directly tied to a hospital's
number of discharges.
Proposed Update to the LTCH PPS Payment Rates and Other
Payment Policies. Based on the best available data for the 409 LTCHs in
our database, we estimate that the proposed changes to the payment
rates and factors that we are presenting in the preamble and Addendum
of this proposed rule, which reflects the continuation of the
transition of the statutory application of the site neutral payment
rate, the update to the LTCH PPS standard Federal payment rate for FY
2019, and the proposed one-time permanent adjustment of approximately-
0.9 percent to the LTCH PPS standard Federal payment rate to ensure
this proposed elimination of the 25[dash]percent threshold policy is
budget neutral would result in an estimated decrease in payments in FY
2019 of approximately $5 million.
Proposed Changes to the Hospital Readmissions Reduction
Program. For FY 2019 and subsequent years, the reduction is based on a
hospital's risk-adjusted readmission rate during a 3-year period for
acute myocardial infarction (AMI), heart failure (HF), pneumonia,
chronic obstructive pulmonary disease (COPD), total hip arthroplasty/
total knee arthroplasty (THA/TKA), and coronary artery bypass graft
(CABG). Overall, in this proposed rule, we estimate that 2,610
hospitals would have their base operating DRG payments reduced by their
determined proposed proxy FY 2019 hospital-specific readmission
adjustment. As a result, we estimate that the Hospital Readmissions
Reduction Program would save approximately $566 million in FY 2019.
Value-Based Incentive Payments under the Hospital VBP
Program. We estimate that there will be no net financial impact to the
Hospital VBP Program for the FY 2019 program year in the aggregate
because, by law, the amount available for value[dash]based incentive
payments under the program in a given year must be equal to the total
amount of base operating MS-DRG payment amount reductions for that
year, as estimated by the Secretary. The estimated amount of base
operating MS-DRG payment amount reductions for the FY 2019 program year
and, therefore, the estimated amount available for value-based
incentive payments for FY 2019 discharges is approximately $1.9
billion.
Proposed Changes to the HAC Reduction Program. A
hospital's Total HAC score and its ranking in comparison to other
hospitals in any given year depend on several different factors. Any
significant impact due to the proposed HAC Reduction Program changes
for FY 2019, including which hospitals would receive the adjustment,
would depend on actual experience.
The proposed removal of NHSN HAI measures from the Hospital IQR
Program and the subsequent cessation of its validation processes for
NHSN HAI measures and proposed creation of a validation process for the
HAC Reduction program represent no net change in reporting burden
across CMS hospital quality programs. However, if our proposal to
remove HAI chart-abstracted measures from the Hospital IQR Program is
finalized, we anticipate a total burden shift of 43,200 hours and
approximately $1.6 million as a result of no longer needing to validate
those HAI measures under the Hospital IQR Program and beginning the
validation process under the HAC Reduction Program.
Proposed Changes to the Hospital Inpatient Quality
Reporting (IQR) Program. Across 3,300 IPPS hospitals, we estimate that
our proposed requirements for the Hospital IQR Program would result in
the following changes to costs and burdens related to information
collection for this program compared to previously adopted
requirements: (1) A total collection of information burden reduction of
1,046,071 hours and a total cost reduction of approximately $38.3
million for the CY 2019 reporting period/FY 2021 payment determination,
due to the proposed removal of ED-1, IMM-2, and VTE-6 measures; and (2)
a total collection of information burden reduction of 901,200 hours and
a total cost reduction of $33 million for the CY 2020 reporting period/
FY 2022 payment determination, due to: (a) The proposed removal of ED-
2, and (b) validation of the NHSN HAI measures no longer being
conducted under the Hospital IQR Program once the HAC Reduction Program
begins validating these measures, as proposed in the preamble

[[Page 20172]]

of this proposed rule for the HAC Reduction Program.
Further, we anticipate that the proposed removal of 39 measures
would result in a reduction in costs unrelated to information
collection. For example, it may be costly for health care providers to
track the confidential feedback, preview reports, and publicly reported
information on a measure where we use the measure in more than one
program. Also, when measures are in multiple programs, maintaining the
specifications for those measures, as well as the tools we need to
collect, validate, analyze, and publicly report the measure data may
result in costs to CMS. In addition, beneficiaries may find it
confusing to see public reporting on the same measure in different
programs. We anticipate that our proposals will reduce the above-
described costs.
Proposed Changes Related to the LTCH QRP. In this proposed
rule, we are proposing to remove three measures from the LTCH QRP, two
measures beginning with the FY 2020 LTCH QRP and one measure beginning
with the FY 2021 LTCH QRP. We also are proposing a new quality measure
removal factor for the LTCH QRP. We estimate that the impact of these
proposed changes is a reduction in costs of approximately $1,148 per
LTCH annually or approximately $482,469 for all LTCHs annually.

B. Background Summary

1. Acute Care Hospital Inpatient Prospective Payment System (IPPS)
Section 1886(d) of the Social Security Act (the Act) sets forth a
system of payment for the operating costs of acute care hospital
inpatient stays under Medicare Part A (Hospital Insurance) based on
prospectively set rates. Section 1886(g) of the Act requires the
Secretary to use a prospective payment system (PPS) to pay for the
capital[dash]related costs of inpatient hospital services for these
``subsection (d) hospitals.'' Under these PPSs, Medicare payment for
hospital inpatient operating and capital-related costs is made at
predetermined, specific rates for each hospital discharge. Discharges
are classified according to a list of diagnosis[dash]related groups
(DRGs).
The base payment rate is comprised of a standardized amount that is
divided into a labor-related share and a nonlabor-related share. The
labor-related share is adjusted by the wage index applicable to the
area where the hospital is located. If the hospital is located in
Alaska or Hawaii, the nonlabor-related share is adjusted by a cost-of-
living adjustment factor. This base payment rate is multiplied by the
DRG relative weight.
If the hospital treats a high percentage of certain low-income
patients, it receives a percentage add-on payment applied to the DRG-
adjusted base payment rate. This add-on payment, known as the
disproportionate share hospital (DSH) adjustment, provides for a
percentage increase in Medicare payments to hospitals that qualify
under either of two statutory formulas designed to identify hospitals
that serve a disproportionate share of low-income patients. For
qualifying hospitals, the amount of this adjustment varies based on the
outcome of the statutory calculations. The Affordable Care Act revised
the Medicare DSH payment methodology and provides for a new additional
Medicare payment that considers the amount of uncompensated care
beginning on October 1, 2013.
If the hospital is training residents in an approved residency
program(s), it receives a percentage add-on payment for each case paid
under the IPPS, known as the indirect medical education (IME)
adjustment. This percentage varies, depending on the ratio of residents
to beds.
Additional payments may be made for cases that involve new
technologies or medical services that have been approved for special
add-on payments. To qualify, a new technology or medical service must
demonstrate that it is a substantial clinical improvement over
technologies or services otherwise available, and that, absent an
add[dash]on payment, it would be inadequately paid under the regular
DRG payment.
The costs incurred by the hospital for a case are evaluated to
determine whether the hospital is eligible for an additional payment as
an outlier case. This additional payment is designed to protect the
hospital from large financial losses due to unusually expensive cases.
Any eligible outlier payment is added to the DRG-adjusted base payment
rate, plus any DSH, IME, and new technology or medical service add-on
adjustments.
Although payments to most hospitals under the IPPS are made on the
basis of the standardized amounts, some categories of hospitals are
paid in whole or in part based on their hospital-specific rate, which
is determined from their costs in a base year. For example, sole
community hospitals (SCHs) receive the higher of a
hospital[dash]specific rate based on their costs in a base year (the
highest of FY 1982, FY 1987, FY 1996, or FY 2006) or the IPPS Federal
rate based on the standardized amount. SCHs are the sole source of care
in their areas. Specifically, section 1886(d)(5)(D)(iii) of the Act
defines an SCH as a hospital that is located more than 35 road miles
from another hospital or that, by reason of factors such as isolated
location, weather conditions, travel conditions, or absence of other
like hospitals (as determined by the Secretary), is the sole source of
hospital inpatient services reasonably available to Medicare
beneficiaries. In addition, certain rural hospitals previously
designated by the Secretary as essential access community hospitals are
considered SCHs.
Under current law, the Medicare-dependent, small rural hospital
(MDH) program is effective through FY 2022. Through and including FY
2006, an MDH received the higher of the Federal rate or the Federal
rate plus 50 percent of the amount by which the Federal rate was
exceeded by the higher of its FY 1982 or FY 1987 hospital[dash]specific
rate. For discharges occurring on or after October 1, 2007, but before
October 1, 2022, an MDH receives the higher of the Federal rate or the
Federal rate plus 75 percent of the amount by which the Federal rate is
exceeded by the highest of its FY 1982, FY 1987, or FY 2002 hospital-
specific rate. MDHs are a major source of care for Medicare
beneficiaries in their areas. Section 1886(d)(5)(G)(iv) of the Act
defines an MDH as a hospital that is located in a rural area (or, as
amended by the Bipartisan Budget Act of 2018, a hospital located in a
State with no rural area that meets certain statutory criteria), has
not more than 100 beds, is not an SCH, and has a high percentage of
Medicare discharges (not less than 60 percent of its inpatient days or
discharges in its cost reporting year beginning in FY 1987 or in two of
its three most recently settled Medicare cost reporting years).
Section 1886(g) of the Act requires the Secretary to pay for the
capital-related costs of inpatient hospital services in accordance with
a prospective payment system established by the Secretary. The basic
methodology for determining capital prospective payments is set forth
in our regulations at 42 CFR 412.308 and 412.312. Under the capital
IPPS, payments are adjusted by the same DRG for the case as they are
under the operating IPPS. Capital IPPS payments are also adjusted for
IME and DSH, similar to the adjustments made under the operating IPPS.
In addition, hospitals may receive outlier payments for those cases
that have unusually high costs.
The existing regulations governing payments to hospitals under the
IPPS are located in 42 CFR part 412, subparts A through M.

[[Page 20173]]

2. Hospitals and Hospital Units Excluded From the IPPS
Under section 1886(d)(1)(B) of the Act, as amended, certain
hospitals and hospital units are excluded from the IPPS. These
hospitals and units are: Inpatient rehabilitation facility (IRF)
hospitals and units; long-term care hospitals (LTCHs); psychiatric
hospitals and units; children's hospitals; cancer hospitals; extended
neoplastic disease care hospitals, and hospitals located outside the 50
States, the District of Columbia, and Puerto Rico (that is, hospitals
located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands,
and American Samoa). Religious nonmedical health care institutions
(RNHCIs) are also excluded from the IPPS. Various sections of the
Balanced Budget Act of 1997 (BBA, Pub. L. 105-33), the Medicare,
Medicaid and SCHIP [State Children's Health Insurance Program] Balanced
Budget Refinement Act of 1999 (BBRA, Pub. L. 106-113), and the
Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act
of 2000 (BIPA, Pub. L. 106-554) provide for the implementation of PPSs
for IRF hospitals and units, LTCHs, and psychiatric hospitals and units
(referred to as inpatient psychiatric facilities (IPFs)). (We note that
the annual updates to the LTCH PPS are included along with the IPPS
annual update in this document. Updates to the IRF PPS and IPF PPS are
issued as separate documents.) Children's hospitals, cancer hospitals,
hospitals located outside the 50 States, the District of Columbia, and
Puerto Rico (that is, hospitals located in the U.S. Virgin Islands,
Guam, the Northern Mariana Islands, and American Samoa), and RNHCIs
continue to be paid solely under a reasonable cost-based system subject
to a rate[dash]of[dash]increase ceiling on inpatient operating costs.
Similarly, extended neoplastic disease care hospitals are paid on a
reasonable cost basis subject to a rate[dash]of[dash]increase ceiling
on inpatient operating costs.
The existing regulations governing payments to excluded hospitals
and hospital units are located in 42 CFR parts 412 and 413.
3. Long-Term Care Hospital Prospective Payment System (LTCH PPS)
The Medicare prospective payment system (PPS) for LTCHs applies to
hospitals described in section 1886(d)(1)(B)(iv) of the Act effective
for cost reporting periods beginning on or after October 1, 2002. The
LTCH PPS was established under the authority of sections 123 of the
BBRA and section 307(b) of the BIPA (as codified under section
1886(m)(1) of the Act). During the 5-year (optional) transition period,
a LTCH's payment under the PPS was based on an increasing proportion of
the LTCH Federal rate with a corresponding decreasing proportion based
on reasonable cost principles. Effective for cost reporting periods
beginning on or after October 1, 2006 through September 30, 2016, all
LTCHs were paid 100 percent of the Federal rate. Section 1206(a) of the
Pathway for SGR Reform Act of 2013 (Pub. L. 113-67) established the
site neutral payment rate under the LTCH PPS, which made the LTCH PPS a
dual rate payment system beginning in FY 2016. Under this statute,
based on a rolling effective date that is linked to the date on which a
given LTCH's Federal FY 2016 cost reporting period begins, LTCHs are
generally paid for discharges at the site neutral payment rate unless
the discharge meets the patient criteria for payment at the LTCH PPS
standard Federal payment rate. The existing regulations governing
payment under the LTCH PPS are located in 42 CFR part 412, subpart O.
Beginning October 1, 2009, we issue the annual updates to the LTCH PPS
in the same documents that update the IPPS (73 FR 26797 through 26798).
4. Critical Access Hospitals (CAHs)
Under sections 1814(l), 1820, and 1834(g) of the Act, payments made
to critical access hospitals (CAHs) (that is, rural hospitals or
facilities that meet certain statutory requirements) for inpatient and
outpatient services are generally based on 101 percent of reasonable
cost. Reasonable cost is determined under the provisions of section
1861(v) of the Act and existing regulations under 42 CFR part 413.
5. Payments for Graduate Medical Education (GME)
Under section 1886(a)(4) of the Act, costs of approved educational
activities are excluded from the operating costs of inpatient hospital
services. Hospitals with approved graduate medical education (GME)
programs are paid for the direct costs of GME in accordance with
section 1886(h) of the Act. The amount of payment for direct GME costs
for a cost reporting period is based on the hospital's number of
residents in that period and the hospital's costs per resident in a
base year. The existing regulations governing payments to the various
types of hospitals are located in 42 CFR part 413.

C. Summary of Provisions of Recent Legislation Proposed To Be
Implemented in This Proposed Rule

1. Pathway for SGR Reform Act of 2013 (Pub. L. 113-67)
The Pathway for SGR Reform Act of 2013 (Pub. L. 113-67) introduced
new payment rules in the LTCH PPS. Under section 1206 of this law,
discharges in cost reporting periods beginning on or after October 1,
2015 under the LTCH PPS will receive payment under a site neutral rate
unless the discharge meets certain patient[dash]specific criteria. In
this proposed rule, we are continuing to update certain policies that
implemented provisions under section 1206 of the Pathway for SGR Reform
Act.
2. Improving Medicare Post-Acute Care Transformation Act of 2014
(IMPACT Act) (Pub. L. 113-185)
The Improving Medicare Post-Acute Care Transformation Act of 2014
(IMPACT Act) (Pub. L. 113-185), enacted on October 6, 2014, made a
number of changes that affect the Long-Term Care Hospital Quality
Reporting Program (LTCH QRP). In this proposed rule, we are proposing
to continue to implement portions of section 1899B of the Act, as added
by section 2(a) of the IMPACT Act, which, in part, requires LTCHs,
among other postacute care providers, to report standardized patient
assessment data, data on quality measures, and data on resource use and
other measures.
3. The Medicare Access and CHIP Reauthorization Act of 2015 (Pub. L.
114-10)
Section 414 of the Medicare Access and CHIP Reauthorization Act of
2015 (MACRA, Pub. L. 114-10) specifies a 0.5 percent positive
adjustment to the standardized amount of Medicare payments to acute
care hospitals for FYs 2018 through 2023. These adjustments follow the
recoupment adjustment to the standardized amounts under section 1886(d)
of the Act based upon the Secretary's estimates for discharges
occurring from FYs 2014 through 2017 to fully offset $11 billion, in
accordance with section 631 of the ATRA. The FY 2018 adjustment was
subsequently adjusted to 0.4588 percent by section 15005 of the 21st
Century Cures Act.
4. The 21st Century Cures Act (Pub. L. 114-255)
The 21st Century Cures Act (Pub. L. 114-255), enacted on December
13, 2016, contained the following provision affecting payments under
the Hospital Readmissions Reduction Program,

[[Page 20174]]

which we are proposing to continue to implement in this proposed rule:
Section 15002, which amended section 1886(q)(3) of the Act
by adding subparagraphs (D) and (E), which requires the Secretary to
develop a methodology for calculating the excess readmissions
adjustment factor for the Hospital Readmissions Reduction Program based
on cohorts defined by the percentage of dual-eligible patients (that
is, patients who are eligible for both Medicare and full-benefit
Medicaid coverage) cared for by a hospital. In this proposed rule, we
are proposing to continue to implement changes to the payment
adjustment factor to assess penalties based on a hospital's performance
relative to other hospitals treating a similar proportion of dual-
eligible patients.
5. The Bipartisan Budget Act of 2018 (Pub. L. 115-123)
The Bipartisan Budget Act of 2018 (Pub. L. 115-123), enacted on
February 9, 2018, contains provisions affecting payments under the IPPS
and the LTCH PPS, which we are proposing to implement or continue to
implement in this proposed rule:
Section 50204 amended section 1886(d)(12) of the Act to
provide for certain temporary changes to the low-volume hospital
payment adjustment policy for FYs 2018 through 2022. For FY 2018, this
provision extends the qualifying criteria and payment adjustment
formula that applied for FYs 2011 through 2017. For FYs 2019 through
2022, this provision modifies the discharge criterion and payment
adjustment formula. In FY 2023 and subsequent fiscal years, the
qualifying criteria and payment adjustment revert to the requirements
that were in effect for FYs 2005 through 2010.
Section 50205 extends the MDH program through FY 2022. It
also provides for an eligible hospital that is located in a State with
no rural area to qualify for MDH status under an expanded definition if
the hospital satisfies any of the statutory criteria at section
1886(d)(8)(E)(ii)(I), (II) (as of January 1, 2018), or (III) of the Act
to be reclassified as rural.
Section 51005(a) modified section 1886(m)(6) of the Act by
extending the blended payment rate for site neutral payment rate LTCH
discharges for cost reporting periods beginning in FY 2016 by an
additional 2 years (FYs 2018 and 2019). In addition, section 51005(b)
reduces the LTCH IPPS comparable per diem amount used in the site
neutral payment rate for FYs 2018 through 2026 by 4.6 percent. In this
proposed rule, we are proposing to make conforming changes to the
existing regulations.
Section 53109 modified section 1886(d)(5)(J) of the Act to
require that, beginning in FY 2019, discharges to hospice care will
also qualify as a postacute care transfer and be subject to payment
adjustments.

D. Summary of the Provisions of This Proposed Rule

In this proposed rule, we are setting forth proposed payment and
policy changes to the Medicare IPPS for FY 2019 operating costs and for
capital-related costs of acute care hospitals and certain hospitals and
hospital units that are excluded from IPPS. In addition, we are setting
forth proposed changes to the payment rates, factors, and other payment
and policy-related changes to programs associated with payment rate
policies under the LTCH PPS for FY 2019.
Below is a general summary of the proposed changes included in this
proposed rule.
1. Proposed Changes to MS-DRG Classifications and Recalibrations of
Relative Weights
In section II. of the preamble of this proposed rule, we include--
Proposed changes to MS-DRG classifications based on our
yearly review for FY 2019.
Proposed adjustment to the standardized amounts under
section 1886(d) of the Act for FY 2019 in accordance with the
amendments made to section 7(b)(1)(B) of Public Law 110-90 by section
414 of the MACRA.
Proposed recalibration of the MS-DRG relative weights.
A discussion of the proposed FY 2019 status of new
technologies approved for add-on payments for FY 2018 and a
presentation of our evaluation and analysis of the FY 2019 applicants
for add[dash]on payments for high-cost new medical services and
technologies (including public input, as directed by Pub. L. 108-173,
obtained in a town hall meeting).
2. Proposed Changes to the Hospital Wage Index for Acute Care Hospitals
In section III. of the preamble to this proposed rule, we are
proposing to make revisions to the wage index for acute care hospitals
and the annual update of the wage data. Specific issues addressed
include, but are not limited to, the following:
The proposed FY 2019 wage index update using wage data
from cost reporting periods beginning in FY 2015.
Proposal regarding other wage-related costs in the wage
index.
Calculation of the proposed occupational mix adjustment
for FY 2019 based on the 2016 Occupational Mix Survey.
Analysis and implementation of the proposed FY 2019
occupational mix adjustment to the wage index for acute care hospitals.
Proposed application of the rural floor and the frontier
State floor and the proposed expiration of the imputed floor.
Proposals to codify policies regarding multicampus
hospitals.
Proposed revisions to the wage index for acute care
hospitals based on hospital redesignations and reclassifications under
sections 1886(d)(8)(B), (d)(8)(E), and (d)(10) of the Act.
The proposed adjustment to the wage index for acute care
hospitals for FY 2019 based on commuting patterns of hospital employees
who reside in a county and work in a different area with a higher wage
index.
Determination of the labor-related share for the proposed
FY 2019 wage index.
Public comment solicitation on wage index disparities.
3. Other Decisions and Proposed Changes to the IPPS for Operating Costs
In section IV. of the preamble of this proposed rule, we discuss
proposed changes or clarifications of a number of the provisions of the
regulations in 42 CFR parts 412 and 413, including the following:
Proposed changes to MS-DRGs subject to the postacute care
transfer policy and special payment policy and implementation of the
statutory changes to the postacute care transfer policy.
Proposed changes to the inpatient hospital update for FY
2019.
Proposed changes related to the statutory changes to the
low-volume hospital payment adjustment policy.
Proposed updated national and regional case-mix values and
discharges for purposes of determining RRC status.
The statutorily required IME adjustment factor for FY
2019.
Proposed changes to the methodologies for determining
Medicare DSH payments and the additional payments for uncompensated
care.
Proposed changes to the effective date of SCH and MDH
classification status determinations.
Proposed changes related to the extension of the MDH
program.
Proposed changes to the rules for payment adjustments
under the Hospital Readmissions Reduction Program based on hospital
readmission

[[Page 20175]]

measures and the process for hospital review and correction of those
rates for FY 2019.
Proposed changes to the requirements and provision of
value-based incentive payments under the Hospital Value-Based
Purchasing Program.
Proposed requirements for payment adjustments to hospitals
under the HAC Reduction Program for FY 2019.
Proposed changes to Medicare GME affiliation agreements
for new urban teaching hospitals.
Discussion of and proposals relating to the implementation
of the Rural Community Hospital Demonstration Program in FY 2019.
Proposed revisions of the hospital inpatient admission
orders documentation requirements.
4. Proposed FY 2019 Policy Governing the IPPS for Capital-Related Costs
In section V. of the preamble to this proposed rule, we discuss the
proposed payment policy requirements for capital[dash]related costs and
capital payments to hospitals for FY 2019.
5. Proposed Changes to the Payment Rates for Certain Excluded
Hospitals: Rate[dash]of[dash]Increase Percentages
In section VI. of the preamble of this proposed rule, we discuss--
Proposed changes to payments to certain excluded hospitals
for FY 2019.
Proposed changes to the regulations governing satellite
facilities.
Proposed changes to the regulations governing excluded
units of hospitals.
Proposed continued implementation of the Frontier
Community Health Integration Project (FCHIP) Demonstration.
6. Proposed Changes to the LTCH PPS
In section VII. of the preamble of the proposed rule, we set
forth--
Proposed changes to the LTCH PPS Federal payment rates,
factors, and other payment rate policies under the LTCH PPS for FY
2019.
Proposed changes to the blended payment rate for site
neutral payment rate cases.
Proposed elimination of the 25-percent threshold policy.
7. Proposed Changes Relating to Quality Data Reporting for Specific
Providers and Suppliers
In section VIII. of the preamble of the proposed rule, we address--
Proposed requirements for the Hospital Inpatient Quality
Reporting (IQR) Program.
Proposed changes to the requirements for the quality
reporting program for PPS-exempt cancer hospitals (PCHQR Program).
Proposed changes to the requirements under the LTCH
Quality Reporting Program (LTCH QRP).
Proposed changes to requirements pertaining to the
clinical quality measurement for eligible hospitals and CAHs
participating in the Medicare and Medicaid Promoting Interoperability
Programs.
8. Proposed Revision to the Supporting Documentation Requirements for
an Acceptable Medicare Cost Report Submission
In section IX. of the preamble of this proposed rule, we set forth
proposed revisions to the supporting documentation required for an
acceptable Medicare cost report submission.
9. Requirements for Hospitals To Make Public List of Standard Charges
In section X. of the preamble of this proposed rule, we discuss our
efforts to further improve the public accessibility of hospital
standard charge information, effective January 1, 2019, in accordance
with section 2718(e) of the Public Health Service Act.
10. Proposed Revisions Regarding Physician Certification and
Recertification of Claims
In section XI. of the preamble of this proposed rule, we set forth
proposed revisions to the requirements for supporting information used
for physician certification and recertification of claims.
11. Request for Information
In section XII. of the preamble of this proposed rule, we include a
request for information on possible establishment of CMS patient health
and safety requirements for hospitals and other Medicare- and Medicaid-
participating providers and suppliers for interoperable electronic
health records and systems for electronic health care information
exchange.
12. Determining Prospective Payment Operating and Capital Rates and
Rate[dash]of[dash]Increase Limits for Acute Care Hospitals
In section V. of the Addendum to this proposed rule, we set forth
proposed changes to the amounts and factors for determining the
proposed FY 2019 prospective payment rates for operating costs and
capital-related costs for acute care hospitals. We are proposing to
establish the threshold amounts for outlier cases. In addition, we
address the update factors for determining the
rate[dash]of[dash]increase limits for cost reporting periods beginning
in FY 2019 for certain hospitals excluded from the IPPS.
13. Determining Prospective Payment Rates for LTCHs
In section V. of the Addendum to this proposed rule, we set forth
proposed changes to the amounts and factors for determining the
proposed FY 2019 LTCH PPS standard Federal payment rate and other
factors used to determine LTCH PPS payments under both the LTCH PPS
standard Federal payment rate and the site neutral payment rate in FY
2019. We are proposing to establish the adjustments for wage levels,
the labor[dash]related share, the cost-of-living adjustment, and high-
cost outliers, including the applicable fixed-loss amounts and the LTCH
cost-to-charge ratios (CCRs) for both payment rates.
14. Impact Analysis
In Appendix A of this proposed rule, we set forth an analysis of
the impact that the proposed changes would have on affected acute care
hospitals, CAHs, LTCHs, and PCHs.
15. Recommendation of Update Factors for Operating Cost Rates of
Payment for Hospital Inpatient Services
In Appendix B of this proposed rule, as required by sections
1886(e)(4) and (e)(5) of the Act, we provide our recommendations of the
appropriate percentage changes for FY 2019 for the following:
A single average standardized amount for all areas for
hospital inpatient services paid under the IPPS for operating costs of
acute care hospitals (and hospital[dash]specific rates applicable to
SCHs and MDHs).
Target rate-of-increase limits to the allowable operating
costs of hospital inpatient services furnished by certain hospitals
excluded from the IPPS.
The LTCH PPS standard Federal payment rate and the site
neutral payment rate for hospital inpatient services provided for LTCH
PPS discharges.
16. Discussion of Medicare Payment Advisory Commission Recommendations
Under section 1805(b) of the Act, MedPAC is required to submit a
report to Congress, no later than March 15 of each year, in which
MedPAC reviews and makes recommendations on Medicare payment policies.
MedPAC's March 2018 recommendations concerning hospital inpatient
payment policies address the update factor for hospital inpatient
operating costs and capital-related costs for hospitals under

[[Page 20176]]

the IPPS. We address these recommendations in Appendix B of this
proposed rule. For further information relating specifically to the
MedPAC March 2018 report or to obtain a copy of the report, contact
MedPAC at (202) 220-3700 or visit MedPAC's website at: https://www.medpac.gov.

II. Proposed Changes to Medicare Severity Diagnosis-Related Group (MS-
DRG) Classifications and Relative Weights

A. Background

Section 1886(d) of the Act specifies that the Secretary shall
establish a classification system (referred to as diagnosis-related
groups (DRGs)) for inpatient discharges and adjust payments under the
IPPS based on appropriate weighting factors assigned to each DRG.
Therefore, under the IPPS, Medicare pays for inpatient hospital
services on a rate per discharge basis that varies according to the DRG
to which a beneficiary's stay is assigned. The formula used to
calculate payment for a specific case multiplies an individual
hospital's payment rate per case by the weight of the DRG to which the
case is assigned. Each DRG weight represents the average resources
required to care for cases in that particular DRG, relative to the
average resources used to treat cases in all DRGs.
Section 1886(d)(4)(C) of the Act requires that the Secretary adjust
the DRG classifications and relative weights at least annually to
account for changes in resource consumption. These adjustments are made
to reflect changes in treatment patterns, technology, and any other
factors that may change the relative use of hospital resources.

B. MS-DRG Reclassifications

For general information about the MS-DRG system, including yearly
reviews and changes to the MS-DRGs, we refer readers to the previous
discussions in the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR
43764 through 43766) and the FYs 2011 through 2018 IPPS/LTCH PPS final
rules (75 FR 50053 through 50055; 76 FR 51485 through 51487; 77 FR
53273; 78 FR 50512; 79 FR 49871; 80 FR 49342; 81 FR 56787 through
56872; and 82 FR 38010 through 38085, respectively).

C. Adoption of the MS-DRGs in FY 2008

For information on the adoption of the MS-DRGs in FY 2008, we refer
readers to the FY 2008 IPPS final rule with comment period (72 FR 47140
through 47189).

D. Proposed FY 2019 MS-DRG Documentation and Coding Adjustment

1. Background on the Prospective MS-DRG Documentation and Coding
Adjustments for FY 2008 and FY 2009 Authorized by Public Law 110-90 and
the Recoupment or Repayment Adjustment Authorized by Section 631 of the
American Taxpayer Relief Act of 2012 (ATRA)
In the FY 2008 IPPS final rule with comment period (72 FR 47140
through 47189), we adopted the MS-DRG patient classification system for
the IPPS, effective October 1, 2007, to better recognize severity of
illness in Medicare payment rates for acute care hospitals. The
adoption of the MS-DRG system resulted in the expansion of the number
of DRGs from 538 in FY 2007 to 745 in FY 2008. By increasing the number
of MS-DRGs and more fully taking into account patient severity of
illness in Medicare payment rates for acute care hospitals, MS-DRGs
encourage hospitals to improve their documentation and coding of
patient diagnoses.
In the FY 2008 IPPS final rule with comment period (72 FR 47175
through 47186), we indicated that the adoption of the MS-DRGs had the
potential to lead to increases in aggregate payments without a
corresponding increase in actual patient severity of illness due to the
incentives for additional documentation and coding. In that final rule
with comment period, we exercised our authority under section
1886(d)(3)(A)(vi) of the Act, which authorizes us to maintain budget
neutrality by adjusting the national standardized amount, to eliminate
the estimated effect of changes in coding or classification that do not
reflect real changes in case-mix. Our actuaries estimated that
maintaining budget neutrality required an adjustment of -4.8 percentage
points to the national standardized amount. We provided for phasing in
this -4.8 percentage point adjustment over 3 years. Specifically, we
established prospective documentation and coding adjustments of -1.2
percentage points for FY 2008, -1.8 percentage points for FY 2009, and
-1.8 percentage points for FY 2010.
On September 29, 2007, Congress enacted the TMA [Transitional
Medical Assistance], Abstinence Education, and QI [Qualifying
Individuals] Programs Extension Act of 2007 (Pub. L. 110-90). Section
7(a) of Public Law 110-90 reduced the documentation and coding
adjustment made as a result of the MS-DRG system that we adopted in the
FY 2008 IPPS final rule with comment period to -0.6 percentage point
for FY 2008 and -0.9 percentage point for FY 2009.
As discussed in prior year rulemakings, and most recently in the FY
2017 IPPS/LTCH PPS final rule (81 FR 56780 through 56782), we
implemented a series of adjustments required under sections 7(b)(1)(A)
and 7(b)(1)(B) of Public Law 110-90, based on a retrospective review of
FY 2008 and FY 2009 claims data. We completed these adjustments in FY
2013, but indicated in the FY 2013 IPPS/LTCH PPS final rule (77 FR
53274 through 53275) that delaying full implementation of the
adjustment required under section 7(b)(1)(A) of Public Law 110-90 until
FY 2013 resulted in payments in FY 2010 through FY 2012 being
overstated, and that these overpayments could not be recovered under
Public Law 110-90.
In addition, as discussed in prior rulemakings and most recently in
the FY 2018 IPPS/LTCH PPS final rule (82 FR 38008 through 38009),
section 631 of the ATRA amended section 7(b)(1)(B) of Public Law 110-90
to require the Secretary to make a recoupment adjustment or adjustments
totaling $11 billion by FY 2017. This adjustment represented the amount
of the increase in aggregate payments as a result of not completing the
prospective adjustment authorized under section 7(b)(1)(A) of Public
Law 110-90 until FY 2013.
2. Adjustment Made for FY 2018 as Required Under Section 414 of Public
Law 114-10 (MACRA) and Section 15005 of Public Law 114-255
As stated in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56785),
once the recoupment required under section 631 of the ATRA was
complete, we had anticipated making a single positive adjustment in FY
2018 to offset the reductions required to recoup the $11 billion under
section 631 of the ATRA. However, section 414 of the MACRA (which was
enacted on April 16, 2015) replaced the single positive adjustment we
intended to make in FY 2018 with a 0.5 percentage point positive
adjustment for each of FYs 2018 through 2023. In the FY 2017
rulemaking, we indicated that we would address the adjustments for FY
2018 and later fiscal years in future rulemaking. Section 15005 of the
21st Century Cures Act (Pub. L. 114-255), which was enacted on December
13, 2016, amended section 7(b)(1)(B) of the TMA, as amended by section
631 of the ATRA and section 414 of the MACRA, to reduce the adjustment
for FY 2018 from a 0.5 percentage point to a 0.4588 percentage point.
As we discussed in the FY 2018

[[Page 20177]]

rulemaking, we believe the directive under section 15005 of Public Law
114-255 is clear. Therefore, in the FY 2018 IPPS/LTCH PPS final rule
(82 FR 38009) for FY 2018, we implemented the required +0.4588
percentage point adjustment to the standardized amount. This is a
permanent adjustment to payment rates. While we did not address future
adjustments required under section 414 of the MACRA and section 15005
of Public Law 114-255 at that time, we stated that we expected to
propose positive 0.5 percentage point adjustments to the standardized
amounts for FYs 2019 through 2023.
3. Proposed Adjustment for FY 2019
Consistent with the requirements of section 414 of the MACRA, we
are proposing to implement a positive 0.5 percentage point adjustment
to the standardized amount for FY 2019. This would be a permanent
adjustment to payment rates. We plan to propose future adjustments
required under section 414 of the MACRA for FYs 2020 through 2023 in
future rulemaking.

E. Refinement of the MS-DRG Relative Weight Calculation

1. Background
Beginning in FY 2007, we implemented relative weights for DRGs
based on cost report data instead of charge information. We refer
readers to the FY 2007 IPPS final rule (71 FR 47882) for a detailed
discussion of our final policy for calculating the cost[dash]based DRG
relative weights and to the FY 2008 IPPS final rule with comment period
(72 FR 47199) for information on how we blended relative weights based
on the CMS DRGs and MS-DRGs. We also refer readers to the FY 2017 IPPS/
LTCH PPS final rule (81 FR 56785 through 56787) for a detailed
discussion of the history of changes to the number of cost centers used
in calculating the DRG relative weights. Since FY 2014, we calculate
the IPPS MS-DRG relative weights using 19 CCRs, which now include
distinct CCRs for implantable devices, MRIs, CT scans, and cardiac
catheterization.
2. Discussion of Policy for FY 2019
Consistent with our established policy, we are calculating the
proposed MS-DRG relative weights for FY 2019 using two data sources:
The MedPAR file as the claims data source and the HCRIS as the cost
report data source. We adjusted the charges from the claims to costs by
applying the 19 national average CCRs developed from the cost reports.
The description of the calculation of the proposed 19 CCRs and the
proposed MS-DRG relative weights for FY 2019 is included in section
II.G. of the preamble to this FY 2019 IPPS/LTCH PPS proposed rule. As
we did with the FY 2018 IPPS/LTCH PPS final rule, for this proposed
rule, we are providing the version of the HCRIS from which we
calculated these proposed 19 CCRs on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/. Click on the link on the left side of the
screen titled ``FY 2019 IPPS Proposed Rule Home Page'' or ``Acute
Inpatient Files for Download.''

F. Proposed Changes to Specific MS-DRG Classifications

1. Discussion of Changes to Coding System and Basis for Proposed FY
2019 MS-DRG Updates
a. Conversion of MS-DRGs to the International Classification of
Diseases, 10th Revision (ICD-10)
As of October 1, 2015, providers use the International
Classification of Diseases, 10th Revision (ICD-10) coding system to
report diagnoses and procedures for Medicare hospital inpatient
services under the MS-DRG system instead of the ICD-9-CM coding system,
which was used through September 30, 2015. The ICD-10 coding system
includes the International Classification of Diseases, 10th Revision,
Clinical Modification (ICD-10-CM) for diagnosis coding and the
International Classification of Diseases, 10th Revision, Procedure
Coding System (ICD-10-PCS) for inpatient hospital procedure coding, as
well as the ICD-10-CM and ICD-10-PCS Official Guidelines for Coding and
Reporting. For a detailed discussion of the conversion of the MS-DRGs
to ICD-10, we refer readers to the FY 2017 IPPS/LTCH PPS final rule (81
FR 56787 through 56789).
b. Basis for Proposed FY 2019 MS-DRG Updates
CMS has previously encouraged input from our stakeholders
concerning the annual IPPS updates when that input was made available
to us by December 7 of the year prior to the next annual proposed rule
update. As discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR
38010), as we work with the public to examine the ICD-10 claims data
used for updates to the ICD-10 MS DRGs, we would like to examine areas
where the MS-DRGs can be improved, which will require additional time
for us to review requests from the public to make specific updates,
analyze claims data, and consider any proposed updates. Given the need
for more time to carefully evaluate requests and propose updates, we
changed the deadline to request updates to the MS-DRGs to November 1 of
each year. This will provide an additional 5 weeks for the data
analysis and review process. Interested parties had to submit any
comments and suggestions for FY 2019 by November 1, 2017, and are
encouraged to submit any comments and suggestions for FY 2020 by
November 1, 2018 via the CMS MS-DRG Classification Change Request
Mailbox located at: [email protected]. The comments
that were submitted in a timely manner for FY 2019 are discussed in
this section of the preamble of this proposed rule.
Following are the changes that we are proposing to the MS-DRGs for
FY 2019 in this FY 2019 IPPS/LTCH PPS proposed rule. We are inviting
public comments on each of the MS-DRG classification proposed changes,
as well as our proposals to maintain certain existing MS-DRG
classifications discussed in this proposed rule. In some cases, we are
proposing changes to the MS-DRG classifications based on our analysis
of claims data and consultation with our clinical advisors. In other
cases, we are proposing to maintain the existing MS-DRG classifications
based on our analysis of claims data and consultation with our clinical
advisors. For this FY 2019 IPPS/LTCH PPS proposed rule, our MS-DRG
analysis was based on ICD-10 claims data from the September 2017 update
of the FY 2017 MedPAR file, which contains hospital bills received
through September 30, 2017, for discharges occurring through September
30, 2017. In our discussion of the proposed MS-DRG reclassification
changes, we refer to our analysis of claims data from the ``September
2017 update of the FY 2017 MedPAR file.''
As explained in previous rulemaking (76 FR 51487), in deciding
whether to propose to make further modifications to the MS-DRGs for
particular circumstances brought to our attention, we consider whether
the resource consumption and clinical characteristics of the patients
with a given set of conditions are significantly different than the
remaining patients represented in the MS-DRG. We evaluate patient care
costs using average costs and lengths of stay and rely on the judgment
of our clinical advisors to determine whether patients are clinically
distinct or similar to other patients represented in the MS-DRG. In
evaluating resource costs, we consider both the absolute and percentage
differences in average costs

[[Page 20178]]

between the cases we select for review and the remainder of cases in
the MS-DRG. We also consider variation in costs within these groups;
that is, whether observed average differences are consistent across
patients or attributable to cases that are extreme in terms of costs or
length of stay, or both. Further, we consider the number of patients
who will have a given set of characteristics and generally prefer not
to create a new MS-DRG unless it would include a substantial number of
cases.
In our examination of the claims data, we apply the following
criteria established in FY 2008 (72 FR 47169) to determine if the
creation of a new complication or comorbidity (CC) or major
complication or comorbidity (MCC) subgroup within a base MS-DRG is
warranted:
A reduction in variance of costs of at least 3 percent;
At least 5 percent of the patients in the MS-DRG fall
within the CC or MCC subgroup;
At least 500 cases are in the CC or MCC subgroup;
There is at least a 20-percent difference in average costs
between subgroups; and
There is a $2,000 difference in average costs between
subgroups.
In order to warrant creation of a CC or MCC subgroup within a base
MS-DRG, the subgroup must meet all five of the criteria.
2. Pre-MDC
a. Heart Transplant or Implant of Heart Assist System
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38012), we stated
our intent to review the ICD-10 logic for Pre-MDC MS-DRGs 001 and 002
(Heart Transplant or Implant of Heart Assist System with and without
MCC, respectively), as well as MS-DRG 215 (Other Heart Assist System
Implant) and MS-DRGs 268 and 269 (Aortic and Heart Assist Procedures
Except Pulsation Balloon with and without MCC, respectively) where
procedures involving heart assist devices are currently assigned. We
also encouraged the public to submit any comments on restructuring the
MS-DRGs for heart assist system procedures to the CMS MS-DRG
Classification Change Request Mailbox located at:
[email protected] by November 1, 2017.
The logic for Pre-MDC MS-DRGs 001 and 002 is comprised of two
lists. The first list includes procedure codes identifying a heart
transplant procedure, and the second list includes procedure codes
identifying the implantation of a heart assist system. The list of
procedure codes identifying the implantation of a heart assist system
includes the following three codes.

------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
02HA0QZ................... Insertion of implantable heart assist system
into heart, open approach.
02HA3QZ................... Insertion of implantable heart assist system
into heart, percutaneous approach.
02HA4QZ................... Insertion of implantable heart assist system
into heart, percutaneous endoscopic
approach.
------------------------------------------------------------------------

In addition to these three procedure codes, there are also 33 pairs
of code combinations or procedure code ``clusters'' that, when reported
together, satisfy the logic for assignment to MS-DRGs 001 and 002. The
code combinations are represented by two procedure codes and include
either one code for the insertion of the device with one code for
removal of the device or one code for the revision of the device with
one code for the removal of the device. The 33 pairs of code
combinations are listed below.

----------------------------------------------------------------------------------------------------------------
Code Code description Code Code description
----------------------------------------------------------------------------------------------------------------
02HA0RS.................. Insertion of with 02PA0RZ................. Removal of short-term
biventricular short- external heart assist
term external heart system from heart, open
assist system into approach.
heart, open approach.
02HA0RS.................. Insertion of with 02PA3RZ................. Removal of short-term
biventricular short- external heart assist
term external heart system from heart,
assist system into percutaneous approach.
heart, open approach.
02HA0RS.................. Insertion of with 02PA4RZ................. Removal of short-term
biventricular short- external heart assist
term external heart system from heart,
assist system into percutaneous endoscopic
heart, open approach. approach.
02HA0RZ.................. Insertion of short-term with 02PA0RZ................. Removal of short-term
external heart assist external heart assist
system into heart, open system from heart, open
approach. approach.
02HA0RZ.................. Insertion of short-term with 02PA3RZ................. Removal of short-term
external heart assist external heart assist
system into heart, open system from heart,
approach. percutaneous approach.
02HA0RZ.................. Insertion of short-term with 02PA4RZ................. Removal of short-term
external heart assist external heart assist
system into heart, open system from heart,
approach. percutaneous endoscopic
approach.
02HA3RS.................. Insertion of with 02PA0RZ................. Removal of short-term
biventricular short- external heart assist
term external heart system from heart, open
assist system into approach.
heart, percutaneous
approach.
02HA3RS.................. Insertion of with 02PA3RZ................. Removal of short-term
biventricular short- external heart assist
term external heart system from heart,
assist system into percutaneous approach.
heart, percutaneous
approach.
02HA3RS.................. Insertion of with 02PA4RZ................. Removal of short-term
biventricular short- external heart assist
term external heart system from heart,
assist system into percutaneous endoscopic
heart, percutaneous approach.
approach.
02HA4RS.................. Insertion of with 02PA0RZ................. Removal of short-term
biventricular short- external heart assist
term external heart system from heart, open
assist system into approach.
heart, percutaneous
endoscopic approach.

[[Page 20179]]

02HA4RS.................. Insertion of with 02PA3RZ................. Removal of short-term
biventricular short- external heart assist
term external heart system from heart,
assist system into percutaneous approach.
heart, percutaneous
endoscopic approach.
02HA4RS.................. Insertion of with 02PA4RZ................. Removal of short-term
biventricular short- external heart assist
term external heart system from heart,
assist system into percutaneous endoscopic
heart, percutaneous approach.
endoscopic approach.
02HA4RZ.................. Insertion of short-term with 02PA0RZ................. Removal of short-term
external heart assist external heart assist
system into heart, system from heart, open
percutaneous endoscopic approach.
approach.
02HA4RZ.................. Insertion of short-term with 02PA3RZ................. Removal of short-term
external heart assist external heart assist
system into heart, system from heart,
percutaneous endoscopic percutaneous approach.
approach.
02HA4RZ.................. Insertion of short-term with 02PA4RZ................. Removal of short-term
external heart assist external heart assist
system into heart, system from heart,
percutaneous endoscopic percutaneous endoscopic
approach. approach.
02WA0QZ.................. Revision of implantable with 02PA0RZ................. Removal of short-term
heart assist system in external heart assist
heart, open approach. system from heart, open
approach.
02WA0QZ.................. Revision of implantable with 02PA3RZ................. Removal of short-term
heart assist system in external heart assist
heart, open approach. system from heart,
percutaneous approach.
02WA0QZ.................. Revision of implantable with 02PA4RZ................. Removal of short-term
heart assist system in external heart assist
heart, open approach. system from heart,
percutaneous endoscopic
approach.
02WA0RZ.................. Revision of short-term with 02PA0RZ................. Removal of short-term
external heart assist external heart assist
system in heart, open system from heart, open
approach. approach.
02WA0RZ.................. Revision of short-term with 02PA3RZ................. Removal of short-term
external heart assist external heart assist
system in heart, open system from heart,
approach. percutaneous approach.
02WA0RZ.................. Revision of short-term with 02PA4RZ................. Removal of short-term
external heart assist external heart assist
system in heart, open system from heart,
approach. percutaneous endoscopic
approach.
02WA3QZ.................. Revision of implantable with 02PA0RZ................. Removal of short-term
heart assist system in external heart assist
heart, percutaneous system from heart, open
approach. approach.
02WA3QZ.................. Revision of implantable with 02PA3RZ................. Removal of short-term
heart assist system in external heart assist
heart, percutaneous system from heart,
approach. percutaneous approach.
02WA3QZ.................. Revision of implantable with 02PA4RZ................. Removal of short-term
heart assist system in external heart assist
heart, percutaneous system from heart,
approach. percutaneous endoscopic
approach.
02WA3RZ.................. Revision of short-term with 02PA0RZ................. Removal of short-term
external heart assist external heart assist
system in heart, system from heart, open
percutaneous approach. approach.
02WA3RZ.................. Revision of short-term with 02PA3RZ................. Removal of short-term
external heart assist external heart assist
system in heart, system from heart,
percutaneous approach. percutaneous approach.
02WA3RZ.................. Revision of short-term with 02PA4RZ................. Removal of short-term
external heart assist external heart assist
system in heart, system from heart,
percutaneous approach. percutaneous endoscopic
approach.
02WA4QZ.................. Revision of implantable with 02PA0RZ................. Removal of short-term
heart assist system in external heart assist
heart, percutaneous system from heart, open
endoscopic approach. approach.
02WA4QZ.................. Revision of implantable with 02PA3RZ................. Removal of short-term
heart assist system in external heart assist
heart, percutaneous system from heart,
endoscopic approach. percutaneous approach.
02WA4QZ.................. Revision of implantable with 02PA4RZ................. Removal of short-term
heart assist system in external heart assist
heart, percutaneous system from heart,
endoscopic approach. percutaneous endoscopic
approach.
02WA4RZ.................. Revision of short-term with 02PA0RZ................. Removal of short-term
external heart assist external heart assist
system in heart, system from heart, open
percutaneous endoscopic approach.
approach.
02WA4RZ.................. Revision of short-term with 02PA3RZ................. Removal of short-term
external heart assist external heart assist
system in heart, system from heart,
percutaneous endoscopic percutaneous approach.
approach.
02WA4RZ.................. Revision of short-term with 02PA4RZ................. Removal of short-term
external heart assist external heart assist
system in heart, system from heart,
percutaneous endoscopic percutaneous endoscopic
approach. approach.
----------------------------------------------------------------------------------------------------------------

In response to our solicitation for public comments on
restructuring the MS-DRGs for heart assist system procedures,
commenters recommended that CMS maintain the current logic under the
Pre-MDC MS-DRGs 001 and 002. Similar to the discussion in the FY 2018
IPPS/LTCH PPS final rule (82 FR 38011 through 38012) involving MS-DRG
215 (Other Heart Assist System Implant), the commenters provided
examples of common clinical scenarios involving a left ventricular
assist device (LVAD) and included the procedure codes that were
reported under the ICD-9 based MS-DRGs in comparison to the procedure
codes reported under the ICD-10 MS-DRGs, which are reflected in the
following table.

[[Page 20180]]

----------------------------------------------------------------------------------------------------------------
ICD-9-CM procedure
Procedure code ICD-9 MS-DRG ICD-10-PCS codes ICD-10 MS-DRG
----------------------------------------------------------------------------------------------------------------
New LVAD inserted................ 37.66 (Insertion of 001 or 002 02WA0QZ (Insertion of 001 or 002
implantable heart implantable heart
assist system). assist system into
heart, open approach).
02WA3QZ (Insertion of
implantable heart
assist system into
heart, percutaneous
approach).
02WA4QZ (Insertion of
implantable heart
assist system into
heart, percutaneous
endoscopic approach).
LVAD Exchange--existing LVAD is 37.63 (Repair of 215 02PA0QZ (Removal of 001 or 002
removed and replaced with either heart assist implantable heart
new LVAD system or new LVAD pump. system). assist system from
heart, open approach).
02PA3QZ (Removal of
implantable heart
assist system from
heart, percutaneous
approach).
02PA4QZ (Removal of
implantable heart
assist system from
heart, percutaneous
endoscopic approach)
and.
02WA0QZ (Insertion of
implantable heart
assist system into
heart, open approach).
02WA3QZ (Insertion of
implantable heart
assist system into
heart, percutaneous
approach).
02WA4QZ (Insertion of
implantable heart
assist system into
heart, percutaneous
endoscopic approach).
LVAD revision and repair-- 37.63 (Repair of 215 02WA0QZ (Revision of 215
existing LVAD is adjusted or heart assist implantable heart
repaired without removing the system). assist system in heart,
existing LVAD device. open approach).
02WA3QZ (Revision of
implantable heart
assist system in heart,
percutaneous approach).
02WA4QZ (Revision of
implantable heart
assist system in heart,
percutaneous endoscopic
approach).
----------------------------------------------------------------------------------------------------------------

The commenters noted that, for Pre-MDC MS-DRGs 001 and 002, the
procedures involving the insertion of an implantable heart assist
system, such as the insertion of a LVAD, and the procedures involving
exchange of an LVAD (where an existing LVAD is removed and replaced
with either a new LVAD or a new LVAD pump) demonstrate clinical
similarities and utilize similar resources. Although the commenters
recommended that CMS maintain the current logic under the Pre-MDC MS-
DRGs 001 and 002, they also recommended that CMS continue to monitor
the data in these MS-DRGs for future consideration of distinctions (for
example, different approaches and evolving technologies) that may
impact the clinical and resource use of patients undergoing procedures
utilizing heart assist devices. The commenters also requested that
coding guidance be issued for assignment of the correct ICD-10-PCS
procedure codes describing LVAD exchanges to encourage accurate
reporting of these procedures.
We agree with the commenters that we should continue to monitor the
data in Pre-MDC MS-DRGs 001 and 002 for future consideration of
distinctions (for example, different approaches and evolving
technologies) that may impact the clinical and resource use of patients
undergoing procedures utilizing heart assist devices. In response to
the request that coding guidance be issued for assignment of the
correct ICD-10-PCS procedure codes describing LVAD exchanges to
encourage accurate reporting of these procedures, as we noted in the FY
2018 IPPS/LTCH PPS final rule (82 FR 38012), coding advice is issued
independently from payment policy. We also noted that, historically, we
have not provided coding advice in rulemaking with respect to policy
(82 FR 38045). We collaborate with the American Hospital Association
(AHA) through the Coding Clinic for ICD-10-CM and ICD-10-PCS to promote
proper coding. We recommend that the requestor and other interested
parties submit any questions pertaining to correct coding for these
technologies to the AHA.
In response to the public comments we received on this topic, we
are providing the results of our claims analysis from the September
2017 update of the FY 2017 MedPAR file for cases in Pre-MDC MS-DRGs 001
and 002. Our findings are shown in the following table.

As shown in this table, for MS-DRG 001, there were a total of 1,993
cases with an average length of stay of 35.6 days and average costs of
$185,660. For MS-DRG 002, there were a total of 179 cases with an
average length of stay of 18.3 days and average costs of $99,635.
We then examined claims data in Pre-MDC MS-DRGs 001 and 002 for
cases that reported one of the three procedure codes identifying the
implantation of a heart assist system such as the LVAD. Our findings
are shown in the following table.

[[Page 20181]]

MS-DRGs for Heart Transplant or Implant of Heart Assist System
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 001--All cases........................................... 1,993 35.6 $185,660
MS-DRG 001--Cases with procedure code 02HA0QZ (Insertion of 1,260 35.5 206,663
implantable heart assist system into heart, open approach).....
MS-DRG 001--Cases with procedure code 02HA3QZ (Insertion of 1 8 33,889
implantable heart assist system into heart, percutaneous
approach)......................................................
MS-DRG 001--Cases with procedure code 02HA4QZ (Insertion of 0 0 0
implantable heart assist system into heart, percutaneous
endoscopic approach)...........................................
MS-DRG 002--All cases........................................... 179 18.3 99,635
MS-DRG 002--Cases with procedure code 02HA0QZ (Insertion of 82 19.9 131,957
implantable heart assist system into heart, open approach).....
MS-DRG 002--Cases with procedure code 02HA3QZ (Insertion of 0 0 0
implantable heart assist system into heart, percutaneous
approach)......................................................
MS-DRG 002--Cases with procedure code 02HA4QZ (Insertion of 0 0 0
implantable heart assist system into heart, percutaneous
endoscopic approach)...........................................
----------------------------------------------------------------------------------------------------------------

As shown in this table, for MS-DRG 001, there were a total of 1,260
cases reporting procedure code 02HA0QZ (Insertion of implantable heart
assist system into heart, open approach) with an average length of stay
of 35.5 days and average costs of $206,663. There was one case that
reported procedure code 02HA3QZ (Insertion of implantable heart assist
system into heart, percutaneous approach) with an average length of
stay of 8 days and average costs of $33,889. There were no cases
reporting procedure code 02HA4QZ (Insertion of implantable heart assist
system into heart, percutaneous endoscopic approach). For MS-DRG 002,
there were a total of 82 cases reporting procedure code 02HA0QZ
(Insertion of implantable heart assist system into heart, open
approach) with an average length of stay of 19.9 days and average costs
of $131,957. There were no cases reporting procedure codes 02HA3QZ
(Insertion of implantable heart assist system into heart, percutaneous
approach) or 02HA4QZ (Insertion of implantable heart assist system into
heart, percutaneous endoscopic approach).
We also examined the cases in MS-DRGs 001 and 002 that reported one
of the possible 33 pairs of code combinations or clusters. Our findings
are shown in the following 8 tables. The first table provides the total
number of cases reporting a procedure code combination (or cluster)
compared to all of the cases in the respective MS-DRG, followed by
additional detailed tables showing the number of cases, average length
of stay, and average costs for each specific code combination that was
reported in the claims data.

Heart Transplant or Implant of Heart Assist System
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG 001 and 002 cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 001--All cases........................................... 1,993 35.6 $185,660
MS-DRG 001--Cases with a procedure code combination (cluster)... 149 28.4 179,607
MS-DRG 002--All cases........................................... 179 18.3 99,635
MS-DRG 002--Cases with a procedure code combination (cluster)... 6 3.8 57,343
----------------------------------------------------------------------------------------------------------------

[[Page 20182]]

Procedure Code Combinations for Implant of Heart Assist System
----------------------------------------------------------------------------------------------------------------
Number of Average length
cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 001
----------------------------------------------------------------------------------------------------------------
Cases with a procedure code combination of 02HA0RZ (Insertion of 30 55.6 $351,995
short-term external heart assist system into heart, open
approach) with 02PA0RZ (Removal of short-term external heart
assist system from heart, open approach).......................
Cases with a procedure code combination of 02HA0RZ (Insertion of 19 29.8 191,163
short-term external heart assist system into heart, open
approach) with 02PA3RZ (Removal of short-term external heart
assist system from heart, percutaneous approach)...............
All cases reporting one or more of the above procedure code 49 45.6 289,632
combinations in MS-DRG 001.....................................
----------------------------------------------------------------------------------------------------------------
MS-DRG 002
----------------------------------------------------------------------------------------------------------------
Cases with a procedure code combination of 02HA0RZ (Insertion of 1 4 48,212
short-term external heart assist system into heart, open
approach) with 02PA0RZ (Removal of short-term external heart
assist system from heart, open approach).......................
Cases with a procedure code combination of 02HA0RZ (Insertion of 2 4.5 66,386
short-term external heart assist system into heart, open
approach) with 02PA3RZ (Removal of short-term external heart
assist system from heart, percutaneous approach)...............
All cases reporting one or more of the above procedure code 3 4.3 60,328
combinations in MS-DRG 002.....................................
All cases reporting one or more of the above procedure code 52 43.3 276,403
combinations across both MS-DRGs 001 and 002...................
----------------------------------------------------------------------------------------------------------------

Procedure Code Combinations for Implant of Heart Assist System
----------------------------------------------------------------------------------------------------------------
Number of Average length
cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 001
----------------------------------------------------------------------------------------------------------------
Cases with a procedure code combination of 02HA3RS (Insertion of 3 43.3 $233,330
biventricular short-term external heart assist system into
heart, percutaneous approach) with 02PA0RZ (Removal of short-
term external heart assist system from heart, open approach)...
Cases with a procedure code combination of 02HA3RS (Insertion of 24 14.8 113,955
biventricular short-term external heart assist system into
heart, percutaneous approach) with 02PA3RZ (Removal of short-
term external heart assist system from heart, percutaneous
approach)......................................................
Cases with a procedure code combination of 02HA3RS (Insertion of 1 44 153,284
biventricular short-term external heart assist system into
heart, percutaneous approach) with 02PA4RZ (Removal of short-
term external heart assist system from heart, percutaneous
endoscopic approach)...........................................
All cases reporting one or more of the above procedure code 28 18.9 128,150
combinations in MS-DRG 001.....................................
----------------------------------------------------------------------------------------------------------------
MS-DRG 002
----------------------------------------------------------------------------------------------------------------
Cases with a procedure code combination of 02HA3RS (Insertion of 2 4 $30,954
biventricular short-term external heart assist system into
heart, percutaneous approach) with 02PA3RZ (Removal of short-
term external heart assist system from heart, percutaneous
approach)......................................................
All cases reporting one of the above procedure code combinations 2 4 30,954
in MS-DRG 002..................................................
All cases reporting one or more of the above procedure code 30 17.9 121,670
combinations across both MS[dash]DRGs 001 and 002..............
----------------------------------------------------------------------------------------------------------------

[[Page 20183]]

Procedure Code Combinations for Implant of Heart Assist System
----------------------------------------------------------------------------------------------------------------
Number of Average length
cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 001
----------------------------------------------------------------------------------------------------------------
Cases with a procedure code combination of 02WA3RZ (Revision of 2 24 $123,084
short-term external heart assist system in heart, percutaneous
approach) with 02PA0RZ (Removal of short-term external heart
assist system from heart, open approach).......................
Cases with a procedure code combination of 02WA3RZ (Revision of 55 14.7 104,963
short-term external heart assist system in heart, percutaneous
approach) with 02PA3RZ (Removal of short-term external heart
assist system from heart, percutaneous approach)...............
All cases reporting one or more of the above procedure code 57 15 105,599
combinations in MS-DRG 001.....................................
----------------------------------------------------------------------------------------------------------------
MS-DRG 002
----------------------------------------------------------------------------------------------------------------
Cases with a procedure code combination of 02WA3RZ (Revision of 1 2 101,168
short-term external heart assist system in heart, percutaneous
approach) with 02PA3RZ (Removal of short-term external heart
assist system from heart, percutaneous approach)...............
All cases reporting one or more of the above procedure code 58 14.8 105,522
combinations across both MS-DRGs 001 and 002...................
----------------------------------------------------------------------------------------------------------------
MS-DRG 001
----------------------------------------------------------------------------------------------------------------
Cases with a procedure code combination of 02WA4RZ (Revision of 1 10 112,698
short-term external heart assist system in heart, percutaneous
endoscopic approach) with 02PA0RZ (Removal of short-term
external heart assist system from heart, open approach)........
----------------------------------------------------------------------------------------------------------------

We did not find any cases reporting the following procedure code
combinations (clusters) in the claims data.

----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------
02HA4RS.................. Insertion of with 02PA0RZ................. Removal of short-term
biventricular short- external heart assist
term external heart system from heart, open
assist system into approach.
heart, percutaneous
endoscopic approach.
02HA4RS.................. Insertion of with 02PA3RZ................. Removal of short-term
biventricular short- external heart assist
term external heart system from heart,
assist system into percutaneous approach.
heart, percutaneous
endoscopic approach.
02HA4RS.................. Insertion of with 02PA4RZ................. Removal of short-term
biventricular short- external heart assist
term external heart system from heart,
assist system into percutaneous endoscopic
heart, percutaneous approach.
endoscopic approach.
02WA3QZ.................. Revision of implantable with 02PA0RZ................. Removal of short-term
heart assist system in external heart assist
heart, percutaneous system from heart, open
approach. approach.
02WA3QZ.................. Revision of implantable with 02PA3RZ................. Removal of short-term
heart assist system in external heart assist
heart, percutaneous system from heart,
approach. percutaneous approach.

[[Page 20184]]

02WA3QZ.................. Revision of implantable with 02PA4RZ................. Removal of short-term
heart assist system in external heart assist
heart, percutaneous system from heart,
approach. percutaneous endoscopic
approach.
----------------------------------------------------------------------------------------------------------------

The data show that there are differences in the average length of
stay and average costs for cases in Pre-MDC MS-DRGs 001 and 002
according to the type of procedure (insertion, revision, or removal),
the type of device (biventricular short-term external heart assist
system, short-term external heart assist system or implantable heart
assist system), and the approaches that were utilized (open,
percutaneous, or percutaneous endoscopic). We agree with the
commenters' recommendation to maintain the structure of Pre-MDC MS-DRGs
001 and 002 for FY 2019 and will continue to analyze the claims data.
We are inviting public comments on our decision to maintain the current
structure of Pre[dash]MDC MS-DRGs 001 and 002 for FY 2019.
Commenters also suggested that CMS maintain the current logic for
MS-DRG 215 (Other Heart Assist System Implant), but they recommended
that CMS continue to monitor the data in MS-DRG 215 for future
consideration of distinctions (for example, different approaches and
evolving technologies) that may impact the clinical and resource use of
procedures utilizing heart assist devices. We also received a request
to review claims data for procedures involving extracorporeal membrane
oxygenation (ECMO) in combination with the insertion of a percutaneous
short-term external heart assist device to determine if the current MS-
DRG assignment is appropriate.
The logic for MS-DRG 215 is comprised of the procedure codes shown
in the following table, for which we examined claims data in the
September 2017 update of the FY 2017 MedPAR file in response to the
commenters' requests. Our findings are shown in the following table.

MS-DRG 215
[Other heart assist system implant]
----------------------------------------------------------------------------------------------------------------
Number of Average length
cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
All cases....................................................... 3,428 8.7 $68,965
Cases with procedure code 02HA0RJ (Insertion of short-term 0 0 0
external heart assist system into heart, intraoperative, open
approach)......................................................
Cases with procedure code 02HA0RS (Insertion of biventricular 9 10 118,361
short-term external heart assist system into heart, open
approach)......................................................
Cases with procedure code 02HA0RZ (Insertion of short-term 66 11.5 99,107
external heart assist system into heart, open approach)........
Cases with procedure code 02HA3RJ (Insertion of short-term 0 0 0
external heart assist system into heart, intraoperative,
percutaneous approach).........................................
Cases with procedure code 02HA3RS (Insertion of biventricular 117 7.2 64,302
short-term external heart assist system into heart,
percutaneous approach).........................................
Cases with procedure code 02HA3RZ (Insertion of short-term 3,136 8.4 67,670
external heart assist system into heart, percutaneous approach)
Cases with procedure code 02HA4RJ (Insertion of short-term 0 0 0
external heart assist system into heart, intraoperative,
percutaneous endoscopic approach)..............................
Cases with procedure code 02HA4RS (Insertion of biventricular 1 2 43,988
short-term external heart assist system into heart,
percutaneous endoscopic approach)..............................
Cases with procedure code 02HA4RZ (Insertion of short-term 31 5.3 57,042
external heart assist system into heart, percutaneous
endoscopic approach)...........................................
Cases with procedure code 02WA0JZ (Revision of synthetic 1 84 366,089
substitute in heart, open approach)............................
Cases with procedure code 02WA0QZ (Revision of implantable heart 56 25.1 123,410
assist system in heart, open approach).........................
Cases with procedure code 02WA0RS (Revision of biventricular 0 0 0
short-term external heart assist system in heart, open
approach)......................................................
Cases with procedure code 02WA0RZ (Revision of short-term 8 13.5 99,378
external heart assist system in heart, open approach)..........
Cases with procedure code 02WA3QZ (Revision of implantable heart 0 0 0
assist system in heart, percutaneous approach).................
Cases with procedure code 02WA3RS (Revision of biventricular 0 0 0
short-term external heart assist system in heart, percutaneous
approach)......................................................
Cases with procedure code 02WA3RZ (Revision of short-term 80 10 71,077
external heart assist system in heart, percutaneous approach)..
Cases with procedure code 02WA4QZ (Revision of implantable heart 0 0 0
assist system in heart, percutaneous endoscopic approach)......
Cases with procedure code 02WA4RS (Revision of biventricular 0 0 0
short-term external heart assist system in heart, percutaneous
endoscopic approach)...........................................
Cases with procedure code 02WA4RZ (Revision of short-term 0 0 0
external heart assist system in heart, percutaneous endoscopic
approach)......................................................
----------------------------------------------------------------------------------------------------------------

As shown in this table, for MS-DRG 215, we found a total of 3,428
cases with an average length of stay of 8.7 days and average costs of
$68,965. For procedure codes describing the insertion of a
biventricular short-term external heart

[[Page 20185]]

assist system with open, percutaneous or percutaneous endoscopic
approaches, we found a total of 127 cases with an average length of
stay ranging from 2 to 10 days and average costs ranging from $43,988
to $118,361. For procedure codes describing the insertion of a short-
term external heart assist system with open, percutaneous or
percutaneous endoscopic approaches, we found a total of 3,233 cases
with an average length of stay ranging from 5.3 days to 11.5 days and
average costs ranging from $57,042 to $99,107. For procedure codes
describing the revision of a short-term external heart assist system
with open or percutaneous approaches, we found a total of 88 cases with
an average length of stay ranging from 10 to 13.5 days and average
costs ranging from $71,077 to $99,378. We found 1 case reporting
procedure code 02WA0JZ (Revision of synthetic substitute in heart, open
approach), with an average length of stay of 84 days and average costs
of $366,089. Lastly, we found 56 cases reporting procedure code 02WA0QZ
(Revision of implantable heart assist system in heart, open approach)
with an average length of stay of 25.1 days and average costs of
$123,410.
As the data show, there is a wide range in the average length of
stay and the average costs for cases reporting procedures that involve
a biventricular short-term external heart assist system versus a short-
term external heart assist system. There is an even greater range in
the average length of stay and the average costs when comparing the
revision of a short-term external heart assist system to the revision
of a synthetic substitute in the heart or to the revision an
implantable heart assist system.
We agree with the commenters that continued monitoring of the data
and further analysis is necessary prior to proposing any modifications
to MS-DRG 215. As stated in the FY 2018 IPPS/LTCH PPS final rule (82 FR
38012), we are aware that the AHA published Coding Clinic advice that
clarified coding and reporting for certain external heart assist
devices due to the technology being approved for new indications. The
current claims data do not yet reflect that updated guidance. We also
note that there have been recent updates to the descriptions of the
codes for heart assist devices in the past year. For example, the
qualifier ``intraoperative'' was added effective October 1, 2017 (FY
2018) to the procedure codes describing the insertion of short-term
external heart assist system procedures to distinguish between
procedures where the device was only used intraoperatively and was
removed at the conclusion of the procedure versus procedures where the
device was not removed at the conclusion of the procedure and for which
that qualifier would not be reported. The current claims data do not
yet reflect these new procedure codes, which are displayed in the
following table and are assigned to MS-DRG 215.

------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
02HA0RJ................... Insertion of short-term external heart
assist system into heart, intraoperative,
open approach.
02HA3RJ................... Insertion of short-term external heart
assist system into heart, intraoperative,
percutaneous approach.
02HA4RJ................... Insertion of short-term external heart
assist system into heart, intraoperative,
percutaneous endoscopic approach.
------------------------------------------------------------------------

Our clinical advisors agree that additional claims data are needed
for analysis prior to proposing any changes to MS-DRG 215. Therefore,
we are proposing not to make any modifications to MS-DRG 215 for FY
2019. We are inviting public comments on our proposal.
As stated earlier in this section, we also received a request to
review cases reporting the use of ECMO in combination with the
insertion of a percutaneous short[dash]term external heart assist
device. Under ICD-10-PCS, ECMO is identified with procedure code
5A15223 (Extracorporeal membrane oxygenation, continuous) and the
insertion of a percutaneous short-term external heart assist device is
identified with procedure code 02HA3RZ (Insertion of short-term
external heart assist system into heart, percutaneous approach).
According to the commenter, when ECMO procedures are performed
percutaneously, they are less invasive and less expensive than
traditional ECMO. The commenter also noted that, currently under ICD-
10-PCS, there is not a specific procedure code to identify percutaneous
ECMO, and providers are only able to report ICD-10-PCS procedure code
5A15223, which may be inappropriately resulting in a higher paying MS-
DRG. Therefore, the commenter submitted a separate request to create a
new ICD-10-PCS procedure code specifically for percutaneous ECMO which
was discussed at the March 6-7, 2018 ICD-10 Coordination and
Maintenance Committee Meeting. We refer readers to section II.F.18. of
the preamble of this proposed rule for further information regarding
this meeting and the discussion for a new procedure code.
The requestor suggested that cases reporting a procedure code for
ECMO in combination with the insertion of a percutaneous short-term
external heart assist device could be reassigned from Pre-MDC MS-DRG
003 (ECMO or Tracheostomy with Mechanical Ventilation >96 Hours or
Principal Diagnosis Except Face, Mouth and Neck with Major O.R.
Procedure) to MS-DRG 215. Our analysis involved examining cases in Pre-
MDC MS-DRG 003 in the September 2017 update of the FY 2017 MedPAR file
for cases reporting ECMO with and without the insertion of a
percutaneous short-term external heart assist device. Our findings are
shown in the following table.

ECMO and Percutaneous Short-Term External Heart Assist Device
----------------------------------------------------------------------------------------------------------------
Number of Average length
Pre-MDC MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 003--All cases........................................... 14,383 29.5 $118,218
MS-DRG 003--Cases with procedure code 5A15223 (Extracorporeal 1,786 19 119,340
membrane oxygenation, continuous)..............................
MS-DRG 003--Cases with procedure code 5A15223 (Extracorporeal 94 11.4 110,874
membrane oxygenation, continuous) and 02HA3RZ (Insertion of
short-term external heart assist system into heart,
percutaneous approach).........................................

[[Page 20186]]

MS-DRG 003--Cases with procedure code 5A15223 (Extracorporeal 1 1 64,319
membrane oxygenation, continuous) and 02HA4RZ (Insertion of
short-term external heart assist system into heart,
percutaneous endoscopic approach)..............................
----------------------------------------------------------------------------------------------------------------

As shown in this table, we found a total of 14,383 cases with an
average length of stay of 29.5 days and average costs of $118,218 in
Pre-MDC MS-DRG 003. We found 1,786 cases reporting procedure code
5A15223 (Extracorporeal membrane oxygenation, continuous) with an
average length of stay of 19 days and average costs of $119,340. We
found 94 cases reporting procedure code 5A15223 and 02HA3RZ (Insertion
of short-term external heart assist system into heart, percutaneous
approach) with an average length of stay of 11.4 days and average costs
of $110,874. Lastly, we found 1 case reporting procedure code 5A15223
and 02HA4RZ (Insertion of short-term external heart assist system into
heart, percutaneous endoscopic approach) with an average length of stay
of 1 day and average costs of $64,319.
We also reviewed the cases in MS-DRG 215 for procedure codes
02HA3RZ and 02HA4RZ. Our findings are shown in the following table.

Percutaneous Short-Term External Heart Assist Device
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 215--All cases........................................... 3,428 8.7 $68,965
MS-DRG 215--Cases with procedure code 02HA3RZ (Insertion of 3,136 8.4 67,670
short-term external heart assist system into heart,
percutaneous approach).........................................
MS-DRG 215--Cases with procedure code 02HA4RZ (Insertion of 31 5.3 57,042
short-term external heart assist system into heart,
percutaneous endoscopic approach)..............................
----------------------------------------------------------------------------------------------------------------

As shown in this table, we found a total of 3,428 cases with an
average length of stay of 8.7 days and average costs of $68,965. We
found a total of 3,136 cases reporting procedure code 02HA3RZ with an
average length of stay of 8.4 days and average costs of $67,670. We
found a total of 31 cases reporting procedure code 02HA4RZ with an
average length of stay of 5.3 days and average costs of $57,042.
For Pre-MDC MS-DRG 003, while the average length of stay and
average costs for cases where procedure code 5A15223 was reported with
procedure code 02HA3RZ or procedure code 02HA4RZ are lower than the
average length of stay and average costs for cases where procedure code
5A15223 was reported alone, we are unable to determine from the data if
those ECMO procedures were performed percutaneously in the absence of a
unique code. In addition, the one case reporting procedure code 5A15223
with 02HA4RZ only had a 1 day length of stay and it is unclear from the
data what the circumstances of that case may have involved. For
example, the patient may have been transferred or may have expired.
Therefore, we are proposing to not reassign cases reporting procedure
code 5A15223 when reported with procedure code 02HA3RZ or procedure
code 02HA4RZ for FY 2019. Our clinical advisors agree that until there
is a way to specifically identify percutaneous ECMO in the claims data
to enable further analysis, a proposal at this time is not warranted.
We are inviting public comments on our proposal.
A commenter also suggested that CMS maintain the current logic for
MS-DRGs 268 and 269 (Aortic and Heart Assist Procedures Except
Pulsation Balloon with and without MCC, respectively), but recommended
that CMS continue to monitor the data in these MS-DRGs for future
consideration of distinctions (for example, different approaches and
evolving technologies) that may impact the clinical and resource use of
procedures involving heart assist devices.
The logic for heart assist system devices in MS-DRGs 268 and 269 is
comprised of the procedure codes shown in the following table, for
which we examined claims data in the September 2017 update of the FY
2017 MedPAR file in response to the commenter's request. Our findings
are shown in the following table.

MS-DRGs for Aortic and Heart Assist Procedures Except Pulsation Balloon
----------------------------------------------------------------------------------------------------------------
Number of Average length
cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 268--All cases........................................... 3,798 9.6 $49,122
MS-DRG 268--Cases with procedure code 02PA0QZ (Removal of 16 23.4 79,850
implantable heart assist system from heart, open approach).....
MS-DRG 268--Cases with procedure code 02PA0RS (Removal of 0 0 0
biventricular short-term external heart assist system from
heart, open approach)..........................................
MS-DRG 268--Cases with procedure code 02PA0RZ (Removal of short- 0 0 0
term external heart assist system from heart, open approach)...
MS-DRG 268--Cases with procedure code 02PA3QZ (Removal of 28 10.5 31,797
implantable heart assist system from heart, percutaneous
approach)......................................................

[[Page 20187]]

MS-DRG 268--Cases with procedure code 02PA3RS (Removal of 0 0 0
biventricular short-term external heart assist system from
heart, percutaneous approach)..................................
MS-DRG 268--Cases with procedure code 02PA3RZ (Removal of short- 96 12.4 51,469
term external heart assist system from heart, percutaneous
approach)......................................................
MS-DRG 268--Cases with procedure code 02PA4QZ (Removal of 5 7.8 37,592
implantable heart assist system from heart, percutaneous
endoscopic approach)...........................................
MS-DRG 268--Cases with procedure code 02PA4RS (Removal of 0 0 0
biventricular short-term external heart assist system from
heart, percutaneous endoscopic approach).......................
MS-DRG 268--Cases with procedure code 02PA4RZ (Removal of short- 0 0 0
term external heart assist system from heart, percutaneous
endoscopic approach)...........................................
MS-DRG 269--All cases........................................... 16,900 2.4 30,793
MS-DRG 269--Cases with procedure code 02PA0QZ (Removal of 10 8 23,741
implantable heart assist system from heart, open approach).....
MS-DRG 269--Cases with procedure code 02PA0RS (Removal of 0 0 0
biventricular short-term external heart assist system from
heart, open approach)..........................................
MS-DRG 269--Cases with procedure code 02PA0RZ (Removal of short- 0 0 0
term external heart assist system from heart, open approach)...
MS-DRG 269--Cases with procedure code 02PA3QZ (Removal of 6 5 19,421
implantable heart assist system from heart, percutaneous
approach)......................................................
MS-DRG 269--Cases with procedure code 02PA3RS (Removal of 0 0 0
biventricular short-term external heart assist system from
heart, percutaneous approach)..................................
MS-DRG 269--Cases with procedure code 02PA3RZ (Removal of short- 11 4 25,719
term external heart assist system from heart, percutaneous
approach)......................................................
MS-DRG 269--Cases with procedure code 02PA4QZ (Removal of 1 3 14,415
implantable heart assist system from heart, percutaneous
endoscopic approach)...........................................
MS-DRG 269--Cases with procedure code 02PA4RS (Removal of 0 0 0
biventricular short-term external heart assist system from
heart, percutaneous endoscopic approach).......................
MS-DRG 269--Cases with procedure code 02PA4RZ (Removal of short- 0 0 0
term external heart assist system from heart, percutaneous
endoscopic approach)...........................................
----------------------------------------------------------------------------------------------------------------

As shown in this table, for MS-DRG 268, there were a total of 3,798
cases, with an average length of stay of 9.6 days and average costs of
$49,122. There were 16 cases reporting procedure code 02PA0QZ (Removal
of implantable heart assist system from heart, open approach), with an
average length of stay of 23.4 days and average costs of $79,850. There
were no cases that reported procedure codes 02PA0RS (Removal of
biventricular short-term external heart assist system from heart, open
approach), 02PA0RZ (Removal of short-term external heart assist system
from heart, open approach), 02PA3RS (Removal of biventricular short-
term external heart assist system from heart, percutaneous approach),
02PA4RS (Removal of biventricular short-term external heart assist
system from heart, percutaneous endoscopic approach) or 02PA4RZ
(Removal of short-term external heart assist system from heart,
percutaneous endoscopic approach). There were 28 cases reporting
procedure code 02PA3QZ (Removal of implantable heart assist system from
heart, percutaneous approach), with an average length of stay of 10.5
days and average costs of $31,797. There were 96 cases reporting
procedure code 02PA3RZ (Removal of short-term external heart assist
system from heart, percutaneous approach), with an average length of
stay of 12.4 days and average costs of $51,469. There were 5 cases
reporting procedure code 02PA4QZ (Removal of implantable heart assist
system from heart, percutaneous endoscopic approach), with an average
length of stay of 7.8 days and average costs of $37,592. For MS-DRG
269, there were a total of 16,900 cases, with an average length of stay
of 2.4 days and average costs of $30,793. There were 10 cases reporting
procedure code 02PA0QZ (Removal of implantable heart assist system from
heart, open approach), with an average length of stay of 8 days and
average costs of $23,741. There were no cases reporting procedure codes
02PA0RS (Removal of biventricular short-term external heart assist
system from heart, open approach), 02PA0RZ (Removal of short-term
external heart assist system from heart, open approach), 02PA3RS
(Removal of biventricular short-term external heart assist system from
heart, percutaneous approach), 02PA4RS (Removal of biventricular short-
term external heart assist system from heart, percutaneous endoscopic
approach) or 02PA4RZ (Removal of short-term external heart assist
system from heart, percutaneous endoscopic approach). There were 6
cases reporting procedure code 02PA3QZ (Removal of implantable heart
assist system from heart, percutaneous approach), with an average
length of stay of 5 days and average costs of $19,421. There were 11
cases reporting procedure code 02PA3RZ (Removal of short-term external
heart assist system from heart, percutaneous approach), with an average
length of stay of 4 days and average costs of $25,719. There was 1 case
reporting procedure code 02PA4QZ (Removal of implantable heart assist
system from heart, percutaneous endoscopic approach), with an average
length of stay of 3 days and average costs of $14,415.
The data show that there are differences in the average length of
stay and average costs for cases in MS-DRGs 268 and 269 according to
the type of device (short-term external heart assist system or
implantable heart assist system), and the approaches that were utilized
(open, percutaneous, or percutaneous endoscopic). We agree with the
recommendation to maintain the structure of MS-DRGs 268 and 269 for FY
2019 and will continue to analyze the claims data for possible future
updates. As such, we are proposing to not make any changes to the
structure of MS-DRGs 268 and 269

[[Page 20188]]

for FY 2019. We are inviting public comments on our proposal.
b. Brachytherapy
We received a request to create a new Pre-MDC MS-DRG for all
procedures involving the CivaSheet[reg] technology, an implantable,
planar brachytherapy source designed to enable delivery of radiation to
the site of the cancer tumor excision or debulking, while protecting
neighboring tissue. The requestor stated that physicians have used the
CivaSheet[reg] technology for a number of indications, such as
colorectal, gynecological, head and neck, soft tissue sarcomas and
pancreatic cancer. The requestor noted that potential uses also include
nonsmall-cell lung cancer, ocular melanoma, and atypical meningioma.
Currently, procedures involving the CivaSheet[reg] technology are
reported using ICD-10-PCS Section D--Radiation Therapy codes, with the
root operation ``Brachytherapy.'' These codes are non-O.R. codes and
group to the MS-DRG to which the principal diagnosis is assigned.
In response to this request, we have analyzed claims data from the
September 2017 update of the FY 2017 MedPAR file for cases representing
patients who received treatment that reported low dose rate (LDR)
brachytherapy procedure codes across all MS-DRGs. We refer readers to
Table 6P.--ICD-10-CM and ICD-10-PCS Codes for Proposed MS-DRG Changes
associated with this proposed rule, which is available via the Internet
on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/. A detailed list of these
procedure codes are shown in Table 6P.1. Our findings are reflected in
the following table.

Cases Reporting Low Dose Rate (LDR) Brachytherapy Procedure Codes Across All MS-DRGs
----------------------------------------------------------------------------------------------------------------
Number of Average length
ICD-10-PCS procedures cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 129 (Major Head and Neck Procedures with CC/MCC or Major 1 7 $10,357
Device)--Cases with procedure code D710BBZ (Low dose rate (LDR)
brachytherapy of bone marrow using Palladium[dash]103 (Pd-103))
MS-DRG 724 (Malignancy, Male Reproductive System without CC/ 1 7 32,298
MCC)--Cases with procedure code DV10BBZ (Low dose rate (LDR)
brachytherapy of prostate using Palladium[dash]103 (Pd-103))...
MS-DRG 129--Cases with procedure code DW11BBZ (Low dose rate 1 3 42,565
(LDR) brachytherapy of head and neck using Palladium[dash]103
(Pd-103))......................................................
MS-DRG 330 (Major Small and Large Bowel Procedures with CC)-- 1 8 74,190
Cases with procedure code DW16BBZ (Low dose rate (LDR)
brachytherapy of pelvic region using Palladium[dash]103 (Pd-
103))..........................................................
----------------------------------------------------------------------------------------------------------------

As shown in the immediately preceding table, we identified 4 cases
reporting one of these LDR brachytherapy procedure codes across all MS-
DRGs, with an average length of stay of 6.3 days and average costs of
$39,853. We believe that creating a new Pre-MDC MS-DRG based on such a
small number of cases could lead to distortion in the relative payment
weights for the Pre-MDC MS-DRG. Having a larger number of clinically
cohesive cases within the Pre-MDC MS-DRG provides greater stability for
annual updates to the relative payment weights. Therefore, we are not
proposing to create a new Pre-MDC MS-DRG for procedures involving the
CivaSheet[reg] technology for FY 2019. We are inviting public comments
on our proposal to maintain the current MS[dash]DRG structure for
procedures involving the CivaSheet[reg] technology.
c. Laryngectomy
The logic for case assignment to Pre-MDC MS-DRGs 11, 12, and 13
(Tracheostomy for Face, Mouth and Neck Diagnoses with MCC, with CC, and
without CC/MCC, respectively) as displayed in the ICD-10 MS-DRG Version
35 Definitions Manual, which is available via the Internet on the CMS
website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-Items/FY2018-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending, is
comprised of a list of procedure codes for laryngectomies, a list of
procedure codes for tracheostomies, and a list of diagnosis codes for
conditions involving the face, mouth, and neck. The procedure codes for
laryngectomies are listed separately and are reported differently from
the procedure codes listed for tracheostomies. The procedure codes
listed for tracheostomies must be reported with a diagnosis code
involving the face, mouth, or neck as a principal diagnosis to satisfy
the logic for assignment to Pre-MDC MS-DRG 11, 12, or 13.
Alternatively, any principal diagnosis code reported with a procedure
code from the list of procedure codes for laryngectomies will satisfy
the logic for assignment to Pre[dash]MDC MS-DRG 11, 12, or 13.
To improve the manner in which the logic for assignment is
displayed in the ICD-10 MS-DRG Definitions Manual and to clarify how it
is applied for grouping purposes, we are proposing to reorder the lists
of the diagnosis and procedure codes. The list of principal diagnosis
codes for face, mouth, and neck would be sequenced first, followed by
the list of the tracheostomy procedure codes and, lastly, the list of
laryngectomy procedure codes.
We also are proposing to revise the titles of Pre-MDC MS-DRGs 11,
12, and 13 from ``Tracheostomy for Face, Mouth and Neck Diagnoses with
MCC, with CC and without CC/MCC, respectively'' to ``Tracheostomy for
Face, Mouth and Neck Diagnoses or Laryngectomy with MCC'',
``Tracheostomy for Face, Mouth and Neck Diagnoses or Laryngectomy with
CC'', and ``Tracheostomy for Face, Mouth and Neck Diagnoses or
Laryngectomy without CC/MCC'', respectively, to reflect that
laryngectomy procedures may also be assigned to these MS-DRGs.
We are inviting public comments on our proposals.
d. Chimeric Antigen Receptor (CAR) T-Cell Therapy
Chimeric Antigen Receptor (CAR) T-cell therapy is a cell-based gene
therapy in which a patient's own T-cells are genetically engineered in
a laboratory and used to assist in the patient's treatment to attack
certain cancerous cells. Blood is drawn from the patient and the T-
cells are separated. The laboratory then utilizes the CAR process to
genetically engineer the T[dash]cells,

[[Page 20189]]

resulting in the addition of a chimeric antigen receptor that will bind
to a certain protein on the patient's cancerous cells. The CAR
T[dash]cells are then administered to the patient by infusion.
Two CAR T[dash]cell therapy drugs received FDA approval in 2017.
KYMRIAH^TM (manufactured by Novartis Pharmaceuticals
Corporation) was approved for the use in the treatment of patients up
to 25 years of age with B-cell precursor acute lymphoblastic leukemia
(ALL) that is refractory or in second or later relapse.
YESCARTA^TM (manufactured by Kite Pharma, Inc.) was approved
for use in the treatment of adult patients with relapsed or refractory
large B-cell lymphoma and who have not responded to or who have
relapsed after at least two other kinds of treatment.
Procedures involving the CAR T[dash]cell therapy drugs are
currently identified with ICD-10-PCS procedure codes XW033C3
(Introduction of engineered autologous chimeric antigen receptor t-cell
immunotherapy into peripheral vein, percutaneous approach, new
technology group 3) and XW043C3 (Introduction of engineered autologous
chimeric antigen receptor t-cell immunotherapy into central vein,
percutaneous approach, new technology group 3), which both became
effective October 1, 2017. Procedures described by these two ICD-10-PCS
procedure codes are designated as non-O.R. procedures that have no
impact on MS-DRG assignment.
We have received many inquiries from the public regarding payment
of CAR T[dash]cell therapy under the IPPS. Suggestions for the MS-DRG
assignment for FY 2019 ranged from assigning ICD-10-PCS procedure codes
XW033C3 and XW043C3 to an existing MS-DRG to the creation of a new MS-
DRG for CAR T[dash]cell therapy. In the context of the recommendation
to create a new MS-DRG for FY 2019, we also received suggestions that
payment should be established in a way that promotes comparability
between the inpatient setting and outpatient setting.
As part of our review of these suggestions, we examined the
existing MS-DRGs to identify the MS-DRGs that represent cases most
clinically similar to those cases in which the CAR T[dash]cell therapy
procedures would be reported. The CAR T-cell procedures involve a type
of autologous immunotherapy in which the patient's cells are
genetically transformed and then returned to that patient after the
patient undergoes cell depleting chemotherapy. Our clinical advisors
believe that patients receiving treatment utilizing CAR T-cell therapy
procedures would have similar clinical characteristics and
comorbidities to those seen in cases representing patients receiving
treatment for other hematopoietic carcinomas who are treated with
autologous bone marrow transplant therapy that are currently assigned
to MS-DRG 016 (Autologous Bone Marrow Transplant with CC/MCC).
Therefore, after consideration of the inquiries received as to how the
IPPS can appropriately group cases reporting the use of CAR T-cell
therapy, we are proposing to assign ICD-10-PCS procedure codes XW033C3
and XW043C3 to Pre[dash]MDC MS-DRG 016 for FY 2019. In addition, we are
proposing to revise the title of MS-DRG 016 from ``Autologous Bone
Marrow Transplant with CC/MCC'' to ``Autologous Bone Marrow Transplant
with CC/MCC or T-cell Immunotherapy.''
However, we note that, as discussed in greater detail in section
II.H.5.a. of the preamble of this proposed rule, the manufacturer of
KYMRIAH^TM and the manufacturer of YESCARTA^TM
submitted applications for new technology add-on payments for FY 2019.
We also recognize that many members of the public have noted that the
combination of the new technology add-on payment applications, the
extremely high[dash]cost of these CAR T-cell therapy drugs, and the
potential for volume increases over time present unique challenges with
respect to the MS-DRG assignment for procedures involving the
utilization of CAR T-cell therapy drugs and cases representing patients
receiving treatment involving CAR T-cell therapy. We believe that, in
the context of these pending new technology add-on payment
applications, there may also be merit in the alternative suggestion we
received to create a new MS-DRG for procedures involving the
utilization of CAR T-cell therapy drugs and cases representing patients
receiving treatment involving CAR T-cell therapy to which we could
assign ICD-10-PCS procedure codes XW033C3 and XW043C3, effective for
discharges occurring in FY 2019. As noted in section II.H.5.a. of the
preamble of this proposed rule, if a new MS-DRG were to be created then
consistent with section 1886(d)(5)(K)(ix) of the Act there may no
longer be a need for a new technology add-on payment under section
1886(d)(5)(K)(ii)(III) of the Act.
We are inviting public comments on our proposed approach of
assigning ICD-10-PCS procedure codes XW033C3 and XW043C3 to Pre-MDC MS-
DRG 016 for FY 2019. We also are inviting public comments on
alternative approaches, including in the context of the pending
KYMRIAH^TM and YESCARTA^TM new technology add-on
payment applications, and the most appropriate way to establish payment
for FY 2019 under any alternative approaches. Such payment alternatives
may include using a CCR of 1.0 for charges associated with ICD-10-PCS
procedure codes XW033C3 and XW043C3, given that many public inquirers
believed that hospitals would be unlikely to set charges different from
the costs for KYMRIAH^TM and YESCARTA^TM CAR T-cell
therapy drugs, as discussed further in section II.A.4.g.2. of the
Addendum of this proposed rule. These payment alternatives, including
payment under any potential new MS-DRG, also could take into account an
appropriate portion of the average sales price (ASP) for these drugs,
including in the context of the pending new technology add-on payment
applications.
We are inviting comments on how these payment alternatives would
affect access to care, as well as how they affect incentives to
encourage lower drug prices, which is a high priority for this
Administration. In addition, we are considering approaches and
authorities to encourage value-based care and lower drug prices. We
solicit comments on how the payment methodology alternatives may
intersect and affect future participation in any such alternative
approaches.
As stated in section II.F.1.b. of the preamble of this proposed
rule, we described the criteria used to establish new MS-DRGs. In
particular, we consider whether the resource consumption and clinical
characteristics of the patients with a given set of conditions are
significantly different than the remaining patients in the MS-DRG. We
evaluate patient care costs using average costs and lengths of stay and
rely on the judgment of our clinical advisors to decide whether
patients are clinically distinct or similar to other patients in the
MS-DRG. In evaluating resource costs, we consider both the absolute and
percentage differences in average costs between the cases we select for
review and the remainder of cases in the MS-DRG. We also consider
whether observed average differences are consistent across patients or
attributable to cases that were extreme in terms of costs or length of
stay, or both. Further, we consider the number of patients who will
have a given set of characteristics and generally prefer not to create
a new MS-DRG unless it would include a substantial number of cases.
Based on the principles typically used to establish a new MS-DRG, we
are soliciting comments on how the administration of the CAR T-cell

[[Page 20190]]

therapy drugs and associated services meet the criteria for the
creation of a new MS-DRG. Also, section 1886(d)(4)(C)(iii) of the Act
specifies that, beginning in FY 1991, the annual DRG reclassification
and recalibration of the relative weights must be made in a manner that
ensures that aggregate payments to hospitals are not affected. Given
that a new MS-DRG must be established in a budget neutral manner, we
are concerned with the redistributive effects away from core hospital
services over time toward specialized hospitals and how that may affect
payment for these core services. Therefore, we are soliciting public
comments on our concerns with the payment alternatives that we are
considering for CAR T-cell therapy drugs and therapies.
3. MDC 1 (Diseases and Disorders of the Nervous System)
a. Epilepsy With Neurostimulator
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38015 through
38019), based on a request we received and our review of the claims
data, the advice of our clinical advisors, and consideration of public
comments, we finalized our proposal to reassign all cases reporting a
principal diagnosis of epilepsy and one of the following ICD-10-PCS
code combinations, which capture cases involving neurostimulator
generators inserted into the skull (including cases involving the use
of the RNS(copyright) neurostimulator), to retitled MS-DRG 023
(Craniotomy with Major Device Implant or Acute Complex Central Nervous
System (CNS) Principal Diagnosis (PDX) with MCC or Chemotherapy Implant
or Epilepsy with Neurostimulator), even if there is no MCC reported:
0NH00NZ (Insertion of neurostimulator generator into
skull, open approach), in combination with 00H00MZ (Insertion of
neurostimulator lead into brain, open approach);
0NH00NZ (Insertion of neurostimulator generator into
skull, open approach), in combination with 00H03MZ (Insertion of
neurostimulator lead into brain, percutaneous approach); and
0NH00NZ (Insertion of neurostimulator generator into
skull, open approach), in combination with 00H04MZ (Insertion of
neurostimulator lead into brain, percutaneous endoscopic approach).
The finalized listing of epilepsy diagnosis codes (82 FR 38018
through 38019) contained codes provided by the requestor (82 FR 38016),
in addition to diagnosis codes organized in subcategories G40.A- and
G40.B- as recommended by a commenter in response to the proposed rule
(82 FR 38018) because the diagnosis codes organized in these
subcategories also are representative of diagnoses of epilepsy.
For FY 2019, we received a request to include two additional
diagnosis codes organized in subcategory G40.1- in the listing of
epilepsy diagnosis codes for cases assigned to MS-DRG 023 because these
diagnosis codes also represent diagnoses of epilepsy. The two
additional codes identified by the requestor are:
G40.109 (Localization-related (focal) (partial)
symptomatic epilepsy and epileptic syndromes with simple partial
seizures, not intractable, without status epilepticus); and
G40.111 (Localization-related (focal) (partial)
symptomatic epilepsy and epileptic syndromes with simple partial
seizures, intractable, with status epilepticus).
We agree with the requestor that diagnosis codes G40.109 and
G40.111 also are representative of epilepsy diagnoses and should be
added to the listing of epilepsy diagnosis codes for cases assigned to
MS-DRG 023 because they also capture a type of epilepsy. Our clinical
advisors reviewed this issue and agree that adding the two additional
epilepsy diagnosis codes is appropriate. Therefore, we are proposing to
add ICD-10-CM diagnosis codes G40.109 and G40.111 to the listing of
epilepsy diagnosis codes for cases assigned to MS-DRG 023, effective
October 1, 2018.
We are inviting public comments on our proposal.
b. Neurological Conditions With Mechanical Ventilation
We received two separate, but related requests to create new MS-
DRGs for cases that identify patients who have been diagnosed with
neurological conditions classified under MDC 1 (Diseases and Disorders
of the Nervous System) and who require mechanical ventilation with and
without a thrombolytic and in the absence of an O.R. procedure. The
requestors suggested that CMS consider when mechanical ventilation is
reported with a neurological condition for the ICD-10 MS-DRG GROUPER
assignment logic, similar to the current logic for MS-DRGs 207 and 208
(Respiratory System Diagnosis with Ventilator Support >96 Hours and
<=96 Hours, respectively) under MDC 4 (Diseases and Disorders of the
Respiratory System), which consider respiratory conditions that require
mechanical ventilation and are assigned a higher relative weight.
The requestors stated that patients with a principal diagnosis of
respiratory failure requiring mechanical ventilation are currently
assigned to MS-DRG 207 (Respiratory System Diagnoses with Ventilator
Support >96 Hours), which has a relative weight of 5.4845, and to MS-
DRG 208 (Respiratory System Diagnoses with Ventilator Support <=96
Hours), which has a relative weight of 2.3678. The requestors also
stated that patients with a principal diagnosis of ischemic cerebral
infarction who received a thrombolytic agent during the hospital stay
and did not undergo an O.R. procedure are assigned to MS-DRGs 061, 062,
and 063 (Ischemic Stroke, Precerebral Occlusion or Transient Ischemia
with Thrombolytic Agent with MCC, with CC, and without CC/MCC,
respectively) under MDC 1, while patients with a principal diagnosis of
intracranial hemorrhage or ischemic cerebral infarction who did not
receive a thrombolytic agent during the hospital stay and did not
undergo an O.R. procedure are assigned to MS-DRGs 064, 065 and 66
(Intracranial Hemorrhage or Cerebral Infarction with MCC, with CC or
TPA in 24 Hours, and without CC/MCC, respectively) under MDC 1.
The requestors provided the current FY 2018 relative weights for
these MS-DRGs as shown in the following table.

------------------------------------------------------------------------
Relative
MS-DRG MS-DRG title weight
------------------------------------------------------------------------
MS-DRG 061.................. Ischemic Stroke, 2.7979
Precerebral Occlusion or
Transient Ischemia with
Thrombolytic Agent with
MCC.
MS-DRG 062.................. Ischemic Stroke, l.9321
Precerebral Occlusion or
Transient Ischemia with
Thrombolytic Agent with
CC.
MS-DRG 063.................. Ischemic Stroke, l.6169
Precerebral Occlusion or
Transient Ischemia with
Thrombolytic Agent
without CC/MCC.
MS-DRG 064.................. Intracranial Hemorrhage or l.7685
Cerebral Infarction with
MCC.
MS-DRG 065.................. Intracranial Hemorrhage or 1.0311
Cerebral Infarction with
CC or TPA in 24 hours.
MS-DRG 066.................. Intracranial Hemorrhage or .7466
Cerebral Infarction with
MCC.
------------------------------------------------------------------------

[[Page 20191]]

The requestors stated that although the ICD-10-CM Official
Guidelines for Coding and Reporting allow sequencing of acute
respiratory failure as the principal diagnosis when it is jointly
responsible (with an acute neurologic event) for admission, which would
result in assignment to MS-DRGs 207 or 208 when the patient requires
mechanical ventilation, it would not be appropriate to sequence acute
respiratory failure as the principal diagnosis when it is secondary to
intracranial hemorrhage or ischemic cerebral infarction.
The requestors also stated that reporting for other purposes, such
as quality measures, clinical trials, and Joint Commission and State
certification or survey cases, is based on the principal diagnosis, and
it is important, from a quality of care perspective, that the
intracranial hemorrhage or cerebral infarction codes continue to be
sequenced as principal diagnosis. The requestors believed that cases of
patients who present with cerebral infarction or cerebral hemorrhage
and acute respiratory failure are currently in conflict for principal
diagnosis sequencing because the cerebral infarction or cerebral
hemorrhage code is needed as the principal diagnosis for quality
reporting and other purposes. However, acute respiratory failure is
needed as the principal diagnosis for purposes of appropriate payment
under the MS-DRGs.
The requestors stated that by creating new MS-DRGs for neurological
conditions with mechanical ventilation, those patients who require
mechanical ventilation for airway protection on admission and those
patients who develop acute respiratory failure requiring mechanical
ventilation after admission can be grouped to MS-DRGs that provide
appropriate payment for the mechanical ventilation resources. The
requestors suggested two new MS-DRGs, citing as support that new MS-
DRGs were created for patients with sepsis requiring mechanical
ventilation greater than and less than 96 hours.
As discussed earlier in this section, the requests we received were
separate, but related requests. The first request was to specifically
identify patients presenting with intracranial hemorrhage or cerebral
infarction with mechanical ventilation and create two new MS-DRGs as
follows:
Suggested new MS-DRG XXX (Intracranial Hemorrhage or
Cerebral Infarction with Mechanical Ventilation >96 Hours); and
Suggested new MS-DRG XXX (Intracranial Hemorrhage or
Cerebral Infarction with Mechanical Ventilation <=96 Hours).
The second request was to consider any principal diagnosis under
the current GROUPER logic for MDC 1 with mechanical ventilation and
create two new MS-DRGs as follows:
Suggested New MS-DRG XXX (Neurological System Diagnosis
with Mechanical Ventilation 96+ Hours); and
Suggested New MS-DRG XXX (Neurological System Diagnosis
with Mechanical Ventilation <=96 Hours).
Both requesters suggested that CMS use the three ICD-10-PCS codes
identifying mechanical ventilation to assign cases to the respective
suggested new MS-DRGs. The three ICD-10-PCS codes are shown in the
following table.

------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
5A1935Z............................. Respiratory ventilation, less than
96 consecutive hours.
5A1945Z............................. Respiratory ventilation, 24-96
consecutive hours.
5A1955Z............................. Respiratory ventilation, greater
than 96 consecutive hours.
------------------------------------------------------------------------

Below we discuss the different aspects of each request in more
detail.
The first request involved two aspects: (1) Analyzing patients
diagnosed with cerebral infarction and required mechanical ventilation
who received a thrombolytic (for example, TPA) and did not undergo an
O.R. procedure; and (2) analyzing patients diagnosed with intracranial
hemorrhage or ischemic cerebral infarction and required mechanical
ventilation who did not receive a thrombolytic (for example, TPA)
during the current episode of care and did not undergo an O.R.
procedure.
For the first subset of patients, we analyzed claims data from the
September 2017 update of the FY 2017 MedPAR file for MS-DRGs 061, 062,
and 063 because cases that are assigned to these MS-DRGs specifically
identify patients who were diagnosed with a cerebral infarction and
received a thrombolytic. The 90 ICD-10-CM diagnosis codes that specify
a cerebral infarction and were included in our analysis are listed in
Table 6P.1a associated with this proposed rule (which is available via
the Internet on the CMS website at: https://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/).
The ICD-10-PCS procedure codes displayed in the following table
describe use of a thrombolytic agent.

------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
3E03017............................. Introduction of other thrombolytic
into peripheral vein, open
approach.
3E03317............................. Introduction of other thrombolytic
into peripheral vein,
percutaneous approach.
3E04017............................. Introduction of other thrombolytic
into central vein, open approach.
3E04317............................. Introduction of other thrombolytic
into central vein, percutaneous
approach.
3E05017............................. Introduction of other thrombolytic
into peripheral artery, open
approach.
3E05317............................. Introduction of other thrombolytic
into peripheral artery,
percutaneous approach.
3E06017............................. Introduction of other thrombolytic
into central artery, open
approach.
3E06317............................. Introduction of other thrombolytic
into central artery, percutaneous
approach.
3E08017............................. Introduction of other thrombolytic
into heart, open approach.
3E08317............................. Introduction of other thrombolytic
into heart, percutaneous
approach.
------------------------------------------------------------------------

We examined claims data in MS-DRGs 061, 062, and 063 and identified
cases that reported mechanical ventilation of any duration with a
principal diagnosis of cerebral infarction where a thrombolytic agent
was administered and the patient did not undergo an O.R. procedure. Our

[[Page 20192]]

findings are shown in the following table.

Cerebral Infarction With Thrombolytic and MV
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 061--All cases........................................... 5,192 6.4 $20,097
MS-DRG 061--Cases with principal diagnosis of cerebral 166 12.8 41,691
infarction and mechanical ventilation >96 hours................
MS-DRG 061--Cases with principal diagnosis of cerebral 378 7.5 26,368
infarction and mechanical ventilation =24-96 hours.............
MS-DRG 061--Cases with principal diagnosis of cerebral 214 4.9 19,795
infarction and mechanical ventilation <24 hours................
MS-DRG 062--All cases........................................... 9,730 3.9 13,865
MS-DRG 062--Cases with principal diagnosis of cerebral 0 0.0 0
infarction and mechanical ventilation >96 hours................
MS-DRG 062--Cases with principal diagnosis of cerebral 10 5.3 19,817
infarction and mechanical ventilation =24-96 hours.............
MS-DRG 062--Cases with principal diagnosis of cerebral 23 3.8 14,026
infarction and mechanical ventilation <24 hours................
MS-DRG 063--All cases........................................... 1,984 2.7 11,771
MS-DRG 063--Cases with principal diagnosis of cerebral 0 0.0 0
infarction and mechanical ventilation >96 hours................
MS-DRG 063--Cases with principal diagnosis of cerebral 3 2.7 14,588
infarction and mechanical ventilation =24-96 hours.............
MS-DRG 063--Cases with principal diagnosis of cerebral 5 2.0 11,195
infarction and mechanical ventilation <24 hours................
----------------------------------------------------------------------------------------------------------------

As shown in this table, there were a total of 5,192 cases in MS-DRG
061 with an average length of stay of 6.4 days and average costs of
$20,097. There were a total of 758 cases reporting the use of
mechanical ventilation in MS-DRG 061 with an average length of stay
ranging from 4.9 days to 12.8 days and average costs ranging from
$19,795 to $41,691. For MS-DRG 062, there were a total of 9,730 cases
with an average length of stay of 3.9 days and average costs of
$13,865. There were a total of 33 cases reporting the use of mechanical
ventilation in MS-DRG 062 with an average length of stay ranging from
3.8 days to 5.3 days and average costs ranging from $14,026 to $19,817.
For MS[dash]DRG 063, there were a total of 1,984 cases with an average
length of stay of 2.7 days and average costs of $11,771. There were a
total of 8 cases reporting the use of mechanical ventilation in MS-DRG
063 with an average length of stay ranging from 2.0 days to 2.7 days
and average costs ranging from $11,195 to $14,588.
We then compared the total number of cases in MS-DRGs 061, 062, and
063 specifically reporting mechanical ventilation >96 hours with a
principal diagnosis of cerebral infarction where a thrombolytic agent
was administered and the patient did not undergo an O.R. procedure
against the total number of cases reporting mechanical ventilation <=96
hours with a principal diagnosis of cerebral infarction where a
thrombolytic agent was administered and the patient did not undergo an
O.R. procedure. Our findings are shown in the following table.

Cerebral Infarction With Thrombolytic and MV
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 061--All cases........................................... 5,192 6.4 $20,097
MS-DRG 061--Cases with principal diagnosis of cerebral 166 12.8 41,691
infarction and mechanical ventilation >96 hours................
MS-DRG 061--Cases with principal diagnosis of cerebral 594 6.5 23,780
infarction and mechanical ventilation <=96 hours...............
MS-DRG 062--All cases........................................... 9,730 3.9 13,865
MS-DRG 062--Cases with principal diagnosis of cerebral 0 0.0 0
infarction and mechanical ventilation >96 hours................
MS-DRG 062--Cases with principal diagnosis of cerebral 34 4.2 15,558
infarction and mechanical ventilation <=96 hours...............
MS-DRG 063--All cases........................................... 1,984 2.7 11,771
MS-DRG 063--Cases with principal diagnosis of cerebral 0 0.0 $0
infarction and mechanical ventilation >96 hours................
MS-DRG 063--Cases with principal diagnosis of cerebral 8 2.3 12,467
infarction and mechanical ventilation <=96 hours...............
----------------------------------------------------------------------------------------------------------------

As shown in this table, the total number of cases reported in MS-
DRG 061 was 5,192, with an average length of stay of 6.4 days and
average costs of $20,097. There were 166 cases that reported mechanical
ventilation >96

[[Page 20193]]

hours, with an average length of stay of 12.8 days and average costs of
$41,691. There were 594 cases that reported mechanical ventilation <=96
hours, with an average length of stay of 6.5 days and average costs of
$23,780.
The total number of cases reported in MS-DRG 062 was 9,730, with an
average length of stay of 3.9 days and average costs of $13,865. There
were no cases identified in MS-DRG 062 where mechanical ventilation >96
hours was reported. However, there were 34 cases that reported
mechanical ventilation <=96 hours, with an average length of stay of
4.2 days and average costs of $15,558.
The total number of cases reported in MS-DRG 63 was 1,984 with an
average length of stay of 2.7 days and average costs of $11,771. There
were no cases identified in MS-DRG 063 where mechanical ventilation >96
hours was reported. However, there were 8 cases that reported
mechanical ventilation <=96 hours, with an average length of stay of
2.3 days and average costs of $12,467.
For the second subset of patients, we examined claims data for MS-
DRGs 064, 065, and 066. We identified cases reporting mechanical
ventilation of any duration with a principal diagnosis of cerebral
infarction or intracranial hemorrhage where a thrombolytic agent was
not administered during the current hospital stay and the patient did
not undergo an O.R. procedure. The 33 ICD-10-CM diagnosis codes that
specify an intracranial hemorrhage and were included in our analysis
are listed in Table 6P.1b associated with this proposed rule (which is
available via the Internet on the CMS website at: https://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/).
We also used the list of 90 ICD-10-CM diagnosis codes that specify
a cerebral infarction listed in Table 6P.1a associated with this
proposed rule for our analysis. We note that the GROUPER logic for case
assignment to MS-DRG 065 includes that a thrombolytic agent (for
example, TPA) was administered within 24 hours of the current hospital
stay. The ICD-10-CM diagnosis code that describes this scenario is
Z92.82 (Status post administration of tPA (rtPA) in a different
facility within the last 24 hours prior to admission to current
facility). We did not review the cases reporting that diagnosis code
for our analysis. Our findings are shown in the following table.

Cerebral Infarction or Intracranial Hemorrhage With MV and Without Thrombolytic
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 064--All cases........................................... 76,513 6.0 $12,574
MS-DRG 064--Cases with principal diagnosis of cerebral 2,153 13.4 38,262
infarction or intracranial hemorrhage and mechanical
ventilation >96 hours..........................................
MS-DRG 064--Cases with principal diagnosis of cerebral 4,843 6.6 18,119
infarction or intracranial hemorrhage and mechanical
ventilation =24-96 hours.......................................
MS-DRG 064--Cases with principal diagnosis of cerebral 4,001 3.1 8,675
infarction or intracranial hemorrhage and mechanical
ventilation <24 hours..........................................
MS-DRG 065--All cases........................................... 106,554 3.7 7,236
MS-DRG 065--Cases with principal diagnosis of cerebral 22 10.2 20,759
infarction or intracranial hemorrhage and mechanical
ventilation >96 hours..........................................
MS-DRG 065--Cases with principal diagnosis of cerebral 127 4.2 12,688
infarction or intracranial hemorrhage and mechanical
ventilation =24-96 hours.......................................
MS-DRG 065--Cases with principal diagnosis of cerebral 301 2.1 6,145
infarction or intracranial hemorrhage and mechanical
ventilation <24 hours..........................................
MS-DRG 066--All cases........................................... 34,689 2.5 5,321
MS-DRG 066--Cases with principal diagnosis of cerebral 1 4.0 3,426
infarction or intracranial hemorrhage and mechanical
ventilation >96 hours..........................................
MS-DRG 066--Cases with principal diagnosis of cerebral 31 3.7 10,364
infarction or intracranial hemorrhage and mechanical
ventilation =24-96 hours.......................................
MS-DRG 066--Cases with principal diagnosis of cerebral 163 1.4 4,148
infarction or intracranial hemorrhage and mechanical
ventilation <24 hours..........................................
----------------------------------------------------------------------------------------------------------------

The total number of cases reported in MS-DRG 064 was 76,513, with
an average length of stay of 6.0 days and average costs of $12,574.
There were a total of 10,997 cases reporting the use of mechanical
ventilation in MS-DRG 064 with an average length of stay ranging from
3.1 days to 13.4 days and average costs ranging from $8,675 to $38,262.
For MS-DRG 065, there were a total of 106,554 cases with an average
length of stay of 3.7 days and average costs of $7,236. There were a
total of 450 cases reporting the use of mechanical ventilation in MS-
DRG 065 with an average length of stay ranging from 2.1 days to 10.2
days and average costs ranging from $6,145 to $20,759. For MS-DRG 066,
there were a total of 34,689 cases with an average length of stay of
2.5 days and average costs of $5,321. There were a total of 195 cases
reporting the use of mechanical ventilation in MS-DRG 066 with an
average length of stay ranging from 1.4 days to 4.0 days and average
costs ranging from $3,426 to $10,364.
We then compared the total number of cases in MS-DRGs 064, 065, and
066 specifically reporting mechanical ventilation >96 hours with a
principal diagnosis of cerebral infarction or intracranial hemorrhage
where a thrombolytic agent was not administered and the patient did not
undergo an O.R. procedure against the total number of cases reporting
mechanical ventilation <=96 hours with a principal diagnosis of
cerebral infarction or intracranial hemorrhage where a thrombolytic
agent was not administered and the patient did not undergo an O.R.
procedure. Our findings are shown in the following table.

[[Page 20194]]

Cerebral Infarction or Intracranial Hemorrhage With MV and Without Thrombolytic
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 064--All cases........................................... 76,513 6.0 $12,574
MS-DRG 064--Cases with principal diagnosis of cerebral 2,153 13.4 38,262
infarction or intracranial hemorrhage and mechanical
ventilation >96 hours..........................................
MS-DRG 064--Cases with principal diagnosis of cerebral 8,794 4.9 13,704
infarction or intracranial hemorrhage and mechanical
ventilation <=96 hours.........................................
MS-DRG 065--All cases........................................... 106,554 3.7 7,236
MS-DRG 065--Cases with principal diagnosis of cerebral 22 10.2 20,759
infarction or intracranial hemorrhage and mechanical
ventilation >96 hours..........................................
MS-DRG 065--Cases with principal diagnosis of cerebral 428 2.7 8,086
infarction or intracranial hemorrhage and mechanical
ventilation <=96 hours.........................................
MS-DRG 066--All cases........................................... 34,689 2.5 5,321
MS-DRG 066--Cases with principal diagnosis of cerebral 1 4.0 3,426
infarction or intracranial hemorrhage and mechanical
ventilation >96 hours..........................................
MS-DRG 066--Cases with principal diagnosis of cerebral 194 1.8 5,141
infarction or intracranial hemorrhage and mechanical
ventilation <=96 hours.........................................
----------------------------------------------------------------------------------------------------------------

The total number of cases reported in MS-DRG 064 was 76,513, with
an average length of stay of 6.0 days and average costs of $12,574.
There were 2,153 cases that reported mechanical ventilation >96 hours,
with an average length of stay of 13.4 days and average costs of
$38,262, and there were 8,794 cases that reported mechanical
ventilation <=96 hours, with an average length of stay of 4.9 days and
average costs of $13,704.
The total number of cases reported in MS-DRG 65 was 106,554, with
an average length of stay of 3.7 days and average costs of $7,236.
There were 22 cases that reported mechanical ventilation >96 hours,
with an average length of stay of 10.2 days and average costs of
$20,759, and there were 428 cases that reported mechanical
ventilation<=96 hours, with an average length of stay of 2.7 days and
average costs of $8,086.
The total number of cases reported in MS-DRG 66 was 34,689, with an
average length of stay of 2.5 days and average costs of $5,321. There
was one case that reported mechanical ventilation >96 hours, with an
average length of stay of 4.0 days and average costs of $3,426, and
there were 194 cases that reported mechanical ventilation <=96 hours,
with an average length of stay of 1.8 days and average costs of $5,141.
We also analyzed claims data for MS-DRGs 207 and 208. As shown in
the following table, there were a total of 19,471cases found in MS-DRG
207 with an average length of stay of 13.8 days and average costs of
$38,124. For MS-DRG 208, there were a total of 55,802 cases found with
an average length of stay of 6.7 days and average costs of $17,439.

Respiratory System Diagnosis With Ventilator Support
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 207--All cases........................................... 19,471 13.8 $38,124
MS-DRG 208--All cases........................................... 55,802 6.7 17,439
----------------------------------------------------------------------------------------------------------------

Our analysis of claims data relating to the first request for MS-
DRGs 061, 062, 063, 064, 065, and 066 and consultation with our
clinical advisors do not support creating new MS-DRGs for cases that
identify patients diagnosed with cerebral infarction or intracranial
hemorrhage who require mechanical ventilation with or without a
thrombolytic and in the absence of an O.R. procedure.
For the first subset of patients (in MS-DRGs 061, 062 and 063), our
data findings for MS-DRG 061 demonstrate the 166 cases that reported
mechanical ventilation >96 hours had a longer average length of stay
(12.8 days versus 6.4 days) and higher average costs ($41,691 versus
$20,097) compared to all the cases in MS-DRG 061. However, there were
no cases that reported mechanical ventilation >96 hours for MS-DRG 062
or MS-DRG 063. For the 594 cases that reported mechanical ventilation
<=96 hours in MS[dash]DRG 061, the data show that the average length of
stay was consistent with the average length of stay of all of the cases
in MS-DRG 061 (6.5 days versus 6.4 days) and the average costs were
also consistent with the average costs of all of the cases in
MS[dash]DRG 061 ($23,780 versus $20,097). For the 34 cases that
reported mechanical ventilation <=96 hours in MS-DRG 062, the data show
that the average length of stay was consistent with the average length
of stay of all of the cases in MS-DRG 062 (4.2 days versus 3.9 days)
and the average costs were also consistent with the average costs of
all of the cases in MS DRG 062 ($15,558 versus $13,865). Lastly, for
the 8 cases that reported mechanical ventilation <=96 hours in MS-DRG
063, the data show that the average length of stay was consistent with
the average length of stay of all of the cases in MS-DRG 063 (2.3 days
versus 2.7 days) and the average costs were also consistent with the
average costs of all of the cases in MS DRG 063 ($12,467 versus
$11,771).
For the second subset of patients (in MS-DRGs 064, 065 and 066),
the data findings for the 2,153 cases that reported mechanical
ventilation >96 hours in MS-DRG 064 showed a longer average length of
stay (13.4 days versus 6.0 days) and higher average costs ($38,262
versus $12,574) compared to all of the cases in MS-DRG 064. However,
the 2,153 cases represent only 2.8 percent of all the cases in MS-DRG

[[Page 20195]]

064. For the 22 cases that reported mechanical ventilation >96 hours in
MS-DRG 065, the data showed a longer average length of stay (10.2 days
versus 3.7 days) and higher average costs ($20,759 versus $7,236)
compared to all of the cases in MS-DRG 065. However, the 22 cases
represent only 0.02 percent of all the cases in MS-DRG 065. For the one
case that reported mechanical ventilation >96 hours in MS-DRG 066, the
data showed a longer average length of stay (4.0 days versus 2.5 days)
and lower average costs ($3,426 versus $5,321) compared to all of the
cases in MS-DRG 066. For the 8,794 cases that reported mechanical
ventilation <=96 hours in MS-DRG 064, the data showed that the average
length of stay was shorter than the average length of stay for all of
the cases in MS-DRG 064 (4.9 days versus 6.0 days) and the average
costs were consistent with the average costs of all of the cases in MS-
DRG 064 ($13,704 versus $12,574). For the 428 cases that reported
mechanical ventilation <=96 hours in MS-DRG 065, the data showed that
the average length of stay was shorter than the average length of stay
for all of the cases in MS-DRG 065 (2.7 days versus 3.7 days) and the
average costs were consistent with the average costs of all the cases
in MS-DRG 065 ($8,086 versus $7,236). For the 194 cases that reported
mechanical ventilation <=96 hours in MS-DRG 066, the data showed that
the average length of stay was shorter than the average length of stay
for all of the cases in MS-DRG 066 (1.8 days versus 2.5 days) and the
average costs were less than the average costs of all of the cases in
MS-DRG 066 ($5,141 versus $5,321).
Based on the analysis described above, the current MS-DRG
assignment for the cases in MS-DRGs 061, 062, 063, 064, 065 and 066
that identify patients diagnosed with cerebral infarction or
intracranial hemorrhage who require mechanical ventilation with or
without a thrombolytic and in the absence of an O.R. procedure appears
appropriate.
Our clinical advisors also noted that patients requiring mechanical
ventilation (in the absence of an O.R. procedure) are known to be more
resource intensive and it would not be practical to create new MS-DRGs
specifically for this subset of patients diagnosed with an acute
neurologic event, given the various indications for which mechanical
ventilation may be utilized. If we were to create new MS-DRGs for
patients diagnosed with an intracranial hemorrhage or cerebral
infarction who require mechanical ventilation, it would not address all
of the other patients who also utilize mechanical ventilation
resources. It would also necessitate further extensive analysis and
evaluation for several other conditions that require mechanical
ventilation across each of the 25 MDCs under the ICD-10 MS-DRGs.
To evaluate the frequency in which the use of mechanical
ventilation is reported for different clinical scenarios, we examined
claims data across each of the 25 MDCs to determine the number of cases
reporting the use of mechanical ventilation >96 hours. Our findings are
shown in the table below.

Mechanical Ventilation >96 Hours Across All MDCs
----------------------------------------------------------------------------------------------------------------
Number of Average length
MDC cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
All cases with mechanical ventilation >96 hours................. 127,626 18.4 $61,056
MDC 1 (Diseases and Disorders of the Nervous System)--Cases with 13,668 18.3 61,234
mechanical ventilation >96 hours...............................
MDC 2 (Disease and Disorders of the Eye)--Cases with mechanical 33 22.7 79,080
ventilation >96 hours..........................................
MDC 3 (Diseases and Disorders of the Ear, Nose, Mouth and 602 20.3 62,625
Throat)--Cases with mechanical ventilation >96 hours...........
MDC 4 (Diseases and Disorders of the Respiratory System)--Cases 27,793 16.6 48,869
with mechanical ventilation >96 hours..........................
MDC 5 (Diseases and Disorders of the Circulatory System)--Cases 16,923 20.7 84,565
with mechanical ventilation >96 hours..........................
MDC 6 (Diseases and Disorders of the Digestive System)--Cases 6,401 22.4 73,759
with mechanical ventilation >96 hours..........................
MDC 7 (Diseases and Disorders of the Hepatobiliary System and 1,803 24.5 80,477
Pancreas)--Cases with mechanical ventilation >96 hours.........
MDC 8 (Diseases and Disorders of the Musculoskeletal System and 2,780 22.3 83,271
Connective Tissue)--Cases with mechanical ventilation >96 hours
MDC 9 (Diseases and Disorders of the Skin, Subcutaneous Tissue 390 22.2 68,288
and Breast)--Cases with mechanical ventilation >96 hours.......
MDC 10 (Endocrine, Nutritional and Metabolic Diseases and 1,168 20.9 60,682
Disorders)--Cases with mechanical ventilation >96 hours........
MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract)-- 2,325 19.6 57,893
Cases with mechanical ventilation >96 hours....................
MDC 12 (Diseases and Disorders of the Male Reproductive System)-- 54 26.8 95,204
Cases with mechanical ventilation >96 hours....................
MDC 13 (Diseases and Disorders of the Female Reproductive 89 24.6 83,319
System)--Cases with mechanical ventilation >96 hours...........
MDC 14 (Pregnancy, Childbirth and the Puerperium)--Cases with 22 17.4 56,981
mechanical ventilation >96 hours...............................
MDC 16 (Diseases and Disorders of Blood, Blood Forming Organs, 468 20.1 68,658
Immunologic Disorders)--Cases with mechanical ventilation >96
hours..........................................................
MDC 17 (Myeloproliferative Diseases and Disorders, Poorly 538 29.7 99,968
Differentiated Neoplasms)--Cases with mechanical ventilation
>96 hours......................................................
MDC 18 (Infectious and Parasitic Diseases, Systemic or 48,176 17.3 55,022
Unspecified Sites)--Cases with mechanical ventilation >96 hours
MDC 19 (Mental Diseases and Disorders)--Cases with mechanical 54 29.3 52,749
ventilation >96 hours..........................................
MDC 20 (Alcohol/Drug Use and Alcohol/Drug Induced Organic Mental 312 20.5 47,637
Disorders)--Cases with mechanical ventilation >96 hours........

[[Page 20196]]

MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs)--Cases 2,436 18.2 57,712
with mechanical ventilation >96 hours..........................
MDC 22 (Burns)--Cases with mechanical ventilation >96 hours..... 242 34.8 188,704
MDC 23 (Factors Influencing Health Status and Other Contacts 64 17.7 50,821
with Health Services)--Cases with mechanical ventilation >96
hours..........................................................
MDC 24 (Multiple Significant Trauma)--Cases with mechanical 922 17.6 72,358
ventilation >96 hours..........................................
MDC 25 (Human Immunodeficiency Virus Infections)--Cases with 363 19.1 56,688
mechanical ventilation >96 hours...............................
----------------------------------------------------------------------------------------------------------------

As shown in the table, the top 5 MDCs with the largest number of
cases reporting mechanical ventilation >96 hours are MDC 18, with
48,176 cases; MDC 4, with 27,793 cases; MDC 5, with 16,923 cases; MDC
1, with 13,668 cases; and MDC 6, with 6,401 cases. We note that the
claims data demonstrate that the average length of stay is consistent
with what we would expect for cases reporting the use of mechanical
ventilation >96 hours across each of the 25 MDCs. The top 5 MDCs with
the highest average costs for cases reporting mechanical ventilation
>96 hours were MDC 22, with average costs of $188,704; MDC 17, with
average costs of $99,968; MDC 12, with average costs of $95,204; MDC 5,
with average costs of $84,565; and MDC 13, with average costs of
$83,319. We note that the data for MDC 8 demonstrated similar results
compared to MDC 13 with average costs of $83,271 for cases reporting
mechanical ventilation >96 hours. In summary, the claims data reflect a
wide variance with regard to the frequency and average costs for cases
reporting the use of mechanical ventilation >96 hours.
We also examined claims data across each of the 25 MDCs for the
number of cases reporting the use of mechanical ventilation <=96 hours.
Our findings are shown in the table below.

Mechanical Ventilation <=96 Hours Across All MDCs
----------------------------------------------------------------------------------------------------------------
Number of Average length
MDC cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
All cases with mechanical ventilation <=96 hours................ 266,583 8.5 $26,668
MDC 1 (Diseases and Disorders of the Nervous System)--Cases with 29,896 7.4 22,838
mechanical ventilation <=96 hours..............................
MDC 2 (Disease and Disorders of the Eye)--Cases with mechanical 60 8.4 29,708
ventilation <=96 hours.........................................
MDC 3 (Diseases and Disorders of the Ear, Nose, Mouth and 1,397 9.8 29,479
Throat)--Cases with mechanical ventilation <=96 hours..........
MDC 4 (Diseases and Disorders of the Respiratory System)--Cases 64,861 7.8 20,929
with mechanical ventilation <=96 hours.........................
MDC 5 (Diseases and Disorders of the Circulatory System)--Cases 45,147 8.8 35,818
with mechanical ventilation <=96 hours.........................
MDC 6 (Diseases and Disorders of the Digestive System)--Cases 15,629 11.3 33,660
with mechanical ventilation <=96 hours.........................
MDC 7 (Diseases and Disorders of the Hepatobiliary System and 4,678 10.5 31,565
Pancreas)--Cases with mechanical ventilation <=96 hours........
MDC 8 (Diseases and Disorders of the Musculoskeletal System and 7,140 10.4 40,183
Connective Tissue)--Cases with mechanical ventilation <=96
hours..........................................................
MDC 9 (Diseases and Disorders of the Skin, Subcutaneous Tissue 1,036 10.7 26,809
and Breast)--Cases with mechanical ventilation <=96 hours......
MDC 10 (Endocrine, Nutritional and Metabolic Diseases and 3,591 9.0 23,863
Disorders)--Cases with mechanical ventilation <=96 hours.......
MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract)-- 5,506 10.2 27,951
Cases with mechanical ventilation <=96 hours...................
MDC 12 (Diseases and Disorders of the Male Reproductive System)-- 168 11.5 35,009
Cases with mechanical ventilation <=96 hours...................
MDC 13 (Diseases and Disorders of the Female Reproductive 310 10.8 32,382
System)--Cases with mechanical ventilation <=96 hours..........
MDC 14 (Pregnancy, Childbirth and the Puerperium)--Cases with 55 7.6 21,785
mechanical ventilation <=96 hours..............................
MDC 16 (Diseases and Disorders of Blood, Blood Forming Organs, 1,171 8.7 26,138
Immunologic Disorders)--Cases with mechanical ventilation <=96
hours..........................................................
MDC 17 (Myeloproliferative Diseases and Disorders, Poorly 1,178 15.3 46,335
Differentiated Neoplasms)--Cases with mechanical ventilation
<=96 hours.....................................................
MDC 18 (Infectious and Parasitic Diseases, Systemic or 69,826 8.5 25,253
Unspecified Sites)--Cases with mechanical ventilation <=96
hours..........................................................
MDC 19 (Mental Diseases and Disorders)--Cases with mechanical 264 10.4 18,805
ventilation <=96 hours.........................................
MDC 20 (Alcohol/Drug Use and Alcohol/Drug Induced Organic Mental 918 8.3 19,376
Disorders)--Cases with mechanical ventilation <=96 hours.......
MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs)--Cases 10,842 6.5 17,843
with mechanical ventilation <=96 hours.........................

[[Page 20197]]

MDC 22 (Burns)--Cases with mechanical ventilation <=96 hours.... 353 9.7 45,557
MDC 23 (Factors Influencing Health Status and Other Contacts 307 6.6 16,159
with Health Services)--Cases with mechanical ventilation <=96
hours..........................................................
MDC 24 (Multiple Significant Trauma)--Cases with mechanical 1,709 8.8 36,475
ventilation <=96 hours.........................................
MDC 25 (Human Immunodeficiency Virus Infections)--Cases with 541 10.4 29,255
mechanical ventilation <=96 hours..............................
----------------------------------------------------------------------------------------------------------------

As shown in the table, the top 5 MDCs with the largest number of
cases reporting mechanical ventilation <=96 hours are MDC 18, with
69,826 cases; MDC 4, with 64,861 cases; MDC 5, with 45,147 cases; MDC
1, with 29,896 cases; and MDC 6, with 15,629 cases. We note that the
claims data demonstrate that the average length of stay is consistent
with what we would expect for cases reporting the use of mechanical
ventilation <=96 hours across each of the 25 MDCs. The top 5 MDCs with
the highest average costs for cases reporting mechanical ventilation
<=96 hours are MDC 17, with average costs of $46,335; MDC 22, with
average costs of $45,557; MDC 8, with average costs of $40,183; MDC 24,
with average costs of $36,475; and MDC 5, with average costs of
$35,818. Similar to the cases reporting mechanical ventilation >96
hours, the claims data for cases reporting the use of mechanical
ventilation <=96 hours also reflect a wide variance with regard to the
frequency and average costs. Depending on the number of cases in each
MS-DRG, it may be difficult to detect patterns of complexity and
resource intensity.
With respect to the requestor's statement that reporting for other
purposes, such as quality measures, clinical trials, and Joint
Commission and State certification or survey cases, is based on the
principal diagnosis, and their belief that patients who present with
cerebral infarction or cerebral hemorrhage and acute respiratory
failure are currently in conflict for principal diagnosis sequencing
because the cerebral infarction or cerebral hemorrhage code is needed
as the principal diagnosis for quality reporting and other purposes
(however, acute respiratory failure is needed as the principal
diagnosis for purposes of appropriate payment under the MS-DRGs), we
note that providers are required to assign the principal diagnosis
according to the ICD-10-CM Official Guidelines for Coding and Reporting
and these assignments are not based on factors such as quality measures
or clinical trials indications. Furthermore, we do not base MS-DRG
reclassification decisions on those factors. If the cerebral hemorrhage
or ischemic cerebral infarction is the reason for admission to the
hospital, the cerebral hemorrhage or ischemic cerebral infarction
diagnosis code should be assigned as the principal diagnosis.
We acknowledge that new MS-DRGs were created for cases of patients
with sepsis requiring mechanical ventilation greater than and less than
96 hours. However, those MS-DRGs (MS-DRG 575 (Septicemia with
Mechanical Ventilation 96+ Hours Age >17) and MS-DRG 576 (Septicemia
without Mechanical Ventilation 96+ Hours Age >17)) were created several
years ago, in FY 2007 (71 FR 47938 through 47939) in response to public
comments suggesting alternatives for the need to recognize the
treatment for that subset of patients with severe sepsis who exhibit a
greater degree of severity and resource consumption as septicemia is a
systemic condition, and also as a preliminary step in the transition
from the CMS DRGs to MS-DRGs.
We believe that additional analysis and efforts toward a broader
approach to refining the MS-DRGs for cases of patients requiring
mechanical ventilation across the MDCs involves carefully examining the
potential for instability in the relative weights and disrupting the
integrity of the MS-DRG system based on the creation of separate
MS[dash]DRGs involving small numbers of cases for various indications
in which mechanical ventilation may be required.
The second request focused on patients diagnosed with any
neurological condition classified under MDC 1 requiring mechanical
ventilation in the absence of an O.R. procedure and without having
received a thrombolytic agent. Because the first request specifically
involved analysis for the acute neurological conditions of cerebral
infarction and intracranial hemorrhage under MDC 1 and our findings do
not support creating new MS-DRGs for those specific conditions, we did
not perform separate claims analysis for other conditions classified
under MDC 1.
Therefore, we are not proposing to create new MS-DRGs for cases
that identify patients diagnosed with neurological conditions
classified under MDC 1 who require mechanical ventilation with or
without a thrombolytic and in the absence of an O.R. procedure. We are
inviting public comments on our proposal.
4. MDC 5 (Diseases and Disorders of the Circulatory System)
a. Pacemaker Insertions
In the FY 2017 IPPS/LTCH PPS final rule (81 FR 56804 through
56809), we discussed a request to examine the ICD-10-PCS procedure code
combinations that describe procedures involving pacemaker insertions to
determine if some procedure code combinations were excluded from the
Version 33 ICD-10 MS-DRG assignments for MS-DRGs 242, 243, and 244
(Permanent Cardiac Pacemaker Implant with MCC, with CC, and without CC/
MCC, respectively) under MDC 5. We finalized our proposal to modify the
Version 34 ICD-10 MS-DRG GROUPER logic so the specified procedure code
combinations were no longer required for assignment into those MS-DRGs.
As a result, the logic for pacemaker insertion procedures was
simplified by separating the procedure codes describing cardiac
pacemaker device insertions into one list and separating the procedure
codes describing cardiac pacemaker lead insertions into another list.
Therefore, when any ICD-10-PCS procedure code describing the insertion
of a pacemaker device is reported from that specific logic list with
any ICD-10-PCS procedure code describing the insertion of a pacemaker
lead from that specific logic list (81 FR 56804 through 56806), the
case is assigned to MS-DRGs 242, 243, and 244 under MDC 5.
We then discussed our examination of the Version 33 GROUPER logic
for MS[dash]DRGs 258 and 259 (Cardiac Pacemaker Device Replacement with
and without MCC, respectively) because assignment of cases to these MS-
DRGs

[[Page 20198]]

also included qualifying ICD-10-PCS procedure code combinations
involving pacemaker insertions (81 FR 56806 through 56808).
Specifically, the logic for Version 33 ICD-10 MS-DRGs 258 and 259
included ICD-10-PCS procedure code combinations describing the removal
of pacemaker devices and the insertion of new pacemaker devices. We
finalized our proposal to modify the Version 34 ICD-10 MS-DRG GROUPER
logic for MS-DRGs 258 and 259 to establish that a case reporting any
procedure code from the list of ICD-10-PCS procedure codes describing
procedures involving pacemaker device insertions without any other
procedure codes describing procedures involving pacemaker leads
reported would be assigned to MS-DRGs 258 and 259 (81 FR 56806 through
56807) under MDC 5. In addition, we pointed out that a limited number
of ICD-10-PCS procedure codes describing pacemaker insertion are
classified as non-operating room (non-O.R.) codes within the MS-DRGs
and that the Version 34 ICD-10 MS-DRG GROUPER logic would continue to
classify these procedure codes as non-O.R. codes. We noted that a case
reporting any one of these non-O.R. procedure codes describing a
pacemaker device insertion without any other procedure code involving a
pacemaker lead would be assigned to MS-DRGs 258 and 259. Therefore, the
listed procedure codes describing a pacemaker device insertion under
MS-DRGs 258 and 259 are designated as non-O.R. affecting the MS-DRG.
Lastly, we discussed our examination of the Version 33 GROUPER
logic for MS-DRGs 260, 261, and 262 (Cardiac Pacemaker Revision Except
Device Replacement with MCC, with CC, and without CC/MCC,
respectively), and noted that cases assigned to these MS-DRGs also
included lists of procedure code combinations describing procedures
involving the removal of pacemaker leads and the insertion of new
leads, in addition to lists of single procedure codes describing
procedures involving the insertion of pacemaker leads, removal of
cardiac devices, and revision of cardiac devices (81 FR 56808). We
finalized our proposal to modify the ICD-10 MS-DRG GROUPER logic for
MS-DRGs 260, 261, and 262 so that cases reporting any one of the listed
ICD-10-PCS procedure codes describing procedures involving pacemakers
and related procedures and associated devices are assigned to MS DRGs
260, 261, and 262 under MDC 5. Therefore, the GROUPER logic that
required a combination of procedure codes be reported for assignment
into MS-DRGs 260, 261 and 262 under Version 33 was no longer required
effective with discharges occurring on or after October 1, 2016 (FY
2017) under Version 34 of the ICD-10 MS-DRGs.
We note that while the discussion in the FY 2017 IPPS/LTCH PPS
final rule focused on the MS-DRGs involving pacemaker procedures under
MDC 5, similar GROUPER logic exists in Version 33 of the ICD-10 MS-DRGs
under MDC 1 (Diseases and Disorders of the Nervous System) in MS-DRGs
040, 041 and 042 (Peripheral, Cranial Nerve and Other Nervous System
Procedures with MCC, with CC or Peripheral Neurostimulator and without
CC/MCC, respectively) and MDC 21 (Injuries, Poisonings and Toxic
Effects of Drugs) in MS-DRGs 907, 908, and 909 (Other O.R. Procedures
for Injuries with MCC, with CC, and without MCC, respectively) where
procedure code combinations involving cardiac pacemaker device
insertions or removals and cardiac pacemaker lead insertions or
removals are required to be reported together for assignment into those
MS-DRGs. We also note that, with the exception of when a principal
diagnosis is reported from MDC 1, MDC 5, or MDC 21, the procedure codes
describing the insertion, removal, replacement, or revision of
pacemaker devices are assigned to a medical MS-DRG in the absence of
another O.R. procedure according to the GROUPER logic. We refer the
reader to the ICD-10 MS-DRG Definitions Manual Version 33, which is
available via the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2016-IPPS-Final-Rule-Home-Page-Items/FY2016-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending for
complete documentation of the GROUPER logic that was in effect at that
time for the Version 33 ICD-10 MS-DRGs discussed earlier.
For FY 2019, we received a request to assign all procedures
involving the insertion of pacemaker devices to surgical MS-DRGs,
regardless of the principal diagnosis. The requestor recommended that
procedures involving pacemaker insertion be grouped to surgical MS-DRGs
within the MDC to which the principal diagnosis is assigned, or that
they group to MS-DRGs 981, 982, and 983 (Extensive O.R. Procedure
Unrelated to Principal Diagnosis with MCC, with CC and without CC/MCC,
respectively). Currently, in Version 35 of the ICD-10 MS-DRGs,
procedures involving pacemakers are assigned to MS-DRGs 040, 041, and
042 (Peripheral, Cranial Nerve and Other Nervous System Procedures with
MCC, with CC or Peripheral Neurostimulator and without CC/MCC,
respectively) under MDC 1 (Diseases and Disorders of the Nervous
System), to MS-DRGs 242, 243, and 244 (Permanent Cardiac Pacemaker
Implant with MCC, with CC, and without CC/MCC, respectively), MS-DRGs
258 and 259 (Cardiac Pacemaker Device Replacement with MCC and without
MCC, respectively), and MS-DRGs 260, 261 and 262 (Cardiac Pacemaker
Revision Except Device Replacement with MCC, with CC, and without CC/
MCC, respectively) under MDC 5 (Diseases and Disorders of the
Circulatory System), and to MS-DRGs 907, 908, and 909 (Other O.R.
Procedures for Injuries with MCC, with CC, and without CC/MCC,
respectively), under MDC 21 (Injuries, Poisoning and Toxic Effects of
Drugs), with all other unrelated principal diagnoses resulting in a
medical MS-DRG assignment. According to the requestor, the medical MS-
DRGs do not provide adequate payment for the pacemaker device,
specialized operating suites, time, skills, and other resources
involved for pacemaker insertion procedures. Therefore, the requestor
recommended that procedures involving pacemaker insertions be grouped
to surgical MS-DRGs. We refer readers to the ICD-10 MS-DRG Definitions
Manual Version 35, which is available via the Internet on the CMS
website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-Items/FY2018-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending for
complete documentation of the GROUPER logic for the MS-DRGs discussed
earlier.
The following procedure codes describe procedures involving the
insertion of a cardiac rhythm related device which are classified as a
type of pacemaker insertion under the ICD-10 MS-DRGs. These four codes
are assigned to MS-DRGs 040, 041, and 042, as well as MS-DRGs 907, 908,
and 909, and are designated as O.R. procedures.

[[Page 20199]]

------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
0JH60PZ................... Insertion of cardiac rhythm related device
into chest subcutaneous tissue and fascia,
open approach.
0JH63PZ................... Insertion of cardiac rhythm related device
into chest subcutaneous tissue and fascia,
percutaneous approach.
0JH80PZ................... Insertion of cardiac rhythm related device
into abdomen subcutaneous tissue and
fascia, open approach.
0JH83PZ................... Insertion of cardiac rhythm related device
into abdomen subcutaneous tissue and
fascia, percutaneous approach.
------------------------------------------------------------------------

We examined cases from the September update of the FY 2017 MedPAR
claims data for cases involving pacemaker insertion procedures
reporting the above ICD-10-PCS codes in MS-DRGs 040, 041 and 042 under
MDC 1. Our findings are shown in the following table.

Cases Involving Pacemaker Insertion Procedures in MDC 1
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG in MDC 1 cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 040--All cases........................................... 4,462 10.4 $26,877
MS-DRG 040--Cases with procedure code 0JH60PZ (Insertion of 13 14.2 55,624
cardiac rhythm related device into chest subcutaneous tissue
and fascia, open approach).....................................
MS-DRG 040--Cases with procedure code 0JH63PZ (Insertion of 2 3.5 15,826
cardiac rhythm related device into chest subcutaneous tissue
and fascia, percutaneous approach).............................
MS-DRG 040--Cases with procedure code 0JH80PZ (Insertion of 0 0 0
cardiac rhythm related device into abdomen subcutaneous tissue
and fascia, open approach).....................................
MS-DRG 040--Cases with procedure code 0JH83PZ (Insertion of 0 0 0
cardiac rhythm related device into abdomen subcutaneous tissue
and fascia, percutaneous approach).............................
MS-DRG 041--All cases........................................... 5,648 5.2 16,927
MS-DRG 041--Cases with procedure code 0JH60PZ (Insertion of 12 6.4 22,498
cardiac rhythm related device into chest subcutaneous tissue
and fascia, open approach).....................................
MS-DRG 041--Cases with procedure code 0JH63PZ (Insertion of 4 5 17,238
cardiac rhythm related device into chest subcutaneous tissue
and fascia, percutaneous approach).............................
MS-DRG 041--Cases with procedure code 0JH80PZ (Insertion of 0 0 0
cardiac rhythm related device into abdomen subcutaneous tissue
and fascia, open approach).....................................
MS-DRG 041--Cases with procedure code 0JH83PZ (Insertion of 0 0 0
cardiac rhythm related device into abdomen subcutaneous tissue
and fascia, percutaneous approach).............................
MS-DRG 042--All cases........................................... 2,154 3.1 13,730
MS-DRG 042--Cases with procedure code 0JH60PZ (Insertion of 5 8 18,183
cardiac rhythm related device into chest subcutaneous tissue
and fascia, open approach).....................................
MS-DRG 042--Cases with procedure code 0JH83PZ (Insertion of 0 0 0
cardiac rhythm related device into abdomen subcutaneous tissue
and fascia, percutaneous approach).............................
MS-DRG 042--Cases with procedure code 0JH80PZ (Insertion of 0 0 0
cardiac rhythm related device into abdomen subcutaneous tissue
and fascia, open approach).....................................
MS-DRG 042--Cases with procedure code 0JH83PZ (Insertion of 0 0 0
cardiac rhythm related device into abdomen subcutaneous tissue
and fascia, percutaneous approach).............................
----------------------------------------------------------------------------------------------------------------

The following table is a summary of the findings shown above from
our review of MS-DRGs 040, 041 and 042 and the total number of cases
reporting a pacemaker insertion procedure.

MS-DRGs for Cases Involving Pacemaker Insertion Procedures in MDC 1
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG in MDC 1 cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRGs 040, 041, and 042--All cases............................ 12,264 6.7 $19,986
MS-DRGs 040, 041, and 042--Cases with a pacemaker insertion 36 9.1 32,906
procedure......................................................
----------------------------------------------------------------------------------------------------------------

We found a total of 12,264 cases in MS-DRGs 040, 041, and 042 with
an average length of stay of 6.7 days and average costs of $19,986. We
found a total of 36 cases in MS-DRGs 040, 041, and 042 reporting
procedure codes describing the insertion of a pacemaker device with an
average length of stay of 9.1 days and average costs of $32,906.
We then examined cases involving pacemaker insertion procedures
reporting those same four ICD-10-PCS procedure codes 0JH60PZ, 0JH63PZ,
0JH80PZ and 0JH83PZ in MS-DRGs 907, 908, and 909 under MDC 21. Our
findings are shown in the following table.

[[Page 20200]]

MS-DRGs for Cases Involving Pacemaker Insertion Procedures in MDC 21
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG in MDC 21 cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 907--All cases........................................... 7,405 10.1 $28,997
MS-DRG 907--Cases with procedure code 0JH60PZ (Insertion of 7 11.1 60,141
cardiac rhythm related device into chest subcutaneous tissue
and fascia, open approach).....................................
MS-DRG 908--All cases........................................... 8,519 5.2 14,282
MS-DRG 908--Cases with procedure code 0JH60PZ (Insertion of 4 3.8 35,678
cardiac rhythm related device into chest subcutaneous tissue
and fascia, open approach).....................................
MS-DRG 909--All cases........................................... 3,224 3.1 9,688
MS-DRG 909--Cases with procedure code 0JH60PZ (Insertion of 2 2 42,688
cardiac rhythm related device into chest subcutaneous tissue
and fascia, open approach).....................................
----------------------------------------------------------------------------------------------------------------

We note that there were no cases found where procedure codes
0JH63PZ, 0JH80PZ or 0JH83PZ were reported in MS-DRGs 907, 908 and 909
under MDC 21 and, therefore, they are not displayed in the table.
The following table is a summary of the findings shown above from
our review of MS-DRGs 907, 908, and 909 and the total number of cases
reporting a pacemaker insertion procedure.

We found a total of 19,148 cases in MS-DRGs 907, 908, and 909 with
an average length of stay of 6.7 days and average costs of $19,199. We
found a total of 13 cases in MS-DRGs 907, 908, and 909 reporting
pacemaker insertion procedures with an average length of stay of 7.5
days and average costs of $49,929.
We also examined cases involving pacemaker insertion procedures
reporting the following procedure codes that are assigned to MS-DRGs
242, 243, and 244 under MDC 5.

------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
0JH604Z................... Insertion of pacemaker, single chamber into
chest subcutaneous tissue and fascia, open
approach.
0JH605Z................... Insertion of pacemaker, single chamber rate
responsive into chest subcutaneous tissue
and fascia, open approach.
0JH606Z................... Insertion of pacemaker, dual chamber into
chest subcutaneous tissue and fascia, open
approach.
0JH607Z................... Insertion of cardiac resynchronization
pacemaker pulse generator into chest
subcutaneous tissue and fascia, open
approach.
0JH60PZ................... Insertion of cardiac rhythm related device
into chest subcutaneous tissue and fascia,
open approach.
0JH634Z................... Insertion of pacemaker, single chamber into
chest subcutaneous tissue and fascia,
percutaneous approach.
0JH635Z................... Insertion of pacemaker, single chamber rate
responsive into chest subcutaneous tissue
and fascia, percutaneous approach.
0JH636Z................... Insertion of pacemaker, dual chamber into
chest subcutaneous tissue and fascia,
percutaneous approach.
0JH637Z................... Insertion of cardiac resynchronization
pacemaker pulse generator into chest
subcutaneous tissue and fascia,
percutaneous approach.
0JH63PZ................... Insertion of cardiac rhythm related device
into chest subcutaneous tissue and fascia,
percutaneous approach.
0JH804Z................... Insertion of pacemaker, single chamber into
abdomen subcutaneous tissue and fascia,
open approach.
0JH805Z................... Insertion of pacemaker, single chamber rate
responsive into abdomen subcutaneous tissue
and fascia, open approach.
0JH806Z................... Insertion of pacemaker, dual chamber into
abdomen subcutaneous tissue and fascia,
open approach.
0JH807Z................... Insertion of cardiac resynchronization
pacemaker pulse generator into abdomen
subcutaneous tissue and fascia, open
approach.
0JH80PZ................... Insertion of cardiac rhythm related device
into abdomen subcutaneous tissue and
fascia, open approach.
0JH834Z................... Insertion of pacemaker, single chamber into
abdomen subcutaneous tissue and fascia,
percutaneous approach.
0JH835Z................... Insertion of pacemaker, single chamber rate
responsive into abdomen subcutaneous tissue
and fascia, percutaneous approach.
0JH836Z................... Insertion of pacemaker, dual chamber into
abdomen subcutaneous tissue and fascia,
percutaneous approach.
0JH837Z................... Insertion of cardiac resynchronization
pacemaker pulse generator into abdomen
subcutaneous tissue and fascia,
percutaneous approach.
0JH83PZ................... Insertion of cardiac rhythm related device
into abdomen subcutaneous tissue and
fascia, percutaneous approach.
------------------------------------------------------------------------

Our data findings are shown in the following table. We note that
procedure codes displayed with an asterisk (*) in the table are
designated as non-O.R. procedures affecting the MS-DRG.

[[Page 20201]]

Cases Involving Pacemaker Insertion Procedures in MDC 5
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG in MDC 5 cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 242--All cases........................................... 18,205 6.9 $26,414
MS-DRG 242--Cases with procedure code 0JH604Z* (Insertion of 2,518 7.7 25,004
pacemaker, single chamber into chest subcutaneous tissue and
fascia, open approach).........................................
MS-DRG 242--Cases with procedure code 0JH605Z* (Insertion of 306 7.7 24,454
pacemaker, single chamber rate responsive into chest
subcutaneous tissue and fascia, open approach).................
MS-DRG 242--Cases with procedure code 0JH606Z* (Insertion of 13,323 6.7 25,497
pacemaker, dual chamber into chest subcutaneous tissue and
fascia, open approach).........................................
MS-DRG 242--Cases with procedure code 0JH607Z (Insertion of 1,528 8.1 37,060
cardiac resynchronization pacemaker pulse generator into chest
subcutaneous tissue and fascia, open approach).................
MS-DRG 242--Cases with procedure code 0JH60PZ (Insertion of 5 16.6 59,334
cardiac rhythm related device into chest subcutaneous tissue
and fascia, open approach).....................................
MS-DRG 242--Cases with procedure code 0JH634Z* (Insertion of 65 8.5 26,789
pacemaker, single chamber into chest subcutaneous tissue and
fascia, percutaneous approach).................................
MS-DRG 242--Cases with procedure code 0JH635Z* (Insertion of 10 7 35,104
pacemaker, single chamber rate responsive into chest
subcutaneous tissue and fascia, percutaneous approach).........
MS-DRG 242--Cases with procedure code 0JH636Z* (Insertion of 313 6.4 23,699
pacemaker, dual chamber into chest subcutaneous tissue and
fascia, percutaneous approach).................................
MS-DRG 242--Cases with procedure code 0JH637Z (Insertion of 82 7.1 35,382
cardiac resynchronization pacemaker pulse generator into chest
Subcutaneous tissue and fascia, percutaneous approach).........
MS-DRG 242--Cases with procedure code 0JH63PZ (Insertion of 2 12.5 32,405
cardiac rhythm related device into chest subcutaneous tissue
and fascia, percutaneous approach).............................
MS-DRG 242--Cases with procedure code 0JH804Z* (Insertion of 25 14.4 43,080
pacemaker, single chamber into abdomen subcutaneous tissue and
fascia, open approach).........................................
MS-DRG 242--Cases with procedure code 0JH805Z* (Insertion of 2 4 26,949
pacemaker, single chamber rate responsive into abdomen
subcutaneous tissue and fascia, open approach).................
MS-DRG 242--Cases with procedure code 0JH806Z* (Insertion of 50 6.8 25,306
pacemaker, dual chamber into abdomen subcutaneous tissue and
fascia, open approach).........................................
MS-DRG 242--Cases with procedure code 0JH807Z (Insertion of 5 21.2 67,908
cardiac resynchronization pacemaker pulse generator into
abdomen subcutaneous tissue and fascia, open approach).........
MS-DRG 242--Cases with procedure code 0JH836Z (Insertion of 1 5 36,111
pacemaker, dual chamber into abdomen subcutaneous tissue and
fascia, percutaneous approach).................................
MS-DRG 243--All cases........................................... 24,586 4 18,669
MS-DRG 243--Cases with procedure code 0JH604Z* (Insertion of 2,537 4.7 17,118
pacemaker, single chamber into chest subcutaneous tissue and
fascia, open approach).........................................
MS-DRG 243--Cases with procedure code 0JH605Z* (Insertion of 271 4.4 17,268
pacemaker, single chamber rate responsive into chest
subcutaneous tissue and fascia, open approach).................
MS-DRG 243--Cases with procedure code 0JH606Z* (Insertion of 19,921 3.9 18,306
pacemaker, dual chamber into chest subcutaneous tissue and
fascia, open approach).........................................
MS-DRG 243--Cases with procedure code 0JH607Z (Insertion of 1,236 4.4 28,658
cardiac resynchronization pacemaker pulse generator into chest
subcutaneous tissue and fascia, open approach).................
MS-DRG 243--Cases with procedure code 0JH60PZ (Insertion of 6 4.2 20,994
cardiac rhythm related device into chest subcutaneous tissue
and fascia, open approach).....................................
MS-DRG 243--Cases with procedure code 0JH634Z* (Insertion of 55 5.2 16,784
pacemaker, single chamber into chest subcutaneous tissue and
fascia, percutaneous approach).................................
MS-DRG 243--Cases with procedure code 0JH635Z* (Insertion of 15 4.1 17,938
pacemaker, single chamber rate responsive into chest
subcutaneous tissue and fascia, percutaneous approach).........
MS-DRG 243--Cases with procedure code 0JH636Z* (Insertion of 431 3.7 16,164
pacemaker, dual chamber into chest subcutaneous tissue and
fascia, percutaneous approach).................................
MS-DRG 243--Cases with procedure code 0JH637Z (Insertion of 58 5 28,926
cardiac resynchronization pacemaker pulse generator into chest
subcutaneous tissue and fascia, percutaneous approach).........
MS-DRG 243--Cases with procedure code 0JH63PZ (Insertion of 3 8.3 23,717
cardiac rhythm related device into chest subcutaneous tissue
and fascia, percutaneous approach).............................
MS-DRG 243--Cases with procedure code 0JH804Z* (Insertion of 10 8.2 20,871
pacemaker, single chamber into abdomen subcutaneous tissue and
fascia, open approach).........................................
MS-DRG 243--Cases with procedure code 0JH805Z* (Insertion of 1 4 15,739
pacemaker, single chamber rate responsive into abdomen
subcutaneous tissue and fascia, open approach).................
MS-DRG 243--Cases with procedure code 0JH806Z* (Insertion of 57 4.4 18,787
pacemaker, dual chamber into abdomen subcutaneous tissue and
fascia, open approach).........................................
MS-DRG 243--Cases with procedure code 0JH807Z (Insertion of 3 4 19,653
cardiac resynchronization pacemaker pulse generator into
abdomen subcutaneous tissue and fascia, open approach).........
MS-DRG 243--Cases with procedure code 0JH80PZ (Insertion of 1 7 16,224
cardiac rhythm related device into abdomen subcutaneous tissue
and fascia, open approach).....................................
MS-DRG 243--Cases with procedure code 0JH836Z* (Insertion of 1 2 14,005
pacemaker, dual chamber into abdomen subcutaneous tissue and
fascia, percutaneous approach).................................
MS-DRG 244--All cases........................................... 15,974 2.7 15,670
MS-DRG 244--Cases with procedure code 0JH604Z* (Insertion of 1,045 3.2 14,541
pacemaker, single chamber into chest subcutaneous tissue and
fascia, open approach).........................................

[[Page 20202]]

MS-DRG 244--Cases with procedure code 0JH605Z* (Insertion of 127 3 13,208
pacemaker, single chamber rate responsive into chest
subcutaneous tissue and fascia, open approach).................
MS-DRG 244--Cases with procedure code 0JH606Z* (Insertion of 14,092 2.7 15,596
pacemaker, dual chamber into chest subcutaneous tissue and
fascia, open approach).........................................
MS-DRG 244--Cases with procedure code 0JH607Z (Insertion of 303 2.8 26,221
cardiac resynchronization pacemaker pulse generator into chest
subcutaneous tissue and fascia, open approach).................
MS-DRG 244--Cases with procedure code 0JH60PZ (Insertion of 2 4.5 9,248
cardiac rhythm related device into chest subcutaneous tissue
and fascia, open approach).....................................
MS-DRG 244--Cases with procedure code 0JH634Z* (Insertion of 32 2.8 11,525
pacemaker, single chamber into chest subcutaneous tissue and
fascia, percutaneous approach).................................
MS-DRG 244--Cases with procedure code 0JH635Z* (Insertion of 1 2 30,100
pacemaker, single chamber rate responsive into chest
subcutaneous tissue and fascia, percutaneous approach).........
MS-DRG 244--Cases with procedure code 0JH636Z* (Insertion of 320 2.6 13,670
pacemaker, dual chamber into chest subcutaneous tissue and
fascia, percutaneous approach).................................
MS-DRG 244--Cases with procedure code 0JH637Z (Insertion of 20 2.7 19,218
cardiac resynchronization pacemaker pulse generator into chest
subcutaneous tissue and fascia, percutaneous approach).........
MS-DRG 244--Cases with procedure code 0JH63PZ (Insertion of 1 3 12,120
cardiac rhythm related device into chest subcutaneous tissue
and fascia, percutaneous approach).............................
MS-DRG 244--Cases with procedure code 0JH805Z* (Insertion of 1 1 21,604
pacemaker, single chamber rate responsive into abdomen
subcutaneous tissue and fascia, open approach).................
MS-DRG 244--Cases with procedure code 0JH806Z* (Insertion of 36 3.2 16,492
pacemaker, dual chamber into abdomen subcutaneous tissue and
fascia, open approach).........................................
MS-DRG 244--Cases with procedure code 0JH836Z* (Insertion of 1 3 12,160
pacemaker, dual chamber into abdomen subcutaneous tissue and
fascia, percutaneous approach).................................
----------------------------------------------------------------------------------------------------------------

The following table is a summary of the findings shown above from
our review of MS-DRGs 242, 243, and 244 and the total number of cases
reporting a pacemaker insertion procedure.

We found a total of 58,765 cases in MS-DRGs 242, 243, and 244 with
an average length of stay of 4.6 days and average costs of $20,253. We
found a total of 58,822 cases reporting pacemaker insertion procedures
in MS-DRGs 242, 243, and 244 with an average length of stay of 4.6 days
and average costs of $20,270. We note that the analysis performed is by
procedure code, and because multiple pacemaker insertion procedures may
be reported on a single claim, the total number of these pacemaker
insertion procedure cases exceeds the total number of all cases found
across MS-DRGs 242, 243, and 244 (58,822 procedures versus 58,765
cases).
We then analyzed claims for cases reporting a procedure code
describing (1) the insertion of a pacemaker device only, (2) the
insertion of a pacemaker lead only, and (3) both the insertion of a
pacemaker device and a pacemaker lead across all the MDCs except MDC 5
to determine the number of cases currently grouping to medical MS-DRGs
and the potential impact of these cases moving into the surgical
unrelated MS-DRGs 981, 982 and 983 (Extensive O.R. Procedure Unrelated
to Principal Diagnosis with MCC, with CC and without CC/MCC,
respectively). Our findings are shown in the following table.

Pacemaker Insertion Procedures in Medical MS-DRGs
----------------------------------------------------------------------------------------------------------------
Number of Average length
All MDCs except MDC 5 cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
Procedures for insertion of pacemaker device.................... 2,747 9.5 $29,389
Procedures for insertion of pacemaker lead...................... 2,831 9.4 29,240
Procedures for insertion of pacemaker device with insertion of 2,709 9.4 29,297
pacemaker lead.................................................
----------------------------------------------------------------------------------------------------------------

[[Page 20203]]

We found a total of 2,747 cases reporting the insertion of a
pacemaker device in 177 medical MS-DRGs with an average length of stay
of 9.5 days and average costs of $29,389 across all the MDCs except MDC
5. We found a total of 2,831 cases reporting the insertion of a
pacemaker lead in 175 medical MS-DRGs with an average length of stay of
9.4 days and average costs of $29,240 across all the MDCs except MDC 5.
We found a total of 2,709 cases reporting both the insertion of a
pacemaker device and the insertion of a pacemaker lead in 170 medical
MS-DRGs with an average length of stay of 9.4 days and average costs of
$29,297 across all the MDCs except MDC 5.
We also analyzed claims for cases reporting a procedure code
describing the insertion of a pacemaker device with a procedure code
describing the insertion of a pacemaker lead in all the surgical MS-
DRGs across all the MDCs except MDC 5. Our findings are shown in the
following table.

Pacemaker Insertion Procedures in Medical MS-DRGs
----------------------------------------------------------------------------------------------------------------
Average length
All MDCs except MDC 5 Number of cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
Procedures for insertion of pacemaker device with insertion 3,667 12.8 $48,856
of pacemaker lead...........................................
----------------------------------------------------------------------------------------------------------------

We found a total of 3,667 cases reporting the insertion of a
pacemaker device and the insertion of a pacemaker lead in 194 surgical
MS-DRGs with an average length of stay of 12.8 days and average costs
of $48,856 across all the MDCs except MDC 5.
For cases where the insertion of a pacemaker device, the insertion
of a pacemaker lead or the insertion of both a pacemaker device and
lead were reported on a claim grouping to a medical MS-DRG, the average
length of stay and average costs were generally higher for these cases
when compared to the average length of stay and average costs for all
the cases in their assigned MS-DRGs. For example, we found 113 cases
reporting both the insertion of a pacemaker device and lead in MS-DRG
378 (G.I. Hemorrhage with CC), with an average length of stay of 7.1
days and average costs of $23,711. The average length of stay for all
cases in MS-DRG 378 was 3.6 days and the average cost for all cases in
MS-DRG 378 was $7,190. The average length of stay for cases reporting
both the insertion of a pacemaker device and lead were twice as long as
the average length of stay for all the cases in MS-DRG 378 (7.1 days
versus 3.6 days). In addition, the average costs for the cases
reporting both the insertion of a pacemaker device and lead were
approximately $16,500 higher than the average costs of all the cases in
MS-DRG 378 ($23,711 versus $7,190). We refer readers to Table 6P.1c
associated with this proposed rule (which is available via the internet
on the CMS website) for the detailed report of our findings across the
other medical MS-DRGs. We note that the average costs and average
length of stay for cases reporting the insertion of a pacemaker device,
the insertion of a pacemaker lead or the insertion of both a pacemaker
device and lead are reflected in Columns D and E, while the average
costs and average length of stay for all cases in the respective MS-DRG
are reflected in Columns I and J.
The claims data results from our analysis of this request showed
that if we were to support restructuring the GROUPER logic so that
pacemaker insertion procedures that include a combination of the
insertion of the pacemaker device with the insertion of the pacemaker
lead are designated as an O.R. procedure across all the MDCs, we would
expect approximately 2,709 cases to move or ``shift'' from the medical
MS-DRGs where they are currently grouping into the surgical unrelated
MS-DRGs 981, 982, and 983.
Our clinical advisors reviewed the data results and recommended
that pacemaker insertion procedures involving a complete pacemaker
system (insertion of pacemaker device combined with insertion of
pacemaker lead) warrant classification into surgical MS-DRGs because
the patients receiving these devices demonstrate greater treatment
difficulty and utilization of resources when compared to procedures
that involve the insertion of only the pacemaker device or the
insertion of only the pacemaker lead. We note that the request we
addressed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24981
through 24984) was to determine if some procedure code combinations
were excluded from the ICD-10 MS-DRG assignments for MS-DRGs 242, 243,
and 244. We proposed and, upon considering public comments received,
finalized an alternate approach that we believed to be less
complicated. We also stated in the FY 2017 IPPS/LTCH PPS final rule (81
FR 56806) that we would continue to monitor the MS-DRGs for pacemaker
insertion procedures as we receive ICD-10 claims data. Upon further
review, we believe that recreating the procedure code combinations for
pacemaker insertion procedures would allow for the grouping of these
procedures to the surgical MS-DRGs, which we believe is warranted to
better recognize the resources and complexity of performing these
procedures. Therefore, we are proposing to recreate pairs of procedure
code combinations involving both the insertion of a pacemaker device
with the insertion of a pacemaker lead to act as procedure code
combination pairs or ``clusters'' in the GROUPER logic that are
designated as O.R. procedures outside of MDC 5 when reported together.
We are inviting public comments on our proposal.
We also are proposing to designate all the procedure codes
describing the insertion of a pacemaker device or the insertion of a
pacemaker lead as non-O.R. procedures when reported as a single,
individual stand-alone code based on the recommendation of our clinical
advisors as noted earlier in this section and consistent with how these
procedures were classified under the Version 33 ICD-10 MS-DRG GROUPER
logic. We are inviting public comments on our proposal.
We refer readers to Table 6P.1d, Table 6P.1e, and Table 6P.1f
associated with this proposed rule (which is available via the internet
on the CMS website at: https://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) for (1) a complete
list of the proposed procedure code combinations or ``pairs''; (2) a
complete list of the procedure codes describing the insertion of a
pacemaker device; and (3) a complete list of the procedure codes
describing the insertion of a pacemaker lead. We are inviting public
comments on our lists of procedure codes that we are proposing to
include for restructuring the ICD-10 MS-DRG GROUPER logic for pacemaker
insertion procedures.
In addition, we are proposing to maintain the current GROUPER logic
for MS-DRGs 258 and 259 (Cardiac

[[Page 20204]]

Pacemaker Device Replacement with MCC and without MCC, respectively)
where the listed procedure codes as shown in the ICD-10 MS-DRG
Definitions Manual Version 35, which is available via the internet on
the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-Items/FY2018-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending,
describing a pacemaker device insertion, continue to be designated as
``non-O.R. affecting the MS-DRG'' because they are reported when a
pacemaker device requires replacement and have a corresponding
diagnosis from MDC 5. Also, we are proposing to maintain the current
GROUPER logic for MS-DRGs 260, 261, and 262 (Cardiac Pacemaker Revision
Except Device Replacement with MCC, with CC, and without CC/MCC,
respectively) so that cases reporting any one of the listed ICD-10-PCS
procedure codes as shown in the ICD-10 MS-DRG Definitions Manual
Version 35 describing procedures involving pacemakers and related
procedures and associated devices will continue to be assigned to those
MS-DRGs under MDC 5 because they are reported when a pacemaker device
requires revision and they have a corresponding circulatory system
diagnosis. We are inviting public comments on our proposal.
We note that, while the requestor did not include the following
procedure codes in its request, these codes are also currently
designated as O.R. procedure codes and are assigned to MS-DRGs 260,
261, and 262 under MDC 5.

------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
02PA0MZ................... Removal of cardiac lead from heart, open
approach.
02PA3MZ................... Removal of cardiac lead from heart,
percutaneous approach.
02PA4MZ................... Removal of cardiac lead from heart,
percutaneous endoscopic approach.
02WA0MZ................... Revision of cardiac lead in heart, open
approach.
02WA3MZ................... Revision of cardiac lead in heart,
percutaneous approach.
02WA4MZ................... Revision of cardiac lead in heart,
percutaneous endoscopic approach.
0JPT0PZ................... Removal of cardiac rhythm related device
from trunk subcutaneous tissue and fascia,
open approach.
0JPT3PZ................... Removal of cardiac rhythm related device
from trunk subcutaneous tissue and fascia,
percutaneous approach.
0JWT0PZ................... Revision of cardiac rhythm related device in
trunk subcutaneous tissue and fascia, open
approach.
0JWT3PZ................... Revision of cardiac rhythm related device in
trunk subcutaneous tissue and fascia,
percutaneous approach.
------------------------------------------------------------------------

We are soliciting public comments on whether these procedure codes
describing the removal or revision of a cardiac lead and removal or
revision of a cardiac rhythm related (pacemaker) device should also be
designated as non-O.R. procedure codes for FY 2019 when reported as a
single, individual stand-alone code with a principal diagnosis outside
of MDC 5 for consistency in the classification among these devices.
We also note that, while the requestor did not include the
following procedure codes in its request, the codes in the following
table became effective October 1, 2016 (FY 2017) and also describe
procedures involving the insertion of a pacemaker. Specifically, the
following list includes procedure codes that describe an intracardiac
or ``leadless'' pacemaker. These procedure codes are designated as O.R.
procedure codes and are currently assigned to MS-DRGs 228 and 229
(Other Cardiothoracic Procedures with MCC and without MCC,
respectively) under MDC 5.

------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
02H40NZ................... Insertion of intracardiac pacemaker into
coronary vein, open approach.
02H43NZ................... Insertion of intracardiac pacemaker into
coronary vein, percutaneous approach.
02H44NZ................... Insertion of intracardiac pacemaker into
coronary vein, percutaneous endoscopic
approach.
02H60NZ................... Insertion of intracardiac pacemaker into
right atrium, open approach.
02H63NZ................... Insertion of intracardiac pacemaker into
right atrium, percutaneous approach.
02H64NZ................... Insertion of intracardiac pacemaker into
right atrium, percutaneous endoscopic
approach.
02H70NZ................... Insertion of intracardiac pacemaker into
left atrium, open approach.
02H73NZ................... Insertion of intracardiac pacemaker into
left atrium, percutaneous approach.
02H74NZ................... Insertion of intracardiac pacemaker into
left atrium, percutaneous endoscopic
approach.
02HK0NZ................... Insertion of intracardiac pacemaker into
right ventricle, open approach.
02HK3NZ................... Insertion of intracardiac pacemaker into
right ventricle, percutaneous approach.
02HK4NZ................... Insertion of intracardiac pacemaker into
right ventricle, percutaneous endoscopic
approach.
02HL0NZ................... Insertion of intracardiac pacemaker into
left ventricle, open approach.
02HL3NZ................... Insertion of intracardiac pacemaker into
left ventricle, percutaneous Approach.
02HL4NZ................... Insertion of intracardiac pacemaker into
left ventricle, percutaneous endoscopic
approach.
02WA0NZ................... Revision of intracardiac pacemaker in heart,
open approach.
02WA3NZ................... Revision of intracardiac pacemaker in heart,
percutaneous approach.
02WA4NZ................... Revision of intracardiac pacemaker in heart,
percutaneous endoscopic approach.
02WAXNZ................... Revision of intracardiac pacemaker in heart,
external approach.
02H40NZ................... Insertion of intracardiac pacemaker into
coronary vein, open approach.
02H43NZ................... Insertion of intracardiac pacemaker into
coronary vein, percutaneous approach.
------------------------------------------------------------------------

We examined claims data for procedures involving an intracardiac
pacemaker reporting any of the above codes across all MS-DRGs. Our
findings are shown in the following table.

[[Page 20205]]

Intracardiac Pacemaker Procedures
----------------------------------------------------------------------------------------------------------------
Average length
Across all MS-DRGs Number of cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
Procedures for intracardiac pacemaker........................ 1,190 8.6 $38,576
----------------------------------------------------------------------------------------------------------------

We found 1,190 cases reporting a procedure involving an
intracardiac pacemaker with an average length of stay of 8.6 days and
average costs of $38,576. Of these 1,190 cases, we found 1,037 cases in
MS-DRGs under MDC 5. We also found that the 153 cases that grouped to
MS-DRGs outside of MDC 5 grouped to surgical MS-DRGs; therefore,
another O.R. procedure was also reported on the claim. However, we are
soliciting public comments on whether these procedure codes describing
the insertion and revision of intracardiac pacemakers should also be
considered for classification into all surgical unrelated MS-DRGs
outside of MDC 5 for FY 2019.
b. Drug-Coated Balloons in Endovascular Procedures
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38111), we
discontinued new technology add[dash]on payments for the LUTONIX[reg]
and IN.PACT^TM Admiral^TM drug-coated balloon (DCB)
technologies, effective for FY 2018, because the technology no longer
met the newness criterion for new technology add-on payments. For FY
2019, we received a request to reassign cases that utilize a drug-
coated balloon in the performance of an endovascular procedure
involving the treatment of superficial femoral arteries for peripheral
arterial disease from the lower severity level MS-DRG 254 (Other
Vascular Procedures without CC/MCC) and MS-DRG 253 (Other Vascular
Procedures with CC) to the highest severity level MS-DRG 252 (Other
Vascular Procedures with MCC). We also received a request to revise the
title of MS-DRG 252 to ``Other Vascular Procedures with MCC or Drug-
Coated Balloon Implant''.
There are currently 36 ICD-10-PCS procedure codes that describe the
performance of endovascular procedures involving treatment of the
superficial femoral arteries that utilize a drug-coated balloon, which
are listed in the following table.

------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
047K041................... Dilation of right femoral artery with drug-
eluting intraluminal device using drug-
coated balloon, open approach.
047K0D1................... Dilation of right femoral artery with
intraluminal device using drug-coated
balloon, open approach.
047K0Z1................... Dilation of right femoral artery using drug-
coated balloon, open approach.
047K341................... Dilation of right femoral artery with drug-
eluting intraluminal device using drug-
coated balloon, percutaneous approach.
047K3D1................... Dilation of right femoral artery with
intraluminal device using drug-coated
balloon, percutaneous approach.
047K3Z1................... Dilation of right femoral artery using drug-
coated balloon, percutaneous approach.
047K441................... Dilation of right femoral artery with drug-
eluting intraluminal device using drug-
coated balloon, percutaneous endoscopic
approach.
047K4D1................... Dilation of right femoral artery with
intraluminal device using drug-coated
balloon, percutaneous endoscopic approach.
047K4Z1................... Dilation of right femoral artery using drug-
coated balloon, percutaneous endoscopic
approach.
047L041................... Dilation of left femoral artery with drug-
eluting intraluminal device using drug-
coated balloon, open approach.
047L0D1................... Dilation of left femoral artery with
intraluminal device using drug-coated
balloon, open approach.
047L0Z1................... Dilation of left femoral artery using drug-
coated balloon, open approach.
047L341................... Dilation of left femoral artery with drug-
eluting intraluminal device using drug-
coated balloon, percutaneous approach.
047L3D1................... Dilation of left femoral artery with
intraluminal device using drug-coated
balloon, percutaneous approach.
047L3Z1................... Dilation of left femoral artery using drug-
coated balloon, percutaneous approach.
047L441................... Dilation of left femoral artery with drug-
eluting intraluminal device using drug-
coated balloon, percutaneous endoscopic
approach.
047L4D1................... Dilation of left femoral artery with
intraluminal device using drug-coated
balloon, percutaneous endoscopic approach.
047L4Z1................... Dilation of left femoral artery using drug-
coated balloon, percutaneous endoscopic
approach.
047M041................... Dilation of right popliteal artery with drug-
eluting intraluminal device using drug-
coated balloon, open approach.
047M0D1................... Dilation of right popliteal artery with
intraluminal device using drug-coated
balloon, open approach.
047M0Z1................... Dilation of right popliteal artery using
drug-coated balloon, open approach.
047M341................... Dilation of right popliteal artery with drug-
eluting intraluminal device using drug-
coated balloon, percutaneous approach.
047M3D1................... Dilation of right popliteal artery with
intraluminal device using drug-coated
balloon, percutaneous approach.
047M3Z1................... Dilation of right popliteal artery using
drug-coated balloon, percutaneous approach.
047M441................... Dilation of right popliteal artery with drug-
eluting intraluminal device using drug-
coated balloon, percutaneous endoscopic
approach.
047M4D1................... Dilation of right popliteal artery with
intraluminal device using drug-coated
balloon, percutaneous endoscopic approach.
047M4Z1................... Dilation of right popliteal artery using
drug-coated balloon, percutaneous
endoscopic approach.
047N041................... Dilation of left popliteal artery with drug-
eluting intraluminal device using drug-
coated balloon, open approach.
047N0D1................... Dilation of left popliteal artery with
intraluminal device using drug-coated
balloon, open approach.
047N0Z1................... Dilation of left popliteal artery using drug-
coated balloon, open approach.
047N341................... Dilation of left popliteal artery with drug-
eluting intraluminal device using drug-
coated balloon, percutaneous approach.
047N3D1................... Dilation of left popliteal artery with
intraluminal device using drug-coated
balloon, percutaneous approach.
047N3Z1................... Dilation of left popliteal artery using drug-
coated balloon, percutaneous approach.
047N441................... Dilation of left popliteal artery with drug-
eluting intraluminal device using drug-
coated balloon, percutaneous endoscopic
approach.
047N4D1................... Dilation of left popliteal artery with
intraluminal device using drug-coated
balloon, percutaneous endoscopic approach.
047N4Z1................... Dilation of left popliteal artery using drug-
coated balloon, percutaneous endoscopic
approach.
------------------------------------------------------------------------

[[Page 20206]]

The requestor performed its own analysis of claims data and
expressed concern that it found that the average costs of cases using a
drug-coated balloon in the performance of percutaneous endovascular
procedures involving treatment of patients who have been diagnosed with
peripheral arterial disease are significantly higher than the average
costs of all of the cases in the MS-DRGs where these procedures are
currently assigned. The requestor also expressed concern that payments
may no longer be adequate because the new technology add-on payments
have been discontinued and may affect patient access to these
procedures.
We first examined claims data from the September 2017 update of the
FY 2017 MedPAR file for cases reporting any 1 of the 36 ICD-10-PCS
procedure codes listed in the immediately preceding table that describe
the use of a drug-coated balloon in the performance of endovascular
procedures in MS-DRGs 252, 253, and 254. Our findings are shown in the
following table.

MS-DRGs for Other Vascular Procedures With Drug[dash]Coated Balloon
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 252--All cases........................................... 33,583 7.6 $23,906
MS-DRG 252--Cases with drug-coated balloon...................... 870 8.8 30,912
MS-DRG 253--All cases........................................... 25,714 5.4 18,986
MS-DRG 253--Cases with drug-coated balloon...................... 1,532 5.4 23,051
MS-DRG 254--All cases........................................... 12,344 2.8 13,287
MS-DRG 254--Cases with drug-coated balloon...................... 488 2.4 17,445
----------------------------------------------------------------------------------------------------------------

As shown in this table, there were a total of 33,583 cases in MS-
DRG 252, with an average length of stay of 7.6 days and average costs
of $23,906. There were 870 cases in MS-DRG 252 reporting the use of a
drug-coated balloon in the performance of an endovascular procedure,
with an average length of stay of 8.8 days and average costs of
$30,912. The total number of cases in MS-DRG 253 was 25,714, with an
average length of stay of 5.4 days and average costs of $18,986. There
were 1,532 cases in MS-DRG 253 reporting the use of a DCB in the
performance of an endovascular procedure, with an average length of
stay of 5.4 days and average costs of $23,051. The total number of
cases in MS-DRG 254 was 12,344, with an average length of stay of 2.8
days and average costs of $13,287. There were 488 cases in MS-DRG 254
reporting the use of a DCB in the performance of an endovascular
procedure, with an average length of stay of 2.4 days and average costs
of $17,445.
The results of our data analysis show that there is not a very high
volume of cases reporting the use of a drug-coated balloon in the
performance of endovascular procedures compared to all of the cases in
the assigned MS-DRGs. The data results also show that the average
length of stay for cases reporting the use of a drug[dash]coated
balloon in the performance of endovascular procedures in MS-DRGs 253
and 254 is lower compared to the average length of stay for all of the
cases in the assigned MS-DRGs, while the average length of stay for
cases reporting the use of a drug-coated balloon in the performance of
endovascular procedures in MS-DRG 252 is slightly higher compared to
all of the cases in MS-DRG 252 (8.8 days versus 7.6 days). Lastly, the
data results showed that the average costs for cases reporting the use
of a drug-coated balloon in the performance of percutaneous
endovascular procedures were higher compared to all of the cases in the
assigned MS-DRGs. Specifically, for MS-DRG 252, the average costs for
cases reporting the use of a DCB in the performance of endovascular
procedures were $30,912 versus the average costs of $23,906 for all
cases in MS-DRG 252, a difference of $7,006. For MS-DRG 253, the
average costs for cases reporting the use of a drug-coated balloon in
the performance of endovascular procedures were $23,051 versus the
average costs of $18,986 for all cases in MS-DRG 253, a difference of
$4,065. For MS-DRG 254, the average costs for cases reporting the use
of a drug-coated balloon in the performance of endovascular procedures
were $17,445 versus the average costs of $13,287 for all cases in MS-
DRG 254, a difference of $4,158.
The following table is a summary of the findings discussed above
from our review of MS-DRGs 252, 253 and 254 and the total number of
cases that used a drug[dash]coated balloon in the performance of the
procedure across MS-DRGs 252, 253, and 254.

As shown in this table, there were a total of 71,641 cases across
MS-DRGs 252, 253, and 254, with an average length of stay of 6.0 days
and average costs of $20,310. There were a total of 2,890 cases across
MS-DRGs 252, 253, and 254 reporting the use of a drug-coated balloon in
the performance of the procedure, with an average length of stay of 6.0
days and average costs of $24,569. The data analysis showed that cases
reporting the use of a drug-coated balloon in the performance of the
procedure across MS-DRGs 252, 253 and 254 have similar lengths of stay
(6.0 days) compared to the average length of stay for all of the cases
in MS-DRGs 252, 253, and 254. The data results also showed that the
cases reporting the use of a drug-coated balloon in the performance of
the procedure across

[[Page 20207]]

these MS-DRGs have higher average costs ($24,569 versus $20,310)
compared to the average costs for all of the cases across these MS-
DRGs.
The results of our claims data analysis and the advice from our
clinical advisors do not support reassigning cases reporting the use of
a drug-coated balloon in the performance of these procedures from the
lower severity level MS-DRGs 253 and 254 to the highest severity level
MS-DRG 252 at this time. If we were to reassign cases that utilize a
drug-coated balloon in the performance of these types of procedures
from MS-DRG 254 to MS-DRG 252, the cases would result in overpayment
and also would have a shorter length of stay compared to all of the
cases in MS-DRG 252. While the cases reporting the use of a drug-coated
balloon in the performance of these procedures are higher compared to
the average costs for all cases in their assigned MS-DRGs, it is not by
a significant amount. We believe that as use of a drug-coated balloon
becomes more common, the costs will be reflected in the data. Our
clinical advisors also agreed that it would not be clinically
appropriate to reassign cases for patients from the lowest severity
level (without CC/MCC) MS-DRG to the highest severity level (with MCC)
MS-DRG in the absence of additional data to better determine the
resource utilization for this subset of patients. Therefore, for these
reasons, we are proposing to not reassign cases reporting the use of a
drug-coated balloon in the performance of endovascular procedures from
MS-DRGs 253 and 254 to MS-DRG 252. We are inviting public comments on
our proposal.
We note that because 24 of the 36 ICD-10-PCS procedure codes
describing the use of a drug-coated balloon in the performance of
endovascular procedures also include the use of an intraluminal device,
we conducted further analysis to determine the number of cases
reporting an intraluminal device with the use of a drug-coated balloon
in the performance of the procedure versus the number of cases
reporting the use of a drug[dash]coated balloon alone. We analyzed the
number of cases across MS-DRGs 252, 253, and 254 reporting: (1) The use
of an intraluminal device (stent) with use of a drug-coated balloon in
the performance of the procedure; (2) the use of a drug-eluting
intraluminal device (stent) with the use of a drug-coated balloon in
the performance of the procedure; and (3) the use of a drug-coated
balloon only in the performance of the procedure. Our findings are
shown in the following table.

MS-DRGs for Other Vascular Procedures and Cases With Drug-Coated Balloon
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRGs 252, 253 and 254--All cases............................. 71,641 6.0 $20,310
MS-DRGs 252, 253 and 254--Cases with intraluminal device with 522 6.0 28,418
drug-coated balloon............................................
MS-DRGs 252, 253 and 254--Cases with drug-eluting intraluminal 447 6.0 26,098
device with drug-coated balloon................................
MS-DRGs 252, 253 and 254--Cases with drug-coated balloon only... 2,705 6.1 24,553
----------------------------------------------------------------------------------------------------------------

As shown in this table, there were a total of 71,641 cases across
MS-DRGs 252, 253, and 254, with an average length of stay of 6.0 days
and average costs of $20,310. There were 522 cases across MS-DRGs 252,
253, and 254 reporting the use of an intraluminal device with use of a
drug-coated balloon in the performance of the procedure, with an
average length of stay of 6.0 days and average costs of $28,418. There
were 447 cases across MS-DRGs 252, 253, and 254 reporting the use of a
drug[dash]eluting intraluminal device with use of a drug-coated balloon
in the performance of the procedure, with an average length of stay of
6.0 days and average costs of $26,098. Lastly, there were 2,705 cases
across MS-DRGs 252, 253, and 254 reporting the use of a drug-coated
balloon alone in the performance of the procedure, with an average
length of stay of 6.1 days and average costs of $24,553.
The data showed that the 2,705 cases in MS-DRGs 252, 253, and 254
reporting the use of a drug-coated balloon alone in the performance of
the procedure have lower average costs compared to the 969 cases in MS-
DRGs 252, 253, and 254 reporting the use of an intraluminal device (522
cases) or a drug-eluting intraluminal device (447 cases) with a drug-
coated balloon in the performance of the procedure ($24,553 versus
$28,418 and $26,098, respectively). The data also showed that the cases
reporting the use of a drug-coated balloon alone in the performance of
the procedure have a comparable average length of stay compared to the
cases reporting the use of an intraluminal device or a drug-eluting
intraluminal device with a drug-coated balloon in the performance of
the procedure (6.1 days versus 6.0 days).
In summary, we believe that further analysis of endovascular
procedures involving the treatment of superficial femoral arteries for
peripheral arterial disease that utilize a drug-coated balloon in the
performance of the procedure would be advantageous. As additional
claims data become available, we will be able to more fully evaluate
the differences in cases where a procedure utilizes a drug-coated
balloon alone in the performance of the procedure versus cases where a
procedure utilizes an intraluminal device or a drug-eluting
intraluminal device in addition to a drug-coated balloon in the
performance of the procedure.
5. MDC 6 (Diseases and Disorders of the Digestive System)
a. Benign Lipomatous Neoplasm of Kidney
We received a request to reassign ICD-10-CM diagnosis code D17.71
(Benign lipomatous neoplasm of kidney) from MDC 06 (Diseases and
Disorders of the Digestive System) to MDC 11 (Diseases and Disorders of
the Kidney and Urinary Tract). The requestor stated that this diagnosis
code is used to describe a kidney neoplasm and believed that because
the ICD-10-CM code is specific to the kidney, a more appropriate
assignment would be under MDC 11. In FY 2015, under the ICD-9-CM
classification, there was not a specific diagnosis code for a benign
lipomatous neoplasm of the kidney. The only diagnosis code available
was ICD-9-CM diagnosis code 214.3 (Lipoma of intra[dash]abdominal
organs), which was assigned to MS-DRGs 393, 394, and 395 (Other
Digestive System Diagnoses with MCC, with CC, and without CC/MCC,
respectively) under MDC 6. Therefore, when we converted from the ICD-9
based MS[dash]DRGs to the ICD[dash]10 MS[dash]DRGs, there was not a
specific code available that identified the kidney from which to

[[Page 20208]]

replicate. As a result, ICD-10-CM diagnosis code D17.71 was assigned to
those same MS-DRGs (MS-DRGs 393, 394, and 395) under MDC 6.
While reviewing the MS-DRG classification of ICD-10-CM diagnosis
code D17.71, we also reviewed the MS-DRG classification of another
diagnosis code organized in subcategory D17.7, ICD-10-CM diagnosis code
D17.72 (Benign lipomatous neoplasm of other genitourinary organ). ICD-
10-CM diagnosis code D17.72 is currently assigned under MDC 09
(Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast) to
MS-DRGs 606 and 607 (Minor Skin Disorders with and without MCC,
respectively). Similar to the replication issue with ICD-10-CM
diagnosis code D17.71, with ICD-10-CM diagnosis code D17.72, under the
ICD-9-CM classification, there was not a specific diagnosis code to
identify a benign lipomatous neoplasm of genitourinary organ. The only
diagnosis code available was ICD-9-CM diagnosis code 214.8 (Lipoma of
other specified sites), which was assigned to MS-DRGs 606 and 607 under
MDC 09. Therefore, when we converted from the ICD-9 based MS[dash]DRGs
to the ICD-10 MS[dash]DRGs, there was not a specific code available
that identified another genitourinary organ (other than the kidney)
from which to replicate. As a result, ICD-10-CM diagnosis code D17.72
was assigned to those same MS-DRGs (MS-DRGs 606 and 607) under MDC 9.
We are proposing to reassign ICD-10-CM diagnosis code D17.71 from
MS-DRGs 393, 394, and 395 (Other Digestive System Diagnoses with MCC,
with CC, and without CC/MCC, respectively) under MDC 06 to MS-DRGs 686,
687, and 688 (Kidney and Urinary Tract Neoplasms with MCC, with CC, and
without CC/MCC, respectively) under MDC 11 because this diagnosis code
is used to describe a kidney neoplasm. We also are proposing to
reassign ICD-10-CM diagnosis code D17.72 from MS-DRGs 606 and 607 under
MDC 09 to MS-DRGs 686, 687, and 688 under MDC 11 because this diagnosis
code is used to describe other types of neoplasms classified to the
genitourinary tract that do not have a specific code identifying the
site. Our clinical advisors agree that the conditions described by the
ICD-10-CM diagnosis codes provide specific anatomic detail involving
the kidney and genitourinary tract and, therefore, if reclassified
under this proposed MDC and reassigned to these MS-DRGs, would improve
the clinical coherence of the patients assigned to these groups.
We are inviting public comments on our proposals.
b. Bowel Procedures
We received a request to reassign the following 8 ICD-10-PCS
procedure codes that describe repositioning of the colon and takedown
of end colostomy from MS-DRGs 344, 345, and 346 (Minor Small and Large
Bowel Procedures with MCC, with CC, and without CC/MCC, respectively)
to MS-DRGs 329, 330, and 331 (Major Small and Large Bowel Procedures
with MCC, with CC, and without CC/MCC, respectively):

------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
0DSK0ZZ................... Reposition ascending colon, open approach.
0DKL4ZZ................... Reposition ascending colon, percutaneous
endoscopic approach.
0DSL0ZZ................... Reposition transverse colon, open approach.
0DSL4ZZ................... Reposition transverse colon, percutaneous
endoscopic approach.
0DSM0ZZ................... Reposition descending colon, open approach.
0DSM4ZZ................... Reposition descending colon, percutaneous
endoscopic approach.
0DSN0ZZ................... Reposition sigmoid colon, open approach.
0DSN4ZZ................... Reposition sigmoid colon, percutaneous
endoscopic approach.
------------------------------------------------------------------------

The requestor indicated that the resources required for procedures
identifying repositioning of specified segments of the large bowel are
more closely aligned with other procedures that group to MS-DRGs 329,
330, and 331, such as repositioning of the large intestine (unspecified
segment).
We analyzed the claims data from the September 2017 update of the
FY 2017 Med PAR file for MS-DRGs 344, 345 and 346 for all cases
reporting the 8 ICD[dash]10-PCS procedure codes listed in the table
above. Our findings are shown in the following table:

----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 344--All cases........................................... 1,452 9.5 $20,609
MS-DRG 344--All cases with a specific large bowel reposition 52 9.6 23,409
procedure......................................................
MS-DRG 345--All cases........................................... 2,674 5.6 11,552
MS-DRG 345--All cases with a specific large bowel reposition.... 246 6 14,915
MS-DRG 346--All cases........................................... 990 3.8 8,977
MS-DRG 346--All cases with a specific large bowel reposition 223 4.5 12,279
procedure......................................................
----------------------------------------------------------------------------------------------------------------

The data showed that the average length of stay and average costs
for cases that reported a specific large bowel reposition procedure
were generally consistent with the average length of stay and average
costs for all of the cases in their assigned MS-DRG.
We then examined the claims data in the September 2017 update of
the FY 2017 MedPAR file for MS-DRGs 329, 330 and 331. Our findings are
shown in the following table.

[[Page 20209]]

As shown in this table, across MS-DRGs 329, 330, and 331, we found
a total of 112,388 cases, with an average length of stay of 8.4 days
and average costs of $21,382. The results of our analysis indicate that
the resources required for cases reporting the specific large bowel
repositioning procedures are more aligned with those resources required
for all cases assigned to MS-DRGs 344, 345, and 346, with the average
costs being lower than the average costs for all cases assigned to MS-
DRGs 329, 330, and 331. Our clinical advisors also indicated that the 8
specific bowel repositioning procedures are best aligned with those in
MS-DRGs 344, 345, and 346. Therefore, we are proposing to maintain the
current assignment of the 8 specific bowel repositioning procedures in
MS[dash]DRGs 344, 345, and 346 for FY 2019. We are inviting public
comments on this proposal.
In conducting our analysis of MS-DRGs 329, 330, and 331, we also
examined the subset of cases reporting one of the bowel procedures
listed in the following table as the only O.R. procedure.

------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
0DQK0ZZ................... Repair ascending colon, open approach.
0DQK4ZZ................... Repair ascending colon, percutaneous
endoscopic approach.
0DQL0ZZ................... Repair transverse colon, open approach.
0DQL4ZZ................... Repair transverse colon, percutaneous
endoscopic approach.
0DQM0ZZ................... Repair descending colon, open approach.
0DQM4ZZ................... Repair descending colon, percutaneous
endoscopic approach.
0DQN0ZZ................... Repair sigmoid colon, open approach.
0DQN4ZZ................... Repair sigmoid colon, percutaneous
endoscopic approach.
0DSB0ZZ................... Reposition ileum, open approach.
0DSB4ZZ................... Reposition ileum, percutaneous endoscopic
approach.
0DSE0ZZ................... Reposition large intestine, open approach.
0DSE4ZZ................... Reposition large intestine, percutaneous
endoscopic approach.
------------------------------------------------------------------------

This approach can be useful in determining whether resource use is
truly associated with a particular procedure or whether the procedure
frequently occurs in cases with other procedures with higher than
average resource use. As shown in the following table, we identified
398 cases reporting a bowel procedure as the only O.R. procedure, with
an average length of stay of 6.3 days and average costs of $13,595
across MS-DRGs 329, 330, and 331, compared to the overall average
length of stay of 8.4 days and average costs of $21,382 for all cases
in MS-DRGs 329, 330, and 331.

----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRGs 329, 330 and 331--All cases............................. 112,388 8.4 $21,382
MS-DRGs 329, 330 and 331--All cases with a bowel procedure as 398 6.3 13,595
only O.R. procedure............................................
MS-DRG 329--All cases........................................... 33,640 13.3 34,015
MS-DRG 329--Cases with a bowel procedure as only O.R. procedure. 86 8.3 19,309
MS-DRG 330--All cases........................................... 52,644 7.3 17,896
MS-DRG 330--Cases with a bowel procedure as only O.R. procedure. 183 6.9 13,617
MS-DRG 331--All cases........................................... 26,104 4.1 12,132
MS-DRG 331--Cases with a bowel procedure as only O.R. procedure. 129 4.3 9,754
----------------------------------------------------------------------------------------------------------------

The resources required for these cases are more aligned with the
resources required for cases assigned to MS-DRGs 344, 345, and 346 than
with the resources required for cases assigned to MS-DRGs 329, 330, and
331. Our clinical advisors also agreed that these cases are more
clinically aligned with cases in MS-DRGs 344, 345, and 346, as they are
minor procedures relative to the major bowel procedures assigned to MS-
DRGs 329, 330, and 331. Therefore, we are proposing to reassign the 12
ICD-10-PCS procedure codes listed above from MS-DRGs 329, 330, and 331
to MS-DRGs 344, 345, and 346. We are inviting public comments on this
proposal.
6. MDC 8 (Diseases and Disorders of the Musculoskeletal System and
Connective Tissue): Spinal Fusion
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38036), we announced
our plans to review the ICD-10 logic for the MS-DRGs where procedures
involving spinal fusion are currently assigned for FY 2019. After
publication of the FY 2018 IPPS/LTCH PPS final rule, we

[[Page 20210]]

received a comment suggesting that CMS publish findings from this
review and discuss possible future actions. The commenter agreed that
it is important to be able to fully evaluate the MS-DRGs to which all
spinal fusion procedures are currently assigned with additional claims
data, particularly considering the 33 clinically invalid codes that
were identified through the rulemaking process (82 FR 38034 through
38035) and the 87 codes identified from the upper and lower joint
fusion tables in the ICD-10-PCS classification and discussed at the
September 12, 2017 ICD-10 Coordination and Maintenance Committee that
were proposed to be deleted effective October 1, 2018 (FY 2019). The
agenda and handouts from that meeting can be obtained from the CMS
website at: https://www.cms.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/ICD-9-CM-C-and-M-Meeting-Materials.html.
According to the commenter, deleting the 33 procedure codes
describing clinically invalid spinal fusion procedures for FY 2018
partially resolves the issue for data used in setting the FY 2020
payment rates. However, the commenter also noted that the problem will
not be fully resolved until the FY 2019 claims are available for FY
2021 ratesetting (due to the 87 codes identified at the ICD-10
Coordination and Maintenance Committee meeting for deletion effective
October 1, 2018 (FY 2019)).
The commenter noted that it analyzed claims data from the FY 2016
MedPAR data set and was surprised to discover a significant number of
discharges reporting 1 of the 87 clinically invalid codes that were
identified and discussed by the ICD-10 Coordination and Maintenance
Committee among the following spinal fusion MS-DRGs.

------------------------------------------------------------------------
MS-DRG Description
------------------------------------------------------------------------
453....................... Combined Anterior/Posterior Spinal Fusion
with MCC.
454....................... Combined Anterior/Posterior Spinal Fusion
with CC.
455....................... Combined Anterior/Posterior Spinal Fusion
without CC/MCC.
456....................... Spinal Fusion Except Cervical with Spinal
Curvature or Malignancy or Infection or
Extensive Fusions with MCC.
457....................... Spinal Fusion Except Cervical with Spinal
Curvature or Malignancy or Infection or
Extensive Fusions with CC.
458....................... Spinal Fusion Except Cervical with Spinal
Curvature or Malignancy or Infection or
Extensive Fusions without CC/MCC.
459....................... Spinal Fusion Except Cervical with MCC.
460....................... Spinal Fusion Except Cervical without MCC.
471....................... Cervical Spinal Fusion with MCC.
472....................... Cervical Spinal Fusion with CC.
473....................... Cervical Spinal Fusion without CC/MCC.
------------------------------------------------------------------------

In addition, the commenter noted that it also identified a number
of discharges for the 33 clinically invalid codes we identified in the
FY 2018 IPPS/LTCH PPS final rule in the same MS-DRGs listed above.
According to the commenter, its findings of these invalid spinal fusion
procedure codes in the FY 2016 claims data comprise approximately 30
percent of all discharges for spinal fusion procedures.
The commenter expressed its appreciation that CMS is making efforts
to address coding inaccuracies within the classification and suggested
that CMS publish findings from its own review of spinal fusion coding
issues in those MS-DRGs where cases reporting spinal fusion procedures
are currently assigned and include a discussion of possible future
actions in the FY 2019 IPPS/LTCH PPS proposed rule. The commenter
believed that such an approach would allow time for stakeholder input
on any possible proposals along with time for the invalid codes to be
worked out of the datasets. The commenter also noted that publishing
CMS' findings will put the agency, as well as the public, in a better
position to address any potential payment issues for these services
beginning in FY 2021.
We thank the commenter for acknowledging the steps we have taken in
our efforts to address coding inaccuracies within the classification as
we continue to refine the ICD-10 MS-DRGs. We are not proposing any
changes to the MS-DRGs involving spinal fusion procedures for FY 2019.
However, in response to the commenter's suggestion and findings, we are
providing the results from our analysis of the September 2017 update of
the FY 2017 MedPAR claims data for the MS-DRGs involving spinal fusion
procedures.
We note that while the commenter stated that 87 codes were
identified from the upper and lower joint fusion tables in the ICD-10-
PCS classification and discussed at the September 12, 2017 ICD-10
Coordination and Maintenance Committee meeting to be deleted effective
October 1, 2018 (FY 2019), there were 99 spinal fusion codes identified
in the meeting materials, as shown in Table 6P.1g associated with this
proposed rule (which is available via the Internet on the CMS website
at: https://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/).
As shown in Table 6P.1g associated with this proposed rule, the 99
procedure codes describe spinal fusion procedures that have device
value ``Z'' representing No Device for the 6th character in the code.
Because a spinal fusion procedure always requires some type of device
(for example, instrumentation with bone graft or bone graft alone) to
facilitate the fusion of vertebral bones, these codes are considered
clinically invalid and were proposed for deletion at the September 12,
2017 ICD-10 Coordination and Maintenance Committee meeting. We received
public comments in support of the proposal to delete the 99 codes
describing a spinal fusion without a device, in addition to receiving
support for the deletion of other procedure codes describing fusion of
body sites other than the spine. A total of 213 procedure codes
describing fusion of a specific body part with device value ``Z'' No
Device are being deleted effective October 1, 2018 (FY 2019) as shown
in Table 6D.--Invalid Procedure Codes associated with this proposed
rule (which is available via the Internet on the CMS website at: https://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/).
We examined claims data from the September 2017 update of the FY
2017 MedPAR file for cases reporting any of the clinically invalid
spinal fusion procedures with device value ``Z'' No Device in MS-DRGs
028 (Spinal Procedures with MCC), 029 (Spinal Procedures with CC or
Spinal Neurostimulators), and 030 (Spinal Procedures without CC/MCC)
under

[[Page 20211]]

MDC 1 and MS-DRGs 453, 454, 455, 456, 457, 458, 459, 460, 471, 472, and
473 under MDC 8 (that are listed and shown earlier in this section).
Our findings are shown in the following tables.

Spinal Fusion Procedures
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 028--All cases........................................... 1,927 11.7 $37,524
MS-DRG 028--Cases with invalid spinal fusion procedures......... 132 13 52,034
MS-DRG 029--All cases........................................... 3,426 5.7 22,525
MS-DRG 029--Cases with invalid spinal fusion procedures......... 171 7.4 33,668
MS-DRG 030--All cases........................................... 1,578 3 15,984
MS-DRG 030--Cases with invalid spinal fusion procedures......... 52 2.6 22,471
MS-DRG 453--All cases........................................... 2,891 9.5 70,005
MS-DRG 453--Cases with invalid spinal fusion procedures......... 823 10.1 84,829
MS-DRG 454--All cases........................................... 12,288 4.7 47,334
MS-DRG 454--Cases with invalid spinal fusion procedures......... 2,473 5.4 59,814
MS-DRG 455--All cases........................................... 12,751 3 37,440
MS-DRG 455--Cases with invalid spinal fusion procedures......... 2,332 3.2 45,888
MS-DRG 456--All cases........................................... 1,439 11.5 66,447
MS-DRG 456--Cases with invalid spinal fusion procedures......... 404 12.5 71,385
MS-DRG 457--All cases........................................... 3,644 6 48,595
MS-DRG 457--Cases with invalid spinal fusion procedures......... 960 6.7 53,298
MS-DRG 458--All cases........................................... 1,368 3.6 37,804
MS-DRG 458--Cases with invalid spinal fusion procedures......... 244 4.1 43,182
MS-DRG 459--All cases........................................... 4,904 7.8 43,862
MS-DRG 459--Cases with invalid spinal fusion procedures......... 726 9 49,387
MS-DRG 460--All cases........................................... 59,459 3.4 29,870
MS-DRG 460--Cases with invalid spinal fusion procedures......... 5,311 3.9 31,936
MS-DRG 471--All cases........................................... 3,568 8.4 36,272
MS-DRG 471--Cases with invalid spinal fusion procedures......... 389 9.9 43,014
MS-DRG 472--All cases........................................... 15,414 3.2 21,836
MS-DRG 472--Cases with invalid spinal fusion procedures......... 1,270 4 25,780
MS-DRG 473--All cases........................................... 18,095 1.8 17,694
MS-DRG 473--Cases with invalid spinal fusion procedures......... 1,185 2.3 19,503
----------------------------------------------------------------------------------------------------------------

Summary Table for Spinal Fusion Procedures
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRGs 028, 029, 030, 453, 454, 455, 456, 457, 458, 459, 460, 142,752 3.9 $31,788
471, 472, and 473--All cases...................................
MS-DRGs 028, 029, 030, 453, 454, 455, 456, 457, 458, 459, 460, 16,472 5.1 42,929
471, 472, and 473--Cases with invalid spinal fusion procedures.
----------------------------------------------------------------------------------------------------------------

As shown in this summary table, we found a total of 142,752 cases
in MS-DRGs 028, 029, 030, 453, 454, 455, 456, 457, 458, 459, 460, 471,
472, and 473 with an average length of stay of 3.9 days and average
costs of $31,788. We found a total of 16,472 cases reporting a
procedure code for an invalid spinal fusion procedure with device value
``Z'' No Device across MS-DRGs 028, 029, and 030 under MDC 1 and MS-
DRGs 453, 454, 455, 456, 457, 458, 459, 460, 471, 472, and 473 under
MDC 8, with an average length of stay of 5.1 days and average costs of
$42,929. The results of the data analysis demonstrate that these
invalid spinal fusion procedures represent approximately 12 percent of
all discharges across the spinal fusion MS-DRGs. Because these
procedure codes describe clinically invalid procedures, we would not
expect these codes to be reported on any claims data. It is unclear why
providers assigned procedure codes for spinal fusion procedures with
the device value ``Z'' No Device. Our analysis did not examine whether
these claims were isolated to a specific provider or whether this
inaccurate reporting was widespread among a number of providers.
With regard to possible future action, we will continue to monitor
the claims data for resolution of the coding issues previously
identified. Because the procedure codes that we analyzed and presented
findings for in this FY 2019 IPPS/LTCH PPS proposed rule are no longer
in the classification effective October 1, 2018 (FY 2019), the claims
data that we examine for FY 2020 may still contain claims with the
invalid codes. As such, we will continue to collaborate with the AHA as
one of the four Cooperating Parties through the AHA's Coding Clinic for
ICD-10-CM/PCS and provide further education on spinal fusion procedures
and the proper reporting of the ICD-10-PCS spinal fusion procedure
codes. We agree with the commenter that until these coding inaccuracies
are no longer reflected in the claims data, it would be premature to
propose any MS-DRG modifications for spinal fusion procedures. Possible
MS-DRG modifications may include taking into account the approach that
was utilized in performing the spinal fusion procedure (for example,
open versus percutaneous).
For the reasons described, stated earlier in our discussion, we are
proposing to not make any changes to the spinal fusion MS-DRGs for FY
2019.

[[Page 20212]]

We are inviting public comments on our proposal.
7. MDC 9 (Diseases and Disorders of the Skin, Subcutaneous Tissue and
Breast): Cellulitis With Methicillin Resistant Staphylococcus Aureus
(MSRA) Infection
We received a request to reassign ICD-10-CM diagnosis codes
reported with a primary diagnosis of cellulitis and a secondary
diagnosis code of B95.62 (Methicillin resistant Staphylococcus aureus
infection as the cause of diseases classified elsewhere) or A49.02
(Methicillin resistant Staphylococcus aureus infection, unspecified
site). Currently, these cases are assigned to MS-DRG 602 (Cellulitis
with MCC) and MS-DRG 603 (Cellulitis without MCC) in MDC 9. The
requestor believed that cases of cellulitis with MSRA infection should
be reassigned to MS-DRG 867 (Other Infectious and Parasitic Diseases
Diagnoses with MCC) because MS-DRGs 602 and 603 include cases that do
not accurately reflect the severity of illness or risk of mortality for
patients diagnosed with cellulitis and MRSA. The requestor acknowledged
that the organism is not to be coded before the localized infection,
but stated in its request that patients diagnosed with cellulitis and
MRSA are entirely different from patients diagnosed only with
cellulitis. The requestor stated that there is a genuine threat to life
or limb in these cases. The requestor further stated that, with the
opioid crisis and the frequency of MRSA infection among this
population, cases of cellulitis with MRSA should be identified with a
specific combination code and assigned to MS-DRG 867.
We analyzed claims data from the September 2017 update of the FY
2017 MedPAR file for all cases assigned to MS-DRGs 602 and 603 and
subsets of these cases reporting a primary ICD-10-CM diagnosis of
cellulitis and a secondary diagnosis code of B95.62 or A49.02. Our
findings are shown in the following table.

----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 602--All cases........................................... 26,244 5.8 $10,034
MS-DRG 603--All cases........................................... 104,491 3.9 6,128
MS-DRGs 602 and 603--Cases reported with a primary diagnosis of 5,364 5.3 8,245
cellulitis and a secondary diagnosis of B95.62.................
MS-DRGs 602 and 603--Cases reported with a primary diagnosis of 309 5.4 8,832
cellulitis and a secondary diagnosis of A49.02.................
----------------------------------------------------------------------------------------------------------------

As shown in this table, we examined the subsets of cases in MS-DRGs
602 and 603 reported with a primary diagnosis of cellulitis and a
secondary diagnosis code B95.62 or A49.02. Both of these subsets of
cases had an average length of stay that was comparable to the average
length of stay for all cases in MS-DRG 602 and greater than the average
length of stay for all cases in MS-DRG 603, and average costs that were
lower than the average costs of all cases in MS-DRG 602 and higher than
the average costs of all cases in MS-DRG 603. As we have discussed in
prior rulemaking (77 FR 53309), it is a fundamental principle of an
averaged payment system that half of the procedures in a group will
have above average costs. It is expected that there will be higher cost
and lower cost subsets, especially when a subset has low numbers.
To examine the request to reassign ICD-10-CM diagnosis codes
reported with a primary diagnosis of cellulitis and a secondary
diagnosis code of B95.62 or A49.02 from MS-DRGs 602 and 603 to MS-DRG
867 (which would typically involve also reassigning those cases to the
two other severity level MS-DRGs 868 and 869 (Other Infectious and
Parasitic Diseases Diagnoses with CC and Other Infectious and Parasitic
Diseases Diagnoses without CC/MCC, respectively)), we then analyzed the
data for all cases in MS-DRGs 867, 868 and 869. The results of our
analysis are shown in the following table.

We compared the average length of stay and average costs for MS-
DRGs 867, 868, and 869 to the average length of stay and average costs
for the subsets of cases in MS-DRGs 602 and 603 reported with a primary
diagnosis of cellulitis and a secondary diagnosis code of B95.62 or
A49.02. We found that the average length of stay for these subsets of
cases was shorter and the average costs were lower than those for all
cases in MS-DRG 867, but that the average length of stay and average
costs were higher than those for all cases in MS-DRG 868 and MS-DRG
869. Our findings from the analysis of claims data do not support
reassigning cellulitis cases reported with ICD-10-CM diagnosis code
B95.62 or A49.02 from MS-DRGs 602 and 603 to MS-DRGs 867, 868 and 869.
Our clinical advisors noted that when a primary diagnosis of cellulitis
is accompanied by a secondary diagnosis of B95.62 or A49.02 in MS-DRGs
602 or 603, the combination of these primary and secondary diagnoses is
the reason for the hospitalization, and the level of acuity of these
subsets of patients is similar to other patients in MS-DRGs 602 and
603. Therefore, these cases are more clinically aligned with all cases
in MS-DRGs 602 and 603. For these reasons, we are not proposing to
reassign cellulitis cases reported with ICD-10-CM diagnosis code of
B95.62 or A49.02 to MS-DRG 867, 868, or 869 for FY 2019. We are
inviting public comments on our proposal to maintain the current MS-DRG
assignment for ICD-10-CM codes B95.62 and A49.02 when reported as
secondary diagnoses with a primary diagnosis of cellulitis.
8. MDC 10 (Endocrine, Nutritional and Metabolic Diseases and
Disorders): Acute Intermittent Porphyria
We received a request to revise the MS-DRG classification for cases
of

[[Page 20213]]

patients diagnosed with porphyria and reported with ICD-10-CM diagnosis
code E80.21 (Acute intermittent (hepatic) porphyria) to recognize the
resource requirements in caring for these patients, to ensure
appropriate payment for these cases, and to preserve patient access to
necessary treatments. Porphyria is defined as a group of rare disorders
(``porphyrias'') that interfere with the production of hemoglobin that
is needed for red blood cells. While some of these disorders are
genetic (inborn) and others are acquired, they all result in the
abnormal accumulation of hemoglobin building blocks, called porphyrins,
which can be deposited in the tissues where they particularly interfere
with the functioning of the nervous system and the skin. Treatment for
patients suffering from disorders of porphyrin metabolism consists of
an intravenous injection of Panhematin[reg] (hemin for injection). ICD-
10-CM diagnosis code E80.21 is currently assigned to MS-DRG 642 (Inborn
and Other Disorders of Metabolism). (We note that this issue has been
discussed previously in the FY 2013 IPPS/LTCH PPS proposed and final
rules (77 FR 27904 through 27905 and 77 FR 53311 through 53313,
respectively) and the FY 2015 IPPS/LTCH PPS proposed and final rules
(79 FR 28016 and 79 FR 49901, respectively).)
We analyzed claims data from the September 2017 update of the FY
2017 MedPAR file for cases assigned to MS-DRG 642. Our findings are
shown in the following table.

As shown in this table, cases reporting diagnosis code E80.21 as
the principal diagnosis in MS-DRG 642 had higher average costs and
longer average lengths of stay compared to the average costs and
lengths of stay for all other cases in MS-DRG 642.
To examine the request to reassign cases with ICD-10-CM diagnosis
code E80.21 as the principal diagnosis, we analyzed claims data for all
cases in MS-DRGs for endocrine disorders, including MS-DRG 643
(Endocrine Disorders with MCC), MS[dash]DRG 644 (Endocrine Disorders
with CC), and MS-DRG 645 (Endocrine Disorders without CC/MCC). The
results of our analysis are shown in the following table.

The data results showed that the average length of stay for the
subset of cases reporting ICD-10-CM diagnosis code E80.21 as the
principal diagnosis in MS-DRG 642 is lower than the average length of
stay for all cases in MS-DRG 643, but higher than the average length of
stay for all cases in MS-DRGs 644 and 645. The average costs for the
subset of cases reporting ICD-10-CM diagnosis code E80.21 as the
principal diagnosis in MS-DRG 642 are much higher than the average
costs for all cases in MS-DRGs 643, 644, and 645. However, after
considering these findings in the context of the current MS-DRG
structure, we were unable to identify an MS-DRG that would more closely
parallel these cases with respect to average costs and length of stay
that would also be clinically aligned. Our clinical advisors believe
that, in the current MS-DRG structure, the clinical characteristics of
patients in these cases are most closely aligned with the clinical
characteristics of patients in all cases in MS-DRG 642. Moreover, given
the small number of porphyria cases, we do not believe there is
justification for creating a new MS-DRG. Basing a new MS-DRG on such a
small number of cases could lead to distortions in the relative payment
weights for the MS-DRG because several expensive cases could impact the
overall relative payment weight. Having larger clinical cohesive groups
within an MS-DRG provides greater stability for annual updates to the
relative payment weights. In summary, we are not proposing to revise
the MS-DRG classification for porphyria cases. We are inviting public
comments on our proposal to maintain porphyria cases in MS-DRG 642.
9. MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract):
Admit for Renal Dialysis
We received a request to review the codes assigned to MS-DRG 685
(Admit for Renal Dialysis) to determine if the MS-DRG should be
deleted, or if it should remain as a valid MS-DRG. Currently, the ICD-
10-CM diagnosis codes shown in the table below are assigned to MS-DRG
685:

------------------------------------------------------------------------
ICD-10-CM code ICD-CM code title
------------------------------------------------------------------------
Z49.01.................... Encounter for fitting and adjustment of
extracorporeal dialysis catheter.
Z49.02.................... Encounter for fitting and adjustment of
peritoneal dialysis catheter.
Z49.31.................... Encounter for adequacy testing for
hemodialysis.
Z49.32.................... Encounter for adequacy testing for
peritoneal dialysis.
------------------------------------------------------------------------

[[Page 20214]]

The requestor stated that, under ICD-9-CM, diagnosis code V56.0
(Encounter for extracorporeal dialysis) was reported as the principal
diagnosis to identify patients who were admitted for an encounter for
dialysis. However, under ICD-10-CM, there is no comparable code in
which to replicate such a diagnosis. The requestor noted that, while
patients continue to be admitted under inpatient status (under certain
circumstances) for dialysis services, there is no existing ICD-10-CM
diagnosis code within the classification that specifically identifies a
patient being admitted for an encounter for dialysis services.
The requestor also noted that three of the four ICD-10-CM diagnosis
codes currently assigned to MS-DRG 685 are on the ``Unacceptable
Principal Diagnosis'' edit code list in the Medicare Code Editor (MCE).
Therefore, these codes are not allowed to be reported as a principal
diagnosis for an inpatient admission.
We examined claims data from the September 2017 update of the FY
2017 MedPAR file for cases reporting ICD-10-CM diagnosis codes Z49.01,
Z49.02, Z49.31, and Z49.32. Our findings are shown in the following
table.

Admit for Renal Dialysis Encounter
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 685--All cases........................................... 78 4 $8,871
MS-DRG 685--Cases reporting ICD-10-CM diagnosis code Z49.01..... 78 4 8,871
MS-DRG 685--Cases reporting ICD-10-CM diagnosis code Z49.02..... 0 0 0
MS-DRG 685--Cases reporting ICD-10-CM diagnosis code Z49.31..... 0 0 0
MS-DRG 685--Cases reporting ICD-10-CM diagnosis code Z49.32..... 0 0 0
----------------------------------------------------------------------------------------------------------------

As shown in the table above, for MS-DRG 685, there were a total of
78 cases reporting ICD-10-CM diagnosis code Z49.01, with an average
length of stay of 4 days and average costs of $8,871. There were no
cases reporting ICD-10-CM diagnosis code Z49.02, Z49.31, or Z49.32.
Our clinical advisors reviewed the clinical issues, as well as the
claims data for MS-DRG 685. Based on their review of the data analysis,
our clinical advisors recommended that MS-DRG 685 be deleted and ICD-
10-CM diagnosis codes Z49.01, Z49.02, Z49.31, and Z49.32 be reassigned.
Historically, patients were admitted as inpatients to receive
hemodialysis services. However, over time, that practice has shifted to
outpatient and ambulatory settings. Because of this change in medical
practice, we do not believe that it is appropriate to maintain a
vestigial MS-DRG, particularly due to the fact that the transition to
ICD-10 has resulted in three out of four codes that map to the MS-DRG
being precluded from being used as principal diagnosis codes on the
claim. In addition, our clinical advisors believe that reassigning the
ICD-10-CM diagnosis codes from MS-DRG 685 to MS-DRGs 698, 699, and 700
(Other Kidney and Urinary Tract Diagnoses with MCC, with CC, and
without CC\MCC, respectively) is clinically appropriate because the
reassignment will result in an accurate MS-DRG assignment of a specific
case or inpatient service and encounter based on acceptable principal
diagnosis codes under these MS-DRGs.
Therefore, for FY 2019, because there is no existing ICD-10-CM
diagnosis code within the classification system that specifically
identifies a patient being admitted for an encounter for dialysis
services and three of the four ICD-10-CM diagnosis codes, Z49.02,
Z49.31, and Z49.32, currently assigned to MS-DRG 685 are on the
Unacceptable Principal Diagnosis edit code list in the Medicare Code
Editor (MCE), we are proposing to delete MS-DRG 685 and reassign ICD-
10-CM diagnosis codes Z49.01, Z49.02, Z49.31, and Z49.32 from MS-DRG
685 to MS-DRGs 698, 699, and 700.
We are inviting public comments on our proposals.
10. MDC 14 (Pregnancy, Childbirth and the Puerperium)
In the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19834) and final
rule (82 FR 38036 through 38037), we noted that the MS-DRG logic
involving a vaginal delivery under MDC 14 is technically complex as a
result of the requirements that must be met to satisfy assignment to
the affected MS-DRGs. As a result, we solicited public comments on
further refinement to the following four MS-DRGs related to vaginal
delivery: MS-DRG 767 (Vaginal Delivery with Sterilization and/or D&C);
MS-DRG 768 (Vaginal Delivery with O.R. Procedure Except Sterilization
and/or D&C); MS-DRG 774 (Vaginal Delivery with Complicating Diagnosis);
and MS-DRG 775 (Vaginal Delivery without Complicating Diagnosis). In
addition, we sought public comments on further refinements to the
conditions defined as a complicating diagnosis in MS-DRG 774 and MS-DRG
781 (Other Antepartum Diagnoses with Medical Complications). We
indicated that we would review public comments received in response to
the solicitation as we continued to evaluate these MS-DRGs under MDC 14
and, if warranted, we would propose refinements for FY 2019. Commenters
were instructed to direct comments for consideration to the CMS MS-DRG
Classification Change Request Mailbox located at
[email protected] by November 1, 2017.
In response to our solicitation for public comments on the MS-DRGs
related to vaginal delivery, one commenter recommended that CMS convene
a workgroup that would include hospital staff and physicians to
systematically review the MDC 14 MS-DRGs and to identify which
conditions should appropriately be considered complicating diagnoses.
As an interim step, this commenter recommended that CMS consider the
following suggestions as a result of its own evaluation of MS-DRGs 767,
774 and 775.
For MS-DRG 767, the commenter recommended that the following ICD-
10-CM diagnosis codes and ICD-10-PCS procedure code be removed from the
GROUPER logic and provided the rationale for why the commenter
suggested removing each code.

[[Page 20215]]

Suggestions for MS-DRG 767
[Vaginal delivery with sterilization and/or D&C]
------------------------------------------------------------------------
Rationale for removing
ICD-10-CM code Code description code from MS-DRG 767
------------------------------------------------------------------------
O66.41.................. Failed attempted This code indicates
vaginal birth after that the attempt at
previous cesarean vaginal delivery has
delivery. failed.
O71.00.................. Rupture of uterus This code indicates
before onset of that the uterus has
labor, unspecified ruptured before onset
trimester. of labor and
therefore, a vaginal
delivery would not be
possible.
O82..................... Encounter for cesarean This code indicates
delivery without the encounter is for
indication. a cesarean delivery.
O75.82.................. Onset (spontaneous) of This code indicates
labor after 37 weeks this is a cesarean
of gestation but delivery.
before 39 completed
weeks, with delivery
by (planned) C-
section.
------------------------------------------------------------------------

For MS-DRG 774, the commenter recommended that the following ICD-
10-CM diagnosis codes be removed from the GROUPER logic and provided
the rationale for why the commenter suggested removing each code.

Suggestions for MS-DRG 774
[Vaginal delivery with Complicating Diagnoses]
------------------------------------------------------------------------
Rationale for removing
ICD-10-CM code Code description code from MS-DRG 774
------------------------------------------------------------------------
O66.41.................. Failed attempted This code indicates
vaginal birth after that the attempt at
previous cesarean vaginal delivery has
delivery. failed.
O71.00.................. Rupture of uterus This code indicates
before onset of that the uterus has
labor, unspecified ruptured before onset
trimester. of labor and
therefore, a vaginal
delivery would not be
possible.
O75.82.................. Onset (spontaneous) of This code indicates
labor after 37 weeks this is a planned
of gestation but cesarean delivery.
before 39 completed
weeks, with delivery
by (planned) C-
section.
O82..................... Encounter for cesarean This code indicates
delivery without the encounter is for
indication. a cesarean delivery.
O80..................... Encounter for full- According to the
term uncomplicated Official Guidelines
delivery. for Coding and
Reporting, ``Code O80
should be assigned
when a woman is
admitted for a full
term normal delivery
and delivers a
single, healthy
infant without any
complications
antepartum, during
the delivery, or
postpartum during the
delivery episode.''
------------------------------------------------------------------------

For MS-DRG 775, the commenter recommended that the following ICD-
10-CM diagnosis codes and ICD-10-PCS procedure code be removed from the
GROUPER logic and provided the rationale for why the commenter
suggested removing each code.

Suggestions for MS-DRG 775
[Vaginal delivery without complicating diagnoses]
------------------------------------------------------------------------
Rationale for removing
ICD-10-CM code Code description code from MS-DRG 775
------------------------------------------------------------------------
O66.41.................. Failed attempted This code indicates
vaginal birth after that the attempt at
previous cesarean vaginal delivery has
delivery. failed.
O69.4XX0................ Labor and delivery According to the
complicated by vasa physicians consulted,
previa, not vasa previa always
applicable or results in C-section.
unspecified. Research indicates
that when vasa previa
is diagnosed, C-
section before labor
begins can save the
baby's life.

[[Page 20216]]

O69.4XX2................ Labor and delivery According to the
complicated by vasa physicians consulted,
previa, fetus 2. vasa previa always
results in C-section.
Research indicates
that when vasa previa
is diagnosed, C-
section before labor
begins can save the
baby's life.
O69.4XX3................ Labor and delivery According to the
complicated by vasa physicians consulted,
previa, fetus 3. vasa previa always
results in C-section.
Research indicates
that when vasa previa
is diagnosed, C-
section before labor
begins can save the
baby's life.
O69.4XX4................ Labor and delivery According to the
complicated by vasa physicians consulted,
previa, fetus 4. vasa previa always
results in C-section.
Research indicates
that when vasa previa
is diagnosed, C-
section before labor
begins can save the
baby's life.
O69.4XX5................ Labor and delivery According to the
complicated by vasa physicians consulted,
previa, fetus 5. vasa previa always
results in C-section.
Research indicates
that when vasa previa
is diagnosed, C-
section before labor
begins can save the
baby's life.
O69.4XX9................ Labor and delivery According to the
complicated by vasa physicians consulted,
previa, other fetus. vasa previa always
results in C-section.
Research indicates
that when vasa previa
is diagnosed, C-
section before labor
begins can save the
baby's life.
O71.00.................. Rupture of uterus This code indicates
before onset of that the uterus has
labor, unspecified ruptured before onset
trimester. of labor and
therefore, a vaginal
delivery would not be
possible.
O82..................... Encounter for cesarean This code indicates
delivery without the encounter is for
indication. a cesarean delivery.
------------------------------------------------------------------------

Suggestions for MS-DRG 775
[Vaginal delivery without Complicating Diagnosis]
------------------------------------------------------------------------
Rationale for removing
ICD-10-CM code Code description code from MS-DRG 775
------------------------------------------------------------------------
10A07Z6................. Abortion of Products This code indicates
of Conception, the procedure to be
Vacuum, Via Natural an abortion rather
or Artificial Opening. than a vaginal
delivery.
------------------------------------------------------------------------

Another commenter agreed that the MS-DRG logic for a vaginal
delivery under MDC 14 is technically complex and provided examples to
illustrate these facts. For instance, the commenter noted that the
GROUPER logic code lists appear redundant with several of the same
codes listed for different MS-DRGs and that the GROUPER logic code list
for a vaginal delivery in MS-DRG 774 is comprised of diagnosis codes
while the GROUPER logic code list for a vaginal delivery in MS-DRG 775
is comprised of procedure codes. The commenter also noted that several
of the ICD-10-CM diagnosis codes shown in the table below that became
effective with discharges on and after October 1, 2016 (FY 2017) or
October 1, 2017 (FY 2018) appear to be missing from the GROUPER logic
code lists for MS-DRGs 781 and 774.

------------------------------------------------------------------------
ICD-10-CM code Code description
------------------------------------------------------------------------
O11.4..................... Pre-existing hypertension with pre-
eclampsia, complicating childbirth.
O11.5..................... Pre-existing hypertension with pre-
eclampsia, complicating the puerperium.
012.04.................... Gestational edema, complicating childbirth.
012.05.................... Gestational edema, complicating the
puerperium.
012.14.................... Gestational proteinuria, complicating
childbirth.
012.15.................... Gestational proteinuria, complicating the
puerperium.
012.24.................... Gestational edema with proteinuria,
complicating childbirth.
012.25.................... Gestational edema with proteinuria,
complicating the puerperium.
O13.4..................... Gestational [pregnancy-induced] hypertension
without significant proteinuria,
complicating childbirth.
O13.5..................... Gestational [pregnancy-induced] hypertension
without significant proteinuria,
complicating the puerperium.
O14.04.................... Mild to moderate pre-eclampsia, complicating
childbirth.
O14.05.................... Mild to moderate pre-eclampsia, complicating
the puerperium.
O14.14.................... Severe pre-eclampsia, complicating
childbirth.
O14.15.................... Severe pre-eclampsia, complicating the
puerperium.
O14.24.................... HELLP syndrome, complicating childbirth.
O14.25.................... HELLP syndrome, complicating the puerperium.
O14.94.................... Unspecified pre-eclampsia, complicating
childbirth.
O14.95.................... Unspecified pre-eclampsia, complicating the
puerperium.
O15.00.................... Eclampsia complicating pregnancy,
unspecified trimester.

[[Page 20217]]

O15.02.................... Eclampsia complicating pregnancy, second
trimester.
O15.03.................... Eclampsia complicating pregnancy, third
trimester.
O15.1..................... Eclampsia complicating labor.
O15.2..................... Eclampsia complicating puerperium, second
trimester.
O16.4..................... Unspecified maternal hypertension,
complicating childbirth.
O16.5..................... Unspecified maternal hypertension,
complicating the puerperium.
O24.415................... Gestational diabetes mellitus in pregnancy,
controlled by oral hypoglycemic drugs.
O24.425................... Gestational diabetes mellitus in childbirth,
controlled by oral hypoglycemic drugs.
O24.435................... Gestational diabetes mellitus in puerperium,
controlled by oral hypoglycemic drugs.
O44.20.................... Partial placenta previa NOS or without
hemorrhage, unspecified trimester.
O44.21.................... Partial placenta previa NOS or without
hemorrhage, first trimester.
O44.22.................... Partial placenta previa NOS or without
hemorrhage, second trimester.
O44.23.................... Partial placenta previa NOS or without
hemorrhage, third trimester.
O44.30.................... Partial placenta previa with hemorrhage,
unspecified trimester.
O44.31.................... Partial placenta previa with hemorrhage,
first trimester.
O44.32.................... Partial placenta previa with hemorrhage,
second trimester.
O44.33.................... Partial placenta previa with hemorrhage,
third trimester.
O44.40.................... Low lying placenta NOS or without
hemorrhage, unspecified trimester.
O44.41.................... Low lying placenta NOS or without
hemorrhage, first trimester.
O44.42.................... Low lying placenta NOS or without
hemorrhage, second trimester.
O44.43.................... Low lying placenta NOS or without
hemorrhage, third trimester.
O44.50.................... Low lying placenta with hemorrhage,
unspecified trimester.
O44.51.................... Low lying placenta with hemorrhage, first
trimester.
O44.52.................... Low lying placenta with hemorrhage, second
trimester.
O44.53.................... Low lying placenta with hemorrhage, third
trimester.
O70.20.................... Third degree perineal laceration during
delivery, unspecified.
O70.21.................... Third degree perineal laceration during
delivery, IIIa.
O70.22.................... Third degree perineal laceration during
delivery, IIIb.
O70.23.................... Third degree perineal laceration during
delivery, IIIc.
O86.11.................... Cervicitis following delivery.
O86.12.................... Endometritis following delivery.
O86.13.................... Vaginitis following delivery.
O86.19.................... Other infection of genital tract following
delivery.
O86.20.................... Urinary tract infection following delivery,
unspecified.
O86.21.................... Infection of kidney following delivery.
O86.22.................... Infection of bladder following delivery.
O86.29.................... Other urinary tract infection following
delivery.
O86.81.................... Puerperal septic thrombophlebitis.
O86.89.................... Other specified puerperal infections.
------------------------------------------------------------------------

Lastly, the commenter stated that the list of ICD-10-PCS procedure
codes appears comprehensive, but indicated that inpatient coding is not
their expertise. We note that it was not clear which list of procedure
codes the commenter was specifically referencing. The commenter did not
provide a list of any procedure codes for CMS to review or reference a
specific MS-DRG in its comment.
Another commenter expressed concern that ICD-10-PCS procedure codes
10D17Z9 (Manual extraction of products of conception, retained, via
natural or artificial opening) and 10D18Z9 (Manual extraction of
products of conception, retained, via natural or artificial opening
endoscopic) are not assigned to the appropriate MS-DRG. ICD-10-PCS
procedure codes 10D17Z9 and 10D18Z9 describe the manual removal of a
retained placenta and are currently assigned to MS-DRG 767 (Vaginal
Delivery with Sterilization and/or D&C). According to the commenter, a
patient that has a vaginal delivery with manual removal of a retained
placenta is not having a sterilization or D&C procedure. The commenter
noted that, under ICD-9-CM, a vaginal delivery with manual removal of
retained placenta grouped to MS-DRG 774 (Vaginal Delivery with
Complicating Diagnosis) or MS-DRG 775 (Vaginal Delivery without
Complicating Diagnosis). The commenter suggested CMS review these
procedure codes for appropriate MS-DRG assignment under the ICD-10 MS-
DRGs.
We thank the commenters and appreciate the recommendations and
suggestions provided in response to our solicitation for comments on
the GROUPER logic for the MS-DRGs involving a vaginal delivery or
complicating diagnosis under MDC 14. With regard to the commenter who
recommended that we convene a workgroup that would include hospital
staff and physicians to systematically review the MDC 14 MS-DRGs and to
identify which conditions should appropriately be considered
complicating diagnoses, we note that we formed an internal workgroup
comprised of clinical advisors that included physicians, coding
specialists, and other IPPS policy staff that assisted in our review of
the GROUPER logic for a vaginal delivery and complicating diagnoses. We
also received clinical input from 3M/Health Information Systems (HIS)
staff, which, under contract with CMS, is responsible for updating and
maintaining the GROUPER program. We note that our analysis involved
other MS-DRGs under MDC 14, in addition to those for which we
specifically solicited public comments. As one of the other commenters
correctly pointed out, there is redundancy, with several of the same
codes listed for different MS-DRGs. Below we provide a summary of our
internal analysis with responses to the commenters' recommendations and
suggestions incorporated into the applicable sections. We refer readers
to the ICD-10 MS-DRG Version 35 Definitions Manual located via the
Internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-
Fee-

[[Page 20218]]

for-Service-Payment/AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-
Items/FY2018-IPPS-Final-Rule-Data-
Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending for
documentation of the GROUPER logic associated with the MDC 14 MS-DRGs
to assist in the review of our discussion that follows.
We started our evaluation of the GROUPER logic for the MS-DRGs
under MDC 14 by first reviewing the current concepts that exist. For
example, there are ``groups'' for cesarean section procedures, vaginal
delivery procedures, and abortions. There also are groups where no
delivery occurs, and lastly, there are groups for after the delivery
occurs, or the ``postpartum'' period. These groups are then further
subdivided based on the presence or absence of complicating conditions
or the presence of another procedure. We examined how we could simplify
some of the older, complex GROUPER logic and remain consistent with the
structure of other ICD-10 MS-DRGs. We identified the following MS-DRGs
for closer review, in addition to MS-DRG 767, MS-DRG 768, MS-DRG 774,
MS-DRG 775 and MS-DRG 781.

------------------------------------------------------------------------
MS-DRG Description
------------------------------------------------------------------------
MS-DRG 765................ Cesarean Section with CC/MCC.
MS-DRG 766................ Cesarean Section without CC/MCC.
MS-DRG 769................ Postpartum and Post Abortion Diagnoses with
O.R. Procedure.
MS-DRG 770................ Abortion with D&C, Aspiration Curettage or
Hysterotomy.
MS-DRG 776................ Postpartum and Post Abortion Diagnoses
without O.R. Procedure.
MS-DRG 777................ Ectopic Pregnancy.
MS-DRG 778................ Threatened Abortion.
MS-DRG 779................ Abortion without D&C.
MS-DRG 780................ False Labor.
MS-DRG 782................ Other Antepartum Diagnoses without Medical
Complications.
------------------------------------------------------------------------

The first issue we reviewed was the GROUPER logic for complicating
conditions (MS-DRGs 774 and 781). Because one of the main objectives in
our transition to the MS-DRGs was to better recognize the severity of
illness of a patient, we believed we could structure the vaginal
delivery and other MDC 14 MS-DRGs in a similar way. Therefore, we began
working with the concept of vaginal delivery ``with MCC, with CC and
without CC/MCC'' to replace the older, ``complicating conditions''
logic.
Next, we compared the additional GROUPER logic that exists between
the vaginal delivery and the cesarean section MS-DRGs (MS-DRGs 765,
766, 767, 774, and 775). Currently, the vaginal delivery MS-DRGs take
into account a sterilization procedure; however, the cesarean section
MS-DRGs do not. Because a patient can have a sterilization procedure
performed along with a cesarean section procedure, we adopted a working
concept of ``cesarean section with and without sterilization with MCC,
with CC and without CC/MCC'', as well as ``vaginal delivery with and
without sterilization with MCC, with CC and without CC/MCC''.
We then reviewed the GROUPER logic for the MS-DRGs involving
abortion and where no delivery occurs (MS-DRGs 770, 777, 778, 779, 780,
and 782). We believed that we could consolidate the groups in which no
delivery occurs.
Finally, we considered the GROUPER logic for the MS-DRGs related to
the postpartum period (MS-DRGs 769 and 776) and determined that the
structure of these MS-DRGs did not appear to require modification.
After we established those initial working concepts for the MS-DRGs
discussed above, we examined the list of the ICD-10-PCS procedure codes
that comprise the sterilization procedure GROUPER logic for the vaginal
delivery MS-DRG 767. We identified the two manual extraction of
placenta codes that the commenter had brought to our attention (ICD-10-
PCS codes 10D17Z9 and 10D18Z9). We also identified two additional
procedure codes, ICD-10-PCS codes 10D17ZZ (Extraction of products of
conception, retained, via natural or artificial opening) and 10D18ZZ
(Extraction of products of conception, retained, via natural or
artificial opening endoscopic) in the list that are not sterilization
procedures. Two of the four procedure codes describe manual extraction
(removal) of retained placenta and the other two procedure codes
describe dilation and curettage procedures. We then identified four
more procedure codes in the list that do not describe sterilization
procedures. ICD-10-PCS procedure codes 0UDB7ZX (Extraction of
endometrium, via natural or artificial opening, diagnostic), 0UDB7ZZ
(Extraction of endometrium, via natural or artificial opening), 0UDB8ZX
(Extraction of endometrium, via natural or artificial opening
endoscopic, diagnostic), and 0UDB8ZZ (Extraction of endometrium, via
natural or artificial opening endoscopic) describe dilation and
curettage procedures that can be performed for diagnostic or
therapeutic purposes. We believe that these ICD-10-PCS procedure codes
would be more appropriately assigned to MDC 13 (Diseases and Disorders
of the Female Reproductive System) in MS-DRGs 744 and 745 (D&C,
Conization, Laparascopy and Tubal Interruption with and without CC/MCC,
respectively) and, therefore, removed them from our working list of
sterilization and/or D&C procedures. Because the GROUPER logic for MS-
DRG 767 includes both sterilization and/or D&C, we agreed that all the
other procedure codes currently included under that logic list of
sterilization procedures should remain, with the exception of the two
identified by the commenter. Therefore, we agree with the commenter
that the manual extraction of retained placenta procedure codes should
be reassigned to a more clinically appropriate vaginal delivery MS-DRG
because they are not describing sterilization procedures.
Our attention then turned to other MDC 14 GROUPER logic code lists
starting with the ``CC for C-section'' list under MS-DRGs 765 and 766
(Cesarean Section with and without CC/MCC, respectively). As noted
earlier in this section, in conducting our review, we considered how we
could utilize the severity level concept (with MCC, with CC, and
without CC/MCC) where applicable. Consistent with this approach, we
removed the ``CC for C-section'' logic from these MS-DRGs as part of
our working concept and efforts to refine MDC 14. We determined it
would be less complicated to simply allow the existing ICD-10
MS[dash]DRG CC and MCC code list logic to apply for these MS-DRGs.
Next, we reviewed the logic code lists for ``Malpresentation'' and
``Twins'' and concluded that this logic was not necessary for the
cesarean section MS-DRGs because these are

[[Page 20219]]

describing antepartum conditions and it is the procedure of the
cesarean section that determines whether or not a patient would be
classified to these MS-DRGs. Therefore, those code lists were also
removed for purposes of our working concept. With regard to the
``Operating Room Procedure'' code list, we agreed there should be no
changes. However, we note that the title to ICD-10-PCS procedure code
10D00Z0 (Extraction of products of conception, classical, open
approach) is being revised effective October 1, 2018, to replace the
term ``classical'' with ``high'' and ICD-10-PCS procedure code 10D00Z1
(Extraction of products of conception, low cervical, open approach) is
being revised to replace the term ``low cervical'' to ``low''. These
revisions are also shown in Table 6F--Revised Procedure Code Titles
available via the Internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/.
Next, we reviewed the ``Delivery Procedure'' and ``Delivery
Outcome'' GROUPER logic code lists for the vaginal delivery MS-DRGs
767, 768, 774, and 775. We identified ICD-10-PCS procedure code 10A0726
(Abortion of products of conception, vacuum, via natural or artificial
opening) and ICD-10-PCS procedure code 10S07ZZ (Reposition products of
conception, via natural or artificial opening) under the ``Delivery
Procedure'' code list as procedure codes that should not be included
because ICD-10-PCS procedure code 10A07Z6 describes an abortion
procedure and ICD-10-PCS procedure code 10S07ZZ describes repositioning
of the fetus and does not indicate a delivery took place. We also note
that, as described earlier in this discussion, a commenter recommended
that ICD-10-PCS procedure code 10A07Z6 be removed from the GROUPER
logic specifically for MS-DRGs 767 and 775. Therefore, we removed these
two procedure codes from the logic code list for ``Delivery Procedure''
in MS-DRGs 767, 768, 774, and 775. We agreed with the commenter that
ICD-10-PCS procedure code 10A07Z6 would be more appropriately assigned
to one of the Abortion MS-DRGs. For the remaining procedures currently
included in the ``Delivery Procedure'' code list we considered which
procedures would be expected to be performed during the course of a
standard, uncomplicated delivery episode versus those that would
reasonably be expected to require additional resources outside of the
delivery room. The list of procedure codes we reviewed is shown in the
following table.

------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
0DQP7ZZ................... Repair rectum, via natural or artificial
opening.
0DQQ0ZZ................... Repair anus, open approach.
0DQQ3ZZ................... Repair anus, percutaneous approach.
0DQQ4ZZ................... Repair anus, percutaneous endoscopic
approach.
0DQQ7ZZ................... Repair anus, via natural or artificial
opening.
0DQQ8ZZ................... Repair anus, via natural or artificial
opening endoscopic.
0DQR0ZZ................... Repair anal sphincter, open approach.
0DQR3ZZ................... Repair anal sphincter, percutaneous
approach.
0DQR4ZZ................... Repair anal sphincter, percutaneous
endoscopic approach.
------------------------------------------------------------------------

While we acknowledge that these procedures may be performed to treat
obstetrical lacerations as discussed in prior rulemaking (81 FR 56853),
we also believe that these procedures would reasonably be expected to
require a separate operative episode and would not be performed
immediately at the time of the delivery. Therefore, we removed those
procedure codes describing repair of the rectum, anus, and anal
sphincter shown in the table above from our working concept list of
procedures to consider for a vaginal delivery. Our review of the list
of diagnosis codes for the ``Delivery Outcome'' as a secondary
diagnosis did not prompt any changes. We agreed that the current list
of diagnosis codes continues to appear appropriate for describing the
outcome of a delivery.
As the purpose of our analysis and this review was to clarify what
constitutes a vaginal delivery to satisfy the ICD-10 MS-DRG logic for
the vaginal delivery MS-DRGs, we believed it was appropriate to expect
that a procedure code describing the vaginal delivery or extraction of
``products of conception'' procedure and a diagnosis code describing
the delivery outcome should be reported on every claim in which a
vaginal delivery occurs. This is also consistent with Section
I.C.15.b.5 of the ICD-10-CM Official Guidelines for Coding and
Reporting, which states ``A code from category Z37, Outcome of
delivery, should be included on every maternal record when a delivery
has occurred. These codes are not to be used on subsequent records or
on the newborn record.'' Therefore, we adopted the working concept
that, regardless of the principal diagnosis, if there is a procedure
code describing the vaginal delivery or extraction of ``products of
conception'' procedure and a diagnosis code describing the delivery
outcome, this logic would result in assignment to a vaginal delivery
MS-DRG. We note that, as a result of this working concept, there would
no longer be a need to maintain the ``third condition'' list under MS-
DRG 774. In addition, as noted earlier in this discussion, because we
were working with the concept of vaginal delivery ``with MCC, with CC,
and without CC/MCC'' to replace the older, ``complicating conditions''
logic, there would no longer be a need to maintain the ``second
condition'' list of complicating diagnosis under MS-DRG 774.
We then reviewed the GROUPER logic code list of ``Or Other O.R.
procedures'' (MS-DRG 768) to determine if any changes to these lists
were warranted. Similar to our analysis of the procedures listed under
the ``Delivery Procedure'' logic code list, our examination of the
procedures currently described in the ``Or Other O.R. procedures''
procedure code list also considered which procedures would be expected
to be performed during the course of a standard, uncomplicated delivery
episode versus those that would reasonably be expected to require
additional resources outside of the delivery room. Our analysis of all
the procedures resulted in the working concept to allow all O.R.
procedures to be applicable for assignment to MS-DRG 768, with the
exception of the procedure codes for sterilization and/or D&C and ICD-
10-PCS procedure codes 0KQM0ZZ (Repair perineum muscle, open approach)
and 0UJM0ZZ (Inspection of vulva, open approach),

[[Page 20220]]

which we determined would be reasonably expected to be performed during
a standard delivery episode and, therefore, assigned to MS-DRG 774 or
MS-DRG 775. We also note that, this working concept for MS-DRG 768
would eliminate vaginal delivery cases with an O.R. procedure grouping
to the unrelated MS[dash]DRGs because all O.R. procedures would be
included in the GROUPER logic procedure code list for ``Or Other O.R.
Procedures''.
The next set of MS-DRGs we examined more closely included MS-DRGs
777, 778, 780, 781, and 782. We believed that, because the conditions
in these MS-DRGs are all describing antepartum related conditions, we
could group the conditions together clinically. Diagnoses described as
occurring during pregnancy and diagnoses specifying a trimester or
maternal care in the absence of a delivery procedure reported were
considered antepartum conditions. We also believed we could better
classify these groups of patients based on the presence or absence of a
procedure. Therefore, we worked with the concept of ``antepartum
diagnoses with and without O.R. procedure''.
As noted earlier in the discussion, we adopted a working concept of
``cesarean section with and without sterilization with MCC, with CC,
and without CC/MCC.'' This concept is illustrated in the following
table and includes our suggested modifications.

Suggested Modifications to MS-DRGs for MDC 14
[Pregnancy, childbirth and the puerperium]
------------------------------------------------------------------------

-------------------------------------------------------------------------
DELETE 2 MS-DRGs:
MS-DRG 765 (Cesarean Section with CC/MCC).
MS-DRG 766 (Cesarean Section without CC/MCC).
CREATE 6 MS-DRGs:
MS-DRG XXX (Cesarean Section with Sterilization with MCC).
MS-DRG XXX (Cesarean Section with Sterilization with CC).
MS-DRG XXX (Cesarean Section with Sterilization without CC/MCC).
MS-DRG XXX (Cesarean Section without Sterilization with MCC).
MS-DRG XXX (Cesarean Section without Sterilization with CC).
MS-DRG XXX (Cesarean Section without Sterilization without CC/MCC).
------------------------------------------------------------------------

As shown in the table, we suggest deleting MS-DRGs 765 and 766. We
also suggest creating 6 new MS-DRGs that are subdivided by a 3-way
severity level split that includes ``with Sterilization'' and ``without
Sterilization''.
We also adopted a working concept of ``vaginal delivery with and
without sterilization with MCC, with CC, and without CC/MCC''. This
concept is illustrated in the following table and includes our
suggested modifications.

Suggested Modifications to MS-DRGs for MDC 14
[Pregnancy, childbirth and the puerperium]
------------------------------------------------------------------------

-------------------------------------------------------------------------
DELETE 3 MS-DRGs:
MS-DRG 767 (Vaginal Delivery with Sterilization and/or D&C).
MS-DRG 774 (Vaginal Delivery with Complicating Diagnosis).
MS-DRG 775 (Vaginal Delivery without Complicating Diagnosis).
CREATE 6 MS-DRGs:
MS-DRG XXX (Vaginal Delivery with Sterilization/D&C with MCC).
MS-DRG XXX (Vaginal Delivery with Sterilization/D&C with CC).
MS-DRG XXX (Vaginal Delivery with Sterilization/D&C without CC/MCC).
MS-DRG XXX (Vaginal Delivery without Sterilization/D&C with MCC).
MS-DRG XXX (Vaginal Delivery without Sterilization/D&C with CC).
MS-DRG XXX (Vaginal Delivery without Sterilization/D&C without CC/
MCC).
------------------------------------------------------------------------

As shown in the table, we suggest deleting MS-DRGs 767, 774, and
775. We also suggest creating 6 new MS-DRGs that are subdivided by a 3-
way severity level split that includes ``with Sterilization/D&C'' and
``without Sterilization/D&C''.
In addition, as indicated above, we believed that we could
consolidate the groups in which no delivery occurs. We believe that
consolidating MS-DRGs where clinically coherent conditions exist is
consistent with our approach to MS-DRG reclassification and our
continued refinement efforts. This concept is illustrated in the
following table and includes our suggested modifications.

Suggested Modifications to MS-DRGs for MDC 14
[Pregnancy, childbirth and the puerperium]
------------------------------------------------------------------------

-------------------------------------------------------------------------
DELETE 5 MS-DRGs:
MS-DRG 777 (Ectopic Pregnancy).
MS-DRG 778 (Threatened Abortion).
MS-DRG 780 (False Labor).
MS-DRG 781 (Other Antepartum Diagnoses with Medical Complications).
MS-DRG 782 (Other Antepartum Diagnoses without Medical Complications).
CREATE 6 MS-DRGs:
MS-DRG XXX (Other Antepartum Diagnoses with O.R. Procedure with MCC).
MS-DRG XXX (Other Antepartum Diagnoses with O.R. Procedure with CC).
MS-DRG XXX (Other Antepartum Diagnoses with O.R. Procedure without CC/
MCC).
MS-DRG XXX (Other Antepartum Diagnoses without O.R. Procedure with
MCC).
MS-DRG XXX (Other Antepartum Diagnoses without O.R. Procedure with
CC).
MS-DRG XXX (Other Antepartum Diagnoses without O.R. Procedure without
CC/MCC).
------------------------------------------------------------------------

As shown in the table, we suggest deleting MS-DRGs 777, 778, 780,
781, and 782. We also suggest creating 6 new MS-DRGs that are
subdivided by a 3-way severity level split that includes ``with O.R.
Procedure'' and ``without O.R. Procedure''.
Once we established each of these fundamental concepts from a
clinical perspective, we were able to analyze the data to determine if
our initial suggested modifications were supported.
To analyze our suggested modifications for the cesarean section and
vaginal delivery MS-DRGs, we examined the claims data from the
September 2017 update of the FY 2017 MedPAR file for MS-DRGs 765, 766,
767, 768, 774, and 775.

MS-DRGs for MDC 14 Pregnancy, Childbirth and the Puerperium
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 765 (Cesarean Section with CC/MCC)--All cases............ 3,494 4.6 $8,929
MS-DRG 766 (Cesarean Section without CC/MCC)--All cases......... 1,974 3.1 6,488
MS-DRG 767 (Vaginal Delivery with Sterilization and/or D&C)--All 351 3.2 7,886
cases..........................................................
MS-DRG 768 (Vaginal Delivery with O.R. Procedure Except 17 6.2 26,164
Sterilization and/or D&C)--All cases...........................
MS-DRG 774 (Vaginal Delivery with Complicating Diagnosis)--All 1,650 3.3 6,046
cases..........................................................
MS-DRG 775 (Vaginal Delivery without Complicating Diagnosis)-- 4,676 2.4 4,769
All cases......................................................
----------------------------------------------------------------------------------------------------------------

[[Page 20221]]

As shown in the table, there were a total of 3,494 cases in MS-DRG
765, with an average length of stay of 4.6 days and average costs of
$8,929. For MS-DRG 766, there were a total of 1,974 cases, with an
average length of stay of 3.1 days and average costs of $6,488. For MS-
DRG 767, there were a total of 351 cases, with an average length of
stay of 3.2 days and average costs of $ 7,886. For MS-DRG 768, there
were a total of 17 cases, with an average length of stay of 6.2 days
and average costs of $26,164. For MS-DRG 774, there were a total of
1,650 cases, with an average length of stay of 3.3 days and average
costs of $6,046. Lastly, for MS-DRG 775, there were a total of 4,676
cases, with an average length of stay of 2.4 days and average costs of
$4,769.
To compare and analyze the impact of our suggested modifications,
we ran a simulation using the Version 35 ICD-10 MS-DRG GROUPER. The
following table reflects our findings for the suggested Cesarean
Section MS-DRGs with a 3-way severity level split.

Suggested MS-DRGs for Cesarean Section
----------------------------------------------------------------------------------------------------------------
Number of Average Length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 783 (Cesarean Section with Sterilization with MCC)....... 178 6.4 $12,977
MS-DRG 784 (Cesarean Section with Sterilization with CC)........ 511 4.1 8,042
MS-DRG 785 (Cesarean Section with Sterilization without CC/MCC). 475 3.0 6,259
MS-DRG 786 (Cesarean Section without Sterilization with MCC).... 707 5.9 11,515
MS-DRG 787 (Cesarean Section without Sterilization with CC)..... 1,887 4.2 7,990
MS-DRG 788 (Cesarean Section without Sterilization without CC/ 1,710 3.3 6,663
MCC)...........................................................
----------------------------------------------------------------------------------------------------------------

As shown in the table, there were a total of 178 cases for the
cesarean section with sterilization with MCC group, with an average
length of stay of 6.4 days and average costs of $12,977. There were a
total of 511 cases for the cesarean section with sterilization with CC
group, with an average length of stay of 4.1 days and average costs of
$8,042. There were a total of 475 cases for the cesarean section with
sterilization without CC/MCC group, with an average length of stay of
3.0 days and average costs of $6,259. For the cesarean section without
sterilization with MCC group there were a total of 707 cases, with an
average length of stay of 5.9 days and average costs of $11,515. There
were a total of 1,887 cases for the cesarean section without
sterilization with CC group, with an average length of stay of 4.2 days
and average costs of $7,990. Lastly, there were a total of 1,710 cases
for the cesarean section without sterilization without CC/MCC group,
with an average length of stay of 3.3 days and average costs of $6,663.
The following table reflects our findings for the suggested Vaginal
Delivery MS-DRGs with a 3-way severity level split.

Suggested MS-DRGs for Vaginal Delivery
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 796 (Vaginal Delivery with Sterilization/D&C with MCC)... 25 6.7 $11,421
MS-DRG 797 (Vaginal Delivery with Sterilization/D&C with CC).... 63 2.4 6,065
MS-DRG 798 (Vaginal Delivery with Sterilization/D&C without CC/ 126 2.3 6,697
MCC)...........................................................
MS-DRG 805 (Vaginal Delivery without Sterilization/D&C with MCC) 406 5.0 9,605
MS-DRG 806 (Vaginal Delivery without Sterilization/D&C with CC). 1,952 2.9 5,506
MS-DRG 807 (Vaginal Delivery without Sterilization/D&C without 4,105 2.3 4,601
CC/MCC)........................................................
----------------------------------------------------------------------------------------------------------------

As shown in the table, there were a total of 25 cases for the
vaginal delivery with sterilization/D&C with MCC group, with an average
length of stay of 6.7 days and average costs of $11,421. There were a
total of 63 cases for the vaginal delivery with sterilization/D&C with
CC group, with an average length of stay of 2.4 days and average costs
of $6,065. There were a total of 126 cases for vaginal delivery with
sterilization/D&C without CC/MCC group, with an average length of stay
of 2.3 days and average costs of $6,697. There were a total of 406
cases for the vaginal delivery without sterilization/D&C with MCC
group, with an average length of stay of 5.0 days and average costs of
$9,605. There were a total of 1,952 cases for the vaginal delivery
without sterilization/D&C with CC group, with an average length of stay
of 2.9 days and average costs of $5,506. There were a total of 4,105
cases for the vaginal delivery without sterilization/D&C without CC/MCC
group, with an average length of stay of 2.3 days and average costs of
$4,601.
We then reviewed the claims data from the September 2017 update of
the FY 2017 MedPAR file for MS-DRGs 777, 778, 780, 781, and 782. Our
findings are shown in the following table.

[[Page 20222]]

MS-DRG 780 (False Labor)--All cases............................. 41 2.1 3,045
MS-DRG 781 (Other Antepartum Diagnoses with Medical 2,333 3.7 5,817
Complications)--All cases......................................
MS-DRG 782 (Other Antepartum Diagnoses without Medical 70 2.1 3,381
Complications)--All cases......................................
----------------------------------------------------------------------------------------------------------------

As shown in the table, there were a total of 72 cases in MS-DRG
777, with an average length of stay of 1.9 days and average costs of
$7,149. For MS-DRG 778, there were a total of 205 cases, with an
average length of stay of 2.7 days and average costs of $4,001. For MS-
DRG 780, there were a total of 41 cases, with an average length of stay
of 2.1 days and average costs of $3,045. For MS-DRG 781, there were a
total of 2,333 cases, with an average length of stay of 3.7 days and
average costs of $5,817. Lastly, for MS-DRG 782, there were a total of
70 cases, with an average length of stay of 2.1 days and average costs
of $3,381.
To compare and analyze the impact of deleting those 5 MS-DRGs and
creating 6 new MS-DRGs, we ran a simulation using the Version 35 ICD-10
MS-DRG GROUPER. Our findings below represent what we found and would
expect under the suggested modifications. The following table reflects
the MS-DRGs for the suggested Other Antepartum Diagnoses MS-DRGs with a
3-way severity level split.

Suggested MS-DRGs for Other Antepartum Diagnoses
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 817 (Other Antepartum Diagnoses with O.R. Procedure with 60 5.1 $13,117
MCC)...........................................................
MS-DRG 818 (Other Antepartum Diagnoses with O.R. Procedure with 66 4.2 10,483
CC)............................................................
MS-DRG 819 (Other Antepartum Diagnoses with O.R. Procedure 44 1.7 5,904
without CC/MCC)................................................
MS-DRG 831 (Other Antepartum Diagnoses without O.R. Procedure 786 4.3 7,248
with MCC)......................................................
MS-DRG 832 (Other Antepartum Diagnoses without O.R. Procedure 910 3.5 4,994
with CC).......................................................
MS-DRG 833 (Other Antepartum Diagnoses without O.R. Procedure 855 2.7 3,843
without CC/MCC)................................................
----------------------------------------------------------------------------------------------------------------

Our analysis of claims data from the September 2017 update of the
FY 2017 MedPAR file recognized that when the criteria to create
subgroups were applied for the 3-way severity level splits for the
suggested MS-DRGs, those criteria were not met in all instances. For
example, the criteria that there are at least 500 cases in the MCC or
CC group was not met for the suggested Vaginal Delivery with
Sterilization/D&C 3[dash]way severity level split or the suggested
Other Antepartum Diagnoses with O.R. Procedure 3[dash]way severity
level split.
However, as we have noted in prior rulemaking (72 FR 47152), we
cannot adopt the same approach to refine the maternity and newborn MS-
DRGs because of the extremely low volume of Medicare patients there are
in these DRGs. While there is not a high volume of these cases
represented in the Medicare data, and while we generally advise that
other payers should develop MS-DRGs to address the needs of their
patients, we believe that our suggested 3[dash]way severity level
splits would address the complexity of the current MDC 14 GROUPER logic
for a vaginal delivery and takes into account the new and different
clinical concepts that exist under ICD-10 for this subset of patients
while also maintaining the existing MS-DRG structure for identifying
severity of illness, utilization of resources and complexity of
service.
However, as an alternative option, we also performed analysis for a
2-way severity level split for the suggested MS-DRGs. Our findings are
shown in the following tables.

Suggested MS-DRGs for Cesarean Section
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG XXX (Cesarean Section with Sterilization with CC/MCC).... 689 4.7 $9,317
MS-DRG XXX (Cesarean Section with Sterilization without CC/MCC). 475 3.0 6,259
MS-DRG XXX (Cesarean Section without Sterilization with MCC).... 2,594 4.7 8,951
MS-DRG XXX (Cesarean Section without Sterilization without CC/ 1,710 3.3 6,663
MCC)...........................................................
----------------------------------------------------------------------------------------------------------------

[[Page 20223]]

MS-DRG XXX (Vaginal Delivery without Sterilization/D&C without 4,105 2.3 4,601
CC/MCC)........................................................
----------------------------------------------------------------------------------------------------------------

Suggested MS-DRGs for Other Antepartum Diagnoses
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG XXX (Other Antepartum Diagnoses with O.R. Procedure with 126 4.7 $11,737
MCC)...........................................................
MS-DRG XXX (Other Antepartum Diagnoses with O.R. Procedure 44 1.7 5,904
without CC/MCC)................................................
MS-DRG XXX (Other Antepartum Diagnoses without O.R. Procedure 1,696 3.9 6,039
with MCC)......................................................
MS-DRG XXX (Other Antepartum Diagnoses without O.R. Procedure 855 2.7 3,843
without CC/MCC)................................................
----------------------------------------------------------------------------------------------------------------

Similar to the analysis performed for the 3-way severity level
split, we acknowledge that when the criteria to create subgroups was
applied for the alternative 2[dash]way severity level splits for the
suggested MS-DRGs, those criteria were not met in all instances. For
example, the suggested Vaginal Delivery with Sterilization/D&C and the
Other Antepartum Diagnoses with O.R. Procedure alternative option 2-way
severity level splits did not meet the criteria for 500 or more cases
in the MCC or CC group.
Based on our review, which included support from our clinical
advisors, and the analysis of claims data described above, we are
proposing the deletion of 10 MS-DRGs and the creation of 18 new MS-DRGs
(as shown below). This proposal is based on the approach described
above, which involves consolidating specific conditions and concepts
into the structure of existing logic and making additional
modifications, such as adding severity levels, as part of our
refinement efforts for the ICD-10 MS-DRGs. Our proposals are intended
to address the vaginal delivery ``complicating diagnosis'' logic and
antepartum diagnoses with ``medical complications'' logic with the
proposed addition of the existing and familiar severity level concept
(with MCC, with CC, and without CC/MCC) to the MDC 14 MS-DRGs to
provide the ability to distinguish the varying resource requirements
for this subset of patients and allow the opportunity to make more
meaningful comparisons with regard to severity across the MS-DRGs. Our
proposals, as set forth below, would also simplify the vaginal delivery
procedure logic that we identified and commenters acknowledged as
technically complex by eliminatng the extensive diagnosis and procedure
code lists for several conditions that must be met for assignment to
the vaginal delivery MS-DRGs. Our proposals are also intended to
respond to issues identified and brought to our attention through
public comments for consideration in updating the GROUPER logic code
lists in MDC 14.
Specifically, we are proposing to delete the following 10 MS-DRGs
under MDC 14:
MS-DRG 765 (Cesarean Section with CC/MCC);
MS-DRG 766 (Cesarean Section without CC/MCC);
MS-DRG 767 (Vaginal Delivery with Sterilization and/or
D&C);
MS-DRG 774 (Vaginal Delivery with Complicating Diagnosis);
MS-DRG 775 (Vaginal Delivery without Complicating
Diagnosis);
MS-DRG 777 (Ectopic Pregnancy);
MS-DRG 778 (Threatened Abortion);
MS-DRG 780 (False Labor);
MS-DRG 781 (Other Antepartum Diagnoses with Medical
Complications); and
MS-DRG 782 (Other Antepartum Diagnoses without Medical
Complications).
We are proposing to create the following new 18 MS-DRGs under MDC
14:
Proposed new MS-DRG 783 (Cesarean Section with
Sterilization with MCC);
Proposed new MS-DRG 784 (Cesarean Section with
Sterilization with CC);
Proposed new MS-DRG 785 (Cesarean Section with
Sterilization without CC/MCC);
Proposed new MS-DRG 786 (Cesarean Section without
Sterilization with MCC);
Proposed new MS-DRG 787 (Cesarean Section without
Sterilization with CC);
Proposed new MS-DRG 788 Cesarean Section without
Sterilization without CC/MCC);
Proposed new MS-DRG 796 (Vaginal Delivery with
Sterilization/D&C with MCC);
Proposed new MS-DRG 797 (Vaginal Delivery with
Sterilization/D&C with CC);
Proposed new MS-DRG 798 (Vaginal Delivery with
Sterilization/D&C without CC/MCC);
Proposed new MS-DRG 805 (Vaginal Delivery without
Sterilization/D&C with MCC);
Proposed new MS-DRG 806 (Vaginal Delivery without
Sterilization/D&C with CC);
Proposed new MS-DRG 807 (Vaginal Delivery without
Sterilization/D&C without CC/MCC);
Proposed new MS-DRG 817 (Other Antepartum Diagnoses with
O.R. Procedure with MCC);
Proposed new MS-DRG 818 (Other Antepartum Diagnoses with
O.R. Procedure with CC);
Proposed new MS-DRG 819 (Other Antepartum Diagnoses with
O.R. Procedure without CC/MCC);
Proposed new MS-DRG 831 (Other Antepartum Diagnoses
without O.R. Procedure with MCC);
Proposed new MS-DRG 832 (Other Antepartum Diagnoses
without O.R. Procedure with CC); and
Proposed new MS-DRG 833 (Other Antepartum Diagnoses
without O.R. Procedure without CC/MCC).
The diagrams below illustrate how the proposed MS-DRG logic for MDC
14 would function. The first diagram (Diagram 1.) begins by asking if
there is a principal diagnosis from MDC 14. If no, the GROUPER logic
directs the case to the appropriate MDC based on the principal
diagnosis reported. Next, the logic asks if there is a cesarean section
procedure reported on the claim. If yes, the logic asks if there was a
sterilization procedure reported on the claim. If yes, the logic
assigns the case to one of the proposed new MS-DRGs 783, 784, or

[[Page 20224]]

785. If no, the logic assigns the case to one of the proposed new MS-
DRGs 786, 787, or 788. If there was not a cesarean section procedure
reported on the claim, the logic asks if there was a vaginal delivery
procedure reported on the claim. If yes, the logic asks if there was
another O.R. procedure other than sterilization, D&C, delivery
procedure or a delivery inclusive O.R. procedure. If yes, the logic
assigns the case to existing MS-DRG 768. If no, the logic asks if there
was a sterilization and/or D&C reported on the claim. If yes, the logic
assigns the case to one of the proposed new MS-DRGs 796, 797, or 798.
If no, the logic assigns the case to one of the proposed new MS-DRGs
805, 806, or 807. If there was not a vaginal delivery procedure
reported on the claim, the GROUPER logic directs you to the other non-
delivery MS-DRGs as shown in Diagram 2.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP07MY18.000

The logic for Diagram 2. begins by asking if there is a principal
diagnosis of abortion reported on the claim. If yes, the logic then
asks if there was a D&C, aspiration curettage or hysterotomy procedure
reported on the claim. If yes, the logic assigns the case to existing
MS-DRG 770. If no, the logic assigns the case to existing MS-DRG 779.
If there was not a principal diagnosis of abortion reported on the
claim, the logic asks if there was a principal diagnosis of an
antepartum condition reported on the claim. If yes, the logic then asks
if there was an O.R. procedure reported on the claim. If yes, the logic
assigns the case to one of the proposed new MS-DRGs 817, 818, or 819.
If no, the logic assigns the case to one of the proposed new MS-DRGs
831, 832, or 833. If there was not a principal diagnosis of an

[[Page 20225]]

antepartum condition reported on the claim, the logic asks if there was
a principal diagnosis of a postpartum condition reported on the claim.
If yes, the logic then asks if there was an O.R. procedure reported on
the claim. If yes, the logic assigns the case to existing MS-DRG 769.
If no, the logic assigns the case to existing MS-DRG 776. If there was
not a principal diagnosis of a postpartum condition reported on the
claim, the logic identifies that there was a principal diagnosis
describing childbirth, delivery or an intrapartum condition reported on
the claim without any other procedures, and assigns the case to
existing MS-DRG 998 (Principal Diagnosis Invalid as Discharge
Diagnosis).
To assist in detecting coding and MS-DRG assignment errors for MS-
DRG 998 that could result when a provider does not report the procedure
code for either a cesarean section or a vaginal delivery along with an
outcome of delivery diagnosis code, as discussed in section II.F.13.d.,
we are proposing to add a new Questionable Obstetric Admission edit
under the MCE. We are inviting public comments on this proposed MCE
edit and we also are inviting public comments on the need for any
additional MCE considerations with regard to the proposed changes for
the MDC 14 MS-DRGs.
[GRAPHIC] [TIFF OMITTED] TP07MY18.001

BILLING CODE 4120-01-C
We refer readers to Tables 6P.1h through 6P.1k for the lists of the
diagnosis and procedure codes that we are proposing to assign to the
GROUPER logic for the proposed new MS-DRGs and the existing MS-DRGs
under MDC

[[Page 20226]]

14. We are inviting public comments on our proposed list of diagnosis
codes, which also addresses the list of diagnosis codes that a
commenter identified as missing from the GROUPER logic. We note that,
as a result of our proposed GROUPER logic changes to the vaginal
delivery MS-DRGs, which would only take into account the procedure
codes for a vaginal delivery and the outcome of delivery secondary
diagnosis codes, there is no longer a need to maintain a specific
principal diagnosis logic list for those MS-DRGs. Therefore, while we
appreciate the detailed suggestions and rationale submitted by the
commenter for why specific diagnosis codes should be removed from the
vaginal delivery principal diagnosis logic as displayed earlier in this
discussion, we are proposing to remove that logic. We are inviting
public comments on our proposal.
We also are inviting public comments on our proposal to reassign
ICD-10-PCS procedure codes 0UDB7ZX, 0UDB7ZZ, 0UDB8ZX, and 0UDB8ZZ that
describe dilation and curettage procedures from MS-DRG 767 under MDC 14
to MS-DRGs 744 and 745 under MDC 13.
In addition, we are inviting public comments on our proposed list
of procedure codes for the proposed revised MDC 14 MS-DRG logic, which
would require a procedure code for case assignment. Finally, we are
inviting public comments on the proposed deletion of the 10 MS-DRGs and
the proposed creation of 18 new MS-DRGs with a 3-way severity level
split listed above in this section, as well as on the potential
alternative new MS-DRGs using a 2-way severity level split as also
presented above.
11. MDC 18 (Infectious and Parasitic Diseases (Systematic or
Unspecified Sites): Systemic Inflammatory Response Syndrome (SIRS) of
Non-Infectious Origin
ICD-10-CM diagnosis codes R65.10 (Systemic Inflammatory Response
Syndrome (SIRS) of non-infectious origin without acute organ
dysfunction) and R65.11 (Systemic Inflammatory Response Syndrome (SIRS)
of non-infectious origin with acute organ dysfunction) are currently
assigned to MS-DRGs 870 (Septicemia or Severe Sepsis with Mechanical
Ventilation >96 Hours), 871 (Septicemia or Severe Sepsis with
Mechanical Ventilation >96 Hours with MCC), and 872 (Septicemia or
Severe Sepsis with Mechanical Ventilation >96 Hours without MCC) under
MDC 18 (Infectious and Parasitic Diseases, Systemic or Unspecified
Sites). Our clinical advisors noted that these diagnosis codes are
specifically describing conditions of a non-infectious origin, and
recommended that they be reassigned to a more clinically appropriate
MS-DRG.
We examined claims data from the September 2017 update of the FY
2017 MedPAR file for cases in MS-DRGs 870, 871, and 872. Our findings
are shown in the following table.

Septicemia or Severe Sepsis With and Without Mechanical Ventilation >96 Hours With and Without MCC
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 870--All cases........................................... 31,658 14.3 $42,981
MS-DRG 871--All cases........................................... 566,531 6.3 13,002
MS-DRG 872--All cases........................................... 150,437 4.3 7,532
----------------------------------------------------------------------------------------------------------------

As shown in this table, we found a total of 31,658 cases in MS-DRG
870, with an average length of stay of 14.3 days and average costs of
$42,981. We found a total of 566,531 cases in MS-DRG 871, with an
average length of stay of 6.3 days and average costs of $13,002.
Lastly, we found a total of 150,437 cases in MS-DRG 872, with an
average length of stay of 4.3 days and average costs of $7,532.
We then examined claims data in MS-DRGs 870, 871, or 872 for cases
reporting an ICD-10-CM diagnosis code of R65.10 or R65.11. Our findings
are shown in the following table.

SIRS of Non-Infectious Origin With and Without Acute Organ Dysfunction
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRGs 870, 871 and 872 cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRGs 870, 871, and 872--Cases reporting a principal diagnosis 1,254 3.8 $6,615
code of R65.10.................................................
MS-DRGs 870, 871, and 872--Cases reporting a principal diagnosis 138 4.8 9,655
code of R65.11.................................................
MS-DRGs 870, 871, and 872--Cases reporting a secondary diagnosis 1,232 5.5 10,670
code of R65.10.................................................
MS-DRGs 870, 871, and 872--Cases reporting a secondary diagnosis 117 6.2 12,525
code of R65.11.................................................
----------------------------------------------------------------------------------------------------------------

As shown in this table, we found a total of 1,254 cases reporting a
principal diagnosis code of R65.10 in MS-DRGs 870, 871, and 872, with
an average length of stay of 3.8 days and average costs of $6,615. We
found a total of 138 cases reporting a principal diagnosis code of
R65.11 in MS-DRGs 870, 871, and 872, with an average length of stay of
4.8 days and average costs of $9,655. We found a total of 1,232 cases
reporting a secondary diagnosis code of R65.10 in MS-DRGs 870, 871, and
872, with an average length of stay of 5.5 days and average costs of
$10,670. Lastly, we found a total of 117 cases reporting a secondary
diagnosis code of R65.11 in MS-DRGs 870, 871, and 872, with an average
length of stay of 6.2 days and average costs of $12,525.
The claims data included a total of 1,392 cases in MS-DRGs 870,
871, and 872 that reported a principal diagnosis code of R65.10 or
R65.11. We note that these 1,392 cases appear to have been coded
inaccurately according to the ICD-10-CM Official Guidelines for Coding
and Reporting at Section I.C.18.g., which specifically state: ``The
systemic inflammatory response syndrome (SIRS) can develop as a result
of certain non[dash]infectious disease processes, such as trauma,
malignant neoplasm, or pancreatitis. When SIRS is documented with a
non-infectious condition, and no subsequent infection

[[Page 20227]]

is documented, the code for the underlying condition, such as an
injury, should be assigned, followed by code R65.10, Systemic
inflammatory response syndrome (SIRS) of non-infectious origin without
acute organ dysfunction or code R65.11, Systemic inflammatory response
syndrome (SIRS) of non-infectious origin with acute organ
dysfunction.'' Therefore, according to the Coding Guidelines, ICD-10-CM
diagnosis codes R65.10 and R65.11 should not be reported as the
principal diagnosis on an inpatient claim.
We have acknowledged in past rulemaking the challenges with coding
for SIRS (and sepsis) (71 FR 24037). In addition, we note that there
has been confusion with regard to how these codes are displayed in the
ICD-10 MS-DRG Definitions Manual under MS-DRGs 870, 871, and 872, which
may also impact the reporting of these conditions. For example, in
Version 35 of the ICD-10 MS-DRG Definitions Manual (which is available
via the Internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-Items/FY2018-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending, the
logic for case assignment to MS-DRGs 870, 871, and 872 is comprised of
a list of several diagnosis codes, of which ICD-10-CM diagnosis codes
R65.10 and R65.11 are included. Because these codes are listed under
the heading of ``Principal Diagnosis'', it may appear that these codes
are to be reported as a principal diagnosis for assignment to MS-DRGs
870, 871, or 872. However, the Definitions Manual display of the
GROUPER logic assignment for each diagnosis code is for grouping
purposes only. The GROUPER (and, therefore, documentation in the MS-DRG
Definitions Manual) was not designed to account for coding guidelines
or coverage policies. Since the inception of the IPPS, the data editing
function has been a separate and independent step in the process of
determining a DRG assignment. Except for extreme data integrity issues
that prevent a DRG from being assigned, such as an invalid principal
diagnosis, the DRG assignment GROUPER does not edit for data integrity.
Prior to assigning the MS-DRG to a claim, the MACs apply a series of
data integrity edits using programs such as the Medicare Code Editor
(MCE). The MCE is designed to identify cases that require further
review before classification into an MS-DRG. These data integrity edits
address issues such as data validity, coding rules, and coverage
policies. The separation of the MS-DRG grouping and data editing
functions allows the MS-DRG GROUPER to remain stable during a fiscal
year even though coding rules and coverage policies may change during
the fiscal year. As such, in the FY 2018 IPPS/LTCH PPS final rule (82
FR 38050 through 38051), we finalized our proposal to add ICD-10-CM
diagnosis codes R65.10 and R65.11 to the Unacceptable Principal
Diagnosis edit in the MCE as a result of the Official Guidelines for
Coding and Reporting related to SIRS, in efforts to improve coding
accuracy for these types of cases.
To address the issue of determining a more appropriate MS-DRG
assignment for ICD-10-CM diagnosis codes R65.10 and R65.11, we reviewed
alternative options under MDC 18. Our clinical advisors determined the
most appropriate option is MS-DRG 864 (Fever) because the conditions
that are assigned here describe conditions of a non-infectious origin.
Therefore, we are proposing to reassign ICD-10-CM diagnosis codes
R65.10 and R65.11 to MS-DRG 864 and to revise the title of MS-DRG 864
to ``Fever and Inflammatory Conditions'' to better reflect the
diagnoses assigned there.

Proposed Revised MS-DRG 864 (Fever and Inflammatory Conditions)
----------------------------------------------------------------------------------------------------------------
Average length
MS-DRG Number of cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 864--All cases........................................ 12,144 3.4 $6,232
----------------------------------------------------------------------------------------------------------------

We are inviting public comments on our proposals.
12. MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs): Corrosive
Burns
ICD-10-CM Coding Guidelines include ``Code first'' sequencing
instructions for cases reporting a primary diagnosis of toxic effect
(ICD-10-CM codes T51 through T65) and a secondary diagnosis of
corrosive burn (ICD-10-CM codes T21.40 through T21.79). We received a
request to reassign these cases from MS-DRGs 901 (Wound Debridements
for Injuries with MCC), 902 (Wound Debridements for Injuries with CC),
903 (Wound Debridements for Injuries without CC/MCC), 904 (Skin Grafts
for Injuries with CC/MCC), 905 (Skin Grafts for Injuries without CC/
MCC), 917 (Poisoning and Toxic Effects of Drugs with MCC), and 918
(Poisoning and Toxic Effects of Drugs without MCC) to MS-DRGs 927
(Extensive Burns or Full Thickness Burns with Mechanical Ventilation
>96 Hours with Skin Graft), 928 (Full Thickness Burn with Skin Graft or
Inhalation Injury with CC/MCC), 929 (Full Thickness Burn with Skin
Graft or Inhalation Injury without CC/MCC), 933 (Extensive Burns or
Full Thickness Burns with Mechanical Ventilation >96 Hours without Skin
Graft), 934 (Full Thickness Burn without Skin Graft or Inhalation
Injury), and 935 (Nonextensive Burns).
The requestor noted that, for corrosion burns codes T21.40 through
T21.79, ICD[dash]10-CM Coding Guidelines instruct to ``Code first (T51
through T65) to identify chemical and intent.'' Because code first
notes provide sequencing directive, when patients are admitted with
corrosive burns (which can be full thickness and extensive), toxic
effect codes T51 through T65 must be sequenced first followed by codes
for the corrosive burns. This causes full-thickness and extensive burns
to group to MS-DRGs 901 through 905 when excisional debridement and
split thickness skin grafts are performed, and to MS-DRGs 917 and 918
when procedures are not performed. This is in contrast to cases
reporting a primary diagnosis of corrosive burn, which group to
MS[dash]DRGs 927 through 935.
The requestor stated that MS-DRGs 456 (Spinal Fusion except
Cervical with Spinal Curvature or Malignancy or Infection or Extensive
Fusions with MCC), 457 (Spinal Fusion Except Cervical with Spinal
Curvature or Malignancy or Infection or Extensive Fusions with CC), and
458 (Spinal Fusion Except Cervical with Spinal Curvature or Malignancy
or Infection or Extensive Fusions without CC/MCC) are grouped based on
the procedure performed in combination with the principal diagnosis or
secondary

[[Page 20228]]

diagnosis (secondary scoliosis). The requestor stated that when codes
for corrosive burns are reported as secondary diagnoses in conjunction
with principal diagnoses codes T5l through T65, particularly when skin
grafts are performed, they would be more appropriately assigned to MS-
DRGs 927 through 935.
We analyzed claims data from the September 2017 update of the FY
2017 MedPAR file for all cases assigned to MS-DRGs 901, 902, 903, 904,
905, 917, and 918, and subsets of these cases with primary diagnosis of
toxic effect with secondary diagnosis of corrosive burn. We note that
we found no cases from this subset in MS[dash]DRGs 903, 907, 908, and
909 and, therefore, did not include the results for these MS[dash]DRGs
in the table below. We also analyzed all cases assigned to MS-DRGs 927,
928, 929, 933, 934, and 935 and those cases that reported a primary
diagnosis of corrosive burn. Our findings are shown in the following
two tables.

MDC 21 Injuries, Poisonings and Toxic Effects of Drugs
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
All Cases with primary diagnosis of toxic effect and secondary 55 5.5 $18,077
diagnosis of corrosive burn--Across all MS-DRGs................
MS-DRG 901--All cases........................................... 968 13 31,479
MS-DRG 901--Cases with primary diagnosis of toxic effect and 1 8 12,388
secondary diagnosis of corrosive burn..........................
MS-DRG 902--All cases........................................... 1,775 6.6 14,206
MS-DRG 902--Cases with primary diagnosis of toxic effect and 8 10.3 20,940
secondary diagnosis of corrosive burn..........................
MS-DRG 904--All cases........................................... 905 9.8 23,565
MS-DRG 904--Cases with primary diagnosis of toxic effect and 8 6.4 22,624
secondary diagnosis of corrosive burn..........................
MS-DRG 905--All cases........................................... 263 4.9 13,291
MS-DRG 905--Cases with primary diagnosis of toxic effect and 2 2.5 7,682
secondary diagnosis of corrosive burn..........................
MS-DRG 906--All cases........................................... 458 4.8 13,555
MS-DRG 906--Cases with primary diagnosis of toxic effect and 1 5 7,409
secondary diagnosis of corrosive burn..........................
MS-DRG 917--All cases........................................... 31,730 4.8 10,280
MS-DRG 917--Cases with primary diagnosis of toxic effect and 6 4.8 7,336
secondary diagnosis of corrosive burn..........................
MS-DRG 918--All cases........................................... 19,819 3 5,529
MS-DRG 918--Cases with primary diagnosis of toxic effect and 28 3.5 5,643
secondary diagnosis of corrosive burn..........................
----------------------------------------------------------------------------------------------------------------

As shown in this table, there were a total of 55 cases with a
primary diagnosis of toxic effect and a secondary diagnosis of
corrosive burn across MS-DRGs 901, 902, 903, 904, 905, 917, and 918.
When comparing this subset of codes relative to those of each MS-DRG as
a whole, we noted that, in most of these MS-DRGs, the average costs and
average length of stay for this subset of cases were roughly equivalent
to or lower than the average costs and average length of stay for cases
in the MS-DRG as a whole, while in one case, they were higher. As we
have noted in prior rulemaking (77 FR 53309) and elsewhere in this
rule, it is a fundamental principle of an averaged payment system that
half of the procedures in a group will have above average costs. It is
expected that there will be higher cost and lower cost subsets,
especially when a subset has low numbers. The results of this analysis
indicate that these cases are appropriately placed within their current
MDC.
Our clinical advisors reviewed this request and indicated that
patients with a primary diagnosis of toxic effect and a secondary
diagnosis of corrosive burn have been exposed to an irritant or
corrosive substance and, therefore, are clinically similar to those
patients in MDC 21. Furthermore, our clinical advisors do not believe
that the size of this subset of cases justifies the significant changes
to the GROUPER logic that would be required to address the commenter's
request, which would involve rerouting cases when the primary and
secondary diagnoses are in different MDCs.

MDC 22 Burns
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
All cases with primary diagnosis of corrosive burn--Across all 60 8.5 $19,456
MS-DRGs........................................................
MS-DRG 927--All cases........................................... 159 28.1 128,960
MS-DRG 927--Cases with primary diagnosis of corrosive burn...... 1 41 75,985
MS-DRG 928--All cases........................................... 1,021 15.1 42,868
MS-DRG 928--Cases with primary diagnosis of corrosive burn...... 13 13.2 31,118
MS-DRG 929--All cases........................................... 295 7.9 21,600
MS-DRG 929--Cases with primary diagnosis of corrosive burn...... 4 12.5 18,527
MS-DRG 933--All cases........................................... 121 4.6 21,291
MS-DRG 933--Cases with primary diagnosis of corrosive burn...... 1 7 91,779
MS-DRG 934--All cases........................................... 503 6.1 13,286

[[Page 20229]]

MS-DRG 934--Cases with primary diagnosis of corrosive burn...... 11 5.8 13,280
MS-DRG 935--All cases........................................... 1,705 5.2 13,065
MS-DRG 935--Cases with primary diagnosis of corrosive burn...... 29 5 9,822
----------------------------------------------------------------------------------------------------------------

To address the request of reassigning cases with a primary
diagnosis of toxic effect and secondary diagnosis of corrosive burn, we
reviewed the data for all cases in MS-DRGs 927, 928, 929, 933, 934, and
935 and those cases reporting a primary diagnosis of corrosive burn. We
found a total of 60 cases reporting a primary diagnosis of corrosive
burn, with an average length of stay of 8.5 days and average costs of
$19,456. Our clinical advisors believe that these cases reporting a
primary diagnosis of corrosive burn are appropriately placed in MDC 22
as they are clinically aligned with other patients in this MDC. In
summary, the results of our claims data analysis and the advice from
our clinical advisors do not support reassigning cases in MS-DRGs 901,
902, 903, 904, 905, 917, and 918 reporting a primary diagnosis of toxic
effect and a secondary diagnosis of corrosive burn to MS-DRGs 927, 928,
929, 933, 934 and 935. Therefore, we are not proposing to reassign
these cases. We are inviting public comments on our proposal to
maintain the current MS[dash]DRG structure for these cases.
13. Proposed Changes to the Medicare Code Editor (MCE)
The Medicare Code Editor (MCE) is a software program that detects
and reports errors in the coding of Medicare claims data. Patient
diagnoses, procedure(s), and demographic information are entered into
the Medicare claims processing systems and are subjected to a series of
automated screens. The MCE screens are designed to identify cases that
require further review before classification into an MS-DRG.
As discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38045),
we made available the FY 2018 ICD-10 MCE Version 35 manual file. The
link to this MCE manual file, along with the link to the mainframe and
computer software for the MCE Version 35 (and ICD-10 MS-DRGs) are
posted on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/ through the FY 2018
IPPS Final Rule Home Page.
For this FY 2019 IPPS/LTCH PPS proposed rule, below we address the
MCE requests we received by the November 1, 2017 deadline. We also
discuss the proposals we are making based on our internal review and
analysis.
a. Age Conflict Edit
In the MCE, the Age Conflict edit exists to detect inconsistencies
between a patient's age and any diagnosis on the patient's record; for
example, a 5-year-old patient with benign prostatic hypertrophy or a
78-year-old patient coded with a delivery. In these cases, the
diagnosis is clinically and virtually impossible for a patient of the
stated age. Therefore, either the diagnosis or the age is presumed to
be incorrect. Currently, in the MCE, the following four age diagnosis
categories appear under the Age Conflict edit and are listed in the
manual and written in the software program:
Perinatal/Newborn--Age of 0 years only; a subset of
diagnoses which will only occur during the perinatal or newborn period
of age 0 (for example, tetanus neonatorum, health examination for
newborn under 8 days old).
Pediatric--Age is 0-17 years inclusive (for example,
Reye's syndrome, routine child health exam).
Maternity--Age range is 12-55 years inclusive (for
example, diabetes in pregnancy, antepartum pulmonary complication).
Adult--Age range is 15-124 years inclusive (for example,
senile delirium, mature cataract).
(1) Perinatal/Newborn Diagnoses Category
Under the ICD-10 MCE, the Perinatal/Newborn Diagnoses category
under the Age Conflict edit considers the age of 0 years only; a subset
of diagnoses which will only occur during the perinatal or newborn
period of age 0 to be inclusive. This includes conditions that have
their origin in the fetal or perinatal period (before birth through the
first 28 days after birth) even if morbidity occurs later. For that
reason, the diagnosis codes on this Age Conflict edit list would be
expected to apply to conditions or disorders specific to that age group
only.
In the ICD-10-CM classification, there are 14 diagnosis codes that
describe specific suspected conditions that have been evaluated and
ruled out during the newborn period and are currently not on the
Perinatal/Newborn Diagnoses Category edit code list. We consulted with
staff at the Centers for Disease Control's (CDC's) National Center for
Health Statistics (NCHS) because NCHS has the lead responsibility for
the ICD-10-CM diagnosis codes. The NCHS' staff confirmed that the
following diagnosis codes are appropriate to add to the edit code list
for the Perinatal/Newborn Diagnoses Category.

------------------------------------------------------------------------
ICD-10-CM code Code description
------------------------------------------------------------------------
Z05.0..................... Observation and evaluation of newborn for
suspected cardiac condition ruled out.
Z05.1..................... Observation and evaluation of newborn for
suspected infectious condition ruled out.
Z05.2..................... Observation and evaluation of newborn for
suspected neurological condition ruled out.
Z05.3..................... Observation and evaluation of newborn for
suspected respiratory condition ruled out.
Z05.41.................... Observation and evaluation of newborn for
suspected genetic condition ruled out.
Z05.42.................... Observation and evaluation of newborn for
suspected metabolic condition ruled out.
Z05.43.................... Observation and evaluation of newborn for
suspected immunologic condition ruled out.
Z05.5..................... Observation and evaluation of newborn for
suspected gastrointestinal condition ruled
out.
Z05.6..................... Observation and evaluation of newborn for
suspected genitourinary condition ruled
out.
Z05.71.................... Observation and evaluation of newborn for
suspected skin and subcutaneous tissue
condition ruled out.

[[Page 20230]]

Z05.72.................... Observation and evaluation of newborn for
suspected musculoskeletal condition ruled
out.
Z05.73.................... Observation and evaluation of newborn for
suspected connective tissue condition ruled
out.
Z05.8..................... Observation and evaluation of newborn for
other specified suspected condition ruled
out.
Z05.9..................... Observation and evaluation of newborn for
unspecified suspected condition ruled out.
------------------------------------------------------------------------

Therefore, we are proposing to add the ICD-10-CM diagnosis codes
listed in the table above to the Age Conflict edit under the Perinatal/
Newborn Diagnoses Category edit code list. We also are proposing to
continue to include the existing diagnosis codes currently listed under
the Perinatal/Newborn Diagnoses Category edit code list. We are
inviting public comments on our proposals.
(2) Pediatric Diagnoses Category
Under the ICD-10 MCE, the Pediatric Diagnoses Category for the Age
Conflict edit considers the age range of 0 to 17 years inclusive. For
that reason, the diagnosis codes on this Age Conflict edit list would
be expected to apply to conditions or disorders specific to that age
group only.
As discussed in section II.F.15. of the preamble of this proposed
rule, Table 6C.--Invalid Diagnosis Codes associated with this proposed
rule (which is available via the Internet on the CMS website at: https://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) lists the diagnoses that are no longer
effective as of October 1, 2018. Included in this table is an ICD-10-CM
diagnosis code currently listed on the Pediatric Diagnoses Category
edit code list, ICD-10-CM diagnosis code Z13.4 (Encounter for screening
for certain developmental disorders in childhood). We are proposing to
remove this code from the Pediatric Diagnoses Category edit code list.
We also are proposing to continue to include the other existing
diagnosis codes currently listed under the Pediatric Diagnoses Category
edit code list. We are inviting public comments on our proposals.
(3) Maternity Diagnoses
Under the ICD-10 MCE, the Maternity Diagnoses Category for the Age
Conflict edit considers the age range of 12 to 55 years inclusive. For
that reason, the diagnosis codes on this Age Conflict edit list would
be expected to apply to conditions or disorders specific to that age
group only.
As discussed in section II.F.15. of the preamble of this proposed
rule, Table 6A.--New Diagnosis Codes associated with this proposed rule
(which is available via the Internet on the CMS website at: https://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) lists the new diagnoses codes that have
been approved to date, which will be effective with discharges
occurring on and after October 1, 2018. The following table lists the
new ICD-10-CM diagnosis codes included in Table 6A associated with
pregnancy and maternal care that we believe are appropriate to add to
the Maternity Diagnoses Category edit code list under the Age Conflict
edit. Therefore, we are proposing to add these codes to the Maternity
Diagnoses Category edit code list under the Age Conflict edit.

------------------------------------------------------------------------
ICD-10-CM code Code description
------------------------------------------------------------------------
F53.0..................... Postpartum depression.
F53.1..................... Puerperal psychosis.
O30.131................... Triplet pregnancy, trichorionic/triamniotic,
first trimester.
O30.132................... Triplet pregnancy, trichorionic/triamniotic,
second trimester.
O30.133................... Triplet pregnancy, trichorionic/triamniotic,
third trimester.
O30.139................... Triplet pregnancy, trichorionic/triamniotic,
unspecified trimester.
O30.231................... Quadruplet pregnancy, quadrachorionic/quadra-
amniotic, first trimester.
O30.232................... Quadruplet pregnancy, quadrachorionic/quadra-
amniotic, second trimester.
O30.233................... Quadruplet pregnancy, quadrachorionic/quadra-
amniotic, third trimester.
O30.239................... Quadruplet pregnancy, quadrachorionic/quadra-
amniotic, unspecified trimester.
O30.831................... Other specified multiple gestation, number
of chorions and amnions are both equal to
the number of fetuses, first trimester.
O30.832................... Other specified multiple gestation, number
of chorions and amnions are both equal to
the number of fetuses, second trimester.
O30.833................... Other specified multiple gestation, number
of chorions and amnions are both equal to
the number of fetuses, third trimester.
O30.839................... Other specified multiple gestation, number
of chorions and amnions are both equal to
the number of fetuses, unspecified
trimester.
O86.00.................... Infection of obstetric surgical wound,
unspecified.
O86.01.................... Infection of obstetric surgical wound,
superficial incisional site.
O86.02.................... Infection of obstetric surgical wound, deep
incisional site.
O86.03.................... Infection of obstetric surgical wound, organ
and space site.
O86.04.................... Sepsis following an obstetrical procedure.
O86.09.................... Infection of obstetric surgical wound, other
surgical site.
------------------------------------------------------------------------

In addition, as discussed in section II.F.15. of the preamble of
this proposed rule, Table 6C.--Invalid Diagnosis Codes associated with
this proposed rule (which is available via the Internet on the CMS
website at: https://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) lists the diagnosis codes that
are no longer effective as of October 1, 2018. Included in this table
are two ICD-10-CM diagnosis codes currently listed on the Maternity
Diagnoses Category edit code list: ICD-10-CM diagnosis codes F53
(Puerperal psychosis) and O86.0 (Infection of obstetric surgical
wound). We are proposing to remove these codes from the Maternity
Diagnoses Category Edit code list. We also are proposing to continue to
include the other existing diagnosis codes currently listed under the
Maternity Diagnoses Category edit

[[Page 20231]]

code list. We are inviting public comments on our proposals.
b. Sex Conflict Edit
In the MCE, the Sex Conflict edit detects inconsistencies between a
patient's sex and any diagnosis or procedure on the patient's record;
for example, a male patient with cervical cancer (diagnosis) or a
female patient with a prostatectomy (procedure). In both instances, the
indicated diagnosis or the procedure conflicts with the stated sex of
the patient. Therefore, the patient's diagnosis, procedure, or sex is
presumed to be incorrect.
(1) Diagnoses for Females Only Edit
We received a request to consider the addition of the following
ICD-10-CM diagnosis codes to the list for the Diagnoses for Females
Only edit.

------------------------------------------------------------------------
ICD-10-CM code Code description
------------------------------------------------------------------------
Z30.015................... Encounter for initial prescription of
vaginal ring hormonal contraceptive.
Z31.7..................... Encounter for procreative management and
counseling for gestational carrier.
Z98.891................... History of uterine scar from previous
surgery.
------------------------------------------------------------------------

The requestor noted that, currently, ICD-10-CM diagnosis code
Z30.44 (Encounter for surveillance of vaginal ring hormonal
contraceptive device) is on the Diagnoses for Females Only edit code
list and suggested that ICD-10-CM diagnosis code Z30.015, which also
describes an encounter involving a vaginal ring hormonal contraceptive,
be added to the Diagnoses for Females Only edit code list as well. In
addition, the requestor suggested that ICD-10-CM diagnosis codes Z31.7
and Z98.891 be added to the Diagnoses for Females Only edit code list.
We reviewed ICD-10-CM diagnosis codes Z30.015, Z31.7, and Z98.891,
and we agree with the requestor that it is clinically appropriate to
add these three ICD-10-CM diagnosis codes to the Diagnoses for Females
Only edit code list because the conditions described by these codes are
specific to and consistent with the female sex.
In addition, as discussed in section II.F.15. of the preamble of
this proposed rule, Table 6A.--New Diagnosis Codes associated with this
proposed rule (which is available via the Internet on the CMS website
at: https://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) lists the new diagnosis codes that have
been approved to date, which will be effective with discharges
occurring on and after October 1, 2018. The following table lists the
new diagnosis codes that are associated with conditions consistent with
the female sex. We are proposing to add these ICD-10-CM diagnosis codes
to the Diagnoses for Females Only edit code list under the Sex Conflict
edit.

------------------------------------------------------------------------
ICD-10-CM code Code description
------------------------------------------------------------------------
F53.0..................... Postpartum depression.
F53.1..................... Puerperal psychosis.
N35.82.................... Other urethral stricture, female.
N35.92.................... Unspecified urethral stricture, female.
O30.131................... Triplet pregnancy, trichorionic/triamniotic,
first trimester.
O30.132................... Triplet pregnancy, trichorionic/triamniotic,
second trimester.
O30.133................... Triplet pregnancy, trichorionic/triamniotic,
third trimester.
O30.139................... Triplet pregnancy, trichorionic/triamniotic,
unspecified trimester.
O30.231................... Quadruplet pregnancy, quadrachorionic/quadra-
amniotic, first trimester.
O30.232................... Quadruplet pregnancy, quadrachorionic/quadra-
amniotic, second trimester.
O30.233................... Quadruplet pregnancy, quadrachorionic/quadra-
amniotic, third trimester.
O30.239................... Quadruplet pregnancy, quadrachorionic/quadra-
amniotic, unspecified trimester.
O30.831................... Other specified multiple gestation, number
of chorions and amnions are both equal to
the number of fetuses, first trimester.
O30.832................... Other specified multiple gestation, number
of chorions and amnions are both equal to
the number of fetuses, second trimester.
O30.833................... Other specified multiple gestation, number
of chorions and amnions are both equal to
the number of fetuses, third trimester.
O30.839................... Other specified multiple gestation, number
of chorions and amnions are both equal to
the number of fetuses, unspecified
trimester.
O86.00.................... Infection of obstetric surgical wound,
unspecified.
O86.01.................... Infection of obstetric surgical wound,
superficial incisional site.
O86.02.................... Infection of obstetric surgical wound, deep
incisional site.
O86.03.................... Infection of obstetric surgical wound, organ
and space site.
O86.04.................... Sepsis following an obstetrical procedure.
O86.09.................... Infection of obstetric surgical wound, other
surgical site.
Q51.20.................... Other doubling of uterus, unspecified.
Q51.21.................... Other complete doubling of uterus.
Q51.22.................... Other partial doubling of uterus.
Q51.28.................... Other doubling of uterus, other specified.
Z13.32.................... Encounter for screening for maternal
depression.
------------------------------------------------------------------------

We are inviting public comments on our proposals.
In addition, as discussed in section II.F.15. of the preamble of
this proposed rule, Table 6C.--Invalid Diagnosis Codes associated with
this proposed rule (which is available via the internet on the CMS
website at: https://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) lists the diagnosis codes that
are no longer effective as of October 1, 2018. Included

[[Page 20232]]

in this table are the following three ICD-10-CM diagnosis codes
currently listed on the Diagnoses for Females Only edit code list.

Because these three ICD-10-CM diagnosis codes will no longer be
effective as of October 1, 2018, we are proposing to remove them from
the Diagnoses for Females Only edit code list under the Sex Conflict
edit. We are inviting public comments on our proposal.
(2) Procedures for Females Only Edit
As discussed in section II.F.15. of the preamble of this proposed
rule, Table 6B.--New Procedure Codes associated with this proposed rule
(which is available via the Internet on the CMS website at: https://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) lists the procedure codes that have been
approved to date, which will be effective with discharges occurring on
and after October 1, 2018. We are proposing to add the three ICD-10-PCS
procedure codes in the following table describing procedures associated
with the female sex to the Procedures for Females Only edit code list.

------------------------------------------------------------------------
ICD-10-CM code Code description
------------------------------------------------------------------------
0UY90Z0................... Transplantation of uterus, allogeneic, open
approach.
0UY90Z1................... Transplantation of uterus, syngeneic, open
approach.
0UY90Z2................... Transplantation of uterus, zooplastic, open
approach.
------------------------------------------------------------------------

We also are proposing to continue to include the existing procedure
codes currently listed under the Procedures for Females Only edit code
list. We are inviting public comments on our proposals.
(3) Diagnoses for Males Only Edit
As discussed in section II.F.15. of the preamble of this proposed
rule, Table 6A.--New Diagnosis Codes associated with this proposed rule
(which is available via the Internet on the CMS website at: https://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) lists the new diagnosis codes that have
been approved to date, which will be effective with discharges
occurring on and after October 1, 2018. The following table lists the
new diagnosis codes that are associated with conditions consistent with
the male sex. We are proposing to add these ICD-10-CM diagnosis codes
to the Diagnoses for Males Only edit code list under the Sex Conflict
edit.

We also are proposing to continue to include the existing diagnosis
codes currently listed under the Diagnoses for Males Only edit code
list. We are inviting public comments on our proposals.
c. Manifestation Code as Principal Diagnosis Edit
In the ICD-10-CM classification system, manifestation codes
describe the manifestation of an underlying disease, not the disease
itself and, therefore, should not be used as a principal diagnosis.
As discussed in section II.F.15. of the preamble of this proposed
rule, Table 6A.--New Diagnosis Codes associated with this proposed rule
(which is available via the Internet on the CMS

[[Page 20233]]

website at: https://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) lists the new diagnosis codes
that have been approved to date which will be effective with discharges
occurring on and after October 1, 2018. Included in this table are ICD-
10-CM diagnosis codes K82.A1 (Gangrene of gallbladder in cholecystitis)
and K82.A2 (Perforation of gallbladder in cholecystitis). We are
proposing to add these two ICD-10-CM diagnosis codes to the
Manifestation Code as Principal Diagnosis edit code list because the
type of cholecystitis would be required to be reported first. We also
are proposing to continue to include the existing diagnosis codes
currently listed under the Manifestation Code as Principal Diagnosis
edit code list. We are inviting public comments on our proposals.
d. Questionable Admission Edit
In the MCE, some diagnoses are not usually sufficient justification
for admission to an acute care hospital. For example, if a patient is
assigned ICD-10-CM diagnosis code R03.0 (Elevated blood pressure
reading, without diagnosis of hypertension), the patient would have a
questionable admission because an elevated blood pressure reading is
not normally sufficient justification for admission to a hospital.
As discussed in section II.F.10. of the preamble of this proposed
rule, we are proposing several modifications to the MS-DRGs under MDC
14 (Pregnancy, Childbirth and the Puerperium). One aspect of these
proposed modifications involves the GROUPER logic for the cesarean
section and vaginal delivery MS-DRGs. We refer readers to section
II.F.10. of the preamble of this proposed rule for a detailed
discussion of the proposals regarding these MS-DRG modifications under
MDC 14 and the relation to the MCE.
If a patient presents to the hospital and either a cesarean section
or a vaginal delivery occurs, it is expected that, in addition to the
specific type of delivery code, an outcome of delivery code is also
assigned and reported on the claim. The outcome of delivery codes are
ICD-10-CM diagnosis codes that are to be reported as secondary
diagnoses as instructed in Section I.C.15.b.5 of the ICD-10-CM Official
Guidelines for Coding and Reporting which states: ``A code from
category Z37, Outcome of delivery, should be included on every maternal
record when a delivery has occurred. These codes are not to be used on
subsequent records or on the newborn record.'' Therefore, to encourage
accurate coding and appropriate MS-DRG assignment in alignment with the
proposed modifications to the delivery MS-DRGs, we are proposing to
create a new ``Questionable Obstetric Admission Edit'' under the
Questionable Admission edit to read as follows:

``b. Questionable obstetric admission

ICD-10-PCS procedure codes describing a cesarean section or vaginal
delivery are considered to be a questionable admission except when
reported with a corresponding secondary diagnosis code describing
the outcome of delivery.

Procedure code list for cesarean section

10D00Z0 Extraction of Products of Conception, High, Open Approach
10D00Z1 Extraction of Products of Conception, Low, Open Approach
10D00Z2 Extraction of Products of Conception, Extraperitoneal, Open
Approach

Procedure code list for vaginal delivery

10D07Z3 Extraction of Products of Conception, Low Forceps, Via
Natural or Artificial Opening
10D07Z4 Extraction of Products of Conception, Mid Forceps, Via
Natural or Artificial Opening
10D07Z5 Extraction of Products of Conception, High Forceps, Via
Natural or Artificial Opening
10D07Z6 Extraction of Products of Conception, Vacuum, Via Natural or
Artificial Opening
10D07Z7 Extraction of Products of Conception, Internal Version, Via
Natural or Artificial Opening
10D07Z8 Extraction of Products of Conception, Other, Via Natural or
Artificial Opening
10D17Z9 Manual Extraction of Products of Conception, Retained, Via
Natural or Artificial Opening
10D18Z9 Manual Extraction of Products of Conception, Retained, Via
Natural or Artificial Opening Endoscopic
10E0XZZ Delivery of Products of Conception, External Approach

Secondary diagnosis code list for outcome of delivery

Z37.0 Single live birth
Z37.1 Single stillbirth
Z37.2 Twins, both liveborn
Z37.3 Twins, one liveborn and one stillborn
Z37.4 Twins, both stillborn
Z37.50 Multiple births, unspecified, all liveborn
Z37.51 Triplets, all liveborn
Z37.52 Quadruplets, all liveborn
Z37.53 Quintuplets, all liveborn
Z37.54 Sextuplets, all liveborn
Z37.59 Other multiple births, all liveborn
Z37.60 Multiple births, unspecified, some liveborn
Z37.61 Triplets, some liveborn
Z37.62 Quadruplets, some liveborn
Z37.63 Quintuplets, some liveborn
Z37.64 Sextuplets, some liveborn
Z37.69 Other multiple births, some liveborn
Z37.7 Other multiple births, all stillborn
Z37.9 Outcome of delivery, unspecified''
We are proposing that the three ICD-10-PCS procedure codes listed
in the following table would be used to establish the list of codes for
the proposed Questionable Obstetric Admission edit logic for cesarean
section.

ICD-10-PCS Procedure Codes for Cesarean Section Under the Proposed
Questionable Obstetric Admission Edit Code List in the MCE
------------------------------------------------------------------------
ICD-10-CM code Code description
------------------------------------------------------------------------
10D00Z0................... Extraction of products of conception, high,
open approach.
10D00Z1................... Extraction of products of conception, low,
open approach.
10D00Z2................... Extraction of products of conception,
extraperitoneal, open approach.
------------------------------------------------------------------------

We are proposing that the nine ICD-10-PCS procedure codes listed in
the following table would be used to establish the list of codes for
the proposed new Questionable Obstetric Admission edit logic for
vaginal delivery.

[[Page 20234]]

ICD-10-PCS Procedure Codes for Vaginal Delivery Under the Proposed
Questionable Obstetric Admission Edit Code List in the MCE
------------------------------------------------------------------------
ICD-10-CM code Code description
------------------------------------------------------------------------
10D07Z3................... Extraction of products of conception, low
forceps, via natural or artificial opening.
10D07Z4................... Extraction of products of conception, mid
forceps, via natural or artificial opening.
10D07Z5................... Extraction of products of conception, high
forceps, via natural or artificial opening.
10D07Z6................... Extraction of products of conception,
vacuum, via natural or artificial opening.
10D07Z7................... Extraction of products of conception,
internal version, via natural or artificial
opening.
10D07Z8................... Extraction of products of conception, other,
via natural or artificial opening.
10D17Z9................... Manual extraction of products of conception,
retained, via natural or artificial
opening.
10D18Z9................... Manual extraction of products of conception,
retained, via natural or artificial
opening.
10E0XZZ................... Delivery of products of conception, external
approach.
------------------------------------------------------------------------

We are proposing that the 19 ICD-10-CM diagnosis codes listed in
the following table would be used to establish the list of secondary
diagnosis codes for the proposed new Questionable Obstetric Admission
edit logic for outcome of delivery.

ICD-10-CM Secondary Diagnosis Codes for Outcome of Delivery Under the
Proposed Questionable Obstetric Admission Edit Code List in the MCE
------------------------------------------------------------------------
ICD-10-CM code Code description
------------------------------------------------------------------------
Z37.0..................... Single live birth.
Z37.1..................... Single stillbirth.
Z37.2..................... Twins, both liveborn.
Z37.3..................... Twins, one liveborn and one stillborn.
Z37.4..................... Twins, both stillborn.
Z37.50.................... Multiple births, unspecified, all liveborn.
Z37.51.................... Triplets, all liveborn.
Z37.52.................... Quadruplets, all liveborn.
Z37.53.................... Quintuplets, all liveborn.
Z37.54.................... Sextuplets, all liveborn.
Z37.59.................... Other multiple births, all liveborn.
Z37.60.................... Multiple births, unspecified, some liveborn.
Z37.61.................... Triplets, some liveborn.
Z37.62.................... Quadruplets, some liveborn.
Z37.63.................... Quintuplets, some liveborn.
Z37.64.................... Sextuplets, some liveborn.
Z37.69.................... Other multiple births, some liveborn.
Z37.7..................... Other multiple births, all liveborn.
Z37.9..................... Outcome of delivery, unspecified.
------------------------------------------------------------------------

We are inviting public comments on our proposal to create this new
Questionable Obstetric Admission edit. We also are inviting public
comments on the lists of diagnosis and procedure codes that we are
proposing to include for this edit.
e. Unacceptable Principal Diagnosis Edit
In the MCE, there are select codes that describe a circumstance
which influences an individual's health status, but does not actually
describe a current illness or injury. There also are codes that are not
specific manifestations, but may be due to an underlying cause. These
codes are considered unacceptable as a principal diagnosis. In limited
situations, there are a few codes on the MCE Unacceptable Principal
Diagnosis edit code list that are considered ``acceptable'' when a
specified secondary diagnosis is also coded and reported on the claim.
As discussed in section II.F.9. of the preamble of this proposed
rule, ICD-10-CM diagnosis codes Z49.02 (Encounter for fitting and
adjustment of peritoneal dialysis catheter), Z49.31 (Encounter for
adequacy testing for hemodialysis), and Z49.32 (Encounter for adequacy
testing for peritoneal dialysis) are currently on the Unacceptable
Principal Diagnosis edit code list. We are proposing to add diagnosis
code Z49.01 (Encounter for fitting and adjustment of extracorporeal
dialysis catheter) to the Unacceptable Principal Diagnosis edit code
list because this is an encounter code that would more likely be
performed in an outpatient setting.
As discussed in section II.F.15. of the preamble of this proposed
rule, Table 6C.--Invalid Diagnosis Codes associated with this proposed
rule (which is available via the Internet on the CMS website at: https://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) lists the diagnosis codes that are no
longer effective as of October 1, 2018. As previously noted, included
in this table is an ICD-10-CM diagnosis code Z13.4 (Encounter for
screening for certain developmental disorders in childhood) which is
currently listed on the Unacceptable Principal diagnoses Category edit
code list. We are proposing to remove this code from the Unacceptable
Principal Diagnoses Category edit code list.
We also are proposing to continue to include the other existing
diagnosis codes currently listed under the Unacceptable Principal
Diagnosis edit code list. We are inviting public comments on our
proposals.

[[Page 20235]]

f. Future Enhancement
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38053 through
38054), we noted the importance of ensuring accuracy of the coded data
from the reporting, collection, processing, coverage, payment, and
analysis aspects. We have engaged a contractor to assist in the review
of the limited coverage and noncovered procedure edits in the MCE that
may also be present in other claims processing systems that are
utilized by our MACs. The MACs must adhere to criteria specified within
the National Coverage Determinations (NCDs) and may implement their own
edits in addition to what are already incorporated into the MCE,
resulting in duplicate edits. The objective of this review is to
identify where duplicate edits may exist and to determine what the
impact might be if these edits were to be removed from the MCE.
We have noted that the purpose of the MCE is to ensure that errors
and inconsistencies in the coded data are recognized during Medicare
claims processing. We are considering whether the inclusion of coverage
edits in the MCE necessarily aligns with that specific goal because the
focus of coverage edits is on whether or not a particular service is
covered for payment purposes and not whether it was coded correctly.
As we continue to evaluate the purpose and function of the MCE with
respect to ICD-10, we encourage public input for future discussion. As
we discussed in the FY 2018 IPPS/LTCH PPS final rule, we recognize a
need to further examine the current list of edits and the definitions
of those edits. We continue to encourage public comments on whether
there are additional concerns with the current edits, including
specific edits or language that should be removed or revised, edits
that should be combined, or new edits that should be added to assist in
detecting errors or inaccuracies in the coded data. Comments should be
directed to the MS-DRG Classification Change Mailbox located at:
[email protected] by November 1, 2018 for FY 2020.
14. Proposed Changes to Surgical Hierarchies
Some inpatient stays entail multiple surgical procedures, each one
of which, occurring by itself, could result in assignment of the case
to a different MS-DRG within the MDC to which the principal diagnosis
is assigned. Therefore, it is necessary to have a decision rule within
the GROUPER by which these cases are assigned to a single MS-DRG. The
surgical hierarchy, an ordering of surgical classes from most
resource[dash]intensive to least resource[dash]intensive, performs that
function. Application of this hierarchy ensures that cases involving
multiple surgical procedures are assigned to the MS-DRG associated with
the most resource[dash]intensive surgical class.
A surgical class can be composed of one or more MS-DRGs. For
example, in MDC 11, the surgical class ``kidney transplant'' consists
of a single MS-DRG (MS-DRG 652) and the class ``major bladder
procedures'' consists of three MS-DRGs (MS-DRGs 653, 654, and 655).
Consequently, in many cases, the surgical hierarchy has an impact on
more than one MS-DRG. The methodology for determining the most
resource-intensive surgical class involves weighting the average
resources for each MS-DRG by frequency to determine the weighted
average resources for each surgical class. For example, assume surgical
class A includes MS-DRGs 001 and 002 and surgical class B includes MS-
DRGs 003, 004, and 005. Assume also that the average costs of MS-DRG
001 are higher than that of MS-DRG 003, but the average costs of MS-
DRGs 004 and 005 are higher than the average costs of MS-DRG 002. To
determine whether surgical class A should be higher or lower than
surgical class B in the surgical hierarchy, we would weigh the average
costs of each MS-DRG in the class by frequency (that is, by the number
of cases in the MS-DRG) to determine average resource consumption for
the surgical class. The surgical classes would then be ordered from the
class with the highest average resource utilization to that with the
lowest, with the exception of ``other O.R. procedures'' as discussed in
this proposed rule.
This methodology may occasionally result in assignment of a case
involving multiple procedures to the lower[dash]weighted MS-DRG (in the
highest, most resource[dash]intensive surgical class) of the available
alternatives. However, given that the logic underlying the surgical
hierarchy provides that the GROUPER search for the procedure in the
most resource[dash]intensive surgical class, in cases involving
multiple procedures, this result is sometimes unavoidable.
We note that, notwithstanding the foregoing discussion, there are a
few instances when a surgical class with a lower average cost is
ordered above a surgical class with a higher average cost. For example,
the ``other O.R. procedures'' surgical class is uniformly ordered last
in the surgical hierarchy of each MDC in which it occurs, regardless of
the fact that the average costs for the MS-DRG or MS-DRGs in that
surgical class may be higher than those for other surgical classes in
the MDC. The ``other O.R. procedures'' class is a group of procedures
that are only infrequently related to the diagnoses in the MDC, but are
still occasionally performed on patients with cases assigned to the MDC
with these diagnoses. Therefore, assignment to these surgical classes
should only occur if no other surgical class more closely related to
the diagnoses in the MDC is appropriate.
A second example occurs when the difference between the average
costs for two surgical classes is very small. We have found that small
differences generally do not warrant reordering of the hierarchy
because, as a result of reassigning cases on the basis of the hierarchy
change, the average costs are likely to shift such that the
higher[dash]ordered surgical class has lower average costs than the
class ordered below it.
Based on the changes that we are proposing to make in this FY 2019
IPPS/LTCH PPS proposed rule, as discussed in section II.F.10. of the
preamble of this proposed rule, we are proposing to revise the surgical
hierarchy for MDC 14 (Pregnancy, Childbirth & the Puerperium) as
follows: In MDC 14, we are proposing to delete MS-DRGs 765 and 766
(Cesarean Section with and without CC/MCC, respectively) and MS-DRG 767
(Vaginal Delivery with Sterilization and/or D&C) from the surgical
hierarchy. We are proposing to sequence proposed new MS-DRGs 783, 784,
and 785 (Cesarean Section with Sterilization with MCC, with CC and
without CC/MCC, respectively) above proposed new MS-DRGs 786, 787, and
788 (Cesarean Section without Sterilization with MCC, with CC and
without CC/MCC, respectively). We are proposing to sequence proposed
new MS-DRGs 786, 787, and 788 (Cesarean Section without Sterilization
with MCC, with CC and without CC/MCC, respectively) above MS-DRG 768
(Vaginal Delivery with O.R. Procedure Except Sterilization and/or D&C).
We also are proposing to sequence proposed new MS-DRGs 796, 797, and
798 (Vaginal Delivery with Sterilization/D&C with MCC, with CC and
without CC/MCC, respectively) below MS-DRG 768 and above MS-DRG 770
(Abortion with D&C, Aspiration Curettage or Hysterotomy). Finally, we
are proposing to sequence proposed new MS-DRGs 817, 818, and 819 (Other
Antepartum Diagnoses with O.R. procedure with

[[Page 20236]]

MCC, with CC and without CC/MCC, respectively) below MS-DRG 770 and
above MS-DRG 769 (Postpartum and Post Abortion Diagnoses with O.R.
Procedure). Our proposals for Appendix D MS-DRG Surgical Hierarchy by
MDC and MS-DRG of the ICD-10 MS-DRG Definitions Manual Version 36 are
illustrated in the following table.

Proposed Surgical Hierarchy: MDC 14
[Pregnancy, childbirth and the puerperium]
------------------------------------------------------------------------

------------------------------------------------------------------------
Proposed New MS-DRGs 783-785........... Cesarean Section with
Sterilization.
Proposed New MS-DRGs 786-788........... Cesarean Section without
Sterilization.
MS-DRG 768............................. Vaginal Delivery with O.R.
Procedures.
Proposed New MS-DRGs 796-798........... Vaginal Delivery with
Sterilization/D&C.
MS-DRG 770............................. Abortion with D&C, Aspiration
Curettage or Hysterotomy.
Proposed New MS-DRGs 817-819........... Other Antepartum Diagnoses with
O.R. Procedure.
MS-DRG 769............................. Postpartum and Post Abortion
Diagnoses with O.R. Procedure.
------------------------------------------------------------------------

We are inviting public comments on our proposals.
As with other MS-DRG related issues, we encourage commenters to
submit requests to examine ICD-10 claims pertaining to the surgical
hierarchy via the CMS MS[dash]DRG Classification Change Request Mailbox
located at: [email protected] by November 1, 2018
for FY 2020 consideration.
15. Proposed Changes to the MS-DRG Diagnosis Codes for FY 2019
a. Background of the CC List and the CC Exclusions List
Under the IPPS MS-DRG classification system, we have developed a
standard list of diagnoses that are considered CCs. Historically, we
developed this list using physician panels that classified each
diagnosis code based on whether the diagnosis, when present as a
secondary condition, would be considered a substantial complication or
comorbidity. A substantial complication or comorbidity was defined as a
condition that, because of its presence with a specific principal
diagnosis, would cause an increase in the length-of-stay by at least 1
day in at least 75 percent of the patients. However, depending on the
principal diagnosis of the patient, some diagnoses on the basic list of
complications and comorbidities may be excluded if they are closely
related to the principal diagnosis. In FY 2008, we evaluated each
diagnosis code to determine its impact on resource use and to determine
the most appropriate CC subclassification (non-CC, CC, or MCC)
assignment. We refer readers to sections II.D.2. and 3. of the preamble
of the FY 2008 IPPS final rule with comment period for a discussion of
the refinement of CCs in relation to the MS[dash]DRGs we adopted for FY
2008 (72 FR 47152 through 47171).
b. Proposed Additions and Deletions to the Diagnosis Code Severity
Levels for FY 2019
The following tables identifying the proposed additions and
deletions to the MCC severity levels list and the proposed additions
and deletions to the CC severity levels list for FY 2019 are available
via the Internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/.
Table 6I.1--Proposed Additions to the MCC List--FY 2019;
Table 6I.2--Proposed Deletions to the MCC List--FY 2019;
Table 6J.1--Proposed Additions to the CC List--FY 2019; and
Table 6J.2--Proposed Deletions to the CC List--FY 2019.
We are inviting public comments on our proposed severity level
designations for the diagnosis codes listed in Table 6I.1. and Table
6J.1. We note that, for Table 6I.2. and Table 6J.2., the proposed
deletions are a result of code expansions, with the exception of
diagnosis codes B20 and J80, which are the result of proposed severity
level designation changes. Therefore, the diagnosis codes on these
lists will no longer be valid codes, effective FY 2019.
We refer readers to the Tables 6I.1, 6I.2, 6J.1, and 6J.2
associated with this proposed rule, which are available via the
Internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/.
c. Principal Diagnosis Is Its Own CC or MCC
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38060), we provided
the public with notice of our plans to conduct a comprehensive review
of the CC and MCC lists for FY 2019. In the FY 2018 IPPS/LTCH PPS final
rule (82 FR 38056 through 38057), we also finalized our proposal to
maintain the existing lists of principal diagnosis codes in Table 6L.--
Principal Diagnosis Is Its Own MCC List and Table 6M.--Principal
Diagnosis Is Its Own CC List for FY 2018, without any changes to the
existing lists, noting our plans to conduct a comprehensive review of
the CC and MCC lists for FY 2019 (82 FR 38060). We stated that having
multiple lists for CC and MCC diagnoses when reported as a principal
and/or secondary diagnosis may not provide an accurate representation
of resource utilization for the MS-DRGs.
We also stated that the purpose of the Principal Diagnosis Is Its
Own CC or MCC Lists was to ensure consistent MS-DRG assignment between
the ICD-9-CM and ICD-10 MS-DRGs. The Principal Diagnosis Is Its Own CC
or MCC Lists were developed for the FY 2016 implementation of the ICD-
10 version of the MS-DRGs to facilitate replication of the ICD-9-CM MS-
DRGs. As part of our efforts to replicate the ICD-9-CM MS-DRGs, we
implemented logic that may have increased the complexity of the MS-DRG
assignment hierarchy and altered the format of the ICD-10 MS-DRG
Definitions Manual. Two examples of workarounds used to facilitate
replication are the proliferation of procedure clusters in the surgical
MS-DRGs and the creation of the Principal Diagnosis Is Its Own CC or
MCC Lists special logic.
The following paragraph was added to the Version 33 ICD-10 MS-DRG
Definitions Manual to explain the use of the Principal Diagnosis Is Its
Own CC or MCC Lists: ``A few ICD-10-CM diagnosis codes express
conditions that are normally coded in ICD-9-CM using two or more ICD-9-
CM diagnosis codes. In the interest of ensuring that the ICD-10 MS-DRGs
Version 33 places a patient in the same DRG regardless whether the
patient record were to be coded in ICD-9-CM or ICD-10-CM/PCS, whenever
one of these ICD-10-CM combination codes is used as principal
diagnosis, the cluster of ICD-9-CM codes that would be coded on an ICD-
9-CM record is considered. If one of the ICD-9-CM codes in the cluster
is a CC

[[Page 20237]]

or MCC, then the single ICD-10-CM combination code used as a principal
diagnosis must also imply the CC or MCC that the ICD-9-CM cluster would
have presented. The ICD-10-CM diagnoses for which this implication must
be made are listed here.'' Versions 34 and 35 of the ICD-10 MS-DRG
Definitions Manual also include this special logic for the MS-DRGs.
The Principal Diagnosis Is Its Own CC or MCC Lists were developed
in the absence of ICD-10 coded data by mapping the ICD-9-CM diagnosis
codes to the new ICD-10-CM combination codes. CMS has historically used
clinical judgment combined with data analysis to assign a principal
diagnosis describing a complex or severe condition to the appropriate
DRG or MS-DRG. The initial ICD-10 version of the MS[dash]DRGs
replicated from the ICD-9 version can now be evaluated using clinical
judgment combined with ICD-10 coded data because it is no longer
necessary to replicate MS-DRG assignment across the ICD-9 and ICD-10
versions of the MS-DRGs for purposes of calculating relative weights.
Now that ICD-10 coded data are available, in addition to using the data
for calculating relative weights, ICD-10 data can be used to evaluate
the effectiveness of the special logic for assigning a severity level
to a principal diagnosis, as an indicator of resource utilization. To
evaluate the effectiveness of the special logic, we have conducted
analysis of the ICD-10 coded data combined with clinical review to
determine whether to propose to keep the special logic for assigning a
severity level to a principal diagnosis, or to propose to remove the
special logic and use other available means of assigning a complex
principal diagnosis to the appropriate MS[dash]DRG.
Using claims data from the September 2017 update of the FY 2017
MedPAR file, we employed the following method to determine the impact
of removing the special logic used in the current Version 35 GROUPER to
process claims containing a code on the Principal Diagnosis Is Its Own
CC or MCC Lists. Edits and cost estimations used for relative weight
calculations were applied, resulting in 9,070,073 IPPS claims analyzed
for this special logic impact evaluation. We refer readers to section
II.G. of the preamble of this proposed rule for further information
regarding the methodology for calculation of the proposed relative
weights.
First, we identified the number of cases potentially impacted by
the special logic. We identified 310,184 cases reporting a principal
diagnosis on the Principal Diagnosis Is Its Own CC or MCC lists. Of the
310,184 total cases that reported a principal diagnosis code on the
Principal Diagnosis Is Its Own CC or MCC Lists, 204,749 cases also
reported a secondary diagnosis code at the same severity level or
higher severity level, and therefore the special logic had no impact on
MS-DRG assignment. However, of the 310,184 total cases, there were
105,435 cases that did not report a secondary diagnosis code at the
same severity level or higher severity level, and therefore the special
logic could potentially impact MS-DRG assignment, depending on the
specific severity leveling structure of the base DRG.
Next, we removed the special logic in the GROUPER that is used for
processing claims reporting a principal diagnosis on the Principal
Diagnosis Is Its Own CC or MCC Lists, thereby creating a Modified
Version 35 GROUPER. Using this Modified Version 35 GROUPER, we
reprocessed the 105,435 claims for which the principal diagnosis code
was the sole source of a MCC or CC on the case, to obtain data for
comparison showing the effect of removing the special logic.
After removing the special logic in the Version 35 GROUPER for
processing claims containing diagnosis codes on the Principal Diagnosis
Is Its Own CC or MCC Lists, and reprocessing the claims using the
Modified Version 35 GROUPER software, we found that 18,596 (6 percent)
of the 310,184 cases reporting a principal diagnosis on the Principal
Diagnosis Is Its Own CC or MCC Lists resulted in a different MS-DRG
assignment. Overall, the number of claims impacted by removal of the
special logic (18,596) represents 0.2 percent of the 9,070,073 IPPS
claims analyzed.
Below we provide a summary of the steps that we followed for the
analysis performed.
Step 1. We analyzed 9,070,073 claims to determine the number of
cases impacted by the special logic.

With Special Logic--9,070,073 Claims Analyzed
------------------------------------------------------------------------

------------------------------------------------------------------------
Number of cases reporting a principal diagnosis from the 310,184
Principal Diagnosis Is Its Own CC/MCC lists (special
logic).................................................
Number of cases reporting an additional CC/MCC secondary 204,749
diagnosis code at or above the level of the designated
severity level of the principal diagnosis..............
Number of cases not reporting an additional CC/MCC 105,435
secondary diagnosis code...............................
------------------------------------------------------------------------

Step 2. We removed special logic from GROUPER and created a
modified GROUPER.
Step 3. We reprocessed 105,435 claims with modified GROUPER.

Without Special Logic--105,435 Claims Analyzed
------------------------------------------------------------------------

------------------------------------------------------------------------
Number of cases reporting a principal diagnosis from the 310,184
Principal Diagnosis Is Its Own CC/MCC lists............
Number of cases resulting in different MS-DRG assignment 18,596
------------------------------------------------------------------------

To estimate the overall financial impact of removing the special
logic from the GROUPER, we calculated the aggregate change in estimated
payment for the MS-DRGs by comparing average costs for each MS-DRG
affected by the change, before and after removing the special logic.
Before removing the special logic in the Version 35 GROUPER, the cases
impacted by the special logic had an estimated average payment of $58
million above the average costs for all the MS-DRGs to which the claim
was originally assigned. After removing the special logic in the
Version 35 GROUPER, the 18,596 cases impacted by the special logic had
an estimated average payment of $39 million below the average costs for
the newly assigned MS-DRGs.
We performed regression analysis to compare the proportion of
variance in the MS-DRGs with and without the special logic. The results
of the

[[Page 20238]]

regression analysis showed a slight decrease in variance when the logic
was removed. While the decrease itself was not statistically
significant (an R-squared of 36.2603 percent after the special logic
was removed, compared with an R-squared of 36.2501 percent in the
current version 35 GROUPER), we note that the proportion of variance
across the MS-DRGs essentially stayed the same, and certainly did not
increase, when the special logic was removed.
We further examined the 18,596 claims that were impacted by the
special logic in the GROUPER for processing claims containing a code on
the Principal Diagnosis Is Its Own CC or MCC Lists. The 18,596 claims
were analyzed by the principal diagnosis code and the MS-DRG assigned,
resulting in 588 principal diagnosis and MS-DRG combinations or
subsets. Of the 588 subsets of cases that utilized the special logic,
556 of the 588 subsets (95 percent) had fewer than 100 cases, 529 of
the 588 subsets (90 percent) had fewer than 50 cases, and 489 of the
588 subsets (83 percent) had fewer than 25 cases.
We examined the 32 subsets of cases (5 percent of the 588 subsets)
that utilized the special logic and had 100 or more cases. Of the 32
subsets of cases, 18 (56 percent) are similar in terms of average costs
and length of stay to the MS-DRG assignment that results when the
special logic is removed, and 14 of the 32 subsets of cases (44
percent) are similar in terms of average costs and length of stay to
the MS-DRG assignment that results when the special logic is utilized.
The table below contains examples of four subsets of cases that
utilize the special logic, comparing average length of stay and average
costs between two MS-DRGs within a base DRG, corresponding to the MS-
DRG assigned when the special logic is removed and the MS-DRG assigned
when the special logic is utilized. All four subsets of cases involve
the principal diagnosis code E11.52 (Type 2 diabetes mellitus with
diabetic peripheral angiopathy with gangrene). There are four subsets
of cases in this example because the records involving the principal
diagnosis code E11.52 are assigned to four different base DRGs, one
medical MS-DRG and three surgical MS[dash]DRGs, depending on the
procedure code(s) reported on the claim. All subsets of cases contain
more than 100 claims. In three of the four subsets, the cases are
similar in terms of average length of stay and average costs to the MS-
DRG assignment that results when the special logic is removed, and in
one of the four subsets, the cases are similar in terms of average
length of stay and average costs to the MS-DRG assignment that results
when the special logic is utilized.
As shown in the following table, using ICD-10-CM diagnosis code
E11.52 (Type 2 diabetes mellitus with diabetic peripheral angiopathy
with gangrene) as our example, the data findings show four different
MS-DRG pairs for which code E11.52 was the principal diagnosis on the
claim and where the special logic impacted MS-DRG assignment. For the
first MS-DRG pair, we examined MS-DRGs 240 and 241 (Amputation for
Circulatory System Disorders Except Upper Limb and Toe with CC and
without CC/MCC, respectively). We found 436 cases reporting diagnosis
code E11.52 as the principal diagnosis, with an average length of stay
of 5.5 days and average costs of $11,769. These 436 cases are assigned
to MS-DRG 240 with the special logic utilized, and assigned to MS-DRG
241 with the special logic removed. The total number of cases reported
in MS-DRG 240 was 7,675, with an average length of stay of 8.3 days and
average costs of $17,876. The total number of cases reported in MS-DRG
241 was 778, with an average length of stay of 5.0 days and average
costs of $10,882. The 436 cases are more similar to MS-DRG 241 in terms
of length of stay and average cost and less similar to MS-DRG 240.
For the second MS-DRG pair, we examined MS-DRGs 256 and 257 (Upper
Limb and Toe Amputation for Circulatory System Disorders with CC and
without CC/MCC, respectively). We found 193 cases reporting ICD-10-CM
diagnosis code E11.52 as the principal diagnosis, with an average
length of stay of 4.2 days and average costs of $8,478. These 193 cases
are assigned to MS-DRG 256 with the special logic utilized, and
assigned to MS-DRG 257 with the special logic removed. The total number
of cases reported in MS-DRG 256 was 2,251, with an average length of
stay of 6.1 days and average costs of $11,987. The total number of
cases reported in MS-DRG 257 was 115, with an average length of stay of
4.6 days and average costs of $7,794. These 193 cases are more similar
to MS-DRG 257 in terms of average length of stay and average costs and
less similar to MS-DRG 256.
For the third MS-DRG pair, we examined MS-DRGs 300 and 301
(Peripheral Vascular Disorders with CC and without CC/MCC,
respectively). We found 185 cases reporting ICD-10-CM diagnosis code
E11.52 as the principal diagnosis, with an average length of stay of
3.6 days and average costs of $5,981. These 185 cases are assigned to
MS-DRG 300 with the special logic utilized, and assigned to MS-DRG 301
with the special logic removed. The total number of cases reported in
MS-DRG 300 was 29,327, with an average length of stay of 4.1 days and
average costs of $7,272. The total number of cases reported in MS-DRG
301 was 9,611, with an average length of stay of 2.8 days and average
costs of $5,263. These 185 cases are more similar to MS-DRG 301 in
terms of average length of stay and average costs and less similar to
MS-DRG 300.
For the fourth MS-DRG pair, we examined MS-DRGs 253 and 254 (Other
Vascular Procedures with CC and without CC/MCC, respectively). We found
225 cases reporting diagnosis code E11.52 as the principal diagnosis,
with an average length of stay of 5.2 days and average costs of
$17,901. These 225 cases are assigned to MS-DRG 253 with the special
logic utilized, and assigned to MS-DRG 254 with the special logic
removed. The total number of cases reported in MS-DRG 253 was 25,714,
with an average length of stay of 5.4 days and average costs of
$18,986. The total number of cases reported in MS-DRG 254 was 12,344,
with an average length of stay of 2.8 days and average costs of
$13,287. Unlike the previous three MS-DRG pairs, these 225 cases are
more similar to MS-DRG 253 in terms of average length of stay and
average costs and less similar to MS-DRG 254.

MS-DRG Pairs for Principal Diagnosis ICD-10-CM Code E11.52 With and Without Special MS-DRG Logic
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRGs 240 and 241--Special logic impacted cases with ICD-10-CM 436 5.5 $11,769
code E11.52 as principal diagnosis.............................
MS-DRG 240--All cases........................................... 7,675 8.3 17,876
MS-DRG 241--All cases........................................... 778 5.0 10,882

[[Page 20239]]

MS-DRGs 253 and 254--Special logic impacted cases with ICD-10-CM 225 5.2 17,901
E11.52 as principal diagnosis..................................
MS-DRG 253--All cases........................................... 25,714 5.4 18,986
MS-DRG 254--All cases........................................... 12,344 2.8 13,287
MS-DRGs 256 and 257--Special logic impacted cases with ICD-10-CM 193 4.2 8,478
E11.52 as principal diagnosis..................................
MS-DRG 256--All cases........................................... 2,251 6.1 11,987
MS-DRG 257--All cases........................................... 115 4.6 7,794
MS-DRGs 300 and 301--Special logic impacted cases with ICD-10-CM 185 3.6 5,981
E11.52 as principal diagnosis..................................
MS-DRG 300--All cases........................................... 29,327 4.1 7,272
MS-DRG 301--All cases........................................... 9,611 2.8 5,263
----------------------------------------------------------------------------------------------------------------

Based on our analysis of the data, we believe that there may be
more effective indicators of resource utilization than the Principal
Diagnosis Is Its Own CC or MCC Lists and the special logic used to
assign clinical severity to a principal diagnosis. As stated earlier in
this discussion, it is no longer necessary to replicate MS-DRG
assignment across the ICD-9 and ICD-10 versions of the MS-DRGs. The
available ICD-10 data can now be used to evaluate other indicators of
resource utilization.
Therefore, as an initial recommendation from the first phase in our
comprehensive review of the CC and MCC lists, we are proposing to
remove the special logic in the GROUPER for processing claims
containing a diagnosis code from the Principal Diagnosis Is Its Own CC
or MCC Lists, and we are proposing to delete the tables containing the
lists of principal diagnosis codes, Table 6L.--Principal Diagnosis Is
Its Own MCC List and Table 6M.--Principal Diagnosis Is Its Own CC List,
from the ICD-10 MS-DRG Definitions Manual for FY 2019. We are inviting
public comments on our proposals.
d. Proposed CC Exclusions List for FY 2019
In the September 1, 1987 final notice (52 FR 33143) concerning
changes to the DRG classification system, we modified the GROUPER logic
so that certain diagnoses included on the standard list of CCs would
not be considered valid CCs in combination with a particular principal
diagnosis. We created the CC Exclusions List for the following reasons:
(1) To preclude coding of CCs for closely related conditions; (2) to
preclude duplicative or inconsistent coding from being treated as CCs;
and (3) to ensure that cases are appropriately classified between the
complicated and uncomplicated DRGs in a pair.
In the May 19, 1987 proposed notice (52 FR 18877) and the September
1, 1987 final notice (52 FR 33154), we explained that the excluded
secondary diagnoses were established using the following five
principles:
Chronic and acute manifestations of the same condition
should not be considered CCs for one another;
Specific and nonspecific (that is, not otherwise specified
(NOS)) diagnosis codes for the same condition should not be considered
CCs for one another;
Codes for the same condition that cannot coexist, such as
partial/total, unilateral/bilateral, obstructed/unobstructed, and
benign/malignant, should not be considered CCs for one another;
Codes for the same condition in anatomically proximal
sites should not be considered CCs for one another; and
Closely related conditions should not be considered CCs
for one another.
The creation of the CC Exclusions List was a major project
involving hundreds of codes. We have continued to review the remaining
CCs to identify additional exclusions and to remove diagnoses from the
master list that have been shown not to meet the definition of a CC. We
refer readers to the FY 2014 IPPS/LTCH PPS final rule (78 FR 50541
through 50544) for detailed information regarding revisions that were
made to the CC and CC Exclusion Lists under the ICD-9-CM MS-DRGs.
In this proposed rule, for FY 2019, we are proposing changes to the
ICD-10 MS-DRGs Version 36 CC Exclusion List. Therefore, we developed
Table 6G.1.--Proposed Secondary Diagnosis Order Additions to the CC
Exclusions List--FY 2019; Table 6G.2.--Proposed Principal Diagnosis
Order Additions to the CC Exclusions List--FY 2019; Table 6H.1.--
Proposed Secondary Diagnosis Order Deletions to the CC Exclusions
List--FY 2019; and Table 6H.2.--Proposed Principal Diagnosis Order
Deletions to the CC Exclusions List--FY 2019. For Table 6G.1, each
secondary diagnosis code proposed for addition to the CC Exclusion List
is shown with an asterisk and the principal diagnoses proposed to
exclude the secondary diagnosis code are provided in the indented
column immediately following it. For Table 6G.2, each of the principal
diagnosis codes for which there is a CC exclusion is shown with an
asterisk and the conditions proposed for addition to the CC Exclusion
List that will not count as a CC are provided in an indented column
immediately following the affected principal diagnosis. For Table 6H.1,
each secondary diagnosis code proposed for deletion from the CC
Exclusion List is shown with an asterisk followed by the principal
diagnosis codes that currently exclude it. For Table 6H.2, each of the
principal diagnosis codes is shown with an asterisk and the proposed
deletions to the CC Exclusions List are provided in an indented column
immediately following the affected principal diagnosis. Tables 6G.1.,
6G.2., 6H.1., and 6H.2. associated with this proposed rule are
available via the Internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/.
To identify new, revised and deleted diagnosis and procedure codes,
for FY 2019, we developed Table 6A.--New Diagnosis Codes, Table 6B.--
New Procedure Codes, Table 6C.--Invalid Diagnosis Codes, Table 6D.--
Invalid Procedure Codes, Table 6E.--Revised Diagnosis Code Titles, and
Table 6F.--Revised Procedure Code Titles for this proposed rule.
These tables are not published in the Addendum to the proposed rule
but are available via the Internet on the CMS

[[Page 20240]]

website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/ as described in section VI. of the
Addendum to this proposed rule. As discussed in section II.F.18. of the
preamble of this proposed rule, the code titles are adopted as part of
the ICD-10 (previously ICD-9-CM) Coordination and Maintenance Committee
process. Therefore, although we publish the code titles in the IPPS
proposed and final rules, they are not subject to comment in the
proposed or final rules.
In this FY 2019 IPPS/LTCH PPS proposed rule, we are inviting public
comments on the MDC and MS-DRG assignments for the new diagnosis and
procedure codes as set forth in Table 6A.--New Diagnosis Codes and
Table 6B.--New Procedure Codes. In addition, we are inviting public
comments on the proposed severity level designations for the new
diagnosis codes as set forth in Table 6A. and the proposed O.R. status
for the new procedure codes as set forth in Table 6B.
We are making available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/
the following tables associated with this proposed rule:
Table 6A.--New Diagnosis Codes--FY 2019;
Table 6B.--New Procedure Codes--FY 2019;
Table 6C.--Invalid Diagnosis Codes--FY 2019;
Table 6D.--Invalid Procedure Codes--FY 2019;
Table 6E.--Revised Diagnosis Code Titles--FY 2019;
Table 6F.--Revised Procedure Code Titles--FY 2019;
Table 6G.1.--Proposed Secondary Diagnosis Order Additions
to the CC Exclusions List--FY 2019;
Table 6G.2.--Proposed Principal Diagnosis Order Additions
to the CC Exclusions List--FY 2019;
Table 6H.1.--Proposed Secondary Diagnosis Order Deletions
to the CC Exclusions List--FY 2019;
Table 6H.2.--Proposed Principal Diagnosis Order Deletions
to the CC Exclusions List--FY 2019;
Table 6I.1.--Proposed Additions to the MCC List--FY 2019;
Table 6I.2.--Proposed Deletions to the MCC List--FY 2019;
Table 6J.1.--Proposed Additions to the CC List--FY 2019;
and
Table 6J.2.--Proposed Deletions to the CC List--FY 2019.
We note that, as discussed in section II.F.15.c. of the preamble of
this proposed rule, we are proposing to delete Table 6L. and Table 6M.
from the ICD-10 MS-DRG Definitions Manual for FY 2019.
16. Comprehensive Review of CC List for FY 2019
a. Overview of Comprehensive CC/MCC Analysis
In the FY 2008 IPPS/LTCH PPS final rule (72 FR 47159), we described
our process for establishing three different levels of CC severity into
which we would subdivide the diagnosis codes. The categorization of
diagnoses as an MCC, CC, or non[dash]CC was accomplished using an
iterative approach in which each diagnosis was evaluated to determine
the extent to which its presence as a secondary diagnosis resulted in
increased hospital resource use. We refer readers to the FY 2008 IPPS/
LTCH PPS final rule (72 FR 47159) for a complete discussion of our
approach. Since this comprehensive analysis was completed for FY 2008,
we have evaluated diagnosis codes individually when receiving requests
to change the severity level of specific diagnosis codes. However,
given the transition to ICD-10-CM and the significant changes that have
occurred to diagnosis codes since this review, we believe it is
necessary to conduct a comprehensive analysis once again. We have begun
this analysis and will discuss our findings in future rulemaking. We
are currently using the same methodology utilized in FY 2008 and
described below to conduct this analysis.
For each secondary diagnosis, we measured the impact in resource
use for the following three subsets of patients:
(1) Patients with no other secondary diagnosis or with all other
secondary diagnoses that are non-CCs.
(2) Patients with at least one other secondary diagnosis that is a
CC but none that is an MCC.
(3) Patients with at least one other secondary diagnosis that is an
MCC.
Numerical resource impact values were assigned for each diagnosis
as follows:

------------------------------------------------------------------------
Value Meaning
------------------------------------------------------------------------
0................................ Significantly below expected value
for the non-CC subgroup.
1................................ Approximately equal to expected value
for the non-CC subgroup.
2................................ Approximately equal to expected value
for the CC subgroup.
3................................ Approximately equal to expected value
for the MCC subgroup.
4................................ Significantly above the expected
value for the MCC subgroup.
------------------------------------------------------------------------

Each diagnosis for which Medicare data were available was evaluated
to determine its impact on resource use and to determine the most
appropriate CC subclass (non[dash]CC, CC, or MCC) assignment. In order
to make this determination, the average cost for each subset of cases
was compared to the expected cost for cases in that subset. The
following format was used to evaluate each diagnosis:

--------------------------------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------------------------------
Code Diagnosis Cnt1 C1 Cnt2 C2 Cnt3 C3
--------------------------------------------------------------------------------------------------------------------------------------------------------

Count (Cnt) is the number of patients in each subset and C1, C2,
and C3 are a measure of the impact on resource use of patients in each
of the subsets. The C1, C2, and C3 values are a measure of the ratio of
average costs for patients with these conditions to the expected
average cost across all cases. The C1 value reflects a patient with no
other secondary diagnosis or with all other secondary diagnoses that
are non-CCs. The C2 value reflects a patient with at least one other
secondary diagnosis that is a CC but none that is a major CC. The C3
value reflects a patient with at least one other secondary diagnosis
that is a major CC. A value close to 1.0 in the C1 field would suggest
that the code produces the same expected value as a non-CC diagnosis.
That is, average costs for the case are similar to the expected average
costs for that subset and the diagnosis is not expected to increase
resource usage. A higher value in the C1 (or C2 and C3) field suggests
more resource usage is associated with the diagnosis and an increased
likelihood that it is more like a CC or major CC than a non-CC. Thus, a
value close to 2.0 suggests the condition is more like a CC than a non-
CC but not as significant in resource usage as an MCC. A value close to
3.0 suggests the condition is expected to consume resources more
similar to an MCC than a CC or non-CC. For example, a C1 value of 1.8
for a secondary diagnosis means that for the subset of patients who
have the secondary diagnosis and have either no other secondary
diagnosis present, or all the other secondary diagnoses present are
non[dash]CCs, the impact on resource use of the secondary diagnoses is
greater than the expected value for a non[dash]CC by an amount equal to
80

[[Page 20241]]

percent of the difference between the expected value of a CC and a non-
CC (that is, the impact on resource use of the secondary diagnosis is
closer to a CC than a non[dash]CC).
These mathematical constructs are used as guides in conjunction
with the judgment of our clinical advisors to classify each secondary
diagnosis reviewed as an MCC, CC or non-CC. Our clinical panel reviews
the resource use impact reports and suggests modifications to the
initial CC subclass assignments when clinically appropriate.
b. Requested Changes to Severity Levels
(1) Human Immunodeficiency Virus [HIV] Disease
We received a request that we consider changing the severity level
of ICD-10-CM diagnosis code B20 (Human immunodeficiency virus [HIV]
disease) from an MCC to a CC. We used the approach outlined above to
evaluate this request. The table below contains the data that were
evaluated for this request.

--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed
ICD-10-CM diagnosis code Cnt1 C1 Cnt2 C2 Cnt3 C3 Current CC CC
subclass subclass
--------------------------------------------------------------------------------------------------------------------------------------------------------
B20 (Human immunodeficiency virus [HIV] disease)........ 2,918 0.9946 8,938 2.1237 11,479 3.0960 MCC CC
--------------------------------------------------------------------------------------------------------------------------------------------------------

While the data did not strongly suggest that the categorization of
HIV as an MCC was inaccurate, our clinical advisors indicated that, for
many patients with HIV disease, symptoms are well controlled by
medications. Our clinical advisors stated that if these patients have
an HIV-related complicating disease, that complicating disease would
serve as a CC or an MCC. Therefore, they advised us that ICD-10-CM
diagnosis code B20 is more similar to a CC than an MCC. Based on the
data results and the advice of our clinical advisors, we are proposing
to change the severity level of ICD-10-CM diagnosis code B20 from an
MCC to a CC. We are inviting public comments on our proposal.
(2) Acute Respiratory Distress Syndrome
We also received a request to change the severity level for ICD-10-
CM diagnosis code J80 (Acute respiratory distress syndrome) from a CC
to a MCC. We used the approach outlined above to evaluate this request.
The following table contains the data that were evaluated for this
request.

--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed
ICD-10-CM diagnosis code Cnt1 C1 Cnt2 C2 Cnt3 C3 Current CC CC
subclass subclass
--------------------------------------------------------------------------------------------------------------------------------------------------------
J80 (Acute respiratory distress syndrome)............... 1,840 1.7704 6,818 2.5596 18,376 3.3428 CC MCC
--------------------------------------------------------------------------------------------------------------------------------------------------------

The data suggest that the resources involved in caring for a
patient with this condition are 77 percent greater than expected when
the patient has either no other secondary diagnosis present, or all the
other secondary diagnoses present are non[dash]CCs. The resources are
56 percent greater than expected when reported in conjunction with
another secondary diagnosis that is a CC, and 34 percent greater than
expected when reported in conjunction with another secondary diagnosis
code that is an MCC. Our clinical advisors agree that the resources
required to care for a patient with this secondary diagnosis are
consistent with those of an MCC. Therefore, we are proposing to change
the severity level of ICD-10-CM diagnosis code J80 from a CC to an MCC.
We are inviting public comments on our proposal.
(3) Encephalopathy
We also received a request to change the severity level for ICD-10-
CM diagnosis code G93.40 (Encephalopathy, unspecified) from an MCC to a
non-CC. The requestor pointed out that the nature of the encephalopathy
or its underlying cause should be coded. The requestor also noted that
unspecified heart failure is a non-CC. We used the approach outlined
earlier to evaluate this request. The following table contains the data
that were evaluated for this request.

--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed
ICD-10-CM diagnosis code Cnt1 C1 Cnt2 C2 Cnt3 C3 Current CC CC
subclass subclass
--------------------------------------------------------------------------------------------------------------------------------------------------------
G93.40 (Encephalopathy, unspecified).................... 1.840 16,306 1.8471 80,222 2.4901 139,066 MCC MCC
--------------------------------------------------------------------------------------------------------------------------------------------------------

The data suggest that the resources involved in caring for a
patient with this condition are 84 percent greater than expected when
the patient has either no other secondary diagnosis present, or all the
other secondary diagnoses present are non[dash]CCs. The resources are
15 percent lower than expected when reported in conjunction with
another secondary diagnosis that is a CC, and 49 percent greater than
expected when reported in conjunction with another secondary diagnosis
code that is an MCC. We note that the pattern observed in resource use
for the condition of unspecified heart failure (ICD-10-CM diagnosis
code I50.9) differs from that of unspecified encephalopathy. Our
clinical advisors reviewed this request and agree that the resources
involved in caring for a patient with this condition are aligned with
those of an MCC. Therefore, we are not proposing a change to the
severity level for ICD-10-CM diagnosis code G93.40. We are inviting
public comments on our proposal.
17. Review of Procedure Codes in MS DRGs 981 Through 983 and 987
Through 989
Each year, we review cases assigned to MS-DRGs 981, 982, and 983

[[Page 20242]]

(Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC,
with CC, and without CC/MCC, respectively) and MS-DRGs 987, 988, and
989 (Nonextensive O.R. Procedure Unrelated to Principal Diagnosis with
MCC, with CC, and without CC/MCC, respectively) to determine whether it
would be appropriate to change the procedures assigned among these MS-
DRGs. MS-DRGs 981 through 983 and 987 through 989 are reserved for
those cases in which none of the O.R. procedures performed are related
to the principal diagnosis. These MS-DRGs are intended to capture
atypical cases, that is, those cases not occurring with sufficient
frequency to represent a distinct, recognizable clinical group.
a. Moving Procedure Codes From MS-DRGs 981 Through 983 or MS-DRGs 987
Through 989 Into MDCs
We annually conduct a review of procedures producing assignment to
MS-DRGs 981 through 983 (Extensive O.R. Procedure Unrelated to
Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively) or MS-DRGs 987 through 989 (Nonextensive O.R. Procedure
Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively) on the basis of volume, by procedure, to see if it would
be appropriate to move procedure codes out of these MS-DRGs into one of
the surgical MS-DRGs for the MDC into which the principal diagnosis
falls. The data are arrayed in two ways for comparison purposes. We
look at a frequency count of each major operative procedure code. We
also compare procedures across MDCs by volume of procedure codes within
each MDC.
We identify those procedures occurring in conjunction with certain
principal diagnoses with sufficient frequency to justify adding them to
one of the surgical MS-DRGs for the MDC in which the diagnosis falls.
Based on the results of our review of the claims data from the
September 2017 update of the FY 2017 MedPAR file, we are not proposing
to move any procedures from MS-DRGs 981 through 983 or MS-DRGs 987
through 989 into one of the surgical MS-DRGs for the MDC into which the
principal diagnosis is assigned. We are inviting public comments on our
proposal to maintain the current structure of these MS-DRGs.
b. Reassignment of Procedures Among MS-DRGs 981 Through 983 and 987
Through 989
We also review the list of ICD-10-PCS procedures that, when in
combination with their principal diagnosis code, result in assignment
to MS-DRGs 981 through 983, or 987 through 989, to ascertain whether
any of those procedures should be reassigned from one of those two
groups of MS-DRGs to the other group of MS-DRGs based on average costs
and the length of stay. We look at the data for trends such as shifts
in treatment practice or reporting practice that would make the
resulting MS-DRG assignment illogical. If we find these shifts, we
would propose to move cases to keep the MS-DRGs clinically similar or
to provide payment for the cases in a similar manner. Generally, we
move only those procedures for which we have an adequate number of
discharges to analyze the data.
Based on the results of our review of the September 2017 update of
the FY 2017 MedPAR file, we are proposing to maintain the current
structure of MS-DRGs 981 through 983 and MS-DRGs 987 through 989.
We are inviting public comments on our proposal.
c. Adding Diagnosis or Procedure Codes to MDCs
We received a request recommending that CMS reassign cases for
congenital pectus excavatum (congenital depression of the sternum or
concave chest) when reported with a procedure describing repositioning
of the sternum (the Nuss procedure) from MS-DRGs 981, 982, and 983
(Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC,
with CC, and without CC/MCC, respectively) to MS-DRGs 515, 516, and 517
(Other Musculoskeletal System and Connective Tissue O.R. Procedures
with MCC, with CC, and without CC/MCC, respectively). ICD-10-CM
diagnosis code Q67.6 (Pectus excavatum) is reported for this congenital
condition and is currently assigned to MDC 4 (Diseases and Disorders of
the Respiratory System). ICD-10-PCS procedure code 0PS044Z (Reposition
sternum with internal fixation device, percutaneous endoscopic
approach) may be reported to identify the Nuss procedure and is
currently assigned to MDC 8 (Diseases and Disorders of the
Musculoskeletal System and Connective Tissue) in MS-DRGs 515, 516, and
517. The requester noted that acquired pectus excavatum (ICD-10-CM
diagnosis code M95.4) groups to MS-DRGs 515, 516, and 517 when reported
with a ICD-10-PCS procedure code describing repositioning of the
sternum and requested that cases involving diagnoses describing
congenital pectus excavatum also group to those MS-DRGs when reported
with a ICD-10-PCS procedure code describing repositioning of the
sternum.
Our analysis of this grouping issue confirmed that, when pectus
excavatum (ICD-10-CM diagnosis code Q67.6) is reported as a principal
diagnosis with a procedure such as the Nuss procedure (ICD-10-PCS
procedure code 0PS044Z), these cases group to MS-DRGs 981, 982, and
983. The reason for this grouping is because whenever there is a
surgical procedure reported on a claim, which is unrelated to the MDC
to which the case was assigned based on the principal diagnosis, it
results in an MS-DRG assignment to a surgical class referred to as
``unrelated operating room procedures.'' In the example provided,
because the ICD-10-CM diagnosis code Q67.6 describing pectus excavatum
is classified to MDC 4 and the ICD-10-PCS procedure code 0PS044Z is
classified to MDC 8, the GROUPER logic assigns this case to the
``unrelated operating room procedures'' set of MS-DRGs.
During our review of ICD-10-CM diagnosis code Q67.6, we also
reviewed additional ICD-10-CM diagnosis codes in the Q65 through Q79
code range to determine if there might be other conditions classified
to MDC 4 that describe congenital malformations and deformities of the
musculoskeletal system. We identified the following six ICD-10-CM
diagnosis codes:

[[Page 20243]]

We are proposing to reassign ICD-10-CM diagnosis code Q67.6, as
well as the additional six ICD-10-CM diagnosis codes above describing
congenital musculoskeletal conditions, from MDC 4 to MDC 8 where other
related congenital conditions that correspond to the musculoskeletal
system are classified, as discussed further below.
We identified other related ICD-10-CM diagnosis codes that are
currently assigned to MDC 8 in categories Q67 (Congenital
musculoskeletal deformities of head, face, spine and chest), Q76
(Congenital malformations of spine and bony thorax), and Q77
(Osteochondrodysplasia with defects of growth of tubular bones and
spine) that are listed in the following table.

------------------------------------------------------------------------
ICD-10-CM code Code description
------------------------------------------------------------------------
Q67.0..................... Congenital facial asymmetry.
Q67.1..................... Congenital compression facies.
Q67.2..................... Dolichocephaly.
Q67.3..................... Plagiocephaly.
Q67.4..................... Other congenital deformities of skull, face
and jaw.
Q67.5..................... Congenital deformity of spine.
Q67.8..................... Other congenital deformities of chest.
Q76.1..................... Klippel-Feil syndrome.
Q76.2..................... Congenital spondylolisthesis.
Q76.3..................... Congenital scoliosis due to congenital bony
malformation.
Q76.411................... Congenital kyphosis, occipito-atlanto-axial
region.
Q76.412................... Congenital kyphosis, cervical region.
Q76.413................... Congenital kyphosis, cervicothoracic region.
Q76.414................... Congenital kyphosis, thoracic region.
Q76.415................... Congenital kyphosis, thoracolumbar region.
Q76.419................... Congenital kyphosis, unspecified region.
Q76.425................... Congenital lordosis, thoracolumbar region.
Q76.426................... Congenital lordosis, lumbar region.
Q76.427................... Congenital lordosis, lumbosacral region.
Q76.428................... Congenital lordosis, sacral and
sacrococcygeal region.
Q76.429................... Congenital lordosis, unspecified region.
Q76.49.................... Other congenital malformations of spine, not
associated with scoliosis.
Q76.5..................... Cervical rib.
Q77.0..................... Achondrogenesis.
Q77.1..................... Thanatophoric short stature.
Q77.3..................... Chondrodysplasia punctate.
Q77.4..................... Achondroplasia.
Q77.5..................... Diastrophic dysplasia.
Q77.6..................... Chondroectodermal dysplasia.
Q77.7..................... Spondyloepiphyseal dysplasia.
Q77.8..................... Other osteochondrodysplasia with defects of
growth of tubular bones and spine.
Q77.9..................... Osteochondrodysplasia with defects of growth
of tubular bones and spine, unspecified.
------------------------------------------------------------------------

Next, we analyzed the MS-DRG assignments for the related codes
listed above and found that cases with the following conditions are
assigned to MS-DRGs 551 and 552 (Medical Back Problems with and without
MCC, respectively) under MDC 8.

------------------------------------------------------------------------
ICD-10-CM code Code description
------------------------------------------------------------------------
Q76.2..................... Congenital spondylolisthesis.
Q76.411................... Congenital kyphosis, occipito-atlanto-axial
region.
Q76.412................... Congenital kyphosis, cervical region.
Q76.413................... Congenital kyphosis, cervicothoracic region.
Q76.414................... Congenital kyphosis, thoracic region.
Q76.415................... Congenital kyphosis, thoracolumbar region.
Q76.419................... Congenital kyphosis, unspecified region.
Q76.49.................... Other congenital malformations of spine, not
associated with scoliosis.
------------------------------------------------------------------------

The remaining conditions shown below are assigned to MS-DRGs 564,
565, and 566 (Other Musculoskeletal System and Connective Tissue
Diagnoses with MCC, with CC, and without CC/MCC, respectively) under
MDC 8.

[[Page 20244]]

Q67.4..................... Other congenital deformities of skull, face
and jaw.
Q67.5..................... Congenital deformity of spine.
Q67.8..................... Other congenital deformities of chest.
Q76.1..................... Klippel-Feil syndrome.
Q76.3..................... Congenital scoliosis due to congenital bony
malformation.
Q76.425................... Congenital lordosis, thoracolumbar region.
Q76.426................... Congenital lordosis, lumbar region.
Q76.427................... Congenital lordosis, lumbosacral region.
Q76.428................... Congenital lordosis, sacral and
sacrococcygeal region.
Q76.429................... Congenital lordosis, unspecified region.
Q76.5..................... Cervical rib.
Q77.0..................... Achondrogenesis.
Q77.1..................... Thanatophoric short stature.
Q77.3..................... Chondrodysplasia punctate.
Q77.4..................... Achondroplasia.
Q77.5..................... Diastrophic dysplasia.
Q77.6..................... Chondroectodermal dysplasia.
Q77.7..................... Spondyloepiphyseal dysplasia.
Q77.8..................... Other osteochondrodysplasia with defects of
growth of tubular bones and spine.
Q77.9..................... Osteochondrodysplasia with defects of growth
of tubular bones and spine, unspecified.
------------------------------------------------------------------------

As a result of our review, we are proposing to reassign ICD-10-CM
diagnosis code Q67.6, as well as the additional six ICD-10-CM diagnosis
codes above describing congenital musculoskeletal conditions, from MDC
4 to MDC 8 in MS-DRGs 564, 565, and 566. Our clinical advisors agree
with this proposed reassignment because it is clinically appropriate
and consistent with the other related ICD-10-CM diagnosis codes grouped
in the Q65 through Q79 range that describe congenital malformations and
deformities of the musculoskeletal system that are classified under MDC
8 in MS-DRGs 564, 565, and 566. By reassigning ICD-10-CM diagnosis code
Q67.6 and the additional six ICD-10-CM diagnosis codes listed in the
table above from MDC 4 to MDC 8, cases reporting these ICD-10-CM
diagnosis codes in combination with the respective ICD-10-PCS procedure
code will reflect a more appropriate grouping from a clinical
perspective because they will now be classified under a surgical
musculoskeletal system related MS-DRG and will no longer result in an
MS-DRG assignment to the ``unrelated operating room procedures''
surgical class.
In summary, we are proposing to reassign ICD-10-CM diagnosis codes
Q67.6, Q67.7, Q76.6, Q76.7, Q76.8, Q76.9, and Q77.2 from MDC 4 to MDC 8
in MS-DRGs 564, 565, and 566 (Other Musculoskeletal System and
Connective Tissue Diagnoses with MCC, with CC, and without CC/MCC,
respectively). We are inviting public comments on our proposals.
We also received a request recommending that CMS reassign cases for
sternal fracture repair procedures from MS-DRGs 981, 982, and 983 and
from MS-DRGs 166, 167 and 168 (Other Respiratory System O.R. Procedures
with MCC, with CC and without CC/MCC, respectively) under MDC 4 to MS-
DRGs 515, 516, and 517 under MDC 8. The requester noted that clavicle
fracture repair procedures with an internal fixation device group to
MS-DRGs 515, 516, and 517 when reported with an ICD-10-CM diagnosis
code describing a fractured clavicle. However, sternal fracture repair
procedures with an internal fixation device group to MS-DRGs 981, 982,
and 983 or MS-DRGs 166, 167 and 168 when reported with an ICD-10-CM
diagnosis code describing a fracture of the sternum. According to the
requestor, because the clavicle and sternum are in the same anatomical
region of the body, it would appear that assignment to MS-DRGs 515,
516, and 517 would be more appropriate for sternal fracture repair
procedures.
The requestor provided the following list of ICD-10-PCS procedure
codes in its request for consideration to reassign to MS-DRGs 515, 516
and 517 when reported with an ICD-10-CM diagnosis code for sternal
fracture.

------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
0PS000Z................... Reposition sternum with rigid plate internal
fixation device, open approach.
0PS004Z................... Reposition sternum with internal fixation
device, open approach.
0PS00ZZ................... Reposition sternum, open approach.
0PS030Z................... Reposition sternum with rigid plate internal
fixation device, percutaneous approach.
0PS034Z................... Reposition sternum with internal fixation
device, percutaneous approach.
------------------------------------------------------------------------

We note that the above five ICD-10-PCS procedure codes that may be
reported to describe a sternal fracture repair are already assigned to
MS-DRGs 515, 516, and 517 under MDC 8. In addition, ICD-10-PCS
procedure codes 0PS000Z and 0PS030Z are assigned to MS-DRGs 166, 167
and 168 under MDC 4.
As noted in the previous discussion, whenever there is a surgical
procedure reported on a claim, which is unrelated to the MDC to which
the case was assigned based on the principal diagnosis, it results in
an MS-DRG assignment to a surgical class referred to as ``unrelated
operating room procedures.'' In the examples provided by the requestor,
when the ICD-10-CM diagnosis code describing a sternal fracture is
classified under MDC 4 and the ICD-10-PCS procedure code describing a
sternal fracture repair procedure is classified under MDC 8, the
GROUPER logic assigns these cases to the ``unrelated operating room
procedures'' group of MS-DRGs (981,

[[Page 20245]]

982, and 983) and when the ICD-10-CM diagnosis code describing a
sternal fracture is classified under MDC 4 and the ICD-10-PCS procedure
code describing a sternal repair procedure is also classified under MDC
4, the GROUPER logic assigns these cases to MS-DRG 166, 167, or 168.
For our review of this grouping issue and the request to have
procedures for sternal fracture repairs assigned to MDC 8, we analyzed
the ICD-10-CM diagnosis codes describing a sternal fracture currently
classified under MDC 4. We identified 10 ICD-10-CM diagnosis codes
describing a sternal fracture with an ``initial encounter'' classified
under MDC 4 that are listed in the following table.

------------------------------------------------------------------------
ICD-10-CM code Code description
------------------------------------------------------------------------
S22.20XA.................. Unspecified fracture of sternum, initial
encounter for closed fracture.
S22.20XB.................. Unspecified fracture of sternum, initial
encounter for open fracture.
S22.21XA.................. Fracture of manubrium, initial encounter for
closed fracture.
S22.21XB.................. Fracture of manubrium, initial encounter for
open fracture.
S22.22XA.................. Fracture of body of sternum, initial
encounter for closed fracture.
S22.22XB.................. Fracture of body of sternum, initial
encounter for open fracture.
S22.23XA.................. Sternal manubrial dissociation, initial
encounter for closed fracture.
S22.23XB.................. Sternal manubrial dissociation, initial
encounter for open fracture.
S22.24XA.................. Fracture of xiphoid process, initial
encounter for closed fracture.
S22.24XB.................. Fracture of xiphoid process, initial
encounter for open fracture.
------------------------------------------------------------------------

Our analysis of this grouping issue confirmed that when 1 of the 10
ICD-10-CM diagnosis codes describing a sternal fracture listed in the
table above from MDC 4 is reported as a principal diagnosis with an
ICD-10-PCS procedure code for a sternal repair procedure from MDC 8,
these cases group to MS-DRG 981, 982, or 983. We also confirmed that
when 1 of the 10 ICD-10-CM diagnosis codes describing a sternal
fracture listed in the table above from MDC 4 is reported as a
principal diagnosis with an ICD-10-PCS procedure code for a sternal
repair procedure from MDC 4, these cases group to MS-DRG 166, 167 or
168.
Our clinical advisors agree with the requested reclassification of
ICD-10-CM diagnosis codes S22.20XA, S22.20XB, S22.21XA, S22.21XB,
S22.22XA, S22.22XB, S22.23XA, S22.23XB, S22.24XA, and S22.24XB
describing a sternal fracture with an initial encounter from MDC 4 to
MDC 8. They advised that this requested reclassification is clinically
appropriate because it is consistent with the other related ICD-10-CM
diagnosis codes that describe fractures of the sternum and which are
classified under MDC 8. The ICD-10-CM diagnosis codes describing a
sternal fracture currently classified under MDC 8 to MS-DRGs 564, 565,
and 566 are listed in the following table.

------------------------------------------------------------------------
ICD-10-CM code Code description
------------------------------------------------------------------------
S22.20XD.................. Unspecified fracture of sternum, subsequent
encounter for fracture with routine
healing.
S22.20XG.................. Unspecified fracture of sternum, subsequent
encounter for fracture with delayed
healing.
S22.20XK.................. Unspecified fracture of sternum, subsequent
encounter for fracture with nonunion.
S22.20XS.................. Unspecified fracture of sternum, sequela.
S22.21XD.................. Fracture of manubrium, subsequent encounter
for fracture with routine healing.
S22.21XG.................. Fracture of manubrium, subsequent encounter
for fracture with delayed healing.
S22.21XK.................. Fracture of manubrium, subsequent encounter
for fracture with nonunion.
S22.21XS.................. Fracture of manubrium, sequela.
S22.22XD.................. Fracture of body of sternum, subsequent
encounter for fracture with routine
healing.
S22.22XG.................. Fracture of body of sternum, subsequent
encounter for fracture with delayed
healing.
S22.22XK.................. Fracture of body of sternum, subsequent
encounter for fracture with nonunion.
S22.22XS.................. Fracture of body of sternum, sequela.
S22.23XD.................. Sternal manubrial dissociation, subsequent
encounter for fracture with routine
healing.
S22.23XG.................. Sternal manubrial dissociation, subsequent
encounter for fracture with delayed
healing.
S22.23XK.................. Sternal manubrial dissociation, subsequent
encounter for fracture with nonunion.
S22.23XS.................. Sternal manubrial dissociation, sequela.
S22.24XD.................. Fracture of xiphoid process, subsequent
encounter for fracture with routine
healing.
S22.24XG.................. Fracture of xiphoid process, subsequent
encounter for fracture with delayed
healing.
S22.24XK.................. Fracture of xiphoid process, subsequent
encounter for fracture with nonunion.
S22.24XS.................. Fracture of xiphoid process, sequela.
------------------------------------------------------------------------

By reclassifying the 10 ICD-10-CM diagnosis codes listed in the
table earlier in this section describing sternal fracture codes with an
``initial encounter'' from MDC 4 to MDC 8, the cases reporting these
ICD-10-CM diagnosis codes in combination with the respective ICD-10-PCS
procedure codes will reflect a more appropriate grouping from a
clinical perspective and will no longer result in an MS-DRG assignment
to the ``unrelated operating room procedures'' surgical class when
reported with a surgical procedure classified under MDC 8.
Therefore, we are proposing to reassign ICD-10-CM diagnosis codes
S22.20XA, S22.20XB, S22.21XA, S22.21XB, S22.22XA, S22.22XB, S22.23XA,
S22.23XB, S22.24XA, and S22.24XB from under MDC 4 to MDC 8 to MS-DRGs
564, 565, and 566. We are inviting public comments on our proposals.
In addition, we received a request recommending that CMS reassign
cases for rib fracture repair procedures from MS-DRGs 981, 982, and
983, and from MS-DRGs 166, 167 and 168 (Other Respiratory System O.R.
Procedures

[[Page 20246]]

with MCC, with CC, and without CC/MCC, respectively) under MDC 4 to MS-
DRGs 515, 516, and 517 under MDC 8. The requestor noted that clavicle
fracture repair procedures with an internal fixation device group to
MS-DRGs 515, 516, and 517 when reported with an ICD-10-CM diagnosis
code describing a fractured clavicle. However, rib fracture repair
procedures with an internal fixation device group to MS-DRGs 981, 982,
and 983 or to MS-DRGs 166, 167 and 168 when reported with an ICD-10-CM
diagnosis code describing a rib fracture. According to the requestor,
because the clavicle and ribs are in the same anatomical region of the
body, it would appear that assignment to MS-DRGs 515, 516, and 517
would be more appropriate for rib fracture repair procedures.
The requestor provided the following list of 10 ICD-10-PCS
procedure codes in its request for consideration for reassignment to
MS-DRGs 515, 516 and 517 when reported with an ICD-10-CM diagnosis code
for rib fracture.

------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
0PH104Z................... Insertion of internal fixation device into 1
to 2 ribs, open approach.
0PH134Z................... Insertion of internal fixation device into 1
to 2 ribs, percutaneous approach.
0PH144Z................... Insertion of internal fixation device into 1
to 2 ribs, percutaneous endoscopic
approach.
0PH204Z................... Insertion of internal fixation device into 3
or more ribs, open approach.
0PH234Z................... Insertion of internal fixation device into 3
or more ribs, percutaneous approach.
0PH244Z................... Insertion of internal fixation device into 3
or more ribs, percutaneous endoscopic
approach.
0PS104Z................... Reposition 1 to 2 ribs with internal
fixation device, open approach.
0PS134Z................... Reposition 1 to 2 ribs with internal
fixation device, percutaneous approach.
0PS204Z................... Reposition 3 or more ribs with internal
fixation, device, open approach.
0PS234Z................... Reposition 3 or more ribs with internal
fixation device, percutaneous approach.
------------------------------------------------------------------------

We note that the above 10 ICD-10-PCS procedure codes that may be
reported to describe a rib fracture repair are already assigned to MS-
DRGs 515, 516, and 517 under MDC 8. In addition, 6 of the 10 ICD 10-PCS
procedure codes listed above (0PH104Z, 0PH134Z, 0PH144Z, 0PH204Z,
0PH234Z and 0PH244Z) are also assigned to MS-DRGs 166, 167, and 168
under MDC 4.
As noted in the previous discussions above, whenever there is a
surgical procedure reported on a claim, which is unrelated to the MDC
to which the case was assigned based on the principal diagnosis, it
results in an MS-DRG assignment to a surgical class referred to as
``unrelated operating room procedures.'' In the examples provided by
the requestor, when the ICD-10-CM diagnosis code describing a rib
fracture is classified under MDC 4 and the ICD-10-PCS procedure code
describing a rib fracture repair procedure is classified under MDC 8,
the GROUPER logic assigns these cases to the ``unrelated operating room
procedures'' group of MS-DRGs (981, 982, and 983) and when the ICD-10-
CM diagnosis code describing a rib fracture is classified under MDC 4
and the ICD-10-PCS procedure code describing a rib repair procedure is
also classified under MDC 4, the GROUPER logic assigns these cases to
MS-DRG 166, 167, or 168.
For our review of this grouping issue and the request to have
procedures for rib fracture repairs assigned to MDC 8, we analyzed the
ICD-10-CM diagnosis codes describing a rib fracture and found that,
while some rib fracture ICD-10-CM diagnosis codes are classified under
MDC 8 (which would result in those cases grouping appropriately to MS-
DRGs 515, 516, and 517), there are other ICD-10-CM diagnosis codes that
are currently classified under MDC 4. We identified the following ICD-
10-CM diagnosis codes describing a rib fracture with an initial
encounter classified under MDC 4, as listed in the following table.

------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
S2231XA................... Fracture of one rib, right side, initial
encounter for closed fracture.
S2231XB................... Fracture of one rib, right side, initial
encounter for open fracture.
S2232XA................... Fracture of one rib, left side, initial
encounter for closed fracture.
S2232XB................... Fracture of one rib, left side, initial
encounter for open fracture.
S2239XA................... Fracture of one rib, unspecified side,
initial encounter for closed fracture.
S2239XB................... Fracture of one rib, unspecified side,
initial encounter for open fracture.
S2241XA................... Multiple fractures of ribs, right side,
initial encounter for closed fracture.
S2241XB................... Multiple fractures of ribs, right side,
initial encounter for open fracture.
S2242XA................... Multiple fractures of ribs, left side,
initial encounter for closed fracture.
S2242XB................... Multiple fractures of ribs, left side,
initial encounter for open fracture.
S2243XA................... Multiple fractures of ribs, bilateral,
initial encounter for closed fracture.
S2243XB................... Multiple fractures of ribs, bilateral,
initial encounter for open fracture.
S2249XA................... Multiple fractures of ribs, unspecified
side, initial encounter for closed
fracture.
S2249XB................... Multiple fractures of ribs, unspecified
side, initial encounter for open fracture.
S225XXA................... Flail chest, initial encounter for closed
fracture.
S225XXB................... Flail chest, initial encounter for open
fracture.
------------------------------------------------------------------------

Our analysis of this grouping issue confirmed that, when one of the
following four ICD-10-PCS procedure codes identified by the requestor
(and listed in the table earlier in this section) from MDC 8 (0PS104Z,
0PS134Z, 0PS204Z, or 0PS234Z) is reported to describe a rib fracture
repair procedure with a principal diagnosis code for a rib fracture
with an initial encounter listed in the table above from MDC 4, these
cases group to MS-DRG 981, 982, or 983.
During our review of those four repositioning of the rib procedure
codes, we also identified the following four ICD-10-PCS procedure codes
classified

[[Page 20247]]

to MDC 8 that describe repositioning of the ribs.

------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
0PS10ZZ................... Reposition 1 to 2 ribs, open approach.
0PS144Z................... Reposition 1 to 2 ribs with internal
fixation device, percutaneous endoscopic
approach.
0PS20ZZ................... Reposition 3 or more ribs, open approach.
0PS244Z................... Reposition 3 or more ribs with internal
fixation device, percutaneous endoscopic
approach.
------------------------------------------------------------------------

We confirmed that when one of the above four procedure codes is
reported with a principal diagnosis code for a rib fracture listed in
the table above from MDC 4, these cases also group to MS-DRG 981, 982,
or 983.
Lastly, we confirmed that when one of the six ICD-10-PCS procedure
codes describing a rib fracture repair listed in the previous table
above from MDC 4 is reported with a principal diagnosis code for a rib
fracture with an initial encounter from MDC 4, these cases group to MS-
DRG 166, 167, or 168.
In response to the request to reassign the procedure codes that
describe a rib fracture repair procedure from MS-DRGs 981, 982, and 983
and from MS-DRGs 166, 167, and 168 under MDC 4 to MS-DRGs 515, 516, and
517 under MDC 8, as discussed above, the 10 ICD-10-PCS procedure codes
submitted by the requestor that may be reported to describe a rib
fracture repair are already assigned to MS-DRGs 515, 516, and 517 under
MDC 8 and 6 of those 10 procedure codes (0PH104Z, 0PH134Z, 0PH144Z,
0PH204Z, 0PH234Z, and 0PH244Z) are also assigned to MS-DRGs 166, 167,
and 168 under MDC 4.
We analyzed claims data from the September 2017 update of the FY
2017 MedPAR file for cases reporting a principal diagnosis of a rib
fracture (initial encounter) from the list of diagnosis codes shown in
the table above with one of the six ICD-10-PCS procedure codes
describing the insertion of an internal fixation device into the rib
(0PH104Z, 0PH134Z, 0PH144Z, 0PH204Z, 0PH234Z, and 0PH244Z) in MS-DRGs
166, 167, and 168 under MDC 4. Our findings are shown in the table
below.

MS-DRGs for Other Respiratory System O.R. Procedures
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 166--All cases........................................... 22,938 10.2 $24,299
MS-DRG 166--Cases with principal diagnosis of rib fracture(s) 40 11.4 43,094
and insertion of internal fixation device for the rib(s).......
MS-DRG 167--All cases........................................... 10,815 5.7 13,252
MS-DRG 167--Cases with principal diagnosis of rib fracture(s) 10 6.7 30,617
and insertion of internal fixation device for the rib(s).......
MS-DRG 168--All cases........................................... 3,242 3.1 9,708
MS-DRG 168--Cases with principal diagnosis of rib fracture(s) 4 2 21,501
and insertion of internal fixation device for the rib(s).......
----------------------------------------------------------------------------------------------------------------

As shown in this table, there were a total of 22,938 cases in MS-
DRG 166, with an average length of stay of 10.2 days and average costs
of $24,299. In MS-DRG 166, we found 40 cases reporting a principal
diagnosis of a rib fracture(s) with insertion of an internal fixation
device for the rib(s), with an average length of stay of 11.4 days and
average costs of $43,094. There were a total of 10,815 cases in MS-DRG
167, with an average length of stay of 5.7 days and average costs of
$13,252. In MS-DRG 167, we found 10 cases reporting a principal
diagnosis of a rib fracture(s) with insertion of an internal fixation
device for the rib(s), with an average length of stay of 6.7 days and
average costs of $30,617. There were a total of 3,242 cases in MS-DRG
168, with an average length of stay of 3.1 days and average costs of
$9,708. In MS-DRG 168, we found 4 cases reporting a principal diagnosis
of a rib fracture(s) with insertion of an internal fixation device for
the rib(s), with an average length of stay of 2 days and average costs
of $21,501. Overall, for MS-DRGs 166, 167, and 168, there were a total
of 54 cases reporting a principal diagnosis of a rib fracture(s) with
insertion of an internal fixation device for the rib(s), demonstrating
that while rib fractures may require treatment, they are not typically
corrected surgically. Our clinical advisors agree with the current
assignment of procedure codes to MS-DRGs 166, 167, and 168 that may be
reported to describe repair of a rib fracture under MDC 4, as well as
the current assignment of procedure codes to MS-DRGs 515, 516, and 517
that may be reported to describe repair of a rib fracture under MDC 8.
Our clinical advisors noted that initial, acute rib fractures can cause
numerous respiratory related issues requiring various treatments and
problems with the healing of a rib fracture are considered
musculoskeletal issues.
We also note that the procedure codes submitted by the requestor
may be reported for other indications and they are not restricted to
reporting for repair of a rib fracture. Therefore, assignment of these
codes to the MDC 4 MS-DRGs and the MDC 8 MS-DRGs is clinically
appropriate.
To address the cases reporting procedure codes describing the
repositioning of a rib(s) that are grouping to MS-DRGs 981, 982, and
983 when reported with a principal diagnosis of a rib fracture (initial
encounter), we are proposing to add the following eight ICD-10-PCS
procedure codes currently assigned to MDC 8 into MDC 4, in MS-DRGs 166,
167 and 168.

[[Page 20248]]

------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
0PS104Z................... Reposition 1 to 2 ribs with internal
fixation device, open approach.
0PS10ZZ................... Reposition 1 to 2 ribs, open approach.
0PS134Z................... Reposition 1 to 2 ribs with internal
fixation device, percutaneous approach.
0PS144Z................... Reposition 1 to 2 ribs with internal
fixation device, percutaneous endoscopic
approach.
0PS204Z................... Reposition 3 or more ribs with internal
fixation device, open approach.
0PS20ZZ................... Reposition 3 or more ribs, open approach.
0PS234Z................... Reposition 3 or more ribs with internal
fixation device, percutaneous approach.
0PS244Z................... Reposition 3 or more ribs with internal
fixation device, percutaneous endoscopic
approach.
------------------------------------------------------------------------

Our clinical advisors agree with this proposed addition to the
classification structure because it is clinically appropriate and
consistent with the other related ICD-10-PCS procedure codes that may
be reported to describe rib fracture repair procedures with the
insertion of an internal fixation device and are classified under MDC
4.
By adding the eight ICD-10-PCS procedure codes describing
repositioning of the rib(s) that may be reported to describe a rib
fracture repair procedure under the classification structure for MDC 4,
these cases will no longer result in an MS-DRG assignment to the
``unrelated operating room procedures'' surgical class when reported
with a diagnosis code under MDC 4.
We are inviting public comments on our proposals.
18. Proposed Changes to the ICD-10-CM and ICD-10-PCS Coding Systems
In September 1985, the ICD[dash]9[dash]CM Coordination and
Maintenance Committee was formed. This is a Federal interdepartmental
committee, co-chaired by the National Center for Health Statistics
(NCHS), the Centers for Disease Control and Prevention (CDC), and CMS,
charged with maintaining and updating the ICD[dash]9[dash]CM system.
The final update to ICD-9-CM codes was made on October 1, 2013.
Thereafter, the name of the Committee was changed to the ICD-10
Coordination and Maintenance Committee, effective with the March 19-20,
2014 meeting. The ICD-10 Coordination and Maintenance Committee
addresses updates to the ICD-10-CM and ICD-10-PCS coding systems. The
Committee is jointly responsible for approving coding changes, and
developing errata, addenda, and other modifications to the coding
systems to reflect newly developed procedures and technologies and
newly identified diseases. The Committee is also responsible for
promoting the use of Federal and non[dash]Federal educational programs
and other communication techniques with a view toward standardizing
coding applications and upgrading the quality of the classification
system.
The official list of ICD-9-CM diagnosis and procedure codes by
fiscal year can be found on the CMS website at: https://cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/codes.html. The official
list of ICD-10-CM and ICD-10-PCS codes can be found on the CMS website
at: https://www.cms.gov/Medicare/Coding/ICD10/.
The NCHS has lead responsibility for the ICD-10-CM and ICD-9-CM
diagnosis codes included in the Tabular List and Alphabetic Index for
Diseases, while CMS has lead responsibility for the ICD-10-PCS and ICD-
9-CM procedure codes included in the Tabular List and Alphabetic Index
for Procedures.
The Committee encourages participation in the previously mentioned
process by health-related organizations. In this regard, the Committee
holds public meetings for discussion of educational issues and proposed
coding changes. These meetings provide an opportunity for
representatives of recognized organizations in the coding field, such
as the American Health Information Management Association (AHIMA), the
American Hospital Association (AHA), and various physician specialty
groups, as well as individual physicians, health information management
professionals, and other members of the public, to contribute ideas on
coding matters. After considering the opinions expressed at the public
meetings and in writing, the Committee formulates recommendations,
which then must be approved by the agencies.
The Committee presented proposals for coding changes for
implementation in FY 2019 at a public meeting held on September 12-13,
2017, and finalized the coding changes after consideration of comments
received at the meetings and in writing by November 13, 2017.
The Committee held its 2018 meeting on March 6-7, 2018. The
deadline for submitting comments on these code proposals is scheduled
for April 6, 2018. It was announced at this meeting that any new ICD-
10-CM/PCS codes for which there was consensus of public support and for
which complete tabular and indexing changes would be made by May 2018
would be included in the October 1, 2018 update to ICD-10-CM/ICD-10-
PCS. As discussed in earlier sections of the preamble of the proposed
rule, there are new, revised, and deleted ICD-10-CM diagnosis codes and
ICD-10-PCS procedure codes that are captured in Table 6A.--New
Diagnosis Codes, Table 6B.--New Procedure Codes, Table 6C.--Invalid
Diagnosis Codes, Table 6D.--Invalid Procedure Codes, Table 6E.--Revised
Diagnosis Code Titles, and Table 6F.--Revised Procedure Code Titles for
this proposed rule, which are available via the Internet on the CMS
website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/. The code titles are adopted as
part of the ICD-10 (previously ICD-9-CM) Coordination and Maintenance
Committee process. Therefore, although we make the code titles
available for the IPPS proposed rule, they are not subject to comment
in the proposed rule. We are inviting public comments on the MDC and
MS-DRG assignments for the new diagnosis and procedure codes as set
forth in Table 6A--New Diagnosis Codes and Table 6B.--New Procedure
Codes. In addition, we are inviting public comments on the proposed
severity level designations for the new diagnosis codes as set forth in
Table 6A. and the proposed O.R. status for the new procedure codes as
set forth in Table 6B. Because of the length of these tables, they are
not published in the Addendum to this proposed rule. Rather, they are
available via the Internet as discussed in section VI. of the Addendum
to this proposed rule.
Live Webcast recordings of the discussions of procedure codes at
the Committee's September 12-13, 2017 meeting and March 6-7, 2018
meeting can be obtained from the CMS website at: https://cms.hhs.gov/
Medicare/Coding/ICD9ProviderDiagnosticCodes/?redirect=/
icd9ProviderDiagnosticCodes/

[[Page 20249]]

03_meetings.asp. The minutes of the discussions of diagnosis codes at
the September 12-13, 2017 meeting and March 6-7, 2018 meeting can be
found at: https://www.cdc.gov/nchs/icd/icd10cm_maintenance.html. These
websites also provide detailed information about the Committee,
including information on requesting a new code, attending a Committee
meeting, and timeline requirements and meeting dates.
We encourage commenters to address suggestions on coding issues
involving diagnosis codes to: Donna Pickett, Co[dash]Chairperson, ICD-
10 Coordination and Maintenance Committee, NCHS, Room 2402, 3311 Toledo
Road, Hyattsville, MD 20782. Comments may be sent by E[dash]mail to:
[email protected].
Questions and comments concerning the procedure codes should be
submitted via E[dash]mail to: [email protected].
In the September 7, 2001 final rule implementing the IPPS new
technology add[dash]on payments (66 FR 46906), we indicated we would
attempt to include proposals for procedure codes that would describe
new technology discussed and approved at the Spring meeting as part of
the code revisions effective the following October.
Section 503(a) of Public Law 108[dash]173 included a requirement
for updating diagnosis and procedure codes twice a year instead of a
single update on October 1 of each year. This requirement was included
as part of the amendments to the Act relating to recognition of new
technology under the IPPS. Section 503(a) amended section 1886(d)(5)(K)
of the Act by adding a clause (vii) which states that the Secretary
shall provide for the addition of new diagnosis and procedure codes on
April 1 of each year, but the addition of such codes shall not require
the Secretary to adjust the payment (or diagnosis[dash]related group
classification) until the fiscal year that begins after such date. This
requirement improves the recognition of new technologies under the IPPS
by providing information on these new technologies at an earlier date.
Data will be available 6 months earlier than would be possible with
updates occurring only once a year on October 1.
While section 1886(d)(5)(K)(vii) of the Act states that the
addition of new diagnosis and procedure codes on April 1 of each year
shall not require the Secretary to adjust the payment, or DRG
classification, under section 1886(d) of the Act until the fiscal year
that begins after such date, we have to update the DRG software and
other systems in order to recognize and accept the new codes. We also
publicize the code changes and the need for a mid[dash]year systems
update by providers to identify the new codes. Hospitals also have to
obtain the new code books and encoder updates, and make other system
changes in order to identify and report the new codes.
The ICD-10 (previously the ICD-9-CM) Coordination and Maintenance
Committee holds its meetings in the spring and fall in order to update
the codes and the applicable payment and reporting systems by October 1
of each year. Items are placed on the agenda for the Committee meeting
if the request is received at least 2 months prior to the meeting. This
requirement allows time for staff to review and research the coding
issues and prepare material for discussion at the meeting. It also
allows time for the topic to be publicized in meeting announcements in
the Federal Register as well as on the CMS website. Final decisions on
code title revisions are currently made by March 1 so that these titles
can be included in the IPPS proposed rule. A complete addendum
describing details of all diagnosis and procedure coding changes, both
tabular and index, is published on the CMS and NCHS websites in June of
each year. Publishers of coding books and software use this information
to modify their products that are used by health care providers. This
5[dash]month time period has proved to be necessary for hospitals and
other providers to update their systems.
A discussion of this timeline and the need for changes are included
in the December 4-5, 2005 ICD-9-CM Coordination and Maintenance
Committee Meeting minutes. The public agreed that there was a need to
hold the fall meetings earlier, in September or October, in order to
meet the new implementation dates. The public provided comment that
additional time would be needed to update hospital systems and obtain
new code books and coding software. There was considerable concern
expressed about the impact this April update would have on providers.
In the FY 2005 IPPS final rule, we implemented section
1886(d)(5)(K)(vii) of the Act, as added by section 503(a) of Public Law
108-173, by developing a mechanism for approving, in time for the April
update, diagnosis and procedure code revisions needed to describe new
technologies and medical services for purposes of the new technology
add[dash]on payment process. We also established the following process
for making these determinations. Topics considered during the Fall ICD-
10 (previously ICD-9-CM) Coordination and Maintenance Committee meeting
are considered for an April 1 update if a strong and convincing case is
made by the requester at the Committee's public meeting. The request
must identify the reason why a new code is needed in April for purposes
of the new technology process. The participants at the meeting and
those reviewing the Committee meeting summary report are provided the
opportunity to comment on this expedited request. All other topics are
considered for the October 1 update. Participants at the Committee
meeting are encouraged to comment on all such requests. There were not
any requests approved for an expedited April l, 2018 implementation of
a code at the September 12-13, 2017 Committee meeting. Therefore, there
are not any new codes for implementation on April 1, 2018.
ICD-9-CM addendum and code title information is published on the
CMS website at: https://www.cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/?redirect=/icd9ProviderDiagnosticCodes/01overview.asp#TopofPage. ICD-10-CM and
ICD-10-PCS addendum and code title information is published on the CMS
website at: https://www.cms.gov/Medicare/Coding/ICD10/. CMS
also sends copies of all ICD-10-CM and ICD-10-PCS coding changes to its
Medicare contractors for use in updating their systems and providing
education to providers.
Information on ICD-10-CM diagnosis codes, along with the Official
ICD-10-CM Coding Guidelines, can also be found on the CDC website at:
https://www.cdc.gov/nchs/icd/icd10.htm. Additionally, information on
new, revised, and deleted ICD-10-CM/ICD-10-PCS codes is provided to the
AHA for publication in the Coding Clinic for ICD-10. AHA also
distributes coding update information to publishers and software
vendors.
The following chart shows the number of ICD-10-CM and ICD-10-PCS
codes and code changes since FY 2016 when ICD-10 was implemented.

Total Number of Codes and Changes in Total Number of Codes per Fiscal
Year ICD-10-CM and ICD-10-PCS Codes
------------------------------------------------------------------------
Fiscal year Number Change
------------------------------------------------------------------------
FY 2016:
ICD-10-CM......................................... 69,823 ........
ICD-10-PCS........................................ 71,974 ........
FY 2017:
ICD-10-CM......................................... 71,486 +1,663
ICD-10-PCS........................................ 75,789 +3,815

[[Page 20250]]

FY 2018:
ICD-10-CM......................................... 71,704 +218
ICD-10-PCS........................................ 78,705 +2,916
Proposed FY 2019:
ICD-10-CM......................................... 71,902 +198
ICD-10-PCS........................................ 78,533 -172
------------------------------------------------------------------------

As mentioned previously, the public is provided the opportunity to
comment on any requests for new diagnosis or procedure codes discussed
at the ICD-10 Coordination and Maintenance Committee meeting.
At the September 12-13, 2017 and March 6-7, 2018 Committee
meetings, we discussed any requests we had received for new ICD-10-CM
diagnosis codes and ICD-10-PCS procedure codes that were to be
implemented on October 1, 2018. We invited public comments on any code
requests discussed at the September 12-13, 2017 and March 6-7, 2018
Committee meetings for implementation as part of the October 1, 2018
update. The deadline for commenting on code proposals discussed at the
September 12-13, 2017 Committee meeting was November 13, 2017. The
deadline for commenting on code proposals discussed at the March 6-7,
2018 Committee meeting was April 6, 2018.
19. Proposed Replaced Devices Offered Without Cost or With a Credit
a. Background
In the FY 2008 IPPS final rule with comment period (72 FR 47246
through 47251), we discussed the topic of Medicare payment for devices
that are replaced without cost or where credit for a replaced device is
furnished to the hospital. We implemented a policy to reduce a
hospital's IPPS payment for certain MS-DRGs where the implantation of a
device that subsequently failed or was recalled determined the base MS-
DRG assignment. At that time, we specified that we will reduce a
hospital's IPPS payment for those MS-DRGs where the hospital received a
credit for a replaced device equal to 50 percent or more of the cost of
the device.
In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51556 through
51557), we clarified this policy to state that the policy applies if
the hospital received a credit equal to 50 percent or more of the cost
of the replacement device and issued instructions to hospitals
accordingly.
b. Proposed Changes for FY 2019
In this FY 2019 IPPS/LTCH PPS proposed rule, for FY 2019, we are
not proposing to add any MS-DRGs to the policy for replaced devices
offered without cost or with a credit. We are proposing to continue to
include the existing MS-DRGs currently subject to the policy as
displayed in the table below.
We are soliciting public comments on our proposal to continue to
include the existing MS-DRGs currently subject to the policy for
replaced devices offered without cost or with credit and to not add any
additional MS-DRGs to the policy.

------------------------------------------------------------------------
MDC MS-DRG MS-DRG title
------------------------------------------------------------------------
Pre-MDC.................... 001 Heart Transplant or Implant
of Heart Assist System
with MCC.
Pre-MDC.................... 002 Heart Transplant or Implant
of Heart Assist System
without MCC.
1.......................... 023 Craniotomy with Major
Device Implant or Acute
Complex CNS Principal
Diagnosis with MCC or
Chemotherapy Implant or
Epilepsy with
Neurostimulator.
1.......................... 024 Craniotomy with Major
Device Implant or Acute
Complex CNS Principal
Diagnosis without MCC.
1.......................... 025 Craniotomy & Endovascular
Intracranial Procedures
with MCC.
1.......................... 026 Craniotomy & Endovascular
Intracranial Procedures
with CC.
1.......................... 027 Craniotomy & Endovascular
Intracranial Procedures
without CC/MCC.
1.......................... 040 Peripheral, Cranial Nerve &
Other Nervous System
Procedures with MCC.
1.......................... 041 Peripheral, Cranial Nerve &
Other Nervous System
Procedures with CC or
Peripheral
Neurostimulator.
1.......................... 042 Peripheral, Cranial Nerve &
Other Nervous System
Procedures without CC/MCC.
3.......................... 129 Major Head & Neck
Procedures with CC/MCC or
Major Device.
3.......................... 130 Major Head & Neck
Procedures without CC/MCC.
5.......................... 215 Other Heart Assist System
Implant.
5.......................... 216 Cardiac Valve & Other Major
Cardiothoracic Procedure
with Cardiac
Catheterization with MCC.
5.......................... 217 Cardiac Valve & Other Major
Cardiothoracic Procedure
with Cardiac
Catheterization with CC.
5.......................... 218 Cardiac Valve & Other Major
Cardiothoracic Procedure
with Cardiac
Catheterization without CC/
MCC.
5.......................... 219 Cardiac Valve & Other Major
Cardiothoracic Procedure
without Cardiac
Catheterization with MCC.
5.......................... 220 Cardiac Valve & Other Major
Cardiothoracic Procedure
without Cardiac
Catheterization with CC.
5.......................... 221 Cardiac Valve & Other Major
Cardiothoracic Procedure
without Cardiac
Catheterization without CC/
MCC.
5.......................... 222 Cardiac Defibrillator
Implant with Cardiac
Catheterization with AMI/
Heart Failure/Shock with
MCC.
5.......................... 223 Cardiac Defibrillator
Implant with Cardiac
Catheterization with AMI/
Heart Failure/Shock
without MCC.
5.......................... 224 Cardiac Defibrillator
Implant with Cardiac
Catheterization without
AMI/Heart Failure/Shock
with MCC.
5.......................... 225 Cardiac Defibrillator
Implant with Cardiac
Catheterization without
AMI/Heart Failure/Shock
without MCC.
5.......................... 226 Cardiac Defibrillator
Implant without Cardiac
Catheterization with MCC.
5.......................... 227 Cardiac Defibrillator
Implant without Cardiac
Catheterization without
MCC.
5.......................... 242 Permanent Cardiac Pacemaker
Implant with MCC.
5.......................... 243 Permanent Cardiac Pacemaker
Implant with CC.
5.......................... 244 Permanent Cardiac Pacemaker
Implant without CC/MCC.
5.......................... 245 AICD Generator Procedures.
5.......................... 258 Cardiac Pacemaker Device
Replacement with MCC.
5.......................... 259 Cardiac Pacemaker Device
Replacement without MCC.
5.......................... 260 Cardiac Pacemaker Revision
Except Device Replacement
with MCC.
5.......................... 261 Cardiac Pacemaker Revision
Except Device Replacement
with CC.
5.......................... 262 Cardiac Pacemaker Revision
Except Device Replacement
without CC/MCC.
5.......................... 265 AICD Lead Procedures.
5.......................... 266 Endovascular Cardiac Valve
Replacement with MCC.
5.......................... 267 Endovascular Cardiac Valve
Replacement without MCC.
5.......................... 268 Aortic and Heart Assist
Procedures Except
Pulsation Balloon with
MCC.
5.......................... 269 Aortic and Heart Assist
Procedures Except
Pulsation Balloon without
MCC.
5.......................... 270 Other Major Cardiovascular
Procedures with MCC.

[[Page 20251]]

5.......................... 271 Other Major Cardiovascular
Procedures with CC.
5.......................... 272 Other Major Cardiovascular
Procedures without CC/MCC.
8.......................... 461 Bilateral or Multiple Major
Joint Procedures of Lower
Extremity with MCC.
8.......................... 462 Bilateral or Multiple Major
Joint Procedures of Lower
Extremity without MCC.
8.......................... 466 Revision of Hip or Knee
Replacement with MCC.
8.......................... 467 Revision of Hip or Knee
Replacement with CC.
8.......................... 468 Revision of Hip or Knee
Replacement without CC/
MCC.
8.......................... 469 Major Hip and Knee Joint
Replacement or
Reattachment of Lower
Extremity with MCC or
Total Ankle Replacement.
8.......................... 470 Major Hip and Knee Joint
Replacement or
Reattachment of Lower
Extremity without MCC.
------------------------------------------------------------------------

20. Other Policy Changes: Other Operating Room (O.R.) and Non-O.R.
Issues
In this proposed rule, we are addressing requests that we received
regarding changing the designation of specific ICD-10-PCS procedure
codes from non-O.R. to O.R. procedures, or changing the designation
from O.R. procedure to non-O.R. procedure. In cases where we are
proposing to change the designation of procedure codes from non-O.R. to
O.R. procedures, we also are proposing one or more MS-DRGs with which
these procedures are clinically aligned and to which the procedure code
would be assigned. We generally examine the MS-DRG assignment for
similar procedures, such as the other approaches for that procedure, to
determine the most appropriate MS-DRG assignment for procedures newly
designated as O.R. procedures. We are inviting public comments on these
proposed MS-DRG assignments.
We also note that many MS-DRGs require the presence of any O.R.
procedure. As a result, cases with a principal diagnosis associated
with a particular MS-DRG would, by default, be grouped to that MS-DRG.
Therefore, we do not list these MS-DRGs in our discussion below.
Instead, we only discuss MS-DRGs that require explicitly adding the
relevant procedures codes to the GROUPER logic in order for those
procedure codes to affect the MS-DRG assignment as intended. In
addition, cases that contain O.R. procedures will map to MS-DRGs 981,
982, or 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis
with MCC, with CC, and without CC/MCC, respectively) or MS-DRGs 987,
988, or 989 (Non-Extensive O.R. Procedure Unrelated to Principal
Diagnosis with MCC, with CC, and without CC/MCC, respectively) when
they do not contain a principal diagnosis that corresponds to one of
the MDCs to which that procedure is assigned. These procedures need not
be assigned to MS-DRGs 981 through 989 in order for this to occur.
Therefore, if requestors included some or all of MS-DRGs 981 through
989 in their request or included MS-DRGs that require the presence of
any O.R. procedure, we did not specifically address that aspect in
summarizing their request or our response to the request in the section
below.
a. Percutaneous and Percutaneous Endoscopic Excision of Brain and
Cerebral Ventricle
One requestor identified 22 ICD-10-PCS procedure codes that
describe procedures involving transcranial brain and cerebral ventricle
excision that the requestor stated would generally require the
resources of an operating room. The 22 procedure codes are listed in
the following table.

------------------------------------------------------------------------
ICD-10-PCS procedure code Code description
------------------------------------------------------------------------
00B03ZX................... Excision of brain, percutaneous approach,
diagnostic.
00B13ZX................... Excision of cerebral meninges, percutaneous
approach, diagnostic.
00B23ZX................... Excision of dura mater, percutaneous
approach, diagnostic.
00B63ZX................... Excision of cerebral ventricle, percutaneous
approach, diagnostic.
00B73ZX................... Excision of cerebral hemisphere,
percutaneous approach, diagnostic.
00B83ZX................... Excision of basal ganglia, percutaneous
approach, diagnostic.
00B93ZX................... Excision of thalamus, percutaneous approach,
diagnostic.
00BA3ZX................... Excision of hypothalamus, percutaneous
approach, diagnostic.
00BB3ZX................... Excision of pons, percutaneous approach,
diagnostic.
00BC3ZX................... Excision of cerebellum, percutaneous
approach, diagnostic.
00BD3ZX................... Excision of medulla oblongata, percutaneous
approach, diagnostic.
00B04ZX................... Excision of brain, percutaneous endoscopic
approach, diagnostic.
00B14ZX................... Excision of cerebral meninges, percutaneous
endoscopic approach, diagnostic.
00B24ZX................... Excision of dura mater, percutaneous
endoscopic approach, diagnostic.
00B64ZX................... Excision of cerebral ventricle, percutaneous
endoscopic approach, diagnostic.
00B74ZX................... Excision of cerebral hemisphere,
percutaneous endoscopic approach,
diagnostic.
00B84ZX................... Excision of basal ganglia, percutaneous
endoscopic approach, diagnostic.
00B94ZX................... Excision of thalamus, percutaneous
endoscopic approach, diagnostic.
00BA4ZX................... Excision of hypothalamus, percutaneous
endoscopic approach, diagnostic.
00BB4ZX................... Excision of pons, percutaneous endoscopic
approach, diagnostic.
00BC4ZX................... Excision of cerebellum, percutaneous
endoscopic approach, diagnostic.
00BD4ZX................... Excision of medulla oblongata, percutaneous
endoscopic approach, diagnostic.
------------------------------------------------------------------------

The requestor stated that, although percutaneous burr hole biopsies
are performed through smaller openings in the skull than open burr hole
biopsies, these procedures require drilling or cutting through the
skull using sterile technique with anesthesia for pain control. The
requestor also noted that similar procedures involving percutaneous
drainage of the subdural space are currently classified as O.R.
procedures in Version 35 of the ICD-10

[[Page 20252]]

MS-DRGs. However, these 22 ICD-10-PCS procedure codes are not
recognized as O.R. procedures for purposes of MS-DRG assignment. The
requestor recommended that the 22 ICD-10-PCS codes be designated as
O.R. procedures and assigned to MS-DRGs 25, 26, and 27 (Craniotomy and
Endovascular Intracranial Procedures with MCC, with CC, and without CC/
MCC, respectively).
We agree with the requestor that these procedures typically require
the resources of an operating room. Therefore, we are proposing to add
these 22 ICD-10-PCS procedure codes to the FY 2019 ICD-10 MS-DRGs
Version 36 Definitions Manual in Appendix E--Operating Room Procedures
and Procedure Code/MS-DRG Index as O.R. procedures assigned to MS-DRGs
25, 26, and 27 in MDC 1 (Diseases and Disorders of the Nervous System).
We are inviting public comments on our proposal.
b. Open Extirpation of Subcutaneous Tissue and Fascia
One requestor identified 22 ICD-10-PCS procedure codes that
describe procedures involving open extirpation of subcutaneous tissue
and fascia that the requestor stated would generally require the
resources of an operating room. The 22 procedure codes are listed in
the following table.

------------------------------------------------------------------------
ICD-10-PCS procedure code Code description
------------------------------------------------------------------------
0JC00ZZ................... Extirpation of matter from scalp
subcutaneous tissue and fascia, open
approach.
0JC10ZZ................... Extirpation of matter from face subcutaneous
tissue and fascia, open approach.
0JC40ZZ................... Extirpation of matter from right neck
subcutaneous tissue and fascia, open
approach.
0JC50ZZ................... Extirpation of matter from left neck
subcutaneous tissue and fascia, open
approach.
0JC60ZZ................... Extirpation of matter from chest
subcutaneous tissue and fascia, open
approach.
0JC70ZZ................... Extirpation of matter from back subcutaneous
tissue and fascia, open approach.
0JC80ZZ................... Extirpation of matter from abdomen
subcutaneous tissue and fascia, open
approach.
0JC90ZZ................... Extirpation of matter from buttock
subcutaneous tissue and fascia, open
approach.
0JCB0ZZ................... Extirpation of matter from perineum
subcutaneous tissue and fascia, open
approach.
0JCC0ZZ................... Extirpation of matter from pelvic region
subcutaneous tissue and fascia, open
approach.
0JCD0ZZ................... Extirpation of matter from right upper arm
subcutaneous tissue and fascia, open
approach.
0JCF0ZZ................... Extirpation of matter from left upper arm
subcutaneous tissue and fascia, open
approach.
0JCG0ZZ................... Extirpation of matter from right lower arm
subcutaneous tissue and fascia, open
approach.
0JCH0ZZ................... Extirpation of matter from left lower arm
subcutaneous tissue and fascia, open
approach.
0JCJ0ZZ................... Extirpation of matter from right hand
subcutaneous tissue and fascia, open
approach.
0JCK0ZZ................... Extirpation of matter from left hand
subcutaneous tissue and fascia, open
approach.
0JCL0ZZ................... Extirpation of matter from right upper leg
subcutaneous tissue and fascia, open
approach.
0JCM0ZZ................... Extirpation of matter from left upper leg
subcutaneous tissue and fascia, open
approach.
0JCN0ZZ................... Extirpation of matter from right lower leg
subcutaneous tissue and fascia, open
approach.
0JCP0ZZ................... Extirpation of matter from left lower leg
subcutaneous tissue and fascia, open
approach.
0JCQ0ZZ................... Extirpation of matter from right foot
subcutaneous tissue and fascia, open
approach.
0JCR0ZZ................... Extirpation of matter from left foot
subcutaneous tissue and fascia, open
approach.
------------------------------------------------------------------------

The requestor stated that these procedures involve making an open
incision deeper than the skin under general anesthesia, and that
irrigation and/or excision of devitalized tissue or cavity are often
required and are considered inherent to the procedure. The requestor
also stated that open drainage of subcutaneous tissue and fascia, open
excisional debridement of subcutaneous tissue and fascia, and open
nonexcisional debridement/extraction of subcutaneous tissue and fascia
are designated as O.R. procedures, and that these 22 procedures should
be designated as O.R. procedures for the same reason. In the ICD-10 MS-
DRGs Version 35, these 22 ICD-10-PCS procedure codes are not recognized
as O.R. procedures for purposes of MS-DRG assignment. The requestor
recommended that the 22 ICD-10-PCS procedure codes listed in the table
be assigned to MS-DRGs 579, 580, and 581 (Other Skin, Subcutaneous
Tissue and Breast Procedures with MCC, CC, and without CC/MCC,
respectively).
We disagree with the requestor that these procedures typically
require the resources of an operating room. Our clinical advisors
indicated that these open extirpation procedures are minor procedures
that can be performed outside of an operating room, such as in a
radiology suite with CT or MRI guidance. We disagree that these
procedures are similar to open drainage procedures. Therefore, we are
proposing to maintain the status of these 22 ICD-10-PCS procedure codes
as non-O.R. procedures. We are inviting public comments on our
proposal.
c. Open Scrotum and Breast Procedures
One requestor identified 13 ICD-10-PCS procedure codes that
describe procedures involving open drainage, open extirpation, and open
debridement/excision of the scrotum and breast. The requestor stated
that the 13 procedures listed in the following table involve making an
open incision deeper than the skin under general anesthesia, and that
irrigation and/or excision of devitalized tissue or cavity are often
required and are considered inherent to the procedure. The requestor
also stated that open drainage of subcutaneous tissue and fascia, open
excisional debridement of subcutaneous tissue and fascia, open
non[dash]excisional debridement/extraction of subcutaneous tissue and
fascia, and open excision of breast are designated as O.R. procedures,
and that these 13 procedures should be designated as O.R. procedures
for the same reason. In the ICD-10 MS-DRGs Version 35, these 13 ICD-10-
PCS procedure codes are not recognized as O.R. procedures for purposes
of MS-DRG assignment.

------------------------------------------------------------------------
ICD-10-PCS procedure code Code description
------------------------------------------------------------------------
0V950ZZ................... Drainage of scrotum, open approach.
0VB50ZZ................... Excision of scrotum, open approach.
0VC50ZZ................... Extirpation of matter from scrotum, open
approach.

[[Page 20253]]

0H9U0ZZ................... Drainage of left breast, open approach.
0H9T0ZZ................... Drainage of right breast, open approach.
0H9V0ZZ................... Drainage of bilateral breast, open approach.
0H9W0ZZ................... Drainage of right nipple, open approach.
0H9X0ZZ................... Drainage of left nipple, open approach.
0HCT0ZZ................... Extirpation of matter from right breast,
open approach.
0HCU0ZZ................... Extirpation of matter from left breast, open
approach.
0HCV0ZZ................... Extirpation of matter from bilateral breast,
open approach.
0HCW0ZZ................... Extirpation of matter from right nipple,
open approach.
0HCX0ZZ................... Extirpation of matter from left nipple, open
approach.
------------------------------------------------------------------------

The requestor recommended that the 3 ICD-10-PCS scrotal procedure
codes be assigned to MS-DRGs 717 and 718 (Other Male Reproductive
System O.R. Procedures Except Malignancy with CC/MCC and without CC/
MCC, respectively) and the 10 breast procedure codes be assigned to MS-
DRGs 584 and 585 (Breast Biopsy, Local Excision and Other Breast
Procedures with CC/MCC and without CC/MCC, respectively).
We agree with the requestor that these procedures typically require
the resources of an operating room due to the nature of breast and
scrotal tissue, as well as with the MS-DRG assignments recommended by
the requestor. In addition, we believe that the scrotal codes should
also be assigned to MS-DRGs 715 and 716 (Other Male Reproductive System
O.R. Procedures for Malignancy with CC/MCC and without CC/MCC,
respectively). Therefore, we are proposing to add these 13 ICD-10-PCS
procedure codes to the FY 2019 ICD-10 MS-DRGs Version 36 Definitions
Manual in Appendix E--Operating Room Procedures and Procedure Code/MS-
DRG Index as O.R. procedures, assigned to MS-DRGs 715, 716, 717, and
718 in MDC 12 (Diseases and Disorders of the Male Reproductive System)
for the scrotal procedure codes and assigned to MS-DRGs 584 and 585 in
MDC 9 (Diseases and Disorders of the Skin, Subcutaneous Tissue &
Breast) for the breast procedure codes. We are inviting public comments
on our proposal.
d. Open Parotid Gland and Submaxillary Gland Procedures
One requestor identified eight ICD-10-PCS procedure codes that
describe procedures involving open drainage and open extirpation of the
parotid or submaxillary glands, shown in the following table.

------------------------------------------------------------------------
ICD-10-PCS procedure code Code description
------------------------------------------------------------------------
0C980ZZ................... Drainage of right parotid gland, open
approach.
0C990ZZ................... Drainage of left parotid gland, open
approach.
0C9G0ZZ................... Drainage of right submaxillary gland, open
approach.
0C9H0ZZ................... Drainage of left submaxillary gland, open
approach.
0CC80ZZ................... Extirpation of matter from right parotid
gland, open approach.
0CC90ZZ................... Extirpation of matter from left parotid
gland, open approach.
0CCG0ZZ................... Extirpation of matter from right
submaxillary gland, open approach.
0CCH0ZZ................... Extirpation of matter from left submaxillary
gland, open approach.
------------------------------------------------------------------------

The requestor stated that these procedures involve making an open
incision through subcutaneous tissue, fascia, and potentially muscle,
to reach and incise the parotid or submaxillary gland under general
anesthesia, and that irrigation and/or excision of devitalized tissue
or cavity may be required and are considered inherent to the procedure.
The requestor also stated that open drainage of subcutaneous tissue and
fascia, open excisional debridement of subcutaneous tissue and fascia,
and open non[dash]excisional debridement/extraction of subcutaneous
tissue and fascia are designated as O.R. procedures, and that these
eight procedures should be designated as O.R. procedures for the same
reason. In the ICD-10 MS-DRGs Version 35, these eight ICD-10-PCS
procedure codes are not recognized as O.R. procedures for purposes of
MS-DRG assignment. The requestor requested that these procedures be
assigned to MS-DRG 139 (Salivary Gland Procedures).
We agree with the requestor that these eight procedures typically
require the resources of an operating room. Therefore, we are proposing
to add these ICD-10-PCS procedure codes to the FY 2019 ICD-10 MS-DRGs
Version 36 Definitions Manual in Appendix E--Operating Room Procedures
and Procedure Code/MS-DRG Index as O.R. procedures assigned to MS-DRG
139 in MDC 3 (Diseases and Disorders of the Ear, Nose, Mouth and
Throat). We are inviting public comments on our proposal.
e. Removal and Reinsertion of Spacer; Knee Joint and Hip Joint
One requestor identified four sets of ICD-10-PCS procedure code
combinations (eight ICD-10-PCS codes) that describe procedures
involving open removal and insertion of spacers into the knee or hip
joints, shown in the following table. The requestor stated that these
are invasive procedures involving removal and reinsertion of devices
into major joints and are performed in the operating room under general
anesthesia. In the ICD-10 MS-DRGs Version 35, these four ICD-10-PCS
procedure code combinations are not recognized as O.R. procedures for
purposes of MS-DRG assignment. The requestor recommended that CMS
determine the most appropriate surgical DRGs for these procedures.

[[Page 20254]]

------------------------------------------------------------------------
ICD-10-PCS procedure code Code description
------------------------------------------------------------------------
0SPC08Z................... Removal of spacer from right knee joint,
open approach.
0SHC08Z................... Insertion of spacer into right knee joint,
open approach.
0SPD08Z................... Removal of spacer from left knee joint, open
approach.
0SHD08Z................... Insertion of spacer into left knee joint,
open approach.
0SP908Z................... Removal of spacer from right hip joint, open
approach.
0SH908Z................... Insertion of spacer into right hip joint,
open approach.
0SPB08Z................... Removal of spacer from left hip joint, open
approach.
0SHB08Z................... Insertion of spacer into left hip joint,
open approach.
------------------------------------------------------------------------

We agree with the requestor that these procedures typically require
the resources of an operating room. However, our clinical advisors
indicated that these codes should be designated as O.R. procedures even
when reported as stand-alone procedures. Therefore, for the knee
procedures, we are proposing to add these four ICD-10-PCS procedure
codes to the FY 2019 ICD-10 MS-DRGs Version 36 Definitions Manual in
Appendix E--Operating Room Procedures and Procedure Code/MS-DRG Index
as O.R. procedures assigned to MS-DRGs 485, 486, and 487 (Knee
Procedures with Principal Diagnosis of Infection with MCC, with CC, and
without CC/MCC, respectively) or MS-DRGs 488 and 489 (Knee Procedures
without Principal diagnosis of Infection with CC/MCC and without CC/
MCC, respectively), both in MDC 8 (Diseases and Disorders of the
Musculoskeletal System and Connective Tissue). For the hip procedures,
we are proposing to add these four ICD-10-PCS procedure codes to the FY
2019 ICD-10 MS-DRGs Version 36 Definitions Manual in Appendix E--
Operating Room Procedures and Procedure Code/MS-DRG Index as O.R.
procedures assigned to MS-DRGs 480, 481, and 482 (Hip and Femur
Procedures Except Major Joint with MCC, with CC, and without CC/MCC,
respectively) in MDC 8 (Diseases and Disorders of the Musculoskeletal
System and Connective Tissue). We are inviting public comments on our
proposal.
f. Endoscopic Dilation of Ureter(s) With Intraluminal Device
One requestor identified the following three ICD-10-PCS procedure
codes that describe procedures involving endoscopic dilation of
ureter(s) with intraluminal device.

------------------------------------------------------------------------
ICD-10-PCS procedure code Code description
------------------------------------------------------------------------
0T778DZ................... Dilation of left ureter with intraluminal
device, via natural or artificial opening
endoscopic.
0T768DZ................... Dilation of right ureter with intraluminal
device, via natural or artificial opening
endoscopic.
0T788DZ................... Dilation of bilateral ureters with
intraluminal device, via natural or
artificial opening endoscopic.
------------------------------------------------------------------------

The requestor stated that these procedures involve the use of
cystoureteroscopy to view the bladder and ureter and dilation under
visualization, which are often followed by placement of a ureteral
stent. The requestor also stated that endoscopic extirpation of matter
from ureter, endoscopic biopsy of bladder, endoscopic dilation of
bladder, endoscopic dilation of renal pelvis, and endoscopic dilation
of the ureter without insertion of intraluminal device are all assigned
to surgical DRGs, and that these three procedures should be designated
as O.R. procedures for the same reason. In the ICD-10 MS-DRGs Version
35, these three ICD-10-PCS procedure codes are not recognized as O.R.
procedures for purposes of MS-DRG assignment. The requestor recommended
that these procedures be assigned to MS-DRGs 656, 657, and 658 (Kidney
and Ureter Procedures for Neoplasm with MCC, with CC, and without CC/
MCC, respectively) and MS-DRGs 659, 660, and 661 (Kidney and Ureter
Procedures for Non-Neoplasm with MCC, with CC, and without CC/MCC,
respectively).
We agree with the requestor that these procedures typically require
the resources of an operating room. In addition to the MS-DRGs
recommended by the requestor, we believe that these procedure codes
should also be assigned to other MS-DRGs, consistent with the
assignment of other dilation of ureter procedures: MS-DRG 907, 908, and
909 (Other O.R. Procedures for Injuries with MCC, with CC, and without
CC/MCC, respectively) and MS-DRGs 957, 958, and 959 (Other O.R.
Procedures for Multiple Significant Trauma with MCC, with CC, and
without CC/MCC, respectively). Therefore, we are proposing to add the
three ICD-10-PCS procedure codes identified by the requestor to the FY
2019 ICD-10 MS-DRGs Version 36 Definitions Manual in Appendix E--
Operating Room Procedures and Procedure Code/MS-DRG Index as O.R.
procedures assigned to MS-DRGs 656, 657, and 658 in MDC 11 (Diseases
and Disorders of the Kidney and Urinary Tract), MS-DRGs 659, 660, and
661 in MDC 11, MS-DRGs 907, 908, and 909 in MDC 21 (Injuries,
Poisonings and Toxic Effects of Drugs), and MS-DRGs 957, 958, and 959
in MDC 24 (Multiple Significant Trauma). We are inviting public
comments on our proposal.
g. Thoracoscopic Procedures of Pericardium and Pleura
One requestor identified seven ICD-10-PCS procedure codes that
describe procedures involving thoracoscopic drainage of the pericardial
cavity or pleural cavity, or extirpation of matter from the pleura, as
shown in the following table.

------------------------------------------------------------------------
ICD-10-PCS procedure code Code description
------------------------------------------------------------------------
0W9D4ZZ................... Drainage of pericardial cavity, percutaneous
endoscopic approach.
0W9D40Z................... Drainage of pericardial cavity with drainage
device, percutaneous endoscopic approach.
0W9D4ZX................... Drainage of pericardial cavity, percutaneous
endoscopic approach, diagnostic.

[[Page 20255]]

0W994ZX................... Drainage of right pleural cavity,
percutaneous endoscopic approach,
diagnostic.
0W9B4ZX................... Drainage of left pleural cavity,
percutaneous endoscopic approach,
diagnostic.
0BCP4ZZ................... Extirpation of matter from left pleura,
percutaneous endoscopic approach.
0BCN4ZZ................... Extirpation of matter from right pleura,
percutaneous endoscopic approach.
------------------------------------------------------------------------

The requestor stated that these procedures involve making an
incision through the chest wall and inserting a thoracoscope for
visualization of thoracic structures during the procedure. The
requestor also stated that some thoracoscopic procedures are assigned
to surgical MS-DRGs, while other procedures are assigned to medical MS-
DRGs. In the ICD-10 MS-DRGs Version 35, these seven ICD-10-PCS
procedure codes are not recognized as O.R. procedures for purposes of
MS-DRG assignment.
We agree with the requestor that these procedures typically require
the resources of an operating room, as well as significant time and
skill. During our review, we noted that the following two related
procedures using the open approach also were not currently recognized
as O.R. procedures:

------------------------------------------------------------------------
ICD-10-PCS procedure code Code description
------------------------------------------------------------------------
0BCP0ZZ................... Extirpation of matter from left pleura, open
approach.
0BCN0ZZ................... Extirpation of matter from right pleura,
open approach.
------------------------------------------------------------------------

Therefore, to be consistent with the MS-DRGs to which other
approaches for procedures involving drainage or extirpation of matter
from the pleura are assigned, we are proposing to add these nine ICD-
10-PCS procedure codes to the FY 2019 ICD-10 MS-DRGs Version 36
Definitions Manual in Appendix E--Operating Room Procedures and
Procedure Code/MS-DRG Index as O.R. procedures assigned to one of the
following MS-DRGs: MS-DRGs 163, 164, and 165 (Major Chest Procedures
with MCC, with CC, and without CC/MCC, respectively) in MDC 4 (Diseases
and Disorders of the Respiratory System); MS-DRGs 270, 271, and 272
(Other Major Cardiovascular Procedures with MCC, with CC, and without
CC/MCC, respectively) in MDC 5 (Diseases and Disorders of the
Circulatory System); MS-DRGs 820, 821, and 822 (Lymphoma and Leukemia
with Major O.R. Procedure with MCC, with CC, and without CC/MCC,
respectively) in MDC 17 (Myeloproliferative Diseases and Disorders,
Poorly Differentiated Neoplasms); MS-DRGs 826, 827, and 828
(Myeloproliferative Disorders or Poorly Differentiated Neoplasms with
Major O.R. Procedure with MCC, with CC, and without CC/MCC,
respectively) in MDC 17; MS-DRGs 907, 908, and 909 (Other O.R.
Procedures for Injuries with MCC, with CC, and without CC/MCC,
respectively) in MDC 21 (Injuries, Poisonings and Toxic Effects of
Drugs); and MS-DRGs 957, 958, and 959 (Other O.R. Procedures for
Multiple Significant Trauma with MCC, with CC, and without CC/MCC,
respectively) in MDC 24 (Multiple Significant Trauma). We are inviting
public comments on our proposal.
h. Open Insertion of Totally Implantable and Tunneled Vascular Access
Devices
One requestor identified 20 ICD-10-PCS procedure codes that
describe procedures involving open insertion of totally implantable and
tunneled vascular access devices. The codes are identified in the
following table.

------------------------------------------------------------------------
ICD-10-PCS procedure code Code description
------------------------------------------------------------------------
0JH60WZ................... Insertion of totally implantable vascular
access device into chest subcutaneous
tissue and fascia, open approach.
0JH60XZ................... Insertion of tunneled vascular access device
into chest subcutaneous tissue and fascia,
open approach.
0JH80WZ................... Insertion of totally implantable vascular
access device into abdomen subcutaneous
tissue and fascia, open approach.
0JH80XZ................... Insertion of tunneled vascular access device
into abdomen subcutaneous tissue and
fascia, open approach.
0JHD0WZ................... Insertion of totally implantable vascular
access device into right upper arm
subcutaneous tissue and fascia, open
approach.
0JHD0XZ................... Insertion of tunneled vascular access device
into right upper arm subcutaneous tissue
and fascia, open approach.
0JHF0WZ................... Insertion of totally implantable vascular
access device into left upper arm
subcutaneous tissue and fascia, open
approach.
0JHF0XZ................... Insertion of tunneled vascular access device
into left upper arm subcutaneous tissue and
fascia, open approach.
0JHG0WZ................... Insertion of totally implantable vascular
access device into right lower arm
subcutaneous tissue and fascia, open
approach.
0JHG0XZ................... Insertion of tunneled vascular access device
into right lower arm subcutaneous tissue
and fascia, open approach.
0JHH0WZ................... Insertion of totally implantable vascular
access device into left lower arm
subcutaneous tissue and fascia, open
approach.
0JHH0XZ................... Insertion of tunneled vascular access device
into left lower arm subcutaneous tissue and
fascia, open approach.
0JHL0WZ................... Insertion of totally implantable vascular
access device into right upper leg
subcutaneous tissue and fascia, open
approach.
0JHL0XZ................... Insertion of tunneled vascular access device
into right upper leg subcutaneous tissue
and fascia, open approach.
0JHM0WZ................... Insertion of totally implantable vascular
access device into left upper leg
subcutaneous tissue and fascia, open
approach.
0JHM0XZ................... Insertion of tunneled vascular access device
into left upper leg subcutaneous tissue and
fascia, open approach.
0JHN0WZ................... Insertion of totally implantable vascular
access device into right lower leg
subcutaneous tissue and fascia, open
approach.
0JHN0XZ................... Insertion of tunneled vascular access device
into right lower leg subcutaneous tissue
and fascia, open approach.
0JHP0WZ................... Insertion of totally implantable vascular
access device into left lower leg
subcutaneous tissue and fascia, open
approach.
0JHP0XZ................... Insertion of tunneled vascular access device
into left lower leg subcutaneous tissue and
fascia, open approach.
------------------------------------------------------------------------

The requestor stated that open procedures to insert totally
implantable vascular access devices (VAD) involve implantation of a
port by open approach, cutting through subcutaneous tissue/fascia,
placing the device, and

[[Page 20256]]

then closing tissues so that none of the device is exposed. The
requestor explained that open procedures to insert tunneled VADs
involve insertion of the catheter into central vasculature, and then
open incision of subcutaneous tissue and fascia through which the
device is tunneled. The requestor also indicated that these procedures
require two ICD-10-PCS codes: One for the insertion of the VAD or port
within the subcutaneous tissue; and one for percutaneous insertion of
the central venous catheter that is connected to the device. The
requestor further noted that, in MDC 11, cases with these procedure
codes are assigned to surgical MS-DRGs and that insertion of infusion
pumps by open approach groups to surgical MS-DRGs. The requestor
recommended that these procedures be assigned to surgical MS-DRGs in
MDC 09 as well. We examined the O.R. designations for this group of
procedures and determined that they currently are designated as non-
O.R. procedures for MDC 09 and MDC 11.
We agree with the requestor that procedures involving open
insertion of totally implantable VAD procedures typically require the
resources of an operating room. However, we disagree that the tunneled
VAD procedures typically require the resources of an operating room.
Therefore, we are proposing to update the FY 2019 ICD-10 MS-DRGs
Version 36 Definitions Manual in Appendix E--Operating Room Procedures
and Procedure Code/MS-DRG Index to designate the 10 ICD-10-PCS
procedure codes describing the totally implantable VAD procedures as
O.R. procedures, which will continue to be assigned to MS-DRGs 579,
580, and 581 (Other Skin, Subcutaneous Tissue and Breast Procedures
with MCC, with CC, and without CC/MCC, respectively) in MDC 9 (Diseases
and Disorders of the Skin, Subcutaneous Tissue and Breast) and MS-DRGs
673, 674, and 675 (Other Kidney and Urinary Tract Procedures, with CC,
with MCC, and without CC/MCC, respectively) in MDC 11 (Diseases and
Disorders of the Kidney and Urinary Tract). We note that these
procedures already affect MS-DRG assignment to these MS-DRGs. However,
if the procedure is unrelated to the principal diagnosis, it will be
assigned to MS-DRGs 981, 982, and 983 instead of a medical MS[dash]DRG.
We are inviting public comments on our proposal.
i. Percutaneous Joint Reposition With Internal Fixation Device
One requestor identified 20 ICD-10-PCS procedure codes that
describe procedures involving percutaneous joint reposition with
internal fixation device, shown in the following table.

------------------------------------------------------------------------
ICD-10-PCS procedure code Code description
------------------------------------------------------------------------
0SS034Z................... Reposition lumbar vertebral joint with
internal fixation device, percutaneous
approach.
0SS334Z................... Reposition lumbosacral joint with internal
fixation device, percutaneous approach.
0SS534Z................... Reposition sacrococcygeal joint with
internal fixation device, percutaneous
approach.
0SS634Z................... Reposition coccygeal joint with internal
fixation device, percutaneous approach.
0SS734Z................... Reposition right sacroiliac joint with
internal fixation device, percutaneous
approach.
0SS834Z................... Reposition left sacroiliac joint with
internal fixation device, percutaneous
approach.
0SS934Z................... Reposition right hip joint with internal
fixation device, percutaneous approach.
0SSB34Z................... Reposition left hip joint with internal
fixation device, percutaneous approach.
0SSC34Z................... Reposition right knee joint with internal
fixation device, percutaneous approach.
0SSD34Z................... Reposition left knee joint with internal
fixation device, percutaneous approach.
0SSF34Z................... Reposition right ankle joint with internal
fixation device, percutaneous approach.
0SSG34Z................... Reposition left ankle joint with internal
fixation device, percutaneous approach.
0SSH34Z................... Reposition right tarsal joint with internal
fixation device, percutaneous approach.
0SSJ34Z................... Reposition left tarsal joint with internal
fixation device, percutaneous approach.
0SSK34Z................... Reposition right tarsometatarsal joint with
internal fixation device, percutaneous
approach.
0SSL34Z................... Reposition left tarsometatarsal joint with
internal fixation device, percutaneous
approach.
0SSM34Z................... Reposition right metatarsal-phalangeal joint
with internal fixation device, percutaneous
approach.
0SSN34Z................... Reposition left metatarsal-phalangeal joint
with internal fixation device, percutaneous
approach.
0SSP34Z................... Reposition right toe phalangeal joint with
internal fixation device, percutaneous
approach.
0SSQ34Z................... Reposition left toe phalangeal joint with
internal fixation device, percutaneous
approach.
------------------------------------------------------------------------

The requestor stated that reposition of the sacrum, femur, tibia,
fibula, and other fractures of bone with internal fixation device by
percutaneous approach are assigned to surgical DRGs, and that
reposition of sacroiliac, hip, knee, and other joint locations with
internal fixation should therefore also be assigned to surgical DRGs.
In the ICD-10 MS-DRGs Version 35, these 20 ICD-10-PCS procedure codes
are not recognized as O.R. procedures for purposes of MS-DRG
assignment.
We disagree with the requestor that these procedures typically
require the resources of an operating room, as these procedures are not
as invasive as the bone reposition procedures referenced by the
requestor. Our clinical advisors advised that these procedures are
typically performed in a radiology suite. Therefore, we are proposing
to maintain the status of these 20 ICD-10-PCS procedure codes as non-
O.R. procedures. We are inviting public comments on our proposal.
j. Endoscopic Destruction of Intestine
One requestor identified four ICD-10-PCS procedure codes that
describe procedures involving endoscopic destruction of the intestine,
as shown in the following table.

------------------------------------------------------------------------
ICD-10-PCS procedure code Code description
------------------------------------------------------------------------
0D5A8ZZ................... Destruction of jejunum, via natural or
artificial opening endoscopic.
0D5B8ZZ................... Destruction of ileum, via natural or
artificial opening endoscopic.
0D5C8ZZ................... Destruction of ileocecal valve, via natural
or artificial opening endoscopic.
0D588ZZ................... Destruction of small intestine, via natural
or artificial opening endoscopic.
------------------------------------------------------------------------

[[Page 20257]]

The requestor stated that these procedures are rarely performed in
the operating room. In the ICD-10 MS-DRGs Version 35, these 20 ICD-10-
PCS procedure codes are currently recognized as O.R. procedures for
purposes of MS-DRG assignment.
We agree with the requestor that these procedures do not typically
require the resources of an operating room. Therefore, we are proposing
to remove these four procedure codes from the FY 2019 ICD-10 MS-DRGs
Version 36 Definitions Manual in Appendix E--Operating Room Procedures
and Procedure Code/MS-DRG Index as O.R. procedures. We are inviting
public comments on our proposal.
k. Drainage of Lower Lung Via Natural or Artificial Opening Endoscopic,
Diagnostic
One requestor identified the following ICD-10-PCS procedure codes
that describe procedures involving endoscopic drainage of the lung via
natural or artificial opening for diagnostic purposes.

------------------------------------------------------------------------
ICD-10-PCS procedure code Code description
------------------------------------------------------------------------
0B9J8ZX................... Drainage of left lower lung lobe, via
natural or artificial opening endoscopic,
diagnostic.
0B9F8ZX................... Drainage of right lower lung lobe, via
natural or artificial opening endoscopic,
diagnostic.
------------------------------------------------------------------------

The requestor stated that these procedures are rarely performed in
the operating room.
We agree with the requestor that these procedures do not require
the resources of an operating room. In addition, while we were
reviewing this comment, we identified three additional related codes:

------------------------------------------------------------------------
ICD-10-PCS procedure code Code description
------------------------------------------------------------------------
0B9D8ZX................... Drainage of right middle lung lobe, via
natural or artificial opening endoscopic,
diagnostic.
0B9C8ZX................... Drainage of right upper lung lobe, via
natural or artificial opening endoscopic,
diagnostic.
0B9G8ZX................... Drainage of left upper lung lobe, via
natural or artificial opening endoscopic,
diagnostic.
------------------------------------------------------------------------

In the ICD-10 MS-DRGs Version 35, these ICD-10-PCS procedure codes
are currently recognized as O.R. procedures for purposes of MS-DRG
assignment.
We are proposing to remove ICD-10-PCS procedure codes 0B9J8ZX,
0B9F8ZX, 0B9D8ZX, 0B9C8ZX, and 0B9G8ZX from the FY 2019 ICD-10 MS-DRGs
Version 36 Definitions Manual in Appendix E--Operating Room Procedures
and Procedure Code/MS-DRG Index as O.R. procedures. We are inviting
public comments on our proposal.

G. Recalibration of the Proposed FY 2019 MS-DRG Relative Weights

1. Data Sources for Developing the Proposed Relative Weights
In developing the proposed FY 2019 system of weights, we are
proposing to use two data sources: Claims data and cost report data. As
in previous years, the claims data source is the MedPAR file. This file
is based on fully coded diagnostic and procedure data for all Medicare
inpatient hospital bills. The FY 2017 MedPAR data used in this proposed
rule include discharges occurring on October 1, 2016, through September
30, 2017, based on bills received by CMS through December 31, 2017,
from all hospitals subject to the IPPS and short[dash]term, acute care
hospitals in Maryland (which at that time were under a waiver from the
IPPS). The FY 2017 MedPAR file used in calculating the proposed
relative weights includes data for approximately 9,652,400 Medicare
discharges from IPPS providers. Discharges for Medicare beneficiaries
enrolled in a Medicare Advantage managed care plan are excluded from
this analysis. These discharges are excluded when the MedPAR ``GHO
Paid'' indicator field on the claim record is equal to ``1'' or when
the MedPAR DRG payment field, which represents the total payment for
the claim, is equal to the MedPAR ``Indirect Medical Education (IME)''
payment field, indicating that the claim was an ``IME only'' claim
submitted by a teaching hospital on behalf of a beneficiary enrolled in
a Medicare Advantage managed care plan. In addition, the December 31,
2017 update of the FY 2017 MedPAR file complies with version 5010 of
the X12 HIPAA Transaction and Code Set Standards, and includes a
variable called ``claim type.'' Claim type ``60'' indicates that the
claim was an inpatient claim paid as fee-for-service. Claim types
``61,'' ``62,'' ``63,'' and ``64'' relate to encounter claims, Medicare
Advantage IME claims, and HMO no-pay claims. Therefore, the calculation
of the proposed relative weights for FY 2019 also excludes claims with
claim type values not equal to ``60.'' The data exclude CAHs, including
hospitals that subsequently became CAHs after the period from which the
data were taken. We note that the proposed FY 2019 relative weights are
based on the ICD[dash]10[dash]CM diagnoses and ICD-10-PCS procedure
codes from the FY 2017 MedPAR claims data, grouped through the
ICD[dash]10 version of the proposed FY 2019 GROUPER (Version 36).
The second data source used in the cost[dash]based relative
weighting methodology is the Medicare cost report data files from the
HCRIS. Normally, we use the HCRIS dataset that is 3 years prior to the
IPPS fiscal year. Specifically, we used cost report data from the
December 31, 2017 update of the FY 2016 HCRIS for calculating the
proposed FY 2019 cost[dash]based relative weights.
2. Methodology for Calculation of the Proposed Relative Weights
As we explain in section II.E.2. of the preamble of this proposed
rule, we calculated the proposed FY 2019 relative weights based on 19
CCRs, as we did for FY 2018. The methodology we are proposing to use to
calculate the FY 2019 MS-DRG cost[dash]based relative weights based on
claims data in the FY 2017 MedPAR file and data from the FY 2016
Medicare cost reports is as follows:
To the extent possible, all the claims were regrouped
using the proposed FY 2019 MS[dash]DRG classifications discussed in
sections II.B. and II.F. of the preamble of this proposed rule.
The transplant cases that were used to establish the
proposed relative weights for heart and heart[dash]lung, liver and/or
intestinal, and lung transplants (MS-DRGs 001, 002, 005, 006, and 007,
respectively) were limited to those Medicare[dash]approved transplant
centers that have cases in the FY 2017 MedPAR

[[Page 20258]]

file. (Medicare coverage for heart, heart[dash]lung, liver and/or
intestinal, and lung transplants is limited to those facilities that
have received approval from CMS as transplant centers.)
Organ acquisition costs for kidney, heart,
heart[dash]lung, liver, lung, pancreas, and intestinal (or
multivisceral organs) transplants continue to be paid on a reasonable
cost basis. Because these acquisition costs are paid separately from
the prospective payment rate, it is necessary to subtract the
acquisition charges from the total charges on each transplant bill that
showed acquisition charges before computing the average cost for each
MS-DRG and before eliminating statistical outliers.
Claims with total charges or total lengths of stay less
than or equal to zero were deleted. Claims that had an amount in the
total charge field that differed by more than $30.00 from the sum of
the routine day charges, intensive care charges, pharmacy charges,
implantable devices charges, supplies and equipment charges, therapy
services charges, operating room charges, cardiology charges,
laboratory charges, radiology charges, other service charges, labor and
delivery charges, inhalation therapy charges, emergency room charges,
blood and blood products charges, anesthesia charges, cardiac
catheterization charges, CT scan charges, and MRI charges were also
deleted.
At least 92.5 percent of the providers in the MedPAR file
had charges for 14 of the 19 cost centers. All claims of providers that
did not have charges greater than zero for at least 14 of the 19 cost
centers were deleted. In other words, a provider must have no more than
five blank cost centers. If a provider did not have charges greater
than zero in more than five cost centers, the claims for the provider
were deleted.
Statistical outliers were eliminated by removing all cases
that were beyond 3.0 standard deviations from the geometric mean of the
log distribution of both the total charges per case and the total
charges per day for each MS-DRG.
Effective October 1, 2008, because hospital inpatient
claims include a POA indicator field for each diagnosis present on the
claim, only for purposes of relative weight-setting, the POA indicator
field was reset to ``Y'' for ``Yes'' for all claims that otherwise have
an ``N'' (No) or a ``U'' (documentation insufficient to determine if
the condition was present at the time of inpatient admission) in the
POA field.
Under current payment policy, the presence of specific HAC codes,
as indicated by the POA field values, can generate a lower payment for
the claim. Specifically, if the particular condition is present on
admission (that is, a ``Y'' indicator is associated with the diagnosis
on the claim), it is not a HAC, and the hospital is paid for the higher
severity (and, therefore, the higher weighted MS-DRG). If the
particular condition is not present on admission (that is, an ``N''
indicator is associated with the diagnosis on the claim) and there are
no other complicating conditions, the DRG GROUPER assigns the claim to
a lower severity (and, therefore, the lower weighted MS-DRG) as a
penalty for allowing a Medicare inpatient to contract a HAC. While the
POA reporting meets policy goals of encouraging quality care and
generates program savings, it presents an issue for the relative
weight-setting process. Because cases identified as HACs are likely to
be more complex than similar cases that are not identified as HACs, the
charges associated with HAC cases are likely to be higher as well.
Therefore, if the higher charges of these HAC claims are grouped into
lower severity MS-DRGs prior to the relative weight-setting process,
the relative weights of these particular MS-DRGs would become
artificially inflated, potentially skewing the relative weights. In
addition, we want to protect the integrity of the budget neutrality
process by ensuring that, in estimating payments, no increase to the
standardized amount occurs as a result of lower overall payments in a
previous year that stem from using weights and case-mix that are based
on lower severity MS-DRG assignments. If this would occur, the
anticipated cost savings from the HAC policy would be lost.
To avoid these problems, we reset the POA indicator field to ``Y''
only for relative weight-setting purposes for all claims that otherwise
have an ``N'' or a ``U'' in the POA field. This resetting ``forced''
the more costly HAC claims into the higher severity MS[dash]DRGs as
appropriate, and the relative weights calculated for each MS-DRG more
closely reflect the true costs of those cases.
In addition, in the FY 2013 IPPS/LTCH PPS final rule, for FY 2013
and subsequent fiscal years, we finalized a policy to treat hospitals
that participate in the Bundled Payments for Care Improvement (BPCI)
initiative the same as prior fiscal years for the IPPS payment modeling
and ratesetting process without regard to hospitals' participation
within these bundled payment models (77 FR 53341 through 53343).
Specifically, because acute care hospitals participating in the BPCI
initiative still receive IPPS payments under section 1886(d) of the
Act, we include all applicable data from these subsection (d) hospitals
in our IPPS payment modeling and ratesetting calculations as if they
were not participating in those models under the BPCI initiative. We
refer readers to the FY 2013 IPPS/LTCH PPS final rule for a complete
discussion on our final policy for the treatment of hospitals
participating in the BPCI Initiative in our ratesetting process.
The participation of hospitals in the BPCI initiative is set to
conclude on September 30, 2018. The participation of hospitals in the
Bundled Payments for Care Improvement (BPCI) Advanced model is set to
start on October 1, 2018. The BPCI Advanced model, tested under the
authority of section 3021 of the Affordable Care Act (codified at
section 1115A of the Act), is comprised of a single payment and risk
track, which bundles payments for multiple services beneficiaries
receive during a Clinical Episode. Acute care hospitals may participate
in BPCI Advanced in one of two capacities: As a model Participant or as
a downstream Episode Initiator. Regardless of the capacity in which
they participate in the BPCI Advanced model, participating acute care
hospitals will continue to receive IPPS payments under section 1886(d)
of the Act. Acute care hospitals that are Participants also assume
financial and quality performance accountability for Clinical Episodes
in the form of a reconciliation payment. For additional information on
the BPCI Advanced model, we refer readers to the BPCI Advanced webpage
on the CMS Center for Medicare and Medicaid Innovation's website at:
https://innovation.cms.gov/initiatives/bpci-advanced/. For FY 2019,
consistent with how we have treated hospitals that participated in the
BPCI Initiative, we believe it is appropriate to include all applicable
data from the subsection (d) hospitals participating in the BPCI
Advanced model in our IPPS payment modeling and ratesetting
calculations because, as noted above, these hospitals are still
receiving IPPS payments under section 1886(d) of the Act.
The charges for each of the proposed 19 cost groups for each claim
were standardized to remove the effects of differences in proposed area
wage levels, IME and DSH payments, and for hospitals located in Alaska
and Hawaii, the applicable proposed cost[dash]of[dash]living
adjustment. Because hospital charges include charges for both operating
and capital costs, we standardized total charges to remove the effects
of differences in proposed geographic

[[Page 20259]]

adjustment factors, cost[dash]of[dash]living adjustments, and DSH
payments under the capital IPPS as well. Charges were then summed by
MS-DRG for each of the proposed 19 cost groups so that each MS-DRG had
19 standardized charge totals. Statistical outliers were then removed.
These charges were then adjusted to cost by applying the proposed
national average CCRs developed from the FY 2016 cost report data.
The 19 cost centers that we used in the proposed relative weight
calculation are shown in the following table. The table shows the lines
on the cost report and the corresponding revenue codes that we used to
create the proposed 19 national cost center CCRs. If stakeholders have
comments about the groupings in this table, we may consider those
comments as we finalize our policy.
We are inviting public comments on our proposals related to
recalibration of the proposed FY 2019 relative weights and the changes
in relative weights from FY 2018.
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3. Development of Proposed National Average CCRs
We developed the proposed national average CCRs as follows:
Using the FY 2016 cost report data, we removed CAHs, Indian Health
Service hospitals, all[dash]inclusive rate hospitals, and cost reports
that represented time periods of less than 1 year (365 days). We
included hospitals located in Maryland because we include their charges
in our claims database. We then created CCRs for each provider for each
cost center (see prior table for line items used in the calculations)
and removed any CCRs that were greater than 10 or less than 0.01. We
normalized the departmental CCRs by dividing the CCR for each
department by the total CCR for the hospital for the purpose of
trimming the data. We then took the logs of the normalized cost center
CCRs and removed any cost center CCRs where the log of the cost center
CCR was greater or less than the mean log plus/minus 3 times the
standard deviation for the log of that cost center CCR. Once the cost
report data were trimmed, we calculated a Medicare[dash]specific CCR.
The Medicare[dash]specific CCR was determined by taking the Medicare
charges for each line item from Worksheet D-3 and deriving the
Medicare[dash]specific costs by applying the hospital[dash]specific
departmental CCRs to the Medicare[dash]specific charges for each line
item from Worksheet D-3. Once each hospital's Medicare[dash]specific
costs were established, we summed the total Medicare[dash]specific
costs and divided by the sum of the total Medicare[dash]specific
charges to produce national average, charge[dash]weighted CCRs.
After we multiplied the total charges for each MS-DRG in each of
the proposed 19 cost centers by the corresponding national average CCR,
we summed the 19 ``costs'' across each proposed MS-DRG to produce a
total standardized cost for the proposed MS-DRG. The average
standardized cost for each proposed MS-DRG was then computed as the
total standardized cost for the proposed MS-DRG divided by the
transfer[dash]adjusted case count for the proposed MS-DRG. We
calculated the transfer-adjusted discharges for use in the calculation
of the Version 36 MS-DRG relative weights using the statutory expansion
of the postacute care transfer policy to include discharges to hospice
care by a hospice program discussed in section IV.A.2.b. of the
preamble of this proposed rule. For the purposes of calculating the
normalization factor, we used the transfer-adjusted discharges with the
expanded postacute care transfer policy for Version 35 as well. (When
we calculate the normalization factor, we calculate the transfer-
adjusted case count for the prior GROUPER version (in this case Version
35) and multiply by the weights of that GROUPER. We then compare that
pool to the transfer-adjusted case count using the new GROUPER
version.) The average cost for each proposed MS-DRG was then divided by
the national average standardized cost per case to determine the
proposed relative weight.
The proposed FY 2019 cost-based relative weights were then
normalized by a proposed adjustment factor of 1.760698 so that the
average case weight after recalibration was equal to the average case
weight before recalibration. The proposed normalization adjustment is
intended to ensure that recalibration by itself neither increases nor
decreases total payments under the IPPS, as required by section
1886(d)(4)(C)(iii) of the Act.
The proposed 19 national average CCRs for FY 2019 are as follows:

------------------------------------------------------------------------
Group CCR
------------------------------------------------------------------------
Routine Days................................................... 0.451
Intensive Days................................................. 0.373
Drugs.......................................................... 0.196
Supplies & Equipment........................................... 0.299
Implantable Devices............................................ 0.321
Therapy Services............................................... 0.312
Laboratory..................................................... 0.116
Operating Room................................................. 0.185
Cardiology..................................................... 0.107
Cardiac Catheterization........................................ 0.115
Radiology...................................................... 0.149
MRIs........................................................... 0.076
CT Scans....................................................... 0.037
Emergency Room................................................. 0.165
Blood and Blood Products....................................... 0.306
Other Services................................................. 0.355
Labor & Delivery............................................... 0.363
Inhalation Therapy............................................. 0.163
Anesthesia..................................................... 0.081
------------------------------------------------------------------------

Since FY 2009, the relative weights have been based on 100 percent
cost weights based on our MS-DRG grouping system.
When we recalibrated the DRG weights for previous years, we set a
threshold of 10 cases as the minimum number of cases required to
compute a reasonable weight. We are proposing to use that same case
threshold in recalibrating the proposed MS-DRG relative weights for FY
2019. Using data from the FY 2017 MedPAR file, there were 7 MS-DRGs
that contain fewer than 10 cases. For FY 2019, because we do not have
sufficient MedPAR data to set accurate and stable cost relative weights
for these low[dash]volume MS-DRGs, we are proposing to compute relative
weights for the proposed low-volume MS-DRGs by adjusting their final FY
2018 relative weights by the percentage change in the average weight of
the cases in other MS-DRGs. The crosswalk table is shown:

------------------------------------------------------------------------
Low-volume MS-DRG MS-DRG title Crosswalk to MS-DRG
------------------------------------------------------------------------
789...................... Neonates, Died or Final FY 2018 relative
Transferred to weight (adjusted by
Another Acute Care percent change in
Facility. average weight of the
cases in other MS-
DRGs).
790...................... Extreme Immaturity Final FY 2018 relative
or Respiratory weight (adjusted by
Distress Syndrome, percent change in
Neonate. average weight of the
cases in other MS-
DRGs).
791...................... Prematurity with Final FY 2018 relative
Major Problems. weight (adjusted by
percent change in
average weight of the
cases in other MS-
DRGs).
792...................... Prematurity without Final FY 2018 relative
Major Problems. weight (adjusted by
percent change in
average weight of the
cases in other MS-
DRGs).
793...................... Full-Term Neonate Final FY 2018 relative
with Major weight (adjusted by
Problems. percent change in
average weight of the
cases in other MS-
DRGs).
794...................... Neonate with Other Final FY 2018 relative
Significant weight (adjusted by
Problems. percent change in
average weight of the
cases in other MS-
DRGs).
795...................... Normal Newborn..... Final FY 2018 relative
weight (adjusted by
percent change in
average weight of the
cases in other MS-
DRGs).
------------------------------------------------------------------------

[[Page 20276]]

We are inviting public comments on our proposals.

H. Proposed Add-On Payments for New Services and Technologies for FY
2019

1. Background
Sections 1886(d)(5)(K) and (L) of the Act establish a process of
identifying and ensuring adequate payment for new medical services and
technologies (sometimes collectively referred to in this section as
``new technologies'') under the IPPS. Section 1886(d)(5)(K)(vi) of the
Act specifies that a medical service or technology will be considered
new if it meets criteria established by the Secretary after notice and
opportunity for public comment. Section 1886(d)(5)(K)(ii)(I) of the Act
specifies that a new medical service or technology may be considered
for new technology add-on payment if, based on the estimated costs
incurred with respect to discharges involving such service or
technology, the DRG prospective payment rate otherwise applicable to
such discharges under this subsection is inadequate. We note that,
beginning with discharges occurring in FY 2008, CMS transitioned from
CMS-DRGs to MS-DRGs. The regulations at 42 CFR 412.87 implement these
provisions and specify three criteria for a new medical service or
technology to receive the additional payment: (1) The medical service
or technology must be new; (2) the medical service or technology must
be costly such that the DRG rate otherwise applicable to discharges
involving the medical service or technology is determined to be
inadequate; and (3) the service or technology must demonstrate a
substantial clinical improvement over existing services or
technologies. Below we highlight some of the major statutory and
regulatory provisions relevant to the new technology add-on payment
criteria, as well as other information. For a complete discussion on
the new technology add-on payment criteria, we refer readers to the FY
2012 IPPS/LTCH PPS final rule (76 FR 51572 through 51574).
Under the first criterion, as reflected in Sec. 412.87(b)(2), a
specific medical service or technology will be considered ``new'' for
purposes of new medical service or technology add-on payments until
such time as Medicare data are available to fully reflect the cost of
the technology in the MS-DRG weights through recalibration. We note
that we do not consider a service or technology to be new if it is
substantially similar to one or more existing technologies. That is,
even if a technology receives a new FDA approval or clearance, it may
not necessarily be considered ``new'' for purposes of new technology
add-on payments if it is ``substantially similar'' to a technology that
was approved or cleared by FDA and has been on the market for more than
2 to 3 years. In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR
43813 through 43814), we established criteria for evaluating whether a
new technology is substantially similar to an existing technology,
specifically: (1) Whether a product uses the same or a similar
mechanism of action to achieve a therapeutic outcome; (2) whether a
product is assigned to the same or a different MS-DRG; and (3) whether
the new use of the technology involves the treatment of the same or
similar type of disease and the same or similar patient population. If
a technology meets all three of these criteria, it would be considered
substantially similar to an existing technology and would not be
considered ``new'' for purposes of new technology add-on payments. For
a detailed discussion of the criteria for substantial similarity, we
refer readers to the FY 2006 IPPS final rule (70 FR 47351 through
47352), and the FY 2010 IPPS/LTCH PPS final rule (74 FR 43813 through
43814).
Under the second criterion, Sec. 412.87(b)(3) further provides
that, to be eligible for the add-on payment for new medical services or
technologies, the MS-DRG prospective payment rate otherwise applicable
to discharges involving the new medical service or technology must be
assessed for adequacy. Under the cost criterion, consistent with the
formula specified in section 1886(d)(5)(K)(ii)(I) of the Act, to assess
the adequacy of payment for a new technology paid under the applicable
MS-DRG prospective payment rate, we evaluate whether the charges for
cases involving the new technology exceed certain threshold amounts.
Table 10 that was released with the FY 2018 IPPS/LTCH PPS final rule
contains the final thresholds that we used to evaluate applications for
new medical service or technology add-on payments for FY 2019. We refer
readers to the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-Items/FY2018-IPPS-Final-Rule-Tables.html to download and view
Table 10.
As previously stated, Table 10 that is released with each proposed
and final rule contains the thresholds that we use to evaluate
applications for new medical service and technology add-on payments for
the fiscal year that follows the fiscal year that is otherwise the
subject of the rulemaking. For example, the thresholds in Table 10
released with the FY 2018 IPPS/LTCH PPS final rule are applicable to FY
2019 new technology applications. Beginning with the thresholds for FY
2020 and future years, we are proposing to provide the thresholds that
we previously included in Table 10 as one of our data files posted via
the Internet on the CMS website at: https://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/, which is
the same URL where the impact data files associated with the rulemaking
for the applicable fiscal year are posted. We believe that this
proposed change in the presentation of this information, specifically
in the data files rather than in a Table 10, will clarify for the
public that the listed thresholds will be used for new technology add-
on payment applications for the next fiscal year (in this case, for FY
2020) rather than for the fiscal year that is otherwise the subject of
the rulemaking (in this case, for FY 2019), while continuing to furnish
the same information on the new technology add[dash]on payment
thresholds for applications for the next fiscal year as has been
provided in previous fiscal years. Accordingly, we would no longer
include Table 10 as one of our IPPS tables, but would instead include
the thresholds applicable to the next fiscal year (beginning with FY
2020) in the data files associated with the prior fiscal year (in this
case, FY 2019).
In the September 7, 2001 final rule that established the new
technology add-on payment regulations (66 FR 46917), we discussed the
issue of whether the Health Insurance Portability and Accountability
Act (HIPAA) Privacy Rule at 45 CFR parts 160 and 164 applies to claims
information that providers submit with applications for new medical
service or technology add-on payments. We refer readers to the FY 2012
IPPS/LTCH PPS final rule (76 FR 51573) for complete information on this
issue.
Under the third criterion, Sec. 412.87(b)(1) of our existing
regulations provides that a new technology is an appropriate candidate
for an additional payment when it represents an advance that
substantially improves, relative to technologies previously available,
the diagnosis or treatment of Medicare beneficiaries. For example, a
new technology represents a substantial clinical improvement when it
reduces mortality, decreases the number of hospitalizations or
physician visits, or reduces recovery time compared to the technologies
previously available. (We

[[Page 20277]]

refer readers to the September 7, 2001 final rule for a more detailed
discussion of this criterion (66 FR 46902).)
The new medical service or technology add-on payment policy under
the IPPS provides additional payments for cases with relatively high
costs involving eligible new medical services or technologies, while
preserving some of the incentives inherent under an average-based
prospective payment system. The payment mechanism is based on the cost
to hospitals for the new medical service or technology. Under Sec.
412.88, if the costs of the discharge (determined by applying cost-to-
charge ratios (CCRs) as described in Sec. 412.84(h)) exceed the full
DRG payment (including payments for IME and DSH, but excluding outlier
payments), Medicare will make an add-on payment equal to the lesser of:
(1) 50 percent of the estimated costs of the new technology or medical
service (if the estimated costs for the case including the new
technology or medical service exceed Medicare's payment); or (2) 50
percent of the difference between the full DRG payment and the
hospital's estimated cost for the case. Unless the discharge qualifies
for an outlier payment, the additional Medicare payment is limited to
the full MS-DRG payment plus 50 percent of the estimated costs of the
new technology or medical service.
Section 503(d)(2) of Public Law 108-173 provides that there shall
be no reduction or adjustment in aggregate payments under the IPPS due
to add-on payments for new medical services and technologies.
Therefore, in accordance with section 503(d)(2) of Public Law 108-173,
add-on payments for new medical services or technologies for FY 2005
and later years have not been subjected to budget neutrality.
In the FY 2009 IPPS final rule (73 FR 48561 through 48563), we
modified our regulations at Sec. 412.87 to codify our longstanding
practice of how CMS evaluates the eligibility criteria for new medical
service or technology add-on payment applications. That is, we first
determine whether a medical service or technology meets the newness
criterion, and only if so, do we then make a determination as to
whether the technology meets the cost threshold and represents a
substantial clinical improvement over existing medical services or
technologies. We amended Sec. 412.87(c) to specify that all applicants
for new technology add-on payments must have FDA approval or clearance
for their new medical service or technology by July 1 of the year prior
to the beginning of the fiscal year that the application is being
considered.
The Council on Technology and Innovation (CTI) at CMS oversees the
agency's cross-cutting priority on coordinating coverage, coding and
payment processes for Medicare with respect to new technologies and
procedures, including new drug therapies, as well as promoting the
exchange of information on new technologies and medical services
between CMS and other entities. The CTI, composed of senior CMS staff
and clinicians, was established under section 942(a) of Public Law 108-
173. The Council is co-chaired by the Director of the Center for
Clinical Standards and Quality (CCSQ) and the Director of the Center
for Medicare (CM), who is also designated as the CTI's Executive
Coordinator.
The specific processes for coverage, coding, and payment are
implemented by CM, CCSQ, and the local Medicare Administrative
Contractors (MACs) (in the case of local coverage and payment
decisions). The CTI supplements, rather than replaces, these processes
by working to assure that all of these activities reflect the agency-
wide priority to promote high-quality, innovative care. At the same
time, the CTI also works to streamline, accelerate, and improve
coordination of these processes to ensure that they remain up to date
as new issues arise. To achieve its goals, the CTI works to streamline
and create a more transparent coding and payment process, improve the
quality of medical decisions, and speed patient access to effective new
treatments. It is also dedicated to supporting better decisions by
patients and doctors in using Medicare[dash]covered services through
the promotion of better evidence development, which is critical for
improving the quality of care for Medicare beneficiaries.
To improve the understanding of CMS' processes for coverage,
coding, and payment and how to access them, the CTI has developed an
``Innovator's Guide'' to these processes. The intent is to consolidate
this information, much of which is already available in a variety of
CMS documents and in various places on the CMS website, in a user
friendly format. This guide was published in 2010 and is available on
the CMS website at: https://www.cms.gov/Medicare/Coverage/CouncilonTechInnov/Downloads/Innovators-Guide-Master-7-23-15.pdf.
As we indicated in the FY 2009 IPPS final rule (73 FR 48554), we
invite any product developers or manufacturers of new medical services
or technologies to contact the agency early in the process of product
development if they have questions or concerns about the evidence that
would be needed later in the development process for the agency's
coverage decisions for Medicare.
The CTI aims to provide useful information on its activities and
initiatives to stakeholders, including Medicare beneficiaries,
advocates, medical product manufacturers, providers, and health policy
experts. Stakeholders with further questions about Medicare's coverage,
coding, and payment processes, or who want further guidance about how
they can navigate these processes, can contact the CTI at
[email protected].
We note that applicants for add-on payments for new medical
services or technologies for FY 2020 must submit a formal request,
including a full description of the clinical applications of the
medical service or technology and the results of any clinical
evaluations demonstrating that the new medical service or technology
represents a substantial clinical improvement, along with a significant
sample of data to demonstrate that the medical service or technology
meets the high-cost threshold. Complete application information, along
with final deadlines for submitting a full application, will be posted
as it becomes available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/newtech.html. To allow interested parties to identify the new medical
services or technologies under review before the publication of the
proposed rule for FY 2020, the CMS website also will post the tracking
forms completed by each applicant. We note that the burden associated
with this information collection requirement is the time and effort
required to collect and submit the data in the formal request for add-
on payments for new medical services and technologies to CMS. The
aforementioned burden is subject to the PRA; it is currently approved
under OMB control number 0938-1347, which expires on December 31, 2020.
2. Public Input Before Publication of a Notice of Proposed Rulemaking
on Add-On Payments
Section 1886(d)(5)(K)(viii) of the Act, as amended by section
503(b)(2) of Public Law 108-173, provides for a mechanism for public
input before publication of a notice of proposed rulemaking regarding
whether a medical service or technology represents a substantial
clinical improvement or advancement. The process for evaluating new
medical service and technology applications requires the Secretary to--

[[Page 20278]]

Provide, before publication of a proposed rule, for public
input regarding whether a new service or technology represents an
advance in medical technology that substantially improves the diagnosis
or treatment of Medicare beneficiaries;
Make public and periodically update a list of the services
and technologies for which applications for add-on payments are
pending;
Accept comments, recommendations, and data from the public
regarding whether a service or technology represents a substantial
clinical improvement; and
Provide, before publication of a proposed rule, for a
meeting at which organizations representing hospitals, physicians,
manufacturers, and any other interested party may present comments,
recommendations, and data regarding whether a new medical service or
technology represents a substantial clinical improvement to the
clinical staff of CMS.
In order to provide an opportunity for public input regarding add-
on payments for new medical services and technologies for FY 2019 prior
to publication of this FY 2019 IPPS/LTCH PPS proposed rule, we
published a notice in the Federal Register on December 4, 2017 (82 FR
57275), and held a town hall meeting at the CMS Headquarters Office in
Baltimore, MD, on February 13, 2018. In the announcement notice for the
meeting, we stated that the opinions and presentations provided during
the meeting would assist us in our evaluations of applications by
allowing public discussion of the substantial clinical improvement
criterion for each of the FY 2019 new medical service and technology
add[dash]on payment applications before the publication of this FY 2019
IPPS/LTCH PPS proposed rule.
Approximately 150 individuals registered to attend the town hall
meeting in person, while additional individuals listened over an open
telephone line. We also live[dash]streamed the town hall meeting and
posted the town hall on the CMS YouTube web page at: https://www.youtube.com/watch?v=9niqfxXe4oA&t=217s. We considered each
applicant's presentation made at the town hall meeting, as well as
written comments submitted on the applications that were received by
the due date of February 23, 2018, in our evaluation of the new
technology add[dash]on payment applications for FY 2019 in this FY 2019
IPPS/LTCH PPS proposed rule.
In response to the published notice and the February 13, 2018 New
Technology Town Hall meeting, we received written comments regarding
the applications for FY 2019 new technology add[dash]on payments. We
note that we do not summarize comments that are unrelated to the
``substantial clinical improvement'' criterion. As explained earlier
and in the Federal Register notice announcing the New Technology Town
Hall meeting (82 FR 57275 through 57277), the purpose of the meeting
was specifically to discuss the substantial clinical improvement
criterion in regard to pending new technology add-on payment
applications for FY 2019. Therefore, we are not summarizing those
written comments in this proposed rule. In section II.H.5. of the
preamble of this proposed rule, we are summarizing comments regarding
individual applications, or, if applicable, indicating that there were
no comments received in response to the New Technology Town Hall
meeting notice, at the end of each discussion of the individual
applications.
Comment: One commenter recommended that the specific criteria that
CMS uses in making substantial clinical improvement determinations be
codified in the regulations to more explicitly clarify that the new
medical service or technology will meet the substantial clinical
improvement criterion if it: (a) Results in a reduction of the length
of a hospital stay; (b) improves patient quality of life; (c) creates
long-term clinical efficiencies in treatment; (d) addresses patient-
centered objectives as defined by the Secretary; or (e) meets such
other criteria as the Secretary may specify. The commenter stated that
criteria similar to these were defined in the September 2001 New
Technology Final Rule (66 FR 46913 through 46914). The commenter also
recommended that final decisions on new technology add-on payment
applications should explicitly discuss how a technology or treatment
meets or fails to meet these specific criteria.
Response: We appreciate the commenter's recommendation. However, in
the September 2001 New Technology Final Rule (66 FR 46913 through
46914), we explained how we evaluate if a new medical service or
technology would meet the substantial clinical improvement criterion.
Specifically, we stated that we evaluate a request for new technology
payments against the following criteria to determine if the new medical
service or technology would represent a substantial clinical
improvement over existing technologies:
The device offers a treatment option for a patient
population unresponsive to, or ineligible for, currently available
treatments.
The device offers the ability to diagnose a medical
condition in a patient population where that medical condition is
currently undetectable or offers the ability to diagnose a medical
condition earlier in a patient population than allowed by currently
available methods. There must also be evidence that use of the device
to make a diagnosis affects the management of the patient.
Use of the device significantly improves clinical outcomes
for a patient population as compared to currently available treatments.
We typically require the applicant to submit evidence that the
technology meets one or more of these standards. Regarding whether the
use of the device significantly improves clinical outcomes for a
patient population as compared to currently available treatments, we
provided examples of improved clinical outcomes.
In response to the commenter's recommendation that final decisions
on new technology add-on applications explicitly discuss how a
technology or treatment meets or fails to meet these specific
standards, we believe that we provide this explanation when approving
or denying an application for new technology add-on payments in the
final rule.
Comment: One commenter stated that the United States Food and Drug
Administration Modernization Act (FDAMA) of 1997 established a category
of medical devices and diagnostics that are eligible for priority FDA
review. The commenter explained that, to qualify, products must be
designated by the FDA as offering the potential for significant
improvements in the diagnosis or treatment of the most serious
illnesses, including those that are life-threatening or irreversibly
debilitating. The commenter indicated that the processes by which
products meeting the statutory standard for priority treatment are
considered by the FDA are spelled out in greater detail in FDA's
Expedited Access Program (EAP), and in the 21st Century Cures Act. The
commenter believed that the criteria for priority FDA review are very
similar to the substantial clinical improvement criteria and,
therefore, devices used in the inpatient setting determined to be
eligible for expedited review and approved by the FDA should
automatically be considered as meeting the substantial clinical
improvement criterion, without further consideration by CMS.

[[Page 20279]]

Another commenter stated that CMS historically has noted that a new
technology is an appropriate candidate for an additional payment ``when
it represents an advance that substantially improves, relative to
technologies previously available, the diagnosis or treatment of
Medicare beneficiaries.'' The commenter believed that this standard was
created for medical devices because they dominated new technology of
the time. The commenter recommended that this standard not be applied
to regenerative medicine therapies because it believed these criteria
are likely outside Congressional intent and inconsistent with some of
the congressionally[dash]created FDA approval rules related to
expedited approval programs. The commenter explained that the FDA
defines congressionally-created ``breakthrough therapy'' and designates
a therapy as such if it ``may demonstrate substantial improvement over
existing therapies.'' In addition, the commenter stated that the
Regenerative Medicine Advanced Therapy (RMAT) designation is granted to
products that are intended to treat, modify, reverse, or cure a serious
or life-threatening disease or condition, and if clinical evidence
shows that it has the potential to meet an unmet medical need.
Response: The FDA provides a number of different types of approvals
and designations for devices, drugs, and other medical products. As
required by section 1886(d)(5)(K)(viii) of the Act, CMS provides a
mechanism for public input, before the publication of the proposed
rule, regarding whether a new service or technology represents an
advance in medical technology that substantially improves the diagnosis
or treatment of individuals entitled to benefits under Medicare Part A.
We believe that the criteria explained in the September 2001 New
Technology Final Rule (66 FR 46914) are consistent with the statutory
requirements for evaluating new medical services and technologies and
continue to be relevant to determining whether a new medical service or
technology represents a substantial clinical improvement over existing
technologies. If the technology has a status designated by the FDA that
is similar to the standards and conditions required to demonstrate
substantial clinical improvement under the new technology add-on
payment criterion, or is designated as a breakthrough therapy, the
technology should be able to demonstrate with evidence that it meets
the new technology add-on payment substantial clinical improvement
criterion. Finally, we do take FDA approvals into consideration in our
evaluation and determination of approvals and denials of new technology
add-on payment applications.
Comment: One commenter stated that, for technologies without a
special FDA designation, the substantial clinical improvement standard
is an inappropriate clinical standard for the family of regenerative
therapies because it creates a threshold that is too high and
unrealistic to meet. The commenter believed that requiring a vague
standard such as ``substantial clinical improvement'' ignores that
innovation is achieved incrementally. The commenter asserted that by
only approving new technologies that can achieve this standard for new
technology add-on payments, CMS' policy is at cross-purposes with
promoting innovation because many worthy technologies will not be
approved by CMS, which denies the general population the opportunity of
having the chance to learn and otherwise benefit from those
technologies.
The commenter also stated that CMS has questioned how substantial
clinical improvement can be measured and achieved via small clinical
trials with FDA approval. The commenter stated that it is concerned
that this view sets a dangerous precedent by significantly undervaluing
new transformative therapies. The commenter added that the FDA often
only requires single-arm trials with small numbers of patients for
these products because it is often not feasible for product developers
to provide data on a large number of patients, especially those working
in rare diseases as many regenerative and advanced therapeutic
developers are. The commenter stated that, given the transformative
nature of the products, this should not be a reason for CMS to deny a
new medical service or technology add-on payment.
Response: We believe that the September 2001 New Technology Final
Rule (66 FR 46914) clearly defines the criteria that CMS uses to
evaluate and determine if a new medical service or technology
represents a substantial clinical improvement. In addition, we accept
different types of data (for example, peer-reviewed articles, study
results, or letters from major associations, among others) that
demonstrate and support the substantial clinical improvement associated
with the new medical service or technology's use. In addition to
clinical data, we will consider any evidence that would support the
conclusion of a substantial clinical improvement associated with a new
medical service or technology. Therefore, we believe that we consider
an appropriate range of evidence.
Comment: One commenter stated that CMS should consider FDA approval
and the associated evidence base leading to such an approval as a
standard for meeting the substantial clinical improvement criterion.
The commenter believed that additional factors such as improvements in
patient quality of life, creation of long-term clinical efficiencies in
care, reductions in the use of other healthcare services, or other such
criteria should be incorporated into the CMS determination process for
whether a new medical service or technology demonstrates or represents
a substantial clinical improvement over existing technologies. The
commenter believed that, by including these additional factors, CMS
would align payment rates such that patients would have access to the
highest standard of treatment for all transformative therapies
representing a substantial clinical improvement for the patient
populations they serve, and it would be recognized as such by the
receipt of new technology add-on payments.
Response: As stated earlier, one of the standards we use to
determine whether a new medical service or technology represents a
substantial clinical improvement over existing technologies is to
evaluate whether the use of the device, drug, service, or technology
significantly improves clinical outcomes for a patient population as
compared to currently available treatments, and we provided examples of
improved clinical outcomes in the September 2001 New Technology Final
Rule (66 FR 46913 through 46914).
Comment: One commenter encouraged CMS to ensure appropriate
implementation of the substantial clinical improvement criterion under
the applicable Medicare statutory provisions and regulations, as
applied to radio pharma ceuticals and other nuclear medicine
technologies that can lead to significant benefits and advances in the
diagnosis and treatment of many diseases. The commenter recommended
that CMS apply an appropriately flexible standard for purposes of
assessing whether a technology represents a substantial clinical
improvement over other existing, available therapies. The commenter
asserted that a flexible standard for this purpose must include new
products and new formulations of products that increase the safety or
efficacy, or both, relative to current treatments. The commenter
believed that failing to recognize a technology that enhances the
safety and/or efficacy of existing options as both ``new'' and a

[[Page 20280]]

``substantial clinical improvement'' over existing options would be a
disservice to Medicare beneficiaries and to the mission of the Medicare
program.
The commenter encouraged CMS to give consideration to the
importance of technologies that make radiotherapies safer, as well as
those that lead to increased efficacy. The commenter explained that
minimizing a patient's exposure to radiation, while also maximizing the
effectiveness of the radiotherapy dose results in highly significant
clinical improvements for patients, including in specific areas that
CMS has expressly identified as relevant to the substantial clinical
improvement criterion.
Response: As stated earlier, we believe that the criteria explained
in the September 2001 New Technology Final Rule (66 FR 46914) are
consistent with the statutory requirements for evaluating new medical
services and technologies and continue to be relevant to determining
whether a new medical service or technology represents a substantial
clinical improvement over existing technologies.
We believe that it is important to maintain an open dialogue
regarding the IPPS new technology add-on payment process, and we
appreciate all of the commenters' input and recommendations.
3. ICD-10-PCS Section ``X'' Codes for Certain New Medical Services and
Technologies
As discussed in the FY 2016 IPPS/LTCH final rule (80 FR 49434), the
ICD-10-PCS includes a new section containing the new Section ``X''
codes, which began being used with discharges occurring on or after
October 1, 2015. Decisions regarding changes to ICD-10-PCS Section
``X'' codes will be handled in the same manner as the decisions for all
of the other ICD-10-PCS code changes. That is, proposals to create,
delete, or revise Section ``X'' codes under the ICD-10-PCS structure
will be referred to the ICD-10 Coordination and Maintenance Committee.
In addition, several of the new medical services and technologies that
have been, or may be, approved for new technology add-on payments may
now, and in the future, be assigned a Section ``X'' code within the
structure of the ICD-10-PCS. We posted ICD-10-PCS Guidelines on the CMS
website at: https://www.cms.gov/Medicare/Coding/ICD10/2016-ICD-10-PCS-and-GEMs.html, including guidelines for ICD-10-PCS Section ``X'' codes.
We encourage providers to view the material provided on ICD-10-PCS
Section ``X'' codes.
4. Proposed FY 2019 Status of Technologies Approved for FY 2018 Add-On
Payments
a. Defitelio[reg] (Defibrotide)
Jazz Pharmaceuticals submitted an application for new technology
add-on payments for FY 2017 for defibrotide (Defitelio[reg]), a
treatment for patients diagnosed with hepatic veno-occlusive disease
(VOD) with evidence of multiorgan dysfunction. VOD, also known as
sinusoidal obstruction syndrome (SOS), is a potentially life-
threatening complication of hematopoietic stem cell transplantation
(HSCT), with an incidence rate of 8 percent to 15 percent. Diagnoses of
VOD range in severity from what has been classically defined as a
disease limited to the liver (mild) and reversible, to a severe
syndrome associated with multi-organ dysfunction or failure and death.
Patients treated with HSCT who develop VOD with multi-organ failure
face an immediate risk of death, with a mortality rate of more than 80
percent when only supportive care is used. The applicant asserted that
Defitelio[reg] improves the survival rate of patients diagnosed with
VOD with multi-organ failure by 23 percent.
Defitelio[reg] received Orphan Drug Designation for the treatment
of VOD in 2003 and for the prevention of VOD in 2007. It has been
available to patients as an investigational drug through an expanded
access program since 2006. The applicant's New Drug Application (NDA)
for Defitelio[reg] received FDA approval on March 30, 2016. The
applicant confirmed that Defitelio[reg] was not available on the U.S.
market as of the FDA NDA approval date of March 30, 2016. According to
the applicant, commercial packaging could not be completed until the
label for Defitelio[reg] was finalized with FDA approval, and that
commercial shipments of Defitelio[reg] to hospitals and treatment
centers began on April 4, 2016. Therefore, we agreed that, based on
this information, the newness period for Defitelio[reg] begins on April
4, 2016, the date of its first commercial availability.
The applicant received approval to use unique ICD-10-PCS procedure
codes to describe the use of Defitelio[reg], with an effective date of
October 1, 2016. The approved ICD-10PCS procedure codes are: XW03392
(Introduction of defibrotide sodium anticoagulant into peripheral vein,
percutaneous approach); and XW04392 (Introduction of defibrotide sodium
anticoagulant into central vein, percutaneous approach).
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology add-on payments for
Defitelio[reg] and consideration of the public comments we received in
response to the FY 2017 IPPS/LTCH PPS proposed rule, we approved
Defitelio[reg] for new technology add-on payments for FY 2017 (81 FR
56906). With the new technology add-on payment application, the
applicant estimated that the average Medicare beneficiary would require
a dosage of 25 mg/kg/day for a minimum of 21 days of treatment. The
recommended dose is 6.25 mg/kg given as a 2-hour intravenous infusion
every 6 hours. Dosing should be based on a patient's baseline body
weight, which is assumed to be 70 kg for an average adult patient. All
vials contain 200 mg at a cost of $825 per vial. Therefore, we
determined that cases involving the use of the Defitelio[reg]
technology would incur an average cost per case of $151,800 (70 kg
adult x 25 mg/kg/day x 21 days = 36,750 mg per patient/200 mg vial =
184 vials per patient x $825 per vial = $151,800). Under Sec.
412.88(a)(2), we limit new technology add-on payments to the lesser of
50 percent of the average cost of the technology or 50 percent of the
costs in excess of the MS-DRG payment for the case. As a result, the
maximum new technology add-on payment amount for a case involving the
use of Defitelio[reg] is $75,900.
Our policy is that a medical service or technology may continue to
be considered ``new'' for purposes of new technology add-on payments
within 2 or 3 years after the point at which data begin to become
available reflecting the inpatient hospital code assigned to the new
service or technology. Our practice has been to begin and end new
technology add-on payments on the basis of a fiscal year, and we have
generally followed a guideline that uses a 6-month window before and
after the start of the fiscal year to determine whether to extend the
new technology add-on payment for an additional fiscal year. In
general, we extend new technology add-on payments for an additional
year only if the 3-year anniversary date of the product's entry onto
the U.S. market occurs in the latter half of the fiscal year (70 FR
47362).
With regard to the newness criterion for Defitelio[reg], we
considered the beginning of the newness period to commence on the first
day Defitelio[reg] was commercially available (April 4, 2016). Because
the 3-year anniversary date of the entry of the Defitelio[reg] onto the
U.S. market (April 4, 2019) will occur in the latter half of FY 2019,
we are proposing to continue new technology add-on payments for this
technology for FY 2019. We are

[[Page 20281]]

proposing that the maximum payment for a case involving Defitelio[reg]
would remain at $75,900 for FY 2019. We are inviting public comments on
our proposal to continue new technology add-on payments for
Defitelio[reg] for FY 2019.
b. EDWARDS INTUITY Elite^TM Valve System (INTUITY) and
LivaNova Perceval Valve (Perceval)
Two manufacturers, Edwards Lifesciences and LivaNova, submitted
applications for new technology add-on payments for FY 2018 for the
INTUITY Elite^TM Valve System (INTUITY) and the Perceval
Valve (Perceval), respectively. Both of these technologies are
prosthetic aortic valves inserted using surgical aortic valve
replacement (AVR). Aortic valvular disease is relatively common,
primarily manifested by aortic stenosis. Most aortic stenosis is due to
calcification of the valve, either on a normal tri-leaflet valve or on
a congenitally bicuspid valve. The resistance to outflow of blood is
progressive over time, and as the size of the aortic orifice narrows,
the heart must generate increasingly elevated pressures to maintain
blood flow. Symptoms such as angina, heart failure, and syncope
eventually develop, and portend a very serious prognosis. There is no
effective medical therapy for aortic stenosis, so the diseased valve
must be replaced or, less commonly, repaired.
According to both applicants, the INTUITY valve and the Perceval
valve are the first sutureless, rapid deployment aortic valves that can
be used for the treatment of patients who are candidates for surgical
AVR. Because potential cases representing patients who are eligible for
treatment using the INTUITY and the Perceval aortic valve devices would
group to the same MS-DRGs, and we believe that these devices are
intended to treat the same or similar disease in the same or similar
patient population, and are purposed to achieve the same therapeutic
outcome using the same or similar mechanism of action, we determined
these two devices are substantially similar to each other and that it
was appropriate to evaluate both technologies as one application for
new technology add-on payments under the IPPS.
With respect to the newness criterion, the INTUITY valve received
FDA approval on August 12, 2016, and was commercially available on the
U.S. market on August 19, 2016. The Perceval valve received FDA
approval on January 8, 2016, and was commercially available on the U.S.
market on February 29, 2016. In accordance with our policy, we stated
in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38120) that we believe
it is appropriate to use the earliest market availability date
submitted as the beginning of the newness period. Accordingly, for both
devices, we stated that the beginning of the newness period is February
29, 2016, when the Perceval valve became commercially available. The
ICD-10-PCS code approved to identify procedures involving the use of
both devices when surgically implanted is ICD-10-PCS code X2RF032
(Replacement of aortic valve using zooplastic tissue, rapid deployment
technique, open approach, new technology group 2).
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology add-on payments for the INTUITY
and Perceval valves and consideration of the public comments we
received in response to the FY 2018 IPPS/LTCH PPS proposed rule, we
approved the INTUITY and Perceval valves for new technology add-on
payments for FY 2018 (82 FR 38125). We stated that we believed that the
use of a weighted-average of the cost of the standard valves based on
the projected number of cases involving each technology to determine
the maximum new technology add-on payment was most appropriate. To
compute the weighted-cost average, we summed the total number of
projected cases for each of the applicants, which equaled 2,429 cases
(1,750 plus 679). We then divided the number of projected cases for
each of the applicants by the total number of cases, which resulted in
the following case-weighted percentages: 72 percent for the INTUITY and
28 percent for the Perceval valve. We then multiplied the cost per case
for the manufacturer specific valve by the case-weighted percentage
(0.72 * $12,500 = $9,005.76 for INTUITY and 0.28 * $11,500 = $3,214.70
for the Perceval valve). This resulted in a case-weighted average cost
of $12,220.46 for the valves. Under Sec. 412.88(a)(2), we limit new
technology add-on payments to the lesser of 50 percent of the average
cost of the device or 50 percent of the costs in excess of the MS-DRG
payment for the case. As a result, the maximum new technology add-on
payment for a case involving the INTUITY or Perceval valves is
$6,110.23 for FY 2018.
With regard to the newness criterion for the INTUITY and Perceval
valves, we considered the newness period for the INTUITY and Perceval
valves to begin February 29, 2016. As discussed previously in this
section, in general, we extend new technology add-on payments for an
additional year only if the 3-year anniversary date of the product's
entry onto the U.S. market occurs in the latter half of the upcoming
fiscal year. Because the 3-year anniversary date of the entry of the
technology onto the U.S. market (February 29, 2019) will occur in the
first half of FY 2019, we are proposing to discontinue new technology
add-on payments for the INTUITY and Perceval valves for FY 2019. We are
inviting public comments on our proposal to discontinue new technology
add-on payments for the INTUITY and Perceval valves.
c. GORE[reg] EXCLUDER[reg] Iliac Branch Endoprosthesis (Gore IBE
Device)
W. L. Gore and Associates, Inc. submitted an application for new
technology add-on payments for the GORE[reg] EXCLUDER[reg] Iliac Branch
Endoprosthesis (GORE IBE device) for FY 2017. The device consists of
two components: The Iliac Branch Component (IBC) and the Internal Iliac
Component (IIC). The applicant indicated that each endoprosthesis is
pre-mounted on a customized delivery and deployment system allowing for
controlled endovascular delivery via bilateral femoral access.
According to the applicant, the device is designed to be used in
conjunction with the GORE[reg] EXCLUDER[reg] AAA Endoprosthesis for the
treatment of patients requiring repair of common iliac or aortoiliac
aneurysms. When deployed, the GORE IBE device excludes the common iliac
aneurysm from systemic blood flow, while preserving blood flow in the
external and internal iliac arteries.
With regard to the newness criterion, the applicant received pre-
market FDA approval of the GORE IBE device on February 29, 2016. The
following procedure codes describe the use of this technology: 04VC0EZ
(Restriction of right common iliac artery with branched or fenestrated
intraluminal device, one or two arteries, open approach); 04VC3EZ
(Restriction of right common iliac artery with branched or fenestrated
intraluminal device, one or two arteries, percutaneous approach);
04VC4EZ (Restriction of right common iliac artery with branched or
fenestrated intraluminal device, one or two arteries, percutaneous
approach); 04VD0EZ (Restriction of left common iliac artery with
branched or fenestrated intraluminal device, one or two arteries, open
approach); 04VD3EZ (Restriction of left common iliac artery with
branched or fenestrated intraluminal device, one or two arteries,
percutaneous approach); 04VD4EZ (Restriction of left common iliac
artery with branched or fenestrated

[[Page 20282]]

intraluminal device, one or two arteries, percutaneous endoscopic
approach).
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology add-on payments for the GORE
IBE device and consideration of the public comments we received in
response to the FY 2017 IPPS/LTCH PPS proposed rule, we approved the
GORE IBE device for new technology add-on payments for FY 2017 (81 FR
56909). With the new technology add-on payment application, the
applicant indicated that the total operating cost of the GORE IBE
device is $10,500. Under Sec. 412.88(a)(2), we limit new technology
add-on payments to the lesser of 50 percent of the average cost of the
device or 50 percent of the costs in excess of the MS-DRG payment for
the case. As a result, the maximum new technology add-on payment for a
case involving the GORE IBE device is $5,250.
With regard to the newness criterion for the GORE IBE device, we
considered the beginning of the newness period to commence when the
GORE IBE device received FDA approval on February 29, 2016. As
discussed previously in this section, in general, we extend new
technology add-on payments for an additional year only if the 3-year
anniversary date of the product's entry onto the U.S. market occurs in
the latter half of the upcoming fiscal year. Because the 3-year
anniversary date of the entry of the GORE IBE device onto the U.S.
market (February 28, 2019) will occur in the first half of FY 2019, we
are proposing to discontinue new technology add-on payments for this
technology for FY 2019. We are inviting public comments on our proposal
to discontinue new technology add-on payments for the GORE IBE device.
d. Idarucizumab
Boehringer Ingelheim Pharmaceuticals, Inc. submitted an application
for new technology add-on payments for FY 2017 for Idarucizumab, a
product developed as an antidote to reverse the effects of PRADAXAR
(Dabigatran), which is also manufactured by Boehringer Ingelheim
Pharmaceuticals, Inc.
Dabigatran is an oral direct thrombin inhibitor currently
indicated: (1) To reduce the risk of stroke and systemic embolism in
patients who have been diagnosed with nonvalvular atrial fibrillation
(NVAF); (2) for the treatment of deep venous thrombosis (DVT) and
pulmonary embolism (PE) in patients who have been administered a
parenteral anticoagulant for 5 to 10 days; (3) to reduce the risk of
recurrence of DVT and PE in patients who have been previously treated;
and (4) for the prophylaxis of DVT and PE in patients who have
undergone hip replacement surgery. Currently, unlike the anticoagulant
Warfarin, there is no specific way to reverse the anticoagulant effect
of Dabigatran in the event of a major bleeding episode. Idarucizumab is
a humanized fragment antigen binding (Fab) molecule, which specifically
binds to Dabigatran to deactivate the anticoagulant effect, thereby
allowing thrombin to act in blood clot formation. The applicant stated
that Idarucizumab represents a new pharmacologic approach to
neutralizing the specific anticoagulant effect of Dabigatran in
emergency situations.
Idarucizumab was approved by the FDA on October 16, 2015.
Idarucizumab is indicated for the use in the treatment of patients who
have been administered Pradaxa when reversal of the anticoagulant
effects of dabigatran is needed for emergency surgery or urgent medical
procedures or in life-threatening or uncontrolled bleeding.
The applicant was granted approval to use unique ICD-10-PCS
procedure codes that became effective October 1, 2016, to describe the
use of this technology. The approved ICD-10-PCS procedure codes are:
XW03331 (Introduction of Idarucizumab, Dabigatran reversal agent into
peripheral vein, percutaneous approach, new technology group 1); and
XW04331 (Introduction of Idarucizumab, Dabigatran reversal agent into
central vein, percutaneous approach, new technology group 1).
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology add-on payments for
Idarucizumab and consideration of the public comments we received in
response to the FY 2017 IPPS/LTCH PPS proposed rule, we approved
Idarucizumab for new technology add-on payments for FY 2017 (81 FR
56897). With the new technology add-on payment application, the
applicant indicated that the total operating cost of Idarucizumab is
$3,500. Under Sec. 412.88(a)(2), we limit new technology add-on
payments to the lesser of 50 percent of the average cost of the
technology or 50 percent of the costs in excess of the MS-DRG payment
for the case. As a result, the maximum new technology add-on payment
for a case involving Idarucizumab is $1,750.
With regard to the newness criterion for Idarucizumab, we
considered the beginning of the newness period to commence when
Idarucizumab was approved by the FDA on October 16, 2015. As discussed
previously in this section, in general, we extend new technology add-on
payments for an additional year only if the 3-year anniversary date of
the product's entry onto the U.S. market occurs in the latter half of
the upcoming fiscal year. Because the 3-year anniversary date of the
entry of Idarucizumab onto the U.S. market will occur in the first half
of FY 2019 (October 15, 2018), we are proposing to discontinue new
technology add-on payments for this technology for FY 2019. We are
inviting public comments on our proposal to discontinue new technology
add-on payments for Idarucizumab.
e. Ustekinumab (Stelara[reg])
Janssen Biotech submitted an application for new technology add-on
payments for the Stelara[reg] induction therapy for FY 2018.
Stelara[reg] received FDA approval as an intravenous (IV) infusion
treatment of Crohn's disease (CD) on September 23, 2016, which added a
new indication for the use of Stelara[reg] and route of administration
for this monoclonal antibody. IV infusion of Stelara[reg] is indicated
for the treatment of adult patients (18 years and older) diagnosed with
moderately to severely active CD who have: (1) Failed or were
intolerant to treatment using immunomodulators or corticosteroids, but
never failed a tumor necrosis factor (TNF) blocker; or (2) failed or
were intolerant to treatment using one or more TNF blockers.
Stelara[reg] for IV infusion has only one purpose, induction therapy.
Stelara[reg] must be administered intravenously by a health care
professional in either an inpatient hospital setting or an outpatient
hospital setting.
Stelara[reg] for IV infusion is packaged in single 130 mg vials.
Induction therapy consists of a single IV infusion dose using the
following weight-based dosing regimen: Patients weighing less than
(<)55 kg are administered 260 mg of Stelara[reg] (2 vials); patients
weighing more than (>)55 kg, but less than (<)85 kg are administered
390 mg of Stelara[reg] (3 vials); and patients weighing more than (>)85
kg are administered 520 mg of Stelara[reg] (4 vials). An average dose
of Stelara[reg] administered through IV infusion is 390 mg (3 vials).
Maintenance doses of Stelara[reg] are administered at 90 mg,
subcutaneously, at 8-week intervals and may occur in the outpatient
hospital setting.
CD is an inflammatory bowel disease of unknown etiology,
characterized by transmural inflammation of the gastrointestinal (GI)
tract. Symptoms of CD may include fatigue, prolonged diarrhea with or
without bleeding, abdominal pain, weight loss and fever. CD can affect
any part of the GI tract

[[Page 20283]]

including the mouth, esophagus, stomach, small intestine, and large
intestine. Conventional pharmacologic treatments of CD include
antibiotics, mesalamines, corticosteroids, immunomodulators, tumor
necrosis alpha (TNF[alpha]) inhibitors, and anti-integrin agents.
Surgery may be necessary for some patients diagnosed with CD in which
conventional therapies have failed.
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology add-on payments for
Stelara[reg] and consideration of the public comments we received in
response to the FY 2018 IPPS/LTCH PPS proposed rule, we approved
Stelara[reg] for new technology add-on payments for FY 2018 (82 FR
38129). Cases involving Stelara[reg] that are eligible for new
technology add-on payments are identified by ICD-10-PCS procedure code
XW033F3 (Introduction of other New Technology therapeutic substance
into peripheral vein, percutaneous approach, new technology group 3).
With the new technology add-on payment application, the applicant
estimated that the average Medicare beneficiary would require a dosage
of 390 mg (3 vials) at a hospital acquisition cost of $1,600 per vial
(for a total of $4,800). Under Sec. 412.88(a)(2), we limit new
technology add-on payments to the lesser of 50 percent of the average
cost of the technology or 50 percent of the costs in excess of the MS-
DRG payment for the case. As a result, the maximum new technology add-
on payment amount for a case involving the use of Stelara[reg] is
$2,400.
With regard to the newness criterion for Stelara[reg], we
considered the beginning of the newness period to commence when
Stelara[reg] received FDA approval as an IV infusion treatment of
Crohn's disease (CD) on September 23, 2016. Because the 3-year
anniversary date of the entry of Stelara[reg] onto the U.S. market
(September 23, 2019) will occur after FY 2019, we are proposing to
continue new technology add-on payments for this technology for FY
2019. We are proposing that the maximum payment for a case involving
Stelara[reg] would remain at $2,400 for FY 2019. We are inviting public
comments on our proposal to continue new technology add-on payments for
Stelara[reg] for FY 2019.
f. Vistogard\TM\ (Uridine Triacetate)
BTG International Inc. submitted an application for new technology
add-on payments for the Vistogard^TM for FY 2017.
Vistogard^TM was developed as an emergency treatment for
Fluorouracil toxicity.
Chemotherapeutic agent 5-fluorouracil (5-FU) is used to treat
specific solid tumors. It acts upon deoxyribonucleic acid (DNA) and
ribonucleic acid (RNA) in the body, as uracil is a naturally occurring
building block for genetic material. Fluorouracil is a fluorinated
pyrimidine. As a chemotherapy agent, Fluorouracil is absorbed by cells
and causes the cell to metabolize into byproducts that are toxic and
used to destroy cancerous cells. According to the applicant, the
byproducts fluorodoxyuridine monophosphate (F-dUMP) and floxuridine
triphosphate (FUTP) are believed to do the following: (1) Reduce DNA
synthesis; (2) lead to DNA fragmentation; and (3) disrupt RNA
synthesis. Fluorouracil is used to treat a variety of solid tumors such
as colorectal, head and neck, breast, and ovarian cancer. With
different tumor treatments, different dosages, and different dosing
schedules, there is a risk for toxicity in these patients. Patients may
suffer from fluorouracil toxicity/death if 5-FU is delivered in slight
excess or at faster infusion rates than prescribed. The cause of
overdose can happen for a variety of reasons including: Pump
malfunction, incorrect pump programming or miscalculated doses, and
accidental or intentional ingestion.
Vistogard^TM is an antidote to Fluorouracil toxicity and
is a prodrug of uridine. Once the drug is metabolized into uridine, it
competes with the toxic byproduct FUTP in binding to RNA, thereby
reducing the impact FUTP has on cell death.
With regard to the newness criterion, Vistogard^TM
received FDA approval on December 11, 2015. However, as discussed in
the FY 2017 IPPS/LTCH PPS final rule (81 FR 56910), due to the delay in
Vistogard^TM's commercial availability, we considered the
newness period to begin March 2, 2016, instead of December 11, 2015.
The applicant noted that the Vistogard^TM is the first
FDA[dash]approved antidote used to reverse fluorouracil toxicity. The
applicant submitted a request for a unique ICD-10-PCS procedure code
and was granted approval for the following procedure code: XW0DX82
(Introduction of Uridine Triacetate into Mouth and Pharynx, External
Approach, new technology group 2). The new code became effective on
October 1, 2016.
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology add-on payments for
Vistogard^TM and consideration of the public comments we
received in response to the FY 2017 IPPS/LTCH PPS proposed rule, we
approved Vistogard^TM for new technology add-on payments for
FY 2017 (81 FR 56912). With the new technology add-on payment
application, the applicant stated that the total operating cost of
Vistogard^TM is $75,000. Under Sec. 412.88(a)(2), we limit
new technology add-on payments to the lesser of 50 percent of the
average cost of the technology or 50 percent of the costs in excess of
the MS-DRG payment for the case. As a result, the maximum new
technology add-on payment for a case involving Vistogard^TM
is $37,500.
With regard to the newness criterion for the
Vistogard^TM, we considered the beginning of the newness
period to commence upon the entry of Vistogard^TM onto the
U.S. market on March 2, 2016. As discussed previously in this section,
in general, we extend new technology add-on payments for an additional
year only if the 3-year anniversary date of the product's entry onto
the U.S. market occurs in the latter half of the upcoming fiscal year.
Because the 3-year anniversary date of the entry of the
Vistogard^TM onto the U.S. market (March 2, 2019) will occur
in the first half of FY 2019, we are proposing to discontinue new
technology add-on payments for this technology for FY 2019. We are
inviting public comments on our proposal to discontinue new technology
add-on payments for the Vistogard^TM.
g. Bezlotoxumab (ZINPLAVA\TM\)
Merck & Co., Inc. submitted an application for new technology add-
on payments for ZINPLAVA^TM for FY 2018.
ZINPLAVA^TM is indicated to reduce recurrence of Clostridium
difficile infection (CDI) in adult patients who are receiving
antibacterial drug treatment for a diagnosis of CDI who are at high
risk for CDI recurrence. ZINPLAVA^TM is not indicated for the
treatment of the presenting episode of CDI and is not an antibacterial
drug.
Clostridium difficile (C-diff) is a disease-causing anaerobic,
spore forming bacteria that can affect the gastrointestinal (GI) tract.
Some people carry the C-diff bacterium in their intestines, but never
develop symptoms of an infection. The difference between asymptomatic
colonization and pathogenicity is caused primarily by the production of
an enterotoxin (Toxin A) and/or a cytotoxin (Toxin B). The presence of
either or both toxins can lead to symptomatic CDI, which is defined as
the acute onset of diarrhea with a documented infection with toxigenic
C-diff, or the presence of either toxin A or B. The GI tract contains
millions of bacteria, commonly referred to as ``normal flora'' or
``good

[[Page 20284]]

bacteria,'' which play a role in protecting the body from infection.
Antibiotics can kill these good bacteria and allow the C-diff bacteria
to multiply and release toxins that damage the cells lining the
intestinal wall, resulting in a CDI. CDI is a leading cause of
hospital-associated gastrointestinal illnesses. Persons at increased
risk for CDI include people who are treated with current or recent
antibiotic use, people who have encountered current or recent
hospitalization, people who are older than 65 years, immunocompromised
patients, and people who have recently had a diagnosis of CDI. CDI
symptoms include, but are not limited to, diarrhea, abdominal pain, and
fever. CDI symptoms range in severity from mild (abdominal discomfort,
loose stools) to severe (profuse, watery diarrhea, severe pain, and
high fevers). Severe CDI can be life[dash]threatening and, in rare
cases, can cause bowel rupture, sepsis and organ failure. CDI is
responsible for 14,000 deaths per year in the United States.
C-diff produces two virulent, pro-inflammatory toxins, Toxin A and
Toxin B, which target host colonocytes (that is, large intestine
endothelial cells) by binding to endothelial cell surface receptors via
combined repetitive oligopeptide (CROP) domains. These toxins cause the
release of inflammatory cytokines leading to intestinal fluid secretion
and intestinal inflammation. The applicant asserted that
ZINPLAVA^TM targets Toxin B sites within the CROP domain
rather than the C-diff organism itself. According to the applicant, by
targeting C-diff Toxin B, ZINPLAVA^TM neutralizes Toxin B,
prevents large intestine endothelial cell inflammation, symptoms
associated with CDI, and reduces the recurrence of CDI.
ZINPLAVA^TM received FDA approval on October 21, 2016,
for reduction of recurrence of CDI in patients receiving antibacterial
drug treatment for CDI and who are at high risk of CDI recurrence.
ZINPLAVA^TM became commercially available on February 10,
2017. Therefore, the newness period for ZINPLAVA^TM began on
February 10, 2017. The applicant submitted a request for a unique ICD-
10-PCS procedure code and was granted approval for the following
procedure codes: XW033A3 (Introduction of bezlotoxumab monoclonal
antibody, into peripheral vein, percutaneous approach, new technology
group 3) and XW043A3 (Introduction of bezlotoxumab monoclonal antibody,
into central vein, percutaneous approach, new technology group 3).
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology add-on payments for
ZINPLAVA^TM and consideration of the public comments we
received in response to the FY 2018 IPPS/LTCH PPS proposed rule, we
approved ZINPLAVA^TM for new technology add-on payments for
FY 2018 (82 FR 38119). With the new technology add-on payment
application, the applicant estimated that the average Medicare
beneficiary would require a dosage of 10 mg/kg of ZINPLAVA^TM
administered as an IV infusion over 60 minutes as a single dose.
According to the applicant, the WAC for one dose is $3,800. Under Sec.
412.88(a)(2), we limit new technology add-on payments to the lesser of
50 percent of the average cost of the technology or 50 percent of the
costs in excess of the MS-DRG payment for the case. As a result, the
maximum new technology add-on payment amount for a case involving the
use of ZINPLAVA^TM is $1,900.
With regard to the newness criterion for ZINPLAVA^TM, we
considered the beginning of the newness period to commence on February
10, 2017. Because the 3-year anniversary date of the entry of
ZINPLAVA^TM onto the U.S. market (February 10, 2020) will
occur after FY 2019, we are proposing to continue new technology add-on
payments for this technology for FY 2019. We are proposing that the
maximum payment for a case involving ZINPLAVA^TM would remain
at $1,900 for FY 2019. We are inviting public comments on our proposal
to continue new technology add-on payments for ZINPLAVA^TM
for FY 2019.
5. FY 2019 Applications for New Technology Add-On Payments
We received 15 applications for new technology add-on payments for
FY 2019. In accordance with the regulations under Sec. 412.87(c),
applicants for new technology add[dash]on payments must have FDA
approval or clearance by July 1 of the year prior to the beginning of
the fiscal year that the application is being considered. A discussion
of the 15 applications is presented below.
a. KYMRIAH\TM\ (Tisagenlecleucel) and YESCARTA\TM\ (Axicabtagene
Ciloleucel)
Two manufacturers, Novartis Pharmaceuticals Corporation and Kite
Pharma, Inc. submitted separate applications for new technology add-on
payments for FY 2019 for KYMRIAH^TM (tisagenlecleucel) and
YESCARTA^TM (axicabtagene ciloleucel), respectively. Both of
these technologies are CD-19-directed T[dash]cell immunotherapies used
for the purposes of treating patients with aggressive variants of
non[dash]Hodgkin lymphoma (NHL). We note that KYMRIAH^TM was
approved by the FDA on August 30, 2017, for use in the treatment of
patients up to 25 years of age with B-cell precursor acute
lymphoblastic leukemia (ALL) that is refractory or in second or later
relapse, which is a different indication and patient population than
the new indication and targeted patient population for which the
applicant submitted a request for approval of new technology add-on
payments for FY 2019. Specifically, and as summarized in the following
table, the new indication for which Novartis Pharmaceuticals
Corporation is requesting approval for new technology add-on payments
for KYMRIAH^TM is as an autologous T-cell immune therapy
indicated for use in the treatment of patients with relapsed/refractory
(R/R) Diffuse Large B[dash]Cell Lymphoma (DLBCL) not eligible for
autologous stem cell transplant (ASCT). As of the time of the
development of this proposed rule, Novartis Pharmaceuticals Corporation
has been granted a Breakthrough Therapy designation by the FDA, and is
awaiting FDA approval for the use of KYMRIAH^TM under this
new indication. We also note that Kite Pharma, Inc. previously
submitted an application for approval for new technology add-on
payments for FY 2018 for KTE-C19 for use as an autologous T[dash]cell
immune therapy in the treatment of adult patients with R/R aggressive
B-cell NHL who are ineligible for ASCT. However, Kite Pharma, Inc.
withdrew its application for KTE-C19 prior to publication of the FY
2018 IPPS/LTCH PPS final rule. Kite Pharma, Inc. has resubmitted an
application for approval for new technology add-on payments for FY 2019
for KTE-C19 under a new name, YESCARTA^TM, for the same
indication. Kite Pharma, Inc. received FDA approval for this original
indication and treatment use of YESCARTA^TM on October 18,
2017. (We refer readers to the following table for a comparison of the
indications and FDA approvals for KYMRIAH^TM and
YESCARTA^TM.)

[[Page 20285]]

Comparison of Indication and FDA Approval for KYMRIAHTM and YESCARTATM
----------------------------------------------------------------------------------------------------------------
Description of indication for which new
FY 2019 applicant technology name technology add-on payments are being FDA approval status
requested
----------------------------------------------------------------------------------------------------------------
KYMRIAHTM (Novartis Pharmaceuticals KYMRIAHTM: Autologous T-cell immune Breakthrough Therapy
Corporation). therapy indicated for use in the designation granted by
treatment of patients with relapsed/ FDA; FDA approval
refractory (R/R) Diffuse Large B Cell pending.
Lymphoma (DLBCL) not eligible for
autologous stem cell transplant (ASCT).
YESCARTATM (Kite Pharma, Inc.).......... YESCARTATM: Autologous T-cell immune FDA approval received 10/
therapy indicated for use in the 18/2017.
treatment of adult patients with R/R
large B-cell lymphoma after two or more
lines of systemic therapy, including
DLBCL not otherwise specified, primary
mediastinal large B-cell, high grade B-
cell lymphoma, and DLBCL arising from
follicular lymphoma.
----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------
Technology approved for other FDA approval of other
indications Description of other indication indication
----------------------------------------------------------------------------------------------------------------
KYMRIAHTM (Novartis Pharmaceuticals KYMRIAHTM: CD-19[dash]directed T-cell FDA approval received 8/30/
Corporation). immunotherapy indicated for the use in 2017.
the treatment of patients up to 25 years
of age with B-cell precursor ALL that is
refractory or in second or later relapse.
YESCARTATM (Kite Pharma, Inc.).......... None...................................... N/A.
----------------------------------------------------------------------------------------------------------------

We note that procedures involving the KYMRIAH^TM and
YESCARTA^TM therapies are both reported using the following
ICD-10-PCS procedure codes: XW033C3 (Introduction of engineered
autologous chimeric antigen receptor t-cell immunotherapy into
peripheral vein, percutaneous approach, new technology group 3); and
XW043C3 (Introduction of engineered autologous chimeric antigen
receptor t-cell immunotherapy into central vein, percutaneous approach,
new technology group 3). We further note that, in section II.F.2.d. of
the preamble of this proposed rule, we are proposing to assign cases
reporting these ICD-10-PCS procedure codes to Pre-MDC MS-DRG 016
(Autologous Bone Marrow Transplant with CC/MCC) for FY 2019. We refer
readers to section II.F.2.d. of this proposed rule for a complete
discussion of the proposed assignment of cases reporting these
procedure codes to Pre-MDC MS-DRG 016, which also includes a proposal
to revise the title of MS-DRG 016 to reflect the proposed assignments.
According to the applicants, patients with NHL represent a
heterogeneous group of B-cell malignancies with varying patterns of
behavior and response to treatment. B-cell NHL can be classified as
either an aggressive, or indolent disease, with aggressive variants
including DLBCL; primary mediastinal large B[dash]cell lymphoma
(PMBCL); and transformed follicular lymphoma (TFL). Within diagnoses of
NHL, DLBCL is the most common subtype of NHL, accounting for
approximately 30 percent of patients who have been diagnosed with NHL,
and survival without treatment is measured in months.\4\ Despite
improved therapies, only 50 to 70 percent of newly diagnosed patients
are cured by standard first-line therapy alone. Furthermore, R/R
disease continues to carry a poor prognosis because only 50 percent of
patients are eligible for autologous stem cell transplantation (ASCT)
due to advanced age, poor functional status, comorbidities, inadequate
social support for recovery after ASCT, and provider or patient
choice.^{5 6 7 8} Of the roughly 50 percent of patients that
are eligible for ASCT, nearly 50 percent fail to respond to
prerequisite salvage chemotherapy and cannot undergo
ASCT.^{9 10 11 12} Second-line chemotherapy regimens studied to
date include rituximab, ifosfamide, carboplatin and etoposide (R-ICE),
and rituximab, dexamethasone, cytarabine, and cisplatin (R-DHAP),
followed by consolidative high-dose therapy (HDT)/ASCT. Both regimens
offer similar overall response rates (ORR) of 51 percent with 1 in 4
patients achieving long-term complete response (CR) at the expense of
increased toxicity.\13\ Second-line treatment with dexamethasone, high-
dose cytarabine, and cisplatin (DHAP) is considered a standard
chemotherapy regimen, but is associated with substantial treatment-
related toxicity.\14\ For patients who experience disease progression
during or after primary treatment, the combination of HDT/ASCT remains
the only curative option.\15\ According to the applicants,

[[Page 20286]]

given the modest response to second[dash]line therapy and/or HDT/ASCT,
the population of patients with the highest unmet need is those with
chemorefractory disease, which include DLBCL, PMBCL, and TFL. These
patients are defined as either progressive disease (PD) as best
response to chemotherapy, stable disease as best response following
greater than or equal to 4 cycles of first-line or 2 cycles of later-
line therapy, or relapse within less than or equal to 12 months of
ASCT.\16\ Based on these definitions and available data from a
multi[dash]center retrospective study (SCHOLAR-1), chemorefractory
disease treated with current and historical standards of care has
consistently poor outcomes with an ORR of 26 percent and median overall
survival (OS) of 6.3 months.\17\
---------------------------------------------------------------------------

\4\ Chaganti, S., et al., ``Guidelines for the management of
diffuse large B-cell lymphoma,'' BJH Guideline, 2016. Available at:
www.bit.do/bsh-guidelines.
\5\ Matasar, M., et al., ``Ofatumumab in combination with ICE or
DHAP chemotherapy in relapsed or refractory intermediate grade B-
cell lymphoma,'' Blood, 25 July 2013, vol. 122, No 4.
\6\ Hitz, F., et al., ``Outcome of patients with chemotherapy
refractory and early progressive diffuse large B cell lymphoma after
R-CHOP treatment,'' Blood (American Society of Hematology (ASH)
annual meeting abstracts, poster session), 2010, pp. 116 (abstract
#1751).
\7\ Telio, D., et al., ``Salvage chemotherapy and autologous
stem cell transplant in primary refractory diffuse large B-cell
lymphoma: outcomes and prognostic factors,'' Leukemia & Lymphoma,
2012, vol. 53(5), pp. 836-41.
\8\ Moskowitz, C.H., et al., ``Ifosfamide, carboplatin, and
etoposide: a highly effective cytoreduction and peripheral-blood
progenitor-cell mobilization regimen for transplant-eligible
patients with non-Hodgkin's lymphoma,'' Journal of Clinical
Oncology, 1999, vol. 17(12), pp. 3776-85.
\9\ Crump, M., et al., ``Outcomes in patients with refractory
aggressive diffuse large B-cell lymphoma (DLBCL): results from the
international scholar-1 study,'' Abstract and poster presented at
Pan Pacific Lymphoma Conference (PPLC), July 2016.
\10\ Gisselbrecht, C., et al., ``Results from SCHOLAR-1:
outcomes in patients with refractory aggressive diffuse large B-cell
lymphoma (DLBCL),'' Oral presentation at European Hematology
Association conference, July 2016.
\11\ Iams, W., Reddy, N., ``Consolidative autologous
hematopoietic stem-cell transplantation in first remission for non-
Hodgkin lymphoma: current indications and future perspective,'' Ther
Adv Hematol, 2014, vol. 5(5), pp. 153-67.
\12\ Kantoff, P.W., et al., ``Sipuleucel-T immunotherapy for
castration-resistant prostate cancer,'' N Engl J Med, 2010, vol.
363, pp. 411-422.
\13\ Rovira, J., Valera, A., Colomo, L., et al., ``Prognosis of
patients with diffuse large B cell lymphoma not reaching complete
response or relapsing after frontline chemotherapy or
immunochemotherapy,'' Ann Hematol, 2015, vol. 94(5), pp. 803-812.
\14\ Swerdlow, S.H., Campo, E., Pileri, S.A., et al., ``The 2016
revision of the World Health Organization classification of lymphoid
neoplasms,'' Blood, 2016, vol. 127(20), pp. 2375-2390.
\15\ Koristka, S., Cartellieri, M., Arndt, C., et al., ``Tregs
activated by bispecific antibodies: killers or suppressors?,''
OncoImmunology, 2015, vol. (3):e994441, DOI: 10.4161/
2162402X.2014.994441.
\16\ Crump, M., Neelapu, S.S., Farooq, U., et al., ``Outcomes in
refractory diffuse large B-cell lymphoma: results from the
international SCHOLAR-1 study,'' Blood, Published online: August 3,
2017, doi: 10.1182/blood-2017-03-69620.
\17\ Ibid.
---------------------------------------------------------------------------

According to Novartis Pharmaceuticals Corporation, upon FDA
approval of the additional indication, KYMRIAH^TM will also
be used for the treatment of patients with R/R DLBCL who are not
eligible for ASCT. Novartis Pharmaceuticals Corporation describes
KYMRIAH^TM as a CD[dash]19[dash]directed genetically modified
autologous T[dash]cell immunotherapy which utilizes peripheral blood
T[dash]cells, which have been reprogrammed with a transgene encoding, a
chimeric antigen receptor (CAR), to identify and eliminate CD-19-
expressing malignant and normal cells. Upon binding to CD-19-expressing
cells, the CAR transmits a signal to promote T-cell expansion,
activation, target cell elimination, and persistence of
KYMRIAH^TM cells. The transduced T[dash]cells expand in vivo
to engage and eliminate CD-19-expressing cells and may exhibit
immunological endurance to help support long-lasting remission.
^{18 19 20 21} According to the applicant, no other agent
currently used in the treatment of patients with R/R DLBCL employs gene
modified autologous cells to target and eliminate malignant cells.
---------------------------------------------------------------------------

\18\ KYMRIAH^TM [prescribing information], East
Hanover, NJ: Novartis Pharmaceuticals Corp, 2017.
\19\ Kalos, M., Levine, B.L., Porter, D.L., et al.,
``T[dash]cells with chimeric antigen receptors have potent antitumor
effects and can establish memory in patients with advanced
leukemia,'' Sci Transl Med, 2011, vol. 3(95), pp, 95ra73.
\20\ FDA Briefing Document. Available at: https://www.fda.gov/downloads/AdvisoryCommittees/CommitteesMeetingMaterials/Drugs/OncologicDrugsAdvisoryCommittee/UCM566168.pdf.
\21\ Wang, X., Riviere, I., ``Clinical manufacturing of CART
cells: foundation of a promising therapy,'' Mol Ther Oncolytics,
2016, vol. 3, pp. 16015.
---------------------------------------------------------------------------

According to Kite Pharma, Inc., YESCARTA^TM is indicated
for the use in the treatment of adult patients with R/R large B-cell
lymphoma after two or more lines of systemic therapy, including DLBCL
not otherwise specified, PMBCL, high grade B-cell lymphoma, and DLBCL
arising from follicular lymphoma. YESCARTA is not indicated for the
treatment of patients with primary central nervous system lymphoma. The
applicant for YESCARTA^TM described the technology as a CD-
19-directed genetically modified autologous T[dash]cell immunotherapy
that binds to CD-19-expressing cancer cells and normal B[dash]cells.
These normal B[dash]cells are considered to be non-essential tissue, as
they are not required for patient survival. According to the applicant,
studies demonstrated that following anti-CD-19 CAR T[dash]cell
engagement with CD-19-expressing target cells, the CD-28 and CD-3-zeta
co-stimulatory domains activate downstream signaling cascades that lead
to T-cell activation, proliferation, acquisition of effector functions
and secretion of inflammatory cytokines and chemokines. This sequence
of events leads to the elimination of CD-19-expressing tumor cells.
Both applicants expressed that their technology is the first
treatment of its kind for the targeted adult population. In addition,
both applicants asserted that their technology is new and does not use
a substantially similar mechanism of action or involve the same
treatment indication as any other currently FDA-approved technology. We
note that, at the time each applicant submitted its new technology add-
on payment application, neither technology had received FDA approval
for the indication for which the applicant requested approval for the
new technology add-on payment; KYMRIAH^TM has been granted
Breakthrough Therapy designation for the use in the treatment of
patients for the additional indication that is the subject of its new
technology add-on application and, as of the time of the development of
this proposed rule, is awaiting FDA approval. However, as stated
earlier, YESCARTA^TM received FDA approval for use in the
treatment of patients and the indication stated in its application on
October 18, 2017, after each applicant submitted its new technology
add-on payment application.
As noted, according to both applicants, KYMRIAH^TM and
YESCARTA^TM are the first CAR T immunotherapies of their
kind. Because potential cases representing patients who may be eligible
for treatment using KYMRIAH^TM and YESCARTA^TM
would group to the same MS-DRGs (because the same ICD-10-CM diagnosis
codes and ICD-10-PCS procedures codes are used to report treatment
using either KYMRIAH^TM or YESCARTA^TM), and we
believe that these technologies are intended to treat the same or
similar disease in the same or similar patient population, and are
purposed to achieve the same therapeutic outcome using the same or
similar mechanism of action, we disagree with the applicants and
believe these two technologies are substantially similar to each other
and that it is appropriate to evaluate both technologies as one
application for new technology add-on payments under the IPPS. For
these reasons, and as discussed further below, we would intend to make
one determination regarding approval for new technology add-on payments
that would apply to both applications, and in accordance with our
policy, would use the earliest market availability date submitted as
the beginning of the newness period for both KYMRIAH^TM and
YESCARTA^TM. We are inviting public comments on whether
KYMRIAH^TM and YESCARTA^TM are substantially
similar.
With respect to the newness criterion, as previously stated,
YESCARTA^TM received FDA approval on October 18, 2017.
According to the applicant, prior to FDA approval,
YESCARTA^TM had been available in the U.S. only on an
investigational basis under an investigational new drug (IND)
application. For the same IND patient population, and until commercial
availability, YESCARTA^TM was available under an Expanded
Access Program (EAP) which started on May 17, 2017. The applicant
stated that it did not recover any costs associated with the EAP.
According to the applicant, the first commercial shipment of
YESCARTA^TM was received by a certified treatment center on
November 22, 2017. As previously indicated, KYMRIAH^TM is not
currently approved by the FDA for use in the treatment of patients with
R/R DLBCL that are not eligible for ASCT; the technology has been
granted Breakthrough Therapy designation by the FDA. The applicant
anticipates receipt of FDA approval to occur in the second quarter of
2018. We believe that, in accordance with our policy, if these
technologies are substantially similar to each other, it is appropriate
to use the earliest market availability date submitted as the beginning
of the newness period for both technologies. Therefore, based on

[[Page 20287]]

our policy, with regard to both technologies, if the technologies are
approved for new technology add-on payments, we believe that the
beginning of the newness period would be November 22, 2017.
We previously stated that, because we believe these two
technologies are substantially similar to each other, we believe it is
appropriate to evaluate both technologies as one application for new
technology add-on payments under the IPPS. The applicants submitted
separate cost and clinical data, and we reviewed and discuss each set
of data separately. However, we would intend to make one determination
regarding new technology add-on payments that would apply to both
applications. We believe that this is consistent with our policy
statements in the past regarding substantial similarity. Specifically,
we have noted that approval of new technology add-on payments would
extend to all technologies that are substantially similar (66 FR
46915), and we believe that continuing our current practice of
extending new technology add-on payments without a further application
from the manufacturer of the competing product, or a specific finding
on cost and clinical improvement if we make a finding of substantial
similarity among two products is the better policy because we avoid--
Creating manufacturer-specific codes for substantially
similar products;
Requiring different manufacturers of substantially similar
products to submit separate new technology add-on payment applications;
Having to compare the merits of competing technologies on
the basis of substantial clinical improvement; and
Bestowing an advantage to the first applicant representing
a particular new technology to receive approval (70 FR 47351).
If substantially similar technologies are submitted for review in
different (and subsequent) years, rather than the same year, we would
evaluate and make a determination on the first application and apply
that same determination to the second application. However, because the
technologies have been submitted for review in the same year, and
because we believe they are substantially similar to each other, we
believe that it is appropriate to consider both sets of cost data and
clinical data in making a determination, and we do not believe that it
is possible to choose one set of data over another set of data in an
objective manner. We are inviting public comments on our proposal to
evaluate KYMRIAH^TM and YESCARTA^TM as one
application for new technology add-on payments under the IPPS.
As stated earlier, we believe that KYMRIAH^TM and
YESCARTA^TM are substantially similar to each other for
purposes of analyzing these two applications as one application. We
also need to determine whether KYMRIAH^TM and
YESCARTA^TM are substantially similar to existing
technologies prior to their approval by the FDA and their release onto
the U.S. market. As discussed earlier, if a technology meets all three
of the substantial similarity criteria, it would be considered
substantially similar to an existing technology and would not be
considered ``new'' for purposes of new technology add-on payments.
With respect to the first criterion, whether a product uses the
same or a similar mechanism of action to achieve a therapeutic outcome,
the applicant for KYMRIAH^TM asserted that its unique design,
which utilizes features that were not previously included in
traditional cytotoxic chemotherapeutic or immunotherapeutic agents,
constitutes a new mechanism of action. The deployment mechanism allows
for identification and elimination of CD-19-expressing malignant and
non-malignant cells, as well as possible immunological endurance to
help support long-lasting remission.^{22 23 24 25} The
applicant provided context regarding how KYMRIAH^TM's unique
design contributes to a new mechanism of action by explaining that
peripheral blood T-cells, which have been reprogrammed with a transgene
encoding, a CAR, identify and eliminate CD[dash]19-expressing malignant
and nonmalignant cells. As explained by the applicant, upon binding to
CD-19-expressing cells, the CAR transmits a signal to promote T-cell
expansion, activation, target cell elimination, and persistence of
KYMRIAH^TM cells.^{26 27 28} According to the
applicant, transduced T[dash]cells expand in vivo to engage and
eliminate CD-19-expressing cells and may exhibit immunological
endurance to help support long-lasting remission.^{29 30 31}
---------------------------------------------------------------------------

\22\ KYMRIAH [prescribing information]. East Hanover, NJ:
Novartis Pharmaceuticals Corp; 2017.
\23\ Kalos, M., Levine, B.L., Porter, D.L., et al., ``T cells
with chimeric antigen receptors have potent antitumor effects and
can establish memory in patients with advanced leukemia,'' Sci
Transl Med, 2011, vol. 3(95), pp. 95ra73.
\24\ FDA Briefing Document. Available at: https://www.fda.gov/downloads/AdvisoryCommittees/CommitteesMeetingMaterials/Drugs/OncologicDrugsAdvisoryCommittee/UCM566168.pdf.
\25\ Maude, S.L., Frey, N., Shaw, P.A., et al., ``Chimeric
antigen receptor T cells for sustained remissions in leukemia,'' N
Engl J Med, 2014, vol. 371(16), pp. 1507-1517.
\26\ KYMRIAH^TM [prescribing information], East
Hanover, NJ: Novartis Pharmaceuticals Corp, 2017.
\27\ Kalos, M., Levine, B.L., Porter, D.L., et al.,
``T[dash]cells with chimeric antigen receptors have potent antitumor
effects and can establish memory in patients with advanced
leukemia,'' Sci Transl Med, 2011, 3(95), pp, 95ra73.
\28\ FDA Briefing Document. Available at: https://www.fda.gov/downloads/AdvisoryCommittees/CommitteesMeetingMaterials/Drugs/OncologicDrugsAdvisoryCommittee/UCM566168.pdf.
\29\ Kalos, M., Levine, B.L., Porter, D.L., et al., ``T cells
with chimeric antigen receptors have potent antitumor effects and
can establish memory in patients with advanced leukemia,'' Sci
Transl Med, 2011, vol. 3(95), pp. 95rs73.
\30\ FDA Briefing Document. Available at: https://www.fda.gov/downloads/AdvisoryCommittees/CommitteesMeetingMaterials/Drugs/OncologicDrugsAdvisoryCommittee/UCM566168.pdf.
\31\ Maude, S.L., Frey, N., Shaw, P.A., et al., ``Chimeric
antigen receptor T[dash]cells for sustained remissions in
leukemia,'' N Engl J Med, 2014, vol. 371(16), pp. 1507-1517.
---------------------------------------------------------------------------

The applicant for YESCARTA^TM stated that
YESCARTA^TM is the first engineered autologous cellular
immunotherapy comprised of CAR T[dash]cells that recognizes CD-19
express cancer cells and normal B-cells with efficacy in patients with
R/R large B-cell lymphoma after two or more lines of systemic therapy,
including DLBCL not otherwise specified, PMBCL, high grade B-cell
lymphoma, and DLBCL arising from follicular lymphoma as demonstrated in
a multi-centered clinical trial. Therefore, the applicant believed that
YESCARTA^TM's mechanism of action is distinct and unique from
any other cancer drug or biologic that is currently approved for use in
the treatment of patients who have been diagnosed with aggressive B-
cell NHL, namely single-agent or combination chemotherapy regimens. The
applicant also pointed out that YESCARTA^TM is the only
available therapy that has been granted FDA approval for the treatment
of adult patients with R/R large B-cell lymphoma after two or more
lines of systemic therapy, including DLBCL not otherwise specified,
PMBCL, high grade B-cell lymphoma, and DLBCL arising from follicular
lymphoma.
With respect to the second and third criteria, whether a product is
assigned to the same or a different MS-DRG and whether the new use of
the technology involves the treatment of the same or similar type of
disease and the same or similar patient population, the applicant for
KYMRIAH^TM indicated that the technology is used in the
treatment of the same patient population, and potential cases
representing patients that may be eligible for treatment using
KYMRIAH^TM would be assigned to the same MS-DRGs as cases
involving

[[Page 20288]]

patients with a DLBCL diagnosis. Potential cases representing patients
that may be eligible for treatment using KYMRIAH^TM map to
437 separate MS-DRGs, with the top 20 MS-DRGs covering approximately 68
percent of all patients who have been diagnosed with DLBCL. For
patients with DLBCL and who have received chemotherapy during their
hospital stay, the target population mapped to 8 separate MS-DRGs, with
the top 2 MS-DRGs covering over 95 percent of this population: MS-DRGs
847 (Chemotherapy without Acute Leukemia as Secondary Diagnosis with
CC), and 846 (Chemotherapy without Acute Leukemia as Secondary
Diagnosis with MCC). The applicant for YESCARTA^TM submitted
findings that potential cases representing patients that may be
eligible for treatment using YESCARTA^TM span 15 unique MS-
DRGs, 8 of which contain more than 10 cases. The most common MS-DRGs
were: MS-DRGs 840 (Lymphoma and Non-Acute Leukemia with MCC), 841
(Lymphoma and Non-Acute Leukemia with CC), and 823 (Lymphoma and Non-
Acute Leukemia with other O.R. Procedures with MCC). These 3 MS-DRGs
accounted for 628 (76 percent) of the 827 cases. While the applicants
for KYMRIAH^TM and YESCARTA^TM submitted different
findings regarding the most common MS-DRGs to which potential cases
representing patients who may be eligible for treatment involving their
technology would map, we believe that, under the current MS-DRGs (FY
2018), potential cases representing patients who may be eligible for
treatment involving either KYMRIAH^TM or
YESCARTA^TM would map to the same MS-DRGs because the same
ICD-10-CM diagnosis codes and ICD-10-PCS procedures codes would be used
to report cases for patients who may be eligible for treatment
involving KYMRIAH^TM and YESCARTA^TM. Furthermore,
as noted above, we are proposing that cases reporting these ICD-10-PCS
procedure codes would be assigned to MS-DRG 016 for FY 2019. Therefore,
under this proposal, for FY 2019, cases involving the utilization of
KYMRIAH^TM and YESCARTA^TM would continue to map to
the same MS-DRGs.
The applicant for YESCARTA^TM also addressed the concern
expressed by CMS in the FY 2018 IPPS/LTCH PPS proposed rule regarding
Kite Pharma Inc.'s FY 2018 new technology add-on payment application
for the KTE-C19 technology (82 FR 19888). At the time, CMS expressed
concern that KTE-C19 may use the same or similar mechanism of action as
the Bi-Specific T-Cell engagers (BiTE) technology. The applicant for
YESCARTA^TM explained that YESCARTA^TM has a unique
and distinct mechanism of action that is substantially different from
BiTE's or any other drug or biologic currently assigned to any MS-DRG
in the FY 2016 MedPAR Hospital Limited Data Set. In providing more
detail regarding how YESCARTA^TM is different from the BiTE
technology, the applicant explained that the BiTE technology is not an
engineered autologous T[dash]cell immunotherapy derived from a
patient's own T[dash]cells. Instead, it is a bi-specific T[dash]cell
engager that recognizes CD-19 and CD-3 cancer cells. Unlike engineered
T[dash]cell therapy, BiTE does not have the ability to enhance the
proliferative and cytolytic capacity of T-cells through ex-vivo
engineering. Further, BiTE is approved for the treatment of patients
who have been diagnosed with Philadelphia chromosome[dash]negative
relapsed or refractory B-cell precursor acute lymphoblastic leukemia
(ALL) and is not approved for patients with relapsed or refractory
large B-cell lymphoma, whereas YESCARTA^TM is indicated for
use in the treatment of adult patients with R/R aggressive B-cell NHL
who are ineligible for ASCT.
The applicant for YESCARTA^TM also indicated that its
mechanism of action is not the same or similar to the mechanism of
action used by KYMRIAH^TM's currently available
FDA[dash]approved CD-19-directed genetically modified autologous
T[dash]cell immunotherapy indicated for use in the treatment of
patients up to 25 years of age with B-cell precursor acute
lymphoblastic leukemia (ALL) that is refractory or in second or later
relapse.\32\ The applicant for YESCARTA^TM stated that the
mechanism of action is different from KYMRIAH^TM's
FDA[dash]approved therapy because the spacer, transmembrane and co-
stimulatory domains of YESCARTA^TM are different from those
of KYMRIAH^TM. The applicant explained that
YESCARTA^TM is comprised of a CD-28 co[dash]stimulatory
domain and KYMRIAH^TM has 4-1BB co-stimulatory domain.
Further, the applicant stated the manufacturing processes of the two
immunotherapies are also different, which may result in cell
composition differences leading to possible efficacy and safety
differences.
---------------------------------------------------------------------------

\32\ Food and Drug Administration. Available at:
www.accessdata.fda.gov/scripts/opdlisting/oopd/.
---------------------------------------------------------------------------

While the applicant for YESCARTA^TM stated how its
technology is different from KYMRIAH^TM, because both
technologies are CD-19-directed T[dash]cell immunotherapies used for
the purpose of treating patients with aggressive variants of NHL, we
believe that YESCARTA^TM and KYMRIAH^TM are
substantially similar treatment options. Furthermore, we also are
concerned that there may be an age overlap (18 to 25) between the two
different patient populations for the currently approved
KYMRIAH^TM technology and YESCARTA^TM technology.
The currently approved KYMRIAH^TM technology is indicated for
use in the treatment of patients who are up to 25 years of age and
YESCARTA^TM technology is indicated for use in the treatment
of adult patients.
As noted earlier, the applicant has asserted that
YESCARTA^TM is not substantially similar to
KYMRIAH^TM. Under this scenario, if both
YESCARTA^TM and KYMRIAH^TM meet all of the new
technology add-on payment criteria and are approved for new technology
add-on payments for FY 2019, for purposes of making the new technology
add[dash]on payment, because procedures utilizing either
YESCARTA^TM or KYMRIAH^TM CAR T-cell therapy drugs
are reported using the same ICD-10-PCS procedure codes, in order to
accurately pay the new technology add[dash]on payment to hospitals that
perform procedures utilizing either technology, it may be necessary to
use alternative coding mechanisms to make the new technology
add[dash]on payments. CMS is inviting comments on alternative coding
mechanisms to make the new technology add-on payments, if necessary.
We are inviting public comments on whether KYMRIAH^TM and
YESCARTA^TM are substantially similar to existing
technologies and whether the technologies meet the newness criterion.
As we stated above, each applicant submitted separate analysis
regarding the cost criterion for each of their products, and both
applicants maintained that their product meets the cost criterion. We
summarize each analysis below.
With regard to the cost criterion, the applicant for
KYMRIAH^TM searched the FY 2016 MedPAR claims data file to
identify potential cases representing patients who may be eligible for
treatment using KYMRIAH^TM. The applicant identified claims
that reported an ICD-10-CM diagnosis code of: C83.30 (DLBCL,
unspecified site); C83.31 (DLBCL, lymph nodes of head, face and neck);
C83.32 (DLBCL, intrathoracic lymph nodes); C83.33 (DLBCL, intra-
abdominal lymph nodes); C83.34 (DLBCL, lymph nodes of axilla and upper
limb); C83.35 (DLBCL, lymph nodes of inquinal region and lower

[[Page 20289]]

limb); C83.36 (DLBCL, intrapelvic lymph nodes); C83.37 (DLBCL, spleen);
C83.38 (DLBCL, lymph nodes of multiple sites); or C83.39 (DLBCL,
extranodal and solid organ sites). The applicant also identified
potential cases where patients received chemotherapy using two
encounter codes, Z51.11 (Antineoplastic chemotherapy) and Z51.12
(Antineoplastic immunotherapy), in conjunction with DLBCL diagnosis
codes.
Applying the parameters above, the applicant for
KYMRIAH^TM identified a total of 22,589 DLBCL potential cases
that mapped to 437 MS-DRGs. The applicant chose the top 20 MS-DRGs
which made up a total of 15,451 potential cases at 68 percent of total
cases. Of the 22,589 total DLBCL potential cases, the applicant also
provided a breakdown of DLBCL potential cases where chemotherapy was
used, and DLBCL potential cases where chemotherapy was not used. Of the
6,501 DLBCL potential cases where chemotherapy was used, MS-DRGs 846
and 847 accounted for 6,181 (95 percent) of the 6,501 cases. Of the
16,088 DLBCL potential cases where chemotherapy was not used, the
applicant chose the top 20 MS-DRGs which made up a total of 9,333
potential cases at 58 percent of total cases. The applicant believed
the distribution of patients that may be eligible for treatment using
KYMRIAH^TM will include a wide variety of MS-DRGs. As such,
the applicant conducted an analysis of three scenarios: Potential DLBCL
cases, potential DLBCL cases with chemotherapy, and potential DLBCL
cases without chemotherapy.
The applicant removed reported historic charges that would be
avoided through the use of KYMRIAH^TM. Next, the applicant
removed 50 percent of the chemotherapy pharmacy charges that would not
be required for patients that may be eligible to receive treatment
using KYMRIAH^TM. The applicant standardized the charges and
then applied an inflation factor of 1.09357, which is the 2[dash]year
inflation factor in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38527),
to update the charges from FY 2016 to FY 2018. The applicant did not
add charges for KYMRIAH^TM to its analysis. However, the
applicant provided a cost analysis related to the three categories of
claims data it previously researched (that is, potential DLBCL cases,
potential DLBCL cases with chemotherapy, and potential DLBCL cases
without chemotherapy). The applicant's analysis showed the inflated
average case[dash]weighted standardized charge per case for potential
DLBCL cases, potential DLBCL cases with chemotherapy, and potential
DLBCL cases without chemotherapy was $63,271, $39,723, and $72,781,
respectively. The average case-weighted threshold amount for potential
DLBCL cases, potential DLBCL cases with chemotherapy, and potential
DLBCL cases without chemotherapy was $58,278, $48,190, and $62,355
respectively. While the inflated average case-weighted standardized
charge per case ($39,723) is lower than the average case-weighted
threshold amount ($48,190) for potential DLBCL cases with chemotherapy,
the applicant expects the cost of KYMRIAH^TM to be higher
than the new technology add-on payment threshold amount for all three
cohorts. Therefore, the applicant maintained that it meets the cost
criterion.
We note that, as discussed earlier, in section II.F.2.d. of the
preamble of this proposed rule, we are proposing to assign the ICD-10-
PCS procedure codes that describe procedures involving the utilization
of these CAR T-cell therapy drugs and cases representing patients
receiving treatment involving CAR T-cell therapy procedures to Pre-MDC
MS-DRG 016 for FY 2019. Therefore, in addition to the analysis above,
we compared the inflated average case[dash]weighted standardized charge
per case from all three cohorts above to the average case-weighted
threshold amount for MS-DRG 016. The average case-weighted threshold
amount for MS-DRG 016 from Table 10 in the FY 2018 IPPS/LTCH PPS final
rule is $161,058. Although the inflated average case-weighted
standardized charge per case for all three cohorts ($63,271, $39,723,
and $72,781) is lower than the average case-weighted threshold amount
for MS-DRG 016, similar to above, the applicant expects the cost of
KYMRIAH^TM to be higher than the new technology add-on
payment threshold amount for MS-DRG 016. Therefore, it appears that
KYMRIAH^TM would meet the cost criterion under this scenario
as well.
We appreciate the applicant's analysis. However, we note that the
applicant did not provide information regarding which specific historic
charges were removed in conducting its cost analysis. Nonetheless, we
believe that even if historic charges were identified and removed, the
applicant would meet the cost criterion because, as indicated, the
applicant expects the cost of KYMRIAH^TM to be higher than
the new technology add-on payment threshold amounts listed earlier.
We are inviting public comments on whether KYMRIAH^TM
meets the cost criterion.
With regard to the cost criterion in reference to
YESCARTA^TM, the applicant conducted the following analysis.
The applicant examined FY 2016 MedPAR claims data restricted to
patients discharged in FY 2016. The applicant included potential cases
reporting an ICD-10 diagnosis code of C83.38. Noting that only MS-DRGs
820 (Lymphoma and Leukemia with Major O.R. Procedure with MCC), 821
(Lymphoma and Leukemia with Major O.R. Procedure with CC), 823 and 824
(Lymphoma and Non[dash]Acute Leukemia with Other O.R. Procedure with
MCC, with CC, respectively), 825 (Lymphoma and Non Acute Leukemia with
Other O.R Procedure without CC/MCC), and 840, 841 and 842 (Lymphoma and
Non-Acute Leukemia with MCC, with CC and without CC/MCC, respectively)
consisted of 10 or more cases, the applicant limited its analysis to
these 8 MS-DRGs. The applicant identified 827 potential cases across
these MS-DRGs. The average case-weighted unstandardized charge per case
was $126,978. The applicant standardized charges using FY 2016
standardization factors and applied an inflation factor of 1.09357 from
the FY 2018 IPPS/LTCH PPS final rule (82 FR 38527). The applicant for
YESCARTA^TM did not include the cost of its technology in its
analysis.
Included in the average case-weighted standardized charge per case
were charges for the current treatment components. Therefore, the
applicant for YESCARTA^TM removed 20 percent of radiology
charges to account for chemotherapy, and calculated the adjusted
average case-weighted standardized charge per case by subtracting these
charges from the standardized charge per case. Based on the
distribution of potential cases within the eight MS-DRGs, the applicant
case-weighted the final inflated average case-weighted standardized
charge per case. This resulted in an inflated average case-weighted
standardized charge per case of $118,575. Using the FY 2018 IPPS Table
10 thresholds, the average case-weighted threshold amount was $72,858.
Even without considering the cost of its technology, the applicant
maintained that because the inflated average case-weighted standardized
charge per case exceeds the average case-weighted threshold amount, the
technology meets the cost criterion.
We note that, as discussed earlier, in section II.F.2.d. of the
preamble of this proposed rule, we are proposing to assign the ICD-10-
PCS procedure codes that describe procedures involving the utilization
of these CAR T-cell therapy

[[Page 20290]]

drugs and cases representing patients receiving treatment involving CAR
T-cell therapy procedures to Pre-MDC MS-DRG 016 for FY 2019. Therefore,
in addition to the analysis above, we compared the inflated average
case-weighted standardized charge per case ($118,575) to the average
case-weighted threshold amount for MS-DRG 016. The average case-
weighted threshold amount for MS-DRG 016 from Table 10 in the FY 2018
IPPS/LTCH PPS final rule is $161,058. Although the inflated average
case-weighted standardized charge per case is lower than the average
case-weighted threshold amount for MS-DRG 016, the applicant expects
the cost of YESCARTA^TM to be higher than the new technology
add-on payment threshold amount for MS-DRG 016. Therefore, it appears
that YESCARTA^TM would meet the cost criterion under this
scenario as well.
We are inviting public comments on whether YESCARTA^TM
technology meets the cost criterion.
With regard to substantial clinical improvement for
KYMRIAH^TM, the applicant asserted that several aspects of
the treatment represent a substantial clinical improvement over
existing technologies. The applicant believed that KYMRIAH^TM
allows access for a treatment option for those patients who are unable
to receive standard of care treatment. The applicant stated in its
application that there are no currently FDA-approved treatment options
for patients with R/R DLBCL who are ineligible for or who have failed
ASCT. Additionally, the applicant maintained that KYMRIAH^TM
significantly improves clinical outcomes, including ORR, CR, OS, and
durability of response, and allows for a manageable safety profile. The
applicant asserted that, when compared to the historical control data
(SCHOLAR-1) and the currently available treatment options, it is clear
that KYMRIAH^TM significantly improves clinical outcomes for
patients with R/R DLBCL who are not eligible for ASCT. The applicant
conveyed that, given that the patient population has no other available
treatment options and an expected very short lifespan without therapy,
there are no randomized controlled trials of the use of
KYMRIAH^TM in patients with R/R DLBCL and, therefore,
efficacy assessments must be made in comparison to historical control
data. The SCHOLAR-1 study is the most comprehensive evaluation of the
outcome of patients with refractory DLBCL. SCHOLAR-1 includes patients
from two large randomized controlled trials (Lymphoma Academic Research
Organization-CORAL and Canadian Cancer Trials Group LY.12) and two
clinical databases (MD Anderson Cancer Center and University of Iowa/
Mayo Clinic Lymphoma Specialized Program of Research Excellence).\33\
---------------------------------------------------------------------------

\33\ Crump, M., Neelapu, S.S., Farooq, U., et al., ``Outcomes in
refractory diffuse large B-cell lymphoma: results from the
international SCHOLAR-1 study,'' Blood, Published online: August 3,
2017, doi: 10.1182/blood-2017-03-769620.
---------------------------------------------------------------------------

The applicant for KYMRIAH^TM conveyed that the PARMA
study established high-dose chemotherapy and ASCT as the standard
treatment for patients with R/R DLBCL.\34\ However, according to the
applicant, many patients with R/R DLBCL are ineligible for ASCT because
of medical frailty. Patients who are ineligible for ASCT because of
medical frailty would also be adversely affected by high-dose
chemotherapy regimens.\35\ Lowering the toxicity of chemotherapy
regimens becomes the only treatment option, leaving patients with
little potential for therapeutic outcomes. According to the applicant,
the lack of efficacy of these aforementioned salvage regimens was
demonstrated in nine studies evaluating combined chemotherapeutic
regimens in patients who were either refractory to first[dash]line or
first salvage. Chemotherapy response rates ranged from 0 percent to 23
percent with OS less than 10 months in all studies.\36\ For patients
who do not respond to combined therapy regimens, the National
Comprehensive Cancer Network (NCCN) offers only clinical trials or
palliative care as therapeutic options.\37\
---------------------------------------------------------------------------

\34\ Philip, T., Guglielmi, C., Hagenbeek, A., et al.,
``Autologous bone marrow transplantation as compared with salvage
chemotherapy in relapses of chemotherapy-sensitive non-Hodgkin's
lymphoma,'' N Engl J Med, 1995, vol. 333(23), pp. 1540-1545.
\35\ Friedberg, J.W., ``Relapsed/refractory diffuse large B-cell
lymphoma,'' Hematology AM Soc Hematol Educ Program, 2011, vol. (1),
pp. 498-505.
\36\ Crump, M., Neelapu, S.S., Farooq, U., et al., ``Outcomes in
refractory diffuse large B-cell lymphoma: results from the
international SCHOLAR-1 study,'' Blood, Published online: August 3,
2017, doi: 10.1182/blood-2017-03-769620.
\37\ National Comprehensive Cancer Network, NCCN Clinical
Practice Guidelines in Oncology (NCCN GuidelinesR), ``B-cell
lymphomas: Diffuse large b-cell lymphoma and follicular lymphoma
(Version 3.2017),'' May 25, 2017. Available at: https://www.nccn.org/professionals/physician_gls/pdf/b-cell_blocks.pdf.
---------------------------------------------------------------------------

According to the applicant for KYMRIAH^TM, the
immunomodulatory agent Lenalidomide was only able to show an ORR of 30
percent, a CR rate of 8 percent, and a 4.6-month median duration of
response.\38\ M[dash]tor inhibitors such as Everolimus and Temserolimus
have been studied as single agents, or in combination with Rituximab,
as have newer monoclonal antibodies Dacetuzumab, Ofatumomab and
Obinutuzumab. However, none induced a CR rate higher than 20 percent or
showed a median duration of response longer than 1 year.\39\
---------------------------------------------------------------------------

\38\ Klyuchnikov, E., Bacher, U., Kroll, T., et al.,
``Allogeneic hematopoietic cell transplantation for diffuse large B
cell lymphoma: who, when and how?,'' Bone Marrow Transplant, 2014,
vol. 49(1), pp. 1-7.
\39\ Ibid.
---------------------------------------------------------------------------

According to the applicant, although controversial, allogeneic stem
cell transplantation (allo-SCT) has been proposed for patients who have
been diagnosed with R/R disease. It is hypothesized that the malignant
cell will be less able to escape the immune targeting of allogenic T-
cells--known as the graft-vs-lymphoma effect.\40\ \41\ The use of allo-
SCT is limited in patients who are not eligible for ASCT because of the
high rate of morbidity and mortality. This medically frail population
is generally excluded from participation. The population most impacted
by this is the elderly, who are often excluded based on age alone. In
seven studies evaluating allo-SCT in patients with R/R DLBCL, the
median age at transplant was 43 years old to 52 years old, considerably
lower than the median age of patients with DLBCL of 64 years old. Only
two studies included any patients over 66 years old. In these studies,
allo-SCT provided OS rates ranging from 18 percent to 52 percent at 3
to 5 years, but was accompanied by treatment-related mortality rates
ranging from 23 percent to 56 percent.\42\ According to the applicant,
this toxicity and efficacy profile of allo-SCT substantially limits its
use, especially in patients 65 years old and older. Given the high
unmet medical need, the applicant maintained that KYMRIAH^TM
represents a substantial clinical improvement by offering a treatment
option for a patient population unresponsive to, or ineligible for,
currently available treatments.
---------------------------------------------------------------------------

\40\ Ibid.
\41\ Maude, S.L., Teachey, D.T., Porter, D.L., Grupp, S.A.,
``CD19-targeted chimeric antigen receptor T-cell therapy for acute
lymphoblastic leukemia,'' Blood, 2015, vol. 125(26), pp. 4017-4023.
\42\ Klyuchnikov, E., Bacher, U., Kroll, T., et al.,
``Allogeneic hematopoietic cell transplantation for diffuse large B
cell lymphoma: who, when and how?,'' Bone Marrow Transplant, 2014,
vol. 49(1), pp. 1-7.
---------------------------------------------------------------------------

To express how KYMRIAH^TM has improved clinical outcomes,
including ORR, CR rate, OS, and durability of response, the applicant
referenced clinical trials in which KYMRIAH^TM was tested.
Study 1 was a single[dash]arm, open[dash]label, multi[dash]site, global
Phase II study to determine the safety and efficacy of tisagenlecleucel
in patients

[[Page 20291]]

with R/R DLBCL (CCTL019C2201/CT02445248/`JULIET' study).\43\ \44\ \45\
Key inclusion criteria included patients who were 18 years old and
older, patients with refractory to at least two lines of chemotherapy
and either relapsed post ASCT or who were ineligible for ASCT,
measurable disease at the time of infusion, and adequate organ and bone
marrow function. The study was conducted in three phases. In the
screening phase patient eligibility was assessed and patient cells
collected for product manufacture. Patients were also able to receive
bridging, cytotoxic chemotherapy during this time. In the pre-treatment
phase patients underwent a restaging of disease followed by
lymphodepleting chemotherapy with fludarabine 25mg/m2 x3 and
cyclophosphamide 250mg/m2/d x3 or bendamustine 90mg/m2/d x2 days. The
treatment and follow[dash]up phase began 2 to 14 days after
lymphodepleting chemotherapy, when the patient received a single
infusion of tisagenlecleucel with a target dose of 5x10\8\ CTL019
transduced viable cells. The primary objective was to assess the
efficacy of tisagenlecleucel, as measured by the best overall response
(BOR), which was defined as CR or partial response (PR). It was
assessed on the Chesson 2007 response criteria amended by Novartis
Pharmaceutical Corporation as confirmed by an Independent Review
Committee (IRC). One hundred forty-seven patients were enrolled, and 99
of them were infused with tisagenlecleucel. Forty-three patients
discontinued prior to infusion (9 due to inability to manufacture and
34 due to patient[dash]related issues).\46\ The median age of treated
patients was 56 years old with a range of 24 to 75; 20 percent were
older than 65 years old. Patients had received 2 to 7 prior lines of
therapy, with 60 percent receiving 3 or more therapies, and 51 percent
having previously undergone ASCT. A primary analysis was performed on
81 patients infused and followed for more than or at least 3 months. In
this primary analysis, the BOR was 53 percent; the study met its
primary objective based on statistical analysis (that is, testing
whether BOR was greater than 20 percent, a clinically relevant
threshold chosen based on the response to chemotherapy in a patient
with R/R DLBCL). Forty-three percent (43 percent) of evaluated patients
reached a CR, and 14 percent reached a PR. ORR evaluated at 3 months
was 38 percent with a distribution of 32 percent CR and 6 percent PR.
All patients in CR at 3 months continued to be in CR. ORR was similar
across subgroups including 64.7 percent response in patients who were
older than 65 years old, 61.1 percent response in patients with Grade
III/IV disease at the time of enrollment, 58.3 percent response in
patients with Activated B[dash]cell, 52.4 percent response in patients
with Germinal Center B[dash]cell subtype, and 60 percent response in
patients with double and triple hit lymphoma. Durability of response
was assessed based on relapse free survival (RFS), which was estimated
at 74 percent at 6 months.
---------------------------------------------------------------------------

\43\ Data on file, Oncology clinical trial protocol
CCTL019C2201: ``A Phase II, single[dash]arm, multi[dash]center trial
to determine the efficacy and safety of CTL019 in adult patients
with relapsed or refractory diffuse large Bcell lymphoma (DLBCL),''
Novartis Pharmaceutical Corp, 2015.
\44\ Schuster, S.J., Bishop, M.R., Tam, C., et al., ``Global
trial of the efficacy and safety of CTL019 in adult patients with
relapsed or refractory diffuse large B-cell lymphoma: an interim
analysis,'' Presented at: 22nd Congress of the European Hematology
Association, June 22-25, 2017, Madrid, Spain.
\45\ ClinicalTrials.gov, ``Study of efficacy and safety of
CTL019 in adult DLBCL patients (JULIET).'' Available at: https://clinicaltrials.gov/ct2/show/NCT02445248.
\46\ Schuster, S.J., Bishop, M.R., Tam, C., et al., ``Global
trial of the efficacy and safety of CTL019 in adult patients with
relapsed or refractory diffuse large B-cell lymphoma: an interim
analysis,'' Presented at: 22nd Congress of the European Hematology
Association, June 22-25, 2017, Madrid, Spain.
---------------------------------------------------------------------------

The applicant for KYMRIAH^TM reported that Study 2 was a
supportive Phase IIa single institution study of adults who were
diagnosed with advanced CD19+ NHL conducted at the University of
Pennsylvania.\47\ \48\ Tisagenlecleucel cells were produced at the
University of Pennsylvania using the same genetic construct and a
similar manufacturing technique as employed in Study 1. Key inclusion
criteria included patients who were at least 18 years old, patients
with CD19+ lymphoma with no available curative options, and measurable
disease at the time of enrollment. Tisagenlecleucel was delivered in a
single infusion 1 to 4 days after restaging and lymphodepleting
chemotherapy. The median tisagenlecleucel cell dose was 5.0 x 108
transduced cells. The study enrolled 38 patients; of these, 21 were
diagnosed with DLBCL and 13 received treatment involving
KYMRIAH^TM. Patients ranged in age from 25 to 77 years old,
and had a median of 4 prior therapies. Thirty-seven percent had
undergone ASCT and 63 percent were diagnosed with Grade III/IV disease.
ORR at 3 months was 54 percent. Progression free survival was 43
percent at a median follow[dash]up of 11.7 months. Safety and efficacy
results are similar to those of the multi-center study.
---------------------------------------------------------------------------

\47\ ClinicalTrials.gov, ``Phase IIa study of redirected
autologous T[dash]cells engineered to contain anti-CD19 attached to
TCRz and 4-signaling domains in patients with chemotherapy relapsed
or refractory CD19+ lymphomas,'' Available at: https://clinicaltrials.gov/ct2/show/NCT02030834.
\48\ Schuster, S.J., Svoboda, J., Nasta, S.D., et al.,
``Sustained remissions following chimeric antigen receptor modified
T-cells directed against CD-19 (CTL019) in patients with relapsed or
refractory CD19+ lymphomas,'' Presented at: 57th Annual Meeting of
the American Society of Hematology, December 6, 2015, Orlando, FL.
---------------------------------------------------------------------------

The applicant for KYMRIAH^TM reported that Study 3 was a
supportive, patient[dash]level meta-analysis of historical outcomes in
patients who were diagnosed with refractory DLBCL (SCHOLAR-1).\49\ This
study included a pooled data analysis of two Phase III clinical trials
(Lymphoma Academic Research Organization-CORAL and Canadian Cancer
Trials Group LY.12) and two observational cohorts (MD Anderson Cancer
Center and University of Iowa/Mayo Clinic Lymphoma Specialized Program
of Research Excellence). Refractory disease was defined as progressive
disease or stable disease as best response to chemotherapy (received
more than or at least 4 cycles of first-line therapy or 2 cycles of
later[dash]line therapy, respectively) or relapse in less than or at 12
months post-ASCT. Of 861 abstracted records, 636 were included based on
these criteria. All patients from each data source who met criteria for
diagnosis of refractory DLBCL, including TFL and PMBCL, who went on to
receive subsequent therapy were considered for analysis. Patients who
were diagnosed with TFL and PMBCL were included because they are
histologically similar and clinically treated as large cell lymphoma.
Response rates were similar across the 4 datasets, ranging from 20
percent to 31 percent, with a pooled response rate of 26 percent. CR
rates ranged from 2 percent to 15 percent, with a pooled CR rate of 7
percent. Subgroup analyses including patients with primary refractory,
refractory to second or later[dash]line therapy, and relapse in less
than 12 months post-ASCT revealed response rates similar to the pooled
analysis, with worst outcomes in the primary refractory group (20
percent). OS from the commencement of therapy was 6.3 months and was
similar across subgroup analyses. Achieving a CR after last salvage
chemotherapy predicted a longer OS of 14.9 months compared to 4.6
months in nonresponders. Patients who had not undergone ASCT had an OS
of 5.1

[[Page 20292]]

months with a 2 year OS rate of 11 percent.
---------------------------------------------------------------------------

\49\ Crump, M., Neelapu, S.S., Farooq, U., et al., ``Outcomes in
refractory diffuse large B-cell lymphoma: results from the
international SCHOLAR-1 study,'' Blood, Published online: August 3,
2017, doi: 10.1182/blood-2017-03-769620.
---------------------------------------------------------------------------

The applicant asserted that KYMRIAH^TM provides a
manageable safety profile when treatment is performed by trained
medical personnel and, as opposed to ASCT, KYMRIAH^TM
mitigates the need for high-dose chemotherapy to induce response prior
to infusion. Adverse events were most common in the 8 weeks following
infusion and were manageable by a trained staff. Cytokine Relapse
Syndrome (CRS) occurred in 58 percent of patients with 23 percent
having Grade III or IV events as graded on the University of
Pennsylvania grading system.\50\ \51\ Median time to onset of CRS was 3
days and median duration was 7 days with a range of 2 to 30 days.
Twenty[dash]four percent of the patients required ICU admission. CRS
was managed with supportive care in most patients. However, 16 percent
required anti-cytokine therapy including tocilizumab (15 percent) and
corticosteroids (11 percent). Other adverse events of special interest
include infection in 34 percent (20 percent Grade III or IV) of
patients, cytopenias not resolved by day 28 in 36 percent (27 percent
Grade III or IV) of patients, neurologic events in 21 percent (12
percent Grade III or IV) of patients, febrile neutropenia in 13 percent
(13 percent Grade III or IV) of patients, and tumor lysis syndrome 1
percent (1 percent Grade III). No deaths were attributed to
tisagenlecleucel including no fatal cases of CRS or neurologic events.
No cerebral edema was observed.\52\ Study 2 safety results were
consistent to those of Study 1.\53\
---------------------------------------------------------------------------

\50\ ClinicalTrials.gov, ``Phase IIa study of redirected
autologous T-cells engineered to contain anti-CD19 attached to TCRz
and 4-signaling domains in patients with chemotherapy relapsed or
refractory CD19+ lymphomas.'' Available at: https://clinicaltrials.gov/ct2/show/NCT02030834.
\51\ Schuster, S.J., Svoboda, J., Nasta, S.D., et al.,
``Sustained remissions following chimeric antigen receptor modified
T-cells directed against CD-19 (CTL019) in patients with relapsed or
refractory CD19+ lymphomas,'' Presented at: 57th Annual Meeting of
the American Society of Hematology, December 6, 2015, Orlando, FL.
\52\ Schuster, S.J., Bishop, M.R., Tam, C., et al., ``Global
trial of the efficacy and safety of CTL019 in adult patients with
relapsed or refractory diffuse large B-cell lymphoma: an interim
analysis,'' Presented at: 22nd Congress of the European Hematology
Association, June 22-25, 2017, Madrid, Spain.
\53\ Ibid.
---------------------------------------------------------------------------

After reviewing the studies provided by the applicant, we are
concerned that the applicant included patients who were diagnosed with
TFL and PMBCL in the SCHOLAR-1 data results for their comparison
analysis, possibly skewing results. Furthermore, the discontinue rate
of the JULIET trial was high. Of 147 patients enrolled for infusion
involving KYMRIAH^TM, 43 discontinued prior to infusion (9
discontinued due to inability to manufacture, and 34 discontinued due
to patient[dash]related issues). Finally, the rate of patients who
experienced a diagnosis of CRS was high, 58 percent.\54\
---------------------------------------------------------------------------

\54\ Schuster, S.J., Bishop, M.R., Tam, C., et al., ``Global
trial of the efficacy and safety of CTL019 in adult patients with
relapsed or refractory diffuse large B-cell lymphoma: an interim
analysis,'' Presented at: 22nd Congress of the European Hematology
Association, June 22-25, 2017, Madrid, Spain.
---------------------------------------------------------------------------

The applicant for YESCARTA^TM stated that
YESCARTA^TM represents a substantial clinical improvement
over existing technologies when used in the treatment of patients with
aggressive B-cell NHL. The applicant asserted that
YESCARTA^TM can benefit the patient population with the
highest unmet need, patients with R/R disease after failure of first-
line or second-line therapy, and patients who have failed or who are
ineligible for ASCT. These patients, otherwise, have adverse outcomes
as demonstrated by historical control data.
Regarding clinical data for YESCARTA^TM, the applicant
stated that historical control data was the only ethical and feasible
comparison information for these patients with chemorefractory,
aggressive NHL who have no other available treatment options and who
are expected to have a very short lifespan without therapy. According
to the applicant, based on meta-analysis of outcomes in patients with
chemorefractory DLBCL, there are no curative options for patients with
aggressive B-cell NHL, regardless of refractory subgroup, line of
therapy, and disease stage with their median OS being 6.6 months.\55\
---------------------------------------------------------------------------

\55\ Seshardi, T., et al., ``Salvage therapy for relapsed/
refractory diffuse large B-cell lymphoma,'' Biol Blood Marrow
Transplant, 2008 Mar, vol. 14(3), pp. 259-67.
---------------------------------------------------------------------------

In the applicant's FY 2018 new technology add-on payment
application for the KTE-C19 technology, which was discussed in the FY
2018 IPPS/LTCH PPS proposed rule (82 FR 19889), the applicant cited
ongoing clinical trials. The applicant provided updated data related to
these ongoing clinical trials as part of its FY 2019 application for
YESCARTA^TM.\56\ \57\ \58\ The updated analysis of the
pivotal Study 1 (ZUMA-1, KTE-C19-101), Phase I and II occurred when
patients had been followed for 12 months after infusion of
YESCARTA^TM. Study 1 is a Phase I-II multi[dash]center,
open[dash]label study evaluating the safety and efficacy of the use of
YESCARTA^TM in patients with aggressive refractory NHL. The
trial consists of two distinct phases designed as Phase I (n=7) and
Phase II (n=101). Phase II is a multi-cohort open[dash]label study
evaluating the efficacy of YESCARTA^TM.\59\ The applicant
noted that, as of the analysis cutoff date for the interim analysis,
the results of Study 1 demonstrated rapid and substantial improvement
in objective, or ORR. After 6 and 12 months, the ORR was 82 and 83
percent, respectively. Consistent response rates were observed in both
Study 1, Cohort 1 (DLBCL; n=77) and Cohort 2 (PMBCL or TFL; n=24) and
across covariates including disease stage, age, IPI scores, CD-19
status, and refractory disease subset. In the updated analysis, results
were consistent across age groups. In this analysis, 39 percent of
patients younger than 65 years old were in ongoing response, and 50
percent of patients at least 65 years old or older were in ongoing
response. Similarly, the survival rate at 12 months was 57 percent
among patients younger than 65 years old and 71 percent among patients
at least 65 years old or older versus historical control of 26 percent.
The applicant further stated that evidence of substantial clinical
improvement regarding the efficacy of YESCARTA^TM for the
treatment of patients with chemorefractory, aggressive B-cell NHL is
supported by the CR of YESCARTA^TM in Study 1, Phase II (54
percent) versus the historical control (7 percent).\60\ \61\ \62\ \63\

[[Page 20293]]

The applicant noted that CR rates were observed in both Study 1, Cohort
1. The applicant reported that, in the updated analysis, results were
in ongoing response (46 percent of patients at least 65 years old or
older were in ongoing response). Similarly, the survival rate at 12
months was 57 percent among patients younger than 65 years old and 71
percent among patients at least 65 years old or older.\64\ \65\ \66\
\67\ The applicant also provided the following tables to depict data to
support substantial clinical improvement (we refer readers to the two
tables below).
---------------------------------------------------------------------------

\56\ Locke, F.L., et al., ``Ongoing complete remissions in Phase
1 of ZUMA-1: A phase I-II multicenter study evaluating the safety
and efficacy of KTE-C19 (anti-CD19 CAR T cells) in patients with
refractory aggressive B-cell non-Hodgkin lymphoma (NHL),'' Oral
presentation (abstract 10480) presented at European Society for
Medical Oncology (ESMO), October 2016.
\57\ Locke, F.L., et al., ``Primary results from ZUMA-1: A
pivotal trial of axicabtagene ciloretroleucel (axi-cel; KTE-C19) in
patients with refractory aggressive non-Hodgkins lymphoma (NHL),''
Oral presentation, American Association of Cancer Research (AACR).
\58\ Locke, F.L., et al., ``Phase I results of ZUMA-1: A
multicenter study of KTE-C19 anti-CD19 CAR T cell therapy in
refractory aggressive lymphoma,'' Mol Ther, vol. 25, No 1, January
2017.
\59\ Neelapu, S.S., Locke, F.L., et al., 2016, ``KTE-C19 (anti-
CD19 CAR T cells) induces complete remissions in patients with
refractory diffuse large B-cell lymphoma (DLBCL): Results from the
pivotal Phase II ZUMA-1,'' Abstract presented at American Society of
Hematology (ASH) 58th Annual Meeting, December 2016.
\60\ Locke, F.L., et al., ``Ongoing complete remissions in Phase
I of ZUMA-1: a phase I-II multicenter study evaluating the safety
and efficacy of KTE-C19 (anti-CD19 CAR T cells) in patients with
refractory aggressive B-cell non-Hodgkin lymphoma (NHL),'' Oral
presentation (abstract 10480) presented at European Society for
Medical Oncology (ESMO), October 2016.
\61\ Locke, F.L., et al., ``Primary results from ZUMA-1: a
pivotal trial of axicabtagene ciloretroleucel (axi-cel; KTE-C19) in
patients with refractory aggressive non-Hodgkins lymphoma (NHL),''
Oral presentation, American Association of Cancer Research (AACR).
\62\ Locke, F.L., et al., ``Phase I results of ZUMA-1: A
multicenter study of KTE-C19 anti-CD19 CAR T cell therapy in
refractory aggressive lymphoma,'' Mol Ther, vol. 25, No 1, January
2017.
\63\ Crump, et al., 2017, ``Outcomes in refractory diffuse large
B-cell lymphoma: Results from the international SCHOLAR-1 study,''
Blood, vol. 0, 2017, pp. blood-2017-03-769620v1.
\64\ Locke, F.L., et al., ``Ongoing complete remissions in Phase
I of ZUMA-1: A phase I-II multicenter study evaluating the safety
and efficacy of KTE-C19 (anti-CD19 CAR T cells) in patients with
refractory aggressive B-cell non-Hodgkin lymphoma (NHL),'' Oral
presentation (abstract 10480) presented at European Society for
Medical Oncology (ESMO), October 2016.
\65\ Locke, F.L., et al., ``Primary results from ZUMA-1: A
pivotal trial of axicabtagene ciloretroleucel (axi-cel; KTE-C19) in
patients with refractory aggressive non-Hodgkins lymphoma (NHL),''
Oral presentation, American Association of Cancer Research (AACR).
\66\ Locke, F.L., et al., ``Phase I results of ZUMA-1: A
multicenter study of KTE-C19 anti-CD19 CAR T cell therapy in
refractory aggressive lymphoma,'' Mol Ther, vol. 25, No 1, January
2017.
\67\ Crump, et al., ``Outcomes in refractory diffuse large B-
cell lymphoma: Results from the international SCHOLAR-1 study,''
Blood, vol. 0, 2017, pp. blood-2017-03-769620v1.

Overall Response Rates Across All YESCARTA\TM\ Studies vs. SCHOLAR-1
----------------------------------------------------------------------------------------------------------------
Study 1, Phase Scholar-1
% I n=7 Study 1, Phase II n=101 n=529
----------------------------------------------------------------------------------------------------------------
Overall Response Rate (%)............. 71 83...................................... 26
Month 6 (%)........................... 43 41...................................... ..............
Ongoing with >15 Months of follow-up 43 42...................................... ..............
(%).
Ongoing with >18 Months of follow-up 43 Follow-up ongoing....................... ..............
(%).
----------------------------------------------------------------------------------------------------------------

Results for YESCARTA\TM\ Study 1, Phase II: Complete Response
------------------------------------------------------------------------
Study 1, Phase II n=101
------------------------------------------------------------------------
Complete Response (%) (95 Percent 54 (44,64).
Confidence Interval).
Duration of Response, median (range in not reached.
months).
Ongoing Responses, CR (%); Median 8.7 39.
months follow-up; median overall survival
has not been reached.
Ongoing Responses, CR (%); Median 15.3 40.
months follow-up; median overall survival
has not been reached.
------------------------------------------------------------------------

According to the applicant, the 6-month and 12-month survival rates
(95 percent CI) for patients enrolled in the SCHOLAR-1 study were 53
percent (49 percent, 57 percent) and 28 percent (25 percent, 32
percent).\68\ In contrast, the 6-month and 12-month survival rates (95
percent CI) in the Study 1 updated analysis were 79 percent (70
percent, 86 percent) and 60 percent (50 percent, 69 percent).\69\ \70\
\71\
---------------------------------------------------------------------------

\68\ Crump, et al., ``Outcomes in refractory diffuse large B-
cell lymphoma: results from the international SCHOLAR-1 study,''
Blood, vol. 0, 2017, pp. blood-2017-03-769620v1.
\69\ Locke, F.L., et al., ``Ongoing complete remissions in Phase
I of ZUMA-1: a phase I-II multicenter study evaluating the safety
and efficacy of KTE-C19 (anti-CD19 CAR T cells) in patients with
refractory aggressive B-cell non-Hodgkin lymphoma (NHL),'' Oral
presentation (abstract 10480) presented at European Society for
Medical Oncology (ESMO), October 2016.
\70\ Locke, F.L., et al., ``Primary results from ZUMA-1: a
pivotal trial of axicabtagene ciloretroleucel (axi-cel; KTE-C19) in
patients with refractory aggressive non-Hodgkins lymphoma (NHL),''
Oral presentation, American Association of Cancer Research (AACR).
\71\ Locke, F.L., et al., ``Phase I results of ZUMA-1: a
multicenter study of KTE-C19 anti-CD19 CAR T cell therapy in
refractory aggressive lymphoma,'' Mol Ther, vol. 25, No 1, January
2017.
---------------------------------------------------------------------------

The applicant also cited safety results from the pivotal Study 1,
Phase II. According to the applicant, the clinical trial protocol
stipulated that patients were infused with YESCARTA^TM in the
hospital inpatient setting and were monitored in the inpatient setting
for at least 7 days for early identification and treatment involving
YESCARTA^TM-related toxicities, which primarily included CRS
diagnoses and neurotoxicities. The applicant noted that the interim
analysis showed the length of stay following infusion of
YESCARTA^TM was a median of 15 days. Ninety-three percent of
patients experienced CRS diagnoses, 13 percent of whom experienced
Grade III or higher (severe, life threatening or fatal) CRS diagnoses.
The median time to onset of CRS diagnosis was 2 days (range 1 to 12
days) and the median time to resolution was 8 days. Ninety-eight
percent of patients recovered from CRS diagnosis. Neurologic events
occurred in 64 percent of patients, 28 percent of whom experienced
Grade III or higher (severe or life threatening) events. The median
time to onset of neurologic events was 5 days (range 1 to 17 days). The
median time to resolution was 17 days. Nearly all patients recovered
from neurologic events. The medications most often used to treat these
complications included growth factors, blood products, anti-infectives,
steroids, tocilizumab, and vasopressors. Two patients died from
YESCARTA^TM-related adverse events (hemophagocytic
lymphohistiocytosis and cardiac arrest in the hospital setting as a
result of CRS diagnoses). According to the applicant, there were no
clinically important differences in adverse event rates across age
groups (younger than 65 years old; 65 years old or older), including
CRS diagnoses and neurotoxicity.\72\ \73\
---------------------------------------------------------------------------

\72\ Locke, F.L., et al., ``Ongoing complete remissions in Phase
I of ZUMA-1: a phase I-II multicenter study evaluating the safety
and efficacy of KTE-C19 (anti-CD19 CAR T cells) in patients with
refractory aggressive B-cell non-Hodgkin lymphoma (NHL),'' Oral
presentation (abstract 10480) presented at European Society for
Medical Oncology (ESMO), October 2016.
\73\ Locke, F.L., et al., ``Primary results from ZUMA-1: a
pivotal trial of axicabtagene ciloretroleucel (axi-cel; KTE-C19) in
patients with refractory aggressive non-Hodgkins lymphoma (NHL),''
Oral presentation, American Association of Cancer Research (AACR).
---------------------------------------------------------------------------

The applicant for YESCARTA^TM provided information
regarding a safety expansion cohort, Study 1 Phase II Safety Expansion
Cohort 3 that was created and carried out in 2017.

[[Page 20294]]

According to the applicant, this Safety Expansion Cohort investigated
measures to mitigate the incidence and/or severity of anti-CD-19 CAR T
therapy and evaluated an adverse event mitigation strategy by
prophylactically using levetiracetam (Keppra), an anticonvulsant, and
tocilizumab, an IL-6 receptor inhibitor. Of the 30 patients treated, 2
patients experienced Grade III CRS diagnoses; 1 of the 2 patients
recovered. In late April 2017, the other patient also experienced
multi-organ failure and a neurologic event that subsequently progressed
to a fatal Grade V cerebral edema that was deemed related to
YESCARTA^TM treatment. This case of cerebral edema was
observed in a 21 year-old male with refractory, rapidly progressive,
symptomatic, stage IVB PMBCL. Analysis of the baseline serum and
cerebrospinal fluid (CSF) obtained prior to any study treatment
demonstrated high cytokine and chemokine levels. According to the
applicant, this suggests a significant preexisting underlying
inflammatory process, both systemically and within the central nervous
system. Rapidly progressing disease, recent mediastinal XRT (external
beam radiation therapy) and/or CMV (cytomegalovirus) reactivation may
have contributed to the pre-existing state. There were no prior cases
of cerebral edema in the 200 patients who have been treated with
YESCARTA^TM in the ZUMA clinical development program. The
single patient event from the Study 1 Phase II Safety Expansion Cohort
3 was the first Grade V cerebral edema event.\74\ \75\
---------------------------------------------------------------------------

\74\ Locke, F.L., et al., ``Ongoing complete remissions in Phase
I of ZUMA-1: a phase I-II multicenter study evaluating the safety
and efficacy of KTE-C19 (anti-CD19 CAR T cells) in patients with
refractory aggressive B-cell non-Hodgkin lymphoma (NHL),'' Oral
presentation (abstract 10480) presented at European Society for
Medical Oncology (ESMO), October 2016.
\75\ Locke, F.L., et al., ``Primary results from ZUMA-1: a
pivotal trial of axicabtagene ciloretroleucel (aci-cel; KTE-C19) in
patients with refractory aggressive non-Hodgkins lymphoma (NHL),''
Oral presentation, American Association of Cancer Research (AACR).
---------------------------------------------------------------------------

After reviewing the information submitted by the applicant as part
of its FY 2019 new technology add-on payment application for
YESCARTA^TM, we are concerned that it does not appear to
include patient mortality data that was included as part of the
applicant's FY2018 new technology add-on payment application for the
KTE-C19 technology. In that application, as discussed in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR 19890), the applicant provided that
by an earlier cutoff date for the interim analysis of Study 1, among
all KTE-C19 treated patients, 12 patients in Study 1, Phase II,
including 10 from Cohort 1, and 2 from Cohort 2, died. Eight of these
deaths were due to disease progression. One patient had disease
progression after receiving KTE-C19 treatment and subsequently had
ASCT. After ASCT, the patient died due to sepsis. Two patients (3
percent) died due to KTE-C19[dash]related adverse events (Grade V
hemophagocytic lymphohistiocytosis event and Grade V anoxic brain
injury), and one died due to an adverse event deemed unrelated to
treatment involving KTE-C19 (Grade V pulmonary embolism), without
disease progression. We believe it would be relevant to include this
information because it is related to the same treatment that is the
subject of the applicant's FY 2019 new technology add-on payment
application.
We also are concerned that there are few published results showing
any survival benefits from the use of this treatment. In addition, we
are concerned with the limited number of patients (n=108) that were
studied after infusion involving YESCARTA^TM T-cell
immunotherapy. Finally, we are concerned about the data related to the
percentage of patients who experience complications or toxicities
related to YESCARTA^TM treatment. According to the applicant,
of the patients who participated in YESCARTA^TM clinical
trials, 93 percent developed CRS diagnoses and 64 percent experienced
neurological adverse events.
We are inviting public comments on whether KYMRIAH^TM and
YESCARTA^TM meet the substantial clinical improvement
criterion.
Finally, we believe that in the context of these pending new
technology add-on payment applications, there may also be merit in the
suggestions from the public to create a new MS-DRG for the assignment
of procedures involving the utilization of CAR T-cell therapy drugs and
cases representing patients who receive treatment involving CAR
T[dash]cell therapy as an alternative to our proposed MS-DRG assignment
to MS-DRG 016 for FY 2019, or the suggestions to allow hospitals to
utilize a CCR specific to procedures involving the utilization of
KYMRIAH^TM and YESCARTA^TM CAR T-cell therapy drugs
for FY 2019 as part of the determination of the cost of a case for
purposes of calculating outlier payments for individual FY 2019 cases,
new technology add-on payments, if approved, for individual FY 2019
cases, and payments to IPPS-excluded cancer hospitals beginning in FY
2019. If as discussed in section II.F.2.d. of the preamble of this
proposed rule a new MS-DRG were to be created, then consistent with
section 1886(d)(5)(K)(ix) of the Act there may no longer be a need for
a new technology add-on payment under section 1886(d)(5)(K)(ii)(III) of
the Act. With respect to an alternative considered for the use of a CCR
specific to procedures involving the utilization of
KYMRIAH^TM and YESCARTA^TM CAR T[dash]cell therapy
drugs for FY 2019 as part of the determination of the cost of a case
for purposes of calculating outlier payments for individual FY 2019
cases, new technology add-on payments, if approved, for individual FY
2019 cases, and payments to IPPS-excluded cancer hospitals beginning in
FY 2019, we refer readers to the discussion in section II.A.4.g.2. of
the Addendum to this proposed rule.
We are inviting public comments regarding the most appropriate
mechanism to provide payment to hospitals for new technologies such as
CAR T[dash]cell therapy drugs, including through the use of new
technology add[dash]on payments.
We also are inviting public comments on how these payment
alternatives would affect access to care, as well as how they affect
incentives to encourage lower drug prices, which is a high priority for
this Administration. In addition, we are considering alternative
approaches and authorities to encourage value-based care and lower drug
prices. We solicit comments on how the payment methodology alternatives
may intersect and affect future participation in any such alternative
approaches.
We did not receive any written public comments in response to the
New Technology Town Hall meeting notice published in the Federal
Register regarding the application of KYMRIAH^TM for new
technology add-on payments for FY 2019.
Below we summarize and respond to a written public comment we
received during the open comment period regarding YESCARTA^TM
in response to the New Technology Town Hall meeting notice published in
the Federal Register.
Comment: The applicant commented that the use of
YESCARTA^TM as a treatment option has resulted in
unprecedented and consistent treatment for patients with refractory
large B[dash]cell lymphoma who previously did not have a curative
option. In addition, the applicant summarized the substantial clinical
improvement differences between YESCARTA^TM and the results
of KYMRIAH^TM's SCHOLAR-1 study. The applicant noted that,
for the patients enrolled in the SCHOLAR-1 study, the median overall
survival was 6 months and complete remission was

[[Page 20295]]

7 percent. Conversely, the applicant conveyed that, for the patients
enrolled in YESCARTA^TM's Study 1, at median 15.4 months
follow-up, responses were ongoing in 42 percent of the patients and 40
percent of the patients were in complete remission.
Response: We appreciate the applicant's input. We will take these
comments into consideration when deciding whether to approve new
technology add-on payments for YESCARTA^TM for FY 2019.
We note that the applicant also provided comments that were
unrelated to the substantial clinical improvement criterion. As stated
earlier, the purpose of the new technology town hall meeting is
specifically to discuss the substantial clinical improvement criterion
in regard to pending new technology add-on payment applications for FY
2019. Therefore, we are not summarizing these additional comments in
this proposed rule. However, the applicant may resubmit its comments in
response to proposals presented in this proposed rule.
b. VYXEOS^TM (Cytarabine and Daunorubicin Liposome for
Injection)
Jazz Pharmaceuticals, Inc. submitted an application for new
technology add-on payments for the VYXEOS^TM technology for
FY 2019. (We note that Celator Pharmaceuticals, Inc. submitted an
application for new technology add[dash]on payments for
VYXEOS^TM for FY 2018. However, Celator Pharmaceuticals did
not receive FDA approval by the July 1, 2017 deadline for applications
for FY 2018.) VYXEOS^TM was approved by FDA on August 3,
2017, for the treatment of adults with newly diagnosed therapy-related
acute myeloid leukemia (t[dash]AML) or AML with myelodysplasia-related
changes (AML-MRC).
AML is a type of cancer in which the bone marrow makes abnormal
myeloblasts (immature bone marrow white blood cells), red blood cells,
and platelets. If left untreated, AML progresses rapidly. Normally, the
bone marrow makes blood stem cells that develop into mature blood cells
over time. Stem cells have the potential to develop into many different
cell types in the body. Stem cells can act as an internal repair
system, dividing, essentially without limit, to replenish other cells.
When a stem cell divides, each new cell has the potential to either
remain a stem cell or become a specialized cell, such as a muscle cell,
a red blood cell, or a brain cell, among others. A blood stem cell may
become a myeloid stem cell or a lymphoid stem cell. Lymphoid stem cells
become white blood cells. A myeloid stem cell becomes one of three
types of mature blood cells: (1) Red blood cells that carry oxygen and
other substances to body tissues; (2) white blood cells that fight
infection; or (3) platelets that form blood clots and help to control
bleeding. In patients diagnosed with AML, the myeloid stem cells
usually become a type of myeloblast. The myeloblasts in patients
diagnosed with AML are abnormal and do not become healthy white blood
cells. Sometimes in patients diagnosed with AML, too many stem cells
become abnormal red blood cells or platelets. These abnormal cells are
called leukemia cells or blasts.
AML is defined by the World Health Organization (WHO) as greater
than 20 percent blasts in the bone marrow or blood. AML can also be
diagnosed if the blasts are found to have a chromosome change that
occurs only in a specific type of AML diagnosis, even if the blast
percentage does not reach 20 percent. Leukemia cells can build up in
the bone marrow and blood, resulting in less room for healthy white
blood cells, red blood cells, and platelets. When this occurs,
infection, anemia, or increased risk for bleeding may result. Leukemia
cells can spread outside the blood to other parts of the body,
including the central nervous system (CNS), skin, and gums.
Treatment of AML diagnoses usually consists of two phases;
remission induction and post-remission therapy. Phase one, remission
induction, is aimed at eliminating as many myeloblasts as possible. The
most common used remission induction regimens for AML diagnoses are the
``7+3'' regimens using an antineoplastic and an anthracycline.
Cytarabine and daunorubicin are two commonly used drugs for ``7+3''
remission induction therapy. Cytarabine is continuously administered
intravenously over the course of 7 days, while daunorubicin is
intermittently administered intravenously for the first 3 days. The
``7+3'' regimen typically achieves a 70 to 80 percent complete
remission (CR) rate in most patients under 60 years of age.
High rates of CR are not generally seen in older patients for a
number of reasons, such as different leukemia biology, much higher
incidence of adverse cytogenetic abnormalities, higher rate of
multidrug resistant leukemic cells, and comparatively lower patient
performance status (the standard criteria for measuring how the disease
impacts a patient's daily living abilities). Intensive induction
therapy has worse outcomes in this patient population.\76\ The
applicant asserted that many older adults diagnosed with AML have a
poor performance status \77\ at presentation and multiple medical
comorbidities that make the use of intensive induction therapy quite
difficult or contraindicated altogether. Moreover, the CR rates of
poor-risk patients diagnosed with AML are substantially lower in
patients over 60 years of age; owing to a higher proportion of
secondary AML, disease developing in the setting of a prior myeloid
disorder, or prior cytotoxic chemotherapy. Therefore, less than half of
older adults diagnosed with AML achieve CR with combination induction
regimens.\78\
---------------------------------------------------------------------------

\76\ Juliusson, G., Lazarevic, V., Horstedt, A.S., Hagberg, O.,
Hoglund, M., ``Acute myeloid leukemia in the real world: why
population-based registries are needed'', Blood, 2012 Apr 26; vol.
119(17), pp. 3890-9.
\77\ Stone, R.M., et al., (2004), ``Acute myeloid leukemia.
Hematology'', Am Soc Hematol Educ Program, 2004, pp. 98-117.
\78\ Appelbaum, F.R., Gundacker, H., Head, D.R., ``Age and acute
myeloid leukemia'', Blood 2006, vol. 107, pp. 3481-3485.
---------------------------------------------------------------------------

According to the applicant, the combination of cytarabine and an
anthracycline, either as ``7+3'' regimens or as part of a different
regimen incorporating other cytotoxic agents, may be used as
so[dash]called ``salvage'' induction therapy in the treatment of adults
diagnosed with AML who experience relapse in an attempt to achieve CR.
According to the applicant, while CR rates of success vary widely
depending on underlying disease biology and host factors, there is a
lower success rate overall in achievement of CR with ``7+3'' regimens
compared to VYXEOS^TM therapy. According to the applicant,
``7+3'' regimens produce a CR rate of approximately 50 percent in
younger adult patients who have relapsed, but were in CR for at least 1
year.\79\
---------------------------------------------------------------------------

\79\ Kantarjian, H., Rayandi, F., O'Brien, S., et al.,
``Intensive chemotherapy does not benefit most older patients (age
70 years and older) with acute myeloid leukemia,'' Blood, 2010, vol.
116(22), pp. 4422.
---------------------------------------------------------------------------

VYXEOS^TM is a nano-scale liposomal formulation
containing a fixed combination of cytarabine and daunorubicin in a 5:1
molar ratio. This formulation was developed by the applicant using a
proprietary system known as CombiPlex. According to the applicant,
CombiPlex addresses several fundamental shortcomings of conventional
combination regimens, specifically the conventional ``7+3'' free drug
dosing, as well as the challenges inherent in combination drug
development, by identifying the most effective synergistic molar ratio
of the

[[Page 20296]]

drugs being combined in vitro, and fixing this ratio in a nano-scale
drug delivery complex to maintain the optimized combination after
administration and ensuring exposure of this ratio to the tumor.
Cytarabine and daunorubicin are co-encapsulated inside the
VYXEOS^TM liposome at a fixed ratiometrically, optimized 5:1
cytarabine:daunorubicin molar ratio. According to the applicant,
encapsulation maintains the synergistic ratios, reduces degradation,
and minimizes the impact of drug transporters and the effect of known
resistant mechanisms. The applicant stated that the 5:1 molar ratio has
been shown, in vitro, to maximize synergistic antitumor activity across
multiple leukemic and solid tumor cell lines, including AML, and in
animal model studies to be optimally efficacious compared to other
cytarabine:daunorubicin ratios. In addition, the applicant stated that
in clinical studies, the use of VYXEOS^TM has demonstrated
consistently more efficacious results than the conventional ``7+3''
free drug dosing. VYXEOS^TM is intended for intravenous
administration after reconstitution with 19 mL sterile water for
injection. VYXEOS^TM is administered as a 90[dash]minute
intravenous infusion on days 1, 3, and 5 (induction therapy), as
compared to the ``7+3'' free drug dosing, which consists of two
individual drugs administered on different days, including 7 days of
continuous infusion.
With regard to the newness criterion, as discussed earlier, if a
technology meets all three of the substantial similarity criteria, it
would be considered substantially similar to an existing technology and
would not be considered ``new'' for purposes of new technology add-on
payments.
With regard to the first criterion, whether a product uses the same
or a similar mechanism of action to achieve a therapeutic outcome, the
applicant asserted that VYXEOS^TM does not use the same or
similar mechanism of action to achieve a therapeutic outcome as any
other drug assigned to the same or a different MS-DRG. The applicant
stated that no other AML treatment is designed, nor is able, to deliver
a fixed, ratiometrically optimized and synergistic drug:drug ratio of
5:1 cytarabine to daunorubicin, and selectively target and accumulate
at the site of malignancy, while minimizing unwanted exposure, which
the applicant based on the data results of preclinical and clinical
studies of the use of VYXEOS^TM. The applicant indicated that
VYXEOS^TM is a nano-scale liposomal formulation of a fixed
combination of cytarabine and daunorubicin. Further, the applicant
stated that the rationale for the development of VYXEOS^TM is
based on prolonged delivery of synergistic drug ratios utilizing the
applicant's proprietary, ratiometric CombiPlex technology. According to
the applicant, conventional ``7+3'' free drug dosing has no delivery
complex, and these individual drugs are administered without regard to
their ratio dependent interaction. According to the applicant,
enzymatic inactivation and imbalanced drug efflux and transporter
expression reduce drug levels in the cell. Further, decreased
cytotoxicity leads to cell survival, emergence of drug resistant cells,
and decreased overall survival.
The applicant provided the results of clinical studies to
demonstrate that the CombiPlex technology and the ratiometric dosing of
VYXEOS^TM represent a shift in anticancer agent delivery,
whereby the fixed, optimized dosing provides less drug to achieve
improved efficacy, while maintaining a favorable risk-benefit profile.
The results of this ratiometric dosing approach are in contrast to the
typical combination chemotherapy development that establishes the
recommended dose of one agent and then adds subsequent drugs to the
combination at increasing concentrations until the aggregate effects of
toxicity are considered to be limiting (the ``7+3'' drug regimen).
According to the applicant, this current approach to combination
chemotherapy development assumes that maximum therapeutic activity will
be achieved with maximum dose intensity for all drugs in the
combination, and ignores the possibility that more subtle
concentration-dependent drug interactions could result in frankly
synergistic outcomes.
The applicant maintained that, while VYXEOS^TM contains
no novel active agents, its innovative drug delivery mechanism appears
to be a superior way to deliver the two active compounds in an effort
to optimize their efficacy in killing leukemic blasts. However, we are
concerned it is possible that VYXEOS^TM may use a similar
mechanism of action compared to currently available treatment options
because both the current treatment regimen and VYXEOS^TM are
used in the treatment of AML by intravenous administration of
cytarabine and daunorubicin. We are concerned that the mechanism of
action of the ratiometrically fixed liposomal formulation of
VYXEOS^TM is the same or similar to that of the current
intravenous administration of cytarabine and daunorubicin.
With respect to the second criterion, whether a product is assigned
to the same or a different MS-DRG, we believe that potential cases
representing patients who may be eligible for treatment involving
VYXEOS^TM would be assigned to the same MS[dash]DRGs as cases
representing patients who receive treatment for diagnoses of AML.
With respect to the third criterion, whether the new use of the
technology involves the treatment of the same or similar type of
disease and the same or similar patient population, the applicant
asserted that VYXEOS^TM is indicated for use in the treatment
of patients who have been diagnosed with high-risk AML. The applicant
also asserted that VYXEOS^TM is the first and only approved
fixed combination of cytarabine and daunorubicin and is designed to
uniquely control the exposure using a nano-scale drug delivery vehicle
leading to statistically significant improvements in survival in
patients who have been diagnosed with high-risk AML compared to the
conventional ``7+3'' free drug dosing. We believe that
VYXEOS^TM involves the treatment of the same patient
population as other AML treatment therapies.
The following unique ICD-10-PCS codes were created to describe the
administration of VYXEOS^TM: XW033B3 (Introduction of
cytarabine and caunorubicin liposome antineoplastic into peripheral
vein, percutaneous approach, new technology group 3) and XW043B3
(Introduction of cytarabine and daunorubicin liposome antineoplastic
into central vein, percutaneous approach, new technology group 3).
We are inviting public comments on whether VYXEOS^TM is
substantially similar to existing technology, including whether the
mechanism of action of VYXEOS^TM differs from the mechanism
of action of the currently available treatment regimen. We also are
inviting public comments on whether VYXEOS^TM meets the
newness criterion.
With regard to the cost criterion, the applicant conducted the
following analysis. The applicant used the FY 2016 MedPAR Hospital
Limited Data Set (LDS) to assess the MS-DRGs to which cases
representing potential patient hospitalizations that may be eligible
for treatment involving VYXEOS^TM would most likely be
assigned. These potential cases representing patients who may be
VYXEOS^TM candidates were identified if they: (1) Were
diagnosed with acute myeloid leukemia (AML); and (2) received
chemotherapy during their

[[Page 20297]]

hospital stay. The cohort was further limited by excluding patients who
had received bone marrow transplants. The cohort used in the analysis
is referred to in this discussion as the primary cohort.
According to the applicant, the primary cohort of cases spans 131
unique MS-DRGs, 16 of which contained more than 10 cases. The most
common MS-DRGs are MS-DRG 837, 834, 838, and 839. These 4 MS-DRGs
account for 4,457 (81 percent) of the 5,483 potential cases in the
cohort.
The case-weighted unstandardized charge per case is approximately
$185,844. The applicant then removed charges related to other
chemotherapy agents because VYXEOS^TM would replace the need
for the use of current chemotherapy agents. The applicant explained
that charges for chemotherapy drugs are grouped with charges for
oncology, diagnostic radiology, therapeutic radiology, nuclear
medicine, CT scans, and other imaging services in the ``Radiology
Charge Amount.'' According to the applicant, removing 100 percent of
the ``Radiology Charge Amount'' would understate the cost of care for
treatment involving VYXEOS^TM for patients who may be
eligible because treatment involving VYXEOS^TM would be
unlikely to replace many of the services captured in the ``Radiology
Charge Amount'' category. The applicant found that chemotherapy charges
represent less than 20 percent of the charges associated with revenue
centers grouped into the ``Radiology Charge Amount'' and removed 20
percent of the radiology charge amount in order to capture the effect
of removing chemotherapy pharmacy charges. The applicant noted that
regardless of the type of induction chemotherapy, patients being
treated for AML have AML-related complications, such as bleeding or
infection that require supportive care drug therapy. For this reason,
it is expected that eligible patients receiving treatment involving
VXYEOS^TM will continue to incur other pharmacy and IV
therapy charges for AML[dash]related complications.
After removing the charges for the prior technology, the applicant
standardized the charges. The applicant then applied an inflation
factor of 1.09357, the value used in the FY 2018 IPPS/LTCH PPS final
rule (82 FR 38527) to update the charges from FY 2016 to FY 2018.
According to the applicant, for the primary new technology add-on
payment cohort, the cost criterion was met without consideration of
VYXEOS^TM charges. The average case-weighted standardized
charge was $170,458, which exceeds the average case[dash]weighted Table
10 MS-DRG threshold amount of $82,561 by $87,897.
The applicant provided additional analyses with the inclusion of
VYXEOS^TM charges under 3-vial, 4-vial, 6-vial, and 10-vial
treatment scenarios. According to the applicant, the cost criterion was
satisfied in each of these scenarios, with charges in excess of the
average case-weighted threshold amount.
Finally, the applicant also provided the following sensitivity
analyses (that did not include charges for VYXEOS^TM) using
the methodology above:
Sensitivity Analysis 1--limits the cohort to patients who
have been diagnosed with AML without remission (C92.00 or C92.50) who
received chemotherapy and did not receive bone marrow transplant.
Sensitivity Analysis 2--the modified cohort was limited to
patients who have been diagnosed with relapsed AML who received
chemotherapy and did not receive bone marrow transplant.
Sensitivity Analysis 3--the modified cohort was limited to
patients who have been diagnosed with AML and who did not receive bone
marrow transplant.
Sensitivity Analysis 4--the primary cohort was maintained,
but 100 percent of the charges for revenue centers grouped into the
``Pharmacy Charge Amount'' were excluded.
Sensitivity Analysis 5--identifies patients who have been
diagnosed with AML in remission.
The applicant noted that, in all of the sensitivity analysis
scenarios, the average case[dash]weighted standardized charge per case
exceeded the average case-weighted Table 10 MS-DRG threshold amount.
Based on all of the analyses above, the applicant maintained that
VYXEOS^TM meets the cost criterion. We are inviting public
comments on whether VYXEOS^TM meets the cost criterion.
With regard to substantial clinical improvement, according to the
applicant, clinical data results have shown that the use of
VYXEOS^TM represents a substantial clinical improvement for
the treatment of AML in newly diagnosed high[dash]risk, older (60 years
of age and older) patients, marked by statistically significant
improvements in overall survival, event free survival and response
rates, and in relapsed patients age 18 to 65 years of age, where a
statistically significant improvement in overall survival has been
documented for the poor[dash]risk subset of patients as defined by the
European Prognostic Index. In both groups of patients, the applicant
stated that there was significant improvement in survival for the
high[dash]risk patient group. The applicant provided the following
specific clinical data results.
The applicant stated that clinical data results show that
treatment with VYXEOS^TM for older patients (60 years of age
and older) who have been diagnosed with untreated, high-risk AML will
result in superior survival rates, as compared to patients treated with
conventional ``7+3'' free drug dosing. The applicant provided a summary
of the pivotal Phase III Study 301 in which 309 patients were enrolled,
with 153 patients randomized to the VYXEOS^TM treatment arm
and 156 to the ``7+3'' free drug dosing treatment arm. Among patients
who were 60 to 69 years old, there were 96 patients in the
VYXEOS^TM treatment arm and 102 in the ``7+3'' free drug
dosing treatment arm. For patients who were 70 to 75 years old, there
were 57 and 54 patients in each treatment arm, respectively. The
applicant noted that the data results from the Phase III Study 301
demonstrated that first-line treatment of patients diagnosed with high-
risk AML in the VYXEOS^TM treatment arm resulted in
substantially greater median overall survival of 9.56 months versus
5.95 months in the ``7+3'' free drug dosing treatment arm (hazard ratio
of 0.69; p =0.005).
The applicant further asserted that high-risk, older
patients (60 years old and older) previously untreated for diagnoses of
AML will have a lower risk of early death when treated with
VYXEOS^TM than those treated with the conventional ``7+3''
free drug dosing. The applicant cited Medeiros, et al.,\80\ which
reported a large observational study of Medicare beneficiaries and
noted the following: The data result of the study showed that 50 to 60
percent of elderly patients diagnosed with AML remain untreated
following diagnosis; treated patients were more likely younger, male,
and married, and less likely to have secondary diagnoses of AML, poor
performance indicators, and poor comorbidity scores compared to
untreated patients; and in multivariate survival analyses, treated
patients exhibited a significant 33 percent lower risk of death
compared to untreated patients.
---------------------------------------------------------------------------

\80\ Medeiros, B., et al., ``Big data analysis of treatment
patterns and outcomes among elderly acute myeloid leukemia patients
in the United States'', Ann Hematol, 2015, vol. 94(7), pp. 1127-
1138.
---------------------------------------------------------------------------

Based on data from the Phase III Study 301,\81\ the applicant cited
the

[[Page 20298]]

following results: The rate of 60-day mortality was less in the
VYXEOS^TM treatment arm (13.7 percent) versus the ``7+3''
free drug dosing treatment arm (21.2 percent); the reduction in early
mortality was due to fewer deaths from refractory AML (3.3 percent
versus 11.3 percent), with very similar rates of 60-day mortality due
to adverse events (10.4 percent versus 9.9 percent); there were fewer
deaths in the VYXEOS^TM treatment arm versus the ``7+3'' free
drug dosing treatment arm during the treatment phase (7.8 percent
versus 11.3 percent); and there were fewer deaths in the
VYXEOS^TM treatment arm during the follow-up phase than in
the ``7+3'' free drug dosing treatment arm (59.5 percent versus 71.5
percent).
---------------------------------------------------------------------------

\81\ Lancet, J., et al., ``Final results of a Phase III
randomized trial of VYXEOS (CPX-351) versus 7+3 in older patients
with newly diagnosed, high-risk (secondary) AML''. Abstract and oral
presentation at American Society of Clinical Oncology (ASCO), June
2016.
---------------------------------------------------------------------------

The applicant asserted that high-risk, older patients (60
years old and older) previously untreated for a diagnosis of AML
exhibited statistically significant improvements in response rates
after treatment with VYXEOS^TM versus treatment with the
conventional ``7+3'' free drug chemotherapy dosing, suggesting that the
use of VYXEOS^TM is a superior pre-transplant induction
treatment versus ``7+3'' free drug dosing. Restoration of normal
hematopoiesis is the ultimate goal of any therapy for AML diagnoses.
The first phase of treatment consists of induction chemotherapy, in
which the goal is to ``empty'' the bone marrow of all hematopoietic
elements (both benign and malignant), and to allow repopulation of the
marrow with normal cells, thereby yielding remission. According to the
applicant, post-induction response rates were significantly higher
following the use of VYXEOS^TM, which elicited a 47.7 percent
total response rate and a 37.3 percent rate for CR, whereas the total
response and CR rates for the ``7+3'' free drug dosing arm were 33.3
percent and 25.6 percent, respectively. The CR + CRi rates for patients
who were 60 to 69 years of age were 50.0 percent in the
VYXEOS^TM treatment arm and 36.3 percent in the ``7+3'' free
drug dosing treatment arm, with an odds ratio of 1.76 (95 percent CI,
1.00-3.10). For patients who were 70 to 75 years old, the rates of CR +
CRi were 43.9 percent in the VYXEOS^TM treatment arm and 27.8
percent in the ``7+3'' free drug dosing treatment arm.
The applicant asserted that VYXEOS^TM treatment
will enable high[dash]risk, older patients (60 years old and older) to
bridge to allogeneic transplant, and VYXEOS^TM treated
responding patients will have markedly better outcomes following
transplant. The applicant stated that diagnoses of secondary AML are
considered incurable with standard chemotherapy approaches and, as with
other high[dash]risk hematological malignancies, transplantation is a
useful treatment alternative. The applicant further stated that
autologous HSCT has limited effectiveness and at this time, only
allogeneic HSCT with full intensity conditioning has been reported to
produce long[dash]term remissions. However, the applicant stated that
the clinical study by Medeiros, et al. reported that, while the use of
allogeneic HSCT is considered a potential cure for AML, its use is
limited in older patients because of significant baseline comorbidities
and increased transplant-related morbidity and mortality. Patients in
either treatment arm of the Phase III Study 301 responding to induction
with a CR or CR+CRi (n=125) were considered for allogeneic
hematopoietic cell transplant (HCT) when possible. In total, 91
patients were transplanted: 52 (34 percent) from the
VYXEOS^TM treatment arm and 39 (25 percent) from the ``7+3''
free drug dosing treatment arm. Patient and AML characteristics were
similar according to randomized arm, including percentage of patients
in each treatment arm that underwent transplant in CR+CRi status.
However, the applicant noted that the VYXEOS^TM treatment arm
contained a higher percentage of older patients (70 years old or older)
who were transplanted (VYXEOS^TM, 31 percent; ``7+3'' free
drug dosing, 15 percent).\82\
---------------------------------------------------------------------------

\82\ Stone Hematology 2004; Gordon AACR 2016; NCI. Available at:
www.cancer.gov.
---------------------------------------------------------------------------

According to the applicant, patient outcome following transplant
strongly favored patients in the VYXEOS^TM treatment arm. The
Kaplan-Meier analysis of the 91 transplanted patients landmarked at the
time of HCT showed that patients in the VYXEOS^TM treatment
arm had markedly better overall survival (hazard ratio 0.46; p=0.0046).
The time-dependent Adjustment Model (Cox proportional hazard ratio) was
used to evaluate the contribution of VYXEOS^TM treatment to
overall survival rate after adjustment for transplant and showed that
VYXEOS^TM treatment remained a significant contributor, even
after adjusting for transplant. The time-dependent Cox hazard ratio for
overall survival rates in the VYXEOS^TM treatment arm versus
the ``7+3'' free drug dosing treatment arm was 0.51 (95 percent CI,
0.35-0.75; p=.0007).
The applicant asserted that VYXEOS^TM treatment
of previously untreated older patients (60 years old and older)
diagnosed with high-risk AML increases the response rate and improves
survival compared to conventional ``7+3'' free drug dosing treatment in
patients diagnosed with FLT3 mutation. The applicant noted the
following: Approximately 20 to 30 percent of AML patients harbor some
form of FLT3 mutation, AML patients with a FLT3 mutation have a higher
relapse rate and poorer prognosis than the overall population diagnosed
with AML, and the most common type of mutation is internal tandem
duplication (ITD) mutation localized to a membrane region of the
receptor.
The applicant cited Gordon, et al., 2016,\83\ which reported on the
significant anti-leukemic activity of VYXEOS^TM treatment in
AML blasts exhibiting high-risk characteristics, including FLT3-ITD,
that are typically associated with poor outcomes when treated with
conventional ``7+3'' free drug dosing treatment. To determine whether
the improved complete remission and overall survival rates of treatment
using VYXEOS^TM as compared to conventional ``7+3'' free drug
dosing treatment are attributable to liposome-mediated altered drug PK
or direct cellular interactions with specific AML blast samples, the
authors evaluated cytotoxicity in 53 AML patient specimens.
Cytotoxicity results were correlated with patient characteristics, as
well as VYXEOS^TM treatment cellular uptake and molecular
phenotype status including FLT3-ITD, which is a predictor of poor
patient outcomes to conventional ``7+3'' free drug dosing treatment.
The applicant stated that a notable result from this research was the
observation that AML blasts exhibiting the FLT3-ITD phenotype exhibited
some of the lowest IC50 (the 50 percent inhibitory
concentration) values and, as a group, were five-fold more sensitive to
the VYXEOS^TM treatment than those with wild type FLT3. In
addition, there was evidence that increased sensitivity to
VYXEOS^TM treatment was associated with increased uptake of
the drug-laden liposomes by the patient-derived AML blasts. The
applicant noted that Gordon, et al. 2016, concluded taken together, the
data are consistent with clinical observations where
VYXEOS^TM treatment retains significant anti-

[[Page 20299]]

leukemic activity in AML patients exhibiting high-risk characteristics.
The applicant also noted that a subanalysis of Phase III Study 301
identified 22 patients who had been diagnosed with FLT3 mutation in the
VYXEOS^TM treatment arm and 20 in the ``7+3'' free drug
dosing treatment arm, which resulted in the following response rates of
FLT3 mutated patients, which were higher with VYXEOS^TM
treatments (15 of 22, 68.2 percent) versus ``7+3'' free drug dosing
treatments (5 of 20, 25.0 percent); and the Kaplan-Meier analysis of
the 42 FLT3 mutated patients showed that patients in the
VYXEOS^TM treatment arm had a trend towards better overall
survival rates (hazard ratio 0.57; p=0.093).
---------------------------------------------------------------------------

\83\ Gordon, M., Tardi, P., Lawrence, M.D., et al., ``CPX-351
cytotoxicity against fresh AML blasts increased for FLT3-ITD+ cells
and correlates with drug uptake and clinical outcomes,'' Abstract
287 and poster presented at AACR (American Association for Cancer
Research), April 2016.
---------------------------------------------------------------------------

The applicant asserted that younger patients (18 to 65
years old) with poor risk first relapse AML have shown higher response
rates with VYXEOS^TM treatment versus conventional
``salvage'' chemotherapy. Overall, the applicant stated that the use of
VYXEOS^TM had an acceptable safety profile in this patient
population based on 60-day mortality data. Study 205 \84\ was a
randomized study comparing VYXEOS^TM treatment against the
investigator's choice of first ``salvage'' chemotherapy in patients who
had been diagnosed with relapsed AML after a first remission lasting
greater than 1 month (VYXEOS^TM treatment arm, n=81 and
``7+3'' free drug dosing treatment arm, n=44; 18 to 65 years old).
Investigator's choice was almost always based on cytarabine +
anthracycline, usually with the addition of one or two new agents.
According to the applicant, treatment involving VYXEOS^TM
demonstrated a higher rate of morphological leukemia clearance among
all patients, 43.2 percent versus 40.0 percent, and the advantage was
most apparent in poor[dash]risk patients, 78.7 percent versus 44.4
percent, as defined by the European Prognostic Index (EPI). In the
subset analysis of this EPI poor[dash]risk patient subset, the
applicant stated there was a significant improvement in survival rate
(6.6 versus 4.2 months median, hazard ratio=0.55, p=0.02) and improved
response rate (39.3 percent versus 27 percent). The applicant also
noted the following: the safety profile for the use of
VYXEOS^TM was qualitatively similar to that of control
``salvage'' therapy, with nearly identical 60-day mortality rates (14.8
percent versus 15.9 percent); among VYXEOS^TM treated
patients, those with no history of prior HSCT (n=59) had higher
response rates (54.2 percent versus 37.8 percent) and lower 60-day
mortality (10.2 percent versus 16.2 percent); overall, the use of
VYXEOS^TM had acceptable safety based on 60-day mortality
data, with somewhat higher frequency of neutropenia and
thrombocytopenia-related grade III-IV adverse events. Even though these
patients are younger (18 to 65 years old) than the population studied
in Phase III Study 301 (60 years old and older), Study 205 patients
were at a later stage of the disease and almost all had responded to
first-line therapy (cytarabine + anthracycline) and had relapsed. The
applicant also cited Cortes, et al. 2015,\85\ which reported that
patients who have been diagnosed with first relapse AML have limited
likelihood of response and short expected survival following
``salvage'' treatment with the results from literature showing that:
---------------------------------------------------------------------------

\84\ Cortes, J., et al., ``Significance of prior HSCT on the
outcome of salvage therapy with CPX-351 or conventional chemotherapy
among first relapse AML patients.'' Abstract and poster presented at
ASH 2011.
\85\ Cortes, J., et al., (2015), ``Phase II, multicenter,
randomized trial of CPX-351 (cytarabine:daunorubicin) liposome
injection versus intensive salvage therapy in adults with first
relapse AML,'' Cancer, January 2015, pp. 234-42.
---------------------------------------------------------------------------

Mitoxantrone, etoposide, and cytarabine induced response
in 23 percent of patients, with median overall survival of only 2
months.
Modulation of deoxycitidine kinase by fludarabine led to
the combination of fludarabine and cytarabine, resulting in a 36
percent CR rate with median remission duration of 39 weeks.
First salvage gemtuzumab ozogamicin induced CR+CRp (or
CR+CRi) response in 30 percent of patients with CD33+ AML and, for
patients with short first CR durations, appeared to be superior to
cytarabine-based therapy.
The applicant noted that Study 205 results showed the use of
VYXEOS^TM retained greater anti-leukemic efficacy in patients
who have been diagnosed with poor[dash]risk first relapse AML, and
produced higher morphological leukemia clearance rates (78.7 percent)
compared to conventional ``salvage'' therapy (44 percent). The
applicant further noted that, overall, the use of VYXEOS^TM
had acceptable safety profile in this patient population based on 60-
day mortality data.
Based on all of the data presented above, the applicant concluded
that VYXEOS^TM represents a substantial clinical improvement
over existing technologies. However, we are concerned that, although
there was an improvement in a number of outcomes in Phase III Study
301, specifically overall survival rate, lower risk of early death,
improved response rates, better outcomes following transplant,
increased response rate and overall survival in patients diagnosed with
FLT3 mutation, and higher response rates versus conventional
``salvage'' chemotherapy in younger patients diagnosed with
poor[dash]risk first relapse, the improved outcomes may not be
statistically significant. Furthermore, we are concerned that the
overall improvement in survival from 5.95 months to 9.56 months may not
represent a substantial clinical improvement. In addition, the rate of
adverse events in both treatment arms of Study 205, given the
theoretical benefit of reduced toxicity with the liposomal formulation,
was similar for both the VYXEOS^TM and ``7+3'' free drug
treatment groups. Therefore, we also are concerned that there is a
similar rate of adverse events, such as febrile neutropenia (68 percent
versus 71 percent), pneumonia (20 percent versus 15 percent), and
hypoxia (13 percent versus 15 percent), with the use of
VYXEOS^TM as compared with the conventional ``7+3'' free drug
regimen.
We are inviting public comments on whether VYXEOS^TM
meets the substantial clinical improvement criterion.
Below we summarize and respond to a written public comment we
received regarding the VYXEOS^TM during the open comment
period in response to the New Technology Town Hall meeting notice
published in the Federal Register.
Comment: The applicant provided a written comment to provide
notification of the addition of VYXEOS^TM to the Category 1
Clinical Practice Guidelines in Oncology recommendation by the National
Comprehensive Cancer Network. The applicant reported that the resources
made available by NCCN are the NCCN Clinical Practice Guidelines in
Oncology (NCCN Guidelines[reg]). The intent of the guidelines is to
assist in the decision-making process of individuals involved in cancer
treatment and care. According to the NCCN Guidelines[reg], Category 1
clinical practices are based upon high[dash]level evidence, and there
is uniform NCCN consensus that the intervention is appropriate. The
February 7, 2018 NCCN Guidelines[reg] for Acute Myeloid Leukemia
include a recommendation for cytarabine and daunorubicin for the
treatment of adult patients 60 years of age or older who have been
newly diagnosed with therapy-related AML (t-AML) or AML with
myelodysplasia-related changes

[[Page 20300]]

(AML-RMC) to be included as a Category 1 clinical practice.\86\
---------------------------------------------------------------------------

\86\ NCCN Clinical Practice Guidelines in Oncology (NCCN
Guidelines[reg]), Acute Myeloid Leukemia, Version I--2018, February
7, 2018, https://www.nccn.org/professionals/physician_gls/pdf/aml.pdf.
---------------------------------------------------------------------------

Response: We appreciate the applicant's submission of additional
information. We will take these comments into consideration when
deciding whether to approve new technology add-on payments for
VYXEOS^TM for FY 2019.
c. VABOMERE^TM (Meropenem-Vaborbactam)
Melinta Therapeutics, Inc., submitted an application for new
technology add-on payments for VABOMERE^TM for FY 2019.
VABOMERE^TM is indicated for use in the treatment of adult
patients who have been diagnosed with complicated urinary tract
infections (cUTIs), including pyelonephritis, caused by specific
bacteria. VABOMERE^TM received FDA approval on August 29,
2017.
Complicated urinary tract infections (cUTIs) are defined as chills,
rigors, or fever (temperature of greater than or equal to 38.0[deg]C);
elevated white blood cell count (greater than 10,000/mm\3\), or left
shift (greater than 15 percent immature PMNs); nausea or vomiting;
dysuria, increased urinary frequency, or urinary urgency; lower
abdominal pain or pelvic pain. Acute pyelonephritis is defined as
chills, rigors, or fever (temperature of greater than or equal to
38.0[deg]C); elevated white blood cell count (greater than 10,000/
mm\3\), or left shift (greater than 15 percent immature PMNs); nausea
or vomiting; dysuria, increased urinary frequency, or urinary urgency;
flank pain; costo[dash]vertebral angle tenderness on physical
examination. Risk factors for infection with drug-resistant organisms
do not, on their own, indicate a cUTI.\87\ The increasing incidence of
multidrug-resistant gram-negative bacteria, such as carbapenem-
resistant Enterobacteriacea (CRE), has resulted in a critical need for
new antimicrobials.
---------------------------------------------------------------------------

\87\ Hooton, T. and Kalpana, G., 2018, ``Acute complicated
urinary tract infection (including pyelonephritis) in adults,'' In
A. Bloom (Ed.), UpToDate. Available at: https://www.uptodate.com/contents/acute-complicated-urinary-tract-infection-including-pyelonephritis-in-adults.
---------------------------------------------------------------------------

The applicant reported that it has developed a beta-lactamase
combination antibiotic, VABOMERE^TM, to treat cUTIs,
including those caused by certain carbapenem[dash]resistant organisms.
By combining the carbapenem class antibiotic meropenem with
vaborbactam, VABOMERE^TM protects meropenem from degradation
by certain CRE strains.
The applicant stated that meropenem, a carbapenem, is a broad
spectrum beta[dash]lactam antibiotic that works by inhibiting cell wall
synthesis of both gram-positive and gram-negative bacteria through
binding of penicillin-binding proteins (PBP). Carbapenemase producing
strains of bacteria have become more resistant to beta-lactam
antibiotics, such as meropenem. However, meropenem in combination with
vaborbactam, inhibits the carbapenemase activity, thereby allowing the
meropenem to bind PBP and kill the bacteria.
According to the applicant, vaborbactam, a boronic acid inhibitor,
is a first-in class beta-lactamase inhibitor. Vaborbactam blocks the
breakdown of carbapenems, such as meropenem, by bacteria containing
carbapenemases. Although vaborbactam has no antibacterial properties,
it allows for the treatment of resistant infections by increasing
bacterial sensitivity to meropenem. New carbapenemase producing strains
of bacteria have become more resistant to beta-lactam antibiotics.
However, meropenem in combination with vaborbactam, can inhibit the
carbapenemase enzyme, thereby allowing the meropenem to bind PBP and
kill the bacteria. The applicant stated that the vaborbactem component
of VABOMERE^TM helps to protect the meropenem from
degradation by certain beta-lactamases, such as Klebsiella pneumonia
carbapenemase (KPC). According to the applicant, VABOMERE^TM
is the first of a novel class of beta[dash]lactamase inhibitors. The
applicant asserted that VABOMERE^TM's use of vaborbactam to
restore the efficacy of meropenem is a novel approach to fighting
antimicrobial resistance.
The applicant stated that VABOMERE^TM is indicated for
use in the treatment of adult patients 18 years old and older who have
been diagnosed with cUTIs, including pyelonephritis. The recommended
dosage of VABOMERE^TM is 4 grams (2 grams of meropenem and 2
grams of vaborbactam) administered every 8 hours by intravenous (IV)
infusion over 3 hours with an estimated glomerular filtration rate
(eGFR) greater than or equal to 50 mL/min/1.73 m\2\. The recommended
dosage of VABOMERE^TM for patients with varying degrees of
renal function is included in the prescribing information. The duration
of treatment is for up to 14 days.
As discussed earlier, if a technology meets all three of the
substantial similarity criteria, it would be considered substantially
similar to an existing technology and would not be considered ``new''
for purposes of new technology add-on payments.
With regard to the first criterion, whether a product uses the same
or a similar mechanism of action to achieve a therapeutic outcome,
according to the applicant, VABOMERE^TM is designed primarily
for the treatment of gram-negative bacteria that are resistant to other
current antibiotic therapies. The applicant stated that
VABOMERE^TM does not use the same or similar mechanism of
action to achieve a therapeutic outcome. The applicant asserted that
the vaborbactam component of VABOMERE^TM is a new class of
beta-lactamase inhibitor that protects meropenem from degradation by
certain enzymes such as carbapenamases. The applicant indicated that
the structure of vaborbactam is distinctly optimized for inhibition of
serine carbapenamases and for combination with a carbapenem antibiotic.
Beta-lactamase inhibitors are agents that inhibit bacterial enzymes--
enzymes that destroy beta-lactam antibiotics and result in resistance
to first[dash]line as well as ``last defense'' antimicrobials used in
hospitals. According to the applicant, in order for carbapenems to be
effective these enzymes must be inhibited. The applicant stated that
the addition of vaborbactam as a potent inhibitor against Class A and C
serine beta-lactamases, particularly KPC, represents a new mechanism of
action. According to the applicant, VABOMERE^TM's use of
vaborbactam to restore the efficacy of meropenem is a novel approach
and that the FDA's approval of VABOMERE^TM for the treatment
of cUTIs represents a significant label expansion because mereopenem
alone (without the addition of vaborbactam) is not indicated for the
treatment of patients with cUTI infections. Therefore, the applicant
maintained that this technology and resistance-fighting mechanism
involved in the therapeutic effect achieved by VABOMERE^TM is
distinct from any other existing product. The applicant noted that
VABOMERE^TM was designated as a qualified infectious disease
product (QIDP) in January 2014. This designation is given to
antibacterial products that treat serious or life[dash]threatening
infections under the Generating Antibiotic Incentives Now (GAIN) title
of the FDA Safety and Innovation Act.
We believe that, although the molecular structure of the
vaborbactam component of VABOMERE^TM is unique, the
bactericidal action of VABOMERE^TM is the same as meropenem
alone. In

[[Page 20301]]

addition, we note that there are other similar beta-lactam/beta-
lactamase inhibitor combination therapies currently available as
treatment options. We are inviting public comments on whether
VABOMERE^TM's mechanism of action is similar to other
existing technologies.
With respect to the second criterion, whether a product is assigned
to the same or a different MS-DRG, the applicant asserted that patients
who may be eligible to receive treatment involving
VABOMERE^TM include hospitalized patients who have been
diagnosed with a cUTI. These potential cases can be identified by a
variety of ICD-10-CM diagnosis codes. Therefore, potential cases
representing patients who have been diagnosed with a cUTI who may be
eligible for treatment involving VABOMERE^TM can be mapped to
multiple MS-DRGs. The following are the most commonly used MS-DRGs for
patients who have been diagnosed with a cUTI: MS-DRG 690 (Kidney and
Urinary Tract Infections without MCC); MS-DRG 853 (Infectious and
Parasitic Diseases with O.R. Procedure with MCC); MS-DRG 870
(Septicemia or Sever Sepsis with Mechanical Ventilation 96+ Hours); MS-
DRG 871 (Septicemia or Severe Sepsis without Mechanical Ventilation 96+
Hours with MCC); and MS-DRG 872 (Septicemia or Severe Sepsis without
Mechanical Ventilation 96+ Hours without MCC). Potential cases
representing patients who may be eligible for treatment with
VABOMERE^TM would be assigned to the same MS-DRGs as cases
representing hospitalized patients who have been diagnosed with a cUTI.
With respect to the third criterion, whether the use of the
technology involves the treatment of the same or similar type of
disease and the same or similar patient population, the applicant
asserted that the use of VABOMERE^TM would treat a different
patient population than existing and currently available treatment
options. According to the applicant, VABOMERE^TM's use of
vaborbactam to restore the efficacy of meropenem is a novel approach to
fighting the global and national public health crisis of antimicrobial
resistance, and as such, the use of VABOMERE^TM reaches
different and expanded patient populations. The applicant further
asserted that future patient populations are saved as well because the
growth of resistant infections is slowed. The applicant believed that,
because of the threat posed by gram-negative bacterial infections and
the limited number of available treatments currently on the market or
in development, the combination structure and development of
VABOMERE^TM and its potential expanded use is new. While the
applicant believes that VABOMERE^TM treats a different
patient population, we note that VABOMERE^TM is only approved
for use in the treatment of adult patients who have been diagnosed with
cUTIs. Therefore, it appears that VABOMERE^TM treats the same
population (adult patients with a cUTI) and there are already other
treatment options available for diagnoses of cUTIs.
We are concerned that VABOMERE^TM may be substantially
similar to existing beta[dash]lactam/beta-lactamase inhibitor
combination therapies. As noted above, we are concerned that
VABOMERE^TM may have a similar mechanism of action, treats
the same population (patients with a cUTI) and would be assigned to the
same MS-DRGs (similar to existing beta[dash]lactam/beta-lactamase
inhibitor combination therapies currently available as treatment
options). We are inviting public comments on whether
VABOMERE^TM meets the substantial similarity criteria and the
newness criterion.
With regard to the cost criterion, the applicant conducted the
following analysis to demonstrate that the technology meets the cost
criterion. In order to identify the range of MS-DRGs to which cases
representing potential patients who may be eligible for treatment using
VABOMERE^TM may map, the applicant used the Premier Research
Database from 2nd Quarter 2015 to 4th Quarter 2016. According to the
applicant, Premier is an electronic laboratory, pharmacy, and billing
data repository that collects data from over 600 hospitals and captures
nearly 20 percent of U.S. hospitalizations. The applicant's list of
most common MS-DRGs is based on data regarding CRE from the Premier
Research Database. According to the applicant, approximately 175 member
hospitals also submit microbiology data, which allowed the applicant to
identify specific pathogens such as CRE infections. Using the Premier
Research Database, the applicant identified over 350 MS-DRGs containing
data for 2,076 cases representing patients who had been hospitalized
for CRE infections. The applicant used the top five most common MS-
DRGs: MS-DRG 871 (Septicemia or Severe Sepsis without Mechanical
Ventilation >96 Hours with MCC), MS-DRG 853 (Infectious and Parasitic
Disease with O.R. Procedure with MCC), MS-DRG 870 (Septicemia or Severe
Sepsis with Mechanical Ventilation >96 Hours), MS-DRG 872 (Septicemia
or Severe Sepsis without Mechanical Ventilation >96 Hours without MCC),
and MS-DRG 690 (Kidney and Urinary Tract Infections without MCC), to
which 627 cases representing potential patients who may be eligible for
treatment involving VABOMERE^TM, or approximately 30.2
percent of the total cases identified, mapped.
The applicant reported that the resulting 627 cases from the
identified top 5 MS-DRGs have an average case-weighted unstandardized
charge per case of $74,815. We note that, instead of using actual
charges from the Premier Research Database, the applicant computed this
amount based on the average case-weighted threshold amounts in Table 10
from the FY 2018 IPPS/LTCH PPS final rule. For the rest of the
analysis, the applicant adjusted the average case-weighted threshold
amounts (referred to above as the average case[dash]weighted
unstandardized charge per case) rather than the actual average
case[dash]weighted unstandardized charge per case from the Premier
Research Database. According to the applicant, based on the Premier
data, $1,999 is the mean antibiotic costs of treating patients
hospitalized with CRE infections with current therapies. The applicant
explained that it identified 69 different regimens that ranged from 1
to 4 drugs from a study conducted to understand the current management
of patients diagnosed with CRE infections. Accordingly, the applicant
estimated the removal of charges for a prior technology of $1,999. The
applicant then standardized the charges. The applicant applied an
inflation factor of 9.357 percent from the FY 2018 IPPS/LTCH PPS final
rule (82 FR 38527) to inflate the charges. The applicant noted that it
does not yet have sufficient charge data from hospitals and will work
to supplement its application with the information once it is
available. However, for purposes of calculating charges, the applicant
used the average charge as the wholesale acquisition cost (WAC) price
for a treatment duration of 14 days and added this amount to the
average charge per case. Using this estimate, the applicant calculated
the final inflated case[dash]weighted standardized charge per case as
$91,304, which exceeds the average case[dash]weighted threshold amount
of $74,815. Therefore, the applicant asserted that
VABOMERE^TM meets the cost criterion.
We are concerned that, as noted earlier, instead of using actual
charges from the Premier Research Database, the applicant computed the
average case[dash]weighted unstandardized charge per case based on the
average case-weighted threshold amounts in Table 10

[[Page 20302]]

from the FY 2018 IPPS/LTCH PPS final rule. Because the applicant did
not demonstrate that the average case-weighted standardized charge per
case for VABOMERE^TM (using actual charges from the Premier
Research Database) would exceed the average case-weighted threshold
amounts in Table 10, we are unable to determine if the applicant meets
the cost criterion. We are inviting public comments on whether
VABOMERE^TM meets the cost criterion, including with respect
to the concern regarding the applicant's analysis.
With regard to the substantial clinical improvement criterion, the
applicant believed that the results from the VABOMERE^TM
clinical trials clearly establish that VABOMERE^TM represents
a substantial clinical improvement for treatment of deadly, antibiotic
resistant infections. Specifically, the applicant asserted that
VABOMERE^TM offers a treatment option for a patient
population unresponsive to, or ineligible for, currently available
treatments, and the use of VABOMERE^TM significantly improves
clinical outcomes for a patient population as compared to currently
available treatments. The applicant provided the results of the
Targeting Antibiotic Non-sensitive Gram-Negative Organisms (TANGO) I
and II clinical trials to support its assertion. TANGO[dash]I \88\ was
a prospective, randomized, double-blinded trial of
VABOMERE^TM versus piperacillin-tazobactam in patients with
cUTIs and acute pyelonephritis (A/P). TANGO[dash]I is also a
noninferiority (NI) trial powered to evaluate the efficacy, safety, and
tolerability of VABOMERE^TM compared to piperacillin-
tazobactam in the treatment of cUTI, including AP, in adult patients.
There were two primary endpoints for this study, one for the FDA, which
was cure or improvement and microbiologic outcome of eradication at the
end[dash]of[dash]treatment (EOT) (day 5 to 14) in the proportion of
patients in the Microbiologic Evaluable Modified Intent-to-Treat (m-
MITT) population who achieved overall success (clinical cure or
improvement and eradication of baseline pathogen to <104 CFU/mL), and
one for the European Medicines Agency (EMA), which was the proportion
of patients in the co-primary m-MITT and Microbiologic Evaluable (ME)
populations who achieve a microbiologic outcome of eradication
(eradication of baseline pathogen to <103 CFU/mL) at the
test[dash]of[dash]cure (TOC) visit (day 15 to 23). The trial enrolled
550 adult patients who were randomized 1:1 to receive
VABOMERE^TM as a 3-hour IV infusion every 8 hours, or
piperacillin 4g-tazobactam 500mg as a 30 minute IV infusion every 8
hours, for at least 5 days for the treatment of a cUTI. Therapy was set
at a minimum of 5 days to fully assess the efficacy and safety of
VABOMERE^TM. After a minimum of 5 days of IV therapy,
patients could be switched to oral levofloxacin (500 mg once every 24
hours) to complete a total of 10-day treatment course (IV + oral), if
they met pre-specified criteria. Treatment was allowed for up to 14
days, if clinically indicated.
---------------------------------------------------------------------------

\88\ Vabomere Prescribing Information, Clinical Studies (August
2017), available at: https://www.accessdata.fda.gov/drugsatfda_docs/label/2017/209776lbl.pdf.
---------------------------------------------------------------------------

Patient demographic and baseline characteristics were balanced
between treatment groups in the m-MITT population.
Approximately 93 percent of patients were Caucasian and 66
percent were females in both treatment groups.
The mean age was 54 years old with 32 percent and 42
percent of the patients 65 years old and older in the
VABOMERE^TM and piperacillin/tazobactam treatment groups,
respectively.
Mean body mass index was approximately 26.5 kg/m\2\ in
both treatment groups.
Concomitant bacteremia was identified in 12 (6 percent)
and 15 (8 percent) of the patients at baseline in the
VABOMERE^TM and piperacillin/tazobactam treatment groups,
respectively.
The proportion of patients who were diagnosed with
diabetes mellitus at baseline was 17 percent and 19 percent in the
VABOMERE^TM and piperacillin/tazobactam treatment groups,
respectively.
The majority of the patients (approximately 90 percent)
were enrolled from Europe, and approximately 2 percent of the patients
were enrolled from North America. Overall, in both treatment groups, 59
percent of the patients had pyelonephritis and 40 percent had a cUTI,
with 21 percent and 19 percent of the patients having a
non[dash]removable and removable source of infection, respectively.
Mean duration of IV treatment in both treatment groups was 8 days
and mean total treatment duration (IV and oral) was 10 days; patients
with baseline bacteremia could receive up to 14 days of therapy (IV and
oral). Approximately 10 percent of the patients in each treatment group
in the m-MITT population had a levofloxacin-resistant pathogen at
baseline and received levofloxacin as the oral switch therapy.
According to the applicant, this protocol violation may have impacted
the assessment of the outcomes at the TOC visit. These patients were
not excluded from the analysis of adverse reactions (headache,
phlebitis, nausea, diarrhea, and others) occurring in 1 percent or more
of the patients receiving VABOMERE^TM, as the decision to
switch to oral levofloxacin was based on post-randomization factors.
Regarding the FDA primary endpoint, the applicant stated the
following:
Overall success rate at the end of IV treatment (day 5 to
14) was 98.4 percent and 94 percent for the VABOMERE^TM and
piperacillin/tazobactam treatment groups, respectively.
The TOC--7 days post IV therapy was 76.5 percent (124 of
162 patients) for the VABOMERE^TM group and 73.2 percent (112
of 153 patients) for the piperacillin/tazobactam group.
Despite being an NI trial, TANGO-I showed a statistically
significant difference favoring VABOMERE^TM in the primary
efficacy endpoint over piperacillin/tazobactam (a commonly used agent
for gram-negative infections in U.S. hospitals).
VABOMERE^TM demonstrated statistical superiority
over piperacillin-tazobactam with overall success of 98.4 percent of
patients treated with VABOMERE^TM in the TANGO-I clinical
trial compared to 94.0 percent for patients treated with piperacillin/
tazobactam, with a treatment difference of 4.5 percent and 95 percent
CI of (0.7 percent, 9.1 percent).
Because the lower limit of the 95 percent CI is also
greater than 0 percent, VABOMERE^TM was statistically
superior to piperacillin/tazobactam.
Because non-inferiority was demonstrated, then superiority
was tested. Further, the applicant asserted that a noninferiority
design may have a ``superiority'' hypothesis imbedded within the study
design that is appropriately tested using a non[dash]inferiority design
and statistical analysis. As such, according to the applicant,
superiority trials concerning antibiotics are impractical and even
unethical in many cases because one cannot randomize patients to
receive inactive therapies. The applicant stated that it would be
unethical to leave a patient with a severe infection without any
treatment.
The EMA endpoint of eradication rates at TOC were higher
in the VABOMERE^TM group compared to the piperacillin/
tazobactam group in both the m-MITT (66.7 percent versus 57.7 percent)
and ME (66.3 percent and 60.4 percent) populations; however, it was

[[Page 20303]]

not a statistically significant improvement.
We note that the eradication rates of the EMA endpoint were not
statistically significant. We are inviting public comments with respect
to our concern as to whether the FDA endpoints demonstrating
noninferiority are statistically sufficient data to support that
VABOMERE^TM is a substantial clinical improvement in the
treatment of patients with a cUTI.
In TANGO-I the applicant offers data comparing
VABOMERE^TM to piperacillin-tazobactam EOT/TOC rates in the
setting of cUTIs/AP, but does not offer a comparison to other
antibiotic treatments of cUTIs known to be effective against gram-
negative uropathogens, specifically other carbapenems.\89\ We also note
that the study population is largely European (98 percent), and given
the variable geographic distribution of antibiotic resistance we are
concerned that the use of piperacillin/tazobactam as the comparator may
have skewed the eradication rates in favor of VABOMERE^TM, or
that the favorable results would not be applicable to patients in the
United States. We are inviting public comments regarding the lack of a
comparison to other antibiotic treatments of cUTIs known to be
effective against gram-negative uropathogens, whether the comparator
the applicant used in its trial studies may have skewed the eradication
rates in favor of VABOMERE^TM, and if the favorable results
would be applicable to patients in the United States to allow for
sufficient information in evaluating substantial clinical improvement.
---------------------------------------------------------------------------

\89\ Golan, Y., 2015, ``Empiric therapy for hospital-acquired,
Gram-negative complicated intra-abdominal infection and complicated
urinary tract infections: a systematic literature review of current
and emerging treatment options,'' BMC Infectious Diseases, vol. 15,
pp. 313. https://doi.org/10.1186/s12879-015-1054-1.
---------------------------------------------------------------------------

The applicant asserted that the TANGO[dash]II study \90\ of
monotherapy with VABOMERE^TM compared to best available
therapy (BAT) (salvage care of cocktails of toxic/poorly efficacious
last resort agents) for the treatment of CRE infections showed
important differences in clinical outcomes, including reduced
mortality, higher clinical cure at EOT and TOC, benefit in important
patient subgroups of HABP/VABP, bacteremia, renal impairment, and
immunocompromised and reduced AEs, particularly lower nephrotoxicity in
the study group. TANGO[dash]II is a multi[dash]center, randomized,
Phase III, open-label trial of patients with infections due to known or
suspected CRE, including cUTI, AP, HABP/VABP, bacteremia, or
complicated intra-abdominal infection (cIAI). Eligible patients were
randomized 2:1 to monotherapy with VABOMERE^TM or BAT for 7
to 14 days. There were no consensus BAT regimes, it could include
(alone or in combination) a carbapenem, aminoglycoside, polymyxin B,
colistin, tigecycline or ceftazidime-avibactam.
---------------------------------------------------------------------------

\90\ Alexander, et al., ``CRE Infections: Results From a
Retrospective Series and Implications for the Design of Prospective
Clinical Trials,'' Open Forum Infectious Diseases.
---------------------------------------------------------------------------

A total of 72 patients were enrolled in the TANGO[dash]II trial. Of
these, 50 of the patients (69.4 percent) had a gram-negative baseline
organism (m-MITT population), and 43 of the patients (59.7 percent) had
a baseline CRE (mCRE-MITT population). Within the mCRE-MITT population,
20 of the patients had bacteremia, 15 of the patients had a cUTI/AP, 5
of the patients had HABP/VABP, and 3 of the patients had a cIAI. The
most common baseline CRE pathogens were K. pneumoniae (86 percent) and
Escherichia coli (7 percent). Cure rates of the mCRE-MITT population at
EOT for VABOMERE^TM and BAT groups were 64.3 percent and 40
percent, respectively, TOC, 7 days after EOT, were 57.1 percent and
26.7 percent, respectively, 28-day mortality was 17.9 percent (5 of 28
patients) and 33.3 percent (5 of 15 patients), respectively. The
applicant asserted that with further sensitivity analysis, taking into
account prior antibiotic failures among the VABOMERE^TM study
arm, the 28[dash]day all-cause mortality rates were even lower among
VABOMERE^TM versus BAT patients (5.3 percent (1 of 19
patients) versus 33.3 percent (5 of 15 patients)). Additionally, in
July 2017, randomization in the trial was stopped early following a
recommendation by the TANGO[dash]II Data Safety Monitoring Board (DSMB)
based on risk-benefit considerations that randomization of additional
patients to the BAT comparator arm should not continue.
According to the applicant, subgroup analyses of the TANGO[dash]II
studies include an analysis of adverse events in which
VABOMERE^TM compared to BAT demonstrated the following:
VABOMERE^TM was associated with less severe
treatment emergent adverse events of 13.3 percent versus 28 percent.
VABOMERE^TM was less likely to be associated
with a significant increase in creatinine 3 percent versus 26 percent.
Efficacy results of the TANGO[dash]II trial cUTI/AP
subgroup demonstrated VABOMERE^TM was associated with an
overall success rate at EOT for the mCRE-MITT populations of 72 percent
(8 of 11 patients) versus 50 percent (2 of 4 patients) and an overall
success rate at TOC of 27.3 percent (3 of 7 patients) versus 50 percent
(2 of 4 patients).
We note that many of the TANGO[dash]II trial outcomes showing
improvements in the use of VABOMERE^TM over BAT are not
statistically significant. We also note that the TANGO[dash]II study
included a small number of patients; the study population in the
mCRE[dash]MITT only included 43 patients. Additionally, the cUTI/AP
subgroup analysis only included a total of 15 patients and did not show
an increased overall success rate at TOC (27.3 percent versus 50
percent) over the BAT group. We are inviting public comments with
respect to our concern as to whether the lack of statistically
significant outcomes and the small number of study participants allows
for enough information to evaluate substantial clinical improvement.
We are inviting public comments on whether the
VABOMERE^TM technology meets the substantial clinical
improvement criterion, including with respect to the specific concerns
we have raised.
Below we summarize and respond to written public comments we
received regarding VABOMERE^TM during the open comment period
in response to the New Technology Town Hall meeting notice published in
the Federal Register.
Comment: The applicant submitted information regarding the
comparison of VABOMERE^TM to other antibiotic treatments for
a cUTI known to be effective against gram[dash]negative uropathogens.
The applicant asserted that doripenem is a carbapenem antibiotic and,
therefore, is subject to degradation and inactivation by
carbapenemases, including the Klebsiella pneumoniae carbapenemase
(KPC). The applicant stated that doripenem has been shown to have poor
activity in vitro against CRE and VABOMERE^TM, in contrast,
takes a novel, first in class beta-lactamase inhibitor, vaborbactam,
and combines it with the carbapenem drug meropenem in a manner that--
because of the unique, novel, and new properties of vaborbactam when
combined with meropenem to create VABOMERE^TM--to effectively
restore the effectiveness of meropenem (a carbapenem) in fighting
against carbapenem-resistant bacteria. The applicant indicated that
extensive in vitro studies have been conducted and show that
carbapenems such as doripenem have poor activity in vitro against KPC-
producing CRE. Because the in vitro data show that doripenem has poor
activity against KPC-producing CRE, the applicant stated that no
comparative clinical efficacy data

[[Page 20304]]

between doripenem and VABOMERE^TM exists.
Response: We appreciate the applicant's comments. However, we
believe that because the study population for VABOMERE^TM is
patients with cUTIs and not UTIs with KPCs, we are concerned that the
applicant does not offer comparison data to other antibiotic treatments
of cUTIs known to be effective against gram[dash]negative uropathogens.
As noted, we are inviting public comments on whether the
VABOMERE^TM technology meets the substantial clinical
improvement criterion, including with respect to the specific concerns
we have raised.
d. DURAGRAFT[reg] Vascular Conduit Solution
Somahlution, Inc. submitted an application for new technology add-
on payments for DURAGRAFT[reg] for FY 2019. DURAGRAFT[reg] is designed
to protect the endothelium of the vein graft following harvesting and
prior to grafting to prevent vascular graft disease (VGD) and vein
graft failure (VGF), and to reduce the clinical complications
associated with graft failure. These complications include myocardial
infarction and repeat revascularization. DURAGRAFT[reg] is formulated
into a solution that is used during standard graft handling, flushing,
and bathing steps.
VGD is the principal cause of both early (within 30 days) and
intermediate/late (months to years) VGF. The principal mediator of VGD
following grafting in bypass surgeries is damage that occurs during
intra-operative vascular graft harvesting and handling.^{91 92}
Endothelium can be destroyed or damaged intraoperatively through the
acute physical stress of harvesting, storage, and handling, and through
more insidious processes such as those associated with ischemic injury,
metabolic stress and oxidative damage. According to the applicant, more
recently, it has been demonstrated that damage associated with graft
storage solution has the highest correlation with the development of
12-month VGF.^{93 94} This is likely due not only to the active
tissue damage associated with commonly used storage solutions, but also
to their inability to protect against ischemic
injury.^{95 96 97} VGD encompasses the pathophysiological
changes that occur in damaged vein grafts following their use in
surgical grafting. These changes, apparent within minutes to hours of
grafting, are manifested as endothelial dysfunction, death and/or
denudation and include pro-inflammatory, pro-thrombogenic and
proliferative changes within the graft. These initial responses to
damage cause even more damage in a domino-like effect, thereby
perpetuating the response-damage cycle that is the basis of VGD
progression.
---------------------------------------------------------------------------

\91\ Harskamp, Ralf E., MD, Alexander, John H., MD, MHS,
Schulte, Phillip J., Phd, et al., ``Vein Graft Preservation
Solutions, Patency, and Outcomes After Coronary Artery Bypass Graft
Surgery: follow-up from the PREVENT IV randomized clinical trial'',
Jama Surg, 2014, vol. 149(8), pp. 798-805.
\92\ Testa, L., Bedogni, F., ``Treatment of Saphenous Vein Graft
Disease: `Never Ending Story' of the Eternal Return,'' Res
Cardiovasc Med, 2014, vol. 3(3), pp. e21092.
\93\ Ibid.
\94\ Ibid.
\95\ Weiss, D.R., Juchem, G., Kemkes, B.M., et al., ``Extensive
deendothelialization and thrombogenicity in routinely prepared vein
grafts for coronary bypass operations: facts and remedy,'' Century
Publishing Corporation, International Journal of Clinical
Experimental Medicine, 2009 May 28, vol. 2(2), pp. 95-113.
\96\ Wilbring, M., Tugtekin, S.M., Zatschler, B., et al., ``Even
short-time storage in physiological saline solution impairs
endothelial vascular function of saphenous vein grafts,'' Elsevier
Science Inc., European Journal of Cardio-Thoracic Surgery, 2011 Oct,
vol. 40(4), pp. 811-815.
\97\ Thatte, H.S., Biswas, K.S., Najjar, S.F., et al., ``Multi-
photon microscopic evaluation of saphenous vein endothelium and its
preservation with a new solution,'' GALA, Elsevier Science Inc., Ann
Thorac Surg, 2003 Apr, vol. 75(4), pp. 1145-1152.
---------------------------------------------------------------------------

The applicant further noted that endothelial dysfunction and
inflammation also result in the diminished ability of the graft to
respond appropriately to new blood flow patterns and adaptive positive
remodeling may be thwarted. This is because proper remodeling is
dependent upon a functional endothelial response to shear stress that
involves the production of remodeling factors by the endothelium
including nitro vasodilators, prostaglandins, lipoxyoxygenases,
hyperpolarizing factors and other growth factors. Therefore, damaged,
missing and/or dysfunctional endothelial cells prevent, to varying
extents, graft adaption which makes the graft susceptible to shear-
mediated endothelial damage. The collective damage results in intimal
hyperplasia or graft wall thickening that is the basis for atheroma
development and subsequent lumen narrowing and graft failure, which is
the end state of VGD. The applicant pointed to several references to
highlight pathologic changes leading to VGD, occlusion and loss of
vasomotor function.^{98 99 100 101 102 103 104 105} The
applicant summarized, that when the damaged luminal surface of a vein
graft is presented to the bloodstream at time of reperfusion, a
domino[dash]effect of further damage is triggered through inflammatory,
thrombogenic and aberrant hyper-proliferative processes that lead to
both early and late VGF. Presenting an intact functional endothelial
layer at the time of grafting is, therefore, tantamount to protecting
the graft and its associated endothelium from damage that occurs post-
grafting, in turn conferring protection against graft failure. Given
the low success rate of failed graft intervention, addressing graft
endothelial protection at the time of surgery is critical.\106\
---------------------------------------------------------------------------

\98\ Verrier, E.D., Boyle, E.M., ``Endothelial cell injury in
cardiovascular surgery: an overview,'' Ann Thorac Surg, 1997, vol.
64, pp. S2-S8.
\99\ Harskamp, R.E., Lopes, R.D., Baisden, C.E., et al.,
``Saphenous vein graft failure after coronary artery bypass surgery:
pathophysiology, management, and future directions,'' Ann Thorac
Surg., 2013 May, vol. 257(5), pp. 824-33.
\100\ Hess, C.N., Lopes, R.D., Gibson, C.M., et al., ``Saphenous
vein graft failure after coronary artery bypass surgery: insights
from PREVENT IV,'' Circulation 2014 Oct 21, vol. 130(17), pp. 1445-
51.
\101\ Sellke, F.W., Boyle, E.M., Verrier, E.D., ``The
pathophysiology of vasomotor dysfunction,'' Ann Thorac Surg, 1997,
vol. 64, pp. S9-S15.
\102\ Motwani, J.G., Topol, E.J., ``Aortocoronary saphenous vein
graft disease: pathogenesis, predisposition and prevention,''
Circulation 1998, vol. 97(9), pp. 916-31.
\103\ Mills, N.L., Everson, C.T., ``Vein graft failure,'' Curr
Opin Cardiol, 1995, vol. 10, pp. 562-8.
\104\ Davies, M.G., Hagen, P.O., ``Pathophysiology of vein graft
failure: a review,'' Eur J Vasc Endovasc Surg, 1995, vol. 9, pp. 7-
18.
\105\ Edmunds, L.H., ``Techniques of myocardial
revascularization. In: Edmunds LH, ed. Cardiac surgery in the
adult,'' New York: McGraw-Hill, 1997, pp. 481-534.
\106\ Kim, F.Y., Marhefka, G., Ruggiero, N.J., et al.,
``Saphenous vein graft disease: review of pathophysiology,
prevention, and treatment,'' Cardiol, Rev 2013, vol. 21(2), pp. 101-
9.
---------------------------------------------------------------------------

With respect to the newness criterion, DURAGRAFT[reg] has not
received FDA approval at the time of the development of this proposed
rule. The applicant indicated that it anticipates FDA approval of its
premarket application by the second quarter of 2018. The applicant also
indicated that ICD-10-PCS code XY0VX83 (Extracorporeal introduction of
endothelial damage inhibitor to vein graft, new technology group 3)
would identify procedures involving the use of the DURAGRAFT[reg]
technology.
As discussed earlier, if a technology meets all three of the
substantial similarity criteria, it would be considered substantially
similar to an existing technology and would not be considered ``new''
for purposes of new technology add-on payments.
With regard to the first criterion, whether a product uses the same
or similar mechanism of action to achieve a therapeutic outcome,
according to the applicant, there are currently no other treatment
options available with the

[[Page 20305]]

same mechanism of action as that of DURAGRAFT[reg]. Moreover, the
applicant conveyed there are currently no commercial solutions approved
for treating arteries or veins intended for bypass surgery. The
applicant explained that the DURAGRAFT[reg] treatment has been
formulated into a solution so that it can be used to treat grafts
during handling, flushing, and bathing steps without changing surgical
practice to perform the treatment. According to the applicant,
DURAGRAFT[reg] is specifically designed to inhibit endothelial cell
damage and death, as well as prevent damage to other cells of the
vascular conduit, which achieves a superior clinical outcome in
coronary artery bypass grafting (CABG).
The applicant did not directly address within its application the
second and third criteria; whether a product is assigned to the same or
a different MS-DRG and whether the new use of the technology involves
the treatment of the same or similar type of disease and the same or
similar patient population. However, the applicant stated, as
previously indicated, that there are currently no other treatment
options available that utilize the same mechanism of action as that of
the DURAGRAFT[reg].
Based on the applicant's statements presented above, we are
concerned that the mechanism of action of the DURAGRAFT[reg] may be the
same or similar to other vein graft storage solutions. We also are
concerned with the lack of information regarding how the technology
meets the substantial similarity criteria. Specifically, we understand
that there are other vein graft storage solutions available, such as
various saline, blood, and electrolyte solutions. We believe that
additional information would be helpful regarding whether the use of
the technology treats the same or similar patient population or type of
disease, and whether the product is assigned to the same or different
MS-DRG as compared to the other storage solutions. We are inviting
public comments on whether DURAGRAFT[reg] meets the substantial
similarity criteria and the newness criterion.
With regard to the cost criterion, the applicant conducted the
following analysis to demonstrate that the technology meets the cost
criterion. In order to identify the range of MS-DRGs that cases
representing potential patients who may be eligible for treatment using
DURAGRAFT[reg] may map to, the applicant identified all MS-DRGs for
patients who underwent coronary artery bypass grafting (CABG).
Specifically, the applicant searched the FY 2016 MedPAR file for claims
that included IPPS patients and identified potential cases by the
following ICD-10-PCS procedure codes:

------------------------------------------------------------------------
ICD-10-PCS procedure code Code title
------------------------------------------------------------------------
021009W................... Bypass coronary artery, one artery from
aorta with autologous venous tissue, open
approach.
02100AW................... Bypass coronary artery, one artery from
aorta with autologous arterial tissue, open
approach.
021049W................... Drainage of intracranial subdural space,
percutaneous approach
02104AW................... Bypass cerebral ventricle to cerebral
cisterns, percutaneous approach.
021109W................... Bypass coronary artery, two arteries from
aorta with autologous venous tissue, open
approach.
02110AW................... Bypass coronary artery, two arteries from
aorta with autologous arterial tissue, open
approach.
021149W................... Bypass coronary artery, two arteries from
aorta with autologous venous tissue,
percutaneous endoscopic approach.
02114AW................... Bypass coronary artery, two arteries from
aorta with autologous arterial tissue,
percutaneous endoscopic approach.
021209W................... Bypass coronary artery, three arteries from
aorta with autologous venous tissue, open
approach.
02120AW................... Bypass coronary artery, three arteries from
aorta with autologous arterial tissue, open
approach.
021249W................... Bypass coronary artery, three arteries from
aorta with autologous venous tissue,
percutaneous endoscopic approach.
02124AW................... Bypass coronary artery, three arteries from
aorta with autologous arterial tissue,
percutaneous endoscopic approach.
021309W................... Bypass coronary artery, four or more
arteries from aorta with autologous venous
tissue, open approach.
02130AW................... Bypass coronary artery, four or more
arteries from aorta with autologous
arterial tissue, open approach.
021349W................... Bypass coronary artery, four or more
arteries from aorta with autologous venous
tissue, percutaneous endoscopic approach.
02134AW................... Bypass coronary artery, four or more
arteries from aorta with autologous
arterial tissue, percutaneous endoscopic
approach.
------------------------------------------------------------------------

This resulted in potential cases spanning 98 MS-DRGs, with
approximately 93 percent of all potential cases, 59,139, mapping to the
following 10 MS-DRGs:

------------------------------------------------------------------------
MS-DRG MS-DRG title
------------------------------------------------------------------------
MS-DRG 3................. Extracorporeal Membrane Oxygenation (ECMO) or
Tracheostomy with Mechanical Ventilation 96+
Hours or Principal Diagnosis Except Face,
Mouth & Neck with Major Operating Room.
MS-DRG 216............... Cardiac Valve and Other Major Cardiothoracic
Procedure with Cardiac Catheterization with
MCC.
MS-DRG 219............... Cardiac Valve and Other Major Cardiothoracic
Procedure without Cardiac Catheterization
with MCC.
MS-DRG 220............... Cardiac Valve and Other Major Cardiothoracic
Procedure without Cardiac Catheterization
with CC.
MS-DRG 228............... Other Cardiothoracic Procedures with MCC.
MS-DRG 229............... Other Cardiothoracic Procedures without CC.
MS-DRG 233............... Coronary Bypass with Cardiac Catheterization
with MCC.
MS-DRG 234............... Coronary Bypass with Cardiac Catheterization
without MCC.
MS-DRG 235............... Coronary Bypass without Cardiac
Catheterization with MCC.
MS-DRG 236............... Coronary Bypass without Cardiac
Catheterization without MCC.
------------------------------------------------------------------------

Using the 59,139 identified cases, the average case-weighted
unstandardized charge per case was $200,886. The applicant then
standardized the charges. The applicant did not remove charges for any
current treatment because, as

[[Page 20306]]

discussed above, the applicant indicated there are no other current
treatment options available. The applicant noted that it did not
provide an inflation factor to project future charges. The applicant
added charges for the DURAGRAFT[reg] technology. This charge was
created by applying the national average CCR for implantable devices of
0.332 from the FY 2018 IPPS/LTCH PPS final rule (82 FR 38103) to the
cost of the device. According to the applicant, no further charges or
related charges were added. Based on the FY 2018 IPPS/LTCH PPS Table 10
thresholds, the average case-weighted threshold amount was $164,620.
The final average case-weighted standardized charge per case was
$185,575. Because the final average case-weighted standardized charge
per case exceeds the average case-weighted threshold amount, the
applicant maintained that the technology meets the cost criterion. We
are inviting public comments on whether DURAGRAFT[reg] meets the cost
criterion.
With respect to the substantial clinical improvement criterion, the
applicant asserted that the substitutional use of DURAGRAFT[reg]
significantly reduces clinical complications associated with VGF
following CABG surgery.
According to the applicant, DURAGRAFT[reg] provides a benefit by
protecting vascular grafts and their fragile luminal endothelial layer
from the point of harvest until the point of grafting; an
intra[dash]operative ischemic interval lasting from about 10 minutes to
3 hours depending on the complexity of the surgery. According to the
applicant, there are currently no products available to protect
vascular grafts during this time interval. The current standard
practice is to place grafts in heparinized saline or heparinized
autologous blood to keep them wet; a practice which has been shown to
cause significant damage to the graft within minutes, and which has
been shown to clinically and statistically correlate with the
development of 12-month VGF.^{107 108 109 110} Therefore,
neglecting to protect the endothelial layer prior to implantation can
have long-term consequences.
---------------------------------------------------------------------------

\107\ Harskamp, Ralf E., MD, Alexander, John H., MD, MHS,
Schulte, Phillip J., Phd, et al., ``Vein Graft Preservation
Solutions, Patency, and Outcomes After Coronary Artery Bypass Graft
Surgery: follow-up from the PREVENT IV randomized clinical trial'',
Jama Surg, 2014, vol. 149(8), pp. 798-805.
\108\ Weiss, D.R., Juchem, G., Kemkes, B.M., et al., ``Extensive
deendothelialization and thrombogenicity in routinely prepared vein
grafts for coronary bypass operations: facts and remedy,'' Century
Publishing Corporation, International Journal of Clinical
Experimental Medicine, 2009 May 28, vol. 2(2), pp. 95-113.
\109\ Wilbring, M., Tugtekin, S.M., Zatschler, B., et al.,
``Even short-time storage in physiological saline solution impairs
endothelial vascular function of saphenous vein grafts,'' Elsevier
Science Inc., European Journal of Cardio-Thoracic Surgery, 2011 Oct,
vol. 40(4), pp. 811-815.
\110\ Thatte, H.S., Biswas, K.S., Najjar, S.F., et al., ``Multi-
photon microscopic evaluation of saphenous vein endothelium and its
preservation with a new solution,'' GALA, Elsevier Science Inc., Ann
Thorac Surg, 2003 Apr, vol. 75(4), pp. 1145-1152.
---------------------------------------------------------------------------

When a damaged luminal surface (endothelium) of a vascular graft is
presented to the bloodstream at the time of reperfusion, a
domino[dash]effect of further damage is triggered in vivo through
inflammatory, thrombogenic, and aberrant adaptive responses including
hyper-proliferative processes that lead to VGF. These pathophysiologic
responses occur within minutes of reperfusion of a graft that has
received sub-optimal treatment/handling initiating a cascade of
exacerbating damage that can continue for years later. Presenting an
intact functional endothelial layer at the time of grafting is,
therefore, tantamount to protecting the graft from damage that occurs
post-grafting, in turn conferring protection against graft failure.
Given the low success rate of failed graft intervention addressing the
graft, endothelial protection at the time of surgery is critical.\111\
---------------------------------------------------------------------------

\111\ Kim, F.Y., Marhefka, G., Ruggiero, N.J., et al.,
``Saphenous vein graft disease: review of pathophysiology,
prevention, and treatment,'' Cardiol Rev 2013, vol. 21(2), pp. 101-
9.
---------------------------------------------------------------------------

The combined PREVENT IV sub-analyses of Hess and Harskamp
demonstrate that from dozens of factors evaluated for impact on the
development of 12-month VGF, exposure to solutions used for
intra[dash]operative graft wetting and storage have the largest
correlation with the development of VGF.^{112, 113} Short-term
exposure of free vascular grafts to these solutions is routine in CABG
operations, where 10 minutes to 3 hours may elapse between the vein
harvest and reperfusion.^{114, 115} According to the applicant,
standard of care solutions are heparinized saline and heparinized
autologous blood, which were never designed to protect vascular grafts
and have also demonstrated an inability to protect against ischemic
injury, actively harming the graft endothelium as
well.^{116 117 118 119} According to the applicant, given the
criticality of presenting an intact functional endothelium at the time
of reperfusion, it should not be surprising that the use of these
solutions is so highly associated with 12-month VGF. Based on these
data, DURAGRAFT[reg] treatment has been designed to be a fully
protective solution. DURAGRAFT[reg] is formulated into a flushing,
wetting, and storage solution replacing solutions traditionally used
for this purpose and, therefore, does not change surgical practice.
---------------------------------------------------------------------------

\112\ Harskamp, Ralf E., MD, Alexander, John H., MD, MHS,
Schulte, Phillip J., Phd, et al., ``Vein Graft Preservation
Solutions, Patency, and Outcomes After Coronary Artery Bypass Graft
Surgery: follow-up from the PREVENT IV randomized clinical trial'',
Jama Surg, 2014, vol. 149(8), pp. 798-805.
\113\ Testa, L., Bedogni, F., ``Treatment of Saphenous Vein
Graft Disease: `Never Ending Story' of the Eternal Return,'' Res
Cardiovasc Med, 2014, vol. 3(3), pp. e21092.
\114\ Motwani, J.G., Topol, E.J., ``Aortocoronary saphenous vein
graft disease: pathogenesis, predisposition and prevention,''
Circulation 1998, vol. 97(9), pp. 916-31.
\115\ Mills, N.L., Everson, C.T., ``Vein graft failure,'' Curr
Opin Cardiol, 1995, vol. 10, pp. 562-8.
\116\ Harskamp, Ralf E., MD, Alexander, John H., MD, MHS,
Schulte, Phillip J., Phd, et al., ``Vein Graft Preservation
Solutions, Patency, and Outcomes After Coronary Artery Bypass Graft
Surgery: follow-up from the PREVENT IV randomized clinical trial,''
Jama Surg, 2014, vol. 149(8), pp. 798-805.
\117\ Weiss, D.R., Juchem, G., Kemkes, B.M., et al., ``Extensive
deendothelialization and thrombogenicity in routinely prepared vein
grafts for coronary bypass operations: facts and remedy,'' Century
Publishing Corporation, International Journal of Clinical
Experimental Medicine, 2009 May 28, vol. 2(2), pp. 95-113.
\118\ Wilbring, M., Tugtekin, S.M., Zatschler, B., et al.,
``Even short-time storage in physiological saline solution impairs
endothelial vascular function of saphenous vein grafts,'' Elsevier
Science Inc., European Journal of Cardio-Thoracic Surgery, 2011 Oct,
vol. 40(4), pp. 811-815.
\119\ Thatte, H.S., Biswas, K.S., Najjar, S.F., et al., ``Multi-
photon microscopic evaluation of saphenous vein endothelium and its
preservation with a new solution,'' GALA, Elsevier Science Inc., Ann
Thorac Surg, 2003 Apr, vol. 75(4), pp. 1145-1152.
---------------------------------------------------------------------------

The applicant noted that retrospective studies designed to assess
clinical effectiveness and safety were conducted based on the readily
available databases already in existence as a result of the use of
DURAGRAFT[reg] treatment in two hospitals that had noncommercial access
to the product through hospital pharmacies. These studies evaluated the
effect of DURAGRAFT[reg] use during CABG surgery on post-CABG clinical
complications associated with VGF, including myocardial infarction (MI)
and repeat revascularization. The applicant conveyed that because of
the time, resources and funding required for randomized studies
evaluating clinical outcomes following CABG surgery, conducting such a
study was not a viable approach for a small company such as
Somahlution.
The first retrospective study (Protocol 001), an unpublished,
independent Physician Investigator (PI), single-center, multi-surgeon
retrospective,

[[Page 20307]]

comparative study (DURAGRAFT[reg] vs. Saline or Blood Solutions), was a
pilot study conducted at the University of CHU in Angers France, which
followed patients for 5 years post-CABG surgery. This pilot study was
conducted to assess the safety and effect of DURAGRAFT[reg] treatment
on both short and long-term clinical outcomes. This study also served
as the basis for the design of a larger retrospective study conducted
at the U.S. Department of Veterans Affairs (VA) Medical Centers,
discussed later. The objective of this single[dash]center clinical
study in CABG patients was to evaluate the potential benefits of
DURAGRAFT[reg] treatment as compared to a no[dash]treatment control
group (saline). The investigator who prepared the analysis remained
blinded to individual patient data. Eligibility criteria included
patients with first[dash]time CABG surgery in which at least one vein
graft was used. Patients with in-situ internal mammary artery (IMA)
graft(s) only (no saphenous vein or free arterial grafts) and
concomitant valve surgery and/or aortic aneurysm repair were excluded.
The institutional review board of the University Health Alliance (UHA)
approved the protocol, and patients gave written informed consent for
their follow-up. A total of 630 patients who underwent elective and
isolated CABG surgery with at least one saphenous vein graft at a
single[dash]center in Europe between January 2002 and December 2008
were included. The no-treatment control group (saline) included 375
patients who underwent CABG surgery from January 2002 to May 2005 and
the DURAGRAFT[reg] treatment group included 255 patients who underwent
CABG surgery from June 2005 to December 2008. At long-term follow-up
(greater than 30 days and up to 5 years), 5 patients were lost to
follow-up (10 died before the 30-day follow[dash]up). Therefore, a
total of 247 patients from the DURAGRAFT[reg] treatment group (97
percent) and 368 patients from the no-treatment control group (saline)
(98 percent) were available for the long-term analysis. Patients
undergoing CABG surgery whose vascular grafts were treated
intraoperatively with DURAGRAFT[reg] demonstrated no statistically
significant differences in major adverse cardiac events (MACE) within
the first 30 days following CABG surgery. According to the applicant,
these data suggest that DURAGRAFT[reg] treatment is at least as safe as
the standard of care used in CABG surgeries in that long-term outcomes
between the two groups were not statistically different. However, also
according to the applicant, a consistent numerical trend toward
improved clinical effectiveness outcomes for the DURAGRAFT[reg]
treatment group compared to the no-treatment control (saline) group was
clearly identified. Although statistically insignificant, there was a
consistent reduction observed in the rates for multiple endpoints such
as all-cause death, MI, MACE, and revascularization. This study found
reductions in DURAGRAFT[reg]-treated grafts relative to saline for
revascularization (57 percent), MI (70 percent), MACE (37 percent) and
all[dash]cause death (23 percent) compared to standard of care
(heparinized saline/blood) through 5 years follow[dash]up. Based on the
small sample-size for this evaluation of only 630 patients, and the
known frequencies of these events following CABG surgeries, statistical
differences were not expected. A subsequent post-hoc analysis also was
performed by the researchers at CHU-Angers to evaluate whether any
long-term clinical variables (such as dual antiplatelet therapy, beta-
blockers, angiotensin receptor-blockers, statins, diabetes, lifestyle
and other factors) had any impact on the study endpoints. The
conclusions of the post-hoc analyses were that the assessed clinical
variables did not impact the clinical study findings and so any
differences between groups were likely due to ``test article'' effect.
According to the applicant, importantly, the data collected from this
feasibility study are consistent with data collected in the
statistically[dash]powered VA study in which statistically significant
reductions of MI, repeat revascularization, and MACE were observed in
the DURAGRAFT[reg] treatment group, lending confidence that the
observed trends in this study, as well as the VA study, represent real
differences associated with DURAGRAFT[reg] use.
The second study, the U.S. VA Hospital Study (Protocol 002), was an
unpublished, independent PI initiated, single-center, multi-surgeon,
retrospective, comparative (DURAGRAFT[reg] vs. Saline) clinical trial,
which was conducted to assess the safety and impact of DURAGRAFT[reg]
treatment on both short and long-term clinical outcomes in patients who
underwent isolated CABG surgery with saphenous vein grafts (SVGs) at
the Boston (West Roxbury) VA Medical Center between 1996 and 2004. The
time interval from 1996 through 1999 represents a time period when
DURAGRAFT[reg] treatment was not available and heparinized saline was
routinely used to wet and store grafts, while 2001 through 2004
represents a time period after the center began exclusively using
DURAGRAFT[reg], which was prepared by the hospital's pharmacy. The year
2000 was omitted from this analysis by the PI due to the transition of
the implementation of DURAGRAFT[reg] treatment into the clinic and the
uncertainty of its use in CABG patients during the transition period.
Data were extracted from a total of 2,436 patients who underwent a CABG
procedure with at least one SVG from 1996 through 1999 (Control n=1,400
pts.) and 2001 through 2004 (DURAGRAFT[reg] treatment n=1,036 pts.).
The median age was 66 years old for the control treatment group and 67
years old for the DURAGRAFT[reg] treatment group. Patients were
excluded from the study if they had a prior history of CABG procedures,
had no use of SVG, or underwent additional procedures during the CABG
surgery. Mean follow-up in the DURAGRAFT[reg] treatment group was
8.54.2 years and 9.95.6 years in the control
treatment group. According to the applicant, this study supports not
only safety, but also improved long-term clinical outcomes in
DURAGRAFT[reg][dash]treated CABG patients. Thirty-day MI also was
significantly reduced in this study. The VA study found statistically
significant reductions in DURAGRAFT[reg]-treated grafts relative to
saline for revascularization (35 percent), MI (45 percent), and MACE
(19 percent) from the follow-up period of 1,000 days to 15 years post-
surgery.
According to the applicant, in addition to the retrospective
studies, a multi[dash]center, within-patient randomized, prospective
study utilizing multidetector computed tomography (MDCT) angiography
was conducted to assess safety and the effect of the use of
DURAGRAFT[reg] on the graft by assessing early anatomic markers of VGD
such as graft wall thickening and early stenotic events. The study was
based on an ``in-patient control'' design in which both the control
saline exposed vascular graft and a DURAGRAFT[reg][dash]treated graft
were grafted within the same patient to reduce patient bias and allow a
paired analysis of the grafts. The study was conducted under two
protocols. The first study protocol evaluated patients up to 3 months
post-CABG and included 1[dash] and 3-month protocol driven MDCT scans
in 125 patients (250 grafts). The second study, a longer-term safety
and efficacy study of 97 patients, included a 12-month protocol driven
angiogram. The 3 month (full data set) and 12 month (interim data set)
data demonstrate that safety and efficacy appear to be equivalent for

[[Page 20308]]

DURAGRAFT[reg] and standard of care (SoC) at 3 months, but between 3
months and 9 months a separation between DURAGRAFT[reg] and SoC begins
to emerge and by 12 months DURAGRAFT[reg] use is associated with a
numerical trend towards improved safety relative to SoC. Furthermore by
12 months, the interim analysis demonstrated that differences in
markers of early graft disease were able to be discerned between
DURAGRAFT[reg][dash]treated grafts and SoC. Reductions in both wall
thickness and degree of stenosis were observed in
DURAGRAFT[reg][dash]treated grafts relative to SoC grafts. These
reductions were observed when the entire graft was assessed and were
more profound when the proximal region of the graft was specifically
evaluated. According to the applicant, this is of note because the
proximal region of the graft is the region in which early graft disease
has been shown to more frequently manifest in many grafting
indications, including CABG, peripheral bypass, aortic grafting, and AV
fistula grafting indications, and is thought to be due to hemodynamic
perturbations that occur in this region where arterial flow is just
entering the venous environment. While there are no notable differences
at 3 months in either safety or efficacy, there are trends towards
better safety at 12 months in patients in the DURAGRAFT[reg] treatment
group compared to the control group.\120\ The efficacy results of the
prospective study were presented at the October 2017 meeting of the TCT
Congress in Denver.
---------------------------------------------------------------------------

\120\ Perrault, L., ``SOMVC001 (DuraGraft) Vascular Graft
Treatment in Patients Undergoing Coronary Artery Bypass Grafting,''
American Heart Association, Inc, Circulation, 2016, vol. 134, pp.
A23242, originally published November 11, 2016.
---------------------------------------------------------------------------

The retrospective studies demonstrated an association of reduced
risk of non-fatal myocardial infarction, repeat revascularization, and
MACE with DURAGRAFT[reg] treatment. However, we have a number of
concerns relating to these studies. In addition to the studies being
unpublished, we are concerned that they leave too many variables
unaccounted for that could affect vein integrity such as method of vein
harvest, vein distention pressure, and post-operative care (including
use of anti-platelet and anti-lipid treatments). Also, control groups
underwent CABG procedures many years earlier than the DURAGRAFT[reg]
treatment groups in both studies. Over the years, with advances in
medical management and surgical techniques, long-term survival and risk
of cardiac events are expected to improve. Finally, it may be helpful
to gain more insight from data that will be available upon completion
and results of the multi-center, prospective, randomized, double-blind,
comparative, within[dash]person (DURAGRAFT[reg] vs. Saline) control
trial that is currently ongoing.
We are inviting public comments on whether DURAGRAFT[reg] meets the
substantial clinical improvement criterion.
Below we summarize and respond to written public comments we
received regarding the DURAGRAFT[reg] during the open comment period in
response to the New Technology Town Hall meeting notice published in
the Federal Register.
Comment: One commenter, a cardiothoracic surgeon, stated that after
practicing cardiac surgery for over 30 years, authoring
peer[dash]reviewed publications in Cardiac Surgery, and participating
in several clinical studies, it supported the approval of new
technology add-on payments for the DURAGRAFT[reg] technology. The
commenter indicated that one of the reasons why vein grafts get
occluded could be because of poor handling during and after harvest.
The commenter expressed that there are currently no other solutions
used in treatment options available that protect vascular conduits once
they are harvested aside from the standard practice of storing them in
saline or blood-based solutions until they are ready for implantation.
The commenter stated that saline and blood-based solutions are very
damaging to vein segments, and the damage that occurs is linked to poor
clinical outcomes including increased risk of myocardial infarction
(MI) and increased rates of repeat revascularization. The commenter
indicated that it had many years of first-hand experience with the use
of DURAGRAFT[reg] because the commenter served as the Principal
Investigator for a retrospective clinical study that evaluated the
DURAGRAFT[reg]'s effect on clinical outcomes compared to standard-of-
care treatment options. The commenter conveyed that the results of the
retrospective clinical study included statistically significant
reductions in MI and repeat revascularization rates. The commenter also
pointed out its awareness of a prospective clinical study the
DURAGRAFT[reg]'s manufacturer has conducted evaluating radiologic
assessments to analyze graft disease, which precedes loss of patency.
According to the commenter, the study demonstrated increased wall
thickness and increased stenosis in grafts stored in saline compared to
grafts stored using the DURAGRAFT[reg]. The commenter stated that this
finding from the prospective clinical study is very consistent with the
clinical results of the retrospective study. The commenter concluded by
stating that it supported the commercial availability and use of the
DURAGRAFT[reg], including use in the treatment of its own patients.
Response: We appreciate the commenter's input. We will take these
comments into consideration when deciding whether to approve new
technology add-on payment for the DURAGRAFT[reg] for FY 2019.
Comment: Another commenter, a cardiovascular and thoracic surgeon
with clinical expertise in coronary artery bypass grafting surgery
(CABG) who has been involved in endothelial dysfunction as a primary
field of study and the Principal Investigator for the
multi[dash]center, within-patient, randomized, prospective study that
Somahlution submitted to the FDA in support of U.S. product clearance,
supported the approval of new technology add-on payments for the
DURAGRAFT[reg]. The commenter indicated that as an author and co-author
of more than 250 articles in peer-reviewed publications, a senior
author of more than 75 papers and writer of several book chapters, and
having delivered over 40 conference presentations worldwide, the study
results, specifically of the 12-month multidector computed tomography
(MDCT) imaging showing less lumen narrowing or stenosis, and less wall
thickening as a resulting outcome of the DURAGRAFT[reg][dash]treated
veins compared to heparinized-saline, are critically important from a
clinical perspective. According to the commenter, the primary mechanism
of the DURAGRAFT[reg] technology is to protect the endothelial cells in
the vein graft and this has been repeatedly demonstrated in pre-
clinical studies. The commenter explained that the findings of the
clinical anatomic changes in the graft demonstrated in the prospective
study are consistent with the pre-clinical findings and the literature
that has clearly pointed to damaged endothelium of the graft as the
starting insult for later development of poor patient outcomes from
graft disease and failure. Finally, the commenter noted that surgeons
in all countries currently use a variety of graft storage and
preservation solutions during a CABG procedure because there has been
no other available solution used in treatment options, aside from the
DURAGRAFT[reg], with systematic evaluation demonstrating a clear safety

[[Page 20309]]

profile and benefit to patient outcomes. The commenter encouraged CMS
to approve new technology add-on payments for the DURAGRAFT[reg]
technology to provide additional support for this new preservation
solution to become available to surgeons in the United States.
Response: We appreciate the commenter's input. We will take these
comments into consideration when deciding whether to approve new
technology add-on payments for DURAGRAFT[reg] for FY 2019.
e. remed[emacr][reg] System
Respicardia, Inc. submitted an application for new technology add-
on payments for the remed[emacr][reg] System for FY 2019. According to
the applicant, the remed[emacr][reg] System is indicated for use as a
transvenous phrenic nerve stimulator in the treatment of adult patients
who have been diagnosed with moderate to severe central sleep apnea.
The remed[emacr][reg] System consists of an implantable pulse
generator, and a stimulation and sensing lead. The pulse generator is
placed under the skin, in either the right or left side of the chest,
and it functions to monitor the patient's respiratory signals. A
transvenous lead for unilateral stimulation of the phrenic nerve is
placed either in the left pericardiophrenic vein or the right
brachiocephalic vein, and a second lead to sense respiration is placed
in the azygos vein. Both leads, in combination with the pulse
generator, function to sense respiration and, when appropriate,
generate an electrical stimulation to the left or right phrenic nerve
to restore regular breathing patterns.
The applicant's application describes central sleep apnea (CSA) as
a chronic respiratory disorder characterized by fluctuations in
respiratory drive, resulting in the cessation of respiratory muscle
activity and airflow during sleep.\121\ The applicant reported that
CSA, as a primary disease, has a low prevalence in the United States
population; and it is more likely to occur in those individuals who
have cardiovascular disease, heart failure, atrial fibrillation,
stroke, or chronic opioid usage. The apneic episodes which occur in
patients with CSA cause hypoxia, increased blood pressure, increased
preload and afterload, and promotes myocardial ischemia and
arrhythmias. In addition, CSA ``enhances oxidative stress, causing
endothelial dysfunction, inflammation, and activation of neurohormonal
systems, which contribute to progression of underlying diseases.''
\122\
---------------------------------------------------------------------------

\121\ Jagielski, D., Ponikowski, P., Augostini, R., Kolodziej,
A., Khayat, R., Abraham, W.T., 2016, ``Transvenous Stimulation of
the Phrenic Nerve for the Treatment of Central Sleep Apnoea: 12
months' experience with the remede[reg]system,'' European Journal of
Heart Failure, pp. 1-8.
\122\ Costanzo, M.R., Ponikowski, P., Javaheri, S., Augostini,
R., Goldberg, L., Holcomb, R., Abraham, W.T., ``Transvenous
Neurostimulation for Centra Sleep Apnoea: A randomised controlled
trial,'' Lancet, 2016, vol. 388, pp. 974-982.
---------------------------------------------------------------------------

According to the applicant, prior to the introduction of the
remed[emacr][reg] System, typical treatments for CSA took the form of
positive airway pressure devices. Positive airway pressure devices,
such as continuous positive airway pressure (CPAP), have previously
been used to treat patients diagnosed with obstructive sleep apnea.
Positive airway devices deliver constant pressurized air via a mask
worn over the mouth and nose, or nose alone. For this reason, positive
airway devices may only function when the patient wears the necessary
mask. Similar to CPAP, adaptive servo-ventilation (ASV) provides
noninvasive respiratory assistance with expiratory positive airway
pressure. However, ASV adds servo-controlled inspiratory pressure, as
well, in an effort to maintain airway patency.\123\
---------------------------------------------------------------------------

\123\ Cowie, M.R., Woehrle, H., Wegscheider, K., Andergmann, C.,
d'Ortho, M.P., Erdmann, E., Teschler, H., ``Adaptive Servo-
Ventilation for Central Sleep Apneain Systolic Heart Failure,'' N
Eng Jour of Med, 2015, pp. 1-11.
---------------------------------------------------------------------------

On October 6, 2017, the remed[emacr][reg] System was approved by
the FDA as an implantable phrenic nerve stimulator indicated for the
use in the treatment of adult patients who have been diagnosed with
moderate to severe CSA. The device was available commercially upon FDA
approval. Therefore, the newness period for the remed[emacr][reg]
System is considered to begin on October 6, 2017. The applicant has
indicated that the device also is designed to restore regular breathing
patterns in the treatment of CSA in patients who also have been
diagnosed with heart failure.
The applicant was approved for two unique ICD-10-PCS procedure
codes for the placement of the leads: 05H33MZ (Insertion of
neurostimulator lead into right innominate (brachiocephalic) vein) and
05H03MZ (Insertion of neurostimulator lead into azygos vein), effective
10/01/2016. The applicant indicated that implantation of the pulse
generator is currently reported using ICD-10-PCS procedure code 0JH60DZ
(Insertion of multiple array stimulator generator into chest
subcutaneous tissue).
As discussed above, if a technology meets all three of the
substantial similarity criteria, it would be considered substantially
similar to an existing technology and would not be considered ``new''
for the purposes of new technology add-on payments.
With regard to the first criterion, whether a product uses the same
or a similar mechanism of action to achieve a therapeutic outcome,
according to the applicant, the remed[emacr][reg] System provides
stimulation to nerves to stimulate breathing. Typical treatments for
hyperventilation CSA include supplemental oxygen and CPAP. Mechanical
ventilation also has been used to maintain a patent airway. The
applicant asserted that the remed[emacr][reg] System is a
neurostimulation device resulting in negative airway pressure, whereas
devices such as CPAP and ASV utilize positive airway pressure.
With respect to the second criterion, whether a product is assigned
to the same or a different MS-DRG, the applicant stated that the
remed[emacr][reg] System is assigned to MS-DRGs 040 (Peripheral,
Cranial Nerve and Other Nervous System Procedures with MCC), 041
(Peripheral, Cranial Nerve and Other Nervous System Procedures with CC
or Peripheral Neurostimulator), and 042 (Peripheral, Cranial Nerve and
Other Nervous System Procedures without CC/MCC). The current procedures
for the treatment options of CPAP and ASV are not assigned to these MS-
DRGs.
With respect to the third criterion, whether the new use of the
technology involves the treatment of the same or similar type of
disease and the same or similar patient population, according to the
applicant, the remed[emacr][reg] System is indicated for the use as a
transvenous unilateral phrenic nerve stimulator in the treatment of
adult patients who have been diagnosed with moderate to severe CSA. The
applicant stated that the remed[emacr][reg] System reduces the negative
symptoms associated with CSA, particularly among patients who have been
diagnosed with heart failure. The applicant asserted that patients who
have been diagnosed with heart failure are particularly negatively
affected by CSA and currently available CSA treatment options of CPAP
and ASV. According to the applicant, the currently available treatment
options, CPAP and ASV, have been found to have worsened mortality and
morbidity outcomes for patients who have been diagnosed with both CSA
and heart failure. Specifically, ASV is currently contraindicated in
the treatment of CSA in patients who have been diagnosed with heart
failure.
The applicant also suggested that the remed[emacr][reg] System is
particularly suited for the treatment of CSA in patients who

[[Page 20310]]

also have been diagnosed with heart failure. We are concerned that,
while the remed[emacr][reg] System may be beneficial to patients who
have been diagnosed with both CSA and heart failure, the FDA approved
indication is for use in the treatment of adult patients who have been
diagnosed with moderate to severe CSA. We note that the applicant's
clinical analyses and data results related to patients who specifically
were diagnosed with CSA and heart failure. We are inviting public
comments on whether the remed[emacr][reg] System meets the newness
criterion.
With regard to the cost criterion, the applicant provided the
following analysis to demonstrate that the technology meets the cost
criterion. The applicant identified cases representing potential
patients who may be eligible for treatment involving the
remed[emacr][reg] System within MS-DRGs 040, 041, and 042. Using the
Standard Analytical File (SAF) Limited Data Set (MedPAR) for FY 2015,
the applicant included all claims for the previously stated MS-DRGs for
its cost threshold calculation. The applicant stated that typically
claims are selected based on specific ICD-10-PCS parameters, however
this is a new technology for which no ICD-10-PCS procedure code and
ICD-10-CM diagnosis code combination exists. Therefore, all claims for
the selected MS-DRGs were included in the cost threshold analysis. This
process resulted in 4,462 cases representing potential patients who may
be eligible for treatment involving the remed[emacr][reg] System
assigned to MS-DRG 040; 5,309 cases representing potential patients who
may be eligible for treatment involving the remed[emacr][reg] System
assigned to MS-DRG 041; and 2,178 cases representing potential patients
who may be eligible for treatment involving the remed[emacr][reg]
System assigned to MS-DRG 042, for a total of 11,949 cases.
Using the 11,949 identified cases, the applicant determined that
the average unstandardized case-weighted charge per case was $85,357.
Using the FY 2015 MedPAR dataset to identify the total mean charges for
revenue code 0278, the applicant removed charges associated with the
current treatment options for each MS-DRG as follows: $9,153.83 for MS-
DRG 040; $12,762.31 for MS-DRG 041; and $21,547.73 for MS-DRG 042. The
applicant anticipated that no other related charges would be eliminated
or replaced. The applicant then standardized the charges and applied a
2-year inflation factor of 1.104055 obtained from the FY 2018 IPPS/LTCH
PPS final rule (82 FR 38524). The applicant then added charges for the
new technology to the inflated average case-weighted standardized
charges per case. No other related charges were added to the cases. The
applicant calculated a final inflated average case-weighted
standardized charge per case of $175,329 and a Table 10 average case-
weighted threshold amount of $78,399. Because the final inflated
average case-weighted standardized charge per case exceeded the average
case-weighted threshold amount, the applicant maintained that the
technology meets the cost criterion. With regard to the analysis above,
we are concerned that all cases in MS-DRGs 040, 041, and 042 were used
in the analysis. We are unsure if all of these cases represent patients
that may be truly eligible for treatment involving the
remed[emacr][reg] System. We are inviting public comments on whether
the remed[emacr][reg] System meets the cost criterion.
With respect to the substantial clinical improvement criterion, the
applicant asserted that the remed[emacr][reg] System meets the
substantial clinical improvement criterion. The applicant stated that
the remed[emacr][reg] System offers a treatment option for a patient
population unresponsive to, or ineligible for, treatment involving
currently available options. According to the applicant, patients who
have been diagnosed with CSA have no other available treatment options
than the remed[emacr] System. The applicant stated that published
studies on both CPAP and ASV have proven that primary endpoints have
not been met for treating patients who have been diagnosed with CSA. In
addition, according to the ASV study, there was an increase in
cardiovascular mortality.
According to the applicant, the remed[emacr][reg] System will prove
to be a better treatment for the negative effects associated with CSA
in patients who have been diagnosed with heart failure, such as
cardiovascular insults resulting from sympathetic nervous system
activation, pulmonary hypertension, and arrhythmias, which ultimately
contribute to the downward cycle of heart failure,\124\ when compared
to the currently available treatment options. The applicant also
indicated that prior studies have assessed CPAP and ASV as options for
the treatment of diagnoses of CSA primarily in patients who have been
diagnosed with heart failure.
---------------------------------------------------------------------------

\124\ Abraham, W., Jagielski, D., Oldenburg, O., Augostini, R.,
Kreuger, S., Kolodziej, A., Ponikowski, P., ``Phrenic Nerve
Stimulation for the Treatment of Central Sleep Apnea,'' JACC: Heart
Failure, 2015, vol. 3(5), pp. 360-369.
---------------------------------------------------------------------------

The applicant shared the results from two studies concerning the
effects of positive airway pressure ventilation treatment:
The Canadian Continuous Positive Airway Pressure for
Patients with Central Sleep Apnea and Heart Failure trial found that,
while CPAP managed the negative symptoms of CSA, such as improved
nocturnal oxygenation, increased ejection fraction, lower
norepinephrine levels, and increased walking distance, it did not
affect overall patient survival; \125\ and
---------------------------------------------------------------------------

\125\ Bradley, T.D., Logan, A.G., Kimoff, R.J., Series, F.,
Morrison, D., Ferguson, K., Phil, D., 2005, ``Continous Positive
Airway Pressure for Central Sleep Apnea and Heart Failure,'' N Eng
Jour of Med, vol. 353(19), pp. 2025-2033.
---------------------------------------------------------------------------

In a randomized trial of 1,325 patients who had been
diagnosed with heart failure who received treatment with ASV plus
standard treatment or standard treatment alone, ASV was found to
increase all-cause and cardiovascular mortality as compared to the
control treatment.\126\
---------------------------------------------------------------------------

\126\ Cowie, M.R., Woehrle, H., Wegscheider, K., Andergmann, C.,
d'Ortho, M.-P., Erdmann, E., Teschler, H., ``Adaptive Servo-
Ventilation for Central Sleep Apneain Systolic Heart Failure,'' N
Eng Jour of Med, 2015, pp. 1-11.
---------------------------------------------------------------------------

The applicant also stated that published literature indicates that
currently available treatment options do not meet primary endpoints
with concern to the treatment of CSA; patients treated with ASV
experienced an increased likelihood of mortality,\127\ and patients
treated with CPAP experienced alleviation of symptoms, but no change in
survival.\128\ The applicant provided further research, which suggested
that a primary drawback of CPAP in the treatment of diagnoses of CSA is
a lack of patient adherence to therapy.\129\
---------------------------------------------------------------------------

\127\ Ibid.
\128\ Bradley, T.D., Logan, A.G., Kimoff, R.J., Series, F.,
Morrison, D., Ferguson, K., Phil, D., 2005, ``Continous Positive
Airway Pressure for Central Sleep Apnea and Heart Failure,'' N Engl
Jour of Med, vol. 353(19), pp. 2025-2033.
\129\ Ponikowski, P., Javaheri, S., Michalkiewicz, D., Bart,
B.A., Czarnecka, D., Jastrzebski, M., Abraham, W.T., ``Transvenous
Phrenic Nerve Stimulation for the Treatment of Central Sleep Apnoea
in Heart Failure,'' European Heart Journal, 2012, vol. 33, pp. 889-
894.
---------------------------------------------------------------------------

The applicant also stated that the remed[emacr] System represents a
substantial clinical improvement over existing technologies because of
the reduction in the number of future hospitalizations, few
device[dash]related complications, and improvement in CSA symptoms and
quality of life. Specifically, the applicant stated that the clinical
data has shown a statistically significant reduction in Apnea-hypopnea
index (AHI), improvement in quality of life, and significantly improved
Minnesota Living with Heart Failure Questionnaire score. In addition,
the applicant

[[Page 20311]]

indicated that study results showed the remed[emacr] System
demonstrated an acceptable safety profile, and there was a trend toward
fewer heart failure hospitalizations.
The applicant provided six published articles as evidence. All six
articles were prospective studies. In three of the six studies, the
majority of patients studied had been diagnosed with CSA with a heart
failure comorbidity, while the remaining three studies only studied
patients who had been diagnosed with CSA with a heart failure
comorbidity. The first study \130\ assessed the treatment of patients
who had been diagnosed with CSA in addition to heart failure. According
to the applicant, as referenced in the results of the published study,
Ponikowski, et al., assessed the treatment effects of 16 of 31 enrolled
patients with evidence of CSA within 6 months prior to enrollment who
met inclusion criteria (apnea-hypopnea index of greater than or equal
to 15 and a central apnea index of greater than or equal to 5) and who
did not meet exclusion criteria (a baseline oxygen saturation of less
than 90 percent, being on supplemental oxygen, having evidence of
phrenic nerve palsy, having had severe chronic obstructive pulmonary
disease (COPD), having hard angina or a myocardial infarction in the
past 3 months, being pacemaker dependent, or having inadequate capture
of the phrenic nerve during neurostimulation). Of the 16 patients whose
treatment was assessed, all had various classifications of heart
failure diagnoses: 3 (18.8 percent) were classified as class I on the
New York Heart Association classification scale (No limitation of
physical activity. Ordinary physical activity does not cause undue
fatigue, palpitation, dyspnea (shortness of breath)); 8 (50 percent)
were classified as a class II (Slight limitation of physical activity.
Comfortable at rest. Ordinary physical activity results in fatigue,
palpitation, dyspnea (shortness of breath)); and 5 (31.3 percent) were
classified as class III (Marked limitation of physical activity.
Comfortable at rest. Less than ordinary activity causes fatigue,
palpitation, or dyspnea).\131\ After successful surgical implantation
of a temporary transvenous lead for unilateral phrenic nerve
stimulation, patients underwent a control night without nerve
stimulation and a therapy night with stimulation, while undergoing
polysomnographic (PSG) testing. Comparison of both nights was
performed.
---------------------------------------------------------------------------

\130\ Ponikowski, P., Javaheri, S., Michalkiewicz, D., Bart,
B.A., Czarnecka, D., Jastrzebski, M., Abraham, W.T., ``Transvenous
Phrenic Nerve Stimulation for the Treatment of Central Sleep Apnoea
in Heart Failure,'' European Heart Journal, 2012, vol. 33, pp. 889-
894.
\131\ ``Classes of Heart Failure,'' 2017, May 8, Retrieved from
American Heart Association: Available at: https://www.heart.org/HEARTORG/Conditions/HeartFailure/AboutHeartFailure/Classes-of-Heart-Failure_UCM_306328_Article.jsp#.WmE2rlWnGUk.
---------------------------------------------------------------------------

According to the applicant, some improvements of CSA symptoms were
identified in statistical analyses. Sleep time and efficacy were not
statistically significantly different for control night and therapy
night, with median sleep times of 236 minutes and 245 minutes and sleep
efficacy of 78 percent and 71 percent, respectively. There were no
statistical differences across categorical time spent in each sleep
stage (for example, N1, N2, N3, and REM) between control and therapy
nights. The average respiratory rate and hypopnea index did not differ
statistically across nights. Marginal positive statistical differences
occurred between control and therapy nights for the baseline oxygen
saturation median values (95 and 96 respectively) and obstructive apnea
index (OAI) (1 and 4, respectively). Beneficial statistically
significant differences occurred from control to therapy nights for the
average heart rate (71 to 70, respectively), arousal index events per
hour (32 to 12, respectively), apnea-hypopnea index (AHI) (45 to 23,
respectively), central apnea index (CAI) (27 to 1, respectively), and
oxygen desaturation index of 4 percent (ODI = 4 percent) (31 to 14,
respectively). Two adverse events were noted: (1) Lead tip thrombus
noted when lead was removed; the patient was anticoagulated without
central nervous system sequelae; and (2) an episode of ventricular
tachycardia upon lead placement and before stimulation was initiated.
The episode was successfully treated by defibrillation of the patient's
implanted ICD. Neither adverse event was directly related to the
phrenic nerve stimulation therapy.
The second study \132\ was a prospective, multi-center,
nonrandomized study that followed patients diagnosed with CSA and other
underlying comorbidities. According to the applicant, as referenced in
the results of the published study, Abraham, et al., 49 of the 57
enrolled patients who were followed indicated a primary endpoint of a
reduction of AHI with secondary endpoints of feasibility and safety of
the therapy. Patients were included if they had an AHI of 20 or greater
and apneic events that were related to CSA. Among the study patient
population, 79 percent had diagnoses of heart failure, 2 percent had
diagnoses of atrial fibrillation, 13 percent had other cardiac etiology
diagnoses, and the remainder of patients had other cardiac unrelated
etiology diagnoses. Exclusion criteria were similar to the previous
study (that is, (Ponikowski P., 2012)), with the addition of a
creatinine of greater than 2.5 mg/dl. After implantation of the
remed[emacr][reg] System, patients were assessed at baseline, 3 months
(n=47) and 6 months (n=44) on relevant measures. At 3 months,
statistically nonsignificant results occurred for the OAI and hypopnea
index (HI) measures. The remainder of the measures showed statistically
significant differences from baseline to 3 months: AHI with a -27.1
episodes per hour of sleep difference; CAI with a -23.4 episodes per
hour of sleep difference; MAI with a -3 episodes per hour of sleep
difference; ODI = 4 percent with a -23.7 difference; arousal index with
-12.5 episodes per hour of sleep difference; sleep efficiency with a
8.4 percent increase; and REM sleep with a 4.5 percent increase.
Similarly, among those assessed at 6 months, statistically significant
improvements on all measures were achieved, including OAI and HI.
Regarding safety, a data safety monitoring board (DSMB) adjudicated and
found the following 3 of 47 patients (6 percent) as having serious
adverse events (SAE) related to the device, implantation procedure or
therapy. None of the DSMB adjudicated SAEs was due to lead
dislodgement. Two SAEs of hematoma or headache were related to the
implantation procedure and occurred as single events in two patients. A
single patient experienced atypical chest discomfort during the first
night of stimulation, but on reinitiation of therapy on the second
night no further discomfort occurred.
---------------------------------------------------------------------------

\132\ Abraham, W., Jagielski, D., Oldenburg, O., Augostini, R.,
Kreuger, S., Kolodziej, A., Ponikowski, P., ``Phrenic Nerve
Stimulation for the Treatment of Central Sleep Apnea,'' JACC: Heart
Failure, 2015, vol. 3(5), pp. 360-369.
---------------------------------------------------------------------------

The third study \133\ assessed the safety and feasibility of
phrenic nerve stimulation for 6 monthly follow-ups of 8 patients
diagnosed with heart failure with CSA. Of the eight patients assessed,
one was lost to follow-up and one died from pneumonia. According to the
applicant, as referenced in the results in the published study, Zheng,
et al. (2015), no unanticipated serious adverse events were found to be
related to the therapy; in one patient, a lead became dislodged and
subsequently successfully repositioned. Three

[[Page 20312]]

patients reported improved sleep quality, and all patients reported
increased energy. A reduction in sleep apneic events and decreases in
AHI and CAI were related to application of the treatment. Gradual
increases to the 6-minute walking time occurred through the study.
---------------------------------------------------------------------------

\133\ Zhang, X., Ding, N., Ni, B., Yang, B., Wang, H., & Zhang,
S.J., 2015, ``Satefy and Feasibility of Chronic Transvenous Phrenic
Nerve Stimulation for Treatment of Central Sleep Apnea in Heart
Failure Patients,'' The Clinical Respiratory Journal, pp. 1-9.
---------------------------------------------------------------------------

The fourth study \134\ extended the previous Phase I study \135\
from 6 months to 12 months, and included only 41 of the original 49
patients continuing in the study. Of the 57 patients enrolled at the
time of the Phase I study, 41 were evaluated at the 12-month follow-up.
Of the 41 patients examined at 12 months, 78 percent had diagnoses of
CSA related to heart failure, 2 percent had diagnoses of atrial
fibrillation with related CSA, 12 percent had diagnoses of CSA related
to other cardiac etiology diagnoses, and the remainder of patients had
diagnoses of CSA related to other noncardiac etiology diagnoses. At 12
months, 6 sleep parameters remained statistically different and 3 were
no longer statistically significant. The HI, OAI, and arousal indexes
were no longer statistically significantly different from baseline
values. A new parameter, time spent with peripheral capillary oxygen
saturation (SpO2) below 90 percent was not statistically
different at 12 months (31.4 minutes) compared to baseline (38.2
minutes). The remaining 6 parameters showed maintenance of improvements
at the 12-month time point as compared to the baseline: AHI from 49.9
to 27.5 events per hour; CAI from 28.2 to 6.0 events per hour; MAI from
3.0 to 0.5 events per hour; ODI = 4 percent from 46.1 to 26.9 events
per hour; sleep efficiency from 69.3 percent to 75.6 percent; and REM
sleep from 11.4 percent to 17.1 percent. At the 3-month, 6-month, and
12-month time points, patient quality of life was assessed to be 70.8
percent, 75.6 percent, and 83.0 percent, respectively, indicating that
patients experienced mild, moderate, or marked improvement. Seventeen
patients were followed at 18 months with statistical differences from
baseline for AHI and CAI. Three patients died over the 12-month follow-
up period: 2 died of end-stage heart failure and 1 died from sudden
cardiac death. All three deaths were adjudicated by the DSMB and none
were related to the procedure or to phrenic nerve stimulation therapy.
Five patients were found to have related serious adverse events over
the 12-month study time. Three events were previously described in the
results referenced in the published study, Abraham, et al., and an
additional 2 SAEs occurred during the 12-month follow-up. One patient
experienced impending pocket perforation resulting in pocket revision,
and another patient experienced lead failure.
---------------------------------------------------------------------------

\134\ Jagielski, D., Ponikowski, P., Augostini, R., Kolodziej,
A., Khayat, R., & Abraham, W.T., 2016, ``Transvenous Stimulation of
the Phrenic Nerve for the Treatment of Central Sleep Apnoea: 12
months' experience with the remede[reg]system,'' European Journal of
Heart Failure, 2016, pp. 1-8.
\135\ Abraham, W., Jagielski, D., Oldenburg, O., Augostini, R.,
Kreuger, S., Kolodziej, A., Ponikowski, P., 2015, ``Phrenic Nerve
Stimulation for the Treatment of Central Sleep Apnea,'' JACC: Heart
Failure, 2015, vol. 3(5), pp. 360-369.
---------------------------------------------------------------------------

The fifth study \136\ was a randomized control trial with a primary
outcome of achieving a reduction in AHI of 50 percent or greater from
baseline to 6 months enrolling 151 patients with the neurostimulation
treatment (n=73) and no stimulation control (n=78). Of the total
sample, 96 (64 percent) of the patients had been diagnosed with heart
failure; 48 (66 percent) of the treated patients had been diagnosed
with heart failure, and 48 (62 percent) of the control patients had
been diagnosed with heart failure. Sixty-four (42 percent) of all of
the patients included in the study had been diagnosed with atrial
fibrillation and 84 (56 percent) had been diagnosed with coronary
artery disease. All of the patients had been treated with the
remed[emacr][reg] System device implanted; the system was activated in
the treatment group during the first month. ``Over about 12 weeks,
stimulation was gradually increased in the treatment group until
diaphragmatic capture was consistently achieved without disrupting
sleep.'' \137\ While patients and physicians were unblinded, the
polysomnography core laboratory remained blinded. The per-protocol
population from which statistical comparisons were made is 58 patients
treated with the remed[emacr][reg] System and 73 patients in the
control group. The authors appropriately controlled for Type I errors
(false positives), which arise from performing multiple tests. Thirty-
five treated patients and 8 control patients met the primary end point,
the number of patients with a 50 percent or greater reduction in AHI
from baseline; the difference of 41 percent is statistically
significant. All seven of the secondary endpoints were assessed and
found to have statistically significant difference in change from
baseline between groups at the 6-month follow-up after controlling for
multiple comparisons: CAI of -22.8 events per hour lower for the
treatment group; AHI (continuous) of -25.0 events per hour lower for
the treatment group; arousal events per hour of -15.2 lower for the
treatment group; percent of sleep in REM of 2.4 percent higher for the
treatment group; patients with marked or moderate improvement in
patient global assessment was 55 percent higher in the treatment group;
ODI = 4 percent was -22.7 events per hour lower for the treatment
group; and the Epworth sleepiness scale was -3.7 lower for the
treatment group. At 12 months, 138 (91 percent) of the patients were
free from device, implant, and therapy related adverse events.
---------------------------------------------------------------------------

\136\ Costanzo, M.R., Ponikowski, P., Javaheri, S., Augostini,
R., Goldberg, L., Holcomb, R., Abraham, W.T.,''Transvenous
Neurostimulation for Centra Sleep Apnoea: A randomised controlled
trial,'' Lancet, 2016, vol. 388, pp. 974-982.
\137\ Ibid.
---------------------------------------------------------------------------

The final study data was from the pivotal study with limited
information in the form of an abstract \138\ and an executive
summary.\139\ The executive summary detailed an exploratory analysis of
the 141 patients enrolled in the pivotal trial which were patients
diagnosed with CSA. The abstract indicated that the 141 patients from
the pivotal trial were randomized to either the treatment arm (68
patients) in which initiation of treatment began 1 month after
implantation of the remed[emacr][reg] System device with a 6[dash]month
follow[dash]up period, or to the control group arm (73 patients) in
which the initiation of treatment with the remed[emacr][reg] System
device was delayed for 6 months after implantation. Randomization
efficacy was compared across baseline polysomnography and associated
respiratory indices in which four of the five measures showed no
statistical differences between those treated and controls; treated
patients had an average MAI score of 3.1 as compared to control
patients with an average MAI score of 2.2 (p=0.029). Patients included
in the trial must have been medically stable, at least 18 years old,
have had an electroencephalogram within 40 days of scheduled
implantation, had an apnoea-hypopnoea index (AHI) of 20 events per hour
or greater, a central apnoea index at least 50 percent of all apneas,
and an obstructive apnea index less than or equal to 20 percent.\140\
Primary exclusion criteria were CSA caused by pain medication, heart
failure of state D from the American Heart Association, a

[[Page 20313]]

new implantable cardioverter defibrillator, pacemaker dependent
subjects without any physiologic escape rhythm, evidence of phrenic
nerve palsy, documented history of psychosis or severe bipolar
disorder, a cerebrovascular accident within 12 months of baseline
testing, limited pulmonary function, baseline oxygen saturation less
than 92 percent while awake and on room air, active infection, need for
renal dialysis, or poor liver function.\141\ Patients included in this
trial were primarily male (89 percent), white (95 percent), with at
least one comorbidity with cardiovascular conditions being most
prevalent (heart failure at 64 percent), with a concomitant implantable
cardiovascular stimulation device in 42 percent of patients at
baseline. The applicant stated that, after randomization, there were no
statistically significant differences between the treatment and control
groups, with the exception of the treated group having a statistically
higher rate of events per hour on the mixed apnea index (MAI) at
baseline than the control group.
---------------------------------------------------------------------------

\138\ Goldberg, L., Ponikowski, P., Javaheri, S., Augostini, R.,
McKane, S., Holcomb, R., Costanzo, M.R., ``In Heart Failure Patients
with Central Sleep Apnea, Transvenous Stimulation of the Phrenic
Nerve Improves Sleep and Quality of Life,'' Heart Failure Society of
America, 21st annual meeting. 2017.
\139\ Respicardia, Inc. (n.d.). Remede System Pivotal Trial.
https://clinicaltrials.gov/ct2/show/NCT01816776.
\140\ Respicardia, Inc. (n.d.). Remede System Pivotal Trial.
https://clinicaltrials.gov/ct2/show/NCT01816776.
\141\ Ibid.
---------------------------------------------------------------------------

The applicant asserted that the results from the pivotal trial
\142\ allow for the comparison of heart failure status in patients; we
note that patients with American Heart Association objective assessment
Class D (Objective evidence of severe cardiovascular disease. Severe
limitations. Experiences symptoms even while at rest) were excluded
from this pivotal trial. The primary endpoint in the pivotal trial was
the proportion of patients with an AHI reduction greater than or equal
to 50 percent at 6 months. When controlling for heart failure status,
both treated groups experienced a statistically greater proportion of
patients with AHI reductions than the controls at 6 months (58 percent
more of treated patients with diagnoses of heart failure and 35 percent
more of treated patients without diagnoses of heart failure as compared
to their respective controls). The secondary endpoints assessed were
the CAI average events per hour, AHI average events per hour, arousal
index (ArI) average events per hour, percent of sleep in REM, and
oxygen desaturation index 4 percent (ODI = 4 percent) average events
per hour. Excluding the percent of sleep in REM, the treatment groups
for both patients with diagnoses of heart failure and non-heart failure
conditions experienced statistically greater improvements at 6 months
on all secondary endpoints as compared to their respective controls.
Lastly, quality of life secondary endpoints were assessed by the
Epworth sleepiness scale (ESS) average scores and the patient global
assessment (PGA). For both the ESS and PGA assessments, both treatment
groups of patients with diagnoses of heart failure and non-heart
failure conditions had statistically beneficial changes between
baseline and 6 months as compared to their respective control groups.
---------------------------------------------------------------------------

\142\ Respicardia, Inc. (n.d.). Remede System Pivotal Trial.
https://clinicaltrials.gov/ct2/show/NCT01816776.
---------------------------------------------------------------------------

The applicant provided analyses from the above report focusing on
the primary and secondary polysomnography endpoints, specifically,
across patients who had been diagnosed with CSA with heart failure and
non-heart failure. Eighty patients included in the study from the
executive summary report had comorbid heart failure, while 51 patients
did not. Of those patients with heart failure, 35 were treated while 45
patients were controls. Of those patients without heart failure, 23
were treated and 28 patients were controls. The applicant did not
provide baseline descriptive statistical comparisons between treated
and control groups controlling for heart failure status. Across all
primary and secondary endpoints, the patient group who were diagnosed
with CSA and comorbid heart failure experienced statistically
significant improvements. Excepting percent of sleep in REM, the
patient group who were diagnosed with CSA without comorbid heart
failure experienced statistically significant improvements in all
primary and secondary endpoints. We are inviting public comments on
whether this current study design is sufficient to support substantial
clinical improvement of the remed[emacr][reg] System with respect to
all patient populations, particularly the non-heart failure population.
As previously noted, the applicant also contends that the
technology offers a treatment option for a patient population
unresponsive to, or ineligible for, currently available treatment
options. Specifically, the applicant stated that the remed[emacr][reg]
System is the only treatment option for patients who have been
diagnosed with moderate to severe CSA; published studies on positive
pressure treatments like CPAP and ASV have not met primary endpoints;
and there was an increase in cardiovascular mortality according to the
ASV study. According to the applicant, approximately 40 percent of
patients who have been diagnosed with CSA have heart failure. The
applicant asserted that the use of the remed[emacr] System not only
treats and improves the symptoms of CSA, but there is evidence of
reverse remodeling in patients with reduced left ventricular ejection
fraction (LVEF).
We are concerned that the remed[emacr][reg] System is not directly
compared to the CPAP or ASV treatment options, which, to our
understanding, are the current treatment options available for patients
who have been diagnosed with CSA without heart failure. We note that
the FDA indication for the implantation of the remed[emacr][reg] System
is for use in the treatment of adult patients who have been diagnosed
with CSA. We also note that the applicant's supporting studies were
directed primarily at patients who had been treated with the
remed[emacr][reg] System who also had been diagnosed with heart
failure. The applicant asserted that it would not be appropriate to use
CPAP and ASV treatment options when comparing CPAP and ASV to the
remed[emacr][reg] System in the patient population of heart failure
diagnoses because these treatment options have been found to increase
mortality outcomes in this population. In light of the limited length
of time in which the remed[emacr][reg] System has been studied, we are
concerned that any claims on mortality as they relate to treatment
involving the use of the remed[emacr][reg] System may be limited.
Therefore, we are concerned as to whether there is sufficient data to
determine that the technology represents a substantial clinical
improvement with respect to patients who have been diagnosed with CSA
without heart failure.
The applicant has shown that, among the subpopulation of patients
who have been diagnosed with CSA and heart failure, the
remed[emacr][reg] System decreases morbidity outcomes as compared to
the CPAP and ASV treatment options. We understand that not all patients
evaluated in the applicant's supporting clinical trials had been
diagnosed with CSA with a comorbidity of heart failure. However, in all
of the supporting studies for this application, the vast majority of
study patients did have this specific comorbidity of CSA and heart
failure. Of the three studies which enrolled both patients diagnosed
with CSA with and without heart failure,^{143 144 145 146} only
two studies

[[Page 20314]]

performed analyses controlling for heart failure
status.^{147 148} The data from these two studies, the
Costanzo, et al. (2016) and the Respicardia, Inc. executive report, are
analyses based on the same pivotal trial data and, therefore, do not
provide results from two separate samples. Descriptive comparisons are
made in the executive summary of the pivotal trial \149\ between all
treated and control patients. However, we are unable to determine the
similarities and differences between patients with heart failure and
non-heart failure treated versus controlled groups. Because
randomization resulted in one difference between the overall treated
and control groups (MAI events per hour), it is possible that further
failures of randomization may have occurred when controlling for heart
failure status in unmeasured variables. Finally, the sample size
analyzed and the subsample sizes of the heart failure patients (80) and
non-heart failure patients (51) are particularly small. It is possible
that these results are not representative of the larger population of
patients who have been diagnosed with CSA.
---------------------------------------------------------------------------

\143\ Respicardia, Inc. (n.d.). Remede System Pivotal Trial.
https://clinicaltrials.gov/ct2/show/NCT01816776.
\144\ Costanzo, M.R., Ponikowski, P., Javaheri, S., Augostini,
R., Goldberg, L., Holcomb, R., Abraham, W.T., ``Transvenous
Neurostimulation for Centra Sleep Apnoea: A randomised controlled
trial,'' Lancet, 2016, vol. 388, pp. 974-982.
\145\ Respicardia, Inc. (n.d.). Remede System Pivotal Trial.
https://clinicaltrials.gov/ct2/show/NCT01816776.
\146\ Jagielski, D., Ponikowski, P., Augostini, R., Kolodziej,
A., Khayat, R., & Abraham, W.T., ``Transvenous Stimulation of the
Phrenic Nerve for the Treatment of Central Sleep Apnoea: 12 months'
experience with the remede[reg]system,'' European Journal of Heart
Failure, 2016, pp. 1-8.
\147\ Respicardia, Inc. (n.d.). Remede System Pivotal Trial.
https://clinicaltrials.gov/ct2/show/NCT01816776.
\148\ Costanzo, M.R., Ponikowski, P., Javaheri, S., Augostini,
R., Goldberg, L., Holcomb, R., Abraham, W.T., ``Transvenous
Neurostimulation for Centra Sleep Apnoea: A randomised controlled
trial,'' Lacet, 2016, vol. 388, pp. 974-982.
\149\ Respicardia, Inc. (n.d.). Remede System Pivotal Trial.
https://clinicaltrials.gov/ct2/show/NCT01816776.
---------------------------------------------------------------------------

Therefore, we are concerned that differences in morbidity and
mortality outcomes between CPAP, ASV, and the remed[emacr][reg] System
in the general CSA patient population have not adequately been tested
or compared. Specifically, the two patient populations, those who have
been diagnosed with heart failure and CSA versus those who have been
diagnosed with CSA alone, may experience different symptoms and
outcomes associated with their disease processes. Patients who have
been diagnosed with CSA alone present with excessive sleepiness, poor
sleep quality, insomnia, poor concentration, and inattention.\150\
Conversely, patients who have been diagnosed with the comorbid
conditions of CSA as a result of heart failure experience significant
cardiovascular insults resulting from sympathetic nervous system
activation, pulmonary hypertension, and arrhythmias, which ultimately
contribute to the downward cycle of heart failure.\151\
---------------------------------------------------------------------------

\150\ Badr, M.S., 2017, Dec 11, ``Central sleep apnea: Risk
factors, clinical presentation, and diagnosis,'' Available at:
https://www.uptodate.com/contents/central-sleep-apnea-risk-factors-clinical-presentation-and-diagnosis?csi=d3a535e6-1cca-4cd5-ab5e-50e9847bda6c&source=contentShare.
\151\ Abraham, W., Jagielski, D., Oldenburg, O., Augostini, R.,
Kreuger, S., Kolodziej, A., Ponikowski, P., ``Phrenic Nerve
Stimulation for the Treatment of Central Sleep Apnea,'' JACC: Heart
Failure, 2015, vol. 3(5), pp. 360-369.
---------------------------------------------------------------------------

We also note that the clinical study had a small patient population
(n=151), with follow[dash]up for 6 months. We are interested in longer
follow[dash]up data that would further validate the points made by the
applicant regarding the beneficial outcomes seen in patients who have
been diagnosed with CSA who have been treated using the
remed[emacr][reg] System. We also are interested in additional
information regarding the possibility of electrical stimulation of
unintended targets and devices combined with the possibility of
interference from outside devices. Furthermore, we are unsure with
regard to the longevity of the implanted device, batteries, and leads
because it appears that the technology is meant to remain in use for
the remainder of a patient's life. We are inviting public comments on
whether the remed[emacr][reg] System represents a substantial clinical
improvement over existing technologies.
We did not receive any public comments in response to the published
notice in the Federal Register regarding the substantial clinical
improvement criterion for the remed[emacr][reg] System or at the New
Technology Town Hall Meeting.
f. Titan Spine nanoLOCK[reg] (Titan Spine nanoLOCK[reg] Interbody
Device)
Titan Spine submitted an application for new technology add-on
payments for the Titan Spine nanoLOCK[reg] Interbody Device (the Titan
Spine nanoLOCK[reg]) for FY 2019. (We note that the applicant
previously submitted an application for new technology add-on payments
for this device for FY 2017.) The Titan Spine nanoLOCK[reg] is a
nanotechnology-based interbody medical device with a dual acid-etched
titanium interbody system used to treat patients diagnosed with
degenerative disc disease (DDD). One of the key distinguishing features
of the device is the surface manufacturing technique and materials,
which produce macro, micro, and nano[dash]surface textures. According
to the applicant, the combination of surface topographies enables
initial implant fixation, mimics an osteoclastic pit for bone growth,
and produces the nano-scale features that interface with the integrins
on the outside of the cellular membrane. Further, the applicant noted
that these features generate better osteogenic and angiogenic responses
that enhance bone growth, fusion, and stability. The applicant asserted
that the Titan Spine nanoLOCK[reg]'s clinical features also reduce
pain, improve recovery time, and produce lower rates of device
complications such as debris and inflammation.
On October 27, 2014, the Titan Spine nanoLOCK[reg] received FDA
clearance for the use of five lumbar interbody devices and one cervical
interbody device: The nanoLOCK[reg] TA--Sterile Packaged Lumbar ALIF
Interbody Fusion Device with nanoLOCK[reg] surface, available in
multiple sizes to accommodate anatomy; the nanoLOCK[reg] TAS--Sterile
Packaged Lumbar ALIF Stand Alone Interbody Fusion Device with
nanoLOCK[reg] surface, available in multiple sizes to accommodate
anatomy; the nanoLOCK[reg] TL--Sterile Packaged Lumbar Lateral Approach
Interbody Fusion Device with nanoLOCK[reg] surface, available in
multiple sizes to accommodate anatomy; the nanoLOCK[reg] TO--Sterile
Packaged Lumbar Oblique/PLIF Approach Interbody Fusion Device with
nanoLOCK[reg] surface, available in multiple sizes to accommodate
anatomy; the nanoLOCK[reg] TT--Sterile Packaged Lumbar TLIF Interbody
Fusion Device with nanoLOCK[reg] surface, available in multiple sizes
to accommodate anatomy; and the nanoLOCK[reg] TC--Sterile Packaged
Cervical Interbody Fusion Device with nanoLOCK[reg] surface, available
in multiple sizes to accommodate anatomy.
The applicant received FDA clearance on December 14, 2015, for the
nanoLOCK[reg] TCS-- Sterile Package Cervical Stand Alone Interbody
Fusion Device with nanoLOCK[reg] surface, available in multiple sizes
to accommodate anatomy. According to the applicant, July 8, 2016 was
the first date that the nanotechnology production facility completed
validations and clearances needed to manufacture the nanoLOCK[reg]
interbody fusion devices. Once validations and clearances were
completed, the technology was available on the U.S. market on October
1, 2016. Therefore, the applicant believes that the newness period for
nanoLOCK[reg] would begin on October 1, 2016. Procedures involving the
Titan Spine nanoLOCK[reg] technology can be identified by the following
ICD-10-PCS Section ``X'' New Technology codes:
XRG0092 (Fusion of occipital-cervical joint using
nanotextured

[[Page 20315]]

surface interbody fusion device, open approach);
XRG1092 (Fusion of cervical vertebral joint using
nanotextured surface interbody fusion device, open approach);
XRG2092 (Fusion of 2 or more cervical vertebral joints
using nanotextured surface interbody fusion device, open approach);
XRG4092 (Fusion of cervicothoracic vertebral joint using
nanotextured surface interbody fusion device, open approach);
XRG6092 (Fusion of thoracic vertebral joint using
nanotextured surface interbody fusion device, open approach);
XRG7092 (Fusion of 2 to 7 thoracic vertebral joints using
nanotextured surface interbody fusion device, open approach);
XRG8092 (Fusion of 8 or more thoracic vertebral joints
using nanotextured surface interbody fusion device, open approach);
XRGA092 (Fusion of thoracolumbar vertebral joint using
nanotextured surface interbody fusion device, open approach);
XRGB092 (Fusion of lumbar vertebral joint using
nanotextured surface interbody fusion device, open approach);
XRGC092 (Fusion of 2 or more lumbar vertebral joints using
nanotextured surface interbody fusion device, open approach); and
XRGD092 (Fusion of lumbosacral joint using nanotextured
surface interbody fusion device, open approach).
We note that the applicant expressed concern that interbody fusion
devices that have failed to gain or apply for FDA clearance with
nanoscale features could confuse health care providers with marketing
and advertising using terms related to nanotechnology and ultimately
adversely affect patient outcomes. Therefore, the applicant believed
that there is a need for additional clarity to the current ICD-10-PCS
Section ``X'' codes previously identified for health care providers
regarding interbody fusion nanotextured surface devices. The applicant
submitted a request for code revisions at the March 2018 ICD-10
Coordination and Maintenance Meeting regarding the ICD-10-PCS Section
``X'' New Technology codes used to identify procedures involving the
Titan Spine nanoLOCK[reg] technology.
As discussed previously, if a technology meets all three of the
substantial similarity criteria, it would be considered substantially
similar to an existing technology and would not be considered ``new''
for the purposes of new technology add-on payments. We note that the
substantial similarity discussion is applicable to both the lumbar and
the cervical interbody devices because all of the devices use the Titan
Spine nanoLOCK[reg] technology.
With regard to the first criterion, whether a product uses the same
or a similar mechanism of action to achieve a therapeutic outcome, the
applicant stated that, for both interbody devices (the lumbar and the
cervical interbody device), the Titan Spine nanoLOCK[reg]'s surface
stimulates osteogenic cellular response to assist in bone formation
during fusion. According to the applicant, the mechanism of action
exhibited by the Titan Spine's nanoLOCK[reg] surface technology
involves the ability to create surface features that are meaningful to
cellular regeneration at the nano-scale level. During the manufacturing
process, the surface produces macro, micro, and nano-surface textures.
The applicant believes that this unique combination and use of these
surface topographies represents a new approach to stimulating
osteogenic cellular response. The applicant further asserted that the
macro-scale textured features are important for initial implant
fixation; the micro-scale textured features mimic an osteoclastic pit
for supporting bone growth; and the nano-scale textured features
interface with the integrins on the outside of the cellular membrane,
which generates the osteogenic and angiogenic (mRNA) responses
necessary to promote healthy bone growth and fusion. The applicant
stated that when correctly manufactured, an interbody fusion device
includes a hierarchy of complex surface features, visible at different
levels of magnification, that work collectively to impact cellular
response through mechanical, cellular, and biochemical properties. The
applicant stated that Titan Spine's proprietary and unique surface
technology, the Titan Spine nanoLOCK[reg] interbody devices, contain
optimized nano[dash]surface characteristics, which generate the
distinct cellular responses necessary for improved bone growth, fusion,
and stability. The applicant further stated that the Titan Spine
nanoLOCK[reg]'s surface engages with the strongest portion of the
vertebral endplate, which enables better resistance to subsidence
because a unique dual acid-etched titanium surface promotes earlier
bone in-growth. According to the applicant, the Titan Spine
nanoLOCK[reg]'s surface is created by using a reductive process of the
titanium itself. The applicant asserted that use of the Titan Spine
nanoLOCK[reg] significantly reduces the potential for debris generated
during impaction when compared to treatments using Polyetheretherketone
(PEEK)-based implants coated with titanium. According to the results of
an in vitro study \152\ (provided by the applicant), which examined
factors produced by human mesenchymal stem cells on spine implant
materials that compared angiogenic factor production using PEEK-based
versus titanium alloy surfaces, osteogenic production levels were
greater with the use of rough titanium alloy surfaces than the levels
produced using smooth titanium alloy surfaces. Human mesenchymal stem
cells were cultured on tissue culture polystyrene, PEEK, smooth TiAlV,
or macro-/micro-/nanotextured rough TiAlV (mmnTiAlV) disks.
Osteoblastic differentiation and secreted inflammatory interleukins
were assessed after 7 days. The results of an additional study \153\
provided by the applicant examined whether inflammatory
microenvironment generated by cells as a result of use of titanium
aluminum-vanadium (Ti-alloy, TiAlV) surfaces is effected by surface
micro[dash]texture, and whether it differs from the effects generated
by PEEK-based substrates. This in vitro study compared angiogenic
factor production and integrin gene expression of human osteoblast-like
MG63 cells cultured on PEEK or titanium-aluminum vanadium (titanium
alloy). Based on these study results, the applicant asserted that the
use of micro[dash]textured surfaces has demonstrated greater promotion
of osteoblast differentiation when compared to use of PEEK-based
surfaces.
---------------------------------------------------------------------------

\152\ Olivares-Navarrete, R., Hyzy, S., Gittens, R., ``Rough
Titanium Alloys Regulate Osteoblast Production of Angiogenic
Factors,'' The Spine Journal, 2013, vol. 13(11), pp. 1563-1570.
\153\ Olivares-Navarrete, R., Hyzy, S., Slosar, P., et al.,
``Implant Materials Generate Different Peri-implant Inflammatory
Factors,'' SPINE, 2015, vol. 40(6), pp. 339-404.
---------------------------------------------------------------------------

The applicant maintains that the nanoLOCK[reg] was the first, and
remains the only, device in spinal fusion, to apply for and
successfully obtain a clearance for nanotechnology from the FDA.
According to the applicant, in order for a medical device to receive a
nanotechnology FDA clearance, the burden of proof includes each of the
following to be present on the medical device in question: (1) Proof of
specific nano scale features, (2) proof of capability to manufacture
nano-scale features with repeatability and documented frequency across
an entire

[[Page 20316]]

device, and (3) proof that those nano-scale features provide a
scientific benefit, not found on devices where the surface features are
not present. The applicant further stated that many of the commercially
available interbody fusion devices are created using additive
manufacturing processes to mold or build surface from the ground up.
Conversely, Titan Spine applied a subtractive surface manufacturing to
remove pieces of a surface. The surface features that remain after this
subtractive process generate features visible at magnifications that
additive manufacturing has not been able to produce. According to the
applicant, this subtractive process has been validated by the White
House Office of Science and Technology, the National Nanotechnology
Initiative, and the FDA that provide clearances to products that
exhibit unique and repeatable features at predictive frequency due to a
manufacturing technique.
With regard to the second criterion, whether a product is assigned
to the same or a different MS-DRG, cases representing patients that may
be eligible for treatment involving the Titan Spine nanoLOCK[reg]
technology would map to the same MS-DRGs as other (lumbar and cervical)
interbody devices currently available to Medicare beneficiaries and
also are used for the treatment of patients who have been diagnosed
with DDD (lumbar or cervical).
With regard to the third criterion, whether the new use of the
technology involves the treatment of the same or similar type of
disease and the same or similar patient population, the applicant
stated that the Titan Spine nanoLOCK[reg] can be used in the treatment
of patients who have been diagnosed with similar types of diseases,
such as DDD, and for a similar patient population receiving treatment
involving both lumbar and cervical interbody devices.
In summary, the applicant maintained that the Titan Spine
nanoLOCK[reg] technology has a different mechanism of action when
compared to other spinal fusion devices. Therefore, the applicant did
not believe that the Titan Spine nanoLOCK[reg] technology is
substantially similar to existing technologies.
We are concerned that the Titan Spine nanoLOCK[reg] interbody
devices may be substantially similar to currently available titanium
interbody devices because other roughened[dash]surface interbody
devices also stimulate bone growth. While there is a uniqueness to the
nanotechnology used by the applicant, other devices also stimulate bone
growth such as PEEK-based surfaces and, therefore, we remain concerned
that the Titan Spine nanoLOCK[reg] interbody devices use the same or
similar mechanism of action as other devices.
We are inviting public comments on whether the Titan Spine
nanoLOCK[reg] interbody devices are substantially similar to existing
technologies and whether these devices meet the newness criterion.
The applicant provided three analyses of claims data from the FY
2016 MedPAR file to demonstrate that the Titan Spine nanoLOCK[reg]
interbody devices meet the cost criterion. We note that cases reporting
procedures involving lumbar and cervical interbody devices would map to
different MS-DRGs. As discussed in the Inpatient New Technology
Add[dash]On Payment Final Rule (66 FR 46915), two separate reviews and
evaluations of the technologies are necessary in this instance because
cases representing patients receiving treatment for diagnoses
associated with lumbar procedures that may be eligible for use of the
technology under the first indication would not be expected to be
assigned to the same MS-DRGs as cases representing patients receiving
treatment for diagnoses associated with cervical procedures that may be
eligible for use of the technology under the second indication.
Specifically, cases representing patients who have been diagnosed with
lumbar DDD and who have received treatment that involved implanting a
lumbar interbody device would map to MS-DRG 028 (Spinal Procedures with
MCC), MS-DRG 029 (Spinal Procedures with CC or Spinal
Neurostimulators), MS-DRG 030 (Spinal Procedures without CC/MCC), MS-
DRG 453 (Combined Anterior/Posterior Spinal Fusion with MCC), MS-DRG
454 (Combined Anterior/Posterior Spinal Fusion with CC), MS-DRG 455
(Combined Anterior/Posterior Spinal Fusion without CC/MCC), MS-DRG 456
(Spinal Fusion Except Cervical with Spinal Curvature or Malignancy or
Infection or Extensive Fusions with MCC), MS-DRG 457 (Spinal Fusion
Except Cervical with Spinal Curvature or Malignancy or Infection or
Extensive Fusion without MCC), MS-DRG 458 (Spinal Fusion Except
Cervical with Spinal Curvature or Malignancy or Infection or Extensive
Fusions without CC/MCC), MS-DRG 459 (Spinal Fusion Except Cervical with
MCC), and MS-DRG 460 (Spinal Fusion Except Cervical without MCC). Cases
representing patients who have been diagnosed with cervical DDD and who
have received treatment that involved implanting a cervical interbody
device would map to MS-DRG 471 (Cervical Spinal Fusion with MCC), MS-
DRG 472 (Cervical Spinal Fusion with CC), and MS-DRG 473 (Cervical
Spinal Fusion without CC/MCC). Procedures involving the implantation of
lumbar and cervical interbody devices are assigned to separate MS-DRGs.
Therefore, the devices categorized as lumbar interbody devices and the
devices categorized as cervical interbody devices must distinctively
(each category) meet the cost criterion and the substantial clinical
improvement criterion in order to be eligible for new technology
add[dash]on payments beginning in FY 2019.
The first analysis searched for any of the ICD-10-PCS procedure
codes within the code series Lumbar--0SG [body parts 0 1 3] [open
approach only 0] [device A only] [anterior column only 0, J], which
typically are assigned to MS-DRGs 028, 029, 030, and 453 through 460.
The average case-weighted unstandardized charge per case was $153,005.
The applicant then removed charges related to the predicate technology
and then standardized the charges. The applicant then applied an
inflation factor of 1.09357, the value used in the FY 2018 IPPS/LTCH
PPS final rule (82 FR 38527) to update the charges from FY 2016 to FY
2018. The applicant added charges related to the Titan Spine
nanoLOCK[reg] lumbar interbody devices. This resulted in a final
inflated average case-weighted standardized charge per case of
$174,688, which exceeds the average case-weighted Table 10 MS-DRG
threshold amount of $83,543.
The second analysis searched for any of the ICD-10-PCS procedure
codes within the code series Cervical--0RG [body parts 0--A] [open
approach only 0] [device A only] [anterior column only 0, J], which
typically are assigned to MS-DRGs 028, 029, 030, 453 through 455, and
471 through 473. The average case-weighted unstandardized charge per
case was $88,034. The methodology used in the first analysis was used
for the second analysis, which resulted in a final inflated average
case-weighted standardized charge per case of $101,953, which exceeds
the average case-weighted Table 10 MS-DRG threshold amount of $83,543.
The third analysis was a combination of the first and second
analyses described earlier that searched for any of the ICD-10-PCS
procedure codes within the Lumbar and Cervical code series listed above
that are assigned to the MS-DRGs in the analyses above. The average
case[dash]weighted unstandardized charge per case was $127,736. The
methodology used for the first and second analysis was used for the
third analysis, which resulted in a

[[Page 20317]]

final inflated average case-weighted standardized charge per case of
$149,915, which exceeds the average case-weighted Table 10 MS-DRG
threshold amount of $104,094.
Because the final inflated average case-weighted standardized
charge per case exceeds the average case-weighted threshold amount in
all of the applicant's analyses, the applicant maintained that the
technology meets the cost criterion.
We are inviting public comments on whether the Titan Spine
nanoLOCK[reg] meets the cost criterion.
With regard to the substantial clinical improvement criterion for
the Titan Spine nanoLOCK[reg] Interbody Lumbar and Cervical Devices,
the applicant submitted the results of two clinical evaluations. The
first clinical evaluation was a case series and the second was a case
control study. Regarding the case series, 4 physicians submitted
clinical information on 146 patients. The 146 patients resulted from 2
surgery groups: a cervical group of 73 patients and a lumbar group of
73 patients. The division into cervical and lumbar groups was due to
differences in surgical procedure and expected recovery time.
Subsequently, the collection and analyses of data were presented for
lumbar and cervical nanoLOCK[reg] device implants. Data was collected
using medical record review. Patient baseline characteristics, the
reason for cervical and lumbar surgical intervention, inclusion and
exclusion criteria, details on the types of pain medications and the
pattern of usage preoperatively and postoperatively were not provided.
We note that the applicant did not provide an explanation of why the
outcomes studied in the case series were chosen for review. However,
the applicant noted that the case series data were restricted to
patients treated with the Titan Spine nanoLOCK[reg] device, with both
retrospective and prospective data collection. These data appeared to
be clinically related and included: (1) Pain medication usage; (2)
extremity and back pain (assessed using the Numeric Pain Rating Scale
(NPRS)); and (3) function (assessed using the Oswestry Disability Index
(ODI)). Clinical data collection began with time points defined as
``Baseline (pre-operation), Month 1 (0-4 weeks), Month 2 (5-8 weeks),
Month 3 (9-12 weeks), Month 4 (13-16 weeks), Month 5 (17-20 weeks) and
Month 6+ (>20 weeks)''. The n, mean, and standard deviation were
presented for continuous variables (NPRS extremity pain, back pain, and
ODI scores), and the n and percentage were presented for categorical
variables (subjects taking pain medications). All analyses compared the
time point (for example, Month 1) to the baseline.
Pain scores for extremities (leg and arm) were assessed using the
NPRS, an 11[dash]category ordinal scale where 0 is the lowest value and
10 is the highest value and, therefore, higher scores indicate more
severe pain. Of the 73 patients in the lumbar group, the applicant
presented data on 18 cases for leg or arm pain at baseline that had a
mean score of 6.4, standard deviation (SD) 2.3. Between Month 1 and
Month 6+ the number of lumbar patients for which data was submitted for
leg or arm pain ranged from 3 patients (Month 5, mean score 3.7, SD
3.5) to 15 patients (Month 6+, mean score 2.5, SD 2.4), with varying
numbers of patients for each of the other defined time points of Month
1 through Month 4. None of the defined time points of Month 1 through
Month 4 had more than 14 patients or less than 3 patients that were
assessed.
Of the 73 patients in the cervical group, 7 were assessed for leg
or arm pain at baseline and had a mean score of 5.1, SD 3.5. Between
Month 1 and Month 6+ the number of cervical patients assessed for leg
or arm pain ranged from 0 patients (Month 5, no scores) to 5 patients
(Month 1, mean score 4.2, SD 2.6), with varying numbers of patients for
each of the other defined time points of Month 1 through Month 4. None
of the defined time points of Month 1 through Month 4 had more than 5
patients or less than 2 patients that were assessed.
Back pain scores were also assessed using the NPRS, where 0 is the
lowest value and 10 is the highest value and, therefore, higher scores
indicate more severe pain. Of the 73 patients in the lumbar group, 66
were assessed for back pain at baseline and had a mean score of 7.9, SD
1.8. Between Month 1 and Month 6+ the number of lumbar patients
assessed for back pain ranged from 4 patients (Month 5, mean score 4.0,
SD 2.7) to 43 patients (Month 1, mean score 4.5, SD 2.7), with varying
numbers of patients for each defined time point.
Of the 73 patients in the cervical group, 71 were assessed for back
pain at baseline and had a mean score of 7.5, SD 2.3. Between Month 1
and Month 6+ the number of cervical patients assessed for back pain
ranged from 2 patients (Month 5, mean score 7.0, SD 2.8) to 47 patients
(Month 1, mean score 4.4, SD 2.9), with varying numbers of patients for
each defined time point.
Function was assessed using the ODI, which ranges from 0 to 100,
with higher scores indicating increased disability/impairment. Of the
73 patients in the lumbar group, 59 were assessed for ODI scores at
baseline and had a mean score of 52.5, SD 18.7. Between Month 1 and
Month 6+ the number of lumbar patients assessed for ODI scores ranged
from 3 patients (Month 5, mean score 33.3, SD 19.8) to 38 patients
(Month 1, mean score 48.1, SD 19.7), with varying numbers of patients
for each defined time point. Of the 73 patients in the cervical group,
56 were assessed for ODI scores at baseline and had a mean score of
53.6, SD 18.2. Between Month 1 and Month 6+ the number of cervical
patients assessed for ODI score ranged from 1 patient (Month 5, mean
score 80, no SD noted) to 41 patients (Month 1, mean score 48.6, SD
20.5), with varying numbers of patients for each defined time point.
The percentages of patients not taking pain medicines per day for
the lumbar and cervical groups over time were assessed. Of the 73
patients in the lumbar group, 69 were assessed at baseline and 27.5
percent of the 69 patients were not taking pain medication. Between
Month 1 and Month 6+ the number of lumbar patients assessed for not
taking pain medicines ranged from 5 patients (Month 5, 80 percent were
not taking pain medicines) to 46 patients (Month 1, 54.3 percent were
not taking pain medicines), with varying numbers of patients for each
defined time point. Of the 73 patients in the cervical group, 72 were
assessed and 22.2 percent of the 72 patients were not taking pain
medicines at baseline. Between Month 1 and Month 6+ the number of
cervical patients assessed for not taking pain medicines ranged from 2
patients (Month 5, 100 percent were not taking pain medicines) to 50
patients (Month 1, 70 percent were not taking pain medicines), with
varying numbers of patients for each defined time point.
According to the applicant, both the lumbar and cervical groups
showed a trend of improvement in all four clinical outcomes over time
for which they collected data in their case series. However, the
applicant also indicated that the trend was difficult to assess due to
the relatively limited number of subjects with available assessments
more than 4 months post-implant. The applicant shared that it had
missing values for over 80 percent of the subjects in the study after
the 4th post-operative month. According to the applicant and its
results of the clinical evaluation, which was based on data from less
than 20 percent of subjects, there was a statistically significant
reduction in back pain for nanoLOCK[reg] patients from ``Baseline,''
based on improvement at earlier than standard time points.

[[Page 20318]]

We are concerned that the small sample size of patients assessed at
each timed follow-up point for each of the clinical outcomes evaluated
in the case series limits our ability to draw meaningful conclusions
from these results. The applicant provided t-test results for the
lumbar and cervical groups assessed for pain (back, leg, and arm). We
are concerned that the t-test resulting from small sample sizes (for
example, 2 of 73 patients in Month 5, and 5 of 73 patients in Month 6+)
does not indicate a statistically meaningful improvement in pain
scores.
Based on the results of the case series provided by the applicant,
we are unable to determine whether the findings regarding extremity and
back pain, ODI scores, and percentage of subjects not taking pain
medication for patients who received treatment involving the Titan
Spine nanoLOCK[reg] devices represent a substantial clinical
improvement due to the inconsistent sample size over time across both
treatment arms in all evaluated outcome measures. The quantity of
missing data in this case series, along with the lack of explanation
for the missing data, raises concerns for the interpretation of these
results. We also are unable to determine based on this case series
whether there were improvements in extremity pain and back pain, ODI
scores, and percentage of subjects not taking pain medicines for
patients who received treatment involving the Titan Spine nanoLOCK[reg]
devices versus conventional and other intervertebral body fusion
devices, as there were no comparisons to current therapies. As noted
above, the applicant did not provide an explanation of why the outcomes
studied in the case series were chosen for review. Therefore, we
believe that we may have insufficient information to determine if the
outcomes studied in the case series are validated proxies for evidence
that the nanoLOCK[reg]'s surface promotes greater osteoblast
differentiation when compared to use of PEEK-based surfaces. We are
inviting public comments regarding our concerns, including with respect
to why the outcomes studied in the case series were chosen for review.
The applicant's second clinical evaluation was a case-control study
with a 1:5 case control ratio. The applicant used deterministically
linked, de-identified, individual[dash]level health care claims,
electronic medical records (EMR), and other data sources to identify 70
cases and 350 controls for a total sample size of 420 patients. The
applicant also identified OM1^TM data source and noted that
the OM1^TM data source reflects data from all U.S. States and
territories and is representative of the U.S. national population. The
applicant used OM1^TM data between January 2016 and June
2017, and specifically indicated that these data contain medical and
pharmacy claims information, laboratory data, vital signs, problem
lists, and other clinical details. The applicant indicated that cases
were selected using the ICD-10-PCS Section ``X'' New Technology codes
listed above and controls were chosen from fusion spine procedures
(Fusion Spine Anterior Cervical, Fusion Spine Anterior Cervical and
Discectomy, Fusion Spine Anterior Posterior Cervical, Fusion Spine
Transforaminal Interbody Lumbar, Fusion Spine Cervical Thoracic, Fusion
Spine Transforaminal Interbody Lumbar with Navigation, and Fusion Spine
Transforaminal Interbody Lumber Robot-Assisted). Further, the applicant
stated that cases and controls were matched by age (within 5 years),
year of surgery, Charlson Comorbidity Index, and gender. According to
the applicant, regarding clinical outcomes studied, unlike the case
series, the case-control study captured Charlson Comorbidity Index, the
average length of stay (ALOS), and 30-day unplanned readmissions; like
the case series, this case-control study captured the use of pain
medications by assessing the cumulative post-surgical opioid use.
The mean age for all patients in the study was 55 years old, and 47
percent were male. For the clinical length of stay outcome, the
applicant noted that the mean length of stay was slightly longer among
control patients, 3.9 days (SD = 5.4) versus 3.2 days (SD = 2.9) for
cases, and a larger proportion of patients in the control group had
lengths of stay equal to or longer than 5 days (21 percent versus 17
percent). Three control patients (0.8 percent) were readmitted within
30 days compared to zero readmissions among case patients. A slightly
lower proportion of case patients were on opioids 3 months post-surgery
compared to control patients (15 percent versus 16 percent).
We are concerned that there may be significant outliers not
identified in the case and control arms because for the mean length of
stay outcome, the standard deviation for control patients (5.4 days) is
larger than the point estimate (3.9 days). Based on the results of this
clinical evaluation provided by the applicant, we are unable to
determine whether the findings regarding lengths of stay and cumulative
post-surgical opioid use for patients who received treatment involving
the nanoLOCK[reg] devices versus conventional intervertebral body
fusion devices represent a substantial clinical improvement. Without
further information on selection of controls and whether there were
adjustments in the statistical analyses controlling for confounding
factors (for example, cause of back pain, level of experience of the
surgeon, BMI and length of pain), we are concerned that the
interpretation of the results may be limited. Finally, we are concerned
that the current data does not adequately support a strong association
between the outcome measures of length of stay, readmission rates, and
use of opioids and the use of nano-surface textures in the
manufacturing of the Titan Spine nanoLOCK[reg] device. For these
reasons, we are concerned that the current data do not support a
substantial clinical improvement over the currently available devices
used for lumbar and cervical DDD treatment.
We note that the applicant indicated its intent to submit the
results of additional ongoing studies to support the evidence of
substantial clinical improvement over existing technologies for
patients who receive treatment involving the nanoLOCK[reg] devices
versus patients receiving treatment involving other interbody fusion
devices. We are inviting public comments on whether the Titan Spine
nanoLOCK[reg] meets the substantial clinical improvement criterion.
Below we summarize and respond to written public comments received
regarding the nanoLOCK[reg] during the open comment period in response
to the New Technology Town Hall meeting notice published in the Federal
Register.
Comment: One commenter focused on two items related to the
substantial clinical improvement and the lack of real-world evidence
and published studies regarding the nanoLOCK[reg] technologies. The
first item referenced by the commenter related to CMS' concern
presented in the FY 2017 IPPS/LTCH PPS final rule that the results of
the in vitro studies that the applicant for the nanoLOCK[reg]
technology relied upon in its application may not have necessarily
correlated with the clinical results specified by the applicant.
Specifically, because at that time the applicant had only conducted in
vitro studies, without obtaining any clinical data from live patients
during a specific clinical trial, CMS stated that it was unable to
substantiate the clinical results that the applicant believed the
technology achieved from a clinical standpoint based on the results of
the studies provided. As a result, CMS stated that it was concerned
that the results of the studies provided by the

[[Page 20319]]

applicant did not demonstrate that the Titan Spine nanoLOCK[reg]
technologies met the substantial clinical improvement criterion. The
commenter also indicated that it believed the applicant has yet to
publish data that would satisfy the concerns CMS noted in the FY 2017
IPPS/LTCH PPS final rule. In addition, the commenter noted that the
applicant suggested that the health care community has started to move
away from randomized controlled trials toward real-world evidence, and
then presented claims analyses that attempted to link any assumed
substantial clinical improvement in patient outcomes from fusion
surgery to the nanoLOCK[reg] technology. In response to this assertion,
the commenter stated that without a randomized controlled study of this
technology as compared to the standard of care or, as CMS noted in FY
2017, clinical data from live patients during a specific clinical
trial, these links cannot be scientifically substantiated. The
commenter also noted that none of the studies presented during the
February 13, 2018 New Technology Town Hall meeting appear to be
published at this time, which would subject them to a rigorous peer-
reviewed process. The commenter continued to support CMS' concern
previously expressed in the FY 2017 IPPS/LTCH PPS final rule regarding
whether substantial clinical improvement has been demonstrated.
The second item of focus referenced by the commenter was also
presented by CMS in the FY 2017 IPPS/LTCH PPS final rule. The commenter
noted that there are other titanium surfaced devices currently
available on the U.S. market. In the FY 2017 IPPS/LTCH PPS final rule,
CMS stated that, while these devices do not use the Titan Spine
nanoLOCK[reg] technology, their surfaces also are made of titanium.
Therefore, CMS believed that the Titan Spine nanoLOCK[reg] interbody
devices may be substantially similar to currently available titanium
interbody devices. The commenter stated that it agreed with the
statements CMS made in the FY 2017 IPPS/LTCH PPS final rule and also
believed that the Titan Spine nanoLOCK[reg] technology is not only
substantially similar to other currently available titanium interbody
devices, but also is similar to other technologies with microscopic,
roughened surfaces with nano-scale features. The commenter indicated
that the verification of these surfaces and visualization of nano-scale
features in other orthopedic and spinal implants have been confirmed in
consensus standards, as well as in electron microscopy techniques,
including atomic force microscopy. In addition, the commenter stated
that the success of these devices at an in vitro level has been
reported in the peer-reviewed literature, similar to that published on
the nanoLOCK[reg]. Despite verification of the applicant's claims
regarding these surfaces, visualization of nano-scale features, and
success of these devices at an in vitro level being reported in peer-
reviewed literature, the commenter believed that, at this time, there
is not enough scientifically[dash]validated evidence of improvement in
patient outcomes to substantiate approval of new technology add-on
payments for any device manufactured with nano-scale features,
including the Titan Spine nanoLOCK[reg] technology.
Response: We appreciate the commenter's input. We will take these
comments into consideration when deciding whether to approve new
technology add-on payments for the Titan Spine nanoLock[reg] for FY
2019.
Comment: One commenter supported the approval of new technology
add-on payments for the Titan Spine nanoLock[reg] technology. The
commenter stated that Titan Spine is the only company that has received
FDA approval for the use of ``nanotechnology'' in its indication for
treatment use and has published substantial research on the cellular
impact of its unique topographic, nano-textured surface. (We note, as
described above, this technology is currently FDA cleared (not FDA
approved) and the technology was available on the U.S. market once
validations and clearances were completed.) The commenter asserted
that, for these reasons, the nanoLOCK[reg] represents an emerging
technology that should not be considered substantially similar to other
spinal technologies on the market. The commenter further asserted that
the real[dash]world evidence gathered from multiple, independent data
sources (including actual electronic medical records (EMR) and
healthcare claims) on nanoLOCK[reg] usage in the treatment of patients
consistently shows patient improvement in terms of clinically and
economically relevant outcomes--faster recovery times, reduced length
of hospital stays, and reductions in downstream medical costs such as
opiate utilization, among others. The commenter stated that impressive
patient outcomes by use of the nanoLOCK[reg] are unmatched by other
competing devices, improving patient outcomes of Medicare beneficiaries
with serious spinal pathologies.
Response: We appreciate the commenters' input. We will take these
comments into consideration when deciding whether to approve new
technology add-on payments for the Titan Spine nanoLock[reg] for FY
2019.
g. Plazomicin
Achaogen, Inc. submitted an application for new technology add-on
payments for Plazomicin for FY 2019. According to the applicant,
Plazomicin is a next-generation aminoglycoside antibiotic, which has
been found in vitro to have enhanced activity against many multi-drug
resistant (MDR) gram-negative bacteria. The proposed indication for the
use of Plazomicin, which had not received FDA approval as of the time
of the development of this proposed rule, is for the treatment of adult
patients who have been diagnosed with the following infections caused
by designated susceptible microorganisms: (1) Complicated urinary tract
infection (cUTI), including pyelonephritis; and (2) bloodstream
infections (BSIs). The applicant stated that it expects that Plazomicin
would be reserved for use in the treatment of patients who have been
diagnosed with these types of infections who have limited or no
alternative treatment options, and would be used only to treat
infections that are proven or strongly suspected to be caused by
susceptible microorganisms.
The applicant stated that there is a strong need for antibiotics
that can treat infections caused by MDR Enterobacteriaceae,
specifically carbapenem resistant Enterobacteriaceae (CRE).
Life[dash]threatening infections caused by MDR bacteria have increased
over the past decade, and the patient population diagnosed with
infections caused by CRE is projected to double within the next 5
years, according to the Centers for Disease Control and Prevention
(CDC). Infections caused by CRE are often associated with poor patient
outcomes due to limited treatment options. Patients who have been
diagnosed with BSIs due to CRE face mortality rates of up to 50
percent. Patients most at risk for CRE infections are those with CRE
colonization, recent hospitalization or stay in a long-term care or
skilled-nursing facility, an extensive history of antibacterial use,
and whose care requires invasive devices like urinary catheters,
intravenous (IV) catheters, or ventilators. The applicant estimated,
using data from the Center for Disease Dynamics, Economics & Policy
(CDDEP), that the Medicare population that has been diagnosed with
antibiotic-resistant cUTI numbers approximately 207,000 and
approximately 7,000 for BSIs/sepsis due to CRE.

[[Page 20320]]

The applicant noted that due to the public health concern of
increasing antibiotic resistance and the need for new antibiotics to
effectively treat MDR infections, Plazomicin has received the following
FDA designations: Breakthrough Therapy; Qualified Infectious Disease
product, Priority Review; and Fast Track. The applicant noted that
Breakthrough Therapy designation was granted on May 17, 2017, for the
treatment of bloodstream infections (BSIs) caused by certain
Enterobacteriaceae in patients who have been diagnosed with these types
of infections who have limited or no alternative treatment options. The
applicant noted that Plazomicin is the first antibacterial agent to
receive this designation. The applicant noted that on December 18,
2014, the FDA designated Plazomicin as a Qualified Infectious Disease
Product (QIDP) for the indications of hospital-acquired bacterial
pneumonia (HAPB), ventilator-associated bacterial pneumonia (VABP), and
complicated urinary tract infection (cUTI), including pyelonephritis
and catheter-related blood stream infections (CRBSI). The applicant
noted that Fast Track designation was granted by the FDA on August 12,
2012, for the Plazomicin development program for the treatment of
serious and life-threatening infections due to CRE. Plazomicin had not
received approval from the FDA as of the time of the development of
this proposed rule. However, the applicant indicated that it
anticipates receiving approval from the FDA by July 1, 2018. The
applicant has submitted a request for approval for a unique ICD-10-PCS
procedure code for the use of Plazomicin, beginning with FY 2019.
As discussed earlier, if a technology meets all three of the
substantial similarity criteria, it would be considered substantially
similar to an existing technology and would not be considered ``new''
for purposes of new technology add-on payments.
With regard to the first criterion, whether a product uses the same
or a similar mechanism of action to achieve a therapeutic outcome, the
applicant asserted that Plazomicin does not use the same or similar
mechanism of action to achieve a therapeutic outcome as any other drug
assigned to the same or a different MS-DRG. The applicant stated that
Plazomicin has a unique chemical structure designed to improve activity
against aminoglycoside-resistant bacteria, which also are often
resistant to other key classes of antibiotics, including beta-lactams
and carbapenems. Bacterial resistance to aminoglycosides usually occurs
through enzymatic modification by aminoglycoside modifying enzymes
(AMEs) to compromise binding the target bacterial site. According to
the applicant, AMEs were found in 98.6 percent of aminoglycoside
nonsusceptible E. coli, Klebsiella spp, Enterobacter spp, and Proteus
spp collected in 2016 U.S. surveillance studies. Genes encoding AMEs
are typically located on elements that also carry other causes of
antibiotic resistance like B-lactamase and/or carbapenemase genes.
Therefore, extended spectrum beta-lactamases (ESBL) producing
Enterobacteriaceae and CRE are commonly resistant to currently
available aminoglycosides. According to the applicant, Plazomicin
contains unique structural modifications at key positions in the
molecule to overcome antibiotic resistance, specifically at the 6 and
N1 positions. These side chain substituents shield Plazomicin from
inactivation by AMEs, such that Plazomicin is not inactivated by any
known AMEs, with the exception of N[dash]acetyltransferase (AAC) 2'-Ia,
-Ib, and -Ic, which is only found in Providencia species. According to
the applicant, as an aminoglycoside, Plazomicin also is not hydrolyzed
by B-lactamase enzymes like ESBLs and carbapenamases. Therefore, the
applicant asserted that Plazomicin is a potent therapeutic agent for
treating MDR Enterobacteriaceae, including aminoglycoside-resistant
isolates, CRE strains, and ESBL-producers.
The applicant asserted that the mechanism of action is new due to
the unique chemical structure. With regard to the general mechanism of
action against bacteria, we are concerned that the mechanism of action
of Plazomicin appears to be similar to other aminoglycoside
antibiotics. As with other aminoglycosides, Plazomicin is bactericidal
through inhibition of bacterial protein synthesis. The applicant
maintained that the structural changes to the antibiotic constitute a
new mechanism of action because it allows the antibiotic to remain
active despite AMEs. Additionally, the applicant stated that Plazomicin
would be the first, new aminoglycoside brought to market in over 40
years.
We are inviting public comments on whether Plazomicin's mechanism
of action is new, including comments in response to our concern that
its mechanism of action to eradicate bacteria (inhibition of bacterial
protein synthesis) may be similar to that of other aminoglycosides,
even if improvements to its structure may allow Plazomicin to be active
even in the presence of common AMEs that inactivate currently marketed
aminoglycosides.
With respect to the second criterion, whether a product is assigned
to the same or a different MS-DRG, we believe that potential cases
representing patients who may be eligible for treatment involving
Plazomicin would be assigned to the same MS-DRGs as cases representing
patients who receive treatment for UTI or bacteremia.
With respect to the third criterion, whether the new use of the
technology involves the treatment of the same or similar type of
disease and the same or similar patient population, the applicant
asserted that Plazomicin is intended for use in the treatment of
patients who have been diagnosed with cUTI, including pyelonephritis,
and bloodstream infections, who have limited or no alternative
treatment options. Because the applicant anticipates that Plazomicin
will be reserved for use in the treatment of patients who have limited
or no alternative treatment options, the applicant believed that
Plazomicin may be indicated to treat a new patient population for which
no other technologies are available. However, it is possible that
existing antimicrobials could also be used to treat those same bacteria
Plazomicin is intended to treat. Specifically, the applicant is seeking
FDA approval for use in the treatment of patients who have been
diagnosed with cUTI, including pyelonephritis, caused by the following
susceptible microorganisms: Escherichia coli (including cases with
concurrent bacteremia), Klebsiella pneumoniae, Proteus spp (including
P. mirabilis and P. vulgaris), and Enterobactercloacae, and for use in
the treatment of patients who have been diagnosed with BSIs caused by
the following susceptible microorganisms: Klebsiella pneumonia and
Escherichia coli. Because the susceptible organisms for which
Plazomicin is proposed to be indicated include nonresistant strains
that existing antibiotics may effectively treat, we are concerned that
Plazomicin may not treat a new patient population. Therefore, we are
inviting public comments on whether Plazomicin treats a new type of
disease or a new patient population. We also are inviting public
comments on whether Plazomicin is substantially similar to any existing
technologies and whether it meets the newness criterion.
With regard to the cost criterion, the applicant conducted the
following analysis to demonstrate that the technology meets the cost
criterion. In order to identify the range of MS-DRGs that potential
cases representing

[[Page 20321]]

patients who have been diagnosed with the specific types of infections
for which the technology has been proposed to be indicated for use in
the treatment of and who may be potentially eligible for treatment
involving Plazomicin may map to, the applicant identified all MS-DRGs
in claims that included cases representing patients who have been
diagnosed with UTI or Septicemia. The applicant searched the FY 2016
MedPAR data for claims reporting 16 ICD-10-CM diagnosis codes for UTI
and 45 ICD-10-CM diagnosis codes for Septicemia and identified a total
of 2,046,275 cases assigned to 702 MS-DRGs. The applicant also
performed a similar analysis based on 75 percent of identified claims,
which spanned 43 MS-DRGs. MS-DRG 871 (Septicemia or Severe Sepsis
without Mechanical Ventilation 96+ hours with MCC) accounted for
roughly 25 percent of all cases in the first analysis of the 702 MS-
DRGs identified, and almost 35 percent of the cases in the second
analysis of the 43 MS-DRGs identified. Other MS-DRGs with a high volume
of cases based on mapping the ICD-10-CM diagnosis codes, in order of
number of discharges, were: MS-DRG 872 (Septicemia or Severe Sepsis
without Mechanical Ventilation 96+ hours without MCC); MS-DRG 690
(Kidney and Urinary Tract Infections without MCC); MS-DRG 689 (Kidney
and Urinary Tract Infections with MCC); MS-DRG 853 (Infectious and
Parasitic Diseases with O.R. Procedure with MCC); and MS-DRG 683 (Renal
Failure with CC).
The applicant calculated an average unstandardized case-weighted
charge per case using 2,046,275 identified cases (100 percent of all
cases) and using 1,533,449 identified cases (75 percent of all cases)
of $69,414 and $63,126, respectively. The applicant removed 50 percent
of the charges associated with other drugs (associated with revenue
codes 025x, 026x, and 063x) from the MedPAR data because the applicant
anticipates that the use of Plazomicin would reduce the charges
associated with the use of some of the other drugs, noting that this
was a conservative estimate because other drugs would still be required
for these patients during their hospital stay. The applicant then
standardized the charges and applied the 2[dash]year inflation factor
of 9.357 percent from the FY 2018 IPPS/LTCH PPS final rule (82 FR
38527) to inflate the charges from FY 2016 to FY 2018. No charges for
Plazomicin were added in the analysis because the applicant explained
that the anticipated price for Plazomicin has yet to be determined.
Based on the FY 2018 IPPS/LTCH PPS Table 10 thresholds, the average
case-weighted threshold amount was $56,996 in the first scenario
utilizing 100 percent of all cases, and $55,363 in the second scenario
utilizing 75 percent of all cases. The inflated average case-weighted
standardized charge per case was $62,511 in the first scenario and
$57,054 in the second analysis. Because the inflated average case-
weighted standardized charge per case exceeds the average case-weighted
threshold amount in both scenarios, the applicant maintained that the
technology meets the cost criterion. The applicant noted that the case-
weighted threshold amount is met before including the average per
patient cost of the technology in both analyses. As such, the applicant
anticipated that the inclusion of the cost of Plazomicin, at any price
point, would further increase charges above the average case-weighted
threshold amount.
The applicant also supplied additional cost analyses, directing
attention at each of the two proposed indications individually; the
cost analyses considered potential cases representing patients who have
been diagnosed with cUTI who may be eligible for treatment involving
Plazomicin separately from potential cases representing patients who
have been diagnosed with BSI/Bacteremia who may be eligible for
treatment involving Plazomicin, with the cost analysis for each
considering 100 percent and 75 percent of identified cases using the FY
2016 MedPAR data and the FY 2018 GROUPER Version 36. The applicant
reported that, for potential cases representing patients who have been
diagnosed with Bacteremia and who may be eligible for treatment
involving Plazomicin, 100 percent of identified cases spanned 539 MS-
DRGs, with 75 percent of the cases mapping to the following 4 MS-DRGs:
871 (Septicemia or Severe Sepsis without Mechanical Ventilation 96+
hours with MCC), 872 (Septicemia or Severe Sepsis without Mechanical
Ventilation 96+ hours without MCC), 853 (Infectious and Parasitic
Diseases with O.R. Procedure with MCC), and 870 (Septicemia or Severe
Sepsis with Mechanical Ventilation 96+ hours).
According to the applicant, for potential cases representing
patients who have been diagnosed with cUTI and who may be eligible for
treatment involving Plazomicin, 100 percent of identified cases mapped
to 702 MS-DRGs, with 75 percent of the cases mapping to 56 MS-DRGs.
Potential cases representing patients who have been diagnosed with
cUTIs and who may be eligible for treatment involving Plazomicin
assigned to MS-DRG 871 (Septicemia or Severe Sepsis without Mechanical
Ventilation 96+ hours with MCC) accounted for approximately 18 percent
of all of the cases assigned to any of the identified 56 MS-DRGs (75
percent of cases sensitivity analysis), followed by MS-DRG 690 (Kidney
and Urinary Tract Infections without MCC), which comprised almost 13
percent of all of the cases assigned to any of the identified 56 MS-
DRGs. Two other common MS-DRGs containing potential cases representing
potential patients who may be eligible for treatment involving
Plazomicin who have been diagnosed with the specific type of indicated
infections for which the technology is intended to be used, using the
applicant's analysis approach for UTI based on mapping the ICD-10-CM
diagnosis codes were: MS-DRG 872 (Septicemia or Severe Sepsis without
Mechanical Ventilation 96+ hours without MCC) and MS-DRG 689 (Kidney
and Urinary Tract Infections with MCC).
For potential cases representing patients who have been diagnosed
with BSI and who may be eligible for treatment involving Plazomicin,
the applicant calculated the average unstandardized case-weighted
charge per case using 1,013,597 identified cases (100 percent of all
cases) and using 760,332 identified cases (75 percent of all cases) of
$87,144 and $67,648, respectively. The applicant applied the same
methodology as the combined analysis above. Based on the FY 2018 IPPS/
LTCH PPS final rule Table 10 thresholds, the average case-weighted
threshold amount for potential cases representing patients who have
been diagnosed with BSI assigned to the MS-DRGs identified in the
sensitivity analysis was $66,568 in the first scenario utilizing 100
percent of all cases, and $61,087 in the second scenario utilizing 75
percent of all cases. The inflated average case-weighted standardized
charge per case was $77,004 in the first scenario and $60,758 in the
second scenario; in the 100 percent of Bacteremia cases sensitivity
analysis, the final inflated case-weighted standardized charge per case
exceeded the average case[dash]weighted threshold amount for potential
cases representing patients who have been diagnosed with BSI and who
may be eligible for treatment involving Plazomicin assigned to the MS-
DRGs identified in the sensitivity analysis by $10,436 before including
costs of Plazomicin. In the 75 percent of all cases sensitivity
analysis scenario, the

[[Page 20322]]

final inflated case-weighted standardized charge per case did not
exceed the average case[dash]weighted threshold amount for potential
cases representing patients who have been diagnosed with BSI assigned
to the MS-DRGs identified in the sensitivity analysis, at $329 less
than the average case-weighted threshold amount. Because the applicant
has not yet determined pricing for Plazomicin, however, it is possible
that Plazomicin may also exceed the average case-weighted threshold
amount for potential cases representing patients who have been
diagnosed with BSI and who may be eligible for treatment involving
Plazomicin assigned to the MS-DRGs identified in the 75 percent cases
sensitivity analysis.
For potential cases representing patients who have been diagnosed
with cUTI and who may be eligible for treatment involving Plazomicin,
the applicant calculated the average unstandardized case-weighted
charge per case using 100 percent of all cases and 75 percent of all
cases of $59,908 and $48,907, respectively. The applicant applied the
same methodology as the combined analysis above. Based on the FY 2018
IPPS/LTCH PPS final rule Table 10 thresholds, the average case-weighted
threshold amount for potential cases representing patients who have
been diagnosed with cUTI and who may be eligible for treatment
involving Plazomicin assigned to the MS-DRGs identified in the first
scenario utilizing 100 percent of all cases was $51,308, and $46,252 in
the second scenario utilizing 75 percent of all cases. The inflated
average case-weighted standardized charge per case was $53,868 in the
first scenario and $45,185 in the second scenario. In the 100 percent
of cUTI cases sensitivity analysis, the final inflated
case[dash]weighted standardized charge per case exceeded the average
case-weighted threshold amount for potential cases representing
patients who have been diagnosed with cUTI and who may be eligible for
treatment involving Plazomicin assigned to the MS-DRGs identified in
the 100 percent of all cases sensitivity analysis by $2,560 before
including costs of Plazomicin. In the 75 percent of all cases scenario,
the final inflated case-weighted standardized charge per case did not
exceed the average case-weighted threshold amount for potential cases
representing patients who have been diagnosed with cUTI and who may be
eligible for treatment involving Plazomicin assigned to the MS-DRGs
identified in the 75 percent sensitivity analysis, at $1,067 less than
the average case-weighted threshold amount. Because the applicant has
not yet determined pricing for Plazomicin, however, it is possible that
Plazomicin may also exceed the average case[dash]weighted threshold
amount for potential cases representing patients who have been
diagnosed with cUTI and who may be eligible for treatment involving
Plazomicin assigned to the MS-DRGs identified in the 75 percent of all
cases sensitivity analysis if charges for Plazomicin are more than
$1,067. We are inviting public comments on whether Plazomicin meets the
cost criterion.
With respect to the substantial clinical improvement criterion, the
applicant asserted that Plazomicin is a next generation aminoglycoside
that offers a treatment option for a patient population who have
limited or no alternative treatment options. Patients who have been
diagnosed with BSI or cUTI caused by MDR Enterobacteria, particularly
CRE, are difficult to treat because carbapenem resistance is often
accompanied by resistance to additional antibiotic classes. For
example, CRE may be extensively drug resistant (XDR) or even pandrug
resistant (PDR). CRE are resistant to most antibiotics, and sometimes
the only treatment option available to health care providers is a last-
line antibiotic (such as colistin and tigecycline) with higher
toxicity. According to the applicant, Plazomicin would give the
clinician an alternative treatment option for patients who have been
diagnosed with MDR bacteria like CRE because it has demonstrated
activity against clinical isolates that possess a broad range of
resistance mechanisms, including ESBLs, carbapenemases, and
aminoglycoside modifying enzymes that limit the utility of different
classes of antibiotics. Plazomicin also can be used to treat patients
who have been diagnosed with BSI caused by resistant pathogens, such as
ESBL[dash]producing Enterobacteriaceae, CRE, and aminoglycoside-
resistant Enterobacteriaceae. The applicant maintained that Plazomicin
is a substantial clinical improvement because it offers a treatment
option for patients who have been diagnosed with serious bacterial
infections that are resistant to current antibiotics. We note that
Plazomicin is not indicated exclusively for resistant bacteria, but
rather for certain susceptible organisms of gram[dash]negative
bacteria, including resistant and nonresistant strains for which
existing antibiotics may be effective. We are concerned that the
applicant focused solely on Plazomicin's activity for resistant
bacteria and did not supply information demonstrating substantial
clinical improvement in treating nonresistant strains in the bacteria
families for which Plazomicin is indicated.
The applicant stated that Plazomicin also meets the substantial
clinical improvement criterion because it significantly improves
clinical outcomes for a patient population compared to currently
available treatment options. Specifically, the applicant asserted that
Plazomicin has: (1) A mortality benefit and improved safety profile in
treating patients who have been diagnosed with BSI due to CRE; and (2)
statistically better outcomes at test-of-cure in patients who have been
diagnosed with cUTI, including higher eradication rates for ESBL-
producing pathogens, and lower rate of subsequent clinical relapses.
The applicant conducted two Phase III studies, CARE and EPIC. The CARE
trial compared Plazomicin to colistin, a last-line antibiotic that is a
standard of care agent for patients who have been diagnosed with BSI
when caused by CRE. The EPIC trial compared Plazomicin to meropenem for
the treatment of patients who have been diagnosed with cUTI/acute
polynephritis.
The CARE clinical trial was a randomized, open label,
multi[dash]center Phase III study comparing the efficacy of Plazomicin
against colistin in the treatment of patients who have been diagnosed
with BSIs or hospital[dash]acquired bacterial pneumonia (HABP)/
ventilator-acquired bacterial pneumonia (VABP) due to CRE. Due to the
small number of enrolled patients with HAPB/VABP, however, results were
only analyzed for patients who had been diagnosed with BSI due to CRE.
The primary endpoint was day 28 all-cause mortality or significant
disease complications. Patients were randomized to receive 7 to 14 days
of IV Plazomicin or colistin, along with an adjunctive therapy of
meropenem or tigecycline. All-cause mortality and significant disease
complications were consistent regardless of adjunctive antibiotics
received, suggesting that the difference in outcomes was driven by
Plazomicin and colistin, with little impact from meropenem and
tigecycline. Follow[dash]up was done at test[dash]of[dash]cure (TOC; 7
days after last dose of IV study drug), end of study (EOS; day 28), and
long-term follow[dash]up (LFU; day 60). Safety analysis included all
patients; microbiological modified intent-to-treat (mMITT) analysis
included 17/18 Plazomicin and 20/21 colisitin patients. Baseline
characteristics like age, gender, APACHE II score, infection type,

[[Page 20323]]

baseline pathogens, creatinine clearance, and adjunctive therapy with
either meropenem or tigecycline were comparable in the Plazomicin and
colistin groups.
According to the applicant, the following results demonstrate a
reduced mortality benefit in the patients who had been diagnosed with
BSI subset. All-cause mortality at day 28 in the Plazomicin group was
more than 5 times less than in the colistin group and all-cause
mortality or significant complications at day 28 was reduced by 39
percent in the Plazomicin group compared to the colistin group. There
was a large sustained 60[dash]day survival benefit in the patients who
had been diagnosed with BSI subset, with survival approximately 70
percent in the Plazomicin group compared to 40 percent in the colistin
group. Additionally, according to the applicant, faster median time to
clearance of CRE bacteremia of 1.5 versus 6 days for Plazomicin versus
colistin and higher rate of documented clearance by day 5 (86 percent
versus 46 percent) supported the reduced mortality benefit due to
faster and more sustained clearance of bacteremia and also demonstrated
clinical improvement in terms of more rapid beneficial resolution of
the disease.
The applicant maintained that Plazomicin also represents a
substantial clinical improvement in improved safety outcomes. Patients
treated with Plazomicin had a lower incidence of renal events (10
percent versus 41.7 percent when compared to colistin), fewer Treatment
Emergent Adverse Events (TEAEs), specifically blood creatinine
increases and acute kidney injury, and approximately 30 percent fewer
serious adverse events were in the Plazomicin group. According to the
applicant, other substantial clinical improvements demonstrated by the
CARE study for use of Plazomicin in patients who had been diagnosed
with BSI included lower rate of superinfections or new infections,
occurring in half as many patients treated with Plazomicin versus
colistin (28.6 percent versus 66.7 percent).
According to the applicant, the CARE study demonstrates decreased
all-cause mortality and significantly reduced disease complications at
day 28 (EOS) and day 60 for patients who had been diagnosed with BSI,
in addition to a superior safety profile to colistin. However, the
applicant stated that, with the achieved enrollment, this study was not
powered to support formal hypothesis testing and p-values and 90
percent confidence intervals are provided for descriptive purposes. The
total number of patients who had been diagnosed with BSI was 29, with
14 receiving Plazomicin and 15 receiving colistin. While we understand
the difficulty enrolling a large number of patients who have been
diagnosed with BSI caused by CRE due to severity of the illness and the
need for administering treatment promptly, we are concerned that
results indicating reduced mortality and treatment advantages over
existing standard of care for patients who have been diagnosed with BSI
due to CRE are not statistically significant due to the small sample
size. Therefore, we are concerned that the results from the CARE study
cannot be used to support substantial clinical improvement.
The EPIC clinical trial was a randomized, multi[dash]center,
multi[dash]national, double[dash]blind study evaluating the efficacy
and safety of Plazomicin compared with meropenem in the treatment of
patients who have been diagnosed with cUTI based on composite cure
endpoint (achieving both microbiological eradication and clinical cure)
in the microbiological modified intent-to-treat (mMITT) population.
Patients received between 4 to 7 days of IV therapy, followed by
optional oral therapy like levofloxacin (or any other approved oral
therapy) as step down therapy for a total of 7 to 10 days of therapy.
Test[dash]of[dash]cure (TOC) was done 15 to 19 days and late
follow[dash]up (LFU) 24 to 32 days after the first dose of IV therapy.
Six hundred nine patients fulfilled inclusion criteria, and were
randomized to receive either Plazomicin or meropenem, with 306 patients
receiving Plazomicin and 303 patients receiving meropenem. Safety
analysis included 303 (99 percent) Plazomicin patients and 301 (99.3
percent) meropenem patients. mMITT analysis included 191 (62.4 percent)
Plazomicin patients and 197 (65 percent) meropenem patients; exclusion
from mMITT analysis was due to lack of study[dash]qualifying
uropathogen, which were pathogens susceptible to both Plazomicin and
meropenem. In the mMITT population, both groups were comparable in
terms of gender, age, percentage of patients who had been diagnosed
with cUTI/acute pyelonephritis (AP)/urosepsis/bacteremia/moderate renal
impairment at baseline.
According to the applicant, Plazomicin successfully achieved the
primary efficacy endpoint of composite cure (combined microbiological
eradication and clinical cure). At the TOC visit, 81.7 percent of
Plazomicin patients versus 70.1 percent of meropenem patients achieved
composite cure; this was statistically significant with a 95 percent
confidence interval. Plazomicin also demonstrated higher eradication
rates for key resistant pathogens than meropenem at both TOC (89.4
percent versus 75.5 percent) and LFU (77 percent versus 60.4 percent),
suggesting that the Plazomicin treatment benefit observed at TOC was
sustained. Specifically, Plazomicin demonstrated higher eradication
rates, defined as baseline uropathogen reduced to less than 104,
against the most common gram-negative uropathogens, including ESBL
producing (82.4 percent Plazomicin versus 75.0 percent meropenem) and
aminoglycoside resistant (78.8 percent Plazomicin versus 68.6 percent
meropenem) pathogens. This was statistically significant, although of
note, as total numbers of Enterobacteriaceae exceeded population of
mMITT (191 Plazomicin, 197 meropenem) this presumably included patients
who were otherwise excluded from the mMITT population.
According to the applicant, importantly, higher microbiological
eradication rates at the TOC and LFU visits were associated with a
lower rate of clinical relapse at LFU for Plazomicin treated patients
(3 versus 14, or 1.8 percent Plazomicin versus 7.9 percent meropenem),
with majority of the meropenem failures having had asymptomatic
bacteriuria; that is, positive urine cultures without clinical
symptoms, at TOC (21.1 percent), suggesting that the higher
microbiological eradication rate at the TOC visit in Plazomicin-treated
patients decreased the risk of subsequent clinical relapse. Plazomicin
decreased recurrent infection by four-fold compared to meropenem,
suggesting improved patient outcomes, such as reduced need for
additional therapy and re-hospitalization for patients who have been
diagnosed with cUTI. The safety profile of Plazomicin compared to
meropenem was similar. The applicant noted that higher bacteria
eradication results for Plazomicin were not due to meropenem
resistance, as only patients with isolates susceptible to both drugs
were included in the study. According to the applicant, the EPIC
clinical trial results demonstrate clear differentiation of Plazomicin
from meropenem, an agent considered by some as a gold-standard for
treatment of patients who have been diagnosed with cUTI in cases due to
resistant pathogens.
While the EPIC clinical trial was a non-inferiority study, the
applicant contended that statistically significant improved outcomes
and lower clinical relapse rates for patients treated with Plazomicin
demonstrate that Plazomicin meets the substantial clinical

[[Page 20324]]

improvement criterion for the cUTI indication. Specifically, according
to the applicant, the efficacy results for Plazomicin combined with a
generally favorable safety profile provide a compelling benefit-risk
profile for patients who have been diagnosed with cUTI, and
particularly those with infections due to resistant pathogens. Most
patients enrolled in the EPIC clinical trial were from Eastern Europe.
It is unclear how generalizable these results would be to patients in
the United States as the susceptibilities of bacteria vary greatly by
location. The applicant maintains that this is consistent with prior
studies and is unlikely to have affected the results of the study
because the pharmacokinetics of Plazomicin and meropenem are not
expected to be affected by race or ethnicity. However, bacterial
resistance can vary regionally and we are interested in how this data
can be extrapolated to a majority of the U.S. population. It is also
unknown how quickly resistance to Plazomicin might develop.
Additionally, the microbiological breakdown of the bacteria is unknown
without the full published results, and patients outside of the mMITT
population were included when the applicant reported the statistically
superior microbiological eradication rates of Enterobacteriaceae at
TOC. We are concerned whether there is still statistical superiority of
Plazomicin in the intended bacterial targets in the mMITT. Finally,
because both Plazomicin and meropenem were also utilized in conjunction
with levofloxacin, it is unclear to us whether combined antibiotic
therapy will continue to be required in clinical practice, and how
levofloxacin activity or resistance might affect the clinical outcome
in both patient groups.
We are inviting public comments on whether Plazomicin meets the
substantial clinical improvement criterion for patients who have been
diagnosed with BSI and cUTI, including with respect to whether
Plazomicin constitutes a substantial clinical improvement for the
treatment of patients who have been diagnosed with BSI who have limited
or no alternative treatment options, and whether statistically better
outcomes at test-of-cure visit, including higher eradication rates for
ESBL-producing pathogens, and lower rate of subsequent clinical
relapses constitute a substantial clinical improvement for patients who
have been diagnosed with cUTI.
We did not receive any public comments in response to the published
notice in the Federal Register regarding the substantial clinical
improvement criterion for Plazomicin or at the New Technology Town Hall
meeting.
h. GIAPREZA^TM
The La Jolla Pharmaceutical Company submitted an application for
new technology add-on payments for GIAPREZA^TM for FY 2019.
GIAPREZA^TM, a synthetic human angiotensin II, is
administered through intravenous infusion to raise blood pressure in
adult patients who have been diagnosed with septic or other
distributive shock.
The applicant stated that shock is a life-threatening critical
condition characterized by the inability to maintain blood flow to
vital tissues due to dangerously low blood pressure (hypotension).
Shock can result in organ failure and imminent death, such that
mortality is measured in hours and days rather than months or years.
Standard therapy for shock currently uses fluid and vasopressors to
raise the mean arterial pressure (MAP). The two classes of standard of
care (SOC) vasopressors are catecholamines and vasopressins. Patients
do not always respond to existing standard of care therapies.
Therefore, a diagnosis of shock can be a difficult and costly condition
to treat. According to the applicant, 35 percent of patients who are
diagnosed with shock fail to respond to standard of care treatment
options using catecholamines and go on to second-line treatment, which
is typically vasopressin. Eighty percent of patients on vasopressin
fail to respond and have no other alternative treatment options. The
applicant estimated that CMS covered charges to treat patients who are
diagnosed with vasodilatory shock who fail to respond to standard of
care therapy are approximately 2 to 3 times greater than the costs of
other conditions, such as acute myocardial infarction, heart failure,
and pneumonia. According to the applicant, one[dash]third of patients
in the intensive care unit are affected by vasodilatory shock, with
745,000 patients who have been diagnosed with shock being treated
annually, of whom approximately 80 percent are septic.
With respect to the newness criterion, according to the applicant,
the expanded access program (EAP), or FDA authorization for the
``compassionate use'' of an investigational drug outside of a clinical
trial, was initiated August 8, 2017. GIAPREZA^TM was granted
Priority Review status and received FDA approval on December 21, 2017,
for the use in the treatment of adults who have been diagnosed with
septic or other distributive shock as an intravenous infusion to
increase blood pressure. We note that the applicant has submitted a
request for approval for a unique ICD[dash]10[dash]PCS code for the
administration of GIAPREZA^TM beginning in FY 2019.
Currently, there are no ICD-10-PCS procedure codes to uniquely identify
procedures involving GIAPREZA^TM.
As discussed above, if a technology meets all three of the
substantial similarity criteria, it would be considered substantially
similar to an existing technology and would not be considered ``new''
for purposes of new technology add-on payments.
With regard to the first criterion, whether a product uses the same
or a similar mechanism of action to achieve a therapeutic outcome,
according to the applicant, GIAPREZA^TM is the first
synthetic formulation of human angiotensin II, a naturally occurring
peptide hormone in the human body. Angiotensin II is one of the major
bioactive components of the renin-angiotensin-aldosterone system
(RAAS), which serves as one of the body's central regulators of blood
pressure. Angiotensin II increases blood pressure through
vasoconstriction, increased aldosterone release, and renal control of
fluid and electrolyte balance. Current therapies for the treatment of
patients who have been diagnosed with shock do not leverage the RAAS.
The applicant asserted that GIAPREZA^TM is a novel treatment
with a unique mechanism of action relative to SOC treatments for
patients who have been diagnosed with shock, which is adequate fluid
resuscitation and vasopressors. Specifically, the two classes of SOC
vasopressors are catecholamines like Norepinephrine, epinephrine,
dopamine, and phenylephrine IV solutions, and vasopressins like
Vasostrict[reg] and vasopressin-sodium chloride IV solutions.
Catecholamines leverage the sympathetic nervous system and vasopressin
leverages the arginine-vasopressin system to regulate blood pressure.
However, the third system that works to regulate blood pressure, the
RAAS, is not currently leveraged by any available therapies to raise
mean arterial pressure in the treatment of patients who have been
diagnosed with shock. The applicant maintained that
GIAPREZA^TM is the first synthetic human angiotensin II
approved by the FDA and the only FDA-approved vasopressor that
leverages the RAAS and, therefore, GIAPREZA^TM utilizes a
different mechanism of action than currently available treatment
options.
The applicant explained that GIAPREZA^TM leverages the
RAAS, which is a body system not used by existing vasopressors to raise
blood pressure through inducing

[[Page 20325]]

vasoconstriction. We are concerned that GIAPREZA^TM's general
mechanism of action, increasing blood pressure by inducing
vasoconstriction through binding to certain G[dash]protein receptors to
stimulate smooth muscle contraction, may be similar to that of
norepinephrine, albeit leveraging a different body system. We are
inviting public comments on whether GIAPREZA^TM uses a
different mechanism of action to achieve a therapeutic outcome with
respect to currently available treatment options, including comments or
additional information regarding whether the mechanism of action used
by GIAPREZA^TM is different from that of other treatment
methods of stimulating vasoconstriction.
With respect to the second criterion, whether a product is assigned
to the same or a different MS-DRG, we believe that potential cases
representing patients who may be eligible for treatment involving
GIAPREZA^TM would be assigned to the same MS-DRGs as cases
representing patients who receive SOC treatment for a diagnosis of
shock. As explained below in the discussion of the cost criterion, the
applicant believed that potential cases representing patients who may
be eligible for treatment involving GIAPREZA^TM would be
assigned to MS-DRGs that contain cases representing patients who have
failed to respond to administration of fluid and vasopressor therapies.
With respect to the third criterion, whether the new use of the
technology involves the treatment of the same or similar type of
disease and the same or similar patient population, according to the
applicant, once patients have failed treatment using catecholamines,
treatment options for patients who have been diagnosed with severe
septic or other distributive shock are limited. Agents that were
previously available are each associated with their own adverse events
(AEs). The applicant noted that primary options that have been
investigated include vasopressin, corticosteroids, methylene blue, and
blood purification techniques. Of these options, the applicant stated
that only vasopressin has a recommendation as add on vasopressor
therapy in current treatment guidelines, but the recommendations are
listed as weak with moderate quality of evidence. According to the
applicant, there is uncertainty regarding vasopressin's effect on
mortality due to mixed clinical trial results, and higher doses of
vasopressin have been associated with cardiac, digital, and splanchnic
ischemia. Therefore, the applicant asserted that there is a significant
unmet medical need for treatments for patients who have been diagnosed
with septic or distributive shock who remain hypotensive, despite
adequate fluid and vasopressor therapy and for medications that can
provide catecholamine-sparing effects.
The applicant also noted that there is currently no standard of
care for addressing the clinical state of septic or other distributive
shock experienced by patients who fail to respond to fluid and
available vasopressor therapy. Additionally, no clinical evidence or
consensus for treatments is available.
Based on the applicant's statements as summarized above, it appears
that the applicant is asserting that GIAPREZA^TM provides a
new therapeutic treatment option for critically[dash]ill patients who
have been diagnosed with shock who have limited options and worsening
prognosis. However, we are concerned that GIAPREZA^TM may not
offer a treatment option to a new patient population, specifically
because the FDA approval for GIAPREZA^TM does not reserve the
use of GIAPREZA^TM only as a last-line drug or adjunctive
therapy for a subset of the patient population who have been diagnosed
with shock who have failed to respond to standard of care treatment
options. According to the FDA labeling, GIAPREZA^TM is a
vasoconstrictor to increase blood pressure in adult patients who have
been diagnosed with septic or other distributive shock. Patients who
have been diagnosed with septic or other distributive shock are not a
new patient population. Therefore, it appears that
GIAPREZA^TM is used to treat the same or similar type of
disease (a diagnosis of shock) and a similar patient population
receiving SOC therapy for the treatment of shock. We are inviting
public comments on whether GIAPREZA^TM meets the substantial
similarity criteria and the newness criterion.
With regard to the cost criterion, the applicant conducted an
analysis for a narrower indication, patients who have been diagnosed
with refractory shock who have failed to respond to standard of care
vasopressors, and an analysis for a broader indication of all patients
who have been diagnosed with septic or other distributive shock. We
believe that only this broader analysis, which reflects the patient
population for which the applicant's technology is approved by the FDA,
is relevant to demonstrate that the technology meets the cost criterion
and, therefore, we are only summarizing this broader analysis below. In
order to identify the range of MS-DRGs that potential cases
representing potential patients who may be eligible for treatment using
GIAPREZA^TM may map to, the applicant used two separate
analyses to identify the MS-DRGs for patients who have been diagnosed
with shock or related diagnoses. The applicant also performed three
sensitivity analyses on the MS-DRGs for each of the two selections: 100
Percent of the MS-DRGs, 80 percent of the MS-DRGs, and 25 percent of
the MS-DRGs. Therefore, a total of six scenarios were included in the
cost analysis.
The first analysis (Scenario 1) selected the MS-DRGs most
representative of the potential patient cases where treatment involving
GIAPREZA^TM would have the greatest clinical impact and
outcomes of improvement over present treatment options. The applicant
searched for 28 different ICD-9-CM codes under this scenario. The
second analysis (Scenario 2) used the 80 most relevant ICD-9-CM
diagnosis codes based on the inclusion criteria of the
GIAPREZA^TM Phase III clinical trial, ATHOS-3, and an
additional 8 ICD-9-CM diagnosis codes for clinical presentation
associated with vasodilatory or distributive shock patients failing
fluid and standard of care therapy to capture any additional potential
cases that may be applicable based on clinical presentations associated
with this patient population.
Among only the top quartile of potential patient cases, the single
MS-DRG representative of most potential patient cases was MS-DRG 871
(Septicemia or Severe Sepsis without Mechanical Ventilation >96 Hours
with MCC) for both ICD-9-CM diagnosis code selection scenarios, and in
both selections, it accounted for a potential patient case percentage
surpassing 25 percent. Because GIAPREZA^TM is not reserved
exclusively as a last-line drug based on the FDA indication, the
applicant removed 50 percent of drug charges for prior technologies or
other charges associated with prior technologies from the
unstandardized charges before standardization in order to account for
other drugs that may be replaced by the use of GIAPREZA^TM.
The applicant has not yet supplied CMS with pricing for
GIAPREZA^TM and did not include charges for the new
technology when conducting this analysis. For all analyses' scenarios,
the applicant standardized charges using the FY 2015 impact file and
then inflated the charges to FY 2019 using an inflation factor of
15.4181 percent (or 1.154181) by multiplying the inflation factor of
1.098446 in the FY 2017 IPPS/LTCH PPS final rule (81 FR 57286) by the
inflation factor of 1.05074 in the FY 2018 IPPS/LTCH PPS final rule (82
FR

[[Page 20326]]

38524). The final inflated average case[dash]weighted standardized
charge per case was calculated for each scenario and compared with the
average case-weighted threshold amount for each group of MS-DRGs based
on the thresholds in Table 10.
Results of the analyses for each of the two code selection
scenarios, each with three sensitivity analyses for a total of six
analyses, are summarized in the tables below:

----------------------------------------------------------------------------------------------------------------
Final average
Number of MS- Case- weighted inflated Amount
DRGs assessed Number of new technology standardized exceeded
Medicare cases add-on payment charge per threshold
threshold case
----------------------------------------------------------------------------------------------------------------
Cost Analysis Based on ICD-9-CM Diagnosis Code Scenario 1
----------------------------------------------------------------------------------------------------------------
ICD-9-CM Diagnosis Code
Selection (28 Codes):
100 Percent................. 439 120,966 $77,427 $77,427 $34,095
80 Percent.................. 10 96,102 77,641 100,167 22,526
25 Percent.................. 1 66,980 53,499 71,951 18,452
----------------------------------------------------------------------------------------------------------------
Cost Analysis Based on ICD-9-CM Diagnosis Code Scenario 2
----------------------------------------------------------------------------------------------------------------
ICD-9-CM Diagnosis Code
Selection (88 Codes):
100 Percent................. 466 164,892 78,675 112,174 33,499
80 Percent.................. 52 131,690 79,732 108,396 28,664
25 Percent.................. 1 67,016 53,499 71,688 18,189
----------------------------------------------------------------------------------------------------------------

The applicant maintained that, based on the Table 10 thresholds,
the inflated average case-weighted standardized charge per case in the
analyses exceeded the average case-weighted threshold amount. The
applicant noted that the inflated average case[dash]weighted
standardized charge per case exceeds the average case-weighted
threshold amount by at least $18,189, without the average per patient
cost of the technology. As such, the applicant anticipated that the
inclusion of the cost of GIAPREZA^TM, at any price point,
would further increase charges above the average case-weighted
threshold amount. Therefore, the applicant stated that the technology
meets the cost criterion. We note that we are unsure whether the
selection in both scenarios fully captures the broader indication for
which the FDA approved the use of GIAPREZA^TM. We are
inviting public comments on whether GIAPREZA^TM meets the
cost criterion, including with respect to the concern we have raised.
With respect to the substantial clinical improvement criterion, the
applicant summarized that it believes that GIAPREZA^TM
represents a substantial clinical improvement because it: (1) Addresses
an unmet medical need for patients who have been diagnosed with septic
or distributive shock that, despite standard of care vasopressors, are
unable to maintain adequate mean arterial pressure; (2) is the only
agent shown in randomized clinical trial to rapidly and sustainably
achieve or maintain target blood pressure in patients who do not
respond adequately to fluid and vasopressor therapy; (3) although not
powered for mortality, the ATHOS-3 trial demonstrated a strong trend to
reduce the risk of death in adults from septic or distributive shock
who remain hypotensive despite fluid therapy and vasopressor therapy, a
severe, life-threatening condition, for which there are no other
therapies; (4) provides a catecholamine-sparing effect; and (5) is
generally safe and well-tolerated, with no significant differences in
the percentages of patients with any grade adverse events or serious
adverse events when compared to placebo.
With regard to expanding on the statements above, the applicant
believes that the use of GIAPREZA^TM offers clinicians a
significant new tool to manage and treat severe hypotension in all
adult patients who have been diagnosed with septic or other
distributive shock who are unresponsive to existing vasopressor
therapies. The applicant also stated that the use of
GIAPREZA^TM provides a new therapeutic option for
critically[dash]ill adult patients who have been diagnosed with septic
or other distributive shock who have limited options and worsening
prognoses.
The applicant maintained that GIAPREZA^TM was shown to be
an effective treatment option for critically[dash]ill patients who have
been diagnosed with refractory shock. The applicant reported that a
randomized, double-blind placebo controlled trial called ATHOS-3 \154\
examined the ability of GIAPREZA^TM to increase mean arterial
pressure (MAP), with the primary endpoint being achievement of a MAP of
greater than or equal to 75 mmHg (the research-backed guideline set by
the Surviving Sepsis Campaign) or a 10 mmHg increase in baseline MAP.
Significantly more patients in the treatment arm met the primary
endpoint (69.9 percent versus 23.4 percent, P<0.001). The applicant
asserted that this MAP improvement constitutes a significant
substantial clinical improvement because patients treated with
GIAPREZA^TM were three times more likely to achieve
acceptable blood pressure than patients receiving the placebo. The MAP
significantly and rapidly increased in patients treated with
GIAPREZA^TM and was sustained over 48 hours consistent across
subgroups and the treatment effect of GIAPREZA^TM was
confirmed using multivariate analysis. The group treated with
GIAPREZA^TM also experienced a greater mean increase in MAP;
the MAP increased by a mean of 12.5 mmHg for the GIAPREZA^TM
group compared to a mean of 2.9 mmHg for the placebo group.
---------------------------------------------------------------------------

\154\ Khanna, A., English, S.W., Wang, X.S., et al.,
``Angiotensin II for the treatment of vasodilatory shock,''
[supplementary appendix] [published online ahead of print May 21,
2017], N Engl J Med., 2017, doi: 10.1056/NEJMoa1704154.
---------------------------------------------------------------------------

Second, the applicant maintained that GIAPREZA^TM
demonstrated potential improvement in organ function by lowering the
cardiovascular sequential organ failure assessment (SOFA) scores of
patients at 48 hours (-1.75 GIAPREZA^TM group versus -1.28
placebo group). However, we are concerned that lower cardiovascular
SOFA scores may not demonstrate substantial clinical improvement
because there was no difference in the improvement of other components
of

[[Page 20327]]

the SOFA score or the overall SOFA score.
Third, the applicant asserted that GIAPREZA^TM represents
a substantial clinical improvement because the use of
GIAPREZA^TM reduced the need to increase overall doses of
catecholamine vasopressors. The applicant stated that patients
receiving higher doses of catecholamine vasopressors suffer from
cardiac toxicity, organ dysfunction, and other metabolic complications
that are associated with higher mortality. By decreasing the overall
dosage of catecholamine vasopressors, GIAPREZA^TM potentially
reduces the adverse effects of vasopressors. The mean change in
catecholamine vasopressors in patients receiving GIAPREZA^TM
versus patients receiving the placebo at 3 hours was -0.03 versus 0.03
(P<0.001), showing that GIAPREZA^TM allowed for
catecholamines to be titrated down, while patients not receiving
GIAPREZA^TM required additional catecholamine doses. The
vasopressor mean doses were consistently lower in the
GIAPREZA^TM group, and at 48 hours, vasopressors had been
discontinued in 28.5 percent of patients in the placebo group versus
40.5 percent of the GIAPREZA^TM group. We note that, while
GIAPREZA^TM may potentially reduce certain adverse effects
associated with SOC treatments, the FDA labeling cautions that the use
of GIAPREZA^TM can cause dangerous blood clots with serious
consequences (clots in arteries and veins, including deep venous
thrombosis); according to the FDA label, prophylactic treatment for
blood clots should be used.
The applicant stated that while the study was not powered to detect
mortality effects, there was a nonsignificant trend toward longer
survival in the GIAPREZA^TM group. Overall mortality rates at
7 days and 8 days in the modified intent to treat (MITT) population
were 22 percent less in the GIAPREZA^TM group than in the
placebo group. At 28 days, the mortality rate in the placebo group was
54 percent versus 46 percent in the GIAPREZA^TM group.
However, the p-values for the decrease in mortality with
GIAPREZA^TM at 7 days, 8 days, and 28 days did not
demonstrate statistical significance.
The applicant concluded that GIAPREZA^TM is the first
commercial product to increase blood pressure in adults who have been
diagnosed with septic or other distributive shock that leverages the
renin-angiotensin-aldosterone system. The applicant stated that the
results of the ATHOS-3 study provide support for a well-tolerated new
therapeutic agent that demonstrates significant improvements in mean
arterial pressure. Additionally, the applicant noted that hypotension
in adults who have been diagnosed with septic or other distributive
shock is a prevalent life-threatening condition where therapeutic
options are limited and a high unmet medical need exists. The applicant
stated that the use of GIAPREZA^TM will represent a safe and
effective new therapy that not only leverages a system that current
therapies are not utilizing, but also offers a viable alternative where
one does not exist.
We understand that, in this heterogeneous and difficult to treat
patient population, studies assessing mortality as a primary endpoint
are difficult, and as such, surrogate endpoints (that is, achieving
baseline MAP) have been explored to assess the efficacy of treatments.
While the outcomes presented by the applicant, such as achieving target
MAP, lower SOFA scores, and reduced catecholamine usage, could be
surrogates for clinical outcomes in these patients, there is not a
strong pool of evidence connecting these single data points directly
with morbidity and mortality. Therefore, we are unsure whether
achieving target MAP, lower SOFA scores, and reduced catecholamine
usage represents a substantial clinical improvement or instead short-
term, temporary improvements without a change in overall patient
prognosis.
In response to this concern about MAP constituting a meaningful
measure for substantial clinical improvement, the applicant supplied
additional information from the current Surviving Sepsis guidelines,
which recommend an initial target MAP of 65 mmHg. The applicant
explained that as MAP falls below a critical threshold, inadequate
tissue perfusion occurs, potentially resulting in multiple organ
dysfunction and death. Therefore, early and adequate hemodynamic
support and treatment of hypotension is critical to restore adequate
organ perfusion and prevent worsening organ dysfunction and failure. In
diagnoses of septic or distributive shock, the goal of treatment is to
increase and maintain a threshold MAP in order to improve tissue
perfusion. According to the applicant, tissue perfusion becomes
linearly dependent on arterial pressure below a threshold MAP. In
patients who have been diagnosed with septic shock requiring
vasopressors, the current Surviving Sepsis guidelines are based on
available evidence that demonstrates that adequate MAP is important to
clinical outcomes and that prolonged decreases in MAP below 65 mmHg is
associated with poor outcome. According to information supplied by the
applicant, even short durations like less than 5 minutes of low MAP
have been associated with severe outcomes, such as myocardial
infarction, stroke, and acute kidney injury. The applicant stated that
a retrospective study \155\ found that MAP was independently related to
ICU and hospital mortality in patients with severe sepsis or septic
shock.
---------------------------------------------------------------------------

\155\ Walsh, M., Devereaux, P.J., Garg, A.X., et al.,
``Relationship between Intraoperative Mean Arterial Pressure and
Clinical Outcomes after Noncardiac Surgery Toward an Empirical
Definition of Hypotension,'' Anesthesiology, 2013, vol. 119(3), pp.
507-515.
---------------------------------------------------------------------------

Finally, we are concerned that the study results may demonstrate
substantial clinical improvement only for patients who are unresponsive
to the administration of fluids and vasopressors because patients were
only included in the ATHOS-3 study if they failed fluids and
vasopressors, rather than for the broader patient population of adult
patients who have been diagnosed with septic or other distributive
shock for which GIAPREZA^TM was approved by the FDA for use
as an available treatment option. The applicant continues to maintain
that the use of GIAPREZA^TM has significant efficacy in
improving blood pressure for patients who have been diagnosed with
distributive shock, while decreasing adrenergic vasopressor usage,
thereby, providing another avenue for therapy in this difficult to
treat patient population. However, we are still concerned that the
results from the clinical trial may be too narrow to accurately
represent the entire patient population that has been diagnosed with
septic or other distributive shock and, therefore, we are concerned
that the clinical trial's results may not adequately demonstrate that
GIAPREZA^TM is a substantial clinical improvement over
existing therapies for all the patients for whom the treatment option
is indicated. We are inviting public comments on whether
GIAPREZA^TM meets the substantial clinical improvement
criterion.
We did not receive any public comments in response to the published
notice in the Federal Register regarding the substantial clinical
improvement criterion for GIAPREZA^TM or at the New
Technology Town Hall meeting.
i. GammaTile^TM
Isoray Medical, Inc. and GT Medical Technologies, Inc. submitted an
application for new technology add-on payments for FY 2019 for the
GammaTile^TM. (We note that Isoray

[[Page 20328]]

Medical, Inc. and GammaTile, LLC previously submitted an application
for new technology add[dash]on payments for GammaTile^TM for
FY 2018, which was withdrawn prior to the issuance of the FY 2018 IPPS/
LTCH PPS final rule.) The GammaTile^TM is a brachytherapy
technology for use in the treatment of patients who have been diagnosed
with brain tumors, which uses cesium-131 radioactive sources embedded
in a collagen matrix. GammaTile^TM is designed to provide
adjuvant radiation therapy to eliminate remaining tumor cells in
patients who required surgical resection of brain tumors. According to
the applicant, the GammaTile^TM technology is a new vehicle
of delivery for and inclusive of cesium-131 brachytherapy sources
embedded within the product. The applicant stated that the technology
has been manufactured for use in the setting of a craniotomy resection
site where there is a high chance of local recurrence of a CNS or dual-
based tumor. The applicant asserted that the use of the
GammaTile^TM technology provides a new, unique modality for
treating patients who require radiation therapy to augment surgical
resection of malignancies of the brain. By offsetting the radiation
sources with a 3 mm gap of a collagen matrix, the applicant asserted
that the use of the GammaTile^TM technology resolves issues
with ``hot'' and ``cold'' spots associated with brachytherapy, improves
safety, and potentially offers a treatment option for patients with
limited, or no other, available options. The GammaTile^TM is
biocompatible and bioabsorbable, and is left in the body permanently
without need for future surgical removal. The applicant asserted that
the commercial manufacturing of the product will significantly improve
on the process of constructing customized implants with greater speed,
efficiency, and accuracy than is currently available, and requires less
surgical expertise in placement of the radioactive sources, allowing a
greater number of surgeons to utilize brachytherapy techniques in a
wider variety of hospital settings.
The applicant for the GammaTile^TM technology anticipates
FDA clearance by the spring of 2018. In its application, the applicant
indicated that it anticipated that the product would be cleared by the
FDA for use in both the primary and salvage treatment of radiosensitive
malignances of the brain. However, in discussions with the applicant,
the applicant indicated that it is only anticipating FDA clearance for
use in the salvage treatment of recurrent radiosensitive malignances of
the brain. The applicant submitted a request for approval for a unique
ICD-10-PCS code for the use of the GammaTile^TM technology,
which was approved effective October 1, 2017 (FY 2018). The ICD-10-PCS
code used to identify procedures involving the use of the
GammaTile^TM technology is 00H004Z (Insertion of radioactive
element, cesium-131 collagen implant into brain, open approach).
As discussed earlier, if a technology meets all three of the
substantial similarity criteria, it would be considered substantially
similar to an existing technology and would not be considered ``new''
for purposes of new technology add-on payments.
With regard to the first criterion, whether a product uses the same
or a similar mechanism of action to achieve a therapeutic outcome, the
applicant stated that when compared to treatment using external beam
radiation therapy, GammaTile^TM uses a new and unique
mechanism of action to achieve a therapeutic outcome. The applicant
explained that the GammaTile^TM technology is fundamentally
different in structure, function, and safety from all external beam
radiation therapies, and delivers treatment through a different
mechanism of action. In contrast to external beam radiation modalities,
the applicant further explained that the GammaTile^TM is a
form of internal radiation termed brachytherapy. Brachytherapy
treatments are performed using radiation sources positioned very close
to the area requiring radiation treatment and only deliver radiation to
the tissues that are immediately adjacent to the margin of the surgical
resection. For this reason, brachytherapy is a current standard of care
treatment for many non-central nervous system tumors, including breast,
cervical, and prostate cancers.
Due to the custom positioning of the radiological sources and the
use of the cesium-131 isotope, the applicant noted that the
GammaTile^TM technology focuses therapeutic levels of
radiation on an extremely small area of the brain. Unlike all external
beam techniques, the applicant stated that this radiation does not pass
externally inward through the skull and healthy areas of the brain to
reach the targeted tissue and, therefore, may limit neurocognitive
deficits seen with the use of external beam techniques. Because of the
rapid reduction in radiation intensity that is characteristic of
cesium-131, the applicant asserted that the GammaTile^TM
technology can target the margin of the excision with greater precision
than any alternative treatment option, while sparing healthy brain
tissue from unnecessary and potentially damaging radiation exposure.
The applicant also stated that, when compared to other types of
brain brachytherapy, GammaTile^TM uses a new and unique
mechanism of action to achieve a therapeutic outcome. The applicant
explained that cancerous cells at the margins of a tumor resection
cavity can also be irradiated with the placement of brachytherapy
sources in the tumor cavity. However, the applicant asserted that the
GammaTile^TM technology is a pioneering form of brachytherapy
for the treatment of brain tumors that uses the isotope cesium-131
embedded in a collagen implant that is customized to the geometry of
the brain cavity. According to the applicant, use of cesium-131 and the
custom distribution of seeds in a three-dimensional collagen device
result in a unique and highly effective delivery of radiation therapy
to brain tissue.
With regard to the second criterion, whether a product is assigned
to the same or a different MS-DRG, the GammaTile^TM
technology is a treatment option for patients who have been diagnosed
with brain tumors that progress locally after initial treatment with
external beam radiation therapy, and potential cases representing
patients that may be eligible for treatment involving this technology
are assigned to the same MS-DRG (MS-DRG 23 (Craniotomy with Major
Device Implant/Acute Complex CNS PDX with MCC or Chemotherapy Implant))
as other current treatment forms of brachytherapy and external beam
radiation therapy.
With regard to the third criterion, whether the new use of the
technology involves the treatment of the same or similar type of
disease and the same or similar patient population, the applicant
stated that the GammaTile^TM technology offers a treatment
option for a patient population with limited, or no other, available
treatment options. The applicant explained that treatment options for
patients who have been diagnosed with brain tumors that progress
locally after initial treatment with external beam radiation therapy
are limited, and there is no current standard of care in this setting.
According to the applicant, surgery alone for recurrent tumors may
provide symptom relief, but does not remove all of the cancer cells.
The applicant further stated that repeating external beam radiation
therapy for adjuvant treatment is hampered by an increasing risk of
brain injury because additional external beam radiation therapy will
increase the

[[Page 20329]]

total dose of radiation to brain tissue, as well as increase the total
volume of irradiated brain tissue. Secondary treatment with external
beam radiation therapy is often performed with a reduced and,
therefore, less effective dose. The applicant stated that the technique
of implanting cesium-131 seeds in a collagen matrix is currently only
available to patients in one location, and requires a high degree of
expertise to implant. The manufacturing process of the
GammaTile^TM will greatly expand the availability of
treatment beyond research programs at highly specialized cancer
treatment centers.
Based on the above, the applicant concluded that the
GammaTile^TM technology is not substantially similar to other
existing technologies and meets the newness criterion.
However, we are concerned that the mechanism of action of the
GammaTile^TM may be the same or similar to current forms or
radiation or brachytherapy. Specifically, while the placement of the
cesium-131 source (or any radioactive source) in a collagen matrix
offset may constitute a new delivery vehicle, we are concerned that
this sort of improvement in brachytherapy for the use in the salvage
treatment of radiosensitive malignancies of the brain may not represent
a new mechanism of action.
We are inviting public comments on whether GammaTile^TM
meets the substantial similarity criteria and the newness criterion.
With regard to the cost criterion, the applicant conducted the
following analysis. The applicant worked with the Barrow Neurological
Institute at St. Joseph's Hospital and Medical Center (St. Joseph's) to
obtain actual claims from mid-2015 through mid-2016 for craniotomies
that did not involve placement of the GammaTile^TM
technology. The cases were assigned to MS-DRGs 25 through 27
(Craniotomy and Endovascular Intracranial Procedures with MCC, with CC,
and without CC/MCC, respectively). For the 460 claims, the average
case-weighted unstandardized charge per case was $143,831. The
applicant standardized the charges for each case and inflated each
case's charges by applying the FY 2017 IPPS/LTCH PPS final rule outlier
charge inflation factor of 1.05074 by the age of each case (that is,
the factor was applied to 2015 claims 3 times and 2016 claims 2 times).
The applicant then calculated an estimate for ancillary charges
associated with placement of the GammaTile^TM device, as well
as standardized charges for the GammaTile^TM device itself.
The applicant determined it meets the cost criterion because the final
inflated average case[dash]weighted standardized charge per case
(including the charges associated with the GammaTile^TM
device) of $246,310 exceeds the average case-weighted threshold amount
of $141,249 for MS-DRG 23, the MS-DRG that would be assigned for cases
involving placement of the GammaTile^TM device.
The applicant also noted that its analysis does not include a
reduction in costs due to reduced operating room times. The applicant
stated that there is significant time and workload associated with
assembling the device, and codes billed for this work are paid at a
flat rate. We are inviting public comments on whether the
GammaTile^TM technology meets the cost criterion.
With regard to substantial clinical improvement, the applicant
stated that the GammaTile^TM technology offers a treatment
option for a patient population unresponsive to, or ineligible for,
currently available treatments for recurrent CNS malignancies and
significantly improves clinical outcomes when compared to currently
available treatment options. The applicant explained that therapeutic
options for patients who have been diagnosed with large or recurrent
brain metastases are limited. However, according to the applicant, the
GammaTile^TM technology provides a treatment option for
patients who have been diagnosed with radiosensitive recurrent brain
tumors that are not eligible for treatment with any other currently
available treatment option. Specifically, the applicant stated that the
GammaTile^TM device may provide the only radiation treatment
option for patients who have been diagnosed with tumors located close
to sensitive vital brain sites (for example, brain stem) and patients
who have been diagnosed with recurrent brain tumors who may not be
eligible for additional treatment involving the use of external beam
radiation therapy. There is a lifetime limit for the amount of
radiation therapy a specific area of the body can receive. Patients
whose previous treatment includes external beam radiation therapy may
be precluded from receiving high doses of radiation associated with
subsequent external beam radiation therapy, and the
GammaTile^TM technology can also be used to treat tumors that
are too large for treatment with external beam radiation therapy.
Patients who have been diagnosed with these large tumors are not
eligible for treatment with external beam radiation therapy because the
radiation dose to healthy brain tissue would be too high.
The applicant described how the GammaTile^TM technology
improves clinical outcomes compared to existing treatment options,
including external beam radiation therapy and other forms of brain
brachytherapy. To demonstrate that the GammaTile^TM
technology represents a substantial clinical improvement over existing
technologies, the applicant submitted data from three abstracts
(described below), with one associated paper demonstrating feasibility
or superior progression-free survival compared to the patient's own
historical control rate.
In a presentation at the Society for Neuro-Oncology in November
2014 (Dardis, Christopher; Surgery and permanent intraoperative
brachytherapy improves time to progression of recurrent intracranial
neoplasms), the outcomes of 20 patients who were diagnosed with 27
tumors covering a variety of histological types treated with the
GammaTile^TM prototype were presented. The applicant noted
the following with regard to the patients: (1) All tumors were
intracranial, supratentorial masses and included low and
high[dash]grade meningiomas, metastases from various primary cancers,
high[dash]grade gliomas, and others; (2) all treated masses were
recurrent following treatment with surgery and/or radiation and the
group averaged two prior craniotomies and two prior courses of external
beam radiation treatment; and (3) following surgical excision, the
prototype GammaTile^TM were placed in the resection cavity to
deliver a dose of 60 Gray to a depth of 5 mm of tissue; and all
patients had previously experienced re-growth of their tumors at the
site of treatment and the local control rate of patients entering the
study was 0 percent.
With regard to outcomes, the applicant stated that, after their
initial treatment, patients had a median progression-free survival time
of 5.8 months; post treatment with the prototype
GammaTile^TM, at the time of this analysis, only 1 patient
had progressed at the treatment site, for a local control rate of 96
percent; and median progression-free survival time, a measure of how
long a patient lives without recurrence of the treated tumor, has not
been reached (as this value can only be calculated when more than 50
percent of treated patients have failed the prescribed treatment).
A second set of outcomes on the prototype GammaTile^TM
was presented at the Society for Neuro-Oncology Conference on
Meningioma in June 2016 (Brachman, David; Surgery and

[[Page 20330]]

permanent intraoperative brachytherapy improves time to progress of
recurrent intracranial neoplasms). This study enrolled 16 patients with
20 recurrent grade 2 or 3 meningiomas, who had undergone prior surgical
excision external beam radiation therapy. These patients underwent
surgical excision of the tumor, followed by adjuvant radiation therapy
with the prototype GammaTile^TM. The applicant noted the
following outcomes: (1) Of the 20 treated tumors, 19 showed no evidence
of radiographic progression at last follow-up, yielding a local control
rate of 95 percent; 2 of the 20 patients exhibited radiation necrosis
(1 symptomatic, 1 asymptomatic); and (2) the median time to failure
from the prior treatment with external beam radiation therapy was 10.3
months and after treatment with the prototype GammaTile^TM
only 1 patient failed at 18.2 months. Therefore, the median treatment
site progression-free survival time after the prototype
GammaTile^TM treatment has not yet been reached (average
follow[dash]up of 16.7 months, range 1 to 37 months).
A third prospective study was accepted for presentation at the
November 2016 Society for Neuro-Oncology annual meeting (Youssef, Emad;
Cs131 implants for salvage therapy of recurrent high grade gliomas). In
this study, 13 patients who were diagnosed with recurrent
high[dash]grade gliomas (9 with glioblastoma and 4 with grade 3
astrocytoma) were treated in an identical manner to the cases described
above. Previously, all patients had failed the international standard
treatment for high[dash]grade glioma, a combination of surgery,
radiation therapy, and chemotherapy referred to as the ``Stupp
regimen.'' For the prior therapy, the median time to failure was 9.2
months (range 1 to 40 months). After therapy with a prototype
GammaTile^TM, the applicant noted the following: (1) The
median time to same site local failure has not been reached and 1
failure was seen at 18 months (local control 92 percent); and (2) with
a median follow[dash]up time of 8.1 months (range 1 to 23 months) 1
symptomatic patient (8 percent) and 2 asymptomatic patients (15
percent) had radiation-related MRI changes. However, no patients
required re-operation for radiation necrosis or wound breakdown. Dr.
Youssef was accepted to present at the 2017 Society for Neuro-Oncology
annual meeting, where he provided an update of 58 tumors treated with
the GammaTile^TM technology. At a median whole group
follow[dash]up of 10.8 months, 12 patients (20 percent) had a local
recurrence at an average of 11.33 months after implant. Six and 18
month recurrence free survival was 90 percent and 65 percent,
respectively. Five patients had complications, at a rate that was equal
to or lower than rates previously published for patients without access
to the GammaTile^TM technology.
The applicant also included discussion of a presentation by D.S.
Pinnaduwage, Ph.D., at the August 2017 annual meeting of the American
Association of Physicists in Medicine. Dr. Pinnaduwage compared the
brain radiation dose of the GammaTile^TM technology with
other radioactive seed sources. Iodine-125 and palladium-103 were
substituted in place of the cesium-131 seeds. The study reported
findings that other radioactive sources reported higher rates of
radiation necrosis and that ``hot spots'' increased with larger tumor
size, further limiting the use of these isotopes. The study concluded
that the larger high-dose volume with palladium-103 and iodine-125
potentially increases the risk for radiation necrosis, and the
inhomogeneity becomes more pronounced with increasing target volume.
The applicant asserted that, when considered in total, the data
reported in these three studies support the conclusion that a
significant therapeutic effect results from the addition of
GammaTile^TM radiation therapy to the site of surgical
removal. According to the applicant, the fact that these patients had
failed prior best available treatments (aggressive surgical and
adjuvant radiation management) presents the unusual scenario of a
salvage therapy outperforming the current standard-of-care. The
applicant noted that follow-up data continues to accrue on these
patients.
The applicant stated that the use of the GammaTile^TM
technology reduces rates of mortality compared to alternative treatment
options. The applicant explained that studies on the
GammaTile^TM technology have shown improved local control of
tumor recurrence. According to the applicant, the results of these
studies showed local control rates of 92 percent to 96 percent for
tumor sites that had local control rates of 0 percent from previous
treatment. The applicant noted that these studies also have not reached
median progression-free survival time with follow-up times ranging from
1 to 37 months. Previous treatment at these same sites resulted in
median progression-free survival times of 5.8 to 10.3 months.
The applicant further stated that the use of the
GammaTile^TM technology reduces rates of radiation necrosis
compared to alternative treatment options. The applicant explained that
the rate of symptomatic radiation necrosis in the
GammaTile^TM clinical studies of 5 to 8 percent is
substantially lower than the 26 percent to 57 percent rate of
symptomatic radiation necrosis requiring re-operation historically
associated with brain brachytherapy, and lower than the rates reported
for initial treatment of similar tumors with modern external beam and
stereotactic radiation techniques. The applicant indicated that this is
consistent with the customized and ideal distribution of radiation
therapy provided by the GammaTile^TM technology.
The applicant also asserted that the use of GammaTile^TM
technology reduces the need for re-operation compared to alternative
treatment options. The applicant explained that patients receiving a
craniotomy, followed by external beam radiation therapy or
brachytherapy, could require re-operation in the following three
scenarios:
Tumor recurrence at the excision site could require
additional surgical removal;
Symptomatic radiation necrosis could require excision of
the affected tissue; and
Certain forms of brain brachytherapy require the removal
of brachytherapy sources after a given period of time.
However, according to the applicant, because of the high local
control rates, low rates of symptomatic radiation necrosis, and short
half-life of cesium-131, the GammaTile^TM technology will
reduce the need for re-operation compared to external beam radiation
therapy and other forms of brain brachytherapy.
Additionally, the applicant stated that the use of
GammaTile^TM technology reduces the need for additional
hospital visits and procedures compared to alternative treatment
options. The applicant noted that the GammaTile^TM technology
is placed during surgery, and does not require any additional visits or
procedures. The applicant contrasted this improvement with external
beam radiation therapy, which is often delivered in multiple fractions
that must be administered over multiple days. The applicant provided an
example where whole brain radiotherapy (WBRT) is delivered over 2 to 3
weeks, while the placement of the GammaTile^TM technology
occurs during the craniotomy and does not add any time to a patient's
recovery.

[[Page 20331]]

The applicant further summarized how the GammaTile^TM
technology is a substantial clinical improvement over existing
treatment options as: (1) Providing a treatment option for patients
with no other available treatment options; (2) reducing rate of
mortality compared to alternative treatment options; (3) reducing rate
of radiation necrosis; (4) reducing the need for re-operation; (5)
reducing the need for additional hospital visits and procedures; and
(6) providing more rapid beneficial resolution of the disease process
treatment.
Based on consideration of all of the data presented above, the
applicant believed that the use of the GammaTile^TM
technology represents a substantial clinical improvement over existing
technologies. The studies were limited to patients who have been
diagnosed with recurrent tumors after previous surgical resection. As
previously discussed, the applicant explained that it is anticipating
FDA clearance for the use of the GammaTile^TM only in the
treatment of recurrent malignancies.
We are concerned with the limited nature of the clinical efficacy
and safety data provided by the applicant. The findings presented
appear to be derived from relatively small case-studies. While the
applicant described increases in median time to disease recurrence in
support of improvement, we are concerned with regard to the lack of
analysis, meta-analysis, or statistical tests that indicated that
seeded brachytherapy procedures represented a statistically significant
improvement over alternative treatments, as limited as they may be. We
also are concerned with the lack of studies involving the actual
manufactured device. In addition, we are concerned that the applicant
referenced various findings in its application, but did not include
relevant reference materials to substantiate those findings. For
instance, the applicant made statements regarding the low complication
rates with the use of GammaTile^TM prototypes, without any
discussion of average rates with comparison to other alternative
treatments.
We are inviting public comments on whether GammaTile^TM
meets the substantial clinical improvement criterion.
We did not receive any public comments on the
GammaTile^TM technology in response to the published notice
in the Federal Register or at the New Technology Town Hall Meeting.
j. Supersaturated Oxygen (SSO2) Therapy (DownStream[reg]
System)
TherOx, Inc. submitted an application for new technology add-on
payments for the Supersaturated Oxygen (SSO2) Therapy (the
DownStream[reg] System) for FY 2019. The DownStream[reg] System is an
adjunctive therapy designed to ameliorate progressive myocardial
necrosis by minimizing microvascular damage in patients who have
received treatment for a diagnosis of acute myocardial infarction (AMI)
following percutaneous intervention (PCI) with coronary artery stent
placement. The applicant stated that, while contemporary therapies for
patients who have received treatment for a diagnosis of AMI have
focused on relieving blockages and improving blood flow to the diseased
myocardium, little has been done to provide localized hyperbaric oxygen
to ischemic tissue. According to the applicant, patients who have
received treatment for a diagnosis of AMI are at high risk for reduced
quality of life, heart failure, and higher mortality as a result of the
extent of necrosis or infarct size experienced in the myocardium during
the infarction. The applicant asserted that the net effect of the
SSO2 Therapy is to reduce the infarct size and, therefore,
preserve heart muscle.
The SSO2 Therapy consists of three main components: the
DownStream[reg] System; the DownStream cartridge; and the
SSO2 delivery catheter. The DownStream[reg] System and
cartridge function together to create an oxygen-enriched saline
solution called SSO2 solution from hospital[dash]supplied
oxygen and physiologic saline. A small amount of the patient's blood is
then mixed with the SSO2 solution, producing oxygen-enriched
hyperoxemic blood, which is then delivered to the left main coronary
artery (LMCA) via the delivery catheter at a flow rate of 100 ml/min.
The duration of the SSO2 Therapy is 60 minutes and the
infusion is performed in the catheterization laboratory. The oxygen
partial pressure (pO2) of the infusion is elevated to ~1,000 mmHg,
therefore providing oxygen locally to the myocardium at a hyperbaric
level for 1 hour. After the 60-minute SSO2 infusion is
complete, the cartridge is unhooked from the patient and discarded per
standard practice. Coronary angiography is performed as a final step
before removing the delivery catheter and transferring the patient to
the intensive care unit (ICU).
According to the applicant, the SSO2 Therapy has been
designated as a Class III medical device (high risk) by the FDA. The
applicant indicated that it expects to receive pre-market approval from
the FDA in the first quarter of 2018. The applicant asserted that use
of the SSO2 Therapy can be identified by the ICD-10-PCS
procedure codes 5A0512C (Extracorporeal supersaturated oxygenation,
intermittent) and 5A0522C (Extracorporeal supersaturated oxygenation,
continuous).
As discussed earlier, if a technology meets all three of the
substantial similarity criteria, it would be considered substantially
similar to an existing technology and would not be considered ``new''
for purposes of new technology add-on payments. According to the
applicant, the SSO2 Therapy is administered adjunctively
immediately following completion of successful PCI. The applicant
maintained that currently available treatment options for patients who
have been diagnosed and begun initial treatment for AMI involve the
revascularization of the blocked coronary artery by means of either
thrombolytic therapy or PCI with stent placement accompanied by the
administration of adjunctive pharmacologic agents such as glycoprotein
IIb/IIIa inhibitors, or via coronary artery bypass graft (CABG)
surgery. The applicant asserted that because there are no other
approved therapies for patients who have been diagnosed with AMI post-
PCI, the SSO2 Therapy meets the newness criterion. Below we
evaluate the applicant's assertions with respect to whether the
SSO2 Therapy meets each of the three substantial similarity
criteria.
With regard to the first criterion, whether a product uses the same
or a similar mechanism of action to achieve a therapeutic outcome,
according to the applicant, the SSO2 Therapy employs two
mechanisms of action: (1) First, the increased oxygen levels re-open
the microcirculatory system within the infarct zone, which has
experienced ischemia during the occlusion period; and (2) second, once
reopened, the blood flow contains additional oxygen to restart the
metabolic processes within the stunned myocardium. The applicant
asserted that these mechanisms have been studied in preclinical
investigations sponsored by the applicant, where controlled studies
were performed in both porcine and canine AMI models to determine the
safety, effectiveness, and mechanism of action of the SSO2
Therapy. According to the applicant, the findings of these studies
demonstrated improved left ventricular function, infarct size
reduction, a microvascular mechanism of action, and that the
SSO2 Therapy is nontoxic. Based on the information provided
by the applicant, current

[[Page 20332]]

treatment options for patients who have been diagnosed and receive
treatment for AMI function to restore coronary artery blood flow, which
addresses macrovascular disease but not the underlying cellular changes
resulting from hypoxia. The applicant maintains that currently
available treatment options for patients who have been diagnosed and
receive treatment for AMI do not treat hypoxemic damage at the
microvascular or microcirculatory level, and that SSO2
Therapy does not use the same or a similar mechanism of action as any
existing treatment available for patients who have been diagnosed and
receive treatment for a diagnosis of AMI.
With respect to the second criterion, whether a product is assigned
to the same or a different MS-DRG, we believe that potential cases
involving the SSO2 Therapy may be assigned to the same MS-
DRG(s) as other cases involving PCI with stent placement also used to
treat patients who have been diagnosed with AMI.
With respect to the third criterion, whether the new use of the
technology involves the treatment of the same or similar type of
disease and the same or similar patient population, the applicant
asserted that, in spite of many advances and refinements in PCI for
reopening the blocked coronary artery, patients who have been diagnosed
and receiving treatment for AMI are at high risk for reduced quality of
life, heart failure, and higher mortality, as a result of the extent of
necrosis experienced in the myocardium during the infarction. According
to the applicant, patients who have been diagnosed with and receiving
treatment for AMI continue to experience elevated early and late Major
Adverse Cardiac Events (MACE), as well as a higher risk for congestive
heart failure (CHF) development. The applicant made the following
assertions: The net effect of the SSO2 Therapy is to reduce
the infarct size, or extent of necrosis, in the myocardium post-AMI
and, therefore, improve left ventricular function, leading to improved
patient outcomes; there are no other approved therapies for patients
who have been diagnosed with and receive treatment for AMI post-PCI and
submitted data evaluating the SSO2 Therapy directly as
compared to the currently available standard of care, PCI with stenting
alone; and SSO2 Therapy's emphasis is on treating patients
who have been diagnosed with AMI at the microvascular level instead of
reopening the blocked coronary artery at the macrovascular level as
with other treatments and that it, therefore, treats a different type
of disease than currently available treatment options for patients who
have been diagnosed with and receive treatment for AMI.
We are inviting public comments on whether the SSO2
Therapy is substantially similar to existing technologies and whether
it meets the newness criterion.
With regard to the cost criterion, the applicant conducted the
following analysis to demonstrate that the technology meets the cost
criterion. In order to identify the range of MS-DRGs to which potential
cases representing potential patients who may be eligible for treatment
involving the SSO2 Therapy may map, the applicant identified
all MS-DRGs for cases of patients who have been diagnosed with anterior
STEMI as a principal diagnosis. Specifically, the applicant searched
the FY 2016 MedPAR file for claims reporting diagnoses of anterior
STEMI by ICD-10-CM diagnosis codes I21.0 (ST elevation myocardial
infarction of anterior wall), I21.01 (ST elevation (STEMI) myocardial
infarction involving left main coronary artery), I21.02 (ST elevation
(STEMI) myocardial infarction involving left anterior descending
coronary artery), or I21.09 (ST elevation (STEMI) myocardial infarction
involving other coronary artery of anterior wall) as a primary
diagnosis. The applicant identified 11,030 potential cases across 4 MS-
DRGs, with approximately 86 percent of all potential cases mapping to
the following 2 MS-DRGs: MS-DRG 246 (Percutaneous Cardiovascular
Procedures with Drug-Eluting Stent with MCC or 4+ Vessels/Stents) and
MS-DRG 247 (Percutaneous Cardiovascular Procedures with Drug-Eluting
Stent without MCC). The remaining 14 percent of potential cases mapped
to MS-DRG 248 (Percutaneous Cardiovascular Procedures with Non-Drug
Eluting Stent with MCC or 4+ Vessels/Stents) and MS-DRG 249
(Percutaneous Cardiovascular Procedures with Non-Drug-Eluting Stent
without MCC).
Using the 11,030 identified cases, the applicant determined that
the average unstandardized case-weighted charge per case was $94,290.
The applicant then standardized the charges. The applicant did not
remove charges for the current treatment because, as discussed above,
the SSO2 Therapy will be used as an adjunctive treatment
option following successful PCI with stent placement. The applicant
then applied the inflation factor of 1.05074 from the FY 2018 IPPS/LTCH
PPS final rule (82 FR 38524) 3 times to inflate the charges from FY
2016 to FY 2019. The applicant added charges related to the new
technology, which accounts for the use of 1 cartridge per patient, as
well as the 60 minutes of procedure time, to the average charges per
case. Based on the FY 2018 IPPS/LTCH PPS final rule Table 10 threshold
amounts, the average case[dash]weighted threshold amount was $91,064.
The inflated average case-weighted standardized charge per case was
$146,974. Because the inflated average case-weighted standardized
charge per case exceeds the average case-weighted threshold amount, the
applicant maintained that the technology meets the cost criterion. We
are inviting comments on whether or not the SSO2 Therapy
meets the cost criterion.
With regard to the substantial clinical improvement criterion,
according to the applicant, the preferred standard of care for the
treatment of patients who have been diagnosed with AMI involves the
revascularization of the blocked coronary artery by means of PCI with
stent placement, accompanied by the administration of adjunctive
pharmacologic agents such as antiplatelet drugs, including glycoprotein
IIb/IIIa inhibitors. The applicant stated that the clinical unmet need
for these patients, particularly patients who have been diagnosed with
anterior wall STEMI with the greatest potential impact to their
ventricle, is to provide incremental therapeutic benefit beyond PCI
with stenting to reduce the damage to their myocardium. The applicant
believed that SSO2 Therapy fulfills this unmet clinical need
in the treatment of patients who have been diagnosed with ST-elevation
AMI by reducing infarct size as compared to the standard of care, PCI
with stenting alone.
The applicant asserted that, as an adjunctive treatment, the
SSO2 Therapy has demonstrated superiority over PCI with
stenting alone in reducing the infarct size for high-risk patients
diagnosed with anterior AMI treated within 6 hours of symptom onset.
The applicant also noted that the SSO2 Therapy has been
shown to preserve left ventricular integrity as compared to patients
who receive treatment involving PCI with stenting alone, utilizing
direct measurements of left ventricular volume over the 30-day post-
procedure period. The applicant noted that the quantification of the
extent of necrosis or infarction in the muscle is the best physical
measure of the consequences of AMI for patients in post-intervention,
as the infarct size is the quantification of the extent of scarring of
the left ventricle post-AMI and, therefore, provides a direct measure
of the health of the

[[Page 20333]]

myocardium and indirectly on the heart's structure and function. A
large infarct means the muscle cannot contract normally, leading to
left ventricular enlargement, reduced ejection fraction, clinical heart
failure, and death. The applicant highlighted the importance of the
SSO2 Therapy's mechanism of action, which treats hypoxemic
damage at the microvascular or microcirculatory level, by noting that
the degree to which microvascular impairment in the myocardium is
irreversible and unaffected by therapeutic intervention leads to a
greater extent of infarction. Furthermore, the applicant noted that
compromised microvascular flow remains a serious problem in STEMI care
and leads to microvascular obstruction (MVO), which a recent study has
shown to be an important independent predictor of mortality and heart
failure (HF) hospitalization at 1 year. The applicant asserted that MVO
is closely tied to the resultant damage or infarct size in patients
diagnosed with acute STEMI and is of critical importance to address
mechanistically in any treatment administered in conjunction to PCI, to
effect an improved outcome in primary care.
The applicant performed controlled studies in both porcine and
canine AMI models to determine the safety, effectiveness, and mechanism
of action of the SSO2 Therapy. The key summary points from
these animal studies are:
The SSO2 Therapy administration post-AMI
acutely improves heart function as measured by left ventricular
ejection fraction (LVEF) and regional wall motion as compared with non-
treated control subjects.
The SSO2 Therapy administration post-AMI
results in tissue salvage, as determined by post-sacrifice histological
measurements of the infarct size. Control animals exhibit larger
infarcts than the SSO2-treated animals.
The SSO2 Therapy has been shown to be non-toxic
to the coronary arteries, myocardium, and end organs in randomized,
controlled swine studies with or without induced acute myocardial
infarction.
The SSO2 Therapy administration post-AMI has
exhibited regional myocardial blood flow improvement in treated animals
as compared to controls.
A significant reduction in myeloperoxidase (MPO) levels
was observed in the SSO2-treated animals versus controls,
which indicate improvement in underlying myocardial hypoxia.
Transmission electron microscopy (TEM) photographs have
shown amelioration of endothelial cell edema and restoration of
capillary patency in ischemic zone cross-sectional histological
examination of the SSO2-treated animals, while nontreated
controls exhibit significant edema and vessel constriction at the
microvascular level.
The applicant also submitted results from five clinical studies
that it asserted demonstrate the substantial clinical benefit
associated with the SSO2 Therapy. These studies include the
Phase I/IA feasibility trial, the European OYSTER-AMI study, the AMIHOT
I and AMIHOT II randomized trials, and the IC-HOT clinical study.
The Phase I/IA and OYSTER-AMI studies demonstrated that the
SSO2 Therapy held promise in improving left ventricular
function, especially in the infarct zone, for patients who have been
diagnosed with and receiving treatment for AMI. Specifically, an IDE-
sanctioned Phase I pilot study was conducted in the United States and
Italy involving 29 patients who had been diagnosed with and receiving
treatment involving the SSO2 Therapy for anterior AMI and
found significant LV functional improvement over time as noted in the
2-D echocardiography analysis of the combined Phase I/IA data. Baseline
measurements of ejection fraction (EF) and wall motion score index
(WMSI) were taken immediately post-PCI prior to SSO2 Therapy
administration. An improving trend in EF and significant improvement in
WMSI were observed at 24-hours after SSO2 Therapy
administration, and further improvement in ventricular function was
demonstrated at 1 and 3 months compared to baseline. The analysis
demonstrated that these improvements in global LV functional measures
were due to recovery of ventricular function in the infarct zone;
regional WMSI assessments showed no change in the noninfarct zone.
Similar results were found in the European OYSTER-AMI trial, which
assessed supersaturated oxygen in reperfused ST-elevation AMI,
directing attention to 41 patients receiving treatment involving the
SSO2 Therapy versus untreated controls. The study showed
that the supersaturated oxygen treatment group had a significantly
faster cardiac enzyme and ST segment elevation reduction, therefore
suggesting an improvement in microvascular reperfusion. The
SSO2 Therapy treatment group also showed a significantly
better improvement in left ventricular wall motion and ejection
fraction,\156\ which a number of studies have shown to be directly
related to mortality.\157\ The OYSTER-AMI study further suggested that
the SSO2 Therapy reduces the infarct size, as demonstrated
in reduced cardiac enzyme CK and CK-MB release.
---------------------------------------------------------------------------

\156\ Bartorelli, A.L., ``Hyperoxemic Perfusion for Treatment of
Reperfusion Microvascular Ischemia in Patients with Myocardial
Infarction,'' Am J Cardivasc Drugs, 2003, vol. 3(4), pp. 253-6.
\157\ Stone, G.W., et al., ``Relationship between infarct size
and outcomes following primary PCI: Patient-level analysis from 10
randomized trials,'' J Am Coll Cardio, vol. 67.14, 2016, pp. 1674-
1683.
---------------------------------------------------------------------------

The AMIHOT I clinical trial was designed as a prospective,
randomized evaluation of patients who had been diagnosed with and
receiving treatment for AMI presenting within 24 hours of symptom
onset, including both anterior and inferior patients diagnosed with
AMI. The AMIHOT I trial was conducted with IDE approval from FDA. The
study included 269 randomized patients, with 3 independent biomarkers
(infarction size reduction, regional wall motion score improvement at 3
months, and reduction in ST segment elevation) designated as co-primary
endpoints to evaluate the effectiveness of the SSO2 Therapy.
The study was designed to demonstrate superiority of the
SSO2 Therapy group as compared to controls for each of these
endpoints, and to demonstrate non-inferiority of the SSO2
Therapy group as compared to control with respect to 30-day MACE. The
study population was comprised of qualifying patients who had been
diagnosed with AMI and receiving treatment with either PCI alone or
with the SSO2 Therapy as an adjunct to successful PCI within
24 hours of symptom onset. According to the applicant, results for the
control/SSO2 Therapy group comparisons for the three co-
primary effectiveness endpoints demonstrated a nominal improvement in
the test group, although this nominal improvement did not achieve
clinical and statistical significance in the entire population. A pre-
specified analysis of the SSO2 Therapy patients who were
revascularized within 6 hours of AMI symptom onset and who had anterior
wall infarction showed a marked improvement in all three co-primary
endpoints as compared to the control group. Key safety data revealed no
statistically significant differences in the composite primary endpoint
of 1-month (30 days) Major Adverse Cardiac Event (MACE) rates between
the SSO2 Therapy and control groups. MACE includes the
combined incidence of death, reinfarction, target vessel
revascularization, and stroke. In total, 9/134 (6.7 percent) patients
in the SSO2 Therapy group and 7/135 (5.2 percent) patients
in the control group experienced 30-day MACE (p=0.62).

[[Page 20334]]

Another pivotal trial in the evaluation of the SSO2
Therapy, the AMIHOT II trial, randomized 301 patients who had been
diagnosed with and receiving treatment for anterior AMI with either PCI
plus the SSO2 therapy or PCI alone. The AMIHOT II trial had
a Bayesian statistical design that allows for the informed borrowing of
data from the previously completed AMIHOT I trial. The primary efficacy
endpoint of the study required proving superiority of the infarct size
reduction with the SSO2 Therapy as compared to patients who
were receiving treatment involving PCI with stenting alone. The primary
safety endpoint for the AMIHOT II trial required a determination of
noninferiority in the 30-day MACE rate, comparing the SSO2
Therapy group with the control group, within a safety delta of 6.0
percent. Endpoint evaluation was performed using a Bayesian
hierarchical model that evaluated the AMIHOT II result conditionally in
consideration of the AMIHOT I 30-day MACE data. According to the
applicant, the results of the AMIHOT II trial showed that the
SSO2 therapy, together with PCI and stenting, demonstrated a
relative reduction of 26 percent in the left ventricular infarct size
and absolute reduction of 6.5 percent compared to PCI and stenting
alone. We are interested in information regarding at what timeframe in
the study was the reduction of infarct size measured. In addition, the
applicant stated that the finding of device effectiveness was supported
by additional analyses that showed a 53 percent increased likelihood of
having a small infarct among the SSO2 therapy patients.\158\
In assessing 30-day Major Adverse Cardiac Events (MACE), while higher
in the SSO2 Therapy group, the rates were statistically
noninferior (5.4 percent versus 3.8 percent). However, given the higher
30[dash]day MACE outcome among the SSO2 Therapy patients in
both the AMIHOT I and AMIHOT II trials, we are concerned about the lack
of long-term data on improvement in patient clinical outcomes, despite
the lack of statistical significance.
---------------------------------------------------------------------------

\158\ Stone, G.W., Martin, J.L., Boer, M.J., et al., ``Effect of
Supersaturated Oxygen Deliver on Infarct Size After Percutaneous
Coromary Intervention in Acute Myocardial Infarction,'' Cir
Cardiovasc Interv, 2009, vol. 2, pp. 366-75.
---------------------------------------------------------------------------

The applicant also submitted the IC-HOT clinical trial, which was
designed to confirm the safety and efficacy of the use of the
SSO2 Therapy in those individuals presenting with a
diagnosis of anterior AMI who have undergone successful PCI with
stenting of the proximal and/or mid left anterior descending artery
within 6 hours of experiencing AMI symptoms. It is an IDE,
nonrandomized, single arm study. The study was primarily focused on
safety, utilizing a composite endpoint of 30-day Net Adverse Clinical
Events (NACE). A maximum observed event rate of 10.7 percent was
established based on a contemporary PCI trial of comparable patients
who had been diagnosed with anterior wall STEMI. The IC-HOT trial
exhibited a 7.1 percent observed NACE rate, meeting the study endpoint.
Notably, no 30-day mortalities were observed, and the type and
frequency of 30-day adverse events occurred at similar or lower rates
than in contemporary STEMI studies of PCI-treated patients who had been
diagnosed with anterior AMI. Furthermore, according to the applicant,
the IC-HOT study supported the conclusions of effectiveness established
in AMIHOT II with a measured 30-day median infarct size = 19.4 percent
(as compared to the AMIHOT II SSO2 Therapy group infarct
size = 20.0 percent). Notable measures include 4[dash]day microvascular
obstruction (MVO), which has been shown to be an independent predictor
of outcomes, 4[dash]day and 30[dash]day left ventricular end diastolic
and end systolic volumes, and 30[dash]day infarct size. The IC-HOT
study results exhibited a favorable MVO as compared to contemporary
trial data, and decreasing left ventricular volumes at 30 days,
compared to contemporary PCI populations that exhibit increasing left
ventricular size. The applicant asserted that the IC-HOT clinical trial
data continue to demonstrate substantial clinical benefit of the
SSO2 Therapy as compared to the standard of care, PCI with
stenting alone.
We are inviting public comments on whether the SSO2
Therapy meets the substantial clinical improvement criterion.
Below we summarize and respond to written public comments we
received regarding the DownStream[reg] System during the open comment
period in response to the New Technology Town Hall meeting notice
published in the Federal Register.
Comment: A number of commenters supported the approval of new
technology add-on payments for the DownStream[reg] System
(SSO2 Therapy) for the treatment of patients diagnosed with
AMI. The commenters asserted that SSO2 Therapy is effective
at significantly reducing infarct size in patients diagnosed with
anterior wall myocardial infarction who have been treated with primary
percutaneous intervention. The commenters reiterated the results of the
AMIHOT II randomized trial which demonstrated that treatment with
SSO2 Therapy following successful PCI in patients diagnosed
with an anterior wall myocardial infarction resulted in a 6.5 percent
absolute reduction and a 26 percent relative reduction in infarct size,
compared to treatment with PCI alone (the percentages above are based
on a 26.5 percent median infarct size in the control PCI group versus
20 percent infarct size in the SSO2 Therapy group). One
commenter stated that the infarct size reduction of 6.5 percent
documented in the AMIHOT II trial results is substantial when it comes
to patient care. In addition, other commenters believed that
SSO2 Therapy is a safe treatment option because there was no
significant difference in Major Adverse Cardiac Events (MACE) between
the treatment and control groups.
The commenters also referenced the results from the IC-HOT
confirmatory study. The commenters believed that the results of this
study demonstrated stabilization of the left ventricular size with no
dilatation at 30 days, which confirmed the efficacy and safety of
SSO2 Therapy. The commenters stated that, in a sample
patient population of 98 patients diagnosed with anterior wall
myocardial infarction, to achieve a result in infarct size of 19.4
percent of the left ventricular following use of SSO2
Therapy is similar to the results achieved in the patients enrolled in
the treatment group of the AMIHOT II trial and is also substantial to
patient care. The commenters emphasized that patients diagnosed with
anterior wall myocardial infarction are high[dash]risk patients with a
high mortality rate, and patients who survive experiences with large
infarct size and left ventricular dysfunction eventually suffer
congestive heart failure, ultimately requiring a defibrillator and have
poor quality of life. The commenters also noted that the MRI results
documented from the IC-HOT trial have shown a reduction in left
ventricular volumes, suggesting the left ventricular cavity did not
dilate and the ventricle remained stable, which is consistent with the
experience of many of the commenters that treated patients using
SSO2 Therapy as part of the trial. Another commenter noted
that 25 percent of the patients in the IC[dash]HOT trial had a normal
ejection fraction at follow[dash]up MRI scan. The commenters believed
that SSO2 Therapy should be a standard[dash]of[dash]care,
given the low number of adverse events and the low instances of new
heart failure admissions in their

[[Page 20335]]

experience with the use of SSO2 Therapy.
Another commenter provided additional clinical studies in response
to a question presented at the New Technology Town Hall meeting
regarding the relationship between myocardial infarct size and clinical
outcomes. The commenter stated that these clinical studies would
provide further context to the research regarding the relationship
between myocardial infarct size and clinical outcomes and emphasized
that this relationship is not dependent on the type of treatment
administered. The commenter opined that as long as infarct size is
reduced, long-term clinical benefit follows. The commenter maintained
that the strong correlation between the scarring of the left ventricle
as a consequence of diagnoses of AMI and important long-term clinical
outcomes has been well documented in large-scale thrombolytic therapy
trials, one of which showed that a 5 percent reduction in medium
infarct size was associated with improved clinical outcomes and
established the superiority of primary PCI over thrombolysis as the
standard[dash]of[dash]care for the treatment of AMI.\159\ The commenter
indicated that, based on the results of the additional clinical
studies, recognizing the significance of the relationship between
infarct size and clinical outcomes, additional trials were performed to
evaluate the effect of continued infarct size reduction, such as a
pooled patient[dash]level analysis to evaluate myocardial infarct size
measured within 30 days of STEMI and its relationship to mortality as
well as hospitalization for heart failure during and up to 1-year
follow up. The commenter stated that one trial demonstrated a highly
significant relationship for mortality and hospitalization for heart
failure, where every 5 percent increase in infarct size was associated
with a 19 percent increase in mortality at 1 year.\160\ The commenter
further stated that the results of this trial indicated that this
relationship was independent of other high-risk clinical and
angiographic features in patients with a large infarction, including
age, sex, diabetes, hypertension, hyperlipidemia, current smoking, and
symptom-to-first device time.\161\ The commenter believed that, given
this established relationship, the 6.5 percent absolute reduction in
median infarct size demonstrated with the use of SSO2
Therapy in the AMIHOT II trial is clinically meaningful. The commenter
concluded that SSO2 Therapy is the only therapy to date that
has demonstrated a significant and clinically meaningful reduction in
infarct size beyond that achieved with PCI alone.
---------------------------------------------------------------------------

\159\ Sch[ouml]mig, A., Kastrati, A., Dirschinger, J., et al.,
``Coronary stenting plus platelet glycoprotein IIb/IIIa blockade
compared with tissue plasminogen activator in acute myocardial
infarction. Stent versus Thrombolysis for Occluded Coronary Arteries
in Patients with Acute Myocardial Infarction Study Investigators,''
New England Journal of Medicine, 2000, vol. 343(6), pp. 385-91.
\160\ Stone, G.W., Selker, H.P., Thiele, H., et al.,
``Relationship between infarct size and outcomes following primary
PCI,'' JACC, 2016, vol. 67(14), pp. 1674-83.
\161\ Ibid.
---------------------------------------------------------------------------

Response: We appreciate all of the commenters' input. However, we
are concerned whether the additional clinical studies presented
regarding the relationship between myocardial infarct size and clinical
outcomes can be applied to SSO2 Therapy and whether the
applicant has provided enough information to demonstrate that the
reduction of infarct size with use of SSO2 Therapy is a
substantial clinical improvement. We are inviting public comments
regarding these concerns.
k. Cerebral Protection System (Sentinel[reg] Cerebral Protection
System)
Claret Medical, Inc. submitted an application for new technology
add-on payments for the Cerebral Protection System (Sentinel[reg]
Cerebral Protection System) for FY 2019. According to the applicant,
the Sentinel Cerebral Protection System is indicated for the use as an
embolic protection (EP) device to capture and remove thrombus and
debris while performing transcatheter aortic valve replacement (TAVR)
procedures. The device is percutaneously delivered via the right radial
artery and is removed upon completion of the TAVR procedure. The De
Novo request for the Sentinel[reg] Cerebral Protection System was
granted on June 1, 2017 (DEN160043).
Aortic stenosis (AS) is a narrowing of the aortic valve opening. AS
restricts blood flow from the left ventricle to the aorta and may also
affect the pressure in the left atrium. The most common presenting
symptoms of AS include dyspnea on exertion or decreased exercise
tolerance, exertional dizziness (presyncope) or syncope and exertional
angina. Symptoms experienced by patients who have been diagnosed with
AS and normal left ventricular systolic function rarely occur until
stenosis is severe (defined as valve area is less than 1.0 cm2, the jet
velocity is over 4.0 m/sec, and/or the mean transvalvular gradient is
greater than or equal to 40 mmHg).\162\ AS is a common valvular
disorder in elderly patients. The prevalence of AS increases with age,
and some degree of valvular calcification is present in 75 percent of
patients who are 85 to 86 years old.\163\ TAVR procedures are the
standard of care treatment for patients who have been diagnosed with
severe AS. Patients undergoing TAVR procedures are often older, frail,
and may be affected by multiple comorbidities, implying a significant
risk for thromboembolic cerebrovascular events.\164\ Embolic ischemic
strokes can occur in patients undergoing surgical and interventional
cardiovascular procedures, such as stenting (carotid, coronary,
peripheral), catheter ablation for atrial fibrillation, endovascular
stent grafting, left atrial appendage closure (LAAO), patent formal
ovale (PFO) closure, balloon aortic valvuloplasty, surgical valve
replacement (SAVR), and TAVR. Clinically overt stroke, or silent
ischemic cerebral infarctions, associated with the TAVR procedure, may
result from a variety of causes, including mechanical manipulation of
instruments or other interventional devices used during the procedure.
These mechanical manipulations are caused by, but not limited to, the
placement of a relatively large bore delivery catheter in the aortic
arch, balloon valvuloplasty, valve positioning, valve re-positioning,
valve expansion, and corrective catheter manipulation, as well as use
of guidewires and guiding or diagnostic catheters required for proper
positioning of the TAVR device. The magnitude and timing of embolic
activity resulting from these manipulations was studied by Szeto, et
al.,\165\ using a transcranial Doppler, and it was found that embolic
material is liberated throughout the TAVR procedure with some of the
emboli reaching the central nervous system leading to cerebral ischemic
infarctions. Some of the cerebral ischemic infarctions lead to
neurologic injury and clinically apparent stroke. Szeto, et al., also
noted that the rate of

[[Page 20336]]

silent ischemic cerebral infarctions following TAVR procedures is
estimated to be between 68 and 91 percent.^{166 167}
---------------------------------------------------------------------------

\162\ Otto, C., Gaasch, W., ``Clinical manifestations and
diagnosis of aortic stenosis in adults,'' In S. Yeon (Ed.), 2016,
Available at: https://www.uptodate.com/contents/clinical-manifestations-and-diagnosis-of-aortic-stenosis-in-adults.
\163\ Lindroos, M., et al., ``Prevalence of aortic valve
abnormalities in the elderly: An echocardiographic study of a random
population sample,'' J Am Coll Cardio, 1993, vol. 21(5), pp. 1220-
1225.
\164\ Giustino, G., et al., ``Neurological Outcomes With Embolic
Protection Devices in Patients Undergoing Transcatheter Aortic Valve
Replacement,'' J Am Coll Cardio, CARDIOVASCULAR INTERVENTIONS, 2016,
vol. 9(20).
\165\ Szeto, W.Y., et al., ``Cerebral Embolic Exposure During
Transfemoral and Transapical Transcatheter Aortic Valve
Replacement,'' J Card Surg, 2011, vol. 26, pp. 348-354.
\166\ Gupta, A., Giambrone, A.E., Gialdini, G., et al., ``Silent
brain infarction and risk of future stroke: A systematic review and
meta-analysis,'' Stroke, 2016, vol. 47, pp. 719-25.
\167\ Mokin, M., Zivadinov, R., Dwyer, M.G., Lazar, R.M.,
Hopkins, L.N., Siddiqui, A.H., ``Transcatheter aortic valve
replacement: perioperative stroke and beyond,'' Expert Rev
Neurother, 2017, vol. 17, pp. 327-34.
---------------------------------------------------------------------------

The TAVR procedure is a minimally invasive procedure that does not
involve open heart surgery. During a TAVR procedure the prosthetic
aortic valve is placed within the diseased native valve. The prosthetic
valve then becomes the functioning aortic valve. As previously
outlined, stroke is one of the risks associated with TAVR procedures.
According to the applicant, the risk of stroke is highest in the early
post[dash]procedure period and, as previously outlined, is likely due
to mechanical factors occurring during the TAVR procedure.\168\ Emboli
can be generated as wire-guided devices are manipulated within
atherosclerotic vessels, or when calcified valve leaflets are traversed
and then crushed during valvuloplasty and subsequent valve
deployment.\169\ Stroke rates in patients evaluated 30 days after TAVR
procedures range from 1.0 percent to 9.6 percent,\170\ and have been
associated with increased mortality. Additionally, new ``silent
infarcts,'' assessed via diffusion-weighted magnetic resonance imaging
(DW-MRI), have been found in a majority of patients after TAVR
procedures.\171\
---------------------------------------------------------------------------

\168\ Nombela-Franco, L., et al., ``Timing, predictive factors,
and prognostic value of cerebrovascular events in a large cohort of
patients undergoing transcatheter aortic valve implantation,''
Circulation, 2012, vol. 126(25), pp. 3041-53.
\169\ Freeman, M., et al., ``Cerebral events and protection
during transcatheter aortic valve replacement,'' Catheterization and
Cardiovascular Interventions, 2014, vol. 84(6), pp. 885-896.
\170\ Haussig, S., Linke, A., ``Transcatheter aortic valve
replacement indications should be expanded to lower-risk and younger
patients,'' Circulation, 2014. vol. 130(25), pp. 2321-31.
\171\ Kahlert, P., et al., ``Silent and apparent cerebral
ischemia after percutaneous transfemoral aortic valve implantation:
a diffusion-weighted magnetic resonance imaging study,''
Circulation, 2010, vol. 121(7), pp. 870-8.
---------------------------------------------------------------------------

As stated earlier, the De Novo request for the Sentinel[reg]
Cerebral Protection System was granted on June 1, 2017. The FDA
concluded that this device should be classified into Class II (moderate
risk). Effective October 1, 2016, ICD-10-PCS Section ``X'' code X2A5312
(Cerebral embolic filtration, dual filter in innominate artery and left
common carotid artery, percutaneous approach) was approved to identify
cases involving TAVR procedures using the Sentinel[reg] Cerebral
Protection System.
As discussed earlier, if a technology meets all three of the
substantial similarity criteria, it would be considered substantially
similar to an existing technology and would not be considered ``new''
for purposes of new technology add-on payments.
With regard to the first criterion, whether a product uses the same
or a similar mechanism of action to achieve a therapeutic outcome,
according to the applicant, the Sentinel[reg] Cerebral Protection
System device is inserted at the beginning of the TAVR procedure, via a
small tube inserted through a puncture in the right wrist. Next, using
a minimally invasive catheter, two small filters are placed in the
brachiocephalic and left common carotid arteries. The filters collect
debris, preventing it from becoming emboli, which can travel to the
brain. These emboli, if left uncaptured, can cause cerebral ischemic
lesions, often referred to as silent ischemic cerebral infarctions,
potentially leading to cognitive decline or clinically overt stroke. At
the completion of the TAVR procedure, the filters, along with the
collected debris, are removed. The applicant stated that there are no
other similar products for commercial sale available in the United
States for cerebral protection during TAVR procedures. Two
neuroprotection devices, the Triguard^TM Cerebral Protection
Device (Keystone Heart, Herzliya Pituach, Israel) and the Embrella
Embolic Deflector^TM System (Edwards Lifesciences, Irvine,
CA) are used in Europe. These devices work by deflecting embolic debris
distally, rather than capturing and removing debris with filters.
With respect to the second criterion, whether a product is assigned
to the same or a different MS-DRG, as stated earlier, the Sentinel[reg]
Cerebral Protection System is an EP device used to capture and remove
thrombus and debris while performing TAVR procedures. Therefore,
potential cases representing patients who may be eligible for treatment
involving this device would map to the same MS-DRGs as cases involving
TAVR procedures.
With respect to the third criterion, whether the new use of the
technology involves the treatment of the same or similar type of
disease and the same or similar patient population, according to the
applicant, this technology will be used to treat patients who have been
diagnosed with severe aortic valve stenosis who are eligible for a TAVR
procedure. The applicant asserted that there are currently no approved
alternative treatment options for cerebral protection during TAVR
procedures, and the Sentinel[reg] Cerebral Protection System is the
first and only embolic protection device for use during TAVR procedures
and, therefore, meets the newness criterion. The applicant also
asserted that the device meets the newness criterion, as evidenced by
the FDA's granting of the De Novo request and there was no predicate
device.
Based on the above, it appears that the Sentinel[reg] Cerebral
Protection System is not substantially similar to other existing
technologies. We are inviting public comments on whether the
Sentinel[reg] Cerebral Protection System is substantially similar to
any existing technology and whether it meets the newness criterion.
The applicant conducted the following analysis to demonstrate that
the technology meets the cost criterion. The applicant searched the FY
2016 MedPAR file for cases with the following ICD-10-CM procedure codes
to identify cases involving TAVR procedures, which are potential cases
representing patients who may be eligible for treatment involving use
of the Sentinel[reg] Cerebral Protection System: 02RF37Z (Replacement
of aortic valve with autologous tissue substitute, percutaneous
approach); 02RF38Z (Replacement of aortic valve with zooplastic tissue,
percutaneous approach); 02RF3JZ (Replacement of aortic valve with
synthetic substitute, percutaneous approach); 02RF3KZ (Replacement of
aortic valve with nonautologous tissue substitute, percutaneous
approach); 02RF37H (Replacement of aortic valve with autologous tissue
substitute, transapical, percutaneous approach ); 02RF38H (Replacement
of aortic valve with zooplastic tissue, transapical, percutaneous
approach); 02RF3JH (Replacement of aortic valve with synthetic
substitute, transapical, percutaneous approach); and 02RF3KH
(Replacement of aortic valve with nonautologous tissue substitute,
transapical, percutaneous approach). This process resulted in 26,012
potential cases. The applicant limited its search to MS-DRG 266
(Endovascular Cardiac Valve Replacement with MCC) and MS-DRG 267
(Endovascular Cardiac Valve Replacement without MCC) because these two
MS-DRGs accounted for 97.4 percent of the total cases identified.
Using the 26,012 identified cases, the applicant determined that
the average unstandardized case-weighted charge per case was $211,261.
No charges were removed for the prior technology because the device is
used to capture

[[Page 20337]]

and remove thrombus and debris while performing TAVR procedures. The
applicant then standardized the charges, but did not inflate the
charges. The applicant then added charges for the new technology to the
average case-weighted standardized charges per case by taking the cost
of the device and dividing the amount by the CCR of 0.332 for
implantable devices from the FY 2018 IPPS/LTCH PPS final rule (82 FR
38103). The applicant calculated a final inflated average
case[dash]weighted standardized charge per case of $187,707 and a Table
10 average case[dash]weighted threshold amount of $170,503. Because the
final inflated average case-weighted standardized charge per case
exceeded the average case-weighted threshold amount, the applicant
maintained that the technology meets the cost criterion. We are
inviting public comments on whether the Sentinel[reg] Cerebral
Protection System meets the cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that the Sentinel[reg] Cerebral Protection System
represents a substantial clinical improvement over existing
technologies because it is the first and only cerebral embolic
protection device commercially available in the United States for use
during TAVR procedures. The applicant stated that the data below shows
that the Sentinel[reg] Cerebral Protection System effectively captures
brain bound embolic debris and significantly improves clinical outcomes
(that is, stroke) beyond the current standard of care, that is, TAVR
procedures with no embolic protection.
The applicant provided the results of four key studies: (1) The
SENTINEL[reg] study \172\ conducted by Claret Medical, Inc.; (2) the
CLEAN[dash]TAVI trial; \173\ (3) the Ulm real-world registry; \174\ and
(4) the MISTRAL-C study.\175\
---------------------------------------------------------------------------

\172\ Kapadia, S., Kodali, S., Makkar, R., et al., ``Protection
against cerebral embolism during transcatheter aortic valve
replacement,'' JACC, 2017, vol. 69(4), pp. 367-377.
\173\ Haussig, S., Mangner, N., Dwyer, M.G., et al., ``Effect of
a Cerebral Protection Device on Brain Lesions Following
Transcatheter Aortic Valve Implantation in Patients With Severe
Aortic Stenosis: The CLEAN-TAVI Randomized Clinical Trial,'' JAMA,
2016, vol. 316, pp. 592-601.
\174\ Seeger, J., et al., ``Cerebral Embolic Protection During
Transfemoral Aortic Valve Replacement Significantly Reduces Death
and Stroke Compared With Unprotected Procedures,'' JACC Cardiovasc
Interv, 2017, in press.
\175\ Mieghem, Van, et al., ``Filter-based cerebral embolic
protection with transcatheter aortic valve implantation: the
randomized MISTRAL-C trial,'' Eurointervention, 2016, vol. 12(4),
pp. 499-507.
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The applicant reported that the SENTINEL[reg] study was a
prospective, single blind, multi-center, randomized study using the
Sentinel[reg] Cerebral Protection System which enrolled patients who
had been diagnosed with severe symptomatic calcified native aortic
valve stenosis indicated for a TAVR procedure. A total of 363 patients
at 19 centers in the United States and Germany were randomized across 3
arms (Safety, Test, and Control) in a 1:1:1 fashion. According to the
applicant, evaluations performed for patients in each arm were as
follows:
Safety Arm patients who underwent a TAVR procedure
involving the Sentinel[reg] Cerebral Protection System--Patients
enrolled in this arm of the study received safety follow-up at
discharge, at 30 days and 90 days post-procedure; and neurological
evaluation at baseline, discharge, 30 days and 90 days (only in the
case of a stroke experienced less than or equal to 30 days) post-
procedure. The Safety Arm patients did not undergo MRI or
neurocognitive assessments.
Test Arm patients who underwent a TAVR procedure involving
the Sentinel[reg] Cerebral Protection System--Patients enrolled in this
arm of the study underwent safety follow-up at discharge, at 30 days
and 90 days post-procedure; MRI assessment for efficacy at baseline, 2
to 7 days and 30 days post-procedure; neurological evaluation at
baseline, discharge, 30 days and 90 days (only in the case of a stroke
experienced less than or equal to 30 days) post-procedure;
neurocognitive evaluation at baseline, 2 to 7 days (optional), 30 days
and 90 days post-procedure; Quality of Life assessment at baseline, 30
days and 90 days; and histopathological evaluation of debris captured
in the Sentinel[reg] Cerebral Protection System's device filters.
Control Arm patients who underwent a TAVR procedure only--
Patients enrolled in this arm of the study underwent safety follow-up
at discharge, at 30 days and 90 days post-procedure; MRI assessment for
efficacy at baseline, 2 to 7 days and 30 days post-procedure;
neurological evaluation at baseline, discharge, 30 days and 90 days
(only in the case of a stroke experienced less than or equal to 30
days) post-procedure; neurocognitive evaluation at baseline, 2 to 7
days (optional), 30 days and 90 days post[dash]procedure; and Quality
of Life assessment at baseline, 30 days and 90 days.
The primary safety endpoint was occurrence of major adverse cardiac
and cerebrovascular events (MACCE) at 30 days compared with a
historical performance goal. MACCE was defined as follows: All causes
of death; all strokes (disabling and nondisabling, Valve Academic
Research Consortium-2 (VARC-2)); and acute kidney injury (stage 3,
VARC-2). The point estimate for the historical performance goal for the
primary safety endpoint at 30 days post-TAVR procedure was derived from
a review of published reports of 30-day TAVR procedure outcomes. The
VARC-2 established an independent collaboration between academic
research organizations and specialty societies (cardiology and cardiac
surgery) in the United States and Europe to create consistent endpoint
definitions and consensus recommendations for implementation in TAVR
procedure clinical research.\176\
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\176\ Leon, M.B., Piazza, N., Nikolsky, E., et al.,
``Standardized endpoint definitions for transcatheter aortic valve
implantation clinical trials: a consensus report from the Valve
Academic Research Consortium,'' European Heart Journal, 2011, vol.
32(2), pp. 205-217, doi:10.1093/eurheartj/ehq406.
---------------------------------------------------------------------------

The applicant reported that results of the SENTINEL[reg] study
demonstrated the following:
The rate of MACCE was numerically lower than the control
arm, 7.3 percent versus 9.9 percent, but was not statistically
significant from that of the control group (p = 0.41).
New lesion volume was 178.0 mm\3\ in control patients and
102.8 mm\3\ in the Sentinel[reg] Cerebral Protection System device arm
(p = 0.33). A post[dash]hoc multi[dash]variable analysis identified
preexisting lesion volume and valve type as predictors of new lesion
volume.
Strokes experienced at 30 days were 9.1 percent in control
patients and 5.6 percent in patients treated with the Sentinel[reg]
Cerebral Protection System devices (p = 0.25). Neurocognitive function
was similar in control patients and patients treated with the
Sentinel[reg] Cerebral Protection System devices, but there was a
correlation between lesion volume and neurocognitive decline (p =
0.0022).
Debris was found within filters in 99 percent of patients
and included thrombus, calcification, valve tissue, artery wall, and
foreign material.
The applicant also noted that the post-hoc analysis of
this data demonstrated that there was a 63 percent reduction in 72-hour
stroke rate (compared to control), p = 0.05.
According to the applicant, the CLEAN-TAVI (Claret Embolic
Protection and TAVI) trial, was a small, randomized, double-blind,
controlled trial. The trial consisted of 100 patients assigned to
either EP (n = 50) with the Claret Medical, Inc. device (the
Sentinel[reg] Cerebral Protection System) or to no EP (n = 50).
Patients were all

[[Page 20338]]

treated with femoral access and self-expandable (SE) devices. The study
endpoint was the number of brain lesions at 2 days post[dash]procedure
versus baseline. Patients were evaluated with DW[dash]MRI at 2 and 7
days post[dash]TAVR procedure. The mean age of patients was 80 years
old; 43 percent were male. The study results showed that patients
treated with the Sentinel[reg] Cerebral Protection System had a lower
number of new lesions (4.00) than patients in the control group (10.0);
(p<0.001).
According to the applicant, the single-center Ulm study, a large
propensity matched trial, with 802 consecutive patients, occurred at
the University of Ulm between 2014 and 2016. The first 522 patients
(65.1 percent of patients) underwent a TAVR procedure without EPs, and
the subsequent 280 patients (34.9 percent of patients) underwent a TAVR
procedure with EP involving the Sentinel[reg] Cerebral Protection
System. For both arms of the study, a TAVR procedure was performed in
identical settings except without cerebral EP, and neurological follow-
up was performed within 7 days post-procedure. The primary endpoint was
a composite of all-cause mortality or all-stroke according to the VARC-
2 criteria within 7 days. The authors who documented the study noted
the following:
Patient baseline characteristics and aortic valve
parameters were similar between groups, that both filters of the device
were successfully positioned in 280 patients, all neurological follow-
up was completed by the 7th post-procedure date, and that propensity
score matching was performed to account for possible confounders.
Results indicated a decreased rate of disabling and
nondisabling stroke at 7 days post[dash]procedure was seen in those
patients who were treated with the Sentinel[reg] Cerebral Protection
System device versus control patients (1.6 percent versus 4.6 percent,
p = 0.03).
At 48 hours, stroke rates were lower with patients treated
with the Sentinel[reg] Cerebral Protection System device versus control
patients (1.1 percent versus 3.6 percent, p = 0.03).
In multi[dash]variate analysis, TAVR procedures performed
without the use of a EP device was found to be an independent predictor
of stroke within 7 days (p = 0.04).
The aim of the MISTRAL-C study was to determine if the
Sentinel[reg] Cerebral Protection System affects new brain lesions and
neurocognitive performance after TAVR procedures. The study was
designed as a multi-center, double-blind, randomized trial enrolling
patients who were diagnosed with symptomatic severe aortic stenosis and
1:1 randomization to TAVI patients treated with or without the
Sentinel[reg] Cerebral Protection System. From January 2013 to August
2015, 65 patients were enrolled in the study. Patients ranged in age
from 77 years old to 86 years old, 15 (47 percent) were female and 17
(53 percent) were male patients randomized to the Sentinel[reg]
Cerebral Protection System group and 16 (49 percent) were female and 17
(51 percent) were male patients randomized to the control group. There
were 3 mortalities between 5 days and 6 months post[dash]procedure for
the Sentinel[reg] Cerebral Protection System group. There were no
strokes reported for the Sentinel[reg] Cerebral Protection System
group. There were 7 mortalities between 5 days and 6 months
post[dash]procedure for the control group. There were 2 strokes
reported for the control group. Patients underwent DW-MRI and
neurological examination, including neurocognitive testing 1 day before
and 5 to 7 days after TAVI. Follow-up DW-MRI and neurocognitive testing
was completed in 57 percent of TAVI patients treated with the
Sentinel[reg] Cerebral Protection System and 80 percent for the group
of TAVI patients treated without the Sentinel[reg] Cerebral Protection
System. New brain lesions were found in 78 percent of the patients with
follow-up MRI. According to the applicant, patients treated with the
Sentinel[reg] Cerebral Protection System had numerically fewer new
lesions and a smaller total lesion volume (95 mm3 versus 197 mm3).
Overall, 27 percent of the patients treated with the Sentinel[reg]
Cerebral Protection System and 13 percent of the patients treated in
the control group had no new lesions. Ten or more new brain lesions
were found only in the patients treated in the control group (20
percent in the control group versus 0 percent in the Sentinel[reg]
Cerebral Protection System group, p = 0.03). Neurocognitive
deterioration was present in 4 percent of the patients treated with the
Sentinel[reg] Cerebral Protection System versus 27 percent of the
patients treated without (p=0.017). The filters captured debris in all
of the patients treated with Sentinel[reg] Cerebral Protection System
device.
In the Ulm study, the primary outcome was a composite of all-cause
mortality or stroke at 7 days, and occurred in 2.1 percent of the
Sentinel[reg] Cerebral Protection System group versus 6.8 percent of
the control group (p = 0.01, number needed to treat (NNT) = 21). Use of
the Sentinel[reg] Cerebral Protection System device was associated with
a 2.2 percent absolute risk reduction in mortality with NNT 45.
Composite endpoint of major adverse cardiac and cerebrovascular events
(MACCE) was found in 2.1 percent of those patients undergoing a TAVR
procedure with the use of the Sentinel[reg] Cerebral Protection System
device versus 7.9 percent in the control group (p = 0.01). Similar but
statistically nonsignificant trends were found in the SENTINEL[reg]
study, with rate of MACCE of 7.3 percent in the Sentinel[reg] Cerebral
Protection System group versus 9.9 percent in the control group (p =
0.41).
The applicant reported that the four studies discussed above that
evaluated the Sentinel[reg] Cerebral Protection System device have
limitations because they are either small, nonrandomized and/or had
significant loss to follow[dash]up. A meta-analysis of EP device
studies, the majority of which included use of the Sentinel[reg]
Cerebral Protection System device, found that use of cerebral EP
devices was associated with a nonsignificant reduction in stroke and
death.\177\
---------------------------------------------------------------------------

\177\ Giustino, G., et al., ``Neurological Outcomes With Embolic
Protection Devices in Patients Undergoing Transcatheter Aortic Valve
Replacement,'' Journal of the American College of Cardiology:
Cardiovascular Interventions, 2016, vol. 9(20), pp. 2124-2133.
---------------------------------------------------------------------------

We are concerned that the use of cerebral protection devices may
not be associated with a significant reduction in stroke and death. We
note that the SENTINEL[reg] study, although a randomized study, did not
meet its primary endpoint, as illustrated by nonstatistically
significant reduction in new lesion volume on MRI or nondisabling
strokes within 30 days (5.6 percent stroke rate in the Sentinel[reg]
Cerebral Protection System device group versus a 9.1 percent stroke
rate in the control group at 30 days; p = 0.25). We also note that only
with a post[dash]hoc analysis of the SENTINEL[reg] study data were
promising trends noted, where the device use was associated with a 63
percent reduction in stroke events at 72 hours (p = 0.05).
Additionally, although there was a statistically significant difference
between the patients treated with and without cerebral embolic
protection in the composite of all-cause mortality or stroke at 7 days,
the Ulm study was a nonrandomized study and propensity matching was
performed during analyses. We are concerned that studies involving the
Sentinel[reg] Cerebral Protection System may be inconclusive regarding
whether the device represents a substantial clinical improvement for
patients undergoing TAVR procedures. We also are concerned that the
SENTINEL[reg] studies did not show a substantial decrease in
neurological

[[Page 20339]]

complications for patients undergoing TAVR procedures. We are inviting
public comments on whether the Sentinel[reg] Cerebral Protection System
meets the substantial clinical improvement criterion.
Below we summarize and respond to a written public comment we
received regarding the Sentinel[reg] Cerebral Protection System during
the open comment period in response to the New Technology Town Hall
meeting notice published in the Federal Register.
Comment: One commenter noted that the TriGUARD device, a similar
device to the Sentinel[reg] Cerebral Protection System device, has been
commercially available throughout Europe and its member countries,
including the United Kingdom since June 29, 2013. The commenter
indicated that the TriGUARD device received its Israel Medical Device
Registration and Approval (AMAR) on November 5, 2015. The commenter
asserted that because the Sentinel[reg] Cerebral Protection System is
the first and only cerebral EP device commercially available in the
United States for use during TAVR procedures it represents a
substantial clinical improvement over currently available and existing
technologies.
Response: We appreciate the information provided by the commenter.
We will take this information into consideration when deciding whether
to approve new technology add-on payments for the Sentinel[reg]
Cerebral Protection System for FY 2019.
l. AZEDRA[reg] (Ultratrace[reg] Iobenguane Iodine-131) Solution
Progenics Pharmaceuticals, Inc. submitted an application for new
technology add-on payments for AZEDRA[reg] (Ultratrace[reg] iobenguane
Iodine-131) for FY 2019. AZEDRA[reg] is a drug solution formulated for
intravenous (IV) use in the treatment of patients who have been
diagnosed with obenguane avid malignant and/or recurrent and/or
unresectable pheochromocytoma and paraganglioma. AZEDRA[reg] contains a
small molecule ligand consisting of meta-iodobenzylguanidine (MIBG) and
\131\Iodine (\131\I) (hereafter referred to as ``\131\I-MIBG''). The
applicant noted that iobenguane Iodine-131 is also known as \131\I-
MIBG).
The applicant reported in its application that pheochromocytomas
and paragangliomas are rare tumors with an incidence of approximately 2
to 8 people per million per year.^{178 179} Both tumors are
catecholamine[dash]secreting neuroendocrine tumors, with
pheochromocytomas being the more common of the two and comprising 80 to
85 percent of cases. While 10 percent of pheochromocytomas are
malignant, whereby ``malignant'' is defined by the World Health
Organization (WHO) as ``the presence of distant metastases,''
paragangliomas have a malignancy frequency of 25
percent.^{180 181} Approximately one-half of malignant tumors
are pronounced at diagnosis, while other malignant tumors develop
slowly within 5 years.\182\ Pheochromocytomas and paragangliomas tend
to be indistinguishable at the cellular level and frequently at the
clinical level. For example catecholamine-secreting paragangliomas
often present clinically like pheochromocytomas with hypertension,
episodic headache, sweating, tremor, and forceful palpitations.\183\
Although pheochromocytomas and paragangliomas can share overlapping
histopathology, epidemiology, and molecular pathobiology
characteristics, there are differences between these two neuroendocrine
tumors in clinical behavior, aggressiveness and metastatic potential,
biochemical findings and association with inherited genetic syndrome
differences, highlighting the importance of distinguishing between the
presence of malignant pheochromocytoma and the presence of malignant
paraganglioma. At this time, there is no curative treatment for
malignant pheochromocytomas and paragangliomas. Successful management
of these malignancies requires a multidisciplinary approach of
decreasing tumor burden, controlling endocrine activity, and treating
debilitating symptoms. According to the applicant, decreasing
metastatic tumor burden would address the leading cause of mortality in
this patient population, where the 5-year survival rate is 50 percent
for patients with untreated malignant pheochromocytomas and
paragangliomas.\184\ The applicant stated that controlling
catecholamine hypersecretion (for example, severe paroxysmal or
sustained hypertension, palpitations and arrhythmias) would also mean
decreasing morbidity associated with hypertension (for example, risk of
stroke, myocardial infarction and renal failure), and begin to address
the 30-percent cardiovascular mortality rate associated with malignant
pheochromocytomas and paragangliomas.
---------------------------------------------------------------------------

\178\ Beard, C.M., Sheps, S.G., Kurland, L.T., Carney, J.A.,
Lie, J.T., ``Occurrence of pheochromocytoma in Rochester,
Minnesota'', pp. 1950-1979.
\179\ Stenstr[ouml]m, G., Sv[auml]rdsudd, K., ``Pheochromocytoma
in Sweden 1958-1981. An analysis of the National Cancer Registry
Data,'' Acta Medica Scandinavica, 1986, vol. 220(3), pp. 225-232.
\180\ Fishbein, Lauren, ``Pheochromocytoma and Paraganglioma,''
Hematology/Oncology Clinics 30, no. 1, 2016, pp. 135-150.
\181\ Lloyd, R.V., Osamura, R.Y., Kl[ouml]ppel, G., & Rosai, J.
(2017). World Health Organization (WHO) Classification of Tumours of
Endocrine Organs. Lyon, France: International Agency for Research on
Center (IARC).
\182\ Kantorovich, Vitaly, and Karel Pacak. ``Pheochromocytoma
and paraganglioma.'' Progress in Brain Research., 2010, vol. 182,
pp. 343-373.
\183\ Carty, S.E., Young, W.F., Elfky, A., ``Paraganglioma and
pheochromocytoma: Management of malignant disease,'' UpToDate.
Available at: https://www.uptodate.com/contents/paraganglioma-and-pheochromocytoma-management-of-malignant-disease.
\184\ Kantorovich, Vitaly, and Karel Pacak. ``Pheochromocytoma
and paraganglioma.'' Progress in Brain Research., 2010, vol. 182,
pp. 343-373.
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The applicant reported that, at this time, controlling
catecholamine activity in pheochromocytomas and paragangliomas is
medically achieved with administration of combined alpha and beta-
adrenergic blockade, and surgically with tumor tissue reduction.
Because there is no curative treatment for malignant pheochromocytomas
and paragangliomas, resecting both primary and metastatic lesions
whenever possible to decrease tumor burden \185\ provides a methodology
for controlling catecholamine activity and lowering cardiovascular
mortality risk. Besides surgical removal of tumor tissue for lowering
tumor burden, there are other treatment options that depend upon tumor
type (that is, pheochromocytoma tumors versus paraganglioma tumors),
anatomic location, and the number and size of the metastatic tumors.
Currently, these treatment options include: (1) Radiation therapy; (2)
nonsurgical local ablative therapy with radiofrequency ablation,
cryoablation, and percutaneous ethanol injection; (3) transarterial
chemoembolization for liver metastases; and (4) radionuclide therapy
using metaiodobenzylguanidine (MIBG) or somatostatin. Regardless of the
method to reduce local tumor burden, periprocedural medical care is
needed to prevent massive catecholamine secretion and hypertensive
crisis.\186\
---------------------------------------------------------------------------

\185\ Noda, T., Nagano, H., Miyamoto, A., et al., ``Successful
outcome after resection of liver metastasis arising from an
extraadrenal retroperitoneal paraganglioma that appeared 9 years
after surgical excision of the primary lesion,'' Int J Clin Oncol,
2009, vol. 14, pp. 473.
\186\ Carty, S.E., Young, W.F., Elfky, A., ``Paraganglioma and
pheochromocytoma: Management of malignant disease,'' UpToDate.
Available at: https://www.uptodate.com/contents/paraganglioma-and-pheochromocytoma-management-of-malignant-disease.

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[[Page 20340]]

The applicant stated that AZEDRA[reg] specifically targets
neuroendocrine tumors arising from chromaffin cells of the adrenal
medulla (in the case of pheochromocytomas) and from neuroendocrine
cells of the extra-adrenal autonomic paraganglia (in the case of
paraganglioms).\187\ According to the applicant, AZEDRA[reg] is a more
consistent form of \131\I-MIBG compared to compounded formulations of
\131\I-MIBG that are not currently approved by the FDA. If approved by
the FDA, the applicant asserted that AZEDRA[reg] would be the only drug
indicated for use in the treatment of patients, who if left untreated,
experience debilitating clinical symptoms and high mortality rates from
iobenguane avid malignant and/or recurrent and/or unresectable
pheochromocytoma and paraganglioma tumors.
---------------------------------------------------------------------------

\187\ Ibid.
---------------------------------------------------------------------------

Among local tumor tissue reduction options, use of external beam
radiation therapy (ERBT) at doses greater than 40 Gy can provide local
pheochromocytoma and paraganglioma tumor control and relief of symptoms
for tumors at a variety of sites, including the soft tissues of the
skull base and neck, abdomen, and thorax, as well as painful bone
metastases.\188\ However, the applicant stated that ERBT irradiated
tissues are unresponsive to subsequent treatment with \131\I-MIBG
radionuclide.\189\ MIBG was initially used for the imaging of
paragangliomas and pheochromocytomas because of its similarity to
noradrenaline, which is taken up by chromaffin cells. Conventional MIBG
used in imaging expanded to off-label compassionate use in patients who
had been diagnosed with malignant pheochromocytomas and paragangliomas.
Because \131\I-MIBG is sequestered within pheochromocytoma and
paraganglioma tumors, subsequent malignant cell death occurs from
radioactivity. Approximately 50 percent of tumors are eligible for
\131\I-MIBG therapy based on having MIBG uptake with diagnostic
imaging. According to the applicant, despite uptake by tumors, studies
have also found that \131\I-MIBG therapy has been limited by total
radiation dose, hematologic side effects, and hypertension. While the
pathophysiology of total radiation dose and hematologic side effects
are more readily understandable, hypertension is believed to be
precipitated by large quantities of non[dash]iodinated MIBG or ``cold''
MIBG being introduced along with radioactive \131\I-MIBG therapy.\190\
The ``cold'' MIBG blocks synaptic reuptake of norepinephrine, which can
lead to tachycardia and paroxysmal hypertension within the first 24
hours, the majority of which occur within 30 minutes of administration
and can be dose-limiting.\191\
---------------------------------------------------------------------------

\188\ Ibid.
\189\ Fitzgerald, P.A., Goldsby, R.E., Huberty, J.P., et al.,
``Malignant pheochromocytomas and paragangliomas: a phase II study
of therapy with high-dose 131I-metaiodobenzylguanidine (131I-
MIBG),'' Ann N Y Acad Sci, 2006, vol. 1073, pp. 465.
\190\ Loh, K.C., Fitzgerald, P.A., Matthay, K.K., Yeo, P.P.,
Price, D.C., ``The treatment of malignant pheochromocytoma with
iodine-131 metaiodobenzylguanidine (\131\I-MIBG): a comprehensive
review of 116 reported patients,'' J Endocrinol Invest, 1997, vol.
20(11), pp. 648-658.
\191\ Gonias, S, et al., ``Phase II Study of High-Dose
[\131\I]Metaiodobenzylguanidine Therapy for Patients With Metastatic
Pheochromocytoma and Paraganglioma,'' J of Clin Onc, July 27, 2009.
---------------------------------------------------------------------------

The applicant asserted that its new proprietary manufacturing
process called Ultratrace[reg] allows AZEDRA[reg] to be manufactured
without the inclusion of unlabeled or ``cold'' MIBG in the final
formulation. The applicant also noted that targeted radionuclide MIBG
therapy to reduce tumor burden is one of two treatments that have been
studied the most. The other treatment is cytotoxic chemotherapy and,
specifically, Carboplatin, Vincristine, and Dacarbazine (CVD). The
applicant stated that cytotoxic chemotherapy is an option for patients
who experience symptoms with rapidly progressive, non-resectable, high
tumor burden, or that cytoxic chemotherapy is another option for a
large number of metatstatic bone lesions.\192\ According to the
applicant, CVD was believed to have an effect on malignant
pheochromocytomas and paragangliomas due to the embryonic origin being
similar to neuroblastomas. The response rates to CVD have been variable
between 25 percent and 50 percent.^{193 194} These patients
experience side effects consistent with chemotherapeutic treatment with
CVD, with the added concern of the precipitation of hormonal
complications such as hypertensive crisis, thereby requiring close
monitoring during cytotoxic chemotherapy.\195\ According to the
applicant, use of CVD relative to other tumor burden reduction options
is not an ideal treatment because of nearly 100 percent recurrence
rates, and the need for chemotherapy cycles to be continually
readministered at the risk of increased systemic toxicities and
eventual development of resistance. Finally, there is a subgroup of
patients that are asymptomatic and have slower progressing tumors where
frequent follow-up is an option for care.\196\ Therefore, the applicant
believed that AZEDRA[reg] offers cytotoxic radioactive therapy for the
anticipated indicated population that avoids harmful side effects that
typically result from use of low-specific activity products.
---------------------------------------------------------------------------

\192\ Carty, S.E., Young, W.F., Elfky, A., ``Paraganglioma and
pheochromocytoma: Management of malignant disease,'' UpToDate.
Available at: https://www.uptodate.com/contents/paraganglioma-and-pheochromocytoma-management-of-malignant-disease.
\193\ Niemeijer, N.D., Alblas, G., Hulsteijn, L.T., Dekkers,
O.M. and Corssmit, E.P.M., ``Chemotherapy with cyclophosphamide,
vincristine and dacarbazine for malignant paraganglioma and
pheochromocytoma: systematic review and meta[hyphen]analysis,''
Clinical endocrinology, 2014, vol 81(5), pp. 642-651.
\194\ Ayala-Ramirez, Montserrat, et al., ``Clinical Benefits of
Systemic Chemotherapy for Patients with Metastatic Pheochromocytomas
or Sympathetic Extra-Adrenal Paragangliomas: Insights from the
Largest Single Institutional Experience,'' Cancer, 2012, vol.
118(11), pp. 2804-2812.
\195\ Wu, L.T., Dicpinigaitis, P., Bruckner, H., et al.,
``Hypertensive crises induced by treatment of malignant
pheochromocytoma with a combination of cyclophosphamide,
vincristine, and dacarbazine,'' Med Pediatr Oncol, 1994, vol. 22(6),
pp. 389-392.
\196\ Carty, S.E., Young, W.F., Elfky, A., ``Paraganglioma and
pheochromocytoma: Management of malignant disease,'' UpToDate.
Available at: https://www.uptodate.com/contents/paraganglioma-and-pheochromocytoma-management-of-malignant-disease.
---------------------------------------------------------------------------

The applicant reported that the anticipated and recommended
AZEDRA[reg] dosage and frequency for patients receiving treatment
involving \131\I-MIBG therapy for a diagnosis of avid malignant and/or
recurrent and/or unresectable pheochromocytoma and paraganglioma tumors
is:
Dosimetric Dosing--5 to 6 micro curies (mCi) (185 to 222
MBq) for a patient weighing more than or equal to 50 kg, and 0.1 mCi/kg
(3.7 MBq/kg) for patients weighing less than 50 kg. Each recommended
dosimetric dose is administered as an IV injection.
Therapeutic Dosing--500 mCi (18.5 GBq) for patients
weighing more than 62.5 kg, and 8 mCi/kg (296 MBq/kg) for patients
weighing less than or equal to 62.5 kg. Therapeutic doses are
administered by IV infusion, in ~50 mL over a period of ~30 minutes
(100 mL/hour), administered approximately 90 days apart.
With respect to the newness criterion, the applicant indicated that
FDA granted Orphan Drug designation for AZEDRA[reg] on January 18,
2006, followed by Fast Track designation on March 8, 2006, and
Breakthrough Therapy designation on July 26, 2015. The applicant's New
Drug Application (NDA) proceeded on a rolling basis, and was completed
on November 2, 2017.

[[Page 20341]]

However, at the time of the development of this proposed rule, the
applicant indicated that it had not yet received FDA approval for the
indicated use of AZEDRA[reg]. The applicant stated that it anticipates
FDA approval by June 30, 2018. Currently, there are no approved ICD-10-
PCS procedure codes to uniquely identify procedures involving the
administration of AZEDRA[reg].
As discussed earlier, if a technology meets all three of the
substantial similarity criteria, it would be considered substantially
similar to an existing technology and would not be considered ``new''
for purposes of new technology add-on payments.
With regard to the first criterion, whether a product uses the same
or similar mechanism of action, the applicant stated that while
AZEDRA[reg] and low[dash]specific activity conventional I-131 MIBG both
target the same transporter sites on the tumor cell surface, the
therapies' safety and efficacy outcomes are different. These
differences in outcomes are because AZEDRA[reg] is manufactured using
the proprietary Ultratrace[reg] technology, which maximizes the
molecules that carry the tumoricidal component (I-131 MIBG, the
warhead) and minimizes the extraneous unlabeled component (MIBG, free
ligands), which could cause cardiovascular side effects. Therefore,
according to the applicant, AZEDRA[reg] is designed to increase
efficacy and decrease safety risks, whereas conventional I-131 MIBG
uses existing technologies and results in a product that overwhelms the
normal reuptake system with excess free ligands, which leads to safety
issues as well as decreasing the probability of the warhead binding to
the tumor cells.
With regard to the second criterion, whether a product is assigned
to the same or a different DRG, the applicant noted that there are no
specific MS-DRGs for the assignment of cases involving the treatment of
patients who have been diagnosed with pheochromocytoma and
paraganglioma. We believe that potential cases representing patients
who may be eligible for treatment involving the administration of
AZEDRA[reg] would be assigned to the same MS-DRGs as cases representing
patients who receive treatment for obenguane avid malignant and/or
recurrent and/or unresectable pheochromocytoma and paraganglioma. We
also refer readers to the cost criterion discussion below, which
includes the applicant's list of the MS-DRGs that potential cases
involving treatment with the administration of AZEDRA[reg] most likely
would map.
With regard to the third criterion, whether the new use of the
technology involves the treatment of the same or similar type of
disease and the same or similar patient population, if approved,
AZEDRA[reg] would be the only FDA-approved drug indicated for use in
the treatment of patients who have been diagnosed with malignant
pheochromocytoma and paraganglioma tumors that avidly take up \131\I-
MIBG and are recurrent and/or unresectable. The applicant stated that
these patients face serious mortality and morbidity risks if left
untreated, as well as potentially suffer from side effects if treated
by available off-label therapies.
The applicant also contended that AZEDRA[reg] can be distinguished
from other currently available treatments because it potentially
provides the following advantages:
AZEDRA[reg] will have a very limited impact on normal
norepinephrine reuptake due to the negligible amount of unlabeled MIBG
present in the dose. Therefore, AZEDRA[reg] is expected to pose a much
lower risk of acute drug-induced hypertension.
There is minimal unlabeled MIBG to compete for the
norepinephrine transporter binding sites in the tumor, resulting in
more effective delivery of radioactivity.
Current off-label therapeutic use of \131\I is compounded
by individual pharmacies with varied quality and conformance standards.
Because of its higher specific activity (the activity of a
given radioisotope per unit mass), AZEDRA[reg] infusion times are
significantly shorter than conventional \131\I administrations.
Therefore, with these potential advantages, the applicant
maintained that AZEDRA[reg] represents an effective option for the
treatment of patients who have been diagnosed with malignant and/or
recurrent and/or unresectable pheochromocytoma and paraganglioma
tumors, where there is a clear, unmet medical need.
For the reasons cited earlier, the applicant believed that
AZEDRA[reg] is not substantially similar to other currently available
therapies and/or technologies and meets the ``newness'' criterion. We
are inviting public comments on whether AZEDRA[reg] is substantially
similar to other currently available therapies and/or technologies and
meets the ``newness'' criterion.
The applicant reported that it conducted an analysis using FY 2015
MedPAR data to demonstrate that AZEDRA[reg] meets the cost criterion.
The applicant searched for potential cases representing patients who
may be eligible for treatment involving AZEDRA[reg] that had one of the
following ICD-9-CM diagnosis codes (which the applicant believed is
indicative of diagnosis appropriate for treatment involving
AZEDRA[reg]): 194.0 (Malignant neoplasm of adrenal gland), 194.6
(Malignant neoplasm of aortic body and other paraganglia), 209.29
(Malignant carcinoid tumor of other sites), 209.30 (Malignant poorly
differentiated neuroendocrine carcinoma, any site), 227.0 (Benign
neoplasm of adrenal gland), 237.3 (Neoplasm of uncertain behavior of
paraganglia)--in combination with one of the following ICD-9-CM
procedure codes describing the administration of a radiopharmaceutical:
00.15 (High-dose infusion interleukin-2); 92.20 (Infusion of liquid
brachytherapy radioisotope); 92.23 (Radioisotopic teleradiotherapy);
92.27 (Implantation or insertion of radioactive elements); 92.28
(Injection or instillation of radioisotopes). The applicant stated that
the combination of these diagnosis and procedure codes in this process
was intended to identify potential cases representing patients who had
been diagnosed with a correlating condition relating to AZEDRA[reg]'s
intended treatment use and who had received subsequent treatment with a
predecessor radiopharmaceutical therapy (such as, for example, a
potential off-label use of conventional I-131 MIBG therapy) for
malignant and/or recurrent pheochromocytoma and paraganglioma tumors.
The applicant reported that the potential cases used for the cost
analysis mapped to MS-DRGs 054 and 055 (Nervous System Neoplasms with
and without MCC, respectively), MS-DRG 271 (Other Major Cardiovascular
Procedures with CC), MS-DRG 436 (Malignancy of Hepatobiliary System or
Pancreas with CC), MS-DRG 827 (Myeloproliferated Disorder or Poorly
Differentiated Neoplasm with Major O.R. Procedure with CC), and MS-DRG
843 (Other Myeloproliferated Disorder or Poorly Differentiated Neoplasm
Diagnosis with MCC). Due to patient privacy concerns, the applicant
stated that the MedPAR data did not identify the exact number of cases
assigned to the six identified MS-DRGs. For purposes of its analysis,
the applicant assumed an equal distribution between these six MS-DRGs.
The applicant noted in its application that potential cases that may be
eligible for treatment involving the administration of AZEDRA[reg]
would typically map to other MS-DRGs such as MS-DRGs 643, 644, and 645
(Endocrine Disorders with MCC, with CC, and without CC/MCC,
respectively), and MS-DRG 849 (Radiotherapy).

[[Page 20342]]

However, because data were not available for these MS-DRGs they were
not included in the analysis. Using the identified cases, the applicant
determined that the average unstandardized case[dash]weighted charge
per case was $95,472. The applicant used a 3-year inflation factor of
1.14359 (a yearly inflation factor of 1.04574 applied over 3 years),
based on the FY 2018 IPPS/LTCH PPS final rule (82 FR 38527), to inflate
the charges from FY 2015 to FY 2018. The applicant determined an
inflated average case-weighted standardized charge per case of
$103,833. Because the price of AZEDRA[reg] has yet to be determined,
the applicant did not include the price of the drug in its analysis,
nor did the applicant remove any charges associated with any
predecessor radiopharmaceutical therapy use of MIBG agents. Based on
the FY 2018 IPPS/LTCH PPS Table 10 thresholds, the average case-
weighted threshold amount was $58,352. The applicant contended that
AZEDRA[reg] meets the cost criterion because the inflated average
case[dash]weighted standardized charge per case exceeds the average
case-weighted threshold amount before including the average per patient
cost for the product.
We are concerned with the limited number of cases the applicant
analyzed, and the applicant's inability to determine the exact number
of cases representing patients that potentially may be eligible for
treatment involving AZEDRA[reg] for each MS-DRG. We also are concerned
that the MS-DRGs identified by the applicant's search of the FY 2015
MedPAR data do not match the MS-DRGs that the applicant noted that
potential cases that may be eligible for treatment involving the
administration of AZEDRA[reg] would typically map (MS-DRGs 643, 644,
and 645, and MS-DRG 849). However, we acknowledge the difficulty in
obtaining cost data for such a rare condition. We also note that, for
the six identified MS-DRGs, the applicant's inflated average
case[dash]weighted standardized charge per case of $103,833 exceeded
all individual Table 10 average case[dash]weighted threshold amounts
($97,188 for MS-DRG 271 being the greatest). We are inviting public
comments on whether the AZEDRA[reg] technology meets the cost
criterion.
With regard to substantial clinical improvement, the applicant
maintained that the use of AZEDRA[reg] has been shown to reduce the use
of antihypertensive medications, reduce tumor size, improve blood
pressure control, reduce secretion of tumor biomarkers, and demonstrate
strong evidence of overall survival rates. In addition, the applicant
asserted that AZEDRA[reg] provides a treatment option for those
outlined in its anticipated indication patient population. The
applicant asserted that AZEDRA[reg] meets the substantial clinical
improvement criterion based on the results from two clinical studies:
(1) MIP-IB12 (IB12): A Phase I Study of Iobenguane (MIBG) I-131 in
Patients With Malignant Pheochromocytoma/Paraganglioma; \197\ and (2)
MIP-IB12B (IB12B): A Study Evaluating Ultratrace[reg] Iobenguane I-131
in Patients With Malignant Relapsed/Refractory Pheochromocytoma/
Paraganglioma. The applicant explained that the IB12B study is similar
to the IB12 study in that both studies evaluated two open[dash]label,
single[dash]arm studies. The applicant reported that both studies
included patients who had been diagnosed with malignant and/or
recurrent and/or unresectable pheochromocytoma and Paraganglioma
tumors, and both studies assessed objective tumor response, biochemical
tumor response, overall survival rates, occurrence of hypertensive
crisis, and the long[dash]term benefit of AZEDRA[reg] treatment
relative to the need for antihypertensives. According to the applicant,
the study designs, however, differed in dose regimens (1 dose
administered to patients in the IB12 study, and 2 doses administered to
patients in the IB12B study) and primary study endpoints. Differences
in the designs of the studies prevented direct comparison of study
endpoints and pooling of the data. However, the applicant stated that
results from safety data from the IB12 study and the IB12B study were
pooled and used to support substantial clinical improvement assertions.
We note that the results from neither the IB12 study nor the IB12B
study compared the effects of AZEDRA[reg] to any of the other treatment
options to decrease tumor burden (for example, cytotoxic chemotherapy,
radiation therapy, and surgical debulking).
---------------------------------------------------------------------------

\197\ Noto, Richard B., et al., ``Phase 1 Study of High-
Specific-Activity I-131 MIBG for Metastatic and/or Recurrent
Pheochromocytoma or Paraganglioma (IB12 Phase 1 Study),'' J Clin
Endocrinol Metab, vol. 103(1), pp. 213-220.
---------------------------------------------------------------------------

Regarding the data results from the IB12 study, the applicant
asserted that, based on the reported safety and tolerability, and
primary endpoint of radiological response at 12 months, high-specific-
activity I-131 MIBG may be an effective alternative therapeutic option
for patients who have been diagnosed with iobenguane-avid, metastatic
and/or recurrent pheochromocytoma and paraganglioma tumors for whom
there are no approved therapies and for those patients who have failed
available treatment options. In addition, the applicant used the
exploratory finding of decreased or discontinuation of antihypertensive
medications relative to baseline medications as evidence that
AZEDRA[reg] has clinical benefit and positive impact on the
long[dash]term effects of hypertension induced norepinephrine producing
malignant pheochromocytoma and paraganlioma tumors. We understand that
the applicant used antihypertensive medications as a proxy to assess
the long-term effects of hypertension such as renal, myocardial, and
cerebral end organ damage. The applicant reported that it studied 15 of
the original IB12 study's 21-patient cohort, and found 33 percent (n=5)
had decreased or discontinuation of antihypertensive medications during
the 12 months of follow-up. The applicant did not provide additional
data on the incidence of renal insufficiency/failure, myocardial
ischemic/infarction events, or transient ischemic attacks or strokes.
It was unclear to us if these five patients also had decreased urine
metanephrines, changed their diet, lost significant weight, or if other
underlying comorbidities that influence hypertension were resolved,
making it difficult to understand the significance of this exploratory
finding.
Regarding the applicant's assertion that the use of AZEDRA[reg] is
safer and more effective than alternative therapies, we note that the
IB12 study was a dose-escalating study and did not compare current
therapies with AZEDRA[reg]. We also note the following: (1) The average
age of the 21 enrolled patients in the IB12 study was 50.4 years old (a
range of 30 to 72 years old); (2) the gender distribution was 61.9
percent (n=13) male and 38.1 percent (n=8) female; and (3) 76.2 percent
(n=16) were white, 14.3 percent (n=3) were black or African American,
and 9.5 percent (n=2) were Asian. We agree with the study's conductor
\198\ that the size of the study is a limitation, and with a younger,
predominately white, male patient population, generalization of study
results to a more diverse population may be difficult. The applicant
reported that one other aspect of the patient population indicated that
all 21 patients received prior anti-cancer therapy for treatment of
malignant

[[Page 20343]]

pheochromocytoma and paraganglioma tumors, which included the
following: 57.1 Percent (n=12) received radiation therapy including
external beam radiation and conventional MIBG; 28.6 percent (n=6)
received cytotoxic chemotherapy (for example, CVD and other
chemotherapeutic agents); and 14.3 percent (n=3) received
Octreotide.\199\ Although this population illustrates a population that
has failed some of the currently available therapy options, which may
potentially support a finding of substantial clinical improvement for
those with no other treatment options, we are unclear which patients
benefited from treatment involving AZEDRA[reg], especially in view of
the finding of a Fitzgerald et al. study cited earlier \200\ that
tissues previously irradiated by ERBT were found to be unresponsive to
subsequent treatment with \131\I-MIBG radionuclide. It was not clear in
the application how previously ERBT-treated patients who failed ERBT
fared with the RECIST scores, biotumor marker results, and reduction in
antihypertensive medications. We also lacked information to draw the
same correlation between previously CVD[dash]treated patients and their
RECIST scores, biotumor marker results, and reduction in
antihypertensive medications.
---------------------------------------------------------------------------

\198\ Noto, Richard B., et. al., ``Phase 1 Study of High-
Specific-Activity I-131 MIBG for Metastatic and/or Recurrent
Pheochromocytoma or Paraganglioma (IB12 Phase 1 Study),'' J Clin
Endocrinol Metab, vol. 103(1), pp. 213-220.
\199\ Ibid.
\200\ Fitzgerald, P.A., Goldsby, R.E., Huberty, J.P., et al.,
``Malignant pheochromocytomas and paragangliomas: a phase II study
of therapy with high-dose 131I-metaiodobenzylguanidine (131I-
MIBG).'' Ann N Y Acad Sci, 2006, vol. 1073, pp. 465.
---------------------------------------------------------------------------

The applicant asserted that the use of AZEDRA[reg] reduces tumor
size and reduces the secretion of tumor biomarkers, thereby providing
important clinical benefits to patients. The IB12 study assessed the
overall best tumor response based on Response Evaluation Criteria in
Solid Tumors (RECIST).\201\ Tumor biomarker response was assessed as
complete or partial response for serum chromogranin A and total
metanephrines in 80 percent and 64 percent of patients, respectively,
and the applicant noted that both the overall best tumor response based
on RECIST and tumor biomarker response favorable results are at doses
higher than 500 mCi. We noticed that tumor burden improvement, as
measured by RECIST criteria, showed that none of the 21 patients
achieved a complete response. In addition, although 4 patients showed
partial response, these 4 patients also experienced dose[dash]limiting
toxicity with hematological events, and that all 4 patients received
administered doses greater than 18.5 GBq (500 mCi). We also note that,
regardless of total administered activity (for example, greater than or
less than 18.5 GBq (500 mCi)), 61.9 percent (n=13) of the 21 patients
enrolled in the study had stable disease and 14.3 percent (n=2) of the
14 patients who received greater than administered doses of 18.5 GBq
(500 mCi) had progressive disease. Finally, we also noticed that, for
most tumor markers, there were no dose relationship trends. While we
recognize that there is no FDA-approved therapy for patients who have
been diagnosed with \131\I-MIBG avid malignant and/or recurrent and/or
unresectable pheochromocytoma and paraganglioma tumors, we have
questions as to whether the overall tumor best response and overall
best tumor marker data results from the IB12 study support a finding
that the AZEDRA[reg] technology represents a substantial clinical
improvement.
---------------------------------------------------------------------------

\201\ Therasse, P., Arbuck, S.G., Eisenhauer, J.W., Kaplan,
R.S., Rubinsten, L., Verweij, J., Van Blabbeke, M., Van Oosterom,
A.T., Christian, M.D., and Gwyther, S.G., ``New guidelines to
evaluate the response to treatment in solid tumors,'' J Natl Cancer
Inst, 2000, vol. 92(3), pp. 205-16. Available at: https://www.eortc.be/Services/Doc/RECIST.pdf.
---------------------------------------------------------------------------

Finally, regarding the applicant's assertion that, based on the
IB12 study data, AZEDRA[reg] provides a safe alternative therapy for
those patients who have failed other currently available treatment
therapies, we note that none of the patients experienced hypertensive
crisis, and that 76 percent (n=16) of the 21 patients enrolled in the
study experienced Grade III or IV adverse events. Although the
applicant indicated the adverse events were related to the study drug,
the applicant also noted that there was no statistically significant
difference between the greater than or less than 18.5 GBq administered
doses; both groups had adverse events rates greater than 75 percent.
Specifically, 5 of 7 patients (76 percent) who received less than or
equal to 18.5 GBq administered doses, and 11 of 14 patients (79
percent) who received greater than 18.5 GBq administered doses
experienced Grade III or IV adverse advents. The most common (greater
than or equal to 10 percent) Grade III and IV adverse events were
neutropenia, leukopenia, thrombocytopenia, nausea, and vomiting. We
also note that: (1) There were 5 deaths during the study that occurred
from approximately 2.5 months up to 22 months after treatment and there
was no detailed data regarding the 5 deaths, especially related to the
total activity received during the study; (2) there was no information
about which patients received prior radiation therapy with EBRT and/or
conventional MIBG relative to those who experienced Grade III or IV
adverse events; and (3) the total lifetime radiation dose was not
provided by the applicant. We are inviting public comments on whether
the safety data profile from the IB12 study supports a finding that
AZEDRA[reg] represents a substantial clinical improvement for patients
who received treatment with \131\I-MIBG for a diagnosis of avid
malignant and/or recurrent and/or unresectable pheochromocytoma and
paraganglioma tumors, given the risks for Grade III or IV adverse
events.
The applicant provided study data results from the IB12B study
(MIP-IB12B), an open[dash]label, prospective 5[dash]year follow-up,
single[dash]arm, multi[dash]center, Phase II pivotal study to evaluate
the safety and efficacy of the use of AZEDRA[reg] for the treatment of
patients who have been diagnosed with malignant and/or recurrent
pheochromocytoma and paraganglioma tumors to support substantial
clinical improvement. The applicant reported that IB12B's primary
endpoint is the proportion of patients with a reduction (including
discontinuation) of all antihypertensive medication by at least 50
percent for at least 6 months. Seventy-four patients who received at
least 1 dosimetric dose of AZEDRA[reg] were evaluated for safety and 68
patients who received at least 1 therapeutic dose of AZEDRA[reg], each
at 500 mCi (or 8 mCi/kg for patients weighing less than or equal to
62.5 kg), were assessed for specific clinical outcomes. The applicant
asserted that results from this prospective study met the primary
endpoint (reduction or discontinuation of anti-hypertensive
medications), as well as demonstrated strong supportive evidence from
key secondary endpoints (overall tumor response, tumor biomarker
response, and overall survival rates) that confers important clinical
relevance to patients who have been diagnosed with malignant
pheochromocytoma and paraganlioma tumors. The applicant also indicated
that the use of AZEDRA[reg] was shown to be generally well tolerated at
doses administered at 8 mCi/kg. We note that the data results from the
IB12B study did not have a comparator arm, making it difficult to
interpret the clinical outcome data relative to other currently
available therapies.
As discussed for the IB12 study, the applicant reported that
antihypertension treatment was a proxy for effectiveness of AZEDRA[reg]
on norepinephrine induced hypertension producing tumors. In the IB12B
study, 25 percent (17/68) of patients met the primary

[[Page 20344]]

endpoint of having a greater than 50 percent reduction in
antihypertensive agents for at least 6 months. The applicant further
indicated that an additional 16 patients showed a greater than 50
percent reduction in antihypertensive agents for less than 6 months,
and pooling data results from these 33 patients, the applicant
concluded that 49 percent (33/68) achieved a greater than 50 percent
reduction at any time during the study 12-month follow-up period. The
applicant further compared its data results from the IB12B study
regarding antihypertension medication and the frequency of
post[dash]infusion hypertension with published studies on MIBG and CVD
therapy. The applicant noted a retrospective analysis of CVD therapy of
52 patients who had been diagnosed with metastatic pheochromocytoma and
paraganliom tumors that found only 15 percent of CVD[dash]treated
patients achieved a 50-percent reduction in antihypertensive agents.
The applicant also compared its results for post-infusion hypertension
with literature reporting on MIBG and found 14 and 19 percent
(depending on the study) of patients receiving MIBG experience
hypertension within 24 hours of infusion. Comparatively, the applicant
stated that the use of AZEDRA[reg] had no acute events of hypertension
following infusion. We are inviting public comments on whether these
data results regarding hypertension support a finding that the
AZEDRA[reg] technology represents a substantial clinical improvement,
and if antihypertensive medication reduction is an adequate proxy for
improvement in renal, cerebral, and myocardial end organ damage.
Regarding reduction in tumor burden (as defined by RECIST scores),
the applicant indicated that at the conclusion of the IB12B
12[dash]month follow-up period, 23.4 percent (n=15) of the 68 patients
showed a partial response (PR), 68.8 percent (n=44) of the 68 patients
achieved stable disease (SD), and 4.7 percent (n=3) of the 68 patients
showed progressive disease. None of the patients showed completed
response (CR). The applicant maintained that achieving SD is important
for patients who have been treated for malignant pheochromocytoma and
paraganglioma tumors because this is a progressive disease without a
cure at this time. The applicant also indicated that literature shows
that SD is maintained in approximately 47 percent of treatment
na[iuml]ve patients who have been diagnosed with metastatic
pheochromocytoma and paraganglioma tumors at 1 year due to the indolent
nature of the disease.\202\ In the IB12B study, the data results
equated to 23 percent of patients achieving partial response and 69
percent of patients achieving stable disease. According to the
applicant, this compares favorably to treatment with both conventional
radiolabeled MIBG and CVD chemotherapy.
---------------------------------------------------------------------------

\202\ Hescot, S., Leboulleux, S., Amar, L., Vezzosi, D., Borget,
I., Bournaud-Salinas, C., de la Fouchardiere, C., Lib[eacute], R.,
Do Cao, C., Niccoli, P., Tabarin, A., ``One-year progression-free
survival of therapy-naive patients with malignant pheochromocytoma
and paraganglioma,'' The J Clin Endocrinol Metab, 2013, vol. 98(10),
pp. 4006-4012.
---------------------------------------------------------------------------

The applicant stated that the data results demonstrated effective
tumor response rates. The applicant reported that the IB12 and IB12B
study data showed overall tumor response rates of 80 percent and 92
percent, respectively. In addition, the applicant contended that the
study data across both trials show that patients demonstrated improved
blood pressure control, reductions in tumor biomarker secretion, and
strong evidence in overall survival rates. The overall median time to
death from the first dose was 36.7 months in all treated patients.
Patients who received 2 therapeutic doses had an overall median
survival rate of 48.7 months, compared to 17.5 months for patients who
only received a single dose.
The applicant indicated that comparison of IB12B study data
regarding overall survival rate with historical data is difficult due
to the differences in the retrospective and heterogeneous nature of the
published clinical studies and patient characteristics, especially when
overall survival is calculated from the time of initial diagnosis. We
agree with the applicant regarding the difficulties in comparing the
results of the published clinical studies, and also believe that the
differences in these studies may make it more difficult to evaluate
whether the use of the AZEDRA[reg] technology improves overall survival
rates relative to other therapies.
We acknowledge the challenges with constructing robust clinical
studies due to the extremely rare occurrence of patients who have been
diagnosed with pheochromocytoma and paraganglioma tumors. However, we
are concerned that because the data for both of these studies is mainly
based upon retrospective studies and small, heterogeneous patient
cohorts, it is difficult to draw strong conclusions regarding efficacy.
Only very limited nonpublished data from two, single[dash]arm,
noncomparative studies are available to evaluate the safety and
effectiveness of Ultratrace[reg] I-131 MIBG, leading to a comparison of
outcomes with historical controls. We are inviting public comments on
whether the use of the AZEDRA[reg] technology meets the substantial
clinical improvement criterion, including with respect to the specific
concerns we have raised.
Below we summarize and respond to two written public comments we
received during the open comment period in response to the published
notice in the Federal Register announcing the New Technology Town Hall
Meeting regarding the substantial clinical improvement criterion aspect
of AZEDRA[reg]'s application for new technology add-on payments for FY
2019 below.
Comment: One commenter supported the approval of the application of
AZEDRA[reg] for new technology add-on payments for FY 2019 and its
substantial clinical improvement in the treatment options available for
Medicare beneficiaries. The commenter believed that AZEDRA[reg]
demonstrates a substantial clinical improvement over other available
therapies (as described previously) and meets a current unmet need for
the treatment of patients who have been diagnosed with pheochromocytoma
and paraganglioma. The commenter stated that AZEDRA[reg]'s structure is
unlike the structure of any existing treatment option, given the use of
the Ultratrace[reg] technology which has demonstrated resulting
occurrences of reduced serious cardiovascular side effects and
increased efficacy due to its unique ``carrier-free'' structure.
Another commenter also supported the approval of new technology
add-on payments for AZEDRA[reg] and its substantial clinical
improvement in the treatment options available for Medicare
beneficiaries. This commenter stated that AZEDRA[reg] is much simpler
to administer than low[dash]specific activity I-131 MIBG, offers
quicker and simpler infusions, and provides a rational, personalized,
and effective therapy with promising and highly significant clinical
benefits for patients who have been diagnosed with advanced
pheochromocytoma and paraganglioma.
Response: We appreciate the commenters' input. We will take these
comments into consideration when deciding whether to approve new
technology add-on payments for AZEDRA[reg] for FY 2019.
m. The AquaBeam System (Aquablation)
PROCEPT BioRobotics Corporation submitted an application for new
technology add-on payments for the

[[Page 20345]]

AquaBeam System (Aquablation) for FY 2019. According to the applicant,
the AquaBeam System is indicated for the use in the treatment of
patients experiencing lower urinary tract symptoms caused by a
diagnosis of benign prostatic hyperplasia (BPH). The AquaBeam System
consists of three main components: A console with two high-pressure
pumps, a conformal surgical planning unit with trans-rectal ultrasound
imaging, and a single-use robotic hand-piece.
The applicant reported that The AquaBeam System provides the
operating surgeon a multi-dimensional view, using both ultrasound image
guidance and endoscopic visualization, to clearly identify the
prostatic adenoma and plan the surgical resection area. Based on the
planning inputs from the surgeon, the system's robot delivers
Aquablation, an autonomous waterjet ablation therapy that enables
targeted, controlled, heat-free and immediate removal of prostate
tissue used for the purpose of treating lower urinary tract symptoms
caused by a diagnosis of BPH. The combination of surgical mapping and
robotically-controlled resection of the prostate is designed to offer
predictable and reproducible outcomes, independent of prostate size,
prostate shape or surgeon experience.
In its application, the applicant indicated that benign prostatic
hyperplasia (BPH) is one of the most commonly diagnosed conditions of
the male genitourinary tract \203\ and is defined as the ``. . .
enlargement of the prostate due to benign growth of glandular tissue .
. .'' in older men.\204\ BPH is estimated to affect 30 percent of males
that are older than 50 years old.^{205 206} BPH may compress
the urethral canal possibly obstructing the urethra, which may cause
symptoms that effect the lower urinary tract, such as difficulty
urinating (dysuria), hesitancy, and frequent
urination.^{207 208 209}
---------------------------------------------------------------------------

\203\ Bachmann, A., Tubaro, A., Barber, N., d'Ancona, F., Muir,
G., Witzsch, U., Thomas, J., ``180-W XPS GreenLight Laser
Vaporisation Versus Transurethral Resection of the Prostate for the
Treatment of Benign Prostatic Obstruction: 6-month safety and
efficacy results of a european multicentre randomised trial--the
GOLIATH study,'' European Association of Urology, 2014, vol. 65, pp.
931-942.
\204\ Gilling, P., Anderson, P., and Tan, A., ``Aquablation of
the Prostate for Symptomatic Benign Prostatic Hyperplasia: 1-Year
results,'' The Journal of Urology, 2017, vol. 197, pp. 156-1572.
\205\ Roehrborn, C., Gange, S., Shore, N., Giddens, J., Bolton,
D., Cowan, B., Rukstalist, D., ``The Prostatic Urethral Lift for the
Treatmentof Lower Urinary Tract Symptoms Associated with Prostate
Enlargement Due to Benign Prostatic Hyperplasia: The LIFT study,''
The Journal of Urology, 2013, vol. 190, pp. 2161-2167.
\206\ Sonksen, J., Barber, N., Speakman, M., Berges, R.,
Wetterauer, U., Greene, D., Gratzke, C., ``Prospective, Randomized,
Multinational Study of Prostatic Urethral Lift Versus Transurethral
Resection of the Prostate: 12-month results from the BPH6 study,''
European Association of Urology, 2015, vol. 68, pp. 643-652.
\207\ Roehrborn, C., Gange, S., Shore, N., Giddens, J., Bolton,
D., Cowan, B., Rukstalist, D., ``The Prostatic Urethral Lift for the
Treatmentof Lower Urinary Tract Symptoms Associated with Prostate
Enlargement Due to Benign Prostatic Hyperplasia: The LIFT study,''
The Journal of Urology, 2013, vol. 190, pp. 2161-2167.
\208\ Sonksen, J., Barber, N., Speakman, M., Berges, R.,
Wetterauer, U., Greene, D., Gratzke, C., ``Prospective, Randomized,
Multinational Study of Prostatic Urethral Lift Versus Transurethral
Resection of the Prostate: 12-month results from the BPH6 study,''
European Association of Urology, 2015, vol. 68, pp. 643-652.
\209\ Roehrborn, C., Gilling, P., Cher, D., andTemplin, B.,
``The WATER Study (Waterjet Ablation Therapy for Ednoscopic
Resection of prostate tissue),'' Redwood City: PROCEPT BioRobotics
Corporation, 2017.
---------------------------------------------------------------------------

The initial treatment for a patient who has been diagnosed with BPH
is watchful waiting and medications.\210\ Symptom severity, as measured
by one test, the International Prostate Symptom Score (IPSS), is the
primary measure by which surgery necessity is decided.\211\ Many
techniques exist for the surgical treatment of patients who have been
diagnosed with BPH, and these surgical treatments differ primarily by
the method of resection: Electrocautery in the case of Transurethral
Resection of the Prostate (TURP), laser enucleation, plasma
vaporization, photoselective vaporization, radiofrequency ablation,
microwave thermotherapy, and transurethral incision \212\ are among the
primary methods. TURP is the primary reference treatment for patients
who have been diagnosed with BPH.\213\ \214\ \215\ \216\ \217\
---------------------------------------------------------------------------

\210\ Ibid.
\211\ Cunningham, G. R., Kadmon, D., 2017, ``Clinical
manifestations and diagnostic evaluation of benign prostatic
hyperplasia,'' 2017. Available at: https://www.uptodate.com/
contents/clinical-manifestations-and-diagnostic-evaluation-of-
benign-prostatic-
hyperplasia?search=cunningham%20kadmon%202017%20benign%20prostatic&so
urce=search_result&selectedTitle=2~150&usage_type=default&display_ran
k=2.
\212\ Ibid.
\213\ Bachmann, A., Tubaro, A., Barber, N., d'Ancona, F., Muir,
G., Witzsch, U., Thomas, J., ``180-W XPS GreenLight Laser
Vaporisation Versus Transurethral Resection of the Prostate for the
Treatment of Benign Prostatic Obstruction: 6-month safety and
efficacy results of a european multicentre randomised trial--the
GOLIATH study,'' European Association of Urology, 2014, vol. 65, pp.
931-942.
\214\ Cunningham, G. R., Kadmon, D., ``Clinical manifestations
and diagnostic evaluation of benign prostatic hyperplasia,'' 2017.
Available at: https://www.uptodate.com/contents/clinical-
manifestations-and-diagnostic-evaluation-of-benign-prostatic-
hyperplasia?search=cunningham%20kadmon%202017%20benign%20prostatic&so
urce=search_result&selectedTitle=2~150&usage_type=default&display_ran
k=2.
\215\ Mamoulakis, C., Efthimiou, I., Kazoulis, S.,
Christoulakis, I., and Sofras, F., ``The Modified Clavien
Classification System: A standardized platform for reporting
complications in transurethral resection of the prostate,'' World
Journal of Urology, 2011, vol. 29, pp. 205-210.
\216\ Roehrborn, C., Gange, S., Shore, N., Giddens, J., Bolton,
D., Cowan, B., Rukstalist, D., ``The Prostatic Urethral Lift for the
Treatmentof Lower Urinary Tract Symptoms Associated with Prostate
Enlargement Due to Benign Prostatic Hyperplasia: The LIFT study,''
The Journal of Urology, 2013, vol. 190, pp. 2161-2167.
\217\ Sonksen, J., Barber, N., Speakman, M., Berges, R.,
Wetterauer, U., Greene, D., Gratzke, C., ``Prospective, Randomized,
Multinational Study of Prostatic Urethral Lift Versus Transurethral
Resection of the Prostate: 12-month results from the BPH6 study,''
European Association of Urology, 2015, vol. 68, pp. 643-652.
---------------------------------------------------------------------------

According to the applicant, while the TURP procedure achieves
alleviation of the symptoms that affect the lower urinary tract
associated with a diagnosis of BPH, morbidity rates caused by adverse
events are high following the procedure. The TURP procedure has a well-
documented history of associated adverse effects, such as hematuria,
clot retention, bladder wall injury, hyponatremia, bladder neck
contracture, urinary incontinence, and retrograde ejaculation.\218\
\219\ \220\ \221\ \222\ The likelihood of both adverse events and
long[dash]term morbidity related to the TURP procedure increase with
the size of the prostate.\223\
---------------------------------------------------------------------------

\218\ Roehrborn, C., Gilling, P., Cher, D., and Templin, B.,
``The WATER Study (Waterjet Ablation Therapy for Ednoscopic
Resection of prostate tissue),'' Redwood City: PROCEPT BioRobotics
Corporation, 2017.
\219\ Cunningham, G. R., & Kadmon, D., 2017, ``Clinical
manifestations and diagnostic evaluation of benign prostatic
hyperplasia,'' 2017. Available at: https://www.uptodate.com/
contents/clinical-manifestations-and-diagnostic-evaluation-of-
benign-prostatic-
hyperplasia?search=cunningham%20kadmon%202017%20benign%20prostatic&so
urce=search_result&selectedTitle=2~150&usage_type=default&display_ran
k=2.
\220\ Mamoulakis, C., Efthimiou, I., Kazoulis, S.,
Christoulakis, I., Sofras, F., ``The Modified Clavien Classification
System: A standardized platform for reporting complications in
transurethral resection of the prostate,'' World Journal of Urology,
2011, vol. 29, pp. 205-210.
\221\ Roehrborn, C., Gange, S., Shore, N., Giddens, J., Bolton,
D., Cowan, B., Rukstalist, D., ``The Prostatic Urethral Lift for the
Treatmentof Lower Urinary Tract Symptoms Associated with Prostate
Enlargement Due to Benign Prostatic Hyperplasia: The LIFT study,''
The Journal of Urology, 2013, vol. 190, pp. 2161-2167.
\222\ Sonksen, J., Barber, N., Speakman, M., Berges, R.,
Wetterauer, U., Greene, D., Gratzke, C., ``Prospective, Randomized,
Multinational Study of Prostatic Urethral Lift Versus Transurethral
Resection of the prostate: 12-month results from the BPH6 study,''
European Association of Urology, 2015, vol. 68, pp. 643-652.
\223\ Bachmann, A., Tubaro, A., Barber, N., d'Ancona, F., Muir,
G., Witzsch, U., Thomas, J., ``180-W XPS GreenLight Laser
Vaporisation Versus Transurethral Resection of the Prostate for the
Treatment of Benign Prostatic Obstruction: 6-month safety and
efficacy results of a european multicentre randomised trial--the
GOLIATH study,'' European Association of Urology, 2014, vol. 65, pp.
931-942.
---------------------------------------------------------------------------

The applicant asserted that the AquaBeam System provides superior
safety outcomes as compared to the

[[Page 20346]]

TURP procedure, while providing non-inferior efficacy in treating the
symptoms that affect the lower urinary tract associated with a
diagnosis of BPH. The applicant further stated that the AquaBeam System
yields consistent and predictable procedure and resection times
regardless of the size and shape of the prostate and the surgeon's
experience. Lastly, according to the applicant, the AquaBeam System
provides increased efficacy and safety for larger prostates as compared
to the TURP procedure.
With respect to the newness criterion, FDA granted the applicant's
De Novo request on December 21, 2017, for use in the resection and
removal of prostate tissue in males suffering from lower urinary tract
symptoms (LUTS) due to benign prostatic hyperplasia. The applicant
stated that the AquaBeam System was made available on the U.S. market
immediately after the FDA granted the De Novo request. Therefore, if
approved for new technology add-on payments, the newness period is
considered to begin on December 21, 2017. There are currently no
existing ICD-10-PCS procedure codes to specifically identify procedures
involving the Aquablation method or technique for the treatment of
symptoms that affect the lower urinary tract in patients who have been
diagnosed with BPH. The applicant stated that it applied for approval
for a distinct ICD[dash]10-PCS procedure code to uniquely identify
procedures involving the AquaBeam System at the ICD-10 Maintenance and
Coordination Committee March 2018 meeting.
As discussed earlier, if a technology meets all three of the
substantial similarity criteria, it would be considered substantially
similar to an existing technology and would not be considered ``new''
for the purposes of new technology add-on payments.
With regard to the first criterion, whether a product uses the same
or a similar mechanism of action to achieve a therapeutic outcome, the
applicant stated that the AquaBeam System is the first technology to
deliver treatment to patients who have been diagnosed with BPH for the
symptoms that effect the lower urinary tract caused by BPH via
Aquablation therapy. The AquaBeam System utilizes intra[dash]operative
image guidance for surgical planning and then Aquablation therapy to
robotically resect tissue utilizing a high-velocity waterjet. According
to the applicant, all other BPH treatment procedures only utilize
cystoscopic visualization, whereas the AquaBeam System utilizes
Aquablation therapy, a combination of cystoscopic visualization and
intra[dash]operative image guidance. According to the applicant, the
AquaBeam System's use of Aquablation therapy qualifies it as the only
technology to utilize a high-velocity room temperature waterjet for
tissue resection, while most other BPH surgical procedures utilize
thermal energy to resect prostatic tissue, or require the implantation
of clips to pull back prostatic tissue blocking the urethra. Lastly,
according to the applicant, all other surgical modalities are executed
by the operating surgeon, while the AquaBeam System allows planning by
the surgeon and utilization of Aquablation therapy ensures accurate and
efficient tissue resection is autonomously executed by the robot.
With respect to the second criterion, whether a product is assigned
to the same or a different MS-DRG, the applicant stated that potential
cases representing potential patients who may be eligible for treatment
involving the AquaBeam System's Aquablation therapy technique will
ultimately map to the same MS-DRGs as cases for existing BPH treatment
options.
With respect to the third criterion, whether the new use of the
technology involves the treatment of the same or similar type of
disease and the same or similar patient population, the applicant
stated that the AquaBeam System's Aquablation therapy will ultimately
treat the same patient population as other available BPH treatment
options. The applicant asserted that the AquaBeam System's Aquablation
therapy has been shown to be more effective and safer than the TURP
procedure for patients with larger prostate sizes. The applicant stated
that prostates 80 ml or greater in size are not appropriate for the
TURP procedure and, therefore, more intensive procedures such as
surgery are required. Furthermore, the applicant claimed that the
AquaBeam System's Aquablation therapy is particularly appropriate for
smaller prostate sizes, ~30 ml, due to increased accuracy provided by
both the computer assistance and ultrasound visualization.
We have the following concerns regarding whether the AquaBeam
System meets the newness criterion. Currently, there are many treatment
options that utilize varying forms of ablation, such as mono and
bipolar TURP procedures, laser, microwave, and radiofrequency, to treat
the symptoms associated with a diagnosis of BPH. We are concerned that,
while this device utilizes water to perform any tissue removal, its
mechanism of action may not be different from that of other forms of
treatment for patients who have been diagnosed with BPH. Further, the
use of water to perform tissue removal in the treatment of associated
symptoms in patients who have been diagnosed with BPH has existed in
other areas of surgical treatment prior to the introduction of this
product (for example, endometrial ablation and wound debridement). In
addition, the standard operative treatment, such as with the TURP
procedure, for patients who have been diagnosed with BPH is to widen
the urethra compressed by an enlarged prostate in an effort to
alleviate the negative effects of an enlarged prostate. Like other
existing methods, the AquaBeam System's Aquablation therapy also
ablates tissue to enlarge compression of the urethra. Additionally,
while the robotic arm and computer programing may result in different
outcomes for patients, we are uncertain that the use of the robotic
hand and computer programming result in a new mechanism of action. We
are inviting public comments on this issue.
We also are inviting public comments on whether the AquaBeam
System's Aquablation therapy is substantially similar to existing
technologies and whether it meets the newness criterion.
With regard to the cost criterion, the applicant conducted the
following analysis to demonstrate that the technology meets the cost
criterion. Given that the AquaBeam System's Aquablation therapy
procedure does not currently have a unique ICD-10-PCS procedure code,
the applicant searched the FY 2016 MedPAR data file for cases with the
following current ICD-10-PCS codes describing other BPH minimally
invasive procedures to identify potential cases representing potential
patients who may be eligible for treatment involving the AquaBeam
System's Aquablation therapy: 0V507ZZ (Destruction of prostate, via
natural or artificial opening), 0V508ZZ (Destruction of prostate, via
natural or artificial opening endoscopic), 0VT07ZZ (Resection of
prostate, via natural or artificial opening), and 0VT08ZZ (Resection of
prostate, via natural or artificial opening endoscopic). The applicant
identified a total of 133 MS-DRGs using these ICD-10-PCS codes.
In order to calculate the standardized charges per case, the
applicant conducted two analyses, based on 100 percent and 75 percent
of identified claims in the FY 2016 MedPAR data file. The applicant
based its analysis on 100 percent of claims mapping to 133 MS-DRGs, and
75 percent of claims mapping to 6 MS-DRGs. The cases identified in the
75 percent analysis mapped to MS-DRGs 665 (Prostatectomy with MCC), 666

[[Page 20347]]

(Prostatectomy with CC), 667 (Prostatectomy without CC/MCC), 713
(Transurethral Prostatectomy with CC/MCC), 714 (Transurethral
Prostatectomy without CC/MCC), and 988 (Non-Extensive O.R. Procedures
Unrelated to Principal Diagnosis with CC). In situations in which there
were fewer than 11 cases for individual MS-DRGs in the MedPAR data
file, a value of 11 was imputed to ensure confidentiality for patients.
When evaluating 100 percent of the cases identified, the applicant
included low-volume MS-DRGs that had equal to or less than 11 total
cases to represent potential patients who may be eligible for treatment
involving the AquaBeam System's Aquablation therapy in order to
calculate the average case-weighted unstandardized and standardized
charge amounts. The 75 percent analysis removed those MS-DRGs with 11
cases or less representing potential patients who may be eligible for
treatment involving the AquaBeam System's Aquablation therapy,
resulting in only 6 of the 133 MS-DRGs remaining for analysis. A total
of 8,449 cases were included in the 100 percent analysis and 6,285
cases were included in the 75 percent analysis.
Using the 100 percent and 75 percent samples, the applicant
determined that the average case-weighted unstandardized charge per
case was $69,662 and $47,475, respectively. The applicant removed 100
percent of total charges associated with the service category
``Medical/Surgical Supply Charge Amount'' (which includes revenue
centers 027x and 062x) because the applicant believed that it was the
most conservative choice, as this amount varies by MS-DRG. The
applicant stated that the financial impact of utilizing the AquaBeam
System's Aquablation therapy on hospital resources other than on
``Medical Supplies'' is unknown at this time. Therefore, a value of $0
was used for charges related to the prior technology.
The applicant standardized the charges, and inflated the charges
using an inflation factor of 1.09357, from the FY 2018 IPPS/LTCH PPS
final rule (82 FR 38524). The applicant then added the charges for the
new technology. The applicant computed a final inflated average
case[dash]weighted standardized charge per case of $69,588 for the 100
percent sample, and $51,022 for the 75 percent sample. The average
case-weighted threshold amount was $59,242 for the 100 percent sample,
and $48,893 for the 75 percent sample. Because the final inflated
average case-weighted standardized charge per case exceeds the average
case-weighted threshold amount for both analyses, the applicant
maintained that the technology meets the cost criterion.
We are inviting public comment regarding whether the technology
meets the cost criterion.
With respect to the substantial clinical improvement criterion, the
applicant asserted that the Aquablation therapy provided by the
AquaBeam System represents a substantial clinical improvement over
existing treatment options for symptoms associated with the lower
urinary tract for patients who have been diagnosed with BPH.
Specifically, the applicant stated that the AquaBeam System's
Aquablation therapy provides superior safety outcomes compared to the
TURP procedure, while providing noninferior efficacy in treating the
symptoms that effect the lower urinary tract associated with a
diagnosis of BPH; the AquaBeam System's delivery of Aquablation therapy
yields consistent and predictable procedure and resection times
regardless of the size and shape of the prostate or the surgeon's
experience; and the AquaBeam System's Aquablation therapy demonstrated
superior efficacy and safety for larger prostates (that is, prostates
sized 50 to 80 mL) as compared to the TURP procedure.
The applicant provided the results of one Phase I and one Phase II
trial published articles, the WATER Study Clinical Study Report, and a
meta-analysis of current treatments with its application as evidence
for the substantial clinical improvement criterion.
According to the applicant, the first study \224\ enrolled 15
nonrandomized patients with a prostate volume between 25 to 80 ml in a
Phase I trial testing the safety and feasibility of the AquaBeam
System's Aquablation therapy; all patients received the AquaBeam
System's Aquablation therapy. This study, a prospective, nonrandomized
study, enrolled men who were 50 to 80 years old who were affected by
moderate to severe lower urinary tract symptoms, who did not respond to
standard medical therapy.\225\ Follow-up assessments were conducted at
1, 3, and 6 months and included information on adverse events, serum
PSA level, uroflowmetry, PVR, quality of life, and the International
Prostate Symptom Score (IPSS) and International Index of Erectile
Function (IIEF) scores. The primary outcome was the assessment of
safety as measured by adverse event reporting; secondary endpoints
focused on alleviation of BPH symptoms.\226\
---------------------------------------------------------------------------

\224\ Gilling P., Reuther, R., Kahokehr, A., Fraundorfer, M.,
``Aquablation--Image-guided Robot-assisted Waterjet Ablation of the
Prostate: Initial clinical experience,'' British Journal of Urology
International, 2016, vol. 117, pp. 923-929.
\225\ Ibid.
\226\ Ibid.
---------------------------------------------------------------------------

The applicant indicated that 8 of the 15 patients who were enrolled
in the trial had at least 1 procedure[dash]related adverse event (for
example, catheterization, hematuria, dysuria, pelvic pain, bladder
spasms), which the authors reported to be consistent with outcomes from
minimally[dash]invasive transurethral procedures.\227\ There were no
occurrences of incontinence, retrograde ejaculation, or erectile
dysfunction at 30 days.\228\ Statistically significant improvement on
all outcomes occurred over the 6[dash]month period. Average IPSS scores
showed a negative slope with scores of 23.1, 11.8, 9.1, and 8.6 for
baseline, 1 month, 3 months, and 6 months (p<0.01 in all cases).
Average quality of life scores, which range from 1 to 5, where 1 is
better and 5 is worse, decreased from 5.0 at baseline to 2.6 at 1
month, 2.2 at 3 months, and 2.5 at 6 months. Average maximum urinary
flow rate increased steadily across time points from 8.6 ml/s at
baseline to 18.6 ml/s at 6 months. Lastly, average post[dash]void
residual urine volume decreased from 91 ml at baseline to 38 ml at 1
month, 60 ml at 3 months, and 30 ml at 6 months.\229\
---------------------------------------------------------------------------

\227\ Gilling, P., Anderson, P., and Tan, A., ``Aquablation of
the Prostate for Symptomatic Benign Prostatic Hyperplasia: 1-Year
results,'' The Journal of Urology, 2017, vol. 197, pp. 156-1572.
\228\ Ibid.
\229\ Ibid.
---------------------------------------------------------------------------

The second study \230\ presents results from a Phase II trial
involving 21 men with a prostate volume between 30 to 102 ml who
received treatment involving the AquaBeam System's Aquablation therapy
with follow-up at 1 year. This prospective study enrolled men between
the ages of 50 and 80 years old who were effected by moderate to severe
symptomatic BPH.\231\ The primary end point was the rate of adverse
events; the secondary end points measured alleviation of symptoms
associated with a diagnosis of BPH. Data was collected at baseline and
at 1 month, 3 months, 6 months, and 12 months; 1 patient withdrew at 3
months. The authors asserted that the occurrence of post[dash]operative
adverse events (urinary retention, dysuria, hematuria, urinary tract
infection, bladder spasm, meatal stenosis) were consistent with other
minimally[dash]invasive transurethral

[[Page 20348]]

procedures; \232\ 6 patients had at least 1 adverse event, including
temporary urinary symptoms and medically[dash]treated urinary tract
infections.\233\ The mean IPSS scores decreased from the baseline of
22.8 with 11.5 at 1 month, 7 at 3 months, 7.1 at 6 months, and 6.8 at
12 months and were statistically significantly different. Similarly,
quality of life decreased from a mean score of 5 at baseline to 1.7 at
12 months, all time points were statistically significantly different
from the baseline.
---------------------------------------------------------------------------

\230\ Ibid.
\231\ Ibid.
\232\ Gilling, P., Anderson, P., and Tan, A., ``Aquablation of
the Prostate for Symptomatic Benign Prostatic Hyperplasia: 1-Year
results,'' The Journal of Urology, 2017, vol. 197, pp. 156-1572.
\233\ Ibid.
---------------------------------------------------------------------------

The third document provided by the applicant is the Clinical Study
Report: WATER Study,\234\ a prospective multi[dash]center, randomized,
blinded study. The WATER Study compared the AquaBeam System's
Aquablation therapy to the TURP procedure for the treatment of lower
urinary tract symptoms associated with a diagnosis of BPH. One hundred
eighty one (181) patients with prostate volumes between 30 and 80 ml
were randomized, 65 patients to the TURP procedure group and the other
116 to the AquaBeam System's Aquablation therapy group, with 176 (97
percent of patients) continuing at 3 and 6 month follow[dash]up, where
2 missing patients received treatment involving the AquaBeam System's
Aquablation therapy and 3 received treatment involving the TURP
procedure; randomization efficacy was assessed and confirmed with
findings of no statistical differences between cases and controls among
all characteristics measures, specifically prostate volume. Two primary
endpoints were identified: (1) The safety endpoint was the proportion
of patients with adverse events rates as ``probably or definitely
related to the study procedure'' also classified as the Clavien-Dindo
(CD) Grade 2 or higher or any Grade 1 resulting in persistent
disability; and (2) the primary efficacy endpoint was a change in the
IPSS score from baseline to 6 months. Three secondary endpoints were
based on perioperative data and were: Length of hospital stay, length
of operative time, and length of resection time. The occurrences of
three secondary endpoints during the 6[dash]month follow[dash]up were:
(1) Reoperation or reintervention within 6 months; (2) evaluation of
proportion of sexually active patients; and (3) evaluation of
proportion of patients with major adverse urologic events.
---------------------------------------------------------------------------

\234\ Roehrborn, C., Gilling, P., Cher, D., Templin, B., ``The
WATER Study (Waterjet Ablation Therapy for Ednoscopic Resection of
prostate tissue),'' Redwood City: PROCEPT BioRobotics Corporation,
2017.
---------------------------------------------------------------------------

At 3 months, 25 percent of the patients in the AquaBeam System's
Aquablation therapy group and 40 percent of the patients in the TURP
group had an adverse event. The difference of -15 percent has a 95
percent confidence interval of -29.2 and -1.0 percent. At 6 months,
25.9 percent of the patients in the AquaBeam System's Aquablation
therapy group and 43.1 percent of the patients in the TURP group had an
adverse event. The difference of -17 percent has a 95 percent
confidence interval of -31.5 to -3.0 percent. An analysis of safety
events classified with the CD system as possibly, probably or
definitely related to the procedure resulted in a CD Grade 1 persistent
event difference between -17.7 percent (favoring the AquaBeam System's
Aquablation therapy) with 95 percent confidence interval of -30.1 to -
7.2 percent and a CD Grade 2 or higher event difference of -3.3 percent
with 95 percent confidence interval of -16.5 to 8.7 percent.
The applicant indicated that the primary efficacy endpoint was
assessed by a change in IPSS score over time. While change in score and
change in percentages are generally higher for the AquaBeam System's
Aquablation therapy, no statistically significant differences occurred
between the AquaBeam System's Aquablation therapy and the TURP
procedure over time. For example, the AquaBeam System's Aquablation
therapy group experienced changes in IPSS mean score by visit of 0, -
3.8, -12.5, -16.0, and -16.9 at baseline, 1 week, 1 month, 3 months,
and 6 months, respectively, while the TURP group had mean scores of 0,
-3.6, -11.1, -14.6, and -15.1 at baseline, 1 week, 1 month, 3 months,
and 6 months, respectively.
Lastly, the applicant indicated that secondary endpoints were
assessed. A mean length of stay for both the AquaBeam System's
Aquablation therapy and the TURP procedure groups of 1.4 was achieved.
While the mean operative times were similar, the hand piece in and out
time was statistically significantly shorter for the AquaBeam System's
Aquablation therapy group at 23.3 minutes as compared to 34.2 in the
TURP procedure group. The mean resection time was 23 minutes shorter
for the AquaBeam System's Aquablation therapy group at 3.9 minutes. No
statistically significant difference was seen between the AquaBeam
System's Aquablation therapy and the TURP procedure groups on the
outcomes of re-intervention and worsening sexual function; 32.9 percent
of the AquaBeam System's Aquablation therapy group had worsening sexual
function as compared to 52.8 percent of the TURP procedure group. While
statistically significant differences occurred across groups for change
in ejaculatory function, the difference no longer remained at 6 months.
While a greater proportion of the TURP procedure group patients
experienced a negative change in erectile function as compared to the
AquaBeam System's Aquablation therapy group patients (10 percent versus
6.2 percent at 6 months), no statistically significant differences
occurred. No statistically significant differences between groups
occurred for major adverse urologic events.
The applicant provided a meta-analysis of landmark studies
regarding typical treatments for patients who have been diagnosed with
BPH in order to provide supporting evidence for the assertion of
superior outcomes achieved with the use of the AquaBeam System's
Aquablation therapy. The applicant cited four ``landmark clinical
trials,'' which report on the AquaBeam System's Aquablation
therapy,\235\ the TURP procedure, Green light laser versus the TURP
procedure,\236\ and Urolift.\237\ Comparisons are made between
performance outcomes on three separate treatments for patients who have
been diagnosed with BPH: The AquaBeam System's Aquablation therapy, the
TURP procedure, and Urolift. The applicant stated that all three
clinical trials included men with average IPSS baseline scores of 21 to
23 points. The applicant stated that, while total procedure times are
similar across all three treatment options, the AquaBeam System's
Aquablation therapy has dramatically less time and variability
associated with the tissue treatment. The applicant further stated that
the differences between treatment options were not assessed for
statistical significance. The applicant indicated

[[Page 20349]]

that the AquaBeam System's Aquablation therapy, with an approximate
score of 17, had the largest improvement in IPSS scores at 6 months as
compared to 16 for the TURP procedure and 11 for Urolift. Compared to
46 percent in the TURP group, the applicant found that the AquaBeam
System's Aquablation therapy and Urolift had much lower percentages, 4
percent and 0 percent, respectively, of an ejaculation[dash]related
consequence in patients. Lastly, the applicant stated that safety
events, as measured by the percentage of CD Grade 2 or higher events,
were lower in the AquaBeam System's Aquablation therapy (19 percent)
and Urolift (14 percent) than in TURP (29 percent).
---------------------------------------------------------------------------

\235\ Roehrborn, C., Gilling, P., Cher, D., Templin, B., ``The
WATER Study (Waterjet Ablation Therapy for Ednoscopic Resection of
prostate tissue),'' Redwood City: PROCEPT BioRobotics Corporation,
2017.
\236\ Bachmann, A., Tubaro, A., Barber, N., d'Ancona, F., Muir,
G., Witzsch, U., Thomas, J., ``180-W XPS GreenLight Laser
Vaporisation Versus Transurethral Resection of the Prostate for the
Treatment of Benign Prostatic Obstruction: 6-month safety and
efficacy results of a european multicentre randomised trial--the
GOLIATH study,'' European Association of Urology, 2014, vol. 65, pp.
931-942.
\237\ Sonksen, J., Barber, N., Speakman, M., Berges, R.,
Wetterauer, U., Greene, D., Gratzke, C., ``Prospective, Randomized,
Multinational Study of Prostatic Urethral Lift Versus Transurethral
Resection of the Prostate: 12-month results from the BPH6 study,''
European Association of Urology, 2015, vol. 68, pp. 643-652.
---------------------------------------------------------------------------

We have several concerns related to the substantial clinical
improvement criterion. The applicant performed a meta-analysis
comparing results from three separate studies, which tested the effects
of three separate treatment options. According to the applicant, the
results provided consistently show the AquaBeam System's Aquablation
therapy and Urolift as being superior to the standard treatment of the
TURP procedure. We have concerns with the interpretation of these
results that the applicant provided. The comparison of multiple
clinical studies is a difficult issue. It is not clear if the applicant
took into account the varying study designs, sample techniques, and
other study specific issues, such as physician skill and patient health
status. For instance, the applicant stated that a comparison of Urolift
and the AquaBeam System's Aquablation therapy may not be appropriate
due to the differing indications of the procedures; the applicant
indicated that Urolift is primarily used for the treatment of patients
who have been diagnosed with BPH who have smaller prostate volumes,
whereas the AquaBeam System's Aquablation therapy procedure may be used
in all prostate sizes. Similarly, the applicant stated that the TURP
procedure is generally not utilized in patients with prostates larger
than 80ml, whereas such patients may be eligible for treatment
involving the AquaBeam System's Aquablation therapy.
We note that the applicant submitted a meta-analysis in an effort
to compare currently available therapies to the AquaBeam System's
Aquablation therapy. The possibility of the heterogeneity of samples
and methods across studies leads to the possible introduction of bias,
which results in the difficulty or inability to distinguish between
bias and actual outcomes. We are inviting public comments on the
applicability of this meta-analysis.
Additionally, the differences between the AquaBeam System's
Aquablation therapy and standard treatment options may not be as
impactful and confined to safety aspects. It appears that the data on
efficacy supported the equivalence of the AquaBeam System's Aquablation
therapy and the TURP procedure based upon noninferiority analysis. We
agree that the safety data were reported as showing superiority of the
AquaBeam System's Aquablation therapy over the TURP procedure, although
the data were difficult to track because adverse consequences were
combined into categories; the AquaBeam System's Aquablation therapy was
reportedly better in terms of ejaculatory function. It was noted in the
application that, while the AquaBeam System's Aquablation therapy was
statistically superior to the TURP procedure in the CD Grade 1 +
adverse events, it was not statistically different in the CD Grade 2 or
greater category. The applicant stated that regardless of the method,
the urethra is typically used as the means for performing the BPH
treatment procedure, which necessarily increases the likelihood of CD
Grade 2 adverse events in all transurethral procedures.
In addition, the applicant noted that the treatment option may
depend on the size of the prostate. The applicant stated that the
AquaBeam System's Aquablation therapy is appropriate for small and
large prostate sizes as a BPH treatment procedure. The AquaBeam
System's Aquablation therapy has been shown to have limited positive
outcomes as compared to the TURP procedure for prostates sized greater
than 50 grams to 80 grams in each of the studies provided by the
applicant. However, the applicant noted that the TURP procedure would
not be used for prostates larger than 80 grams in size. Therefore, we
believe that another proper comparator for the AquaBeam System's
Aquablation therapy may be laser or radical/open surgical procedures
given their respective indication for small and large prostate sizes.
Lastly, the applicant compared AquaBeam System's Aquablation
therapy and the standard of care TURP procedure to support a finding of
improved safety. There are other treatment modalities available that
may have a similar safety profile as the AquaBeam System's Aquablation
therapy and we are interested in information that compares the AquaBeam
System's Aquablation therapy to other treatment modalities.
We are inviting public comments on whether the AquaBeam System's
Aquablation therapy meets the substantial clinical improvement
criterion.
We did not receive any public comments in response to the published
notice in the Federal Register regarding the AquaBeam System's
Aquablation therapy or at the New Technology Town Hall Meeting.
n. AndexXa^TM (Andexanet alfa)
Portola Pharmaceuticals, Inc. (Portola) submitted an application
for new technology add-on payments for FY 2019 for the use of
AndexXa^TM (Andexanet alfa). (We note that the applicant
previously submitted applications for new technology add-on payments
for FY 2017 and FY 2018 for Andexanet alfa, which were withdrawn.)
AndexXa^TM is an antidote used to treat patients who are
receiving treatment with an oral Factor Xa inhibitor who suffer a major
bleeding episode and require urgent reversal of direct and indirect
Factor Xa anticoagulation. Patients at high risk for thrombosis,
including those who have been diagnosed with atrial fibrillation (AF)
and venous thrombosis (VTE), typically receive treatment using long-
term oral anticoagulation agents. Factor Xa inhibitors are included in
a new class of anticoagulants. Factor Xa inhibitors are oral
anticoagulants used to prevent stroke and systemic embolism in patients
who have been diagnosed with AF. These oral anticoagulants are also
used to treat patients who have been diagnosed with deep-vein
thrombosis (DVT) and its complications, pulmonary embolism (PE), and
patients who have undergone knee, hip, or abdominal surgery.
Rivarobaxan (Xarelto[reg]), apixaban (Eliqis[reg]), betrixaban
(Bevyxxa[reg]), and edoxaban (Savaysa[reg]) also are included in the
new class of Factor Xa inhibitors, and are often referred to as ``novel
oral anticoagulants'' (NOACs) or ``non-vitamin K antagonist oral
anticoagulants.'' Although these anticoagulants have been commercially
available since 2011, there is no FDA-approved therapy used for the
urgent reversal of any Factor Xa inhibitor as a result of serious
bleeding episodes.
AndexXa^TM has not received FDA approval as of the time
of the development of this proposed rule. The applicant indicated that
it anticipates receipt of FDA approval for the use of the technology
during the first quarter of 2018. The applicant received approval for
two unique ICD-10-PCS procedure codes that became effective October 1,

[[Page 20350]]

2016 (FY 2017). The approved ICD-10-PCS procedure codes are: XW03372
(Introduction of Andexanet alfa, Factor Xa inhibitor reversal agent
into peripheral vein, percutaneous approach, new technology group 2);
and XW04372 (Introduction of Andexanet alfa, Factor Xa inhibitor
reversal agent into central vein, percutaneous approach, new technology
group 2).
With regard to the ``newness'' criterion, as discussed earlier, if
a technology meets all three of the substantial similarity criteria, it
would be considered substantially similar to an existing technology and
would not be considered ``new'' for purposes of new technology add-on
payments. The applicant asserted that, if approved,
AndexXa^TM would be the first and the only antidote available
used to treat patients who are receiving treatment with an oral Factor
Xa inhibitor who suffer a major bleeding episode and require urgent
reversal of direct and indirect Factor Xa anticoagulation. Therefore,
the applicant asserted that the technology is not substantially similar
to any other currently approved and available treatment options for
Medicare beneficiaries. Below we discuss the applicant's assertion in
the context of the three substantial similarity criteria.
With regard to the first criterion, whether a product uses the same
or a similar mechanism of action to achieve a therapeutic outcome,
according to the applicant, AndexXa^TM, if approved, would be
the first anticoagulant reversal agent that binds to direct Factor Xa
inhibitors with high affinity, thereby sequestering the inhibitors and
consequently rapidly reducing free plasma concentration of Factor Xa
inhibitors, and neutralizing the inhibitors' anticoagulant effect,
which allows for the restoration of normal hemostasis.
AndexXa^TM also binds to and sequesters antithrombin III
molecules that are complexed with indirect inhibitor molecules, which
disrupts the capacity of the antithrombin complex to bind to native
Factor Xa inhibitors. According to the applicant, AndexXa^TM
represents a significant therapeutic advance because it provides rapid
reversal of anticoagulation therapy in the event of a serious bleeding
episode. Other anticoagulant reversal agents, such as
Kcentra^TM and Idarucizumab, do not reverse the effects of
Factor Xa inhibitors.
With regard to the second criterion, whether a product is assigned
to the same or a different MS-DRG, AndexXa^TM would be the
first FDA[dash]approved anticoagulant reversal agent for Factor Xa
inhibitors. Therefore, the MS-DRGs do not contain cases that represent
patients who have been treated with any anticoagulant reversal agents
for Factor Xa inhibitors.
With regard to the third criterion, whether the new use of the
technology involves the treatment of the same or similar type of
disease and the same or similar patient population, the applicant
stated that AndexXa^TM, if approved, would be the only
anticoagulant reversal agent available for treating patients who are
receiving direct or indirect Factor Xa therapy who experience serious,
uncontrolled bleeding events or who require emergency surgery.
Therefore, the applicant believed that AndexXa^TM would be
the first type of treatment option available to this patient
population. As a result, we believe that it appears that
AndexXa^TM is not substantially similar to any existing
technologies. We are inviting public comments on whether
AndexXa^TM meets the substantial similarity criteria, and
whether AndexXa^TM meets the newness criterion.
With regard to the cost criterion, the applicant researched the FY
2015 MedPAR claims data file for potential cases representing patients
who may be eligible for treatment using AndexXa^TM. The
applicant used three sets of ICD-9-CM codes to identify these cases:
(1) Codes identifying potential cases representing patients who were
treated with an anticoagulant and, therefore, who are at risk of
bleeding; (2) codes identifying potential cases representing patients
with a history of conditions that were treated with Factor Xa
inhibitors; and (3) codes identifying potential cases representing
patients who experienced bleeding episodes as the reason for the
current admission. The applicant included with its application the
following table displaying a complete list of ICD-9-CM codes that met
its selection criteria.

------------------------------------------------------------------------
ICD-9-CM codes applicable Applicable ICD-9-CM code description
------------------------------------------------------------------------
V12.50.................... Personal history of unspecified circulatory
disease.
V12.51.................... Personal history of venous thrombosis and
embolism.
V12.52.................... Personal history of thrombophlebitis.
V12.54.................... Personal history of transient ischemic
attack (TIA), and cerebral infarction
without residual deficits.
V12.55.................... Personal history of pulmonary embolism.
V12.59.................... Personal history of other diseases of
circulatory system.
V43.64.................... Hip joint replacement.
V43.65.................... Knee joint replacement.
V58.43.................... Aftercare following surgery for injury and
trauma.
V58.49.................... Other specified aftercare following surgery.
V58.73.................... Aftercare following surgery of the
circulatory system, NEC.
V58.75.................... Aftercare following surgery of the teeth,
oral cavity and digestive system, NEC.
V58.61.................... Long-term (current) use of anticoagulants.
E934.2.................... Anticoagulants causing adverse effects in
therapeutic use.
99.00..................... Perioperative autologous transfusion of
whole blood or blood components.
99.01..................... Exchange transfusion.
99.02..................... Transfusion of previously collected
autologous blood.
99.03..................... Other transfusion of whole blood.
99.04..................... Transfusion of packed cells.
99.05..................... Transfusion of platelets.
99.06..................... Transfusion of coagulation factors.
99.07..................... Transfusion of other serum.
------------------------------------------------------------------------

The applicant identified a total of 51,605 potential cases that
mapped to 683 MS-DRGs, resulting in an average case-weighted charge per
case of $72,291. The applicant also provided an analysis that was
limited to cases

[[Page 20351]]

representing 80 percent of all potential cases identified (41,255
cases) that mapped to the top 151 MS-DRGs. Under this analysis, the
average case-weighted charge per case was $69,020. The applicant
provided a third analysis that was limited to cases representing 25
percent of all potential cases identified (12,873 cases) that mapped to
the top 9 MS-DRGs. This third analysis resulted in an average case-
weighted charge per case of $46,974.
Under each of these analyses, the applicant also provided
sensitivity analyses based on variables representing two areas of
uncertainty: (1) Whether to remove 40 percent or 60 percent of blood
and blood administration charges; and (2) whether to remove pharmacy
charges based on the ceiling price of factor eight inhibitor bypass
activity (FEIBA), a branded anti-inhibitor coagulant complex, or on the
pharmacy indicator 5 (PI5) in the MedPAR data file, which correlates to
potential cases utilizing generic coagulation factors. Overall, the
applicant conducted twelve sensitivity analyses, and provided the
following rationales:
The applicant chose to remove 40 percent and 60 percent of
blood and blood administration charges because potential patients who
may be eligible for treatment using AndexXa^TM for Factor Xa
reversal may still require blood and blood products to treat other
conditions. Therefore, the applicant believed that it would be
inappropriate to remove all of the charges associated with blood and
blood administration because all of the charges cannot be attributed to
Factor Xa reversal. The applicant maintained that the amounts of blood
and blood products required for treatment vary according to the
severity of the bleeding. Therefore, the applicant stated that the use
of AndexXa^TM may replace 60 percent of blood and blood
product administration charges for potential cases with less severity
of bleeding, but only 40 percent of charges for potential cases with
more severe bleeding.
The applicant maintained that FEIBA is the highest priced
clotting factor used for Factor Xa inhibitor reversal, and it is
unlikely that pharmacy charges for Factor Xa reversal would exceed the
FEIBA ceiling price of $2,642. Therefore, the applicant capped the
charges to be removed at $2,642 to exclude charges unrelated to the
reversal of Factor Xa anticoagulation. The applicant also considered an
alternative scenario in which charges associated with pharmacy
indicator 5 (PI5) were removed from the costs of potential cases that
included this indicator in the MedPAR data. On average, charges removed
from the costs of potential cases utilizing generic coagulation factors
were much lower than the total pharmacy charges.
The applicant noted that, in all 12 scenarios, the average case-
weighted standardized charge per case for potential cases representing
patients who may be eligible for treatment using AndexXa^TM
would exceed the average case-weighted threshold amounts in Table 10 of
the FY 2018 IPPS/LTCH PPS final rule by more than $855.
The applicant's order of operations used for each analysis is as
follows: (1) Removing 60 percent or 40 percent of blood and blood
product administration charges and up to 100 percent of pharmacy
charges for PI5 or FEIBA from the average case-weighted unstandardized
charge per case; and (2) standardizing the charges per cases using the
Impact File published with the FY 2015 IPPS/LTCH PPS final rule. After
removing the charges for the prior technology and standardizing
charges, the applicant applied an inflation factor of 1.154181, which
is a combination of 9.8446 percent, the value used in the FY 2017 IPPS
final rule as the 2-year outlier threshold inflation factor, and 5.074
percent, the value used in the FY 2018 IPPS final rule as the 1-year
outlier threshold inflation factor, to update the charges from FY 2015
to FY 2018. The applicant did not add charges for AndexXa^TM
as the price had not been set at the time of conducting this analysis.
Under each scenario, the applicant stated that the inflated average
case-weighted standardized charge per case exceeded the average case-
weighted threshold amount (based on the FY 2018 IPPS Table 10
thresholds). Below we provide a table for all 12 scenarios that the
applicant indicated demonstrate that the technology meets the cost
criterion.

------------------------------------------------------------------------
Inflated
average Average case-
standardized weighted
Scenario case- weighted threshold
charge per amount
case
------------------------------------------------------------------------
100 Percent of Cases, FEIBA, 60 Percent $71,305 $60,209
Removal of Blood and Blood Product
Administration Costs...................
100 Percent of Cases, PI5, 60 Percent 73,108 60,209
Removal of Blood and Blood Product
Administration Costs...................
100 Percent of Cases, FEIBA, 40 Percent 72,172 60,209
Removal of Blood and Blood Product
Administration Costs...................
100 Percent of Cases, PI5, 40 Percent 73,740 60,209
Removal of Blood and Blood Product
Administration Costs...................
80 Percent of Cases, FEIBA, 60 Percent 68,400 58,817
Removal of Blood and Blood Product
Administration Costs...................
80 Percent of Cases, PI5, 60 Percent 70,184 58,817
Removal of Blood and Blood Product
Administration Costs...................
80 Percent of Cases, FEIBA, 40 Percent 69,279 58,817
Removal of Blood and Blood Product
Administration Costs...................
80 Percent of Cases, PI5, 40 Percent 70,826 58,817
Removal of Blood and Blood Product
Administration Costs...................
25 Percent of Cases, FEIBA, 60 Percent 46,127 45,272
Removal of Blood and Blood Product
Administration Costs...................
25 Percent of Cases, PI5, 60 Percent 47,730 45,272
Removal of Blood and Blood Product
Administration Costs...................
25 Percent of Cases, FEIBA, 40 Percent 47,089 45,272
Removal of Blood and Blood Product
Administration Costs...................
25 Percent of Cases, PI5, 40 Percent 48,403 45,272
Removal of Blood and Blood Product
Administration Costs...................
------------------------------------------------------------------------

We are inviting public comments on whether AndexXa^TM
meets the cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that AndexXa^TM represents a substantial
clinical improvement for the treatment of patients who are receiving
direct or indirect Factor Xa therapy who experience serious,
uncontrolled bleeding events or who require emergency surgery because
the technology addresses an unmet medical need for a universal antidote
to direct and indirect Factor Xa inhibitors; if approved, would be the
only agent shown in prospective clinical trials to rapidly (within 2 to
5 minutes) and sustainably reverse the anticoagulation activity of
Factor Xa inhibitors; is potentially nonthrombogenic, as no serious
adverse effects of thrombosis were observed in clinical trials; and
could supplant currently available

[[Page 20352]]

treatments for bleeding from anti-Factor Xa therapy, which have not
been shown to be effective in the treatment of all patients.
With regard to addressing an unmet need for a universal antidote to
direct and indirect Factor Xa inhibitors, the applicant asserted that
the use of any anticoagulant is associated with an increased risk of
bleeding, and bleeding complications can be life-threatening. Bleeding
is especially concerning for patients treated with Factor Xa inhibitors
because there are currently no antidotes to Factor Xa inhibitors
available. As a result, when a patient anticoagulated with an oral
direct Factor Xa inhibitor presents with life-threatening bleeding,
clinicians often resort to using preparations of vitamin K dependent
clotting factors, such as 4-factor prothrombin complex concentrates
(PCCs). Despite the lack of any large, prospective, randomized study
examining the efficacy and safety of these agents in this patient
population, administration of 4-factor PCCs as a means to ``reverse''
the anticoagulant effect of Factor Xa inhibitors is commonplace in many
hospitals due to the lack of any alternative in the setting of a
serious or life[dash]threatening bleed.
The applicant stated that AndexXa^TM has a unique
mechanism of action and represents a new biological approach to the
treatment of patients who have been diagnosed with acute severe
bleeding who require immediate reversal of the Factor Xa inhibitor
therapy. The applicant explained that although AndexXa^TM is
structurally very similar to native Factor Xa inhibitors, the
technology has undergone several modifications that restrict its
biological activity to reversing the effects of Factor Xa inhibitors by
binding with and sequestering direct or indirect Factor Xa inhibitors,
which allows native Factor Xa inhibitors to dictate the normal
coagulation and hemostasis process. As a result, the applicant
maintained that AndexXa^TM represents a safe and effective
therapy for the management of severe bleeding in a fragile patient
population and a substantial clinical improvement over existing
technologies and reversal strategies.
The applicant noted the following: (1) On average, patients with a
bleeding complication were hospitalized for 6.3 to 8.5 days, and (2)
the most common therapies currently used to manage severe bleeding
events in patients undergoing anticoagulant treatment are blood and
blood product transfusions, most frequently with packed red blood cells
(RBC) or fresh frozen plasma (FFP).\238\ According to the applicant,
the blood products that are currently being employed as reversal agents
carry significant risks. For instance, no clinical studies have
evaluated the safety and efficacy of FFP transfusions to treat bleeding
associated with Factor Xa inhibitors.^{239 240} Furthermore,
transfusions with packed RBCs carry a risk (1 to 4 per 50,000
transfusions) of acute hemolytic reactions, in which the recipient's
antibodies attack the transfused red blood cells, which is associated
with clinically significant anemia, kidney failure, and death.\241\ The
applicant asserted that a RBC transfusion in trauma patients with major
bleeding is associated with an increased risk of nonfatal vascular
events and death.\242\ The applicant noted that, although patients who
are treated with AndexXa^TM would receive RBC transfusions if
their hemoglobin is low enough to warrant it, AndexXa^TM
reduces the need for RBC transfusion.
---------------------------------------------------------------------------

\238\ Truven, ``2016 Truven Medicare Projected Bleeding
Events'', MARKETSCAN[reg] Medicare Supplemental Database, January 1,
2016 to December 31, 2016 Data pull, Data on File, Supplemental
file.
\239\ Siegal, D.M., ``Managing target-specific oral
anticoagulant associated bleeding including an update on
pharmacological reversal agents,'' J Thromb Thrombolysis, 2015 Apr,
vol. 39(3), pp. 395-402.
\240\ Kalus, J.S., ``Pharmacologic interventions for reversing
the effects of oral anticoagulants,'' Am J Health Syst Pharm, 2013,
vol. 70(10 Suppl 1), pp. S12-21.
\241\ Sharma, S., Sharma, P., Tyler, L.N., ``Transfusion of
Blood and Blood Products: Indications and Complications,'' Am Fam
Physician, 2011, vol. 83(6), pp. 719-24.
\242\ Perel, P., Clayton, T., Altman, D.G., et al., ``Red blood
cell transfusion and mortality in trauma patients: risk-stratified
analysis of an observational study,'' PLoS Med, 2014, vol. 11(6),
pp. e1001664.
---------------------------------------------------------------------------

The applicant asserted that laboratory studies have failed to
provide consistent evidence of ``reversal'' of the anticoagulant effect
of Factor Xa inhibitors across a range of different PCC products and
concentrations. Results of thrombin generation assays have varied
depending on the format of the assay. Despite years of experience with
low molecular weight heparins and pentasaccharide anticoagulants,
neither PCCs nor factor eight inhibitor bypassing activity are
recognized as safe and effective reversal agents for these Factor Xa
inhibitors.\243\ Unlike patients taking vitamin K antagonists, patients
receiving treatment with oral Factor Xa inhibitor drugs have normal
levels of clotting factors. Therefore, a strategy based on
``repleting'' factor levels is of uncertain foundation and could result
in supra-normal levels of coagulation factors after rapid metabolism
and clearance of the oral anticoagulant.\244\
---------------------------------------------------------------------------

\243\ Sarich, T.C., Seltzer, J.H., Berkowitz, S.D., et al.,
``Novel oral anticoagulants and reversal agents: Considerations for
clinical development,'' Am Heart J, 2015, vol. 169(6), pp. 751-7.
\244\ Siegal, D.M., ``Managing target-specific oral
anticoagulant associated bleeding including an update on
pharmacological reversal agents,'' J Thromb Thrombolysis, 2015 Apr,
vol. 39(3), pp. 395-402.
---------------------------------------------------------------------------

The applicant provided results from two randomized, double-blind,
placebo-controlled Phase III studies,^{245 246} the ANNEXA-A
(reversal of apixaban) and ANNEXA[dash]R (reversal of rivaroxaban)
trials. The primary endpoint in both these studies was the percent
change in anti-Factor Xa activity. Secondary endpoints included
proportion of participants with an 80 percent or greater reduction in
anti-Factor Xa activity, change in unbound Factor Xa inhibitor
concentration, and change in endogenous thrombin potential (ETP). A
total of 145 participants were enrolled in the study, with 101
participants randomized to AndexXa^TM and 44 participants
randomized to placebo. The mean age of participants was 58 years old,
and 39 percent were women. There was a mean of greater than 90 percent
reduction in anti-Factor Xa activity in both parts of both studies in
subjects receiving AndexXa^TM. The studies also demonstrated
the following: (1) Rapid and sustainable reversal of anticoagulation;
(2) reduced Factor Xa inhibitor free plasma levels by at least 80
percent below a calculated no-effect level; and (3) reduced anti-Factor
Xa activity to the lowest level of detection within 2 to 5 minutes of
infusion. The applicant noted that decreased Factor Xa inhibitor levels
have been shown to correspond to decreased bleeding complications,
reconstitution of activity of coagulation factors, and correction of
coagulation.^{247 248 249}
---------------------------------------------------------------------------

\245\ Conners, J.M., ``Antidote for Factor Xa Anticoagulants,''
N Engl J Med, 2015 Nov 13.
\246\ Siegal, D.M., Curnutte, J.T., Connolly, S.J., et al.,
``Andexanet Alfa for the Reversal of Factor Xa Inhibitor Activity,''
N Engl J Med, 2015 Nov 11.
\247\ Lu, G., DeGuzman, F., Hollenbach, S., et al., ``Reversal
of low molecular weight heparin and fondaparinux by a recombinant
antidote,'' (r-Antidote, PRT064445), Circulation, 2010, vol. 122,
pp. A12420.
\248\ Rose, M., Beasley, B., ``Apixaban clinical review
addendum,'' Silver Spring, MD: Center for Drug Evaluation and
Research, 2012. Available at: https://www.accessdata.fda.gov/drugsatfda_docs/nda/2012/202155Orig1s000MedR.pdf.
\249\ Beasley, N., Dunnmon, P., Rose, M., ``Rivaroxaban clinical
review: FDA draft briefing document for the Cardiovascular and Renal
Drugs Advisory Committee,'' 2011. Available at: https://www.fda.gov/downloads/AdvisoryCommittees/CommitteesMeetingMaterials/drugs/CardiovascularandRenalDrugsAdvisoryCommittee/ucm270796.pdf.
---------------------------------------------------------------------------

The applicant stated that the results from the two Phase III
studies and previous proof-of-concept Phase II dose-finding studies
showed that use of

[[Page 20353]]

AndexXa^TM can rapidly reverse anticoagulation activity of
Factor Xa inhibitors and sustain that reversal. Therefore, the
applicant asserted that the use of AndexXa^TM has the
potential to successfully treat patients who only need short-duration
reversal of the Factor Xa inhibitor anticoagulant, as well as patients
who require longer duration reversal, such as patients experiencing a
severe intracranial hemorrhage or requiring emergency surgery.
Furthermore, the applicant noted that its technology's duration of
action allows for a gradual return of Factor Xa inhibitor
concentrations to placebo control levels within 2 hours following the
end of infusion.
With regard to AndexXa^TM's nonthrombogenic nature, the
applicant provided clinical trial data which revealed participants in
Phase II and Phase III trials had no thrombotic events and there were
no serious or severe adverse events reported. Results also showed that
use of AndexXa^TM has a much lower risk of thrombosis than
typical procoagulants because the technology lacks the region
responsible for inducing coagulation. Furthermore, the applicant
asserted that the use of AndexXa^TM is not associated with
the known complications seen with RBC transfusions. The applicant
asserted that, while the Phase II and Phase III trials and studies
measured physiological hallmarks of reversal of NOACs, it is expected
that the availability of a safe and reliable Factor Xa reversal will
result in an overall better prognosis for patients--potentially leading
to a reduction in length of hospital stay, fewer complications, and
decreased mortality associated with unexpected bleeding episodes.
The applicant also stated that use of AndexXa^TM can
supplant currently available treatments used for reversing severe
bleeding from anti-Factor Xa therapy, which have not been shown to be
effective in the treatment of all patients. With regard to PCCs and
FFPs, the applicant stated that there is a lack of clinical evidence
available for patients taking Factor Xa inhibitors that experience
severe bleeding events. The applicant noted that the case reports
provide a snapshot of emergent treatment of these often medically
complex anti-Factor Xa-treated patients with major bleeds. However, the
applicant stated that these analyses reveal the inconsistent approach
in assessing the degree of anticoagulation in the patient and the
variability in treatment strategy. The applicant explained that little
or no assessment of efficacy in restoring coagulation in the patients
was performed, and the major outcomes measures were bleeding cessation
or mortality. The applicant concluded that overall, there is very
little evidence for the efficacy suggested in some guidelines, and the
evidence is insufficient to draw any conclusions.
The applicant submitted interim data purporting to show substantial
clinical improvement within its target patient population as part of an
ongoing Phase IIIb/IV open[dash]label ANNEXA-4 study. The ANNEXA-4
study is a multi[dash]center, prospective, open-label, single group
study that evaluated 67 patients who had acute, major bleeding within
18 hours of receipt of a Factor Xa inhibitor (32 patients receiving
rivarobaxan, 31 receiving apixaban, and 4 receiving enoxaparin). The
population in the study was reflective of a real-world population, with
mean age of 77 years old, most patients with cardiovascular disease,
and the majority of bleeds being intracranial or gastrointestinal.
According to the applicant, the results of the ANNEXA-4 study
demonstrate safe, reliable, and rapid reversal of Factor Xa levels in
patients experiencing acute bleeding and are consistent with the
results seen in the Phase II and Phase III trials, based on interim
data. However, we are concerned that this interim data also indicate 18
percent of patients experienced a thrombotic event and 15 percent of
patients died following reversal during the 30-day follow-up period in
the ANNEXA-4 study. For this reason, we are concerned that there is
insufficient data to determine substantial clinical improvement over
existing technologies.
We are inviting public comments on whether AndexXa^TM
meets the substantial clinical improvement criterion.
We did not receive any public comments on the AndexXa^TM
technology in response to the published notice in the Federal Register
or at the New Technology Town Hall Meeting.

III. Proposed Changes to the Hospital Wage Index for Acute Care
Hospitals

A. Background

1. Legislative Authority
Section 1886(d)(3)(E) of the Act requires that, as part of the
methodology for determining prospective payments to hospitals, the
Secretary adjust the standardized amounts for area differences in
hospital wage levels by a factor (established by the Secretary)
reflecting the relative hospital wage level in the geographic area of
the hospital compared to the national average hospital wage level. We
currently define hospital labor market areas based on the delineations
of statistical areas established by the Office of Management and Budget
(OMB). A discussion of the proposed FY 2019 hospital wage index based
on the statistical areas appears under section III.A.2. of the preamble
of this proposed rule.
Section 1886(d)(3)(E) of the Act requires the Secretary to update
the wage index annually and to base the update on a survey of wages and
wage-related costs of short[dash]term, acute care hospitals. (CMS
collects these data on the Medicare cost report, CMS Form 2552-10,
Worksheet S-3, Parts II, III, and IV. The OMB control number for
approved collection of this information is 0938-0050.) This provision
also requires that any updates or adjustments to the wage index be made
in a manner that ensures that aggregate payments to hospitals are not
affected by the change in the wage index. The proposed adjustment for
FY 2019 is discussed in section II.B. of the Addendum to this proposed
rule.
As discussed in section III.I. of the preamble of this proposed
rule, we also take into account the geographic reclassification of
hospitals in accordance with sections 1886(d)(8)(B) and 1886(d)(10) of
the Act when calculating IPPS payment amounts. Under section
1886(d)(8)(D) of the Act, the Secretary is required to adjust the
standardized amounts so as to ensure that aggregate payments under the
IPPS after implementation of the provisions of sections 1886(d)(8)(B),
1886(d)(8)(C), and 1886(d)(10) of the Act are equal to the aggregate
prospective payments that would have been made absent these provisions.
The proposed budget neutrality adjustment for FY 2019 is discussed in
section II.A.4.b. of the Addendum to this proposed rule.
Section 1886(d)(3)(E) of the Act also provides for the collection
of data every 3 years on the occupational mix of employees for short-
term, acute care hospitals participating in the Medicare program, in
order to construct an occupational mix adjustment to the wage index. A
discussion of the occupational mix adjustment that we are proposing to
apply to the FY 2019 wage index appears under sections III.E.3. and F.
of the preamble of this proposed rule.

2. Core-Based Statistical Areas (CBSAs) for the Proposed FY 2019
Hospital Wage Index

The wage index is calculated and assigned to hospitals on the basis
of the labor market area in which the hospital is located. Under
section 1886(d)(3)(E)

[[Page 20354]]

of the Act, beginning with FY 2005, we delineate hospital labor market
areas based on OMB[dash]established Core[dash]Based Statistical Areas
(CBSAs). The current statistical areas (which were implemented
beginning with FY 2015) are based on revised OMB delineations issued on
February 28, 2013, in OMB Bulletin No. 13-01. OMB Bulletin No. 13-01
established revised delineations for Metropolitan Statistical Areas,
Micropolitan Statistical Areas, and Combined Statistical Areas in the
United States and Puerto Rico based on the 2010 Census, and provided
guidance on the use of the delineations of these statistical areas
using standards published on June 28, 2010 in the Federal Register (75
FR 37246 through 37252). We refer readers to the FY 2015 IPPS/LTCH PPS
final rule (79 FR 49951 through 49963) for a full discussion of our
implementation of the OMB labor market area delineations beginning with
the FY 2015 wage index.
Generally, OMB issues major revisions to statistical areas every 10
years, based on the results of the decennial census. However, OMB
occasionally issues minor updates and revisions to statistical areas in
the years between the decennial censuses through OMB Bulletins. On July
15, 2015, OMB issued OMB Bulletin No. 15-01, which provided updates to
and superseded OMB Bulletin No. 13-01 that was issued on February 28,
2013. The attachment to OMB Bulletin No. 15-01 provided detailed
information on the update to statistical areas since February 28, 2013.
The updates provided in OMB Bulletin No. 15-01 were based on the
application of the 2010 Standards for Delineating Metropolitan and
Micropolitan Statistical Areas to Census Bureau population estimates
for July 1, 2012 and July 1, 2013. In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 56913), we adopted the updates set forth in OMB Bulletin
No. 15-01 effective October 1, 2016, beginning with the FY 2017 wage
index. For a complete discussion of the adoption of the updates set
forth in OMB Bulletin No. 15-01, we refer readers to the FY 2017 IPPS/
LTCH PPS final rule. In the FY 2018 IPPS/LTCH PPS final rule (82 FR
38130), we continued to use the OMB delineations that were adopted
beginning with FY 2015 to calculate the area wage indexes, with updates
as reflected in OMB Bulletin No. 15-01 specified in the FY 2017 IPPS/
LTCH PPS final rule.
On August 15, 2017, OMB issued OMB Bulletin No. 17-01, which
provided updates to and superseded OMB Bulletin No. 15-01 that was
issued on July 15, 2015. The attachments to OMB Bulletin No. 17-01
provide detailed information on the update to statistical areas since
July 15, 2015, and are based on the application of the 2010 Standards
for Delineating Metropolitan and Micropolitan Statistical Areas to
Census Bureau population estimates for July 1, 2014 and July 1, 2015.
In OMB Bulletin No. 17-01, OMB announced that one Micropolitan
Statistical Area now qualifies as a Metropolitan Statistical Area. The
new urban CBSA is as follows:
Twin Falls, Idaho (CBSA 46300). This CBSA is comprised of
the principal city of Twin Falls, Idaho in Jerome County, Idaho and
Twin Falls County, Idaho.
The OMB bulletin is available on the OMB Web site at https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/bulletins/2017/b-17-01.pdf. We note that we did not have sufficient time to include this
change in the computation of the proposed FY 2019 wage index,
ratesetting, and Tables 2 and 3 associated with this proposed rule.
This new CBSA may affect the budget neutrality factors and wage
indexes, depending on whether the area is eligible for the rural floor
and the impact of the overall payments of the hospital located in this
new CBSA. We are providing below an estimate of this new area's wage
index based on the average hourly wages for new CBSA 46300 and the
national average hourly wages from the wage data for the proposed FY
2019 wage index (described below in section III.B. of the preamble of
this proposed rule). Currently, provider 130002 is the only hospital
located in Twin Falls County, Idaho, and there are no hospitals located
in Jerome County, Idaho. Thus, the proposed wage index for CBSA 46300
is calculated using the average hourly wage data for one provider
(provider 130002).
Below in sections III.D. and E.2. of the preamble of this proposed
rule, we provide the proposed FY 2019 unadjusted and occupational mix
adjusted national average hourly wages. Taking the estimated average
hourly wage of new CBSA 46300 and dividing by the proposed national
average hourly wage results in the estimated wage indexes shown in the
table below.

------------------------------------------------------------------------
Estimated
Estimated occupational
unadjusted mix adjusted
wage index for wage index for
new CBSA 46300 new CBSA 46300
------------------------------------------------------------------------
Proposed National Average Hourly Wage... 42.990625267 42.948428861
Estimated CBSA Average Hourly Wage...... 35.833564813 38.127590025
Estimated Wage Index.................... 0.8335 0.8878
------------------------------------------------------------------------

For FY 2019, we are using the OMB delineations that were adopted
beginning with FY 2015 to calculate the area wage indexes, with updates
as reflected in OMB Bulletin Nos. 13-01, 15-01, and 17-01. In the final
rule, we will incorporate this change into the final FY 2019 wage
index, ratesetting, and tables.
3. Codes for Constituent Counties in CBSAs
CBSAs are made up of one or more constituent counties. Each CBSA
and constituent county has its own unique identifying codes. There are
two different lists of codes associated with counties: Social Security
Administration (SSA) codes and Federal Information Processing Standard
(FIPS) codes. Historically, CMS has listed and used SSA and FIPS county
codes to identify and crosswalk counties to CBSA codes for purposes of
the hospital wage index. As we discussed in the FY 2018 IPPS/LTCH PPS
final rule (82 FR 38129 through 38130), we have learned that SSA county
codes are no longer being maintained and updated. However, the FIPS
codes continue to be maintained by the U.S. Census Bureau. We believe
that using the latest FIPS codes will allow us to maintain a more
accurate and up-to-date payment system

[[Page 20355]]

that reflects the reality of population shifts and labor market
conditions.
The Census Bureau's most current statistical area information is
derived from ongoing census data received since 2010; the most recent
data are from 2015. The Census Bureau maintains a complete list of
changes to counties or county equivalent entities on the website at:
https://www.census.gov/geo/reference/county-changes.html. We believe
that it is important to use the latest counties or county equivalent
entities in order to properly crosswalk hospitals from a county to a
CBSA for purposes of the hospital wage index used under the IPPS.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38129 through 38130)
we adopted a policy to discontinue the use of the SSA county codes and
began using only the FIPS county codes for purposes of crosswalking
counties to CBSAs. In addition, in the same rule, we implemented the
latest FIPS code updates which were effective October 1, 2017,
beginning with the FY 2018 wage indexes. The updated changes were used
to calculate the wage indexes in a manner generally consistent with the
CBSA-based methodologies finalized in the FY 2005 IPPS final rule and
the FY 2015 IPPS/LTCH PPS final rule.
For FY 2019, we are continuing to use only the FIPS county codes
for purposes of crosswalking counties to CBSAs. For FY 2019, Tables 2
and 3 associated with this proposed rule and the County to CBSA
Crosswalk File and Urban CBSAs and Constituent Counties for Acute Care
Hospitals File posted on the CMS website reflect these county changes.

B. Worksheet S-3 Wage Data for the Proposed FY 2019 Wage Index

The proposed FY 2019 wage index values are based on the data
collected from the Medicare cost reports submitted by hospitals for
cost reporting periods beginning in FY 2015 (the FY 2018 wage indexes
were based on data from cost reporting periods beginning during FY
2014).
1. Included Categories of Costs
The proposed FY 2019 wage index includes all of the following
categories of data associated with costs paid under the IPPS (as well
as outpatient costs):
Salaries and hours from short-term, acute care hospitals
(including paid lunch hours and hours associated with military leave
and jury duty);
Home office costs and hours;
Certain contract labor costs and hours, which include
direct patient care, certain top management, pharmacy, laboratory, and
nonteaching physician Part A services, and certain contract indirect
patient care services (as discussed in the FY 2008 final rule with
comment period (72 FR 47315 through 47317)); and
Wage-related costs, including pension costs (based on
policies adopted in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51586
through 51590)) and other deferred compensation costs.
2. Excluded Categories of Costs
Consistent with the wage index methodology for FY 2018, the
proposed wage index for FY 2019 also excludes the direct and overhead
salaries and hours for services not subject to IPPS payment, such as
skilled nursing facility (SNF) services, home health services, costs
related to GME (teaching physicians and residents) and certified
registered nurse anesthetists (CRNAs), and other subprovider components
that are not paid under the IPPS. The proposed FY 2019 wage index also
excludes the salaries, hours, and wage[dash]related costs of
hospital[dash]based rural health clinics (RHCs), and Federally
qualified health centers (FQHCs) because Medicare pays for these costs
outside of the IPPS (68 FR 45395). In addition, salaries, hours, and
wage-related costs of CAHs are excluded from the wage index for the
reasons explained in the FY 2004 IPPS final rule (68 FR 45397 through
45398).
3. Use of Wage Index Data by Suppliers and Providers Other Than Acute
Care Hospitals Under the IPPS
Data collected for the IPPS wage index also are currently used to
calculate wage indexes applicable to suppliers and other providers,
such as SNFs, home health agencies (HHAs), ambulatory surgical centers
(ASCs), and hospices. In addition, they are used for prospective
payments to IRFs, IPFs, and LTCHs, and for hospital outpatient
services. We note that, in the IPPS rules, we do not address comments
pertaining to the wage indexes of any supplier or provider except IPPS
providers and LTCHs. Such comments should be made in response to
separate proposed rules for those suppliers and providers.

C. Verification of Worksheet S-3 Wage Data

The wage data for the proposed FY 2019 wage index were obtained
from Worksheet S-3, Parts II and III of the Medicare cost report (Form
CMS-2552-10, OMB Control Number 0938-0050) for cost reporting periods
beginning on or after October 1, 2014, and before October 1, 2015. For
wage index purposes, we refer to cost reports during this period as the
``FY 2015 cost report,'' the ``FY 2015 wage data,'' or the ``FY 2015
data.'' Instructions for completing the wage index sections of
Worksheet S[dash]3 are included in the Provider Reimbursement Manual
(PRM), Part 2 (Pub. No. 15-2), Chapter 40, Sections 4005.2 through
4005.4. The data file used to construct the proposed FY 2019 wage index
includes FY 2015 data submitted to us as of February 6, 2018. As in
past years, we performed an extensive review of the wage data, mostly
through the use of edits designed to identify aberrant data.
We asked our MACs to revise or verify data elements that result in
specific edit failures. For the proposed FY 2019 wage index, we
identified and excluded 80 providers with aberrant data that should not
be included in the wage index, although if data elements for some of
these providers are corrected, we intend to include data from those
providers in the final FY 2019 wage index. We also adjusted certain
aberrant data and included these data in the proposed wage index. For
example, in situations where a hospital did not have documentable
salaries, wages, and hours for housekeeping and dietary services, we
imputed estimates, in accordance with policies established in the FY
2015 IPPS/LTCH PPS final rule (79 FR 49965 through 49967). We
instructed MACs to complete their data verification of questionable
data elements and to transmit any changes to the wage data no later
than March 23, 2018. In addition, as a result of the April and May
appeals processes, and posting of the April 27, 2018 PUF, we may make
additional revisions to the FY 2019 wage data, as described further
below. The revised data would be reflected in the FY 2019 IPPS/LTCH PPS
final rule.
In constructing the proposed FY 2019 wage index, we included the
wage data for facilities that were IPPS hospitals in FY 2015, inclusive
of those facilities that have since terminated their participation in
the program as hospitals, as long as those data did not fail any of our
edits for reasonableness. We believed that including the wage data for
these hospitals is, in general, appropriate to reflect the economic
conditions in the various labor market areas during the relevant past
period and to ensure that the current wage index represents the labor
market area's current wages as compared to the national average of
wages. However, we excluded the wage data for CAHs as discussed in the
FY 2004 IPPS final rule (68 FR 45397 through 45398; that is, any
hospital that is designated as a CAH by 7 days prior to the publication
of the preliminary wage index public use file (PUF) is excluded from
the calculation of the wage index). For this proposed

[[Page 20356]]

rule, we removed 8 hospitals that converted to CAH status on or after
January 23, 2017, the cut-off date for CAH exclusion from the FY 2018
wage index, and through and including January 26, 2018, the cut-off
date for CAH exclusion from the FY 2019 wage index. After excluding
CAHs and hospitals with aberrant data, we calculated the proposed wage
index using the Worksheet S-3, Parts II and III wage data of 3,260
hospitals.
For the proposed FY 2019 wage index, we allotted the wages and
hours data for a multicampus hospital among the different labor market
areas where its campuses are located in the same manner that we
allotted such hospitals' data in the FY 2018 wage index (82 FR 38131
through 38132); that is, using campus full-time equivalent (FTE)
percentages as originally finalized in the FY 2012 IPPS/LTCH PPS final
rule (76 FR 51591). Table 2, which contains the proposed FY 2019 wage
index associated with this proposed rule (available via the internet on
the CMS website), includes separate wage data for the campuses of 16
multicampus hospitals. The following chart lists the multicampus
hospitals by CSA certification number (CCN) and the FTE percentages on
which the wages and hours of each campus were allotted to their
respective labor market areas:

------------------------------------------------------------------------
Full-time
CSA certification number (CCN) of multicampus hospital equivalent (FTE)
percentages
------------------------------------------------------------------------
050121................................................ 0.81
05B121................................................ 0.19
070022................................................ 0.99
07B022................................................ 0.01
070033................................................ 0.92
07B033................................................ 0.08
100029................................................ 0.54
10B029................................................ 0.46
100167................................................ 0.37
10B167................................................ 0.63
140010................................................ 0.82
14B010................................................ 0.18
220074................................................ 0.89
22B074................................................ 0.11
330234................................................ 0.72
33B234................................................ 0.28
360019................................................ 0.95
36B019................................................ 0.05
360020................................................ 0.99
36B020................................................ 0.01
390006................................................ 0.95
39B006................................................ 0.05
390115................................................ 0.86
39B115................................................ 0.14
390142................................................ 0.83
39B142................................................ 0.17
460051................................................ 0.97
46B051................................................ 0.03
510022................................................ 0.95
51B022................................................ 0.05
670062................................................ 0.55
67B062................................................ 0.45
------------------------------------------------------------------------

We note that, in past years, in Table 2, we have placed a ``B'' to
designate the subordinate campus in the fourth position of the hospital
CCN. However, for this proposed rule and future rulemaking, we have
moved the ``B'' to the third position of the CCN. Because all IPPS
hospitals have a ``0'' in the third position of the CCN, we believe
that placement of the ``B'' in this third position, instead of the
``0'' for the subordinate campus, is the most efficient method of
identification and interferes the least with the other, variable,
digits in the CCN.

D. Method for Computing the Proposed FY 2019 Unadjusted Wage Index

1. Proposed Methodology for FY 2019
The method used to compute the proposed FY 2019 wage index without
an occupational mix adjustment follows the same methodology that we
used to compute the proposed wage indexes without an occupational mix
adjustment since FY 2012 (76 FR 51591 through 51593).
As discussed in the FY 2012 IPPS/LTCH PPS final rule, in ``Step
5,'' for each hospital, we adjust the total salaries plus wage-related
costs to a common period to determine total adjusted salaries plus
wage-related costs. To make the wage adjustment, we estimate the
percentage change in the employment cost index (ECI) for compensation
for each 30-day increment from October 14, 2014, through April 15,
2016, for private industry hospital workers from the BLS' Compensation
and Working Conditions. We have consistently used the ECI as the data
source for our wages and salaries and other price proxies in the IPPS
market basket, and we are not proposing any changes to the usage of the
ECI for FY 2019. The factors used to adjust the hospital's data were
based on the midpoint of the cost reporting period, as indicated in the
following table.

Midpoint of Cost Reporting Period
------------------------------------------------------------------------
After Before Adjustment factor
------------------------------------------------------------------------
10/14/2014 11/15/2014 1.02567
11/14/2014 12/15/2014 1.02413
12/14/2014 01/15/2015 1.02257
01/14/2015 02/15/2015 1.02100
02/14/2015 03/15/2015 1.01941
03/14/2015 04/15/2015 1.01784
04/14/2015 05/15/2015 1.01627
05/14/2015 06/15/2015 1.01471
06/14/2015 07/15/2015 1.01316
07/14/2015 08/15/2015 1.01161
08/14/2015 09/15/2015 1.01007
09/14/2015 10/15/2015 1.00849
10/14/2015 11/15/2015 1.00685
11/14/2015 12/15/2015 1.00516
12/14/2015 01/15/2016 1.00343
01/14/2016 02/15/2016 1.00171
02/14/2016 03/15/2016 1.00000
03/14/2016 04/15/2016 0.99824
------------------------------------------------------------------------

For example, the midpoint of a cost reporting period beginning
January 1, 2015, and ending December 31, 2015, is June 30, 2015. An
adjustment factor of 1.01316 would be applied to the wages of a
hospital with such a cost reporting period.
Using the data as previously described, the proposed FY 2019
national average hourly wage (unadjusted for occupational mix) is
$42.990625267.
Previously, we also would provide a Puerto Rico overall average
hourly wage. As discussed in the FY 2017 IPPS/LTCH PPS final rule (81
FR 56915), prior to January 1, 2016, Puerto Rico hospitals were paid
based on 75 percent of the national standardized amount and 25 percent
of the Puerto Rico-specific standardized amount. As a result, we
calculated a Puerto Rico-specific wage index that was applied to the
labor share of the Puerto Rico[dash]specific standardized amount.
Section 601 of the Consolidated Appropriations Act, 2016 (Pub. L.
114[dash]113) amended section 1886(d)(9)(E) of the Act to specify that
the payment calculation with respect to operating costs of inpatient
hospital services of a subsection (d) Puerto Rico hospital for
inpatient hospital discharges on or after January 1, 2016, shall use
100 percent of the national standardized amount. As we stated in the FY
2017 IPPS/LTCH PPS final rule (81 FR 56915 through 56916), because
Puerto Rico hospitals are no longer paid with a Puerto Rico-specific
standardized amount as of January 1, 2016, under section 1886(d)(9)(E)
of the Act, as amended by section 601 of the Consolidated
Appropriations Act, 2016, there is no longer a need to calculate a
Puerto Rico-specific average hourly wage and wage index. Hospitals in
Puerto Rico are now paid 100 percent of the national standardized
amount and, therefore, are subject to the national average hourly wage
(unadjusted for occupational mix) (which is $42.990625267 for this FY
2019 proposed rule) and the national wage index, which is applied to
the national labor share of the national standardized amount. For FY
2019, we

[[Page 20357]]

are not proposing a Puerto Rico-specific overall average hourly wage or
wage index.
2. Proposed Update of Policies Related to Other Wage-Related Costs,
Clarification of the Calculation of Other Wage-Related Costs, and
Proposals for FY 2020 and Subsequent Years
Section 1886(d)(3)(E) of the Act requires the Secretary to update
the wage index based on a survey of hospitals' costs that are
attributable to wages and wage-related costs. In the September 1, 1994
IPPS final rule (59 FR 45356), we developed a list of ``core'' wage-
related costs that hospitals may report on Worksheet S-3, Part II of
the Medicare hospital cost report in order to include those costs in
the wage index. Core wage-related costs include categories of
retirement cost, plan administrative costs, health and insurance costs,
taxes, and other specified costs such as tuition reimbursement.
In addition to these categories of core wage-related costs, we
allow hospitals to report wage-related costs other than those on the
core list if the other wage-related costs meet certain criteria. The
criteria for including other wage-related costs in the wage index are
discussed in the September 1, 1994 IPPS final rule (59 FR 45357) and
clarified in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38132 through
38136). In addition, the criteria for including other wage[dash]related
costs in the wage index are listed in the Provider Reimbursement Manual
(PRM), Part II, Chapter 40, Sections 4005.2 through 4005.4, Line 18 on
W/S S-3 Part II and Line 25 and its subscripts on W/S S-3 Part IV of
the Medicare cost report (Form CMS-2552-10, OMB control number 0938-
0050).
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38132 through
38136), we clarified that a hospital may be able to report a wage-
related cost (defined as the value of the benefit) that does not appear
on the core list if it meets all of the following criteria:
The wage-related cost is provided at a significant
financial cost to the employer. To meet this test, the individual wage-
related cost must be greater than 1 percent of total salaries after the
direct excluded salaries are removed (the sum of Worksheet S-3, Part
II, Lines 11, 12, 13, 14, Column 4, and Worksheet S-3, Part III, Line
3, Column 4).
The wage-related cost is a fringe benefit as described by
the IRS and is reported to the IRS on an employee's or contractor's W-2
or 1099 form as taxable income.
The wage-related cost is not furnished for the convenience
of the provider or otherwise excludable from income as a fringe benefit
(such as a working condition fringe).
We noted that those wage-related costs reported as salaries on Line
1 (for example, loan forgiveness and sick pay accruals) should not be
included as other wage[dash]related costs on Line 18.
The above instructions for calculating the 1-percent test
inadvertently omitted Line 15 for Home Office Part A Administrator on
Worksheet S-3, Part II from the denominator. Line 15 should be included
in the denominator because Home Office Part A Administrator is added to
Line 1 in the wage index calculation. Therefore, in this proposed rule,
we are correcting the inadvertent omission of Line 15 from the
denominator, and we are clarifying that, for calculating the 1-percent
test, each individual category of the other wage-related cost (that is,
the numerator) should be divided by the sum of Worksheet S-3, Part III,
Lines 3 and 4, Column 4 (that is, the denominator). Line 4 sums the
following lines from Worksheet S-3, Part II: Lines 11, 12, 13, 14,
14.01, 14.02, and 15. We also direct readers to instructions for
calculating the 1-percent test in the Provider Reimbursement Manual
(PRM), Part II, Chapter 40, Section 4005.4, Line 25 and its subscripts
on Worksheet S-3, Part IV of the Medicare cost report (Form CMS-2552-
10, OMB control number 0938-0050), which state: ``Calculate the 1-
percent test by dividing each individual category of the other wage-
related cost (that is, the numerator) by the sum of Worksheet S-3, Part
III, Lines 3 and 4, Column 4, (that is, the denominator).''
In addition to our discussion about calculating the 1-percent test
and other criteria for including other-wage related costs in the wage
index, we stated in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38133
through 38166) that we would consider proposing to remove other wage-
related costs from the wage index entirely.
In the FY 2018 IPPS/LTCH PPS proposed and final rules (82 FR 19901
and 82 FR 38133, respectively), we stated that we originally allowed
for the inclusion of wage-related costs other than those on the core
list because we were concerned that individual hospitals might incur
unusually large wage-related costs that are not reflected on the core
list but that may represent a significant wage-related cost. However,
we stated in the FY 2018 IPPS/LTCH PPS proposed and final rules (82 FR
19901 and 82 FR 38133, respectively) that we were reconsidering
allowing other wage-related costs to be included in the wage index
because internal reviews of the FY 2018 wage data showed that only a
small minority of hospitals were reporting other wage-related costs
that meet the 1-percent test described earlier.
This year, as part of the wage index desk review process for FY
2019, internal reviews showed that only 8 hospitals out of the more
than 3,000 IPPS hospitals in the wage index had other wage-related
costs that were correctly reported for inclusion in the wage index.
Given the extremely limited number of hospitals nationally using
Worksheet S-3, Part IV, Line 25 and subscripts, and Worksheet S-3, Part
II, Line 18, to correctly report other wage-related costs in accordance
with the criteria to be included in the wage index, we continue to
believe that other wage-related costs do not constitute an appropriate
and significant portion of wage costs in a particular labor market
area. In other words, while other wage-related costs may represent
costs that may have an impact on an individual hospital's average
hourly wage, we do not believe that costs reported by only a very small
minority of hospitals (less than 0.003 percent) accurately reflect the
economic conditions of the labor market area as a whole in which such
an individual hospital is located. The fact that only 8 hospitals out
of more than 3,000 IPPS hospitals included in the FY 2019 IPPS proposed
wage index reported other wage-related costs correctly in accordance
with the 1-percent test and related criteria indicates that, in fact,
other wage-related costs are not a relative measure of the labor costs
to be included in the IPPS wage index. Therefore, we believe that
inclusion of other wage-related costs in the wage index in such a
limited manner may distort the average hourly wage of a particular
labor market area so that its wage index does not accurately represent
that labor market area's current wages relative to national wages.
Furthermore, the open-ended nature of the types of other wage-
related costs that may be included on Line 25 and its subscripts of
Worksheet S-3 Part IV and Line 18 of Worksheet S-3 Part II, in contrast
to the concrete list of core wage-related costs, may hinder consistent
and proper reporting of fringe benefits. Our internal reviews indicate
widely divergent types of costs that hospitals are reporting as other
wage-related costs on these lines. We are concerned that inconsistent
reporting of other wage-related costs further compromises the accuracy
of the wage index as a representation of the relative average hourly
wage for each labor

[[Page 20358]]

market area. Our intent in creating a core list of wage-related costs
in the September 1, 1994 IPPS final rule was to promote consistent
reporting of fringe benefits, and we are increasingly concerned that
inconsistent reporting of wage-related costs undermines this effort.
Specifically, we expressed in the September 1, 1994 IPPS final rule
that, since we began including fringe benefits in the wage index, we
have been concerned with the inconsistent reporting of fringe benefits,
whether because of a lack of provider proficiency in identifying fringe
benefit costs or varying interpretations across fiscal intermediaries
of the definition for fringe benefits in PRM-I, Section 2144.1 (59 FR
45356). We believe that the limited and inconsistent use of Line 25 and
its subscripts of Worksheet S-3 Part IV and Line 18 of Worksheet S-3
Part II for reporting wage[dash]related costs other than the core list
indicate that including other wage[dash]related costs in the wage index
compromises the accuracy of the wage index as a relative measure of
wages in a given labor market area.
Therefore, for the reasons discussed earlier, for the FY 2020 wage
index and subsequent years, we are proposing to only include the wage-
related costs on the core list in the calculation of the wage index and
not to include any other wage-related costs in the calculation of the
wage index. Under our proposal, we would no longer consider any other
wage-related costs beginning with the FY 2020 wage index. Considering
the extremely limited number of hospitals reporting other wage-related
costs and the inconsistency in types of other wage-related costs being
reported, we believe this proposal will help ensure a more consistent
and more accurate wage index representative of the relative average
hourly wage for each labor market area. In addition, we believe that
this proposal to no longer include other wage-related costs in the wage
index calculation benefits the vast majority of hospitals because most
hospitals do not report other wage-related costs. Because the wage
index is budget neutral, hospitals in an area without other wage-
related costs included in the wage index have their wage indexes
reduced when other areas' wage indexes are raised by including other
wage[dash]related costs in their wage index calculation. We also note
that this proposal to exclude other wage[dash]related costs from the
wage index, starting with the FY 2020 wage index, contributes to agency
efforts to simplify hospital paperwork burden because it would
eliminate the need for Line 18 on Worksheet S-3, Part II and Line 25
and its subscripts on Worksheet S-3, Part IV of the Medicare cost
report (Form CMS-2552-10, OMB control number 0938-0050). We note that
we would include in the FY 2019 wage index the other wage-related costs
of the eight hospitals that accurately reported those costs in
accordance with the current criteria.
In summary, we are clarifying that our current policy for
calculating the 1-percent test includes Line 15 for Home Office Part A
Administrator on Worksheet S-3, Part II in the denominator. In
addition, we are proposing to eliminate other wage-related costs from
the calculation of the wage index for the FY 2020 wage index and
subsequent years, as discussed earlier. We are inviting public comments
on this proposal.
3. Proposals To Codify Policies Regarding Multicampus Hospitals
We have received an increasing number of inquiries regarding the
treatment of multicampus hospitals as the number of multicampus
hospitals has grown in recent years. While the regulations at Sec.
412.230(d)(2)(iii) and (v) for geographic reclassification under the
MGCRB include criteria for how multicampus hospitals may be
reclassified, the regulations at Sec. 412.92 for sole community
hospitals (SCHs), Sec. 412.96 for rural referral centers (RRC), Sec.
412.103 for rural reclassification, and Sec. 412.108 for
Medicare[dash]dependent, small rural hospitals (MDHs) do not directly
address multicampus hospitals. Thus, in this proposed rule, we are
proposing to codify in these regulations the policies for multicampus
hospitals that we have developed in response to recent questions
regarding CMS' treatment of multicampus hospitals for purposes other
than geographic reclassification under the MGCRB.
The proposals below apply to hospitals with a main campus and one
or more remote locations under a single provider agreement where
services are provided and billed under the IPPS and that meet the
provider-based criteria at Sec. 413.65 as a main campus and a remote
location of a hospital, also referred to as multicampus hospitals or
hospitals with remote locations. We are proposing that a main campus of
a hospital cannot obtain an SCH, RRC, or MDH status or rural
reclassification independently or separately from its remote
location(s), and vice versa. Rather, if the criteria are met in the
regulations at Sec. 412.92 for SCHs, Sec. 412.96 for RRCs, Sec.
412.103 for rural reclassification, or Sec. 412.108 for MDHs (as
discussed later in this section), the hospital (that is, the main
campus and its remote location(s)) would be granted the special
treatment or rural reclassification afforded by the aforementioned
regulations.
We believe this is an appropriate policy for two reasons. First,
each remote location of a hospital is included on the main campus's
cost report and shares the same provider number. That is, the main
campus and remote location(s) would share the same status or rural
reclassification because the hospital is a single entity with one
provider agreement. Second, it would not be administratively feasible
for CMS and the MACs to track every hospital with remote locations
within the same CBSA and to assign different statuses or rural
reclassifications exclusively to the main campus or to its remote
location. We note that, for wage index purposes only, CMS tracks
multicampus remote locations located in different CBSAs in order to
comply with the statutory requirement to adjust for geographic
differences in hospital wage levels (section 1886(d)(3)(E) of the Act).
However, for purposes of rural reclassification under Sec. 412.103, we
do not believe it would be appropriate for a main campus and remote
location(s) (whether located in the same or separate CBSAs) to be
reclassified independently or separately from each other because,
unlike MGCRB reclassifications which are used only for wage index
purposes, Sec. 412.103 rural reclassifications have payment effects
other than wage index (for example, payments to disproportionate share
hospitals (DSHs), and non-Medicare payment provisions, such as the 340B
Drug Pricing Program administered by HRSA).
To qualify for rural reclassification or SCH, RRC, or MDH status,
we are proposing that a hospital with remote locations must demonstrate
that both the main campus and its remote location(s) satisfy the
relevant qualifying criteria. A hospital with remote locations submits
a joint cost report that includes data from its main campus and remote
location(s), and its MedPAR data also combine data from the main campus
and remote location(s). We believe that it would not be feasible to
separate data by location, nor would it be appropriate, because we
consider a main campus and remote location(s) to be one hospital.
Therefore, where the regulations at Sec. 412.92, Sec. 412.96, Sec.
412.103, and Sec. 412.108 require data, such as bed count, number of
discharges, or case-mix index, for example, to demonstrate that the
hospital meets the qualifying criteria, we are proposing to codify in
our regulations that the combined data from the main campus and its
remote location(s) are to be used.

[[Page 20359]]

For example, if a hospital with a main campus with 200 beds and a
remote location with 75 beds applies for RRC status, the combined count
of 275 beds would be considered the hospital's bed count, and the main
campus and its remote location would be granted RRC status if the
hospital applies during the last quarter of its cost reporting period
and both the main campus and the remote location are located in a rural
area as defined in 42 CFR part 412, subpart D. This is consistent with
the regulation at Sec. 412.96(b)(1), which states, in part, that the
number of beds is determined under the provisions of Sec. 412.105(b).
For Sec. 412.105(b), beds are counted from the main campus and remote
location(s) of a hospital. We believe this is also consistent with
Sec. 412.96(b)(1)(ii), which sets forth the criteria that the hospital
is located in a rural area and the hospital has a bed count of 275 or
more beds during its most recently completed cost reporting period,
unless the hospital submits written documentation with its application
that its bed count has changed since the close of its most recently
completed cost reporting period for one or more of several reasons,
including the merger of two or more hospitals.
Similarly, combined data would be used for demonstrating the
hospital meets criteria at Sec. 412.92 for SCH status. For example,
the patient origin data, which are typically MedPAR data used to
document the boundaries of the hospital's service area as required in
Sec. 412.92(b)(1)(ii) and (iii), would be used from both locations. We
reiterate that we believe this is the appropriate policy because the
main campus and remote location are considered one hospital and that it
is the only administratively feasible policy because there is currently
no way to split the MedPAR data for each location.
For Sec. 412.103 rural reclassification, a hospital with remote
location(s) seeking to qualify under Sec. 412.103(a)(3), which
requires that the hospital would qualify as an RRC or SCH if the
hospital were located in a rural area, would similarly demonstrate that
it meets the criteria at Sec. 412.92 or at Sec. 412.96, such as bed
count, by using combined data from the main campus and its remote
location(s) (with the exception of certain criteria discussed below
related to location, mileage, travel time, and distance requirements).
We refer readers to the portions of our discussion that explain how
hospitals with remote locations would meet criteria for RRC or SCH
status.
A hospital seeking MDH status would also use combined data for bed
count and discharges to demonstrate that it meets the criteria at Sec.
412.108(a)(1). For example, if the main campus of a hospital has 75
beds and its remote location has 30 beds, the bed count exceeds 100
beds and the hospital would not satisfy the criteria at Sec.
412.108(a)(1)(i) (which is proposed to be redesignated as
412.108(a)(1)(ii)).
We are reminding readers that, under Sec. 412.108(b)(4) and Sec.
412.92(b)(3)(i), an approved MDH or SCH status determination remains in
effect unless there is a change in the circumstances under which the
status was approved. While we believe that this proposal is consistent
with the policies for multicampus hospitals that we have developed in
response to recent questions, current MDHs and SCHs should make sure
that this proposal does not create a change in circumstance (such as an
increase in the number of beds to more than 100 for MDHs or to more
than 50 for SCHs), which an MDH or SCH is required to report to the MAC
within 30 days of the event, in accordance with Sec. 412.108(b)(4)(ii)
and (iii) and Sec. 412.92(b)(3)(ii) and (iii).
With regard to other qualifying criteria set forth in the
regulations at Sec. Sec. 412.92, 412.96, 412.103, and 412.108 that do
not involve data that can be combined, specifically qualifying criteria
related to location, mileage, travel time, and distance requirements, a
hospital would need to demonstrate that the main campus and its remote
location(s) each independently satisfy those requirements in order for
the entire hospital, including its remote location(s), to be
reclassified or obtain a special status.
To qualify for SCH status, for example, it would be insufficient
for only the main campus, and not the remote location, to meet distance
criteria. Rather, the main campus and its remote location(s) would each
need to meet at least one of the criteria at Sec. 412.92(a).
Specifically, the main campus and its remote location must each be
located more than 35 miles from other like hospitals, or if in a rural
area (as defined in Sec. 412.64), be located between 25 and 35 miles
from other like hospitals if meeting one of the criteria at Sec.
412.92(a)(1) (and each meet the criterion at Sec. 412.92(a)(1)(iii) if
applicable), or between 15 and 25 miles from other like hospitals if
the other like hospitals are inaccessible for at least 30 days in each
2 out of 3 years (Sec. 412.92(a)(2)), or travel time to the nearest
like hospital is at least 45 minutes (Sec. 412.92(a)(3)). We believe
that this is necessary to show that the hospital is indeed the sole
source of inpatient hospital services reasonably available to
individuals in a geographic area who are entitled to benefits under
Medicare Part A, as required by section 1886(d)(5)(D)(iii)(II) of the
Act. For hospitals with remote locations that apply for SCH
classification under Sec. 412.92(a)(1)(i) and (ii), combined data are
used to document the boundaries of the hospital's service area using
data from across both locations, as discussed earlier, and all like
hospitals within a 35-mile radius of each location are included in the
analysis. To be located in a rural area to use the criteria in Sec.
412.92(a)(1), (2), and (3), the main campus and its remote location(s)
must each be either geographically located in a rural area, as defined
in Sec. 412.64, or reclassified as rural under Sec. 412.103.
Similarly, for RRC classification under Sec. 412.96 and MDH
classification under Sec. 412.108, the main campus and its remote
location(s) must each be either geographically located in a rural area,
as defined in 42 CFR part 412, subpart D, or reclassified as rural
under Sec. 412.103 to meet the rural requirement portion of the
criteria at Sec. 412.96(b)(1), Sec. 412.96(c), or Sec. 412.108(a)(1)
(or for MDH, be located in a State with no rural area and satisfy any
of the criteria under Sec. 412.103(a)(1) or (a)(3) or under Sec.
412.103(a)(2) as of January 1, 2018). For hospitals with remote
locations that apply for RRC classification under Sec.
412.96(b)(2)(ii) or Sec. 412.96(c)(4), 25 miles is calculated from
each location (the main campus and its remote location(s)), and
combined data from both the main campus and its remote location(s) are
used to calculate the percentage of Medicare patients, services
furnished to Medicare beneficiaries, and discharges.
For hospitals seeking to reclassify as rural by meeting the
criteria at Sec. 412.103(a)(1), (a)(2), or (a)(6), we also are
proposing to codify in our regulations that it would not be sufficient
for only the main campus, and not its remote location(s), to
demonstrate that its location meets the aforementioned criteria.
Rather, under Sec. 412.103(a)(1) and (2) (which also are incorporated
in Sec. 412.103(a)(6)), we are proposing that the main campus and its
remote location(s) must each either be located (1) in a rural census
tract of an MSA as determined under the most recent version of the
Goldsmith Modification, the Rural-Urban Commuting Area codes (Sec.
412.103(a)(1)), or (2) in an area designated by any law or regulation
of the State in which it is located as a rural area, or be designated
as a rural hospital by State law or regulation (Sec. 412.103(a)(2)).
For hospitals seeking to reclassify as rural

[[Page 20360]]

by meeting the criteria in Sec. 412.103(a)(3), which require that the
hospital would qualify as an RRC or a SCH if the hospital were located
in a rural area, we refer readers to our discussion presented earlier
that explains how hospitals with remote locations would meet criteria
for RRC or SCH status.
We note that we have also received questions about how a hospital
with remote locations that trains residents in approved medical
residency training programs would be treated for IME adjustment
purposes if it reclassifies as rural under Sec. 412.103. As we noted
in the FY 2015 IPPS/LTCH PPS final rule (79 FR 50114), the rural
reclassification provision of Sec. 412.103 only applies to IPPS
hospitals under section 1886(d) of the Act. Therefore, it applies for
IME payment purposes, given that the IME adjustment under section
1886(d)(5)(B) of the Act is an additional payment under IPPS. In
contrast, sections 1886(a)(4) and (d)(1)(A) of the Act exclude direct
GME costs from operating costs and these costs are not included in the
calculation of the IPPS payment rates for inpatient hospital services.
Payment for direct GME is separately authorized under section 1886(h)
of the Act and, therefore, not subject to Sec. 412.103. Therefore, if
a geographically urban teaching hospital reclassifies as rural under
Sec. 412.103, such a reclassification would only affect the teaching
hospital's IME adjustment, and not its direct GME payment. Accordingly,
we are clarifying that in order for the IME cap adjustment regulations
at Sec. 412.105(f)(1)(iv)(A), Sec. 412.105(f)(1)(vii), and Sec.
412.105(f)(1)(xv) to be applicable to a teaching hospital with a main
campus and a remote location(s), the main campus and its remote
location(s), respectively, must each be either geographically located
in a rural area as defined in 42 CFR part 412, subpart D, or
reclassified as rural under Sec. 412.103. For direct GME purposes at
Sec. 413.79, both the main campus and its remote location(s) are
required to be geographically rural because a hospital's status for any
direct GME payments or adjustments is unaffected by a Sec. 412.103
rural reclassification.
We are proposing to codify these policies regarding the application
of the qualifying criteria for hospitals with remote locations in the
regulations at Sec. 412.92 for SCHs, Sec. 412.96 for RRCs, Sec.
412.103 for rural reclassification, or Sec. 412.108 for MDHs.
Specifically, we are proposing to revise these regulations as follows:
We are proposing to add paragraph (a)(4) to Sec. 412.92 to specify
that, for a hospital with a main campus and one or more remote
locations under a single provider agreement where services are provided
and billed under the IPPS and that meets the provider-based criteria at
Sec. 413.65 as a main campus and a remote location of a hospital,
combined data from the main campus and its remote location(s) are
required to demonstrate that the criteria at Sec. 412.92(a)(1)(i) and
(ii) are met. For the mileage and rural location criteria at Sec.
412.92(a) and the mileage, accessibility, and travel time criteria
specified at Sec. 412.92(a)(1) through (a)(3), the hospital must
demonstrate that the main campus and its remote location(s) each
independently satisfy those requirements.
In Sec. 412.96, we are proposing to redesignate paragraph (d) as
paragraph (e) and add a new paragraph (d) to specify that, for a
hospital with a main campus and one or more remote locations under a
single provider agreement where services are provided and billed under
the IPPS and that meets the provider-based criteria at Sec. 413.65 as
a main campus and a remote location of a hospital, combined data from
the main campus and its remote location(s) are required to demonstrate
that the criteria at Sec. 412.96(b)(1) and (2) and (c)(1) through
(c)(5) are met. For purposes of meeting the rural location criteria in
Sec. 412.96(b)(1) and (c) and the mileage criteria in Sec.
412.96(b)(2)(ii) and (c)(4), the hospital must demonstrate that the
main campus and its remote location(s) each independently satisfy those
requirements.
We are proposing to add paragraph (a)(7) to Sec. 412.103 to
specify that, for a hospital with a main campus and one or more remote
locations under a single provider agreement where services are provided
and billed under the IPPS and that meets the provider-based criteria at
Sec. 413.65 as a main campus and a remote location of a hospital, the
hospital must demonstrate that the main campus and its remote
location(s) each independently satisfy the location criteria specified
in Sec. 412.103(a)(1) and (2) (which criteria also are incorporated in
Sec. 412.103(a)(6)).
We are proposing to add paragraph (a)(3) to Sec. 412.108 to
specify that, for a hospital with a main campus and one or more remote
locations under a single provider agreement where services are provided
and billed under the IPPS and that meets the provider-based criteria at
Sec. 413.65 as a main campus and a remote location of a hospital,
combined data from the main campus and its remote location(s) are
required to demonstrate that the criteria in Sec. 412.108(a)(1) and
(2) are met. For the location requirement specified at proposed amended
paragraph (a)(1)(i) of this section, the hospital must demonstrate that
the main campus and its remote location(s) each independently satisfy
this requirement.
We are inviting public comments on our proposals described above.

E. Proposed Occupational Mix Adjustment to the FY 2019 Wage Index

As stated earlier, section 1886(d)(3)(E) of the Act provides for
the collection of data every 3 years on the occupational mix of
employees for each short-term, acute care hospital participating in the
Medicare program, in order to construct an occupational mix adjustment
to the wage index, for application beginning October 1, 2004 (the FY
2005 wage index). The purpose of the occupational mix adjustment is to
control for the effect of hospitals' employment choices on the wage
index. For example, hospitals may choose to employ different
combinations of registered nurses, licensed practical nurses, nursing
aides, and medical assistants for the purpose of providing nursing care
to their patients. The varying labor costs associated with these
choices reflect hospital management decisions rather than geographic
differences in the costs of labor.
1. Use of 2016 Medicare Wage Index Occupational Mix Survey for the
Proposed FY 2019 Wage Index
Section 304(c) of the Consolidated Appropriations Act, 2001 (Pub.
L. 106-554) amended section 1886(d)(3)(E) of the Act to require CMS to
collect data every 3 years on the occupational mix of employees for
each short-term, acute care hospital participating in the Medicare
program. We collected data in 2013 to compute the occupational mix
adjustment for the FY 2016, FY 2017, and FY 2018 wage indexes. As
discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19903) and
final rule (82 FR 38137), a new measurement of occupational mix is
required for FY 2019.
The FY 2019 occupational mix adjustment is based on a new calendar
year (CY) 2016 survey. Hospitals were required to submit their
completed 2016 surveys (Form CMS-10079, OMB number 0938-0907) to their
MACs by July 3, 2017. The preliminary, unaudited CY 2016 survey data
were posted on the CMS website on July 12, 2017. As with the Worksheet
S-3, Parts II and III cost report wage data, as part of the FY 2019
desk review process, the MACs revised or verified data elements in
hospitals' occupational mix surveys that result in certain edit
failures.

[[Page 20361]]

2. Calculation of the Proposed Occupational Mix Adjustment for FY 2019
For FY 2019, we are proposing to calculate the occupational mix
adjustment factor using the same methodology that we have used since
the FY 2012 wage index (76 FR 51582 through 51586) and to apply the
occupational mix adjustment to 100 percent of the FY 2019 wage index.
Similar to the method we use for the calculation of the wage index
without occupational mix, salaries and hours for a multicampus hospital
are allotted among the different labor market areas where its campuses
are located. Table 2 associated with this proposed rule (which is
available via the Internet on the CMS website), which contains the
proposed FY 2019 occupational mix adjusted wage index, includes
separate wage data for the campuses of 16 multicampus hospitals. We
refer readers to section III.C. of the preamble of this proposed rule
for a chart listing the multicampus hospitals and the FTE percentages
used to allot their occupational mix data.
Because the statute requires that the Secretary measure the
earnings and paid hours of employment by occupational category not less
than once every 3 years, all hospitals that are subject to payments
under the IPPS, or any hospital that would be subject to the IPPS if
not granted a waiver, must complete the occupational mix survey, unless
the hospital has no associated cost report wage data that are included
in the FY 2019 wage index. For the proposed FY 2019 wage index, we are
using the Worksheet S-3, Parts II and III wage data of 3,260 hospitals,
and we are using the occupational mix surveys of 3,078 hospitals for
which we also have Worksheet S-3 wage data, which represented a
``response'' rate of 94 percent (3,078/3,260). For the proposed FY 2019
wage index, we are applying proxy data for noncompliant hospitals, new
hospitals, or hospitals that submitted erroneous or aberrant data in
the same manner that we applied proxy data for such hospitals in the FY
2012 wage index occupational mix adjustment (76 FR 51586). As a result
of applying this methodology, the proposed FY 2019 occupational mix
adjusted national average hourly wage is $42.948428861.
In summary, the proposed FY 2019 unadjusted national average hourly
wage and the proposed FY 2019 occupational mix adjusted national
average hourly wage is:

------------------------------------------------------------------------
Proposed unadjusted national Proposed occupational mix adjusted
average hourly wage national average hourly wage
------------------------------------------------------------------------
$42.990625267 $42.948428861
------------------------------------------------------------------------

F. Analysis and Implementation of the Proposed Occupational Mix
Adjustment and the Proposed FY 2019 Occupational Mix Adjusted Wage
Index

As discussed in section III.E. of the preamble of this proposed
rule, for FY 2019, we are proposing to apply the occupational mix
adjustment to 100 percent of the FY 2019 wage index. We calculated the
proposed occupational mix adjustment using data from the 2016
occupational mix survey data, using the methodology described in the FY
2012 IPPS/LTCH PPS final rule (76 FR 51582 through 51586). Using the
occupational mix survey data and applying the occupational mix
adjustment to 100 percent of the FY 2019 wage index results in a
proposed national average hourly wage of $42.948428861.
The proposed FY 2019 national average hourly wages for each
occupational mix nursing subcategory as calculated in Step 2 of the
occupational mix calculation are as follows:

------------------------------------------------------------------------
Average hourly
Occupational mix nursing subcategory wage
------------------------------------------------------------------------
National RN............................................. $41.67064907
National LPN and Surgical Technician.................... 24.68950438
National Nurse Aide, Orderly, and Attendant............. 16.96671421
National Medical Assistant.............................. 18.1339666
National Nurse Category................................. 35.05256013
------------------------------------------------------------------------

The proposed national average hourly wage for the entire nurse
category as computed in Step 5 of the occupational mix calculation is
$35.05256013. Hospitals with a nurse category average hourly wage (as
calculated in Step 4) of greater than the national nurse category
average hourly wage receive an occupational mix adjustment factor (as
calculated in Step 6) of less than 1.0. Hospitals with a nurse category
average hourly wage (as calculated in Step 4) of less than the national
nurse category average hourly wage receive an occupational mix
adjustment factor (as calculated in Step 6) of greater than 1.0.
Based on the 2016 occupational mix survey data, we determined (in
Step 7 of the occupational mix calculation) that the national
percentage of hospital employees in the nurse category is 42.3 percent,
and the national percentage of hospital employees in the all other
occupations category is 57.7 percent. At the CBSA level, the percentage
of hospital employees in the nurse category ranged from a low of 26.6
percent in one CBSA to a high of 82.0 percent in another CBSA.
We compared the FY 2019 proposed occupational mix adjusted wage
indexes for each CBSA to the proposed unadjusted wage indexes for each
CBSA. As a result of applying the proposed occupational mix adjustment
to the wage data, the proposed wage index values for 232 (56.9 percent)
urban areas and 23 (48.9 percent) rural areas would increase. The
proposed wage index values for 113 (27.7 percent) urban areas would
increase by greater than or equal to 1 percent but less than 5 percent,
and the proposed wage index values for 7 (1.7 percent) urban areas
would increase by 5 percent or more. The proposed wage index values for
9 (19.1 percent) rural areas would increase by greater than or equal to
1 percent but less than 5 percent, and 1 rural area's proposed wage
index value would increase by 5 percent or more. However, the proposed
wage index values for 175 (42.9 percent) urban areas and 24 (51.1
percent) rural areas would decrease. The proposed wage index values for
81 (19.9 percent) urban areas would decrease by greater than or equal
to 1 percent but less than 5 percent, and 1 urban area's proposed wage
index value would decrease by 5 percent or more. The proposed wage
index values of 6 (12.8 percent) rural areas would decrease by greater
than or equal to 1 percent and less than 5 percent, and no rural areas'
proposed wage index values would decrease by 5 percent or more. The
largest proposed positive impacts would be 6.42 percent for an urban
area and 5.25 percent for a rural area. The largest proposed negative
impacts would be 5.84 percent for an urban area and 1.6 percent for a
rural area. One urban area's proposed wage indexes, but no rural area
proposed wage indexes, would remain unchanged by application of the
occupational mix adjustment. These results indicate that a larger
percentage of urban areas (56.9 percent) would benefit from the
occupational mix adjustment than would rural areas (48.9 percent).
We also compared the FY 2019 wage data adjusted for occupational
mix from the 2016 survey to the FY 2019 wage data adjusted for
occupational mix from the 2013 survey. This analysis illustrates the
effect on area wage indexes of using the 2016 survey data compared to
the 2013 survey data; that is, it shows whether hospitals' wage indexes
would increase or decrease under the 2016 survey data as compared to
the prior 2013 survey data. Of the 407

[[Page 20362]]

urban CBSAs and 47 rural CBSAs, our analysis shows that the FY 2019
wage index values for 179 (43.9 percent) urban areas and 20 (42.6
percent) rural areas would increase using the 2016 survey data. Ninety-
eight (24.0 percent) urban areas would increase by greater than or
equal to 1 percent but less than 5 percent, and 27 (6.6 percent) urban
areas would increase by 5 percent or more. Nine (19.1 percent) rural
areas would increase by greater than or equal to 1 percent but less
than 5 percent, and 4 (8.5 percent) rural areas would increase by 5
percent or more. However, the wage index values for 229 (56.1 percent)
urban areas and 27 (57.4 percent) rural areas would decrease using the
2016 survey data. One hundred thirty three (32.6 percent) urban areas
would decrease by greater than or equal to 1 percent but less than 5
percent, and 24 (5.9 percent) urban areas would decrease by 5 percent
or more. Eleven (23.4 percent) rural areas would decrease by greater
than or equal to 1 percent but less than 5 percent, and 2 (4.3 percent)
rural areas would decrease by 5 percent or more. The largest positive
impacts using the 2016 survey data compared to the 2013 survey data are
17.2 percent for an urban area and 13.8 percent for a rural area. The
largest negative impacts are 13.0 percent for an urban area and 14.0
percent for rural areas. No urban areas and no rural areas are
unaffected. These results indicate that the wage indexes of more CBSAs
overall (56.3 percent) would decrease due to application of the 2016
occupational mix survey data as compared to the 2013 occupational mix
survey data to the wage index. Further, a slightly larger percentage of
urban areas (43.9 percent) would benefit from the use of the 2016
occupational mix survey data as compared to the 2013 occupational mix
survey data than would rural areas (42.6 percent).

G. Proposed Application of the Rural, Imputed, and Frontier Floors

1. Proposed Rural Floor
Section 4410(a) of Public Law 105-33 provides that, for discharges
on or after October 1, 1997, the area wage index applicable to any
hospital that is located in an urban area of a State may not be less
than the area wage index applicable to hospitals located in rural areas
in that State. This provision is referred to as the ``rural floor.''
Section 3141 of Public Law 111-148 also requires that a national budget
neutrality adjustment be applied in implementing the rural floor. Based
on the proposed FY 2019 wage index associated with this proposed rule
(which is available via the Internet on the CMS website), we estimated
that 255 hospitals would receive an increase in their FY 2019 proposed
wage index due to the application of the rural floor.
2. Proposed Expiration of Imputed Floor Policy
In the FY 2005 IPPS final rule (69 FR 49109 through 49111), we
adopted the ``imputed floor'' policy as a temporary 3-year regulatory
measure to address concerns from hospitals in all[dash]urban States
that have argued that they are disadvantaged by the absence of rural
hospitals to set a wage index floor for those States. Since its initial
implementation, we have extended the imputed floor policy eight times,
the last of which was adopted in the FY 2018 IPPS/LTCH PPS final rule
and is set to expire on September 30, 2018. (We refer readers to
further discussions of the imputed floor in the IPPS/LTCH PPS final
rules from FY 2014 through FY 2018 (78 FR 50589 through 50590, 79 FR
49969 through 49970, 80 FR 49497 through 49498, 81 FR 56921 through
56922, and 82 FR 38138 through 38142, respectively) and to the
regulations at 42 CFR 412.64(h)(4).) Currently, there are three all-
urban States--Delaware, New Jersey, and Rhode Island--with a range of
wage indexes assigned to hospitals in these States, including through
reclassification or redesignation. (We refer readers to discussions of
geographic reclassifications and redesignations in section III.I. of
the preamble of this proposed rule.)
In computing the imputed floor for an all-urban State under the
original methodology, which was established beginning in FY 2005, we
calculated the ratio of the lowest-to-highest CBSA wage index for each
all-urban State as well as the average of the ratios of lowest-to-
highest CBSA wage indexes of those all-urban States. We then compared
the State's own ratio to the average ratio for all-urban States and
whichever is higher is multiplied by the highest CBSA wage index value
in the State--the product of which established the imputed floor for
the State. As of FY 2012, there were only two all-urban States--New
Jersey and Rhode Island--and only New Jersey benefitted under this
methodology. Under the previous OMB labor market area delineations,
Rhode Island had only one CBSA (Providence-New Bedford-Fall River, RI-
MA) and New Jersey had 10 CBSAs. Therefore, under the original
methodology, Rhode Island's own ratio equaled 1.0, and its imputed
floor was equal to its original CBSA wage index value. However, because
the average ratio of New Jersey and Rhode Island was higher than New
Jersey's own ratio, this methodology provided a benefit for New Jersey,
but not for Rhode Island.
In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53368 through
53369), we retained the imputed floor calculated under the original
methodology as discussed above, and established an alternative
methodology for computing the imputed floor wage index to address the
concern that the original imputed floor methodology guaranteed a
benefit for one all-urban State with multiple wage indexes (New Jersey)
but could not benefit the other all-urban State (Rhode Island). The
alternative methodology for calculating the imputed floor was
established using data from the application of the rural floor policy
for FY 2013. Under the alternative methodology, we first determined the
average percentage difference between the post[dash]reclassified, pre-
floor area wage index and the post[dash]reclassified, rural floor wage
index (without rural floor budget neutrality applied) for all CBSAs
receiving the rural floor. (Table 4D associated with the FY 2013 IPPS/
LTCH PPS final rule (which is available via the Internet on the CMS
website) included the CBSAs receiving a State's rural floor wage
index.) The lowest post-reclassified wage index assigned to a hospital
in an all-urban State having a range of such values then is increased
by this factor, the result of which establishes the State's alternative
imputed floor. We amended Sec. 412.64(h)(4) of the regulations to add
paragraphs to incorporate the finalized alternative methodology, and to
make reference and date changes. In summary, for the FY 2013 wage
index, we did not make any changes to the original imputed floor
methodology at Sec. 412.64(h)(4) and, therefore, made no changes to
the New Jersey imputed floor computation for FY 2013. Instead, for FY
2013, we adopted a second, alternative methodology for use in cases
where an all-urban State has a range of wage indexes assigned to its
hospitals, but the State cannot benefit under the original methodology.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50589 through
50590), we extended the imputed floor policy (both the original
methodology and the alternative methodology) for 1 additional year,
through September 30, 2014, while we continued to explore potential
wage index reforms.
In the FY 2015 IPPS/LTCH PPS final rule (79 FR 49969 through
49970), for FY 2015, we adopted a policy to extend the imputed floor
policy (both the original methodology and alternative methodology) for
another year, through September 30, 2015, as we continued to

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explore potential wage index reforms. In that final rule, we revised
the regulations at Sec. 412.64(h)(4) and (h)(4)(vi) to reflect the 1-
year extension of the imputed floor. As discussed in section III.B. of
the preamble of that FY 2015 final rule, we adopted the new OMB labor
market area delineations beginning in FY 2015. Under the new OMB
delineations, Delaware became an all-urban State, along with New Jersey
and Rhode Island. Under the new OMB delineations, Delaware has three
CBSAs, New Jersey has seven CBSAs, and Rhode Island continues to have
only one CBSA (Providence-Warwick, RI-MA). We refer readers to a
detailed discussion of our adoption of the new OMB labor market area
delineations in section III.B. of the preamble of the FY 2015 IPPS/LTCH
PPS final rule. Therefore, under the adopted new OMB delineations
discussed in section III.B. of the preamble of the FY 2015 IPPS/LTCH
PPS final rule, Delaware became an all-urban State and was subject to
an imputed floor as well for FY 2015.
In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49497 through
49498), for FY 2016, we extended the imputed floor policy (under both
the original methodology and the alternative methodology) for 1
additional year, through September 30, 2016. In the FY 2017 IPPS/LTCH
PPS final rule (81 FR 56921 through 56922), for FY 2017, we extended
the imputed floor policy (under both the original methodology and the
alternative methodology) for 1 additional year, through September 30,
2017. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38138 through
38142), for FY 2018, we extended the imputed floor policy (under both
the original methodology and the alternative methodology) for 1
additional year, through September 30, 2018. In these three final
rules, we revised the regulations at Sec. 412.64(h)(4) and (h)(4)(vi)
to reflect the additional 1-year extensions.
The imputed floor is set to expire effective October 1, 2018, and
in this FY 2019 proposed rule, we are not proposing to extend the
imputed floor policy. In the FY 2005 IPPS final rule (69 FR 49110), we
adopted the imputed floor policy for all-urban States under the
authority of section 1886(d)(3)(E) of the Act, which gives the
Secretary broad authority to adjust the proportion (as estimated by the
Secretary from time to time) of hospitals' costs which are attributable
to wages and wage-related costs of the DRG prospective payment rates
for area differences in hospital wage levels by a factor (established
by the Secretary). However, we have expressed reservations about the
establishment of an imputed floor, considering that the imputed rural
floor methodology creates a disadvantage in the application of the wage
index to hospitals in States with rural hospitals but no urban
hospitals receiving the rural floor (72 FR 24786 and 72 FR 47322). As
we discussed in the FY 2008 IPPS final rule (72 FR 47322), the
application of the rural and imputed floors requires transfer of
payments from hospitals in States with rural hospitals but where the
rural floor is not applied to hospitals in States where the rural or
imputed floor is applied. For this reason, in this proposed rule, we
are proposing not to apply an imputed floor to wage index calculations
and payments for hospitals in all-urban States for FY 2019 and
subsequent years. That is, hospitals in New Jersey, Delaware, and Rhode
Island (and in any other all-urban State) would receive a wage index
that is calculated without applying an imputed floor for FY 2019 and
subsequent years. Therefore, only States containing both rural areas
and hospitals located in such areas (including any hospital
reclassified as rural under the provisions of Sec. 412.103 of the
regulations) would benefit from the rural floor, in accordance with
section 4410 of Public Law 105-33. In addition, we would no longer
include the imputed floor as a factor in the national budget neutrality
adjustment. Therefore, the proposed wage index and impact tables
associated with this FY 2019 IPPS/LTCH PPS proposed rule (which are
available via the Internet on the CMS website) do not reflect the
imputed floor policy, and there is no proposed national budget
neutrality adjustment for the imputed floor for FY 2019.
We are inviting public comments on our proposal not to extend the
imputed floor for FY 2019 and subsequent years.
3. Proposed State Frontier Floor for FY 2019
Section 10324 of Public Law 111-148 requires that hospitals in
frontier States cannot be assigned a wage index of less than 1.0000.
(We refer readers to the regulations at 42 CFR 412.64(m) and to a
discussion of the implementation of this provision in the FY 2011 IPPS/
LTCH PPS final rule (75 FR 50160 through 50161).) In this FY 2019 IPPS/
LTCH PPS proposed rule, we are not proposing any changes to the
frontier floor policy for FY 2019. In this proposed rule, 50 hospitals
would receive the frontier floor value of 1.0000 for their FY 2019 wage
index. These hospitals are located in Montana, Nevada, North Dakota,
South Dakota, and Wyoming.
The areas affected by the proposed rural and frontier floor
policies for the proposed FY 2019 wage index are identified in Table 2
associated with this proposed rule, which is available via the Internet
on the CMS website.

H. Proposed FY 2019 Wage Index Tables

In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49498 and 49807
through 49808), we finalized a proposal to streamline and consolidate
the wage index tables associated with the IPPS proposed and final rules
for FY 2016 and subsequent fiscal years. Prior to FY 2016, the wage
index tables had consisted of 12 tables (Tables 2, 3A, 3B, 4A, 4B, 4C,
4D, 4E, 4F, 4J, 9A, and 9C) that were made available via the Internet
on the CMS website. Effective beginning FY 2016, with the exception of
Table 4E, we streamlined and consolidated 11 tables (Tables 2, 3A, 3B,
4A, 4B, 4C, 4D, 4F, 4J, 9A, and 9C) into 2 tables (Tables 2 and 3). In
addition, as discussed in section III.J. of the preamble of this
proposed rule, we are adding a Table 4 associated with this proposed
rule entitled ``List of Counties Eligible for the Out-Migration
Adjustment under Section 1886(d)(13) of the Act--FY 2019'' (which is
available via Internet on the CMS Website) We refer readers to section
VI. of the Addendum to this proposed rule for a discussion of the
proposed wage index tables for FY 2019.

I. Revisions to the Wage Index Based on Hospital Redesignations and
Reclassifications

1. General Policies and Effects of Reclassification and Redesignation
Under section 1886(d)(10) of the Act, the Medicare Geographic
Classification Review Board (MGCRB) considers applications by hospitals
for geographic reclassification for purposes of payment under the IPPS.
Hospitals must apply to the MGCRB to reclassify not later than 13
months prior to the start of the fiscal year for which reclassification
is sought (usually by September 1). Generally, hospitals must be
proximate to the labor market area to which they are seeking
reclassification and must demonstrate characteristics similar to
hospitals located in that area. The MGCRB issues its decisions by the
end of February for reclassifications that become effective for the
following fiscal year (beginning October 1). The regulations applicable
to reclassifications by the MGCRB are located in 42 CFR 412.230 through
412.280. (We refer readers to a discussion in the FY 2002 IPPS final
rule (66 FR 39874 and 39875) regarding how the MGCRB defines mileage
for

[[Page 20364]]

purposes of the proximity requirements.) The general policies for
reclassifications and redesignations and the policies for the effects
of hospitals' reclassifications and redesignations on the wage index
are discussed in the FY 2012 IPPS/LTCH PPS final rule for the FY 2012
final wage index (76 FR 51595 and 51596). In addition, in the FY 2012
IPPS/LTCH PPS final rule, we discussed the effects on the wage index of
urban hospitals reclassifying to rural areas under 42 CFR 412.103.
Hospitals that are geographically located in States without any rural
areas are ineligible to apply for rural reclassification in accordance
with the provisions of 42 CFR 412.103.
On April 21, 2016, we published an interim final rule with comment
period (IFC) in the Federal Register (81 FR 23428 through 23438) that
included provisions amending our regulations to allow hospitals
nationwide to have simultaneous Sec. 412.103 and MGCRB
reclassifications. For reclassifications effective beginning FY 2018, a
hospital may acquire rural status under Sec. 412.103 and subsequently
apply for a reclassification under the MGCRB using distance and average
hourly wage criteria designated for rural hospitals. In addition, we
provided that a hospital that has an active MGCRB reclassification and
is then approved for redesignation under Sec. 412.103 will not lose
its MGCRB reclassification; such a hospital receives a reclassified
urban wage index during the years of its active MGCRB reclassification
and is still considered rural under section 1886(d) of the Act and for
other purposes.
We discussed that when there is both a Sec. 412.103 redesignation
and an MGCRB reclassification, the MGCRB reclassification controls for
wage index calculation and payment purposes. We exclude hospitals with
Sec. 412.103 redesignations from the calculation of the reclassified
rural wage index if they also have an active MGCRB reclassification to
another area. That is, if an application for urban reclassification
through the MGCRB is approved, and is not withdrawn or terminated by
the hospital within the established timelines, we consider the
hospital's geographic CBSA and the urban CBSA to which the hospital is
reclassified under the MGCRB for the wage index calculation. We refer
readers to the April 21, 2016 IFC (81 FR 23428 through 23438) and the
FY 2017 IPPS/LTCH PPS final rule (81 FR 56922 through 56930) for a full
discussion of the effect of simultaneous reclassifications under both
the Sec. 412.103 and the MGCRB processes on wage index calculations.
2. MGCRB Reclassification and Redesignation Issues for FY 2019
a. FY 2019 Reclassification Requirements and Approvals
As previously stated, under section 1886(d)(10) of the Act, the
MGCRB considers applications by hospitals for geographic
reclassification for purposes of payment under the IPPS. The specific
procedures and rules that apply to the geographic reclassification
process are outlined in regulations under 42 CFR 412.230 through
412.280.
At the time this proposed rule was constructed, the MGCRB had
completed its review of FY 2019 reclassification requests. Based on
such reviews, there are 337 hospitals approved for wage index
reclassifications by the MGCRB starting in FY 2019. Because MGCRB wage
index reclassifications are effective for 3 years, for FY 2019,
hospitals reclassified beginning in FY 2017 or FY 2018 are eligible to
continue to be reclassified to a particular labor market area based on
such prior reclassifications for the remainder of their 3-year period.
There were 259 hospitals approved for wage index reclassifications in
FY 2017 that will continue for FY 2019, and 345 hospitals approved for
wage index reclassifications in FY 2018 that will continue for FY 2019.
Of all the hospitals approved for reclassification for FY 2017, FY
2018, and FY 2019, based upon the review at the time of this proposed
rule, 941 hospitals are in a MGCRB reclassification status for FY 2019
(with 22 of these hospitals reclassified back to their geographic
location).
Under the regulations at 42 CFR 412.273, hospitals that have been
reclassified by the MGCRB are permitted to withdraw their applications
if the request for withdrawal is received by the MGCRB any time before
the MGCRB issues a decision on the application, or after the MGCRB
issues a decision, provided the request for withdrawal is received by
the MGCRB within 45 days of the date that CMS' annual notice of
proposed rulemaking is issued in the Federal Register concerning
changes to the inpatient hospital prospective payment system and
proposed payment rates for the fiscal year for which the application
has been filed. For information about withdrawing, terminating, or
canceling a previous withdrawal or termination of a 3[dash]year
reclassification for wage index purposes, we refer readers to Sec.
412.273, as well as the FY 2002 IPPS final rule (66 FR 39887 through
39888) and the FY 2003 IPPS final rule (67 FR 50065 through 50066).
Additional discussion on withdrawals and terminations, and
clarifications regarding reinstating reclassifications and ``fallback''
reclassifications were included in the FY 2008 IPPS final rule (72 FR
47333) and the FY 2018 IPPS/LTCH PPS final rule (82 FR 38148 through
38150).
Changes to the wage index that result from withdrawals of requests
for reclassification, terminations, wage index corrections, appeals,
and the Administrator's review process for FY 2019 will be incorporated
into the wage index values published in the FY 2019 IPPS/LTCH PPS final
rule. These changes affect not only the wage index value for specific
geographic areas, but also the wage index value that redesignated/
reclassified hospitals receive; that is, whether they receive the wage
index that includes the data for both the hospitals already in the area
and the redesignated/reclassified hospitals. Further, the wage index
value for the area from which the hospitals are redesignated/
reclassified may be affected.
Applications for FY 2020 reclassifications (OMB control number
0938-0573) are due to the MGCRB by September 4, 2018 (the first working
day of September 2018). We note that this is also the deadline for
canceling a previous wage index reclassification, withdrawal, or
termination under 42 CFR 412.273(d). Applications and other information
about MGCRB reclassifications may be obtained, beginning in mid-July
2018, via the Internet on the CMS website at: https://www.cms.gov/Regulations-and-Guidance/Review-Boards/MGCRB/, or by calling
the MGCRB at (410) 786[dash]1174. The mailing address of the MGCRB is:
1508 Woodlawn Drive, Suite 100, Baltimore, MD 21207.
Under regulations in effect prior to FY 2018 (42 CFR
412.256(a)(1)), applications for reclassification were required to be
mailed or delivered to the MGCRB, with a copy to CMS, and were not
allowed to be submitted through the facsimile (FAX) process or by other
electronic means. Because we believed this previous policy was outdated
and overly restrictive and to promote ease of application for FY 2018
and subsequent years, in the FY 2017 IPPS/LTCH PPS final rule (81 FR
56928), we revised this policy to require applications and supporting
documentation to be submitted via the method prescribed in instructions
by the MGCRB, with an electronic copy to CMS. Specifically, in the FY
2017 IPPS/LTCH PPS final rule, we revised Sec. 412.256(a)(1) to
specify that an application must be submitted to the MGCRB according to
the method prescribed by the MGCRB, with an

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electronic copy of the application sent to CMS. We specified that CMS
copies should be sent via email to [email protected].
In the FY 2017 IPPS/LTCH PPS final rule (81 FR 56928), we
reiterated that MGCRB application requirements will be published
separately from the rulemaking process, and paper applications will
likely still be required. The MGCRB makes all initial determinations
for geographic reclassification requests, but CMS requests copies of
all applications to assist in verifying a reclassification status
during the wage index development process. We stated that we believed
that requiring electronic versions would better aid CMS in this
process, and would reduce the overall burden upon hospitals.
b. Proposed Revision of Reclassification Requirements for a Provider
That Is the Sole Hospital in the MSA
Section 412.230 of the regulations sets forth criteria for an
individual hospital to apply for geographic reclassification to a
higher rural or urban wage index area. Specifically, under Sec.
412.230(a)(1)(ii), an individual hospital may be redesignated from an
urban area to another urban area, from a rural area to another rural
area, or from a rural area to an urban area for the purpose of using
the other area's wage index value. Such a hospital must also meet other
criteria. One of these required criteria, under Sec.
412.230(d)(1)(iii)(C), is that the hospital must demonstrate that its
own average hourly wage is, in the case of a hospital located in a
rural area, at least 106 percent, and in the case of a hospital located
in an urban area, at least 108 percent of the average hourly wage of
all other hospitals in the area in which the hospital is located. We
refer readers to the FY 2009 IPPS/LTCH PPS final rule (73 FR 48568) for
further explanation as to how the 108/106 percent average hourly wage
standards were determined. In cases in which a hospital wishing to
reclassify is the only hospital in its MSA, that hospital is unable to
satisfy this criterion because it cannot demonstrate that its average
hourly wage is higher than that of the other hospitals in the area in
which the hospital is located (because there are no other hospitals in
the area).
In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51600 through
51601), we implemented a policy change to allow for waiver of the
average hourly wage comparison criterion under Sec. 412.230(d)(1)(iii)
for a hospital in a single hospital MSA for reclassifications beginning
in FY 2013 if the hospital could document that it is the single
hospital in its MSA that is paid under 42 CFR part 412, subpart D
(Sec. 412.230(d)(5)). In that final rule, we stated that we agreed
that the then-current policies for geographic reclassification were
disparate for hospitals located in single hospital MSAs compared to
hospitals located in multiple hospital MSAs. We also acknowledged
commenters' views that this disparity was sometimes a disadvantage
because hospitals in single hospital MSAs had fewer options for
qualifying for geographic reclassification. In the years since we
implemented this policy change, we have encountered questions and
concerns regarding its implementation. Currently, to qualify under
Sec. 412.230(d)(5) for the waiver of the average hourly wage criterion
under Sec. 412.230(d)(1)(iii)(C), a hospital must document to the
MGCRB that it is the only hospital in its geographic wage index area
that is paid under 42 CFR part 412, subpart D. To do so, a hospital
frequently is required to contact the appropriate CMS Regional Office
or MAC for a statement certifying its status as the single hospital in
its MSA. Hospitals have indicated that this process may be time-
consuming, inconsistent in its application nationally, and poses
challenges with respect to accurately reflecting situations where
hospitals have recently opened or ceased operations during the
application process. In light of these questions and concerns and after
reviewing the implementation of this reclassification provision, we
believe that a revision of the policy is necessary to reduce
unnecessary burden to affected hospitals and enhance consistency while
achieving previously stated policy goals.
The objective of the 108/106 percent average hourly wage criterion
at Sec. 412.230(d)(1)(iii)(C) is to require a reclassifying hospital
to document that it has significantly higher average hourly wages than
other hospitals in its labor market area. The stated purpose of Sec.
412.230(d)(5) was to provide additional reclassification options for
hospitals that, due to their single hospital MSA status, could not
mathematically meet the requirements of Sec. 412.230(d)(1)(iii).
Therefore, in order to determine whether a hospital is the single
hospital in the MSA under Sec. 412.230(d)(5), rather than require the
hospital to obtain documentation from the CMS Regional Office or the
MAC to prove its single hospital MSA status, we believe it would be
appropriate to use the same data used to determine whether the 108/106
percent criterion is met under Sec. 412.230(d)(1)(iii)(C): That is,
the annually published 3-year average hourly wage data as provided in
Sec. 412.230(d)(2)(ii). Specifically, in this proposed rule, we are
proposing that, for reclassification applications for FY 2021 and
subsequent fiscal years, a hospital would provide the wage index data
from the current year's IPPS final rule to demonstrate that it is the
only hospital in its labor market area with wage data listed within the
3-year period considered by the MGCRB. Accordingly, we are proposing to
revise the regulation text at Sec. 412.230(d)(5) to provide that the
requirements of Sec. 412.230(d)(1)(iii) would not apply if a hospital
is the single hospital in its MSA with published 3-year average hourly
wage data included in the current fiscal year inpatient prospective
payment system final rule. In proposing this revision, we would remove
the language in this regulation requiring that the hospital be the
single hospital ``paid under subpart D of this part'', as we believe
the proposed revisions to the regulation above more accurately identify
the universe of hospitals this policy was intended to address. That is,
to meet the requirements of a single hospital MSA, we are proposing
that a hospital applying for reclassification beginning in FY 2021
(application that is due September 1, 2019) must only provide
documentation from Table 2 of the Addendum to the FY 2020 IPPS/LTCH PPS
final rule demonstrating it is the only CCN listed within the
associated ``Geographic CBSA'' numbers (currently listed under column
H) with a ``3[dash]Year Average Hourly Wage (2018, 2019, 2020)'' value
(currently listed under column G).
The purpose of the single hospital MSA provision was to address
situations where a hospital essentially had no means of comparing wages
to other hospitals in it labor market area. We believe this proposal
would allow for a more straightforward and consistent implementation of
the single hospital MSA exception and would reduce provider burden. We
believe the proposed requirements above for meeting the single hospital
MSA exception can be easily verified and validated by the applicant and
the MGCRB, and would continue to address the concerns expressed by
commenters included in the FY 2012 IPPS/LTCH PPS final rule.
We are inviting public comments on this proposal, which, if
finalized, would be effective for reclassifications beginning in FY
2021.

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c. Clarification of Group Reclassification Policies for Multicampus
Hospitals
Under current policy described in Sec. Sec. 412.230(d)(2)(v),
412.232(d)(2)(iii), and 412.234(c)(2), and as discussed in the FY 2008
IPPS/LTCH final rule (72 FR 47334 through 47335), remote locations of
hospitals in a distinct geographic area from the main hospital campus
are eligible to seek wage index reclassification. In Table 2 associated
with this proposed rule (which is available via the Internet on the CMS
website), such locations are indicated with a ``B'' in the third digit
of the CCN. (As discussed in section III.C. of the preamble of this
proposed rule, in past years, the ``B'' was instead placed in the
fourth digit.) When CMS initially includes such a ``B'' hospital
location in Table 2 for a particular fiscal year, it signifies that,
for wage index purposes, the hospital indicated the presence of a
remote location in a distinct geographic area on Worksheet S-2 of the
cost report used to construct that current fiscal year's wage index,
and hours and wages were allocated between the main campus and the
remote location. For billing purposes, these ``B'' locations are
assigned their own area wage index value, separate from the main
hospital campus. Hospitals are eligible to seek both individual and
county group reclassifications for these ``B'' locations through the
MGCRB, using the wage data published for the most recent IPPS final
rule for the ``B'' location. While we are not proposing any change to
the multicampus hospital reclassification policy, it has come to our
attention that the MGCRB has had difficulty processing certain county
group reclassification applications that include multicampus locations
that have not yet been assigned a ``B'' number in Table 2. Typically,
this would occur when an inpatient hospital location has recently been
opened or acquired, creating a new ``B'' location. Because the wage
index development process utilizes cost reports that end up to 4 years
prior to the upcoming IPPS fiscal year, the most recently published
wage data for the hospital used to construct the wage index would not
reflect the specific wage data for any new ``B'' location in a
different labor market area. However, as specified in Sec. Sec.
412.232(a)(2) and 412.234(a)(1) of the regulations, for county group
reclassification applications, all hospitals in a county must apply for
reclassification as a group. Thus, in order for hospitals in a county
to obtain reclassification as a group, these new ``B'' locations are
required under these regulations to be a party to any county group
reclassification application, despite not having wage data published in
Table 2. In a group reclassification involving a new ``B'' location,
the ``B'' location would not yet have data included in the CMS hospital
survey used to construct the wage index and to evaluate
reclassification requests, and the most recently published wage data of
the main hospital would encompass a time period well before the
creation or acquisition of the new remote location. Therefore, the
hospital could not submit composite average hourly wage data for the
``B'' location with the county group reclassification application.
Because the county group reclassification application must list all
active hospitals located in the county of the hospital group, including
any ``B'' locations, if a ``B'' number is not listed in Table 2
associated with the IPPS final rule used to evaluate reclassification
criteria, we are requesting that the county hospital group submit the
application listing the remote location with a ``B'' in the third digit
of the hospital's CCN to help facilitate the MGCRB's review. If the
county group reclassification is approved by the MGCRB, CMS will
include the hospital's ``B'' location in Table 2 of the subsequent IPPS
final rule, and will instruct the MAC to adjust the payment for that
remote location to the appropriate reclassified area. This ``B''
location designation would be included in subsequent rules, without
composite wage data, until a time when the wage data of the new
location are included in the cost report used to construct the wage
index in effect for IPPS purposes, and a proper allocation can be
determined.
3. Redesignations Under Section 1886(d)(8)(B) of the Act
In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51599 through
51600), we adopted the policy that, beginning with FY 2012, an eligible
hospital that waives its Lugar status in order to receive the out-
migration adjustment has effectively waived its deemed urban status
and, thus, is rural for all purposes under the IPPS effective for the
fiscal year in which the hospital receives the out-migration
adjustment. In addition, in that rule, we adopted a minor procedural
change that would allow a Lugar hospital that qualifies for and accepts
the out-migration adjustment (through written notification to CMS
within 45 days from the publication of the proposed rule) to waive its
urban status for the full 3[dash]year period for which its out-
migration adjustment is effective. By doing so, such a Lugar hospital
would no longer be required during the second and third years of
eligibility for the out[dash]migration adjustment to advise us annually
that it prefers to continue being treated as rural and receive the out-
migration adjustment. In the FY 2017 IPPS/LTCH PPS final rule (81 FR
56930), we again clarified that such a request to waive Lugar status,
received within 45 days of the publication of the proposed rule, is
valid for the full 3-year period for which the hospital's out-migration
adjustment is effective. We further clarified that if a hospital wishes
to reinstate its urban status for any fiscal year within this 3-year
period, it must send a request to CMS within 45 days of publication of
the proposed rule for that particular fiscal year. We indicated that
such reinstatement requests may be sent electronically to
[email protected]. In the FY 2018 IPPS/LTCH PPS final rule (82 FR
38147 through 38148), we finalized a policy revision to require a Lugar
hospital that qualifies for and accepts the out-migration adjustment,
or that no longer wishes to accept the out-migration adjustment and
instead elects to return to its deemed urban status, to notify CMS
within 45 days from the date of public display of the proposed rule at
the Office of the Federal Register. These revised notification
timeframes were effective beginning October 1, 2017. In addition, in
the FY 2018 IPPS/LTCH PPS final rule (82 FR 38148), we clarified that
both requests to waive and to reinstate ``Lugar'' status may be sent to
[email protected]. To ensure proper accounting, we request
hospitals to include their CCN, and either ``waive Lugar'' or
``reinstate Lugar'', in the subject line of these requests.

J. Proposed Out-Migration Adjustment Based on Commuting Patterns of
Hospital Employees

In accordance with section 1886(d)(13) of the Act, as added by
section 505 of Public Law 108-173, beginning with FY 2005, we
established a process to make adjustments to the hospital wage index
based on commuting patterns of hospital employees (the
``out[dash]migration'' adjustment). The process, outlined in the FY
2005 IPPS final rule (69 FR 49061), provides for an increase in the
wage index for hospitals located in certain counties that have a
relatively high percentage of hospital employees who reside in the
county but work in a different county (or counties) with a higher wage
index.
Section 1886(d)(13)(B) of the Act requires the Secretary to use
data the Secretary determines to be appropriate to establish the
qualifying counties. When the provision of section

[[Page 20367]]

1886(d)(13) of the Act was implemented for the FY 2005 wage index, we
analyzed commuting data compiled by the U.S. Census Bureau that were
derived from a special tabulation of the 2000 Census journey-to-work
data for all industries (CMS extracted data applicable to hospitals).
These data were compiled from responses to the ``long-form'' survey,
which the Census Bureau used at that time and which contained questions
on where residents in each county worked (69 FR 49062). However, the
2010 Census was ``short form'' only; information on where residents in
each county worked was not collected as part of the 2010 Census. The
Census Bureau worked with CMS to provide an alternative dataset based
on the latest available data on where residents in each county worked
in 2010, for use in developing a new out-migration adjustment based on
new commuting patterns developed from the 2010 Census data beginning
with FY 2016.
To determine the out-migration adjustments and applicable counties
for FY 2016, we analyzed commuting data compiled by the Census Bureau
that were derived from a custom tabulation of the American Community
Survey (ACS), an official Census Bureau survey, utilizing 2008 through
2012 (5-year) Microdata. The data were compiled from responses to the
ACS questions regarding the county where workers reside and the county
to which workers commute. As we discussed in the FYs 2016, 2017, and
2018 IPPS/LTCH PPS final rules (80 FR 49501, 81 FR 56930, and 82 FR
38150, respectively), the same policies, procedures, and computation
that were used for the FY 2012 out[dash]migration adjustment were
applicable for FY 2016, FY 2017 and FY 2018, and we are proposing to
use them again for FY 2019. We have applied the same policies,
procedures, and computations since FY 2012, and we believe they
continue to be appropriate for FY 2019. We refer readers to the FY 2016
IPPS/LTCH PPS final rule (80 FR 49500 through 49502) for a full
explanation of the revised data source.
For FY 2019, the out-migration adjustment will continue to be based
on the data derived from the custom tabulation of the ACS utilizing
2008 through 2012 (5-year) Microdata. For future fiscal years, we may
consider determining out-migration adjustments based on data from the
next Census or other available data, as appropriate. For FY 2019, we
are not proposing any changes to the methodology or data source that we
used for FY 2016 (81 FR 25071). (We refer readers to a full discussion
of the out[dash]migration adjustment, including rules on deeming
hospitals reclassified under section 1886(d)(8) or section 1886(d)(10)
of the Act to have waived the out-migration adjustment, in the FY 2012
IPPS/LTCH PPS final rule (76 FR 51601 through 51602).) Table 2
associated with this proposed rule (which is available via the Internet
on the CMS website) includes the proposed out-migration adjustments for
the FY 2019 wage index.
In addition, we are adding a new Table 4, ``List of Counties
Eligible for the Out-Migration Adjustment under Section 1886(d)(13) of
the Act--FY 2019,''associated with this proposed rule. This table
consists of the following: a list of counties that would be eligible
for the out-migration adjustment for FY 2019 identified by FIPS county
code, the proposed FY 2019 out-migration adjustment, and the number of
years the adjustment would be in effect. We believe this new table
would make this information more transparent and provide the public
with easier access to this information. We intend to make the
information available annually via Table 4 in the IPPS/LTCH PPS
proposed and final rules, and are including it among the tables
associated with this FY 2019 IPPS/LTCH PPS proposed rule that are
available via the Internet on the CMS website.

K. Reclassification From Urban to Rural Under Section 1886(d)(8)(E) of
the Act, Implemented at 42 CFR 412.103 and Proposed Change to Lock-In
Date

Under section 1886(d)(8)(E) of the Act, a qualifying prospective
payment hospital located in an urban area may apply for rural status
for payment purposes separate from reclassification through the MGCRB.
Specifically, section 1886(d)(8)(E) of the Act provides that, not later
than 60 days after the receipt of an application (in a form and manner
determined by the Secretary) from a subsection (d) hospital that
satisfies certain criteria, the Secretary shall treat the hospital as
being located in the rural area (as defined in paragraph (2)(D)) of the
State in which the hospital is located. We refer readers to the
regulations at 42 CFR 412.103 for the general criteria and application
requirements for a subsection (d) hospital to reclassify from urban to
rural status in accordance with section 1886(d)(8)(E) of the Act. The
FY 2012 IPPS/LTCH PPS final rule (76 FR 51595 through 51596) includes
our policies regarding the effect of wage data from reclassified or
redesignated hospitals.
Hospitals must meet the criteria to be reclassified from urban to
rural status under Sec. 412.103, as well as fulfill the requirements
for the application process. There may be one or more reasons that a
hospital applies for the urban to rural reclassification, and the
timeframe that a hospital submits an application is often dependent on
those reason(s). Because the wage index is part of the methodology for
determining the prospective payments to hospitals for each fiscal year,
we stated in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56931) that we
believed there should be a definitive timeframe within which a hospital
should apply for rural status in order for the reclassification to be
reflected in the next Federal fiscal year's wage data used for setting
payment rates.
Therefore, after notice of proposed rulemaking and consideration of
public comments, in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56931
through 56932), we revised Sec. 412.103(b) by adding paragraph (6) to
specify that, in order for a hospital to be treated as rural in the
wage index and budget neutrality calculations under Sec.
412.64(e)(1)(ii), (e)(2), (e)(4), and (h) for payment rates for the
next Federal fiscal year, the hospital's filing date (the lock-in date)
must be no later than 70 days prior to the second Monday in June of the
current Federal fiscal year and the application must be approved by the
CMS Regional Office in accordance with the requirements of Sec.
412.103. We refer readers to the FY 2017 IPPS/LTCH PPS final rule for a
full discussion of this policy.
In this FY 2019 IPPS/LTCH PPS proposed rule, we are proposing to
change the lock-in date to provide for additional time in the
ratesetting process and to match the lock-in date with another existing
deadline. As we discussed in the FY 2017 IPPS/LTCH PPS proposed and
final rules (81 FR 25071 and 56931, respectively), the IPPS ratesetting
process that CMS undergoes each proposed and final rulemaking is
complex and labor-intensive, and subject to a compressed timeframe in
order to issue the final rule each year within the timeframes for
publication. Accordingly, CMS must ensure that it receives, in a timely
fashion, the necessary data, including, but not limited to, the list of
hospitals that are reclassified from urban to rural status under Sec.
412.103, in order to calculate the wage indexes and other IPPS rates.
In order to allot more time to the ratesetting process, we are
proposing to revise the lock-in date such that a hospital's application
for rural reclassification under Sec. 412.103 must be approved by the
CMS Regional Office

[[Page 20368]]

no later than 60 days after the public display date of the IPPS notice
of proposed rulemaking at the Office of the Federal Register in order
for a hospital to be treated as rural in the wage index and budget
neutrality calculations under Sec. 412.64(e)(1)(ii), (e)(2), (e)(4),
and (h) for payment rates for the next Federal fiscal year. Depending
on the public display date of the proposed rule (which may be earlier
in future years), this proposed revision to the lock-in date would
potentially allow for additional time in the ratesetting process for
CMS to incorporate rural reclassification data, which we believe would
support efforts to eliminate errors and assist in ensuring a more
accurate wage index.
Under this proposed revision, there would no longer be a
requirement that the hospital file its rural reclassification
application by a specified date (which under the current policy is 70
days prior to the second Monday in June). While we stated in the FY
2017 IPPS/LTCH PPS final rule (81 FR 56930 through 56932) that a
hospital would need to file its reclassification application with the
CMS Regional Office not later than 70 days prior to the second Monday
in June, that timeframe was a precautionary measure to ensure that CMS
would receive the approval in time to include the reclassified
hospitals in the wage index and budget neutrality calculations for the
upcoming Federal fiscal year (60 days for the CMS Regional Office to
approve an application, in accordance with Sec. 412.103(c), and an
additional 10 days to process the approval and notify CMS Central
Office). While we still believe that it would be prudent for hospitals
to apply approximately 70 days prior to the proposed lock-in date, we
believe that requiring hospitals to apply by a set date is unnecessary
because the Regional Offices may approve a hospital's request to
reclassify under Sec. 412.103 in less than 60 days, and CMS may be
notified in a timeframe shorter than 10 days. Therefore, under our
proposal, any hospital with an approved rural reclassification by the
lock-in date proposed above (that is, 60 days after the public display
date of the IPPS notice of proposed rulemaking at the Office of the
Federal Register) would be included in the wage index and budget
neutrality calculations for setting payment rates for the next Federal
fiscal year, regardless of the date of filing.
In addition, we note that CMS generally provides 60 days after the
public display date of the IPPS notice of proposed rulemaking at the
Office of the Federal Register for submitting public comments regarding
the proposed rule for consideration in the final rule. Therefore, we
believe that, in addition to providing for more time in the ratesetting
process, which helps to ensure a more accurate wage index, this
proposed revision would also provide clarity and simplify regulations
by synchronizing the lock-in date for Sec. 412.103 redesignations with
the usual public comment deadline for the IPPS proposed rule.
Accordingly, we are proposing to revise Sec. 412.103(b)(6) to
specify that in order for a hospital to be treated as rural in the wage
index and budget neutrality calculations under Sec. 412.64(e)(1)(ii),
(e)(2), (e)(4), and (h) for payment rates for the next Federal fiscal
year, the hospital's application must be approved by the CMS Regional
Office in accordance with the requirements of Sec. 412.103 no later
than 60 days after the public display date at the Office of the Federal
Register of the IPPS proposed rule for the next Federal fiscal year. We
are inviting public comments on this proposal.
We are reiterating that the lock-in date does not affect the timing
of payment changes occurring at the hospital-specific level as a result
of reclassification from urban to rural under Sec. 412.103. As we
discussed in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56931), this
lock-in date also does not change the current regulation that allows
hospitals that qualify under Sec. 412.103(a) to request, at any time
during a cost reporting period, to reclassify from urban to rural. A
hospital's rural status and claims payment reflecting its rural status
continue to be effective on the filing date of its reclassification
application, which is the date the CMS Regional Office receives the
application, in accordance with Sec. 412.103(d). The hospital's IPPS
claims will be paid reflecting its rural status beginning on the filing
date (the effective date) of the reclassification, regardless of when
the hospital applies.

L. Process for Requests for Wage Index Data Corrections

1. Process for Hospitals To Request Wage Index Data Corrections
The preliminary, unaudited Worksheet S-3 wage data files for the
proposed FY 2019 wage index were made available on May 19, 2017, and
the preliminary CY 2016 occupational mix data files were made available
on July 12, 2017, through the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files-Items-FY-2019-Wage-Index-Home-Page.html.
On February 2, 2018, we posted a public use file (PUF) at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files-Items-FY-2019-Wage-Index-Home-Page.html containing FY 2019 wage index data available as of February
1, 2018. This PUF contains a tab with the Worksheet S-3 wage data
(which includes Worksheet S-3, Parts II and III wage data from cost
reporting periods beginning on or after October l, 2014 through
September 30, 2015; that is, FY 2015 wage data), a tab with the
occupational mix data (which includes data from the CY 2016
occupational mix survey, Form CMS-10079), a tab containing the
Worksheet S-3 wage data of hospitals deleted from the February 2, 2018
wage data PUF, and a tab containing the CY 2016 occupational mix data
of the hospitals deleted from the February 2, 2018 occupational mix
PUF. In a memorandum dated December 14, 2017, we instructed all MACs to
inform the IPPS hospitals that they service of the availability of the
February 2, 2018 wage index data PUFs, and the process and timeframe
for requesting revisions in accordance with the FY 2019 Wage Index
Timetable.
In the interest of meeting the data needs of the public, beginning
with the proposed FY 2009 wage index, we post an additional PUF on the
CMS website that reflects the actual data that are used in computing
the proposed wage index. The release of this file does not alter the
current wage index process or schedule. We notify the hospital
community of the availability of these data as we do with the current
public use wage data files through our Hospital Open Door Forum. We
encourage hospitals to sign up for automatic notifications of
information about hospital issues and about the dates of the Hospital
Open Door Forums at the CMS Web site at: https://www.cms.gov/Outreach-and-Education/Outreach/OpenDoorForums/.
In a memorandum dated April 28, 2017, we instructed all MACs to
inform the IPPS hospitals that they service of the availability of the
preliminary wage index data files posted on May 19, 2017, and the
process and timeframe for requesting revisions. The preliminary CY 2016
occupational mix survey data was posted on CMS' website on July 12,
2017.
If a hospital wished to request a change to its data as shown in
the May 19, 2017 preliminary wage data files and the July 12, 2017
preliminary occupational mix data files, the hospital had to submit
corrections along with

[[Page 20369]]

complete, detailed supporting documentation to its MAC by September 1,
2017. Hospitals were notified of this deadline and of all other
deadlines and requirements, including the requirement to review and
verify their data as posted in the preliminary wage index data files on
the internet, through the letters sent to them by their MACs. November
15, 2017 was the deadline for MACs to complete all desk reviews for
hospital wage and occupational mix data and transmit revised Worksheet
S-3 wage data and occupational mix data to CMS.
November 4, 2017 was the date by when MACs notified State hospital
associations regarding hospitals that failed to respond to issues
raised during the desk reviews. Additional revisions made by the MACs
were transmitted to CMS throughout January 2018. CMS published the wage
index PUFs that included hospitals' revised wage index data on February
2, 2018. Hospitals had until February 16, 2018, to submit requests to
the MACs to correct errors in the February 2, 2018 PUF due to CMS or
MAC mishandling of the wage index data, or to revise desk review
adjustments to their wage index data as included in the February 2,
2018 PUF. Hospitals also were required to submit sufficient
documentation to support their requests.
After reviewing requested changes submitted by hospitals, MACs were
required to transmit to CMS any additional revisions resulting from the
hospitals' reconsideration requests by March 23, 2018. Under our
current policy as adopted in the FY 2018 IPPS/LTCH PPS final rule (82
FR 38153), the deadline for a hospital to request CMS intervention in
cases where a hospital disagreed with a MAC's handling of wage data on
any basis (including a policy, factual, or other dispute) was April 5,
2018. Data that were incorrect in the preliminary or February 2, 2018
wage index data PUFs, but for which no correction request was received
by the February 16, 2018 deadline, are not considered for correction at
this stage. In addition, April 5, 2018 is the deadline for hospitals to
dispute data corrections made by CMS of which the hospital is notified
after the February 2, 2018 PUF and at least 14 calendar days prior to
April 5, 2018 (that is, March 22, 2018), that do not arise from a
hospital's request for revisions. We note that, as we did for the FY
2018 wage index, for the proposed FY 2019 wage index, in accordance
with the FY 2019 wage index timeline posted on the CMS website at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files-Items-FY-2019-Wage-Index-Home-Page.html, the April appeals have to be sent via mail and email. We
refer readers to the wage index timeline for complete details.
Hospitals are given the opportunity to examine Table 2 associated
with this proposed rule, which is listed in section VI. of the Addendum
to this proposed rule and available via the internet on the CMS website
at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS-FY2019-IPPS-Proposed-Rule-Home-Page.html. Table 2
contains each hospital's proposed adjusted average hourly wage used to
construct the wage index values for the past 3 years, including the FY
2015 data used to construct the proposed FY 2019 wage index. We note
that the proposed hospital average hourly wages shown in Table 2 only
reflect changes made to a hospital's data that were transmitted to CMS
by early February 2018.
We plan to post the final wage index data PUFs in late April 2018
via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files-Items-FY-2019-Wage-Index-Home-Page.html. The April 2018 PUFs are made
available solely for the limited purpose of identifying any potential
errors made by CMS or the MAC in the entry of the final wage index data
that resulted from the correction process previously described (the
process for disputing revisions submitted to CMS by the MACs by March
23, 2018, and the process for disputing data corrections made by CMS
that did not arise from a hospital's request for wage data revisions as
discussed earlier).
After the release of the April 2018 wage index data PUFs, changes
to the wage and occupational mix data can only be made in those very
limited situations involving an error by the MAC or CMS that the
hospital could not have known about before its review of the final wage
index data files. Specifically, neither the MAC nor CMS will approve
the following types of requests:
Requests for wage index data corrections that were
submitted too late to be included in the data transmitted to CMS by the
MACs on or before March 23, 2017.
Requests for correction of errors that were not, but could
have been, identified during the hospital's review of the February 2,
2018 wage index PUFs.
Requests to revisit factual determinations or policy
interpretations made by the MAC or CMS during the wage index data
correction process.
If, after reviewing the April 2018 final wage index data PUFs, a
hospital believes that its wage or occupational mix data were incorrect
due to a MAC or CMS error in the entry or tabulation of the final data,
the hospital is given the opportunity to notify both its MAC and CMS
regarding why the hospital believes an error exists and provide all
supporting information, including relevant dates (for example, when it
first became aware of the error). The hospital is required to send its
request to CMS and to the MAC no later than May 30, 2018. May 30, 2018
is also the deadline for hospitals to dispute data corrections made by
CMS of which the hospital is notified on or after 13 calendar days
prior to April 5, 2018 (that is, March 23, 2018), and at least 14
calendar days prior to May 30, 2018 (that is, May 16, 2018), that do
not arise from a hospital's request for revisions. (Data corrections
made by CMS of which a hospital is notified on or after 13 calendar
days prior to May 30, 2018 (that is, May 17, 2018) may be appealed to
the Provider Reimbursement Review Board (PRRB)). Similar to the April
appeals, beginning with the FY 2015 wage index, in accordance with the
FY 2019 wage index timeline posted on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files-Items-FY-2019-Wage-Index-Home-Page.html, the May appeals must be sent via mail and email to CMS and
the MACs. We refer readers to the wage index timeline for complete
details.
Verified corrections to the wage index data received timely (that
is, by May 30, 2018) by CMS and the MACs will be incorporated into the
final FY 2019 wage index, which will be effective October 1, 2018.
We created the processes previously described to resolve all
substantive wage index data correction disputes before we finalize the
wage and occupational mix data for the FY 2019 payment rates.
Accordingly, hospitals that do not meet the procedural deadlines set
forth earlier will not be afforded a later opportunity to submit wage
index data corrections or to dispute the MAC's decision with respect to
requested changes. Specifically, our policy is that hospitals that do
not meet the procedural deadlines set forth above (requiring requests
to MACs by the specified date in February and, where such requests are
unsuccessful, requests for intervention by CMS by the specified date in
April) will not be permitted to challenge later, before the PRRB, the
failure of CMS to make a requested data

[[Page 20370]]

revision. We refer readers also to the FY 2000 IPPS final rule (64 FR
41513) for a discussion of the parameters for appeals to the PRRB for
wage index data corrections. As finalized in the FY 2018 IPPS/LTCH PPS
final rule (82 FR 38154 through 38156), this policy also applies to a
hospital disputing corrections made by CMS that do not arise from a
hospital's request for a wage index data revision. That is, a hospital
disputing an adjustment made by CMS that did not arise from a
hospital's request for a wage index data revision would be required to
request a correction by the first applicable deadline. Hospitals that
do not meet the procedural deadlines set forth earlier will not be
afforded a later opportunity to submit wage index data corrections or
to dispute CMS' decision with respect to requested changes.
Again, we believe the wage index data correction process described
earlier provides hospitals with sufficient opportunity to bring errors
in their wage and occupational mix data to the MAC's attention.
Moreover, because hospitals have access to the final wage index data
PUFs by late April 2018, they have the opportunity to detect any data
entry or tabulation errors made by the MAC or CMS before the
development and publication of the final FY 2019 wage index by August
2018, and the implementation of the FY 2019 wage index on October 1,
2018. Given these processes, the wage index implemented on October 1
should be accurate. Nevertheless, in the event that errors are
identified by hospitals and brought to our attention after May 30,
2018, we retain the right to make midyear changes to the wage index
under very limited circumstances.
Specifically, in accordance with 42 CFR 412.64(k)(1) of our
regulations, we make midyear corrections to the wage index for an area
only if a hospital can show that: (1) The MAC or CMS made an error in
tabulating its data; and (2) the requesting hospital could not have
known about the error or did not have an opportunity to correct the
error, before the beginning of the fiscal year. For purposes of this
provision, ``before the beginning of the fiscal year'' means by the May
deadline for making corrections to the wage data for the following
fiscal year's wage index (for example, May 30, 2018 for the FY 2019
wage index). This provision is not available to a hospital seeking to
revise another hospital's data that may be affecting the requesting
hospital's wage index for the labor market area. As indicated earlier,
because CMS makes the wage index data available to hospitals on the CMS
website prior to publishing both the proposed and final IPPS rules, and
the MACs notify hospitals directly of any wage index data changes after
completing their desk reviews, we do not expect that midyear
corrections will be necessary. However, under our current policy, if
the correction of a data error changes the wage index value for an
area, the revised wage index value will be effective prospectively from
the date the correction is made.
In the FY 2006 IPPS final rule (70 FR 47385 through 47387 and
47485), we revised 42 CFR 412.64(k)(2) to specify that, effective on
October 1, 2005, that is, beginning with the FY 2006 wage index, a
change to the wage index can be made retroactive to the beginning of
the Federal fiscal year only when CMS determines all of the following:
(1) The MAC or CMS made an error in tabulating data used for the wage
index calculation; (2) the hospital knew about the error and requested
that the MAC and CMS correct the error using the established process
and within the established schedule for requesting corrections to the
wage index data, before the beginning of the fiscal year for the
applicable IPPS update (that is, by the May 30, 2018 deadline for the
FY 2019 wage index); and (3) CMS agreed before October 1 that the MAC
or CMS made an error in tabulating the hospital's wage index data and
the wage index should be corrected.
In those circumstances where a hospital requested a correction to
its wage index data before CMS calculated the final wage index (that
is, by the May 30, 2018 deadline for the FY 2019 wage index), and CMS
acknowledges that the error in the hospital's wage index data was
caused by CMS' or the MAC's mishandling of the data, we believe that
the hospital should not be penalized by our delay in publishing or
implementing the correction. As with our current policy, we indicated
that the provision is not available to a hospital seeking to revise
another hospital's data. In addition, the provision cannot be used to
correct prior years' wage index data; and it can only be used for the
current Federal fiscal year. In situations where our policies would
allow midyear corrections other than those specified in 42 CFR
412.64(k)(2)(ii), we continue to believe that it is appropriate to make
prospective-only corrections to the wage index.
We note that, as with prospective changes to the wage index, the
final retroactive correction will be made irrespective of whether the
change increases or decreases a hospital's payment rate. In addition,
we note that the policy of retroactive adjustment will still apply in
those instances where a final judicial decision reverses a CMS denial
of a hospital's wage index data revision request.
2. Process for Data Corrections by CMS After the February 2 Public Use
File (PUF)
The process set forth with the wage index timeline discussed in
section III.M.1. of the preamble of this proposed rule allows hospitals
to request corrections to their wage index data within prescribed
timeframes. In addition to hospitals' opportunity to request
corrections of wage index data errors or MACs' mishandling of data, CMS
has the authority under section 1886(d)(3)(E) of the Act to make
corrections to hospital wage index and occupational mix data in order
to ensure the accuracy of the wage index. As we explained in the FY
2016 IPPS/LTCH PPS final rule (80 FR 49490 through 49491) and the FY
2017 IPPS/LTCH PPS final rule (81 FR 56914), section 1886(d)(3)(E) of
the Act requires the Secretary to adjust the proportion of hospitals'
costs attributable to wages and wage-related costs for area differences
reflecting the relative hospital wage level in the geographic areas of
the hospital compared to the national average hospital wage level. We
believe that, under section 1886(d)(3)(E) of the Act, we have
discretion to make corrections to hospitals' data to help ensure that
the costs attributable to wages and wage-related costs in fact
accurately reflect the relative hospital wage level in the hospitals'
geographic areas.
We have an established multistep, 15-month process for the review
and correction of the hospital wage data that is used to create the
IPPS wage index for the upcoming fiscal year. Since the origin of the
IPPS, the wage index has been subject to its own annual review process,
first by the MACs, and then by CMS. As a standard practice, after each
annual desk review, CMS reviews the results of the MACs' desk reviews
and focuses on items flagged during the desk review, requiring that, if
necessary, hospitals provide additional documentation, adjustments, or
corrections to the data. This ongoing communication with hospitals
about their wage data may result in the discovery by CMS of additional
items that were reported incorrectly or other data errors, even after
the posting of the February 2 PUF, and throughout the remainder of the
wage index development process. In addition, the fact that CMS analyzes
the data from a regional and even national level, unlike the review
performed by the MACs that review a limited subset of hospitals, can

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facilitate additional editing of the data that may not be readily
apparent to the MACs. In these occasional instances, an error may be of
sufficient magnitude that the wage index of an entire CBSA is affected.
Accordingly, CMS uses its authority to ensure that the wage index
accurately reflects the relative hospital wage level in the geographic
area of the hospital compared to the national average hospital wage
level, by continuing to make corrections to hospital wage data upon
discovering incorrect wage data, distinct from instances in which
hospitals request data revisions.
We note that CMS corrects errors to hospital wage data as
appropriate, regardless of whether that correction will raise or lower
a hospital's average hourly wage. For example, as discussed in section
III.D.2. of the preamble of this FY 2019 IPPS/LTCH PPS proposed rule,
in the calculation of the proposed FY 2019 wage index, upon discovering
that hospitals reported other wage-related costs on Line 18 of
Worksheet S[dash]3, despite those other wage-related costs failing to
meet the requirement that other wage[dash]related costs must exceed 1
percent of total adjusted salaries net of excluded area salaries, CMS
made internal edits to remove those other wage-related costs from Line
18. Conversely, if CMS discovers after conclusion of the desk review,
for example, that a MAC inadvertently failed to incorporate positive
adjustments resulting from a prior year's wage index appeal of a
hospital's wage-related costs such as pension, CMS would correct that
data error and the hospital's average hourly wage would likely increase
as a result.
While we maintain CMS' authority to conduct additional review and
make resulting corrections at any time during the wage index
development process, in accordance with the policy finalized in the FY
2018 IPPS/LTCH PPS final rule (82 FR 38154 through 38156), starting
with the FY 2019 wage index, we implemented a process for hospitals to
request further review of a correction made by CMS that did not arise
from a hospital's request for a wage index data correction. Instances
where CMS makes a correction to a hospital's data after the February 2
PUF based on a different understanding than the hospital about certain
reported costs, for example, could potentially be resolved using this
process before the final wage index is calculated. We believe this
process and the timeline for requesting such corrections (as described
earlier and in the FY 2018 IPPS/LTCH PPS final rule) bring additional
transparency to instances where CMS makes data corrections after the
February 2 PUF, and provide opportunities for hospitals to request
further review of CMS changes in time for the most accurate data to be
reflected in the final wage index calculations. These additional
appeals opportunities are described earlier and in the FY 2019 Wage
Index Development Time Table, as well as in the FY 2018 IPPS/LTCH PPS
final rule (82 FR 38154 through 8156).

M. Proposed Labor-Related Share for the Proposed FY 2019 Wage Index

Section 1886(d)(3)(E) of the Act directs the Secretary to adjust
the proportion of the national prospective payment system base payment
rates that are attributable to wages and wage-related costs by a factor
that reflects the relative differences in labor costs among geographic
areas. It also directs the Secretary to estimate from time to time the
proportion of hospital costs that are labor-related and to adjust the
proportion (as estimated by the Secretary from time to time) of
hospitals' costs which are attributable to wages and wage-related costs
of the DRG prospective payment rates. We refer to the portion of
hospital costs attributable to wages and wage-related costs as the
labor-related share. The labor-related share of the prospective payment
rate is adjusted by an index of relative labor costs, which is referred
to as the wage index.
Section 403 of Public Law 108-173 amended section 1886(d)(3)(E) of
the Act to provide that the Secretary must employ 62 percent as the
labor-related share unless this would result in lower payments to a
hospital than would otherwise be made. However, this provision of
Public Law 108-173 did not change the legal requirement that the
Secretary estimate from time to time the proportion of hospitals' costs
that are attributable to wages and wage-related costs. Thus, hospitals
receive payment based on either a 62[dash]percent labor-related share,
or the labor[dash]related share estimated from time to time by the
Secretary, depending on which labor-related share resulted in a higher
payment.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38158 through
38175), we rebased and revised the hospital market basket. We
established a 2014-based IPPS hospital market basket to replace the FY
2010-based IPPS hospital market basket, effective October 1, 2017.
Using the 2014[dash]based IPPS market basket, we finalized a
labor[dash]related share of 68.3 percent for discharges occurring on or
after October 1, 2017. In addition, in FY 2018, we implemented this
revised and rebased labor[dash]related share in a budget neutral manner
(82 FR 38522). However, consistent with section 1886(d)(3)(E) of the
Act, we did not take into account the additional payments that would be
made as a result of hospitals with a wage index less than or equal to
1.0000 being paid using a labor-related share lower than the labor-
related share of hospitals with a wage index greater than 1.0000.
The labor-related share is used to determine the proportion of the
national IPPS base payment rate to which the area wage index is
applied. We include a cost category in the labor-related share if the
costs are labor intensive and vary with the local labor market. In this
proposed rule, for FY 2019, we are not proposing to make any further
changes to the national average proportion of operating costs that are
attributable to wages and salaries, employee benefits, professional
fees: Labor-related, administrative and facilities support services,
installation, maintenance, and repair services, and all other labor-
related services. Therefore, for FY 2019, we are proposing to continue
to use a labor[dash]related share of 68.3 percent for discharges
occurring on or after October 1, 2018.
As discussed in section IV.B. of the preamble of this proposed
rule, prior to January 1, 2016, Puerto Rico hospitals were paid based
on 75 percent of the national standardized amount and 25 percent of the
Puerto Rico-specific standardized amount. As a result, we applied the
Puerto Rico-specific labor-related share percentage and
nonlabor[dash]related share percentage to the Puerto Rico-specific
standardized amount. Section 601 of the Consolidated Appropriations
Act, 2016 (Pub. L. 114-113) amended section 1886(d)(9)(E) of the Act to
specify that the payment calculation with respect to operating costs of
inpatient hospital services of a subsection (d) Puerto Rico hospital
for inpatient hospital discharges on or after January 1, 2016, shall
use 100 percent of the national standardized amount. Because Puerto
Rico hospitals are no longer paid with a Puerto Rico-specific
standardized amount as of January 1, 2016, under section 1886(d)(9)(E)
of the Act as amended by section 601 of the Consolidated Appropriations
Act, 2016, there is no longer a need for us to calculate a Puerto Rico-
specific labor[dash]related share percentage and nonlabor-related share
percentage for application to the Puerto Rico-specific standardized
amount. Hospitals in Puerto Rico are now paid 100 percent of the
national standardized amount and, therefore, are subject to the
national labor-related share and nonlabor-related share percentages
that are applied to the

[[Page 20372]]

national standardized amount. Accordingly, for FY 2019, we are not
proposing a Puerto Rico[dash]specific labor-related share percentage or
a nonlabor-related share percentage.
Tables 1A and 1B, which are published in section VI. of the
Addendum to this FY 2019 IPPS/LTCH PPS proposed rule and available via
the Internet on the CMS website, reflect the proposed national labor-
related share, which is also applicable to Puerto Rico hospitals. For
FY 2019, for all IPPS hospitals (including Puerto Rico hospitals) whose
wage indexes are less than or equal to 1.0000, we are proposing to
apply the wage index to a labor[dash]related share of 62 percent of the
national standardized amount. For all IPPS hospitals (including Puerto
Rico hospitals) whose wage indexes are greater than 1.000, for FY 2019,
we are proposing to apply the wage index to a proposed labor-related
share of 68.3 percent of the national standardized amount.
We are inviting public comments on our proposals discussed above.

N. Request for Public Comments on Wage Index Disparities

CMS is committed to transforming the health care delivery system,
including the Medicare program, by putting an additional focus on
patient-centered care and working with providers, physicians, and
patients to improve outcomes. We are seeking to reduce burdens for
hospitals, physicians, and patients, improve the quality of care,
decrease costs, and ensure that patients and their providers and
physicians are making the best health care choices possible.
One key to that transformation is ensuring that the Medicare
payment rates are as accurate and appropriate as possible, consistent
with the law. As described later in this section, there have been
numerous studies, analyses, and reports on disparities between the wage
index values for individual hospitals and the wage index values among
different geographic areas and ways to improve the Medicare wage index.
Given that some time has elapsed since these studies were performed, in
this proposed rule, we are taking this opportunity to invite the public
to submit further comments, suggestions, and recommendations for
regulatory and policy changes to the Medicare wage index that address
these issues. If practicable, we are requesting the public to submit
appropriate supporting data and specific recommendations in their
comments. For any suggestions or recommendations presented that involve
novel legal questions, we welcome analysis regarding CMS' authority for
our consideration.
1. General Background
As we discussed earlier, section 1886(d)(3)(E) of the Act requires
that, as part of the methodology for determining prospective payments
to hospitals, the Secretary must adjust the standardized amounts for
area differences in hospital wage levels by a factor (established by
the Secretary) reflecting the relative hospital wage level in the
geographic area of the hospital compared to the national average
hospital wage level. Section 1886(d)(3)(E) of the Act requires that we
update the wage index annually. Furthermore, this section of the Act
provides that the Secretary base the update on a survey of wages and
wage[dash]related costs of short-term, acute care hospitals. Section
1886(d)(3)(E) of the Act also requires us to make any updates or
adjustments to the wage index for a fiscal year in a manner that
ensures that aggregate payments to hospitals in a fiscal year are not
greater or less than those that would have been made in the year
without the wage index adjustment.
We also take into account the geographic reclassification of
hospitals in accordance with sections 1886(d)(8)(B) and 1886(d)(10) of
the Act when calculating IPPS payment amounts. Under section
1886(d)(8)(D) of the Act, the Secretary is required to adjust the
standardized amounts so as to ensure that aggregate payments under the
IPPS after implementation of the provisions of sections 1886(d)(8)(B)
and (C) and 1886(d)(10) of the Act are equal to the aggregate
prospective payments that would have been made absent these provisions.
Section 1886(d)(3)(E) of the Act also provides for the collection
of data every 3 years on the occupational mix of employees for short-
term, acute care hospitals participating in the Medicare program, in
order to construct an occupational mix adjustment to the wage index.
For this purpose, the statute requires the exclusion of data with
respect to the wages and wage-related costs incurred in furnishing
skilled nursing facility services.
The current wage index methodology relies on labor markets that are
based on statistical area definitions (CBSAs) established by OMB.
Hospitals are grouped by geographic location into either an urban labor
market (that is, an MSA or metropolitan division) or a statewide rural
labor market (any area of a State that is not defined as urban). The
current system also relies on hospital wage data submitted by hospitals
to CMS, rather than on data that reflect broader labor market wages
such as data from the Bureau of Labor Statistics or data from the
American Community Survey. In public comments received on prior
rulemaking for FYs 2009, 2010, and 2011, many parties have argued that
the current labor market definitions and wage data sources used by CMS,
in many instances, are not reflective of the true cost of labor for any
given hospital or are inappropriate to use for this purpose, or both.
(These public comments (on proposed rules under file numbers CMS-1390-
P, CMS-1406-P, and CMS-1498-P) are available via the Internet on the
website at: www.regulations.gov.) For responses to public comments
received on the FY 2009 IPPS/LTCH PPS proposed rule, we refer readers
to the FY 2009 IPPS/LTCH PPS final rule (73 FR 48563 through 48567);
for responses to public comments on the FY 2010 IPPS/LTCH PPS proposed
rule, we refer readers to the FY 2010 IPPS/LTCH PPS final rule (74 FR
43824 through 43826); and for responses to public comments on the FY
2011 IPPS/LTCH PPS proposed rule, we refer readers to the FY 2011 IPPS/
LTCH PPS final rule (75 FR 50157 through 50160).) With respect to the
labor market definitions, multiple exceptions and adjustments (for
example, provider reclassifications under the MGCRB and the rural floor
adjustment) have been put into place in attempts to correct perceived
inequities. However, many of these exceptions and adjustments may
create or further exacerbate distortions in labor market values. The
issue of ``cliffs,'' or significant differences in wage index values
between proximate hospitals, can often be attributed to one hospital
benefiting from such an exception and adjustment when another hospital
cannot. With respect to the wage data sources, in public comments on
prior proposed rulemakings cited earlier, many stakeholders have argued
that the use of hospital reported data results in increasing wage index
disparities over time between high wage index areas and low wage index
areas. (These public comments are available via the Internet on the
website at: www.regulations.gov.)
2. Prior Reports, Studies, and Analyses
a. MedPAC Report to Congress
Section 106(b)(1) of the Medicare Improvements and Extension Act of
2006, Division B of the Tax Relief and Health Care Act of 2006 (MIEA-
TRHCA), Public Law 109-432, required MedPAC to submit to Congress, not
later than June 30, 2007, a report on the Medicare wage index
classification system applied under the Medicare

[[Page 20373]]

prospective payment systems, including the IPPS under section
1886(d)(3)(E) of the Act. Section 106(b) of MIEA-TRHCA required the
report to include any alternatives that MedPAC recommends to the method
to compute the wage index under section 1886(d)(3)(E) of the Act.
In addition, section 106(b)(2) of the MIEA-TRHCA instructed the
Secretary of Health and Human Services, taking into account MedPAC's
recommendations on the Medicare wage index classification system, to
include in the FY 2009 IPPS proposed rule one or more proposals to
revise the wage index adjustment applied under section 1886(d)(3)(E) of
the Act for purposes of the IPPS. The Secretary was also directed to
consider each of the following:
Problems associated with the definition of labor markets
for the wage index adjustment;
The modification or elimination of geographic
reclassifications and other adjustments;
The use of Bureau of Labor of Statistics (BLS) data or
other data or methodologies to calculate relative wages for each
geographic area;
Minimizing variations in wage index adjustments between
and within MSAs and statewide rural areas;
The feasibility of applying all components of CMS'
proposal to other settings;
Methods to minimize the volatility of wage index
adjustments while maintaining the principle of budget neutrality;
The effect that the implementation of the proposal would
have on health care providers and on each region of the country;
Methods for implementing the proposal(s), including
methods to phase in such implementations; and
Issues relating to occupational mix, such as staffing
practices, and any evidence on the effect on quality of care and
patient safety, including any recommendation for alternative
calculations to the occupational mix.
In its June 2007 Report to Congress, ``Report to the Congress:
Promoting Greater Efficiency in Medicare'' (Chapter 6 with Appendix),
MedPAC made three broad recommendations regarding the wage index:
(1) Congress should repeal the existing hospital wage index
statute, including reclassifications and exceptions, and give the
Secretary authority to establish a new wage index system.
(2) The Secretary should establish a hospital compensation index
that--
Uses wage data from all employers and industry-specific
occupational weights;
Is adjusted for geographic differences in the ratio of
benefits to wages;
Is adjusted at the county level and smooths large
differences between counties; and
Is implemented so that large changes in wage index values
are phased in over a transition period.
(3) The Secretary should use the hospital compensation index for
the home health and skilled nursing facility prospective payment
systems and evaluate its use in the other Medicare fee-for-service
prospective payment systems.
Following are the highlights of the alternative wage index system
recommended by MedPAC:
The MedPAC recommended wage index generally retains the
current labor market definitions but supplements the metropolitan areas
with county-level adjustments and eliminates single wage index values
for rural areas.
In the MedPAC recommended wage index, the county-level
adjustments, together with a smoothing process that constrains the
magnitude of differences between and within contiguous wage areas,
serve as a replacement for geographical reclassifications.
The MedPAC recommended wage index uses BLS data instead of
the CMS hospital wage data collected on the Medicare cost report.
MedPAC adjusts the BLS data for geographic differences in the ratio of
benefits to wages using Medicare cost report data.
The BLS data are collected from a sample of all types of
employers, not just hospitals. The MedPAC recommended wage index could
be adapted for other providers, such as home health agencies and
skilled nursing facilities by replacing hospital occupational weights
with occupational weights appropriate for other types of providers.
In the MedPAC recommended wage index, volatility over time
is addressed by the use of BLS data, which is based on a 3-year rolling
sample design.
MedPAC recommended a phased implementation for its
recommended wage index in order to cushion the effect of large wage
index changes on individual hospitals.
MedPAC suggested that using BLS data automatically
addresses occupational mix differences because the BLS data are
specific to health care occupations and national industry-wide
occupational weights are applied to all geographic areas.
The full June 2007 MedPAC Report to Congress is available at the
MedPAC website site: https://medpac.gov/docs/default-source/reports/Jun07_EntireReport.pdf.
During the FY 2009 IPPS rulemaking process, we received many public
comments regarding MedPAC's recommendations for reforming the wage
index (73 FR 48564 through 48566). The public comments varied greatly,
and there was no consensus position among the commenters. A complete
set of the public comments on the FY 2009 IPPS proposed rule (CMS-1390-
P) is available via the Internet on the website at:
www.regulations.gov.
In the FY 2009 IPPS final rule (73 FR 48564 through 48567), we also
summarized an analysis of MedPAC's recommendations that was performed
by our contractor, Acumen LLC. In that analysis, we used a variety of
terminology to refer to the wage indexes recommended by MedPAC, as well
as the wage indexes currently used by CMS:
When we referred to MedPAC's ``hospital compensation
index'' or ``compensation index'', we were discussing the wage index
that MedPAC developed that includes an adjustment to account for
differences in the ratio of benefits to wages in different labor market
areas. MedPAC developed this ratio of benefits using Medicare cost
report data.
When we referred to MedPAC's recommended ``wage index'',
we were discussing the MedPAC-developed index without any adjustment
for nonwage benefits. This wage index was developed using BLS data.
When we referred to CMS' ``pre-reclassification wage
index'' or ``pre-reclassification, pre-floor wage index'', we were
discussing the wage index developed by CMS but without any adjustments
for geographic reclassifications or the rural floor. This wage index
also does not include any adjustments for outmigration, section 508
reclassifications, Lugar redesignations, section 401 urban-to-rural
reclassifications, or for any special exceptions.
When we referred to CMS' ``final wage index'', we were
discussing the wage index developed by CMS that is the final wage index
received by or to be received by a hospital. Thus, this wage index does
account for all geographic reclassifications as well as the rural
floor. This final wage index also includes any adjustments as a result
of outmigration, section 508 reclassifications, Lugar redesignations,
section 401 urban[dash]to[dash]rural

[[Page 20374]]

reclassifications, or any other special exceptions.
Acumen analyzed and compared all four of the wage indexes cited
above. In other words, Acumen compared (A) CMS' pre-reclassification,
pre-floor wage index for FY 2008 (which was provided by CMS and is
based on hospital cost reports from FY 2004) and CMS' final wage index
for FY 2008 with (B) both the MedPAC recommended hospital compensation
index and wage index for FY 2007. Acumen's comparisons of the CMS wage
index to the MedPAC recommended indexes indicate the effects of various
components of the alternative wage indexes. All of the comparisons
reflect differences between the CMS and BLS wage data. The comparison
of the CMS pre-reclassification index to the MedPAC hospital
compensation index reflects the additional impact of MedPAC's method of
using county-level adjustors to smooth differences in index values
among the CMS wage areas. The comparison of the CMS pre-
reclassification index to the MedPAC recommended wage index includes
the effect of county-level smoothing and indicates the incremental
effect of removing the MedPAC adjustment for benefits. The comparison
of the CMS final wage index to the MedPAC recommended wage index adds
the incremental effect of geographic reclassifications and other wage
index exceptions (for example, the rural and imputed floors) to the
preceding comparison. Finally, the comparison of the CMS final wage
index to the MedPAC recommended compensation index yields the combined
effects of all the differences between the two indexes.
First, Acumen analyzed the overall impacts of the MedPAC
recommended indexes. Acumen conducted the analysis at two levels: The
hospital level and the county level. At the hospital level, Acumen
analyzed all four comparisons described above. However, at the county
level, Acumen did not include comparisons using the CMS final wage
index because it includes reclassifications and other changes that are
granted to hospitals, not counties. As a result, hospitals in the same
county or wage area can have different final wage index values.
Acumen's analysis was based on 3,426 hospitals, for which all four wage
index values were available (the CMS pre-reclassification wage index,
the CMS final wage index, the MedPAC recommended hospital wage index,
and the MedPAC recommended hospital compensation index), and on the
1,595 counties in which these hospitals are located.
Second, Acumen estimated the impact for several subgroups of
hospitals and counties. At the hospital level, Acumen assessed the
impact by geographic area (for example, urban hospitals and rural
hospitals), hospital size (number of beds), geographic region, teaching
status, DSH status, SCH status, RRC status, MDH status, type of
ownership (government, proprietary, voluntary), and reclassification
status. At the county level, Acumen presented results for metropolitan
area counties and rural counties.
Third, Acumen calculated the change in the wage index that each
hospital (or county) could expect to experience from adopting the
MedPAC recommendations and reported statistics on these expected
differences (mean, median, standard deviation, minimum, and maximum).
Acumen did not model changes in Medicare payments that would result
from using different wage indexes. Instead, Acumen normalized all four
wage indexes by setting their discharge weighted means equal to 1.00.
Normalization puts all four wage indexes on the same scale so that
differences in wage index values between one index and another index
are directly comparable. As a result, the wage index differences
reported by Acumen imply payment differences, but do not precisely
measure the magnitude of those payment differences.
The main findings of Acumen's impact analysis are summarized as
follows:
Adopting the MedPAC recommendations would reduce the
differentials between wage index values across geographic areas. Both
the MedPAC wage and compensation indexes are less dispersed than either
the CMS pre-reclassification wage index or the final wage index.
Under either of the MedPAC recommended indexes,
differences between the highest wage index hospitals and the lowest
wage index hospitals would be reduced. For example, the range or
difference that exists from the highest wage index hospital to the
lowest wage index hospital (the ``high-low range'') under the MedPAC
compensation index (0.752 versus 1.499, or a difference of 0.747) is
roughly 11 percent less than the high-low range under the CMS final
wage index (0.732 versus 1.569, or a difference of 0.837). Using the
CMS pre-reclassification wage index as a comparison (with a high-low
range of 0.716 versus 1.600), the MedPAC recommended compensation index
is roughly 16 percent less. The minimum value of the MedPAC recommended
compensation index (0.752) is roughly 5 percent more than the minimum
value of the CMS pre-reclassification wage index (0.716), and the
maximum value of the MedPAC recommended compensation index (1.499) is
roughly 6 percent less than the maximum value of the CMS pre-
reclassification index (1.600).
Adopting the MedPAC recommendations would also lower the
wage dispersion among both rural hospitals and urban hospitals (whether
classified by geography or payment), among hospitals of all sizes, and
among all hospitals categorized by teaching status, DSH status,
ownership status, and Medicare utilization status. These findings are
generally consistent, regardless of whether the MedPAC recommended
compensation index is compared to the CMS final wage index or to the
CMS pre[dash]reclassification wage index.
Adopting the MedPAC recommendations would have a
differential impact on urban hospitals across geographic regions of the
country. In moving from the CMS final wage index to the MedPAC
compensation index, the largest reduction in standard deviations would
occur for urban hospitals in the New England region (-19.0 percent),
the Middle Atlantic region (-27.8 percent), and the Pacific region (-
19.0 percent). However, for urban hospitals in the West North Central
region, the standard deviation of wage index values would increase by
11.7 percent.
Adopting the MedPAC recommendations would decrease the
standard deviation among hospitals with most types of
reclassifications. For example, compared to the CMS final wage index,
the MedPAC compensation index would reduce the standard deviation by
11.6 percent.
The adoption of the MedPAC recommended indexes would lead
a substantial number of hospitals to experience a large change in their
index values in the transition. If the MedPAC compensation index is
compared to the CMS final wage index, 37 percent of all hospitals would
experience either increases or decreases of more than 5 percent. For
approximately 34 percent of the reclassified hospitals (or 278
hospitals), wage index values would decrease by more than 5 percent.
Reclassified hospitals comprise more than one-half of all hospitals
that would likely experience wage index decreases greater than 5
percent in moving from the CMS final wage index to the MedPAC
compensation index.
Under a move from the CMS pre-reclassification wage index
to the MedPAC recommended compensation

[[Page 20375]]

index, counties in rural areas would experience fewer decreases and
more increases in their wage index compared to counties in urban areas.
(As noted earlier, county-level comparisons were not performed using
the CMS final wage index.)
The full Acumen analysis of the MedPAC recommendations (Impact
Analysis for the 2009 Final Rule: Interim Report--Revision of Medicare
Wage Index) is available via the Internet on the website at: https://www.acumenllc.com/reports/cms.
b. Acumen Report on Revision of the Medicare Wage Index
In addition to the analysis of the MedPAC recommendation that
Acumen performed, in the FY 2010 and FY 2011 IPPS rulemaking (74 FR
43824 through 48325 and 75 FR 50158 through 50159, respectively), we
discussed a separate report by Acumen on the wage index and methodology
entitled ``Revision of the Medicare Wage Index'' (available on the CMS
website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Reform.html). The report was
divided into two parts. The first part analyzed the strengths and
weaknesses of the data sources used to construct the MedPAC and CMS
indexes. The second part focused on the methodology of wage index
construction and covered issues related to the definition of wage areas
and methods of adjusting for differences among neighboring wage areas,
as well as reasons for differential impacts of shifting to a new index.
Specifically, in the first part of the report, Acumen examined the
following issues:
Differences between the BLS data and the CMS wage data--
Acumen assessed the strengths and weaknesses of the data used to
construct the CMS wage index and the MedPAC compensation index by
examining the differences between the BLS and the CMS wage data. Acumen
also evaluated the importance of accounting for self-employed workers,
part-time workers, and industry wage differences.
Employee benefit (wage-related) cost--Acumen considered
whether benefit costs need to be included in the hospital wage index
and discussed the differences between the Medicare cost report
Worksheet A benefits data (proposed by MedPAC to use with BLS wage
data) and the Medicare cost report Worksheet S-3 benefit data. Acumen
also analyzed the possibility of using BLS' Employer Costs for Employee
Compensation (ECEC) series as an alternative to Worksheet A or
Worksheet S-3 benefits data that would pose less of a data collection
burden for providers.
Impact of the fixed national occupational weights--Acumen
assessed MedPAC's and CMS' methods for adjusting for occupational mix
differences. While the MedPAC recommended compensation index uses fixed
weights for occupations representative of the hospital industry
nationally, the CMS wage index incorporates an occupational mix
adjustment from a separate data collection.
Year-to-year volatility in the CMS and BLS wage data--
Acumen calculated the extent of volatility in the CMS and BLS wage
indexes using several measures of volatility. Acumen also explored
potential causes of volatility, such as the number of hospitals and the
annual change in the number of hospitals in a wage area. Finally,
Acumen evaluated the impact on annual volatility of using a 2-year
rolling average of CMS wage index values.
Acumen concluded that MedPAC's recommended methods for revising the
wage index represent an improvement over the existing methods, and that
the BLS data should be used so that the MedPAC approach can be
implemented.
Several commenters during the FY 2010 and FY 2011 IPPS rulemakings
(74 FR 43824 and 75 FR 50158, respectively) reiterated their concerns
regarding the use of the BLS data for computing the Medicare wage index
that they had expressed in public comments on the FY 2009 IPPS final
rule (73 FR 48564 through 48565). The commenters stated that they still
had significant concerns about the shortcomings of the BLS data, and
they urged CMS to move cautiously in considering MedPAC's and Acumen's
findings. Other commenters expressed support for MedPAC's and Acumen's
findings and recommendations, although some commenters cautioned that a
few refinements may still be needed before adopting these
recommendations.
The second part of Acumen's final report focused on the methodology
of wage index construction and covered issues related to the definition
of wage areas and methods of adjusting for differences among
neighboring wage areas, as well as reasons for differential impacts of
shifting to a new index. In particular, the second part of the report
provides a more in-depth analysis of MedPAC's recommended method of
improving upon the definition of the wage areas used in the current
wage index. MedPAC's method first blends MSA and county-level wages and
then implements a ``smoothing'' step that limits differences in wage
index values between adjacent counties to no more than 10 percent.
Acumen found MedPAC's method to be an improvement over the current wage
index construction. Acumen recommended further exploration of labor
market area definitions using a wage area framework based on
hospital[dash]specific characteristics, such as commuting times from
hospitals to population centers, to construct a more accurate hospital
wage index. Acumen suggested that such an approach offers the greatest
potential for replacing or greatly reducing the need for hospital
reclassifications and exceptions.
We received many public comments regarding the Acumen analysis (75
FR 50158 through 50159). Again, the public comments varied greatly, and
there was no consensus position among the commenters. One national
hospital association in its comments recommended that CMS consider the
following guiding principles as it evaluates options for improving the
wage index system: Any new system should--
Be fair and accurately reflect the labor marketplace for
hospitals, for example, consider only hospital wage and benefit costs
rather than broader labor market costs;
Provide predictable payments;
Be stable;
Be transparent so that the data may be examined and
verified;
Minimize the administrative burden on hospitals;
Utilize the most current information possible;
Define boundaries that capture meaningful relationships
between labor markets, to reduce the need for exceptions and
reclassifications;
Due to the imperfection of any current labor market
definition that we are aware of, provide an exception process for
hospitals with labor costs atypical for areas to which they have been
assigned;
Use consistent definitions, methodologies, rules, and
interpretations across the nation for the acquisition and application
of data;
Include a transition from the old to the new system that
is not disruptive; it should include a phased-in transition period if
necessary to protect hospitals from abrupt reductions in payment
levels; and
Not let perfection be the enemy of the better.
Commenters generally urged CMS to move forward cautiously and
ensure a thorough process for evaluating changes to the existing wage
index.

[[Page 20376]]

The complete sets of the public comments on the FY 2010 IPPS/LTCH
PPS proposed rule (CMS-1406-P) and the FY 2011 IPPS/LTCH PPS proposed
rule (CMS-1498-P) are available via the Internet on the website at:
www.regulations.gov.
c. Report to Congress--Plan To Reform the Medicare Hospital Wage Index
Section 3137(b) of the Affordable Care Act required the Secretary
of Health and Human Services to submit to Congress, not later than
December 31, 2011, a report that includes a plan to reform the Medicare
wage index applied under the Medicare IPPS. In developing the plan, the
Secretary had to take into consideration the goals for reforming the
wage index that were set forth by MedPAC in its June 2007 report,
including establishing a new system that--
Uses BLS data, or other data or methodologies, to
calculate relative wages for each geographic area;
Minimizes wage index adjustments between and within MSAs
and statewide rural areas;
Includes methods to minimize the volatility of wage index
adjustments while maintaining budget neutrality in applying such
adjustments;
Takes into account the effect that implementation of the
system would have on health care providers and on each region of the
country;
Addresses issues related to occupational mix, such as
staffing practices and ratios, and any evidence on the effect on
quality of care or patient safety as a result of the implementation of
the system; and
Provides for a transition.
After we consulted with relevant parties during the development of
the plan (which included an April 12, 2011 special wage index reform
open door forum, along with a review of electronically submitted
comments and concerns), the Secretary submitted a Report to Congress--
Plan to Reform the Medicare Hospital Wage Index on April 11, 2012 that
describes the concept of a Commuting Based Wage Index (CBWI) as one
potential replacement for the current Medicare wage index methodology.
Acumen again assisted CMS is the analysis for the report. The following
is a summary of the highlights of the report:
The report included a potential change in the description and
definition of labor market areas. The concept, referred to as the CBWI,
would use commuting data to define hospital labor market areas. The
CBWI is based on data on the number of hospital workers commuting from
home to work to define a hospital's labor market. To derive the CBWI,
commuting flows would be used to identify the specific areas (for
example, zip code or census tracts) from which a hospital hires its
workers and to determine the proportion of its workers hired from each
area. A CBWI system could use either current hospital cost report data
or other alternative sources, such as the BLS Occupational Employment
Survey data, to calculate labor market area average wage values. While
the current wage index system aggregates wage data within geographic
CBSA[dash]based areas where hospitals are located, the CBWI would
aggregate wage data based upon where the hospital workers reside.
Once the hiring proportions by area and area wage levels are
determined, the hospital's benchmark wage level would be calculated as
the weighted average of these two elements. This value would then be
divided by the national average. This calculation would result in a
hospital[dash]specific value, which reflects wage levels in the areas
from which a hospital hires, accounting for variation in the proportion
of workers hired from each area.
Using more precisely defined labor markets, the CBWI values can
vary for hospitals within the same CBSA or county and, thus, more
precisely reflect wage differences within and across CBSA boundaries
and address intra-area variation more precisely than the current
system. Although the CBWI would allow wage index values to vary within
a CBSA, the CBWI is less likely to produce large differences--or
``cliffs''--between wage index values for nearby hospitals in adjacent
CBSAs because nearby hospitals likely hire workers from areas in
similar proportions.
Acumen found in its analysis that the CBWI system would more
closely reflect hospitals' actual wages than the current CBSA-based
system. Acumen suggested the CBWI has the potential to reduce the need
for exceptions and adjustments and further manipulation of wage index
values to prevent these ``cliffs'' between labor market areas.
The April 12, 2012 Report to Congress detailed several findings
relevant to implementation of a CBWI:
Because the CBWI accounts for specific differences in
hospitals' geographic hiring patterns, it would yield wage index values
that more closely correlate to actual labor costs than either the
current wage index system (with or without geographic reclassification)
or a system that attempts to reduce wage index differences across
geographic boundaries, such as MedPAC's proposed wage index based on
BLS data for health care industry workers.
While a CBWI could be constructed with the most recent
Census commuting data, were the CBWI to be adopted, a more up-to-date
reporting system for collecting commuting data from hospitals would
potentially have to be established so that the wage index calculations
would accurately reflect the commuting patterns of hospital employees.
Concerns about a CBWI leading to hospitals altering hiring
patterns and distorting labor markets do not appear to be worse than
under the current system and could potentially be mitigated with policy
adjustments.
As current statutory provisions governing the Medicare
wage index and exceptions to that wage index were designed for the
current MSA-based wage index system, their applicability would need to
be reviewed if a CBWI were to be adopted.
The Medicare statute has traditionally applied payment
changes in a budget neutral manner. If a CBWI were to be adopted in a
budget neutral manner, payments to some providers would increase while
payments to other providers would decrease.
The complete report can be accessed on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Reform.html.
We received many public comments regarding the April 2012 Report to
Congress as part of the FY 2013 IPPS rulemaking (77 FR 53660 through
53663). Again, the public comments varied greatly, and there was no
consensus position among the commenters. The complete set of the public
comments on the FY 2013 IPPS/LTCH PPS proposed rule (CMS-1588-P) is
available via the Internet on the website at: www.regulations.gov.
d. Institute of Medicine (IOM) Study on Medicare's Approach to
Measuring Geographic Variations in Hospitals' Wage Costs
In addition to submitting the 2012 Report to Congress, in April
2012, the Secretary commissioned the Institute of Medicine (IOM) to
evaluate Medicare's approach for measuring geographic variation in the
wage costs faced by hospitals. In the report, IOM's Committee on
Geographic Adjustment Factors in Medicare Payment proposed a set of
recommendations for modifying the hospital wage index in both the
method used in its construction and the data used in its calculation.

[[Page 20377]]

In constructing the wage index, the IOM recommended altering the
current labor market definitions to account for the out-commuting
patterns of health care workers who travel to a place of employment in
an MSA other than the one in which they live. The IOM's recommendation
is based on its theory that county-to-MSA commuting patterns reveal the
degree of integration of labor markets across geographically drawn
boundaries (that is, MSAs) and a commuting-based smoothing adjustment
to the wage index would more accurately measure the market wage each
hospital faces. The IOM model used workers' out-commuting patterns to
smooth wage index values for hospitals in different counties, similar
to the out-migration adjustment used in the current wage index system.
The IOM also suggested that using out[dash]commuting shares in the
smoothing adjustment creates an index based on the wage levels of
workers living in that area in which a hospital is located, as opposed
to wage levels of workers employed in that area, as in the CBWI model.
In calculating its smoothed wage index, the IOM uses the following four
steps:
Step 1--Compute a wage index for each MSA, adhering to
Medicare's current approach for calculating the average hourly wage
(AHW) paid by all IPPS hospitals located in the MSA (this step
replicates the current pre-reclassification wage index).
Step 2--Compute an area wage for each county equal to a
weighted average of MSA[dash]level AHWs, where the weight for each MSA
measures the share of all hospital workers living in the county who
commute to hospitals located in that MSA.
Step 3--Assign all hospitals located in the county a
hospital wage index value equal to the county area wage index.
Step 4--Normalize wage indexes to ensure budget
neutrality, similar to the approach currently implemented by Medicare.
In addition, the IOM's wage index model uses hourly wage data from
the BLS Occupational Employment Survey rather than from hospital cost
reports. The IOM also recommended measuring hourly wages using data for
all health care workers, rather than only hospital workers, and using a
fuller set of occupations incorporated in the hospital wage index
occupational mix adjustment. The IOM suggested that BLS data would
reduce administrative burdens placed upon hospitals and, by broadening
the array of reported occupations from what is currently covered in the
hospital cost report, would achieve more accurate labor market
definitions and reduce year-to-year volatility. The IOM encouraged CMS
to establish an ongoing agreement with the BLS to use occupational
survey data specific to health care workers to calculate average hourly
wage values. The IOM suggested, for instance, that the 5-year American
Community Survey is a potential source of the necessary commuting
information.
The findings indicated that the IOM hospital wage index method
would result in the reduction in wage index ``cliffs,'' and would
diminish the need to maintain current wage index exceptions and
adjustments. The IOM also recommended that the hospital wage values
should be applied to other nonhospital health care providers, shifting
to a single measurement of geographic variation to be used in multiple
Medicare provider payment systems.
The IOM's Phase I report, published in September 2011, is available
via the Internet on the website at: https://nationalacademies.org/hmd/Reports/2011/Geographic-Adjustment-in-Medicare-Payment-Phase-I-Improving-Accuracy.aspx.
We received many public comments regarding the IOM Report as part
of the FY 2013 IPPS rulemaking (77 FR 53660 through 53663). Again, the
public comments varied greatly, and there was no consensus position
among the commenters. The complete set of the public comments on the FY
2013 IPPS/LTCH PPS proposed rule (CMS-1588-P) is available via the
Internet on the website at: www.regulations.gov.
As stated earlier, given that some time has elapsed since the
MedPAC, Acumen, CMS, and the IOM examined disparities between the wage
index values for individual hospitals and the wage index values among
different geographic areas, and ways to improve the Medicare wage
index, in this proposed rule, we are taking this opportunity to invite
the public to submit further comments, suggestions, and recommendations
for regulatory and policy changes to the Medicare wage index. For
example, some stakeholders in recent years have expressed the belief
that the existing wage index disparities between high and low wage
index areas are too great, particularly for rural hospitals and/or
financially struggling hospitals. They have suggested additional floors
be created for low wage index areas, or that the portion of the IPPS
payment adjusted by the wage index be lowered from the current
statutory 62 percent for hospitals with a wage index value below 1.0 to
a smaller percentage. Some stakeholders also have stated that the
reporting lag from when hospitals raise wages and when those increased
wages become reflected in the Medicare wage index is a barrier to
addressing wage index disparities. Other stakeholders have echoed
previous recommendations that the Medicare wage index should be based
on a different source of data, such as data from the Bureau of Labor
Statistics.
If practicable, we are requesting commenters to submit supporting
data and specific recommendations in their comments. For any
suggestions or recommendations that would involve novel legal
questions, we welcome analysis regarding CMS' authority for our
consideration.

IV. Other Decisions and Proposed Changes to the IPPS for Operating
System

A. Proposed Changes to MS-DRGs Subject to Postacute Care Transfer
Policy and MS-DRG Special Payments Policies (Sec. 412.4)

1. Background
Existing regulations at 42 CFR 412.4(a) define discharges under the
IPPS as situations in which a patient is formally released from an
acute care hospital or dies in the hospital. Section 412.4(b) defines
acute care transfers, and Sec. 412.4(c) defines postacute care
transfers. Our policy set forth in Sec. 412.4(f) provides that when a
patient is transferred and his or her length of stay is less than the
geometric mean length of stay for the MS-DRG to which the case is
assigned, the transferring hospital is generally paid based on a
graduated per diem rate for each day of stay, not to exceed the full
MS-DRG payment that would have been made if the patient had been
discharged without being transferred.
The per diem rate paid to a transferring hospital is calculated by
dividing the full MS-DRG payment by the geometric mean length of stay
for the MS-DRG. Based on an analysis that showed that the first day of
hospitalization is the most expensive (60 FR 45804), our policy
generally provides for payment that is twice the per diem amount for
the first day, with each subsequent day paid at the per diem amount up
to the full MS-DRG payment (Sec. 412.4(f)(1)). Transfer cases also are
eligible for outlier payments. In general, the outlier threshold for
transfer cases, as described in Sec. 412.80(b), is equal to the fixed-
loss outlier threshold for nontransfer cases (adjusted for geographic
variations in costs), divided by the geometric mean length of stay for

[[Page 20378]]

the MS-DRG, and multiplied by the length of stay for the case, plus 1
day.
We established the criteria set forth in Sec. 412.4(d) for
determining which DRGs qualify for postacute care transfer payments in
the FY 2006 IPPS final rule (70 FR 47419 through 47420). The
determination of whether a DRG is subject to the postacute care
transfer policy was initially based on the Medicare Version 23.0
GROUPER (FY 2006) and data from the FY 2004 MedPAR file. However, if a
DRG did not exist in Version 23.0 or a DRG included in Version 23.0 is
revised, we use the current version of the Medicare GROUPER and the
most recent complete year of MedPAR data to determine if the DRG is
subject to the postacute care transfer policy. Specifically, if the MS-
DRG's total number of discharges to postacute care equals or exceeds
the 55th percentile for all MS-DRGs and the proportion of short-stay
discharges to postacute care to total discharges in the MS-DRG exceeds
the 55th percentile for all MS-DRGs, CMS will apply the postacute care
transfer policy to that MS-DRG and to any other MS-DRG that shares the
same base MS-DRG. The statute directs us to identify MS-DRGs based on a
high volume of discharges to postacute care facilities and a
disproportionate use of postacute care services. As discussed in the FY
2006 IPPS final rule (70 FR 47416), we determined that the 55th
percentile is an appropriate level at which to establish these
thresholds. In that same final rule (70 FR 47419), we stated that we
will not revise the list of DRGs subject to the postacute care transfer
policy annually unless we are making a change to a specific MS-DRG.
To account for MS-DRGs subject to the postacute care policy that
exhibit exceptionally higher shares of costs very early in the hospital
stay, Sec. 412.4(f) also includes a special payment methodology. For
these MS-DRGs, hospitals receive 50 percent of the full MS-DRG payment,
plus the single per diem payment, for the first day of the stay, as
well as a per diem payment for subsequent days (up to the full MS-DRG
payment (Sec. 412.4(f)(6)). For an MS-DRG to qualify for the special
payment methodology, the geometric mean length of stay must be greater
than 4 days, and the average charges of 1-day discharge cases in the
MS-DRG must be at least 50 percent of the average charges for all cases
within the MS-DRG. MS-DRGs that are part of an MS-DRG severity level
group will qualify under the MS-DRG special payment methodology policy
if any one of the MS-DRGs that share that same base MS-DRG qualifies
(Sec. 412.4(f)(6)).
2. Proposed Changes for FY 2019
As discussed in section II.F. of the preamble of this proposed
rule, based on our analysis of FY 2017 MedPAR claims data, we are
proposing to make changes to a number of MS-DRGs, effective for FY
2019. Specifically, we are proposing to:
Assign CAR-T therapy procedure codes to MS-DRG 016
(proposed revised title: Autologous Bone Marrow Transplant with CC/MCC
or T-Cell Immunotherapy);
Delete MS-DRG 685 (Admit for Renal Dialysis) and reassign
diagnosis codes from MS-DRG 685 to MS-DRGs 698, 699, and 700 (Other
Kidney and Urinary Tract Diagnoses with MCC, with CC, and without CC/
MCC, respectively);
Delete 10 MS-DRGs (MS-DRGs 765, 766, 767, 774, 775, 777,
778, 780, 781, and 782) and create 18 new MS-DRGs relating to
Pregnancy, Childbirth and the Puerperium (MS-DRGs 783 through 788, 794,
796, 798, 805, 806, 807, 817, 818, 819, and 831 through 833);
Assign two additional diagnosis codes to MS-DRG 023
(Craniotomy with Major Device Implant or Acute Complex Central Nervous
System (CNS) Principal Diagnosis (PDX) with MCC or Chemotherapy Implant
or Epilepsy with Neurostimulator);
Reassign 12 ICD-10-PCS procedure codes from MS-DRGs 329,
330 and 331 (Major Small and Large Bowel Procedures with MCC, with CC,
and without CC/MCC, respectively) to MS-DRGs 344, 345, and 346 (Minor
Small and Large Bowel Procedures with MCC, with CC, and without CC/MCC,
respectively); and
Reassign ICD-10-CM diagnosis codes R65.10 and R65.11 from
MS-DRGs 870, 871, and 872 (Septicemia or Severe Sepsis with and without
Mechanical Ventilation 96 Hours with and without MCC, respectively) to
MS-DRG 864 (proposed revised title: Fever and Inflammatory Conditions).
In light of the proposed changes to these MS-DRGs for FY 2019,
according to the regulations under Sec. 412.4(d), we have evaluated
these MS-DRGs using the general postacute care transfer policy criteria
and data from the FY 2017 MedPAR file. If an MS-DRG qualified for the
postacute care transfer policy, we also evaluated that MS-DRG under the
special payment methodology criteria according to regulations at Sec.
412.4(f)(6). We continue to believe it is appropriate to reassess MS-
DRGs when proposing reassignment of procedure codes or diagnosis codes
that would result in material changes to an MS-DRG. MS-DRGs 023, 329,
330, 331, 698, 699, 700, 870, 871, and 872 are currently subject to the
postacute care transfer policy. As a result of our review, these MS-
DRGs, as proposed to be revised, would continue to qualify to be
included on the list of MS-DRGs that are subject to the postacute care
transfer policy.
Using the March 2018 update of the FY 2017 MedPAR file, we have
developed the following chart which sets forth the most recent analysis
of the postacute care transfer policy criteria completed for this
proposed rule with respect to each of these proposed new or revised MS-
DRGs. We note that this analysis does not take into account the
proposed change relating to discharges to hospice care, effective
October 1, 2018, discussed in section IV.A.3. of the preamble of this
proposed rule. For the FY 2019 final rule, we will update this analysis
using the most recent available data at that time.

List of Proposed New or Revised MS-DRGs Subject to Review of Postacute Care Transfer Policy Status for FY 2019
--------------------------------------------------------------------------------------------------------------------------------------------------------
Percent of
short-stay
Postacute care postacute care
Proposed new or revised MS- transfers Short-stay transfers to Postacute care transfer
DRG MS-DRG title Total cases (55th postacute care all cases policy status
percentile: transfers (55th
1,372) percentile:
7.977208%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
016......................... Autologous Bone Marrow 2,064 * 417 126 6.10 No.
Transplant with CC/MCC or
T[dash]Cell Immunotherapy
(Proposed Revised).

[[Page 20379]]

023......................... Craniotomy with Major Device 9,436 4,990 1,264 13.40 Yes.
Implant or Acute CNS
Principal Diagnosis with MCC
or Chemotherapy Implant or
Epilepsy with Neurostimulator
(Proposed Revised).
329......................... Major Small and Large Bowel 35,361 21,816 7,058 19.96 Yes.
Procedures with MCC (Proposed
Revised).
330......................... Major Small and Large Bowel 52,702 23,575 6,178 11.72 Yes.
Procedures with CC (Proposed
Revised).
331......................... Major Small and Large Bowel 2,9685 6,713 543 * 1.83 Yes.**
Procedures without CC/MCC
(Proposed Revised).
344......................... Minor Small and Large Bowel 1,285 * 675 206 16.03 No.
Procedures with MCC (Proposed
Revised).
345......................... Minor Small and Large Bowel 2,475 * 989 202 8.16 No.
Procedures with CC (Proposed
Revised).
346......................... Minor Small and Large Bowel 1,274 * 328 71 * 5.58 No.
Procedures without CC/MCC
(Proposed Revised).
698......................... Other Kidney and Urinary Tract 5,6925 34,672 8,351 14.67 Yes.
Diagnoses with MCC (Proposed
Revised).
699......................... Other Kidney and Urinary Tract 33,945 15,263 3,132 9.23 Yes.
Diagnoses with CC (Proposed
Revised).
700......................... Other Kidney and Urinary Tract 4,431 1,589 181 * 4.08 Yes.**
Diagnoses without CC/MCC
(Proposed Revised).
783......................... Cesarean Section with 191 * 6 0 * 0 No.
Sterilization with MCC
(Proposed New).
784......................... Cesarean Section with 548 * 19 0 * 0 No.
Sterilization with CC
(Proposed New).
785......................... Cesarean Section with 502 * 6 0 * 0 No.
Sterilization without CC/MCC
(Proposed New).
786......................... Cesarean Section without 739 * 34 5 ** 0.7 No.
Sterilization with MCC
(Proposed New).
787......................... Cesarean Section without 2,034 * 93 3 * 0.15 No.
Sterilization with CC
(Proposed New).
788......................... Cesarean Section without 1,854 * 41 0 * 0 No.
Sterilization without CC/MCC
(Proposed New).
794......................... Vaginal Delivery with 1 * 1 0 * 0 No.
Sterilization/D&C with MCC
(Proposed New).
796......................... Vaginal Delivery with 49 * 2 0 * 0 No.
Sterilization/D&C with CC
(Proposed New).
798......................... Vaginal Delivery with 162 * 1 0 * 0 No.
Sterilization/D&C without CC/
MCC (Proposed New).
805......................... Vaginal Delivery without 506 * 20 0 * 0 No.
Sterilization/D&C with MCC
Proposed New).
806......................... Vaginal Delivery without 2,128 * 72 2 * 0 No.
Sterilization/D&C with CC
(Proposed New).
807......................... Vaginal Delivery without 3,809 * 69 6 * 0 No.
Sterilization/D&C without CC/
MCC (Proposed New).
817......................... Other Antepartum Diagnoses 76 * 12 0 * 0 No.
with O.R. Procedure with MCC
(Proposed New).
818......................... Other Antepartum Diagnoses 85 * 5 1 * 1.18 No.
with O.R. Procedure with CC
(Proposed New).
819......................... Other Antepartum Diagnoses 49 * 0 0 * 0 No.
with O.R. Procedure without
CC/MCC (Proposed New).
831......................... Other Antepartum Diagnoses 857 * 30 1 * 0.12 No.
without O.R. Procedure with
MCC (Proposed New).
832......................... Other Antepartum Diagnoses 1,241 * 52 13 * 1.05 No.
without O.R. Procedure with
CC (Proposed New).
833......................... Other Antepartum Diagnoses 659 * 11 0 * 0 No.
without O.R. Procedure
without CC/MCC (Proposed New).

[[Page 20380]]

864......................... Fever and Inflammatory 12,150 3,882 286 * 2.35 No.
Conditions (Proposed Revised).
870......................... Septicemia or Severe Sepsis 34,335 15,099 4,988 14.53 Yes.
with Mechanical Ventilation
96 Hours (Proposed Revised).
871......................... Septicemia or Severe Sepsis 592,110 281,401 43,504 * 7.35 Yes.**
without Mechanical
Ventilation 96 Hours with MCC
(Proposed Revised).
872......................... Septicemia or Severe Sepsis 154,469 64,490 6,848 * 4.43 Yes.**
without Mechanical
Ventilation 96 Hours without
MCC (Proposed Revised).
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Indicates a current postacute care transfer policy criterion that the MS-DRG did not meet.
** As described in the policy at 42 CFR 412.4(d)(3)(ii)(D), MS-DRGs that share the same base MS-DRG will all qualify under the postacute care transfer
policy if any one of the MS-DRGs that share that same base MS-DRG qualifies.

Based on our annual review of proposed new or revised MS-DRGs and
analysis of the March 2018 update of the FY 2017 MedPAR file, we have
identified MS-DRGs that we are proposing to be included on the list of
MS-DRGs subject to the special payment methodology policy. None of the
proposed revised MS-DRGs that are listed in the table above as
continuing to meet the criteria for postacute care transfer policy
status (specifically, MS-DRGs 023, 330, 331, 698, 699, 700, 870, 871,
and 872) are currently listed as being subject to the special payment
methodology. Based on our analysis of proposed changes to MS-DRGs
included in this proposed rule, we have determined that proposed
revised MS-DRG 023 (Craniotomy with Major Device Implant or Acute
Complex CNS Principal Diagnosis with MCC or Chemotherapy Implant or
Epilepsy with Neurostimulator) would meet the criteria for the MS-DRG
special payment methodology. Therefore, we are proposing that proposed
revised MS-DRG 023 would be subject to the MS-DRG special payment
methodology, effective FY 2019. As described in the regulations at
Sec. 412.4(f)(6)(iv), MS-DRGs that share the same base MS-DRG will all
qualify under the MS-DRG special payment policy if any one of the MS-
DRGs that share that same base MS-DRG qualifies. Therefore, we are
proposing that MS-DRG 024 (Craniotomy with Major Device Implant or
Acute Complex CNS Principal Diagnosis without MCC or Chemotherapy
Implant or Epilepsy with Neurostimulator) also would be subject to the
MS-DRG special payment methodology, effective for FY 2019.

List of Proposed Revised MS-DRGS Subject to Review of Special Payment Policy Status for FY 2019
----------------------------------------------------------------------------------------------------------------
50 percent of
Average average Special
Proposed revised MS- MS-DRG title Geometric mean charges of 1- charges for payment policy
DRG length of stay day discharges all cases status
within MS-DRG
----------------------------------------------------------------------------------------------------------------
023................... Craniotomy with Major 7.3 $138,521 $96,268 Yes.
Device Implant or Acute
CNS Principal Diagnosis
with MCC or
Chemotherapy Implant or
Epilepsy with
Neurostimulator.
330................... Major Small and Large 6.1 32,410 41,813 No.
Bowel Procedures with
CC.
331................... Major Small and Large 3.7 34,430 28,931 No.
Bowel procedures
without CC/MCC.
698................... Other Kidney and Urinary 4.9 17,966 24,920 No.
Tract Diagnoses with
MCC.
699................... Other Kidney and Urinary 3.4 17,040 17,012 No.
Tract Diagnoses with CC.
700................... Other Kidney and Urinary 2.5 14,592 12,954 No.
Tract Diagnoses without
CC/MCC.
870................... Septicemia or Severe 12.4 0 102,333 No.
Sepsis with Mechanical
Ventilation <96 Hours.
871................... Septicemia or Severe 4.8 19,479 29,746 No.
Sepsis without
Mechanical Ventilation
<96 Hours with MCC.
872................... Septicemia or Severe 3.6 18,911 17,193 No.
Sepsis without
Mechanical Ventilation
<96 Hours without MCC.
----------------------------------------------------------------------------------------------------------------

We are inviting public comments on this proposal.
The proposed special payment policy status of these MS-DRGs is
reflected in Table 5 associated with this proposed rule, which is
listed in section VI. of the Addendum to this proposed rule and
available via the Internet on the CMS website.
3. Proposed Implementation of Changes Required by Section 53109 of the
Bipartisan Budget Act of 2018
Prior to the enactment of the Bipartisan Budget Act of 2018 (Pub.
L.

[[Page 20381]]

115-123), under section 1886(d)(5)(J) of the Act, a discharge was
deemed a ``qualified discharge'' if the individual was discharged to
one of the following postacute care settings:
A hospital or hospital unit that is not a subsection (d)
hospital.
A skilled nursing facility.
Related home health services provided by a home health
agency provided within a timeframe established by the Secretary
(beginning within 3 days after the date of discharge).
Section 53109 of the Bipartisan Budget Act of 2018 amended section
1886(d)(5)(J)(ii) of the Act to also include discharges to hospice care
by a hospice program as a qualified discharge, effective for discharges
occurring on or after October 1, 2018. Accordingly, effective for
discharges occurring on or after October 1, 2018, if a discharge is
assigned to one of the MS-DRGs subject to the postacute care transfer
policy and the individual is transferred to hospice care by a hospice
program, the discharge would be subject to payment as a transfer case.
We are proposing to make conforming amendments to Sec. 412.4(c) of the
regulation to include discharges to hospice care occurring on or after
October 1, 2018 as qualified discharges. We are proposing that hospital
bills with a Patient Discharge Status code of 50 (Discharged/
Transferred to Hospice--Routine or Continuous Home Care) or 51
(Discharged/Transferred to Hospice, General Inpatient Care or Inpatient
Respite) would be subject to the postacute care transfer policy in
accordance with this statutory amendment. Consistent with our policy
for other qualified discharges, CMS claims processing software will be
revised to identify cases in which hospice benefits were billed on the
date of hospital discharge without the appropriate discharge status
code. Such claims will be returned as unpayable to the hospital and may
be rebilled with a corrected discharge code.
We are inviting public comments on our proposals.

B. Proposed Changes in the Inpatient Hospital Update for FY 2019 (Sec.
412.64(d))

1. Proposed FY 2019 Inpatient Hospital Update
In accordance with section 1886(b)(3)(B)(i) of the Act, each year
we update the national standardized amount for inpatient hospital
operating costs by a factor called the ``applicable percentage
increase.'' For FY 2019, we are setting the applicable percentage
increase by applying the adjustments listed in this section in the same
sequence as we did for FY 2018. Specifically, consistent with section
1886(b)(3)(B) of the Act, as amended by sections 3401(a) and 10319(a)
of the Affordable Care Act, we are setting the applicable percentage
increase by applying the following adjustments in the following
sequence. The applicable percentage increase under the IPPS is equal to
the rate[dash]of[dash]increase in the hospital market basket for IPPS
hospitals in all areas, subject to--
(a) A reduction of one[dash]quarter of the applicable percentage
increase (prior to the application of other statutory adjustments; also
referred to as the market basket update or rate[dash]of[dash]increase
(with no adjustments)) for hospitals that fail to submit quality
information under rules established by the Secretary in accordance with
section 1886(b)(3)(B)(viii) of the Act;
(b) A reduction of three-quarters of the applicable percentage
increase (prior to the application of other statutory adjustments; also
referred to as the market basket update or rate-of-increase (with no
adjustments)) for hospitals not considered to be meaningful EHR users
in accordance with section 1886(b)(3)(B)(ix) of the Act;
(c) An adjustment based on changes in economy[dash]wide
productivity (the multifactor productivity (MFP) adjustment); and
(d) An additional reduction of 0.75 percentage point as required by
section 1886(b)(3)(B)(xii) of the Act.
Sections 1886(b)(3)(B)(xi) and (b)(3)(B)(xii) of the Act, as added
by section 3401(a) of the Affordable Care Act, state that application
of the MFP adjustment and the additional FY 2019 adjustment of 0.75
percentage point may result in the applicable percentage increase being
less than zero.
We note that, in compliance with section 404 of the MMA, in the FY
2018 IPPS/LTCH PPS final rule (82 FR 38158 through 38175), we replaced
the FY 2010[dash]based IPPS operating market basket with the rebased
and revised 2014-based IPPS operating market basket, effective with FY
2018.
We are proposing to base the proposed FY 2019 market basket update
used to determine the applicable percentage increase for the IPPS on
IHS Global Inc.'s (IGI's) fourth quarter 2017 forecast of the
2014[dash]based IPPS market basket rate[dash]of[dash]increase with
historical data through third quarter 2017, which is estimated to be
2.8 percent. We are proposing that if more recent data subsequently
become available (for example, a more recent estimate of the market
basket and the MFP adjustment), we would use such data, if appropriate,
to determine the FY 2019 market basket update and the MFP adjustment in
the final rule.
For FY 2019, depending on whether a hospital submits quality data
under the rules established in accordance with section
1886(b)(3)(B)(viii) of the Act (hereafter referred to as a hospital
that submits quality data) and is a meaningful EHR user under section
1886(b)(3)(B)(ix) of the Act (hereafter referred to as a hospital that
is a meaningful EHR user), there are four possible applicable
percentage increases that can be applied to the standardized amount as
specified in the table that appears later in this section.
In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51689 through
51692), we finalized our methodology for calculating and applying the
MFP adjustment. As we explained in that rule, section
1886(b)(3)(B)(xi)(II) of the Act, as added by section 3401(a) of the
Affordable Care Act, defines this productivity adjustment as equal to
the 10-year moving average of changes in annual economy-wide, private
nonfarm business MFP (as projected by the Secretary for the 10-year
period ending with the applicable fiscal year, calendar year, cost
reporting period, or other annual period). The Bureau of Labor
Statistics (BLS) publishes the official measure of private nonfarm
business MFP. We refer readers to the BLS website at https://www.bls.gov/mfp for the BLS historical published MFP data.
MFP is derived by subtracting the contribution of labor and capital
input growth from output growth. The projections of the components of
MFP are currently produced by IGI, a nationally recognized economic
forecasting firm with which CMS contracts to forecast the components of
the market baskets and MFP. As we discussed in the FY 2016 IPPS/LTCH
PPS final rule (80 FR 49509), beginning with the FY 2016 rulemaking
cycle, the MFP adjustment is calculated using the revised series
developed by IGI to proxy the aggregate capital inputs. Specifically,
in order to generate a forecast of MFP, IGI forecasts BLS aggregate
capital inputs using a regression model. A complete description of the
MFP projection methodology is available on the CMS website at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch.html. As
discussed in the FY 2016 IPPS/LTCH PPS final rule, if IGI makes changes
to the MFP methodology, we will announce them on our website rather
than in the annual rulemaking.

[[Page 20382]]

For FY 2019, we are proposing an MFP adjustment of 0.8 percentage
point. Similar to the market basket update, for this proposed rule, we
used IGI's fourth quarter 2017 forecast of the MFP adjustment to
compute the proposed MFP adjustment. As noted previously, we are
proposing that if more recent data subsequently become available, we
would use such data, if appropriate, to determine the FY 2019 market
basket update and the MFP adjustment for the final rule.
Based on these data, for this proposed rule, we have determined
four proposed applicable percentage increases to the standardized
amount for FY 2019, as specified in the following table:

Proposed FY 2019 Applicable Percentage Increases for the IPPS
----------------------------------------------------------------------------------------------------------------
Hospital Hospital Hospital did Hospital did
submitted submitted not submit not submit
quality data quality data quality data quality data
FY 2019 and is a and is not a and is a and is not a
meaningful EHR meaningful EHR meaningful EHR meaningful EHR
user user user user
----------------------------------------------------------------------------------------------------------------
Proposed Market Basket 2.8 2.8 2.8 2.8
Rate[dash]of[dash]Increase.....................
Proposed Adjustment for Failure to Submit 0 0 -0.7 -0.7
Quality Data under Section 1886(b)(3)(B)(viii)
of the Act.....................................
Proposed Adjustment for Failure to be a 0 -2.1 0 -2.1
Meaningful EHR User under Section
1886(b)(3)(B)(ix) of the Act...................
Proposed MFP Adjustment under Section -0.8 -0.8 -0.8 -0.8
1886(b)(3)(B)(xi) of the Act...................
Statutory Adjustment under Section -0.75 -0.75 -0.75 -0.75
1886(b)(3)(B)(xii) of the Act..................
---------------------------------------------------------------
Proposed Applicable Percentage Increase 1.25 -0.85 0.55 -1.55
Applied to Standardized Amount.............
----------------------------------------------------------------------------------------------------------------

We are proposing to revise the existing regulations at 42 CFR
412.64(d) to reflect the current law for the FY 2019 update.
Specifically, in accordance with section 1886(b)(3)(B) of the Act, we
are proposing to revise paragraph (vii) of Sec. 412.64(d)(1) to
include the applicable percentage increase to the FY 2019 operating
standardized amount as the percentage increase in the market basket
index, subject to the reductions specified under Sec. 412.64(d)(2) for
a hospital that does not submit quality data and Sec. 412.64(d)(3) for
a hospital that is not a meaningful EHR user, less an MFP adjustment
and less an additional reduction of 0.75 percentage point.
We are inviting public comments on our proposals.
Section 1886(b)(3)(B)(iv) of the Act provides that the applicable
percentage increase to the hospital-specific rates for SCHs and MDHs
equals the applicable percentage increase set forth in section
1886(b)(3)(B)(i) of the Act (that is, the same update factor as for all
other hospitals subject to the IPPS). Therefore, the update to the
hospital-specific rates for SCHs and MDHs also is subject to section
1886(b)(3)(B)(i) of the Act, as amended by sections 3401(a) and
10319(a) of the Affordable Care Act. (As discussed in section IV.G. of
the preamble of this FY 2019 IPPS/LTCH PPS proposed rule, section 205
of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA)
(Pub. L. 114[dash]10, enacted on April 16, 2015) extended the MDH
program through FY 2017 (that is, for discharges occurring on or before
September 30, 2017). Section 50205 of the Bipartisan Budget Act of 2018
(Pub. L. 115-123), enacted February 9, 2018, extended the MDH program
for discharges on or after October 1, 2017 through September 30, 2022.)
For FY 2019, we are proposing the following updates to the
hospital-specific rates applicable to SCHs and MDHs: A proposed update
of 1.25 percent for a hospital that submits quality data and is a
meaningful EHR user; a proposed update of 0.55 percent for a hospital
that fails to submit quality data and is a meaningful EHR user; a
proposed update of -0.85 percent for a hospital that submits quality
data and is not a meaningful EHR user; and a proposed update of -1.55
percent for a hospital that fails to submit quality data and is not a
meaningful EHR user. As noted previously, for this FY 2019 IPPS/LTCH
PPS proposed rule, we are using IGI's fourth quarter 2017 forecast of
the 2014[dash]based IPPS market basket update with historical data
through third quarter 2017. Similarly, we are using IGI's fourth
quarter 2017 forecast of the MFP adjustment. We are proposing that if
more recent data subsequently become available (for example, a more
recent estimate of the market basket increase and the MFP adjustment),
we would use such data, if appropriate, to determine the update in the
final rule.
We are inviting public comments on our proposal.
2. Proposed FY 2019 Puerto Rico Hospital Update
As discussed in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56937
through 56938), prior to January 1, 2016, Puerto Rico hospitals were
paid based on 75 percent of the national standardized amount and 25
percent of the Puerto Rico-specific standardized amount. Section 601 of
Public Law 114-113 amended section 1886(d)(9)(E) of the Act to specify
that the payment calculation with respect to operating costs of
inpatient hospital services of a subsection (d) Puerto Rico hospital
for inpatient hospital discharges on or after January 1, 2016, shall
use 100 percent of the national standardized amount. Because Puerto
Rico hospitals are no longer paid with a Puerto Rico-specific
standardized amount under the amendments to section 1886(d)(9)(E) of
the Act, there is no longer a need for us to determine an update to the
Puerto Rico standardized amount. Hospitals in Puerto Rico are now paid
100 percent of the national standardized amount and, therefore, are
subject to the same update to the national standardized amount
discussed under section IV.B.1. of the preamble of this proposed rule.
Accordingly, in this FY 2019 IPPS/LTCH PPS proposed rule, for FY 2019,
we are proposing an applicable percentage increase of 1.25 percent to
the standardized amount for hospitals located in Puerto Rico.
We note that section 1886(b)(3)(B)(viii) of the Act, which
specifies the adjustment to the applicable percentage increase for
``subsection (d)'' hospitals that do not submit quality data under the
rules established by the Secretary, is not

[[Page 20383]]

applicable to hospitals located in Puerto Rico.
In addition, section 602 of Public Law 114-113 amended section
1886(n)(6)(B) of the Act to specify that Puerto Rico hospitals are
eligible for incentive payments for the meaningful use of certified EHR
technology, effective beginning FY 2016, and also to apply the
adjustments to the applicable percentage increase under section
1886(b)(3)(B)(ix) of the Act to Puerto Rico hospitals that are not
meaningful EHR users, effective FY 2022. Accordingly, because the
provisions of section 1886(b)(3)(B)(ix) of the Act are not applicable
to hospitals located in Puerto Rico until FY 2022, the adjustments
under this provision are not applicable for FY 2019.
We are inviting public comments on our proposals.

C. Rural Referral Centers (RRCs) Proposed Annual Updates to Case-Mix
Index and Discharge Criteria (Sec. 412.96)

Under the authority of section 1886(d)(5)(C)(i) of the Act, the
regulations at Sec. 412.96 set forth the criteria that a hospital must
meet in order to qualify under the IPPS as a rural referral center
(RRC). RRCs receive some special treatment under both the DSH payment
adjustment and the criteria for geographic reclassification.
Section 402 of Public Law 108-173 raised the DSH payment adjustment
for RRCs such that they are not subject to the 12[dash]percent cap on
DSH payments that is applicable to other rural hospitals. RRCs also are
not subject to the proximity criteria when applying for geographic
reclassification. In addition, they do not have to meet the requirement
that a hospital's average hourly wage must exceed, by a certain
percentage, the average hourly wage of the labor market area in which
the hospital is located.
Section 4202(b) of Public Law 105-33 states, in part, that any
hospital classified as an RRC by the Secretary for FY 1991 shall be
classified as such an RRC for FY 1998 and each subsequent fiscal year.
In the August 29, 1997 IPPS final rule with comment period (62 FR
45999), we reinstated RRC status for all hospitals that lost that
status due to triennial review or MGCRB reclassification. However, we
did not reinstate the status of hospitals that lost RRC status because
they were now urban for all purposes because of the OMB designation of
their geographic area as urban. Subsequently, in the August 1, 2000
IPPS final rule (65 FR 47089), we indicated that we were revisiting
that decision. Specifically, we stated that we would permit hospitals
that previously qualified as an RRC and lost their status due to OMB
redesignation of the county in which they are located from rural to
urban, to be reinstated as an RRC. Otherwise, a hospital seeking RRC
status must satisfy all of the other applicable criteria. We use the
definitions of ``urban'' and ``rural'' specified in Subpart D of 42 CFR
part 412. One of the criteria under which a hospital may qualify as an
RRC is to have 275 or more beds available for use (Sec.
412.96(b)(1)(ii)). A rural hospital that does not meet the bed size
requirement can qualify as an RRC if the hospital meets two mandatory
prerequisites (a minimum case[dash]mix index (CMI) and a minimum number
of discharges), and at least one of three optional criteria (relating
to specialty composition of medical staff, source of inpatients, or
referral volume). (We refer readers to Sec. 412.96(c)(1) through
(c)(5) and the September 30, 1988 Federal Register (53 FR 38513) for
additional discussion.) With respect to the two mandatory
prerequisites, a hospital may be classified as an RRC if--
The hospital's CMI is at least equal to the lower of the
median CMI for urban hospitals in its census region, excluding
hospitals with approved teaching programs, or the median CMI for all
urban hospitals nationally; and
The hospital's number of discharges is at least 5,000 per
year, or, if fewer, the median number of discharges for urban hospitals
in the census region in which the hospital is located. The number of
discharges criterion for an osteopathic hospital is at least 3,000
discharges per year, as specified in section 1886(d)(5)(C)(i) of the
Act.
1. Case-Mix Index (CMI)
Section 412.96(c)(1) provides that CMS establish updated national
and regional CMI values in each year's annual notice of prospective
payment rates for purposes of determining RRC status. The methodology
we used to determine the national and regional CMI values is set forth
in the regulations at Sec. 412.96(c)(1)(ii). The proposed national
median CMI value for FY 2019 is based on the CMI values of all urban
hospitals nationwide, and the proposed regional median CMI values for
FY 2019 are based on the CMI values of all urban hospitals within each
census region, excluding those hospitals with approved teaching
programs (that is, those hospitals that train residents in an approved
GME program as provided in Sec. 413.75). These proposed values are
based on discharges occurring during FY 2017 (October 1, 2016 through
September 30, 2017), and include bills posted to CMS' records through
December 2017.
In this FY 2019 IPPS/LTCH PPS proposed rule, we are proposing that,
in addition to meeting other criteria, if rural hospitals with fewer
than 275 beds are to qualify for initial RRC status for cost reporting
periods beginning on or after October 1, 2018, they must have a CMI
value for FY 2017 that is at least--
1.66185 (national--all urban); or
The median CMI value (not transfer[dash]adjusted) for
urban hospitals (excluding hospitals with approved teaching programs as
identified in Sec. 413.75) calculated by CMS for the census region in
which the hospital is located.
The proposed median CMI values by region are set forth in the table
below. We intend to update these proposed CMI values in the FY 2019
final rule to reflect the updated FY 2017 MedPAR file, which will
contain data from additional bills received through March 2018.

------------------------------------------------------------------------
Case-mix index
Region value
------------------------------------------------------------------------
1. New England (CT, ME, MA, NH, RI, VT)................. 1.4071
2. Middle Atlantic (PA, NJ, NY)......................... 1.4694
3. South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV).. 1.5486
4. East North Central (IL, IN, MI, OH, WI).............. 1.5765
5. East South Central (AL, KY, MS, TN).................. 1.5289
6. West North Central (IA, KS, MN, MO, NE, ND, SD)...... 1.6387
7. West South Central (AR, LA, OK, TX).................. 1.6872
8. Mountain (AZ, CO, ID, MT, NV, NM, UT, WY)............ 1.7366
9. Pacific (AK, CA, HI, OR, WA)......................... 1.6619
------------------------------------------------------------------------

[[Page 20384]]

A hospital seeking to qualify as an RRC should obtain its hospital-
specific CMI value (not transfer-adjusted) from its MAC. Data are
available on the Provider Statistical and Reimbursement (PS&R) System.
In keeping with our policy on discharges, the CMI values are computed
based on all Medicare patient discharges subject to the IPPS MS-DRG-
based payment.
We are inviting public comments on our proposal.
2. Discharges
Section 412.96(c)(2)(i) provides that CMS set forth the national
and regional numbers of discharges criteria in each year's annual
notice of prospective payment rates for purposes of determining RRC
status. As specified in section 1886(d)(5)(C)(ii) of the Act, the
national standard is set at 5,000 discharges. In this FY 2019 IPPS/LTCH
PPS proposed rule, for FY 2019, we are proposing to update the regional
standards based on discharges for urban hospitals' cost reporting
periods that began during FY 2016 (that is, October 1, 2015 through
September 30, 2016), which are the latest cost report data available at
the time this proposed rule was developed. Therefore, we are proposing
that, in addition to meeting other criteria, a hospital, if it is to
qualify for initial RRC status for cost reporting periods beginning on
or after October 1, 2018, must have, as the number of discharges for
its cost reporting period that began during FY 2016, at least--
5,000 (3,000 for an osteopathic hospital); or
If less, the median number of discharges for urban
hospitals in the census region in which the hospital is located, as
reflected in the table below. We intend to update these numbers in the
FY 2019 final rule based on the latest available cost report data.

------------------------------------------------------------------------
Number of
Region discharges
------------------------------------------------------------------------
1. New England (CT, ME, MA, NH, RI, VT)................. 8,431
2. Middle Atlantic (PA, NJ, NY)......................... 9,762
3. South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV).. 10,643
4. East North Central (IL, IN, MI, OH, WI).............. 8,297
5. East South Central (AL, KY, MS, TN).................. 7,796
6. West North Central (IA, KS, MN, MO, NE, ND, SD)...... 7,721
7. West South Central (AR, LA, OK, TX).................. 5,456
8. Mountain (AZ, CO, ID, MT, NV, NM, UT, WY)............ 8,819
9. Pacific (AK, CA, HI, OR, WA)......................... 9,017
------------------------------------------------------------------------

We note that because the median number of discharges for hospitals
in each census region is greater than the national standard of 5,000
discharges, under this proposed rule, 5,000 discharges is the minimum
criterion for all hospitals, except for osteopathic hospitals for which
the minimum criterion is 3,000 discharges.
We are inviting public comments on our proposal.

D. Proposed Payment Adjustment for Low-Volume Hospitals (Sec. 412.101)

1. Background
Section 1886(d)(12) of the Act provides for an additional payment
to each qualifying low-volume hospital under the IPPS beginning in FY
2005. The additional payment adjustment to a low-volume hospital
provided for under section 1886(d)(12) of the Act is in addition to any
payment calculated under section 1886 of the Act. Therefore, the
additional payment adjustment is based on the per discharge amount paid
to the qualifying hospital under section 1886 of the Act. In other
words, the low-volume hospital payment adjustment is based on total per
discharge payments made under section 1886 of the Act, including
capital, DSH, IME, and outlier payments. For SCHs and MDHs, the low-
volume hospital payment adjustment is based in part on either the
Federal rate or the hospital-specific rate, whichever results in a
greater operating IPPS payment.
Section 50204 of the Bipartisan Budget Act of 2018 (Pub. L. 115-
123) modified the definition of a low-volume hospital and the
methodology for calculating the payment adjustment for low[dash]volume
hospitals for FYs 2019 through 2022. (Section 50204 also extended prior
changes to the definition of a low-volume hospital and the methodology
for calculating the payment adjustment for low-volume hospitals through
FY 2018, as discussed later in this section.). Beginning with FY 2023,
the low[dash]volume hospital qualifying criteria and payment adjustment
will revert to the statutory requirements that were in effect prior to
FY 2011. (For additional information on the low-volume hospital payment
adjustment prior to FY 2018, we refer readers to the FY 2017 IPPS/LTCH
PPS final rule (81 FR 56941 through 56943). For additional information
on the low-volume hospital payment adjustment for FY 2018, we refer
readers to the FY 2018 IPPS notice (CMS-1677-N) that appears elsewhere
in this issue of the Federal Register.) In section IV.D.2.b. of the
preamble of this proposed rule, we discuss the proposed low-volume
hospital payment adjustment policies for FY 2019.
2. Proposed Implementation of Changes to the Low-Volume Hospital
Definition and Payment Adjustment Methodology Made by the Bipartisan
Budget Act of 2018
a. Extension of the Temporary Changes to the Low-Volume Hospital
Definition and Payment Adjustment Methodology for FY 2018 and Proposed
Conforming Changes to Regulations
Section 50204 of the Bipartisan Budget Act of 2018 extended through
FY 2018 certain changes to the low-volume hospital payment policy made
by the Affordable Care Act and extended by subsequent legislation. We
addressed this extension of the temporary changes to the low-volume
hospital payment policy for FY 2018 in a notice (CMS-1677-N) that
appears elsewhere in this issue of the Federal Register. However, in
this FY 2019 IPPS/LTCH PPS proposed rule, we are proposing to make
conforming changes to the regulations text in Sec. 412.101 to reflect
the extension of the changes to the qualifying criteria and the payment
adjustment methodology for low-volume hospitals through FY 2018, in
accordance with section 50204 of the Bipartisan Budget Act of 2018.
Specifically, we are proposing to make conforming changes to paragraphs
(b)(2)(ii) and (c)(2) introductory text of Sec. 412.101 to reflect
that the low-volume hospital payment adjustment policy in effect for FY
2018 is the same

[[Page 20385]]

low[dash]volume hospital payment adjustment policy in effect for FYs
2011 through 2017 (as described in the FY 2018 IPPS notice (CMS-1677-N)
that appears elsewhere in this issue of the Federal Register).
b. Temporary Changes to the Low-Volume Hospital Definition and Payment
Adjustment Methodology for FYs 2019 Through 2022
As discussed earlier, section 50204 of the Bipartisan Budget Act of
2018 further modified the definition of a low-volume hospital and the
methodology for calculating the payment adjustment for low-volume
hospitals for FYs 2019 through 2022. Specifically, section 50204
amended the qualifying criteria for low-volume hospitals under section
1886(d)(12)(C)(i) of the Act to specify that, for FYs 2019 through
2022, a subsection (d) hospital qualifies as a low-volume hospital if
it is more than 15 road miles from another subsection (d) hospital and
has less than 3,800 total discharges during the fiscal year. Section
50204 also amended section 1886(d)(12)(D) of the Act to provide that,
for discharges occurring in FYs 2019 through 2022, the Secretary shall
determine the applicable percentage increase using a continuous, linear
sliding scale ranging from an additional 25 percent payment adjustment
for low-volume hospitals with 500 or fewer discharges to a zero percent
additional payment for low-volume hospitals with more than 3,800
discharges in the fiscal year. Consistent with the requirements of
section 1886(d)(12)(C)(ii) of the Act, the term ``discharge'' for
purposes of these provisions refers to total discharges, regardless of
payer (that is, Medicare and non-Medicare discharges).
To implement this requirement, we are proposing a continuous,
linear sliding scale formula to determine the low-volume hospital
payment adjustment for FYs 2019 through 2022 that is similar to the
continuous, linear sliding scale formula used to determine the
low[dash]volume hospital payment adjustment originally established by
the Affordable Care Act and implemented in the regulations at Sec.
412.101(c)(2)(ii) in the FY 2011 IPPS/LTCH PPS final rule (75 FR 50240
through 50241). Consistent with the statute, we are proposing that
qualifying hospitals with 500 or fewer total discharges would receive a
low-volume hospital payment adjustment of 25 percent. For qualifying
hospitals with fewer than 3,800 discharges but more than 500
discharges, the low-volume payment adjustment would be calculated by
subtracting from 25 percent the proportion of payments associated with
the discharges in excess of 500. That proportion is calculated by
multiplying the discharges in excess of 500 by a fraction that is equal
to the maximum available add-on payment (25 percent) divided by a
number represented by the range of discharges for which this policy
applies (3,800 minus 500, or 3,300). In other words, for qualifying
hospitals with fewer than 3,800 total discharges but more than 500
total discharges, we are proposing the low-volume hospital payment
adjustment for FYs 2019 through 2022 would be calculated using the
following formula:

Low-Volume Hospital Payment Adjustment = 0.25-[0.25/3300] x (number of
total discharges-500) = (95/330) x (number of total discharges/13,200).

To reflect these changes for FYs 2019 through 2022, we are
proposing to revise Sec. 412.101(b)(2) by adding paragraph (iii) to
specify that a hospital must have fewer than 3,800 total discharges,
which includes Medicare and non-Medicare discharges, during the fiscal
year, based on the hospital's most recently submitted cost report, and
be located more than 15 road miles from the nearest ``subsection (d)''
hospital, consistent with the amendments to section 1886(d)(12)(C)(i)
of the Act as provided by section 50204(a)(2) of the Bipartisan Budget
Act of 2018. We also are proposing to add paragraph (3) to Sec.
412.101(c), consistent with section 1886(d)(12)(D) of the Act as
amended by section 50204(a)(3) of the Bipartisan Budget Act of 2018, to
specify that:
For low-volume hospitals with 500 or fewer total
discharges during the fiscal year, the low[dash]volume hospital payment
adjustment is an additional 25 percent for each Medicare discharge.
For low-volume hospitals with total discharges during the
fiscal year of more than 500 and fewer than 3,800, the adjustment for
each Medicare discharge is an additional percent calculated using the
formula [(95/330) x (number of total discharges/13,200)].
The ``number of total discharges'' would be determined as total
discharges, which includes Medicare and non-Medicare discharges during
the fiscal year, based on the hospital's most recently submitted cost
report.
In addition, in accordance with the provisions of section 50204(a)
of the Bipartisan Budget Act of 2018, for FY 2023 and subsequent fiscal
years, we are proposing to make conforming changes to paragraphs
(b)(2)(i) and (c)(1) of Sec. 412.101 to reflect that the
low[dash]volume payment adjustment policy in effect for these years is
the same low-volume hospital payment adjustment policy in effect for
FYs 2005 through 2010, as described earlier. Lastly, we are proposing
to make conforming changes to paragraph (d) (which relates to
eligibility of new hospitals for the adjustment), consistent with the
provisions of section 50204(a) of the Bipartisan Budget Act of 2018,
for FY 2019 and subsequent fiscal years, as total discharges are used
under the low-volume hospital payment adjustment policy in effect for
those years as described earlier.
3. Proposed Process for Requesting and Obtaining the Low-Volume
Hospital Payment Adjustment
In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50238 through 50275
and 50414) and subsequent rulemaking (for example, the FY 2018 IPPS/
LTCH PPS final rule (82 FR 38186 through 38188)), we discussed the
process for requesting and obtaining the low-volume hospital payment
adjustment. Under this previously established process, a hospital makes
a written request for the low[dash]volume payment adjustment under
Sec. 412.101 to its MAC. This request must contain sufficient
documentation to establish that the hospital meets the applicable
mileage and discharge criteria. The MAC will determine if the hospital
qualifies as a low-volume hospital by reviewing the data the hospital
submits with its request for low-volume hospital status in addition to
other available data. Under this approach, a hospital will know in
advance whether or not it will receive a payment adjustment under the
low-volume hospital policy. The MAC and CMS may review available data,
in addition to the data the hospital submits with its request for
low[dash]volume hospital status, in order to determine whether or not
the hospital meets the qualifying criteria. (For additional information
on our existing process for requesting the low[dash]volume hospital
payment adjustment, we refer readers to the FY 2018 IPPS/LTCH PPS final
rule (82 FR 38185 through 38188).)
As described earlier, for FY 2019 and subsequent fiscal years, the
discharge determination is made based on the hospital's number of total
discharges, that is, Medicare and non[dash]Medicare discharges, as was
the case for FYs 2005 through 2010. Under Sec. 412.101(b)(2)(i) and
proposed new Sec. 412.101(b)(2)(iii), a hospital's most recently
submitted cost report is used to determine if the hospital meets the
discharge criterion to receive the low-volume payment adjustment in the
current year. We use cost report data to determine if a hospital meets
the discharge criterion because this is the best available data

[[Page 20386]]

source that includes information on both Medicare and non-Medicare
discharges. (For FYs 2011 through 2018, the most recently available
MedPAR data were used to determine the hospital's Medicare discharges
because non-Medicare discharges were not used to determine if a
hospital met the discharge criterion for those years.) Therefore, a
hospital should refer to its most recently submitted cost report for
total discharges (Medicare and non-Medicare) in order to decide whether
or not to apply for low-volume hospital status for a particular fiscal
year.
In addition to the discharge criterion, for FY 2019 and for
subsequent fiscal years, eligibility for the low[dash]volume hospital
payment adjustment is also dependent upon the hospital meeting the
applicable mileage criterion specified in Sec. 412.101(b)(2)(i) or
proposed new Sec. 412.101(b)(2)(iii) for the fiscal year.
Specifically, to meet the mileage criterion to qualify for the low-
volume hospital payment adjustment for FY 2019, as noted earlier, a
hospital must be located more than 15 road miles from the nearest
subsection (d) hospital. We define in Sec. 412.101(a) the term ``road
miles'' to mean ``miles'' as defined in Sec. 412.92(c)(1) (75 FR 50238
through 50275 and 50414). For establishing that the hospital meets the
mileage criterion, the use of a web[dash]based mapping tool as part of
the documentation is acceptable. The MAC will determine if the
information submitted by the hospital, such as the name and street
address of the nearest hospitals, location on a map, and distance from
the hospital requesting low-volume hospital status, is sufficient to
document that it meets the mileage criterion. If not, the MAC will
follow up with the hospital to obtain additional necessary information
to determine whether or not the hospital meets the applicable mileage
criterion.
In accordance with our previously established process, a hospital
must make a written request for low-volume hospital status that is
received by its MAC by September 1 immediately preceding the start of
the Federal fiscal year for which the hospital is applying for low-
volume hospital status in order for the applicable low-volume hospital
payment adjustment to be applied to payments for its discharges for the
fiscal year beginning on or after October 1 immediately following the
request (that is, the start of the Federal fiscal year). For a hospital
whose request for low-volume hospital status is received after
September 1, if the MAC determines the hospital meets the criteria to
qualify as a low-volume hospital, the MAC will apply the applicable
low-volume hospital payment adjustment to determine payment for the
hospital's discharges for the fiscal year, effective prospectively
within 30 days of the date of the MAC's low-volume status
determination.
Specifically, for FY 2019, we are proposing that a hospital must
submit a written request for low-volume hospital status to its MAC that
includes sufficient documentation to establish that the hospital meets
the applicable mileage and discharge criteria (as described earlier).
Consistent with historical practice, for FY 2019, we are proposing that
a hospital's written request must be received by its MAC no later than
September 1, 2018 in order for the low-volume hospital payment
adjustment to be applied to payments for its discharges beginning on or
after October 1, 2018. If a hospital's written request for low-volume
hospital status for FY 2019 is received after September 1, 2018, and if
the MAC determines the hospital meets the criteria to qualify as a low-
volume hospital, the MAC will apply the low-volume hospital payment
adjustment to determine the payment for the hospital's FY 2019
discharges, effective prospectively within 30 days of the date of the
MAC's low-volume hospital status determination.
Under this process, a hospital receiving the low-volume hospital
payment adjustment for FY 2018 may continue to receive a low-volume
hospital payment adjustment without reapplying if it continues to meet
the mileage criterion (which remains unchanged for FY 2019) and it also
meets the applicable discharge criterion as modified for FY 2019 (that
is, 3,800 or fewer total discharges). In this case, a hospital's
request can include a verification statement that it continues to meet
the mileage criterion applicable for FY 2019. (Determination of meeting
the discharge criterion is discussed earlier in this section.) We note
that a hospital must continue to meet the applicable qualifying
criteria as a low-volume hospital (that is, the hospital must meet the
applicable discharge criterion and mileage criterion for the fiscal
year) in order to receive the payment adjustment in that fiscal year;
that is, low-volume hospital status is not based on a ``one-time''
qualification (75 FR 50238 through 50275).
We are inviting public comments on our proposal.

E. Indirect Medical Education (IME) Payment Adjustment Factor (Sec.
412.105)

1. IME Payment Adjustment Factor for FY 2019
Under the IPPS, an additional payment amount is made to hospitals
with residents in an approved graduate medical education (GME) program
in order to reflect the higher indirect patient care costs of teaching
hospitals relative to nonteaching hospitals. The payment amount is
determined by use of a statutorily specified adjustment factor. The
regulations regarding the calculation of this additional payment, known
as the IME adjustment, are located at Sec. 412.105. We refer readers
to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51680) for a full
discussion of the IME adjustment and IME adjustment factor. Section
1886(d)(5)(B)(ii)(XII) of the Act provides that, for discharges
occurring during FY 2008 and fiscal years thereafter, the IME formula
multiplier is 1.35. Accordingly, for discharges occurring during FY
2019, the formula multiplier is 1.35. We estimate that application of
this formula multiplier for the FY 2019 IME adjustment will result in
an increase in IPPS payment of 5.5 percent for every approximately 10
percent increase in the hospital's resident-to-bed ratio.
2. Proposed Technical Correction to Regulations at 42 CFR
412.105(f)(1)(vii)
In the regulation governing the IME payment adjustment at Sec.
412.105(f)(1)(vii), we have identified an inadvertent omission of a
cross-reference relating to an adjustment to a hospital's full-time
equivalent cap for a new medical residency training program. Section
412.105(f)(1)(vii) states that if a hospital establishes a new medical
residency training program, as defined in Sec. 413.79(l), the
hospital's full-time equivalent cap may be adjusted in accordance with
the provisions of Sec. 413.79(e)(1) through (e)(4). However, there is
a paragraph (e)(5) under Sec. 413.79 that we have inadvertently
omitted that applies to the regulation at Sec. 412.105(f)(1)(vii). In
this proposed rule, we are proposing to correct this omission by
removing the reference to ``Sec. 413.79(e)(1) through (e)(4)'' and
adding in its place the reference ``Sec. 413.79(e)'' to make clear
that the provisions of Sec. 413.79(e)(1) through (e)(5) apply. This
proposed revision is intended to correct the omission and is not
intended to substantially change the underlying regulation.

F. Proposed Payment Adjustment for Medicare Disproportionate Share
Hospitals (DSHs) for FY 2019 (Sec. 412.106)

1. General Discussion
Section 1886(d)(5)(F) of the Act provides for additional Medicare
payments to subsection (d) hospitals

[[Page 20387]]

that serve a significantly disproportionate number of low-income
patients. The Act specifies two methods by which a hospital may qualify
for the Medicare disproportionate share hospital (DSH) adjustment.
Under the first method, hospitals that are located in an urban area and
have 100 or more beds may receive a Medicare DSH payment adjustment if
the hospital can demonstrate that, during its cost reporting period,
more than 30 percent of its net inpatient care revenues are derived
from State and local government payments for care furnished to needy
patients with low incomes. This method is commonly referred to as the
``Pickle method.'' The second method for qualifying for the DSH payment
adjustment, which is the most common, is based on a complex statutory
formula under which the DSH payment adjustment is based on the
hospital's geographic designation, the number of beds in the hospital,
and the level of the hospital's disproportionate patient percentage
(DPP). A hospital's DPP is the sum of two fractions: The ``Medicare
fraction'' and the ``Medicaid fraction.'' The Medicare fraction (also
known as the ``SSI fraction'' or ``SSI ratio'') is computed by dividing
the number of the hospital's inpatient days that are furnished to
patients who were entitled to both Medicare Part A and Supplemental
Security Income (SSI) benefits by the hospital's total number of
patient days furnished to patients entitled to benefits under Medicare
Part A. The Medicaid fraction is computed by dividing the hospital's
number of inpatient days furnished to patients who, for such days, were
eligible for Medicaid, but were not entitled to benefits under Medicare
Part A, by the hospital's total number of inpatient days in the same
period.
Because the DSH payment adjustment is part of the IPPS, the
statutory references to ``days'' in section 1886(d)(5)(F) of the Act
have been interpreted to apply only to hospital acute care inpatient
days. Regulations located at 42 CFR 412.106 govern the Medicare DSH
payment adjustment and specify how the DPP is calculated as well as how
beds and patient days are counted in determining the Medicare DSH
payment adjustment. Under Sec. 412.106(a)(1)(i), the number of beds
for the Medicare DSH payment adjustment is determined in accordance
with bed counting rules for the IME adjustment under Sec. 412.105(b).
Section 3133 of the Patient Protection and Affordable Care Act, as
amended by section 10316 of the same Act and section 1104 of the Health
Care and Education Reconciliation Act (Pub. L. 111-152), added a
section 1886(r) to the Act that modifies the methodology for computing
the Medicare DSH payment adjustment. (For purposes of this proposed
rule, we refer to these provisions collectively as section 3133 of the
Affordable Care Act.) Beginning with discharges in FY 2014, hospitals
that qualify for Medicare DSH payments under section 1886(d)(5)(F) of
the Act receive 25 percent of the amount they previously would have
received under the statutory formula for Medicare DSH payments. This
provision applies equally to hospitals that qualify for DSH payments
under section 1886(d)(5)(F)(i)(I) of the Act and those hospitals that
qualify under the Pickle method under section 1886(d)(5)(F)(i)(II) of
the Act.
The remaining amount, equal to an estimate of 75 percent of what
otherwise would have been paid as Medicare DSH payments, reduced to
reflect changes in the percentage of individuals who are uninsured, is
available to make additional payments to each hospital that qualifies
for Medicare DSH payments and that has uncompensated care. The payments
to each hospital for a fiscal year are based on the hospital's amount
of uncompensated care for a given time period relative to the total
amount of uncompensated care for that same time period reported by all
hospitals that receive Medicare DSH payments for that fiscal year.
As provided by section 3133 of the Affordable Care Act, section
1886(r) of the Act requires that, for FY 2014 and each subsequent
fiscal year, a subsection (d) hospital that would otherwise receive DSH
payments made under section 1886(d)(5)(F) of the Act receives two
separately calculated payments. Specifically, section 1886(r)(1) of the
Act provides that the Secretary shall pay to such subsection (d)
hospital (including a Pickle hospital) 25 percent of the amount the
hospital would have received under section 1886(d)(5)(F) of the Act for
DSH payments, which represents the empirically justified amount for
such payment, as determined by the MedPAC in its March 2007 Report to
Congress. We refer to this payment as the ``empirically justified
Medicare DSH payment.''
In addition to this empirically justified Medicare DSH payment,
section 1886(r)(2) of the Act provides that, for FY 2014 and each
subsequent fiscal year, the Secretary shall pay to such subsection (d)
hospital an additional amount equal to the product of three factors.
The first factor is the difference between the aggregate amount of
payments that would be made to subsection (d) hospitals under section
1886(d)(5)(F) of the Act if subsection (r) did not apply and the
aggregate amount of payments that are made to subsection (d) hospitals
under section 1886(r)(1) of the Act for such fiscal year. Therefore,
this factor amounts to 75 percent of the payments that would otherwise
be made under section 1886(d)(5)(F) of the Act.
The second factor is, for FY 2018 and subsequent fiscal years, 1
minus the percent change in the percent of individuals who are
uninsured, as determined by comparing the percent of individuals who
were uninsured in 2013 (as estimated by the Secretary, based on data
from the Census Bureau or other sources the Secretary determines
appropriate, and certified by the Chief Actuary of CMS), and the
percent of individuals who were uninsured in the most recent period for
which data are available (as so estimated and certified), minus 0.2
percentage point for FYs 2018 and 2019.
The third factor is a percent that, for each subsection (d)
hospital, represents the quotient of the amount of uncompensated care
for such hospital for a period selected by the Secretary (as estimated
by the Secretary, based on appropriate data), including the use of
alternative data where the Secretary determines that alternative data
are available which are a better proxy for the costs of subsection (d)
hospitals for treating the uninsured, and the aggregate amount of
uncompensated care for all subsection (d) hospitals that receive a
payment under section 1886(r) of the Act. Therefore, this third factor
represents a hospital's uncompensated care amount for a given time
period relative to the uncompensated care amount for that same time
period for all hospitals that receive Medicare DSH payments in the
applicable fiscal year, expressed as a percent.
For each hospital, the product of these three factors represents
its additional payment for uncompensated care for the applicable fiscal
year. We refer to the additional payment determined by these factors as
the ``uncompensated care payment.''
Section 1886(r) of the Act applies to FY 2014 and each subsequent
fiscal year. In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50620
through 50647) and the FY 2014 IPPS interim final rule with comment
period (78 FR 61191 through 61197), we set forth our policies for
implementing the required changes to the Medicare DSH payment
methodology made by section 3133 of the Affordable Care Act for FY
2014. In those rules, we noted that, because section 1886(r) of the Act
modifies the

[[Page 20388]]

payment required under section 1886(d)(5)(F) of the Act, it affects
only the DSH payment under the operating IPPS. It does not revise or
replace the capital IPPS DSH payment provided under the regulations at
42 CFR part 412, subpart M, which were established through the exercise
of the Secretary's discretion in implementing the capital IPPS under
section 1886(g)(1)(A) of the Act.
Finally, section 1886(r)(3) of the Act provides that there shall be
no administrative or judicial review under section 1869, section 1878,
or otherwise of any estimate of the Secretary for purposes of
determining the factors described in section 1886(r)(2) of the Act or
of any period selected by the Secretary for the purpose of determining
those factors. Therefore, there is no administrative or judicial review
of the estimates developed for purposes of applying the three factors
used to determine uncompensated care payments, or the periods selected
in order to develop such estimates.
2. Eligibility for Empirically Justified Medicare DSH Payments and
Uncompensated Care Payments
As explained earlier, the payment methodology under section 3133 of
the Affordable Care Act applies to ``subsection (d) hospitals'' that
would otherwise receive a DSH payment made under section 1886(d)(5)(F)
of the Act. Therefore, hospitals must receive empirically justified
Medicare DSH payments in a fiscal year in order to receive an
additional Medicare uncompensated care payment for that year.
Specifically, section 1886(r)(2) of the Act states that, in addition to
the payment made to a subsection (d) hospital under section 1886(r)(1)
of the Act, the Secretary shall pay to such subsection (d) hospitals an
additional amount. Because section 1886(r)(1) of the Act refers to
empirically justified Medicare DSH payments, the additional payment
under section 1886(r)(2) of the Act is limited to hospitals that
receive empirically justified Medicare DSH payments in accordance with
section 1886(r)(1) of the Act for the applicable fiscal year.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50622) and the FY
2014 IPPS interim final rule with comment period (78 FR 61193), we
provided that hospitals that are not eligible to receive empirically
justified Medicare DSH payments in a fiscal year will not receive
uncompensated care payments for that year. We also specified that we
would make a determination concerning eligibility for interim
uncompensated care payments based on each hospital's estimated DSH
status for the applicable fiscal year (using the most recent data that
are available). We indicated that our final determination on the
hospital's eligibility for uncompensated care payments will be based on
the hospital's actual DSH status at cost report settlement for that
payment year.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50622) and the FY
2015 IPPS/LTCH PPS final rule (79 FR 50006), we specified our policies
for several specific classes of hospitals within the scope of section
1886(r) of the Act. We refer readers to those two final rules for a
detailed discussion of our policies. In summary, we specified the
following:
Subsection (d) Puerto Rico hospitals that are eligible for
DSH payments also are eligible to receive empirically justified
Medicare DSH payments and uncompensated care payments under the new
payment methodology (78 FR 50623 and 79 FR 50006).
Maryland hospitals are not eligible to receive empirically
justified Medicare DSH payments and uncompensated care payments under
the payment methodology of section 1886(r) of the Act because they are
not paid under the IPPS. As discussed in the FY 2015 IPPS/LTCH PPS
final rule (79 FR 50007), effective January 1, 2014, the State of
Maryland elected to no longer have Medicare pay Maryland hospitals in
accordance with section 1814(b)(3) of the Act and entered into an
agreement with CMS that Maryland hospitals would be paid under the
Maryland All-Payer Model. The Maryland All-Payer Model was scheduled to
end on December 31, 2018, but CMS and the State have agreed to extend
it through December 31, 2019. Alternatively, CMS and the State may
enter into an agreement to govern payments to Maryland hospitals under
a new payment model. Under either scenario, Maryland hospitals would
not be paid under the IPPS in FY 2019, and would remain ineligible to
receive empirically justified Medicare DSH payments or uncompensated
care payments under section 1886(r) of the Act.
Sole community hospitals (SCHs) that are paid under their
hospital-specific rate are not eligible for Medicare DSH payments. SCHs
that are paid under the IPPS Federal rate receive interim payments
based on what we estimate and project their DSH status to be prior to
the beginning of the Federal fiscal year (based on the best available
data at that time) subject to settlement through the cost report, and
if they receive interim empirically justified Medicare DSH payments in
a fiscal year, they also will receive interim uncompensated care
payments for that fiscal year on a per discharge basis, subject as well
to settlement through the cost report. Final eligibility determinations
will be made at the end of the cost reporting period at settlement, and
both interim empirically justified Medicare DSH payments and
uncompensated care payments will be adjusted accordingly (78 FR 50624
and 79 FR 50007).
Medicare-dependent, small rural hospitals (MDHs) are paid
based on the IPPS Federal rate or, if higher, the IPPS Federal rate
plus 75 percent of the amount by which the Federal rate is exceeded by
the updated hospital-specific rate from certain specified base years
(76 FR 51684). The IPPS Federal rate that is used in the MDH payment
methodology is the same IPPS Federal rate that is used in the SCH
payment methodology. Section 50205 of the Bipartisan Budget Act of 2018
(Pub. L. 115-123), enacted on February 9, 2018, extended the MDH
program for discharges on or after October 1, 2017, through September
30, 2022. Because MDHs are paid based on the IPPS Federal rate, they
continue to be eligible to receive empirically justified Medicare DSH
payments and uncompensated care payments if their DPP is at least 15
percent, and we apply the same process to determine MDHs' eligibility
for empirically justified Medicare DSH and uncompensated care payments
as we do for all other IPPS hospitals. Due to the extension of the MDH
program, MDHs will continue to be paid based on the IPPS Federal rate
or, if higher, the IPPS Federal rate plus 75 percent of the amount by
which the Federal rate is exceeded by the updated hospital-specific
rate from certain specified base years. Accordingly, we will continue
to make a determination concerning eligibility for interim
uncompensated care payments based on each hospital's estimated DSH
status for the applicable fiscal year (using the most recent data that
are available). Our final determination on the hospital's eligibility
for uncompensated care payments will be based on the hospital's actual
DSH status at cost report settlement for that payment year. In
addition, as we do for all IPPS hospitals, we will calculate a
numerator for Factor 3 for all MDHs, regardless of whether they are
projected to be eligible for Medicare DSH payments during the fiscal
year, but the denominator for Factor 3 will be based on the
uncompensated care data from the hospitals that we have projected to be
eligible for Medicare DSH payments during the fiscal year.

[[Page 20389]]

IPPS hospitals that elect to participate in the Bundled
Payments for Care Improvement Advanced Initiative (BPCI Advanced) model
starting October 1, 2018, will continue to be paid under the IPPS and,
therefore, are eligible to receive empirically justified Medicare DSH
payments and uncompensated care payments. For further information
regarding the BPCI Advanced model, we refer readers to the CMS website
at: https://innovation.cms.gov/initiatives/bpci-advanced/.
IPPS hospitals that are participating in the
Comprehensive Care for Joint Replacement Model (80 FR 73300) continue
to be paid under the IPPS and, therefore, are eligible to receive
empirically justified Medicare DSH payments and uncompensated care
payments.
Hospitals participating in the Rural Community Hospital
Demonstration Program are not eligible to receive empirically justified
Medicare DSH payments and uncompensated care payments under section
1886(r) of the Act because they are not paid under the IPPS (78 FR
50625 and 79 FR 50008). The Rural Community Hospital Demonstration
Program was originally authorized for a 5-year period by section 410A
of the Medicare Prescription Drug, Improvement, and Modernization Act
of 2003 (MMA) (Pub. L. 108-173), and extended for another 5-year period
by sections 3123 and 10313 of the Affordable Care Act (Pub. L. 114-
255). The period of performance for this 5-year extension period ended
December 31, 2016. Section 15003 of the 21st Century Cures Act (Pub. L.
114-255), enacted December 13, 2016, again amended section 410A of
Public Law 108-173 to require a 10-year extension period (in place of
the 5-year extension required by the Affordable Care Act), therefore
requiring an additional 5-year participation period for the
demonstration program. Section 15003 of Public Law 114-255 also
required a solicitation for applications for additional hospitals to
participate in the demonstration program. As a result, there are
currently 30 hospitals participating in the demonstration program.
Under the payment methodology that applies during the second 5 years of
the extension period under the demonstration program, these hospitals
do not receive empirically justified Medicare DSH payments, and they
are excluded from receiving interim and final uncompensated care
payments.
3. Empirically Justified Medicare DSH Payments
As we have discussed earlier, section 1886(r)(1) of the Act
requires the Secretary to pay 25 percent of the amount of the Medicare
DSH payment that would otherwise be made under section 1886(d)(5)(F) of
the Act to a subsection (d) hospital. Because section 1886(r)(1) of the
Act merely requires the program to pay a designated percentage of these
payments, without revising the criteria governing eligibility for DSH
payments or the underlying payment methodology, we stated in the FY
2014 IPPS/LTCH PPS final rule that we did not believe that it was
necessary to develop any new operational mechanisms for making such
payments. Therefore, in the FY 2014 IPPS/LTCH PPS final rule (78 FR
50626), we implemented this provision by advising MACs to simply adjust
the interim claim payments to the requisite 25 percent of what would
have otherwise been paid. We also made corresponding changes to the
hospital cost report so that these empirically justified Medicare DSH
payments can be settled at the appropriate level at the time of cost
report settlement. We provided more detailed operational instructions
and cost report instructions following issuance of the FY 2014 IPPS/
LTCH PPS final rule that are available on the CMS website at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2014-Transmittals-Items/R5P240.html.
4. Uncompensated Care Payments
As we discussed earlier, section 1886(r)(2) of the Act provides
that, for each eligible hospital in FY 2014 and subsequent years, the
uncompensated care payment is the product of three factors. These three
factors represent our estimate of 75 percent of the amount of Medicare
DSH payments that would otherwise have been paid, an adjustment to this
amount for the percent change in the national rate of uninsurance
compared to the rate of uninsurance in 2013, and each eligible
hospital's estimated uncompensated care amount relative to the
estimated uncompensated care amount for all eligible hospitals. Below
we discuss the data sources and methodologies for computing each of
these factors, our final policies for FYs 2014 through 2018, and our
proposed policies for FY 2019.
a. Calculation of Proposed Factor 1 for FY 2019
Section 1886(r)(2)(A) of the Act establishes Factor 1 in the
calculation of the uncompensated care payment. Section 1886(r)(2)(A) of
the Act states that this factor is equal to the difference between: (1)
The aggregate amount of payments that would be made to subsection (d)
hospitals under section 1886(d)(5)(F) of the Act if section 1886(r) of
the Act did not apply for such fiscal year (as estimated by the
Secretary); and (2) the aggregate amount of payments that are made to
subsection (d) hospitals under section 1886(r)(1) of the Act for such
fiscal year (as so estimated). Therefore, section 1886(r)(2)(A)(i) of
the Act represents the estimated Medicare DSH payments that would have
been made under section 1886(d)(5)(F) of the Act if section 1886(r) of
the Act did not apply for such fiscal year. Under a prospective payment
system, we would not know the precise aggregate Medicare DSH payment
amount that would be paid for a Federal fiscal year until cost report
settlement for all IPPS hospitals is completed, which occurs several
years after the end of the Federal fiscal year. Therefore, section
1886(r)(2)(A)(i) of the Act provides authority to estimate this amount,
by specifying that, for each fiscal year to which the provision
applies, such amount is to be estimated by the Secretary. Similarly,
section 1886(r)(2)(A)(ii) of the Act represents the estimated
empirically justified Medicare DSH payments to be made in a fiscal
year, as prescribed under section 1886(r)(1) of the Act. Again, section
1886(r)(2)(A)(ii) of the Act provides authority to estimate this
amount.
Therefore, Factor 1 is the difference between our estimates of: (1)
The amount that would have been paid in Medicare DSH payments for the
fiscal year, in the absence of the new payment provision; and (2) the
amount of empirically justified Medicare DSH payments that are made for
the fiscal year, which takes into account the requirement to pay 25
percent of what would have otherwise been paid under section
1886(d)(5)(F) of the Act. In other words, this factor represents our
estimate of 75 percent (100 percent minus 25 percent) of our estimate
of Medicare DSH payments that would otherwise be made, in the absence
of section 1886(r) of the Act, for the fiscal year.
As we did for FY 2018, in this FY 2019 IPPS/LTCH PPS proposed rule,
in order to determine Factor 1 in the uncompensated care payment
formula for FY 2019, we are proposing to continue the policy
established in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50628
through 50630) and in the FY 2014 IPPS interim final rule with comment
period (78 FR 61194) of

[[Page 20390]]

determining Factor 1 by developing estimates of both the aggregate
amount of Medicare DSH payments that would be made in the absence of
section 1886(r)(1) of the Act and the aggregate amount of empirically
justified Medicare DSH payments to hospitals under 1886(r)(1) of the
Act. These estimates will not be revised or updated after we know the
final Medicare DSH payments for FY 2019.
Therefore, in order to determine the two elements of proposed
Factor 1 for FY 2019 (Medicare DSH payments prior to the application of
section 1886(r)(1) of the Act, and empirically justified Medicare DSH
payments after application of section 1886(r)(1) of the Act), for this
proposed rule, we used the most recently available projections of
Medicare DSH payments for the fiscal year, as calculated by CMS' Office
of the Actuary using the most recently filed Medicare hospital cost
report with Medicare DSH payment information and the most recent
Medicare DSH patient percentages and Medicare DSH payment adjustments
provided in the IPPS Impact File.
For purposes of calculating the proposed Factor 1 and modeling the
impact of this FY 2019 IPPS/LTCH PPS proposed rule, we used the Office
of the Actuary's December 2017 Medicare DSH estimates, which were based
on data from the December 2017 update of the Medicare Hospital Cost
Report Information System (HCRIS) and the FY 2018 IPPS/LTCH PPS final
rule IPPS Impact file, published in conjunction with the publication of
the FY 2018 IPPS/LTCH PPS final rule. Because SCHs that are projected
to be paid under their hospital-specific rate are excluded from the
application of section 1886(r) of the Act, these hospitals also were
excluded from the December 2017 Medicare DSH estimates. Furthermore,
because section 1886(r) of the Act specifies that the uncompensated
care payment is in addition to the empirically justified Medicare DSH
payment (25 percent of DSH payments that would be made without regard
to section 1886(r) of the Act), Maryland hospitals, which are not
eligible to receive DSH payments, were also excluded from the Office of
the Actuary's December 2017 Medicare DSH estimates. The 30 hospitals
participating in the Rural Community Hospital Demonstration Program
were also excluded from these estimates because, under the payment
methodology that applies during the second 5 years of the extension
period, these hospitals are not eligible to receive empirically
justified Medicare DSH payments or interim and final uncompensated care
payments.
For this proposed rule, using the data sources discussed above, the
Office of the Actuary used the most recently submitted Medicare cost
report data for FY 2015 to identify Medicare DSH payments and the most
recent Medicare DSH payment adjustments provided in the Impact File
published in conjunction with the publication of the FY 2018 IPPS/LTCH
PPS final rule and applied update factors and assumptions for future
changes in utilization and case-mix to estimate Medicare DSH payments
for the upcoming fiscal year. The December 2017 Office of the Actuary
estimate for Medicare DSH payments for FY 2019, without regard to the
application of section 1886(r)(1) of the Act, was approximately $16.295
billion. This estimate excluded Maryland hospitals participating in the
Maryland All-Payer Model, hospitals participating in the Rural
Community Hospital Demonstration, and SCHs paid under their
hospital[dash]specific payment rate. Therefore, based on the December
2017 estimate, the estimate of empirically justified Medicare DSH
payments for FY 2019, with the application of section 1886(r)(1) of the
Act, is approximately $4.074 billion (or 25 percent of the total amount
of estimated Medicare DSH payments for FY 2019). Under Sec.
412.106(g)(1)(i) of the regulations, Factor 1 is the difference between
these two estimates of the Office of the Actuary. Therefore, in this
proposed rule, we are proposing that Factor 1 for FY 2019 will be
$12,221,027,954.62, which is equal to 75 percent of the total amount of
estimated Medicare DSH payments for FY 2018 ($16,294,703,939.49 minus
$4,073,675,984.87).
The Office of the Actuary's estimates for FY 2019 for this proposed
rule began with a baseline of $13.232 billion in Medicare DSH
expenditures for FY 2015. The following table shows the factors applied
to update this baseline through the current estimate for FY 2019:

Factors Applied for FY 2016 Through FY 2019 To Estimate Medicare DSH Expenditures
Using FY 2015 Baseline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated DSH
FY Update Discharges Case-mix Other Total payment (in
billions) *
--------------------------------------------------------------------------------------------------------------------------------------------------------
2016.................................................... 1.009 0.9864 1.031 1.046 1.073333 14.202
2017.................................................... 1.0015 0.9925 1.004 1.0657 1.063531 15.105
2018.................................................... 1.018088 0.9921 1.005 1.02745 1.04296 15.754
2019.................................................... 1.0175 1.011 1.005 1.0005 1.034353 16.295
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Rounded.

In this table, the discharges column shows the increase in the
number of Medicare fee-for-service (FFS) inpatient hospital discharges.
The figure for FY 2016 is based on Medicare claims data that have been
adjusted by a completion factor. The discharge figure for FY 2017 is
based on preliminary data for 2017. The discharge figures for FYs 2018
and 2019 are assumptions based on recent trends recovering back to the
long[dash]term trend and assumptions related to how many beneficiaries
will be enrolled in Medicare Advantage (MA) plans. The case-mix column
shows the increase in case-mix for IPPS hospitals. The case-mix figures
for FY 2016 and FY 2017 are based on actual data adjusted by a
completion factor. The FY 2018 increase is based on preliminary data.
The FY 2018 and FY 2019 increases are estimates and are based on the
recommendation of the 2010-2011 Medicare Technical Review Panel. The
``Other'' column shows the increase in other factors that contribute to
the Medicare DSH estimates. These factors include the difference
between the total inpatient hospital discharges and the IPPS
discharges, and various adjustments to the payment rates that have been
included over the years but are not reflected in the other columns
(such as the change in rates for the 2[dash]midnight stay policy). In
addition, the ``Other'' column includes a factor for the Medicaid
expansion due to the Affordable Care Act. The factor for Medicaid
expansion was developed

[[Page 20391]]

using public information and statements for each State regarding its
intent to implement the expansion. Based on this information, it is
assumed that 50 percent of all individuals who were potentially newly
eligible Medicaid enrollees in 2016 resided in States that had elected
to expand Medicaid eligibility and, for 2017 and thereafter, that 55
percent of such individuals would reside in expansion States. In the
future, these assumptions may change based on actual participation by
States. For a discussion of general issues regarding Medicaid
projections, we refer readers to the 2016 Actuarial Report on the
Financial Outlook for Medicaid (https://www.cms.gov/Research-Statistics-Data-and-Systems/Research/ActuarialStudies/Downloads/MedicaidReport2016.pdf). We note that, in developing their estimates of
the effect of Medicaid expansion on Medicare DSH expenditures, our
actuaries have assumed that the new Medicaid enrollees are healthier
than the average Medicaid recipient and, therefore, use fewer hospital
services.
The table below shows the factors that are included in the
``Update'' column of the above table:

----------------------------------------------------------------------------------------------------------------
Affordable
Market basket Care Act Multifactor Documentation Total update
FY percentage payment productivity and coding percentage
reductions adjustment
----------------------------------------------------------------------------------------------------------------
2016............................ 2.4 -0.2 -0.5 -0.8 0.9
2017............................ 2.7 -0.75 -0.3 -1.5 0.15
2018............................ 2.7 -0.75 -0.6 0.4588 1.8088
2019............................ 2.8 -0.75 -0.8 0.5 1.75
----------------------------------------------------------------------------------------------------------------
Note: All numbers are based on the FY 2019 President's Budget projections.

We are inviting public comments on our proposed methodology for
calculation of Factor 1 for FY 2019.
b. Calculation of Proposed Factor 2 for FY 2019
(1) Background
Section 1886(r)(2)(B) of the Act establishes Factor 2 in the
calculation of the uncompensated care payment. Specifically, section
1886(r)(2)(B)(i) of the Act provides that, for each of FYs 2014, 2015,
2016, and 2017, a factor equal to 1 minus the percent change in the
percent of individuals under the age of 65 who are uninsured, as
determined by comparing the percent of such individuals (1) who were
uninsured in 2013, the last year before coverage expansion under the
Affordable Care Act (as calculated by the Secretary based on the most
recent estimates available from the Director of the Congressional
Budget Office before a vote in either House on the Health Care and
Education Reconciliation Act of 2010 that, if determined in the
affirmative, would clear such Act for enrollment); and (2) who are
uninsured in the most recent period for which data are available (as so
calculated), minus 0.1 percentage point for FY 2014 and minus 0.2
percentage point for each of FYs 2015, 2016, and 2017.
Section 1886(r)(2)(B)(ii) of the Act permits the use of a data
source other than the CBO estimates to determine the percent change in
the rate of uninsurance beginning in FY 2018. In addition, for FY 2018
and subsequent years, the statute does not require that the estimate of
the percent of individuals who are uninsured be limited to individuals
who are under 65. Specifically, the statute states that, for FY 2018
and subsequent fiscal years, the second factor is 1 minus the percent
change in the percent of individuals who are uninsured, as determined
by comparing the percent of individuals who were uninsured in 2013 (as
estimated by the Secretary, based on data from the Census Bureau or
other sources the Secretary determines appropriate, and certified by
the Chief Actuary of CMS) and the percent of individuals who were
uninsured in the most recent period for which data are available (as so
estimated and certified), minus 0.2 percentage point for FYs 2018 and
2019.
(2) Proposed Methodology for Calculation of Factor 2 for FY 2019
As we discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR
38197), in our analysis of a potential data source for the rate of
uninsurance for purposes of computing Factor 2 in FY 2018, we
considered the following: (a) The extent to which the source accounted
for the full U.S. population; (b) the extent to which the source
comprehensively accounted for both public and private health insurance
coverage in deriving its estimates of the number of uninsured; (c) the
extent to which the source utilized data from the Census Bureau; (d)
the timeliness of the estimates; (e) the continuity of the estimates
over time; (f) the accuracy of the estimates; and (g) the availability
of projections (including the availability of projections using an
established estimation methodology that would allow for calculation of
the rate of uninsurance for the applicable Federal fiscal year). As we
explained in the FY 2018 IPPS/LTCH PPS final rule, these considerations
are consistent with the statutory requirement that this estimate be
based on data from the Census Bureau or other sources the Secretary
determines appropriate and help to ensure the data source will provide
reasonable estimates for the rate of uninsurance that are available in
conjunction with the IPPS rulemaking cycle. We are proposing to use the
same methodology as was used in FY 2018 to determine Factor 2 for FY
2019.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38197 and 38198), we
explained that we determined the source that, on balance, best meets
all of these considerations is the uninsured estimates produced by CMS'
Office of the Actuary (OACT) as part of the development of the National
Health Expenditure Accounts (NHEA). The NHEA represents the
government's official estimates of economic activity (spending) within
the health sector. The information contained in the NHEA has been used
to study numerous topics related to the health care sector, including,
but not limited to, changes in the amount and cost of health services
purchased and the payers or programs that provide or purchase these
services; the economic causal factors at work in the health sector; the
impact of policy changes, including major health reform; and
comparisons to other countries' health spending. Of relevance to the
determination of Factor 2 is that the comprehensive and integrated
structure of the NHEA creates an ideal tool for evaluating changes to
the health care system, such as the mix of the insured and uninsured
because this mix is integral to the well-established NHEA methodology.
Below we describe some aspects of the methodology used to develop the
NHEA that were

[[Page 20392]]

particularly relevant in estimating the percent change in the rate of
uninsurance for FY 2018 and that we believe continue to be relevant in
developing the estimate for FY 2019. A full description of the
methodology used to develop the NHEA is available on the CMS website
at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/DSM-15.pdf.
The NHEA estimates of U.S. population reflect the Census Bureau's
definition of the resident-based population, which includes all people
who usually reside in the 50 States or the District of Columbia, but
excludes residents living in Puerto Rico and areas under U.S.
sovereignty, members of the U.S. Armed Forces overseas, and U.S.
citizens whose usual place of residence is outside of the United
States, plus a small (typically less than 0.2 percent of population)
adjustment to reflect Census undercounts. In past years, the estimates
for Factor 2 were made using the CBO's uninsured population estimates
for the under 65 population. For FY 2018 and subsequent years, the
statute does not restrict the estimate to the measurement of the
percent of individuals under the age of 65 who are uninsured.
Accordingly, as we explained in the FY 2018 IPPS/LTCH PPS proposed and
final rules, we believe it is appropriate to use an estimate that
reflects the rate of uninsurance in the United States across all age
groups. In addition, we continue to believe that a resident-based
population estimate more fully reflects the levels of uninsurance in
the United States that influence uncompensated care for hospitals than
an estimate that reflects only legal residents. The NHEA estimates of
uninsurance are for the total U.S. population (all ages) and not by
specific age cohort, such as the population under the age of 65.
The NHEA includes comprehensive enrollment estimates for total
private health insurance (PHI) (including direct and employer-sponsored
plans), Medicare, Medicaid, the Children's Health Insurance Program
(CHIP), and other public programs, and estimates of the number of
individuals who are uninsured. Estimates of total PHI enrollment are
available for 1960 through 2016, estimates of Medicaid, Medicare, and
CHIP enrollment are available for the length of the respective
programs, and all other estimates (including the more detailed
estimates of direct-purchased and employer-sponsored insurance) are
available for 1987 through 2016. The NHEA data are publicly available
on the CMS website at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/.
In order to compute Factor 2, the first metric that is needed is
the proportion of the total U.S. population that was uninsured in 2013.
In developing the estimates for the NHEA, OACT's methodology included
using the number of uninsured individuals for 1987 through 2009 based
on the enhanced Current Population Survey (CPS) from the State Health
Access Data Assistance Center (SHADAC). The CPS, sponsored jointly by
the U.S. Census Bureau and the U.S. Bureau of Labor Statistics (BLS),
is the primary source of labor force statistics for the population of
the United States. (We refer readers to the website at: https://www.census.gov/programs-surveys/cps.html.) The enhanced CPS, available
from SHADAC (available at https://datacenter.shadac.org) accounts for
changes in the CPS methodology over time. OACT further adjusts the
enhanced CPS for an estimated undercount of Medicaid enrollees (a
population that is often not fully captured in surveys that include
Medicaid enrollees due to a perceived stigma associated with being
enrolled in the Medicaid program or confusion about the source of their
health insurance).
To estimate the number of uninsured individuals for 2010 through
2014, OACT extrapolates from the 2009 CPS data using data from the
National Health Interview Survey (NHIS). For both 2015 and 2016, OACT's
estimates of the rate of uninsurance are derived by applying the NHIS
data on the proportion of uninsured individuals to the total U.S.
population as described above. The NHIS is one of the major data
collection programs of the National Center for Health Statistics
(NCHS), which is part of the Centers for Disease Control and Prevention
(CDC). The U.S. Census Bureau is the data collection agent for the
NHIS. The NHIS results have been instrumental over the years in
providing data to track health status, health care access, and progress
toward achieving national health objectives. For further information
regarding the NHIS, we refer readers to the CDC website at: https://www.cdc.gov/nchs/nhis/index.htm.
The next metrics needed to compute Factor 2 are projections of the
rate of uninsurance in both calendar years 2018 and 2019. On an annual
basis, OACT projects enrollment and spending trends for the coming 10-
year period. Those projections (currently for years 2017 through 2026)
use the latest NHEA historical data, which presently run through 2016.
The NHEA projection methodology accounts for expected changes in
enrollment across all of the categories of insurance coverage
previously listed. The sources for projected growth rates in enrollment
for Medicare, Medicaid, and CHIP include the latest Medicare Trustees
Report, the Medicaid Actuarial Report, or other updated estimates as
produced by OACT. Projected rates of growth in enrollment for private
health insurance and the uninsured are based largely on OACT's
econometric models, which rely on the set of macroeconomic assumptions
underlying the latest Medicare Trustees Report. Greater detail can be
found in OACT's report titled ``Projections of National Health
Expenditure: Methodology and Model Specification,'' which is available
on the CMS website at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/ProjectionsMethodology.pdf.
As discussed in the FY 2018 IPPS/LTCH PPS final rule, the use of
data from the NHEA to estimate the rate of uninsurance is consistent
with the statute and meets the criteria we have identified for
determining the appropriate data source. Section 1886(r)(2)(B)(ii) of
the Act instructs the Secretary to estimate the rate of uninsurance for
purposes of Factor 2 based on data from the Census Bureau or other
sources the Secretary determines appropriate. The NHEA utilizes data
from the Census Bureau; the estimates are available in time for the
IPPS rulemaking cycle; the estimates are produced by OACT on an annual
basis and are expected to continue to be produced for the foreseeable
future; and projections are available for calendar year time periods
that span the upcoming fiscal year. Timeliness and continuity are
important considerations because of our need to be able to update this
estimate annually. Accuracy is also a very important consideration and,
all things being equal, we would choose the most accurate data source
that sufficiently meets our other criteria.
Using these data sources and the methodologies described above,
OACT estimates that the uninsured rate for the historical, baseline
year of 2013 was 14 percent and for CYs 2018 and 2019 is 9.1 percent
and 9.6 percent, respectively. As required by section 1886(r)(2)(B)(ii)
of the Act, the Chief Actuary of CMS has certified these estimates.
As with the CBO estimates on which we based Factor 2 in prior
fiscal years, the NHEA estimates are for a calendar year. In the
rulemaking for FY 2014,

[[Page 20393]]

many commenters noted that the uncompensated care payments are made for
the fiscal year and not on a calendar year basis and requested that CMS
normalize the CBO estimate to reflect a fiscal year basis.
Specifically, commenters requested that CMS calculate a weighted
average of the CBO estimate for October through December 2013 and the
CBO estimate for January through September 2014 when determining Factor
2 for FY 2014. We agreed with the commenters that normalizing the
estimate to cover FY 2014 rather than CY 2014 would more accurately
reflect the rate of uninsurance that hospitals would experience during
the FY 2014 payment year. Accordingly, we estimated the rate of
uninsurance for FY 2014 by calculating a weighted average of the CBO
estimates for CY 2013 and CY 2014 (78 FR 50633). We have continued this
weighted average approach in each fiscal year since FY 2014.
We continue to believe that, in order to estimate the rate of
uninsurance during a fiscal year more accurately, Factor 2 should
reflect the estimated rate of uninsurance that hospitals will
experience during the fiscal year, rather than the rate of uninsurance
during only one of the calendar years that the fiscal year spans.
Accordingly, we are proposing to continue to apply the weighted average
approach used in past fiscal years in order to estimate the rate of
uninsurance for FY 2019. OACT has certified this estimate of the fiscal
year rate of uninsurance to be reasonable and appropriate for purposes
of section 1886(r)(2)(B)(ii) of the Act.
The calculation of the proposed Factor 2 for FY 2019 using a
weighted average of OACT's projections for CY 2018 and CY 2019 is as
follows:
Percent of individuals without insurance for CY 2013: 14
percent.
Percent of individuals without insurance for CY 2018: 9.1
percent.
Percent of individuals without insurance for CY 2019: 9.6
percent.
Percent of individuals without insurance for FY 2019 (0.25
times 0.091) + (0.75 times 0.096): 9.48 percent.

1-[bond]((0.0948-0.14)/0.14)[bond] = 1-0.3229 = 0.6771 (67.71 percent)
0.6771 (67.71 percent)-.002 (0.2 percentage points for FY 2019 under
section 1886(r)(2)(B)(ii) of the Act) = 0.6751 or 67.51 percent
0.6751 = Factor 2

Therefore, the proposed Factor 2 for FY 2019 is 67.51 percent.
The proposed FY 2019 uncompensated care amount is:
$12,221,027,954.62 x 0.6751 = $8,250,415,972.16.

------------------------------------------------------------------------

------------------------------------------------------------------------
Proposed FY 2019 Uncompensated Care Amount....... $8,250,415,972.16
------------------------------------------------------------------------

We are inviting public comments on our proposed methodology for
calculation of Factor 2 for FY 2019.
c. Calculation of Proposed Factor 3 for FY 2019
(1) Background
Section 1886(r)(2)(C) of the Act defines Factor 3 in the
calculation of the uncompensated care payment. As we have discussed
earlier, section 1886(r)(2)(C) of the Act states that Factor 3 is equal
to the percent, for each subsection (d) hospital, that represents the
quotient of: (1) The amount of uncompensated care for such hospital for
a period selected by the Secretary (as estimated by the Secretary,
based on appropriate data (including, in the case where the Secretary
determines alternative data are available that are a better proxy for
the costs of subsection (d) hospitals for treating the uninsured, the
use of such alternative data)); and (2) the aggregate amount of
uncompensated care for all subsection (d) hospitals that receive a
payment under section 1886(r) of the Act for such period (as so
estimated, based on such data).
Therefore, Factor 3 is a hospital-specific value that expresses the
proportion of the estimated uncompensated care amount for each
subsection (d) hospital and each subsection (d) Puerto Rico hospital
with the potential to receive Medicare DSH payments relative to the
estimated uncompensated care amount for all hospitals estimated to
receive Medicare DSH payments in the fiscal year for which the
uncompensated care payment is to be made. Factor 3 is applied to the
product of Factor 1 and Factor 2 to determine the amount of the
uncompensated care payment that each eligible hospital will receive for
FY 2014 and subsequent fiscal years. In order to implement the
statutory requirements for this factor of the uncompensated care
payment formula, it was necessary to determine: (1) The definition of
uncompensated care or, in other words, the specific items that are to
be included in the numerator (that is, the estimated uncompensated care
amount for an individual hospital) and the denominator (that is, the
estimated uncompensated care amount for all hospitals estimated to
receive Medicare DSH payments in the applicable fiscal year); (2) the
data source(s) for the estimated uncompensated care amount; and (3) the
timing and manner of computing the quotient for each hospital estimated
to receive Medicare DSH payments. The statute instructs the Secretary
to estimate the amounts of uncompensated care for a period based on
appropriate data. In addition, we note that the statute permits the
Secretary to use alternative data in the case where the Secretary
determines that such alternative data are available that are a better
proxy for the costs of subsection (d) hospitals for treating
individuals who are uninsured.
In the course of considering how to determine Factor 3 during the
rulemaking process for FY 2014, the first year this provision was in
effect, we considered defining the amount of uncompensated care for a
hospital as the uncompensated care costs of that hospital and
determined that Worksheet S-10 of the Medicare cost report potentially
provides the most complete data regarding uncompensated care costs for
Medicare hospitals. However, because of concerns regarding variations
in the data reported on Worksheet S-10 and the completeness of these
data, we did not use Worksheet S-10 data to determine Factor 3 for FY
2014, or for FYs 2015, 2016, or 2017. Instead, we believed that the
utilization of insured low-income patients, as measured by patient
days, would be a better proxy for the costs of hospitals in treating
the uninsured and therefore appropriate to use in calculating Factor 3
for these years. Of particular importance in our decision-making was
the relative newness of Worksheet S-10, which went into effect on May
1, 2010. At the time of the rulemaking for FY 2014, the most recent
available cost reports would have been from FYs 2010 and 2011, which
were submitted on or after May 1, 2010, when the new Worksheet S-10
went into effect. We believed that concerns about the standardization
and completeness of the Worksheet S-10 data could be more acute for
data collected in the first year of the Worksheet's use (78 FR 50635).
In addition, we believed that it would be most appropriate to use data
elements that have been historically publicly available, subject to
audit, and used for payment purposes (or that the public understands
will be used for payment purposes) to determine the amount of
uncompensated care for purposes of Factor 3 (78 FR 50635). At the time
we issued the FY 2014 IPPS/LTCH PPS final rule, we did not believe that
the available data regarding uncompensated care from Worksheet S-10 met
these criteria and, therefore, we believed they were not reliable
enough to use for determining FY 2014 uncompensated

[[Page 20394]]

care payments. For FYs 2015, 2016, and 2017, the cost reports used for
calculating uncompensated care payments (that is, FYs 2011, 2012, and
2013) were also submitted prior to the time that hospitals were on
notice that Worksheet S-10 could be the data source for calculating
uncompensated care payments. Therefore, we believed it was also
appropriate to use proxy data to calculate Factor 3 for these years. We
indicated our belief that Worksheet S-10 could ultimately serve as an
appropriate source of more direct data regarding uncompensated care
costs for purposes of determining Factor 3 once hospitals were
submitting more accurate and consistent data through this reporting
mechanism.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38202), we stated
that we can no longer conclude that alternative data to the Worksheet
S-10 are available for FY 2014 that are a better proxy for the costs of
subsection (d) hospitals for treating individuals who are uninsured.
Hospitals were on notice as of FY 2014 that Worksheet S-10 could
eventually become the data source for CMS to calculate uncompensated
care payments. Furthermore, hospitals' cost reports from FY 2014 had
been publicly available for some time, and CMS had analyses of
Worksheet S-10, conducted both internally and by stakeholders,
demonstrating that Worksheet S-10 accuracy had improved over time.
Analyses performed by MedPAC had already shown that the correlation
between audited uncompensated care data from 2009 and the data from the
FY 2011 Worksheet S-10 was over 0.80, as compared to a correlation of
approximately 0.50 between the audited uncompensated care data and 2011
Medicare SSI and Medicaid days. Based on this analysis, MedPAC
concluded that use of Worksheet S-10 data was already better than using
Medicare SSI and Medicaid days as a proxy for uncompensated care costs,
and that the data on Worksheet S-10 would improve over time as the data
are actually used to make payments (81 FR 25090). In addition, a 2007
MedPAC analysis of data from the Government Accountability Office (GAO)
and the American Hospital Association (AHA) had suggested that Medicaid
days and low-income Medicare days are not an accurate proxy for
uncompensated care costs (80 FR 49525).
Subsequent analyses from Dobson/DaVanzo, originally commissioned by
CMS for the FY 2014 rulemaking and updated in later years, compared
Worksheet S-10 and IRS Form 990 data and assessed the correlation in
Factor 3s derived from each of the data sources. The most recent update
of this analysis, which used IRS Form 990 data for tax years 2011,
2012, and 2013 (the latest available years) as a benchmark, found that
the amounts for Factor 3 derived using the IRS Form 990 and Worksheet
S-10 data continue to be highly correlated and that this correlation
continues to increase over time, from 0.80 in 2011 to 0.85 in 2013.
This empirical evidence led us to believe that we had reached a
tipping point in FY 2018 with respect to the use of the Worksheet S-10
data. We refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR
38201 through 38203) for a complete discussion of these analyses.
We found further evidence for this tipping point when we examined
changes to the FY 2014 Worksheet S-10 data submitted by hospitals
following the publication of the FY 2017 IPPS/LTCH PPS final rule. In
the FY 2017 IPPS/LTCH PPS final rule, as part of our ongoing quality
control and data improvement measures for the Worksheet S-10, we
referred readers to Change Request 9648, Transmittal 1681, titled ``The
Supplemental Security Income (SSI)/Medicare Beneficiary Data for Fiscal
Year 2014 for Inpatient Prospective Payment System (IPPS) Hospitals,
Inpatient Rehabilitation Facilities (IRFs), and Long Term Care
Hospitals (LTCHs),'' issued on July 15, 2016 (available at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Downloads/R1681OTN.pdf). In this transmittal, as part of the process for ensuring
complete submission of Worksheet S-10 by all eligible DSH hospitals, we
instructed MACs to accept amended Worksheets S-10 for FY 2014 cost
reports submitted by hospitals (or initial submissions of Worksheet S-
10 if none had been submitted previously) and to upload them to the
Health Care Provider Cost Report Information System (HCRIS) in a timely
manner. The transmittal stated that, for revisions to be considered,
hospitals were required to submit their amended FY 2014 cost report
containing the revised Worksheet S-10 (or a completed Worksheet S-10 if
no data were included on the previously submitted cost report) to the
MAC no later than September 30, 2016. For the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19949 through 19950), we examined hospitals' FY
2014 cost reports to see if the Worksheet S-10 data on those cost
reports had changed as a result of the opportunity for hospitals to
submit revised Worksheet S-10 data for FY 2014. Specifically, we
compared hospitals' FY 2014 Worksheet S-10 data as they existed in the
first quarter of CY 2016 with data from the fourth quarter of CY 2016.
We found that the FY 2014 Worksheet S-10 data had changed over that
time period for approximately one quarter of hospitals that receive
uncompensated care payments. The fact that the Worksheet S-10 data
changed for such a significant number of hospitals following a review
of the cost report data they originally submitted and that the revised
Worksheet S[dash]10 information is available to be used in determining
uncompensated care costs contributed to our belief that we could no
longer conclude that alternative data are available that are a better
proxy than the Worksheet S-10 data for the costs of subsection (d)
hospitals for treating individuals who are uninsured.
We also recognized commenters' concerns that, in using Medicaid
days as part of the proxy for uncompensated care, it would be possible
for hospitals in States that choose to expand Medicaid to receive
higher uncompensated care payments because they may have more Medicaid
patient days than hospitals in a State that does not choose to expand
Medicaid. Because the earliest Medicaid expansions under the Affordable
Care Act began in 2014, the 2011, 2012, and 2013 Medicaid days used to
calculate uncompensated care payments in FYs 2015, 2016, and 2017 are
the latest available data on Medicaid utilization that do not reflect
the effects of these Medicaid expansions. Accordingly, if we had used
only low-income insured days to estimate uncompensated care in FY 2018,
we would have needed to hold the time period of these data constant and
use data on Medicaid days from 2011, 2012, and 2013 in order to avoid
the risk of any redistributive effects arising from the decision to
expand Medicaid in certain States. As a result, we would have been
using older data that may provide a less accurate proxy for the level
of uncompensated care being furnished by hospitals, contributing to our
growing concerns regarding the continued use of low-income insured days
as a proxy for uncompensated care costs in FY 2018.
In summary, as we stated in the FY 2018 IPPS/LTCH PPS final rule
(82 FR 38203), when weighing the new information regarding the growing
correlation between the Worksheet S-10 data and IRS 990 data that
became available to us after the FY 2017 rulemaking in conjunction with
the information regarding Worksheet S-10 data and the low-income days
proxy that we had analyzed as part of our consideration of this issue
in prior rulemaking, we determined that we

[[Page 20395]]

could no longer conclude that alternative data to the Worksheet S-10
are available for FY 2014 that are a better proxy for the costs of
subsection (d) hospitals for treating individuals who are uninsured. We
also stated that we believe that continued use of Worksheet S-10 will
improve the accuracy and consistency of the reported data, especially
in light of CMS' concerted efforts to allow hospitals to review and
resubmit their Worksheet S-10 data for past years and the use of select
audit protocols to trim aberrant data and replace them with more
reasonable amounts. We also committed to continue to work with
stakeholders to address their concerns regarding the accuracy of the
reporting of uncompensated care costs through provider education and
refinement of the instructions to Worksheet S-10.
(2) Methodology Used To Calculate Factor 3 in Prior Fiscal Years
Section 1886(r)(2)(C) of the Act governs both the selection of the
data to be used in calculating Factor 3, and also allows the Secretary
the discretion to determine the time periods from which we will derive
the data to estimate the numerator and the denominator of the Factor 3
quotient. Specifically, section 1886(r)(2)(C)(i) of the Act defines the
numerator of the quotient as the amount of uncompensated care for such
hospital for a period selected by the Secretary. Section
1886(r)(2)(C)(ii) of the Act defines the denominator as the aggregate
amount of uncompensated care for all subsection (d) hospitals that
receive a payment under section 1886(r) of the Act for such period. In
the FY 2014 IPPS/LTCH PPS final rule (78 FR 50638), we adopted a
process of making interim payments with final cost report settlement
for both the empirically justified Medicare DSH payments and the
uncompensated care payments required by section 3133 of the Affordable
Care Act. Consistent with that process, we also determined the time
period from which to calculate the numerator and denominator of the
Factor 3 quotient in a way that would be consistent with making interim
and final payments. Specifically, we must have Factor 3 values
available for hospitals that we estimate will qualify for Medicare DSH
payments and for those hospitals that we do not estimate will qualify
for Medicare DSH payments but that may ultimately qualify for Medicare
DSH payments at the time of cost report settlement.
In the FY 2017 IPPS/LTCH PPS final rule, in order to mitigate undue
fluctuations in the amount of uncompensated care payments to hospitals
from year to year and smooth over anomalies between cost reporting
periods, we finalized a policy of calculating a hospital's share of
uncompensated care based on an average of data derived from three cost
reporting periods instead of one cost reporting period. As explained in
the preamble to the FY 2017 IPPS/LTCH PPS final rule (81 FR 56957
through 56959), instead of determining Factor 3 using data from a
single cost reporting period as we did in FY 2014, FY 2015, and FY
2016, we used data from three cost reporting periods (Medicaid data for
FYs 2011, 2012, and 2013 and SSI days from the three most recent
available years of SSI utilization data (FYs 2012, 2013, and 2014)) to
compute Factor 3 for FY 2017. Furthermore, instead of determining a
single Factor 3 as we had done since the first year of the
uncompensated care payment in FY 2014, we calculated an individual
Factor 3 for each of the three cost reporting periods, which we then
averaged by the number of cost reporting years with data to compute the
final Factor 3 for a hospital. Under this policy, if a hospital had
merged, we would combine data from both hospitals for the cost
reporting periods in which the merger was not reflected in the
surviving hospital's cost report data to compute Factor 3 for the
surviving hospital. Moreover, to further reduce undue fluctuations in a
hospital's uncompensated care payments, if a hospital filed multiple
cost reports beginning in the same fiscal year, we combined data from
the multiple cost reports so that a hospital could have a Factor 3
calculated using more than one cost report within a cost reporting
period. We codified these changes for FY 2017 by amending the
regulations at Sec. 412.106(g)(1)(iii)(C).
For FY 2018, consistent with the methodology used to calculate
Factor 3 for FY 2017, we advanced the time period of the data used in
the calculation of Factor 3 forward by one year and used data from FY
2012, FY 2013, and FY 2014 cost reports. We believed it would not be
appropriate to use Worksheet S-10 data for periods prior to FY 2014, as
hospitals did not have notice that the Worksheet S-10 data from these
years might be used for purposes of computing uncompensated care
payments and, as a result, may not have fully appreciated the
importance of reporting their uncompensated care costs as completely
and accurately as possible. Rather, for cost reporting periods prior to
FY 2014, we believed it would be appropriate to continue to use low-
income insured days. Accordingly, for the time period consisting of
three cost reporting years, including FY 2014, FY 2013, and FY 2012, we
used Worksheet S-10 data for the FY 2014 cost reporting period and the
low-income insured days proxy data for the two earlier cost reporting
periods. In order to perform this calculation, we drew three sets of
data (2 years of Medicaid utilization data and 1 year of Worksheet S-10
data) from the most recent available HCRIS extract. Accordingly, for FY
2018, in addition to the Worksheet S-10 data for FY 2014, we used
Medicaid days from FY 2012 and FY 2013 cost reports and FY 2014 and FY
2015 SSI ratios. We also continued to use FY 2012 cost report data
submitted to CMS by IHS and Tribal hospitals to determine FY 2012
Medicaid days for those hospitals. (Cost report data from IHS and
Tribal hospitals are included in HCRIS beginning in FY 2013 and are no
longer submitted separately.) We continued the policies that were
finalized in the FY 2015 IPPS/LTCH PPS final rule (79 FR 50020) to
address several specific issues concerning the process and data to be
employed in determining Factor 3 in the case of hospital mergers as
well as the policies finalized in the FY 2017 IPPS/LTCH PPS final rule
concerning multiple cost reports beginning in the same fiscal year (81
FR 56957).
To limit the effect of aberrant reporting of Worksheet S-10 data,
we identified those hospitals that had high levels of reported
uncompensated care relative to the total operating costs reported on
the cost report. Specifically, for those hospitals where the ratio of
uncompensated care costs relative to total operating costs for the
hospital's 2014 cost report exceeded 50 percent, we determined the
ratio of uncompensated care costs relative to total operating costs
from the hospital's 2015 cost report and applied that ratio to the
hospital's total operating costs from the 2014 cost report to determine
an adjusted amount of uncompensated care costs for FY 2014. We then
substituted this amount for the FY 2014 Worksheet S-10 data when
determining Factor 3 for FY 2018. We believed that this approach, which
affected the data for three hospitals in FY 2018, balanced our desire
to exclude potentially aberrant data from a small number of hospitals
in the determination of Factor 3 with our concern regarding
inappropriately reducing FY 2018 uncompensated care payments to a
hospital that may have a legitimately high ratio. We stated our intent
to consider in future rulemaking whether continued use of this
adjustment or an

[[Page 20396]]

alternative adjustment is necessary for subsequent years.
Due to concerns that the uncompensated care data reported by Puerto
Rico hospitals and Indian Health Service and Tribal hospitals need to
be examined further, we concluded that the Worksheet S-10 data for
these hospitals should not be used to determine Factor 3 for FY 2018
(82 FR 38209). We also determined that Worksheet S-10 data should not
be used to determine Factor 3 for All[dash]Inclusive Rate Providers,
whose CCRs were deemed to be potentially erroneous and in need of
further examination (82 FR 38212). For the reasons described earlier
related to the impact of the Medicaid expansion beginning in FY 2014,
we did not believe it was appropriate to calculate a Factor 3 for these
hospitals using FY 2014 low-income insured days. Because we did not
believe it was appropriate to use the FY 2014 uncompensated care data
for these hospitals and we also did not believe it was appropriate to
use the FY 2014 low[dash]income insured days, we concluded that the
best proxy for the costs of Puerto Rico, Indian Health Service and
Tribal hospitals, and All-Inclusive Rate Providers for treating the
uninsured is the low-income insured days data for FY 2012 and FY 2013.
Accordingly, in order to determine the Factor 3 for FY 2018 for these
hospitals, we calculated an average of three individual Factor 3s using
the Factor 3 calculated using FY 2013 cost report data twice and the
Factor 3 calculated using FY 2012 cost report data once. We believed it
was appropriate to double-weight the Factor 3 calculated using FY 2013
data as it reflects the most recent available information regarding the
hospital's low-income insured days before any expansion of Medicaid. We
stated that we would reexamine the use of the Worksheet S-10 data for
Puerto Rico, Indian Health Service and Tribal hospitals, and All-
Inclusive Rate Providers as part of the FY 2019 rulemaking. In
addition, for Puerto Rico hospitals, we continued to use a proxy for
SSI days consisting of 14 percent of a hospital's Medicaid days, as was
first applied in FY 2017 (82 FR 38209).
Therefore, for FY 2018, we computed a Factor 3 for each hospital
by--
Step 1: Calculating Factor 3 using the low-income insured
days proxy based on FY 2012 cost report data and the FY 2014 SSI ratio;
Step 2: Calculating Factor 3 using the insured low-income
days proxy based on FY 2013 cost report data and the FY 2015 SSI ratio;
Step 3: Calculating Factor 3 based on the FY 2014
Worksheet S-10 data (or using the Factor 3 calculated in Step 2 for
Puerto Rico, IHS/Tribal hospitals, and All[dash]Inclusive Rate
Providers); and
Step 4: Averaging the Factor 3 values from Steps 1, 2, and
3; that is, adding the Factor 3 values from FY 2012, FY 2013, and FY
2014 for each hospital, and dividing that amount by the number of cost
reporting periods with data to compute an average Factor 3.
We stated our belief that if we were to propose to continue this
methodology for FY 2019 and FY 2020, this approach would have the
effect of transitioning the incorporation of data from Worksheet S-10
into the calculation of Factor 3 because an additional year of
Worksheet S-10 data would be incorporated into the calculation of
Factor 3 in FY 2019, and the use of low[dash]income insured days would
be phased out by FY 2020.
(3) Proposed Methodology for Calculating Factor 3 for FY 2019
Since the publication of the FY 2018 IPPS/LTCH PPS final rule, we
have continued to monitor the reporting of Worksheet S-10 data in
anticipation of using Worksheet S-10 data from hospitals' FY 2014 and
FY 2015 cost reports in the calculation of Factor 3. We acknowledge the
concerns that have been raised regarding the instructions for Worksheet
S-10. In particular, commenters have expressed concerns that the lack
of clear and concise line level instructions prevents accurate and
consistent data from being reported on Worksheet S-10. We note that, in
November 2016, CMS issued Transmittal 10, which clarified and revised
the instructions for the Worksheet S-10, including the instructions
regarding the reporting of charity care charges. Transmittal 10 is
available for download on the CMS website at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Downloads/R10P240.pdf.
In Transmittal 10, we clarified that hospitals may include discounts
given to uninsured patients who meet the hospital's charity care
criteria in effect for that cost reporting period. This clarification
applied to cost reporting periods beginning prior to October 1, 2016,
as well as cost reporting periods beginning on or after October 1,
2016. As a result, nothing prohibits a hospital from considering a
patient's insurance status as a criterion in its charity care policy. A
hospital determines its own financial criteria as part of its charity
care policy. The instructions for the Worksheet S-10 set forth that
hospitals may include discounts given to uninsured patients, including
patients with coverage from an entity that does not have a contractual
relationship with the provider, who meet the hospital's charity care
criteria in effect for that cost reporting period. In addition, we
revised the instructions for the Worksheet S-10 for cost reporting
periods beginning on or after October 1, 2016, to provide that charity
care charges must be determined in accordance with the hospital's
charity care criteria/policy and written off in the cost reporting
period, regardless of the date of service.
During the FY 2018 rulemaking, commenters pointed out that, in the
FY 2017 IPPS/LTCH PPS final rule (81 FR 56963), CMS agreed to institute
certain additional quality control and data improvement measures prior
to moving forward with incorporating Worksheet S-10 data into the
calculation of Factor 3. However, the commenters indicated that, aside
from a brief window in 2016 for hospitals to submit corrected data on
their FY 2014 Worksheet S-10 by September 30, 2016, and the issuance of
revised instructions (Transmittal 10) in November 2016 that are
applicable to cost reports beginning on or after October 1, 2016, CMS
has not implemented any additional quality control and data improvement
measures. We stated in the FY 2018 IPPS/LTCH PPS final rule that we
would continue to work with our stakeholders to address their concerns
regarding the reporting of uncompensated care through provider
education and refinement of the instructions to the Worksheet S-10 (82
FR 38206).
On September 29, 2017, we issued Transmittal 11, which clarified
the definitions and instructions for uncompensated care, non-Medicare
bad debt, nonreimbursed Medicare bad debt, and charity care, as well as
modified the calculations relative to uncompensated care costs and
added edits to ensure the integrity of the data reported on Worksheet
S-10. Transmittal 11 is available for download on the CMS website at:
https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2017Downloads/R11p240.pdf. We further clarified that full or partial
discounts given to uninsured patients who meet the hospital's charity
care policy or financial assistance policy/uninsured discount policy
(hereinafter referred to as Financial Assistance Policy or FAP) may be
included on Line 20, Column 1 of Worksheet S-10. These clarifications
apply to cost reporting periods beginning on or after October 1, 2013.
We also modified the application of the CCR. We specified that the CCR
will not be applied to the deductible and

[[Page 20397]]

coinsurance amounts for insured patients approved for charity care and
nonreimbursed Medicare bad debt. The CCR will be applied to the charges
for uninsured patients approved for charity care or an uninsured
discount, non[dash]Medicare bad debt, and charges for noncovered days
exceeding a length of stay limit imposed on patients covered by
Medicaid or other indigent care programs.
We also provided another opportunity for hospitals to submit
revisions to their Worksheet S-10 data for FY 2014 and FY 2015 cost
reports. We refer readers to Change Request 10378, Transmittal 1981,
titled ``Fiscal Year (FY) 2014 and 2015 Worksheet S-10 Revisions:
Further Extension for All Inpatient Prospective Payment System (IPPS)
Hospitals,'' issued on December 1, 2017 (available at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2017Downloads/R1981OTN.pdf). In this transmittal, we instructed MACs to
accept amended Worksheets S-10 for FY 2014 and FY 2015 cost reports
submitted by hospitals (or initial submissions of Worksheet S-10 if
none have been submitted previously) and to upload them to the Health
Care Provider Cost Report Information System (HCRIS) in a timely
manner. The transmittal states that hospitals must submit their amended
FY 2014 and FY 2015 cost reports containing the revised Worksheet S-10
(or a completed Worksheet S-10 if no data were included on the
previously submitted cost report) to the MAC no later than January 2,
2018. We note that this transmittal supersedes the previous deadline in
Change Request 10026, which was issued on June 30, 2017, with respect
to the dates by which hospitals must submit their revised or newly
submitted Worksheet S-10 in order to be considered for purposes of this
rulemaking, as well as the dates by which MACs must accept these data
and upload a revised cost report to HCRIS. Under the deadlines
established in Change Request 10378, in order for revisions to be
guaranteed consideration for this FY 2019 proposed rule, hospitals had
to submit their amended FY 2014 and FY 2015 cost reports containing the
revised Worksheet S-10 (or a completed Worksheet S-10 if no data were
included on the previously submitted cost report) to the MAC no later
than December 1, 2017. We also indicated that, all revised data
received by December 1, 2017, would be considered for purposes of this
FY 2019 IPPS/LTCH PPS proposed rule, and all revised data received by
the January 2, 2018 deadline would be available to be considered for
purposes of the FY 2019 IPPS/LTCH PPS final rule.
However, for this FY 2019 IPPS/LTCH PPS proposed rule, we were able
to include data updated in HCRIS through February 15, 2018.
Specifically, in light of the impact of the hurricanes in 2017 (Harvey,
Irma, Maria, and Nate) and the extension of the deadline for
resubmitting Worksheets S-10 for FY 2014 and FY 2015 through January 2,
2018, we believed it was appropriate to use data updated through
February 15, 2018, rather than the December 2017 HCRIS update, which we
typically use for the annual proposed rule. We believe that providing
the additional time to allow cost reports that may have been delayed
due to these unique circumstances to be included in our calculations
for purposes of this FY 2019 proposed rule, enabled us to use more
accurate uncompensated care cost data in calculating the proposed
Factor 3 values.
We examined hospitals' FY 2014 and FY 2015 cost reports to
determine if the Worksheet S-10 data on those cost reports had changed
as a result of the additional opportunity for hospitals to submit
revised Worksheet S-10 data for FY 2014 and FY 2015. Specifically, we
compared hospitals' FY 2014 and FY 2015 Worksheet S-10 data as reported
in the fourth quarter of CY 2016 update of HCRIS to the February 15,
2018 update of HCRIS. We examined hospitals' cost report data to
determine if the Worksheet S-10 data had changed for any of the
following lines: Total bad debt from Line 26, charity care for
uninsured patients from Line 20, Column 1, or charity care for insured
patients from Line 20, Column 2. Based on our review, we found that
Worksheet S-10 data for both FY 2014 and FY 2015 had changed over that
time period for approximately one-half of the hospitals that were
eligible to receive Medicare DSH payments in FY 2018. The fact that the
Worksheet S-10 data changed for such a significant number of hospitals
following the opportunity to review their previously submitted cost
report data and submit a revised Worksheet S-10, and that this revised
Worksheet S-10 information is available to be used in determining
uncompensated care costs, contributes to our determination that it is
appropriate to continue to incorporate Worksheet S-10 data into the
calculation of Factor 3 values for hospitals that are eligible to
receive Medicare DSH payments.
With the additional steps we have taken to ensure the accuracy and
consistency of the data reported on Worksheet S-10 since the
publication of the FY 2018 IPPS/LTCH PPS final rule, we continue to
believe that we can no longer conclude that alternative data to the
Worksheet S-10 are currently available for FY 2014 that are a better
proxy for the costs of subsection (d) hospitals for treating
individuals who are uninsured. Similarly, the actions that we have
taken to improve the accuracy and consistency of the Worksheet S-10
data, including the opportunity for hospitals to resubmit Worksheet S-
10 data for FY 2015, lead us to conclude that there are no alternative
data to the Worksheet S-10 data currently available for FY 2015 that
are a better proxy for the costs of subsection (d) hospitals for
treating uninsured individuals. As such, we are proposing to advance
the time period of the data used in the calculation of Factor 3 forward
by 1 year and to use data from FY 2013, FY 2014, and FY 2015 cost
reports to determine Factor 3 for FY 2019. For the reasons we described
earlier, we continue to believe it is inappropriate to use Worksheet S-
10 data for periods prior to FY 2014. Rather, for cost reporting
periods prior to FY 2014, we believe it is appropriate to continue to
use low-income insured days. Accordingly, with a time period that
includes 3 cost reporting years consisting of FY 2015, FY 2014, and FY
2013, we are proposing to use Worksheet S-10 data for the FY 2014 and
FY 2015 cost reporting periods and the low-income insured days proxy
data for the earliest cost reporting period. As in previous years, in
order to perform this calculation, we will draw three sets of data (1
year of Medicaid utilization data and 2 years of Worksheet S-10 data)
from the most recent available HCRIS extract, which, is the HCRIS data
updated through February 15, 2018, for purposes of this FY 2019
proposed rule. We expect to use the March 2018 update of HCRIS for the
final rule. However, due to unique circumstances regarding the impact
of the hurricanes in 2017 (Harvey, Irma, Maria, and Nate) and the
extension of the deadline to resubmit Worksheet S-10 data through
January 2, 2018, and the subsequent impact on the MAC review timeline,
we may consider using data updated through May 31, 2018, in the final
rule, if necessary.
Accordingly, for FY 2019, in addition to the Worksheet S-10 data
for FY 2014 and FY 2015, we are proposing to use Medicaid days from FY
2013 cost reports and FY 2016 SSI ratios. We note that cost report data
from Indian Health Service and Tribal hospitals are included in HCRIS
beginning in FY 2013 and no longer need to be incorporated from a
separate data source. We also are proposing to

[[Page 20398]]

continue the policies that were finalized in the FY 2015 IPPS/LTCH PPS
final rule (79 FR 50020) to address several specific issues concerning
the process and data to be employed in determining Factor 3 in the case
of hospital mergers. In addition, we are proposing to continue the
policies that were finalized in the FY 2018 IPPS/LTCH PPS final rule to
address technical considerations related to the calculation of Factor 3
and the incorporation of Worksheet S-10 data (82 FR 38213 through
38220). With respect to the calculation of Factor 3, we adopted a
policy under which we annualize Medicaid days data and uncompensated
care cost data reported on the Worksheet S-10 if a hospital's cost
report does not equal 12 months of data. As in FY 2018, for FY 2019, we
are not proposing to annualize SSI days because we do not obtain these
data from hospital cost reports in HCRIS. Rather, we obtain these data
from the latest available SSI ratios posted on the Medicare DSH
homepage (https://www.cms.gov/Medicare/Medicare-fee-for-service-payment/AcuteInpatientPPS/dsh.html), which are aggregated at the
hospital level and do not include the information needed to determine
if the data should be annualized. To address the effects of averaging
Factor 3s calculated for 3 separate fiscal years, we apply a scaling
factor to the Factor 3 values of all DSH eligible hospitals such that
total uncompensated care payments are consistent with the estimated
amount available to make uncompensated care payments for the applicable
fiscal year. With respect to the incorporation of Worksheet S-10, we
believe that the definition of uncompensated care adopted in FY 2018 is
still appropriate because it incorporates the most commonly used
factors within uncompensated care as reported by stakeholders,
including charity care costs and non-Medicare bad debt costs, and
correlates to Line 30 of Worksheet S-10. Therefore, we are again
proposing that, for purposes of calculating Factor 3 and uncompensated
care costs in FY 2019, ``uncompensated care'' would be defined as the
amount on Line 30 of Worksheet S-10, which is the cost of charity care
(Line 23) and the cost of non-Medicare bad debt and nonreimbursable
Medicare bad debt (Line 29).
We note that we are proposing to discontinue the policy finalized
in the FY 2017 IPPS/LTCH PPS final rule concerning multiple cost
reports beginning in the same fiscal year (81 FR 56957). Under this
policy, we would first combine the data across the multiple cost
reports before determining the difference between the start date and
the end date to determine if annualization is needed. The policy was
developed in response to commenters' concerns regarding the unique
circumstances of hospitals that filed cost reports that are shorter or
longer than 12 months. As we explained in the FY 2017 IPPS/LTCH PPS
final rule (81 FR 56957 through 56959) and in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19953), we believed that, for hospitals that file
multiple cost reports beginning in the same year, combining the data
from these cost reports had the benefit of supplementing the data of
hospitals that filed cost reports that are less than 12 months, such
that the basis of their uncompensated care payments and those of
hospitals that filed full-year 12-month cost reports would be more
equitable. We now believe that concerns about the equitability of the
data used as the basis of hospital uncompensated care payments are more
thoroughly addressed by the policy finalized in the FY 2018 IPPS/LTCH
PPS final rule, under which CMS annualizes the Medicaid days and
uncompensated care cost data of hospital cost reports that do not equal
12 months of data. Based on our experience, we believe that in many
cases where a hospital files two cost reports beginning in the same
fiscal year, combining the data across multiple cost reports before
annualizing would yield a similar result to choosing the longer of the
two cost reports and then annualizing the data if the cost report is
shorter or longer than 12 months. Furthermore, even in cases where a
hospital files more than one cost report beginning in the same fiscal
year, it is not uncommon for one of those cost reports to span exactly
12 months. In this case, if Factor 3 is determined using only the full
12-month cost report, annualization would be unnecessary as there would
already be 12 months of data. Therefore, for FY 2019, we believe it is
appropriate to propose to eliminate the additional step of combining
data across multiple cost reports if a hospital filed more than one
cost report beginning in the same fiscal year. Instead, for purposes of
calculating Factor 3, we would use data from the cost report that is
equivalent to 12 months or, if no such cost report exists, the cost
report that is closest to 12 months and annualize the data.
Furthermore, we acknowledge that, in rare cases, a hospital may have
more than one cost report beginning in one fiscal year, where one
report also spans the entirety of the following fiscal year such that
the hospital has no cost report beginning in that fiscal year. For
instance, a hospital's cost reporting period may have started towards
the end of FY 2012 but cover the duration of FY 2013. In these rare
situations, we are proposing to use data from the cost report that
spans both fiscal years in the Factor 3 calculation for the latter
fiscal year as the hospital would already have data from the preceding
cost report that could be used to determine Factor 3 for the previous
fiscal year.
We also are proposing to continue to apply statistical trims to
anomalous hospital CCRs using the methodology adopted in the FY 2018
IPPS/LTCH PPS final rule (82 FR 38217 through 38219), where we stated
our belief that, just as we apply trims to hospitals' CCRs to eliminate
anomalies when calculating outlier payments for extraordinarily high
cost cases (Sec. 412.84(h)(3)(ii)), it is appropriate to apply
statistical trims to the CCRs on Worksheet S-10, Line 1, that are
considered anomalies. Specifically, Sec. 412.84(h)(3)(ii) states that
the Medicare contractor may use a statewide CCR for hospitals whose
operating or capital CCR is in excess of 3 standard deviations above
the corresponding national geometric mean (that is, the CCR
``ceiling''). This mean is recalculated annually by CMS and published
in the proposed and final IPPS rules each year.
Similar to the process used in the FY 2018 IPPS/LTCH PPS final rule
(82 FR 38217 through 38218) for trimming CCRs, we are proposing the
following steps for FY 2019:
Step 1: Remove Maryland hospitals. In addition, we would remove
All[dash]Inclusive Rate Providers because they have charge structures
that differ from other IPPS hospitals. For providers that did not
report a CCR on Worksheet S-10, Line 1, we would assign them the
statewide average CCR in step 5 below.
Step 2: For each fiscal year (FY 2014 and FY 2015), calculate a CCR
``ceiling'' with the following data: For each IPPS hospital that was
not removed in Step 1 (including non-DSH eligible hospitals), we would
use cost report data to calculate a CCR by dividing the total costs on
Worksheet C, Part I, Line 202, Column 3 by the charges reported on
Worksheet C, Part I, Line 202, Column 8. (Combining data from multiple
cost reports from the same FY is no longer necessary in this step, as
the longer cost report would be selected). The ceiling would be
calculated as 3 standard deviations above the national geometric mean
CCR for the applicable fiscal year. This approach is consistent with
the methodology for calculating the CCR ceiling used for high-cost
outliers. Remove all hospitals that exceed the

[[Page 20399]]

ceiling so that these aberrant CCRs do not skew the calculation of the
statewide average CCR. (Based on the information currently available to
us, this trim would remove 5 hospitals that have a CCR above the
calculated ceiling of 1.031 for FY 2014 and 9 hospitals that have a CCR
above the calculated ceiling of 0.93 for FY 2015.)
Step 3: Using the CCRs for the remaining hospitals in Step 2,
determine the urban and rural statewide average CCRs for FY 2014 and
for FY 2015 for hospitals within each State (including non-DSH eligible
hospitals), weighted by the sum of total inpatient discharges and
outpatient visits from Worksheet S-3, Part I, Line 14, Column 14.
Step 4: Assign the appropriate statewide average CCR (urban or
rural) calculated in Step 3 to all hospitals with a CCR for the
applicable fiscal year greater than 3 standard deviations above the
corresponding national geometric mean for that fiscal year (that is,
the CCR ``ceiling''). The statewide average CCR would therefore be
applied to 14 hospitals, of which 2 hospitals in FY 2014 have Worksheet
S-10 data and 5 hospitals in FY 2015 have Worksheet S-10 data.
After applying the applicable trims to a hospital's CCR as
appropriate, we would calculate a hospital's uncompensated care costs
for the applicable fiscal year as being equal to Line 30, which is the
sum of Line 23, Column 3 and Line 29, as follows:

Hospital Uncompensated Care Costs = Line 30 (Line 23, Column 3 + Line
29), which is equal to--
[(Line 1 CCR (as adjusted, if applicable) x Uninsured patient charity
care Line 20, Column 1)-(Payments received from uninsured patient
charity care Line 22, Column 1)] + [(Insured patient charity care Line
20, Column 2)-Insured patient charges from days beyond length of stay
limit * (1-(Line 1 CCR (as adjusted, if applicable)))-(Payments
received from insured patient charity care Line 22, Column 2)] + [(Line
1 CCR (as adjusted, if applicable) x Non-Medicare bad debt Line 28) +
(Medicare allowable bad debts Line 27.01-Medicare reimbursable bad debt
Line 27)].

Similar in concept to the policy that we adopted for FY 2018, for
FY 2019, we continue to believe that uncompensated care costs that
represent an extremely high ratio of a hospital's total operating
expenses (such as the ratio of 50 percent used in the FY 2018 IPPS/LTCH
PPS final rule) may be potentially aberrant, and that using the ratio
of uncompensated care costs to total operating costs to identify
potentially aberrant data when determining Factor 3 amounts has merit.
That is, we continue to believe that, in the rare situations where a
hospital has a ratio of uncompensated care costs to total operating
expenditures that is extremely high, the issue is most likely with the
hospital's uncompensated care costs and not its total operating costs.
We have instructed the MACs to review situations where a hospital has
an extremely high ratio of uncompensated care costs to total operating
costs with the hospital. We do not intend to make the MACs' review
protocols public. As stated in the FY 2017 IPPS/LTCH PPS final rule (81
FR 56964), for program integrity reasons, CMS desk review and audit
protocols are confidential and are for CMS and MAC use only. If the
hospital cannot justify its reported uncompensated care amount, we
believe it would be appropriate to utilize data from another fiscal
year to address the potentially aberrant Worksheet S-10 data for FY
2014 or FY 2015. As we have previously indicated, we do not believe it
would be appropriate to use Worksheet S-10 data from years prior to FY
2014 in the determination of Factor 3. Therefore, the most widely
available Worksheet S-10 data available to us if a hospital has an
extremely high ratio of uncompensated care costs to total operating
expenses based on its FY 2014 or FY 2015 Worksheet S-10 data are the FY
2015 and FY 2016 Worksheet S-10 data. Accordingly, similar in concept
to the approach we used in FY 2018, in cases where a hospital's
uncompensated care costs for FY 2014 are an extremely high ratio of its
total operating costs and the hospital cannot justify the amount it
reported, we are proposing to determine the ratio of FY 2015
uncompensated care costs to FY 2015 total operating expenses from the
hospital's FY 2015 cost report and apply that ratio to the FY 2014
total operating expenses from the hospital's FY 2014 cost report to
determine an adjusted amount of uncompensated care costs for FY 2014.
We would then use this adjusted amount to determine Factor 3 for FY
2019. Similarly, if a hospital has uncompensated care costs for FY 2015
that are an extremely high ratio of its total operating costs for that
year and the hospital cannot justify its reported amount, we are
proposing to follow the same methodology using data from the hospital's
FY 2016 cost report to determine an adjusted amount of uncompensated
care costs for FY 2015. That is, we would determine the ratio of FY
2016 uncompensated care costs to FY 2016 total operating expenses from
a hospital's FY 2016 cost report and apply that ratio to the FY 2015
total operating expenses from the hospital's FY 2015 cost report to
determine an adjusted amount of uncompensated care costs for FY 2015.
We would then use this adjusted amount when determining Factor 3 for FY
2019. We have tentatively included the data for hospitals that have a
high ratio of uncompensated care costs to total operating expenses when
calculating Factor 3 for this proposed rule. We note, however, that our
calculation of Factor 3 for the final rule will be contingent on the
results of the ongoing MAC reviews of these hospitals. In the event
those reviews necessitate supplemental data edits, we would incorporate
such edits in the final rule for the purpose of correcting aberrant
data.
For FY 2019, we also believe that situations where there were
extremely large dollar increases or decreases in a hospital's
uncompensated care costs when it resubmitted its FY 2014 Worksheet S-10
or FY 2015 Worksheet S-10 data, or when the data it had previously
submitted were reprocessed by the MAC, may reflect potentially aberrant
data and warrant further review. For example, although we do not make
our actual review protocols public, we might conclude that it would be
appropriate to review hospitals with increases or decreases in
uncompensated care costs in the top 1 percent of such changes. We have
instructed our MACs to review these situations with each hospital. If
it is determined after this review that an increase or decrease in
uncompensated care costs cannot be justified by the hospital, we are
proposing to follow the same approach that we are proposing to use to
address situations when a hospital's ratio of its uncompensated care
costs to its operating expenses is extremely high and the hospital
cannot justify its reported amount. Specifically, if after review, the
increase or decrease in uncompensated care costs for FY 2014 or FY 2015
cannot be justified by the hospital, we would determine the ratio of
the uncompensated care costs to total operating expenses from the
hospital's cost report for the subsequent fiscal year and apply that
ratio to the total operating expenses from the hospital's resubmitted
cost report with the large increase or decrease in uncompensated care
payments to determine an adjusted amount of uncompensated care costs
for the applicable fiscal year. We have tentatively included the data
for

[[Page 20400]]

hospitals where there was an extremely large increase or decrease in
uncompensated care payments when calculating Factor 3 for this proposed
rule. However, we note that our calculation of Factor 3 for the final
rule will be contingent on the results of the ongoing MAC reviews of
these hospitals. In the event those reviews necessitate supplemental
data edits, we would incorporate such edits in the final rule for the
purpose of correcting aberrant data.
For Indian Health Service and Tribal hospitals, subsection (d)
Puerto Rico hospitals, and All-Inclusive Rate Providers, we are
proposing to continue the policy we first adopted for FY 2018 of
substituting data regarding FY 2013 low-income insured days for the
Worksheet S-10 data when determining Factor 3. As we discussed in the
FY 2018 IPPS/LTCH PPS final rule (82 FR 38209), the use of data from
Worksheet S-10 to calculate the uncompensated care amount for Indian
Health Service and Tribal hospitals may jeopardize these hospitals'
uncompensated care payments due to their unique funding structure. With
respect to Puerto Rico hospitals, we continue to agree with concerns
raised by commenters that the uncompensated care data reported by these
hospitals need to be further examined before the data are used to
determine Factor 3 (82 FR 38209). Finally, the CCRs for All-Inclusive
Rate Providers are potentially erroneous and still in need of further
examination before they can be used in the determination of
uncompensated care amounts for purposes of Factor 3 (82 FR 38212). For
the reasons described earlier related to the impact of the Medicaid
expansion beginning in FY 2014, we also continue to believe that it is
inappropriate to calculate a Factor 3 using FY 2014 and FY 2015 low-
income insured days. Because we do not believe it is appropriate to use
the FY 2014 or FY 2015 uncompensated care data for these hospitals and
we also do not believe it is appropriate to use the FY 2014 or FY 2015
low-income insured days, the best proxy for the costs of Indian Health
Service and Tribal hospitals, subsection (d) Puerto Rico hospitals, and
All[dash]Inclusive Rate Providers for treating the uninsured continues
to be the low-income insured days data for FY 2013. Accordingly, for
these hospitals, we are proposing to determine Factor 3 only on the
basis of low-income insured days for FY 2013. We believe this approach
is appropriate as the FY 2013 data reflect the most recent available
information regarding these hospitals' low-income insured days before
any expansion of Medicaid. We are not making any proposals with respect
to the calculation of Factor 3 for FY 2020 and will reexamine the use
of the Worksheet S-10 data for Indian Health Service and Tribal
hospitals, subsection (d) Puerto Rico hospitals, and All-Inclusive Rate
Providers as part of the FY 2020 rulemaking. In addition, because we
are continuing to use 1 year of insured low-income patient days as a
proxy for uncompensated care and residents of Puerto Rico are not
eligible for SSI benefits, we are proposing to continue to use a proxy
for SSI days consisting of 14 percent of a hospital's Medicaid days for
Puerto Rico hospitals, as finalized in the FY 2017 IPPS/LTCH PPS final
rule (81 FR 56953 through 56956).
Therefore, for FY 2019, we are proposing to compute Factor 3 for
each hospital by--
Step 1: Calculating Factor 3 using the low-income insured days
proxy based on FY 2013 cost report data and the FY 2016 SSI ratio (or,
for Puerto Rico hospitals, 14 percent of the hospital's FY 2013
Medicaid days);
Step 2: Calculating Factor 3 based on the FY 2014 Worksheet S-10
data;
Step 3: Calculating Factor 3 based on the FY 2015 Worksheet S-10
data; and
Step 4: Averaging the Factor 3 values from Steps 1, 2, and 3; that
is, adding the Factor 3 values from FY 2013, FY 2014, and FY 2015 for
each hospital, and dividing that amount by the number of cost reporting
periods with data to compute an average Factor 3 (or for Puerto Rico
hospitals, Indian Health Service and Tribal hospitals, and All-
Inclusive Rate Providers using the Factor 3 value from Step 1).
We also are proposing to amend the regulations at Sec.
412.106(g)(1)(iii)(C) by adding a new paragraph (5) to reflect this
proposed methodology for computing Factor 3 for FY 2019.
We note that, if a hospital does not have both Medicaid days for FY
2013 and SSI days for FY 2016 available for use in the calculation of
Factor 3 in Step 1, we consider the hospital not to have data available
for the fiscal year, and will remove that fiscal year from the
calculation and divide by the number of years with data. A hospital
will be considered to have both Medicaid days and SSI days data
available if it reports zero days for either component of the Factor 3
calculation in Step 1. However, if a hospital is missing data due to
not filing a cost report in one of the applicable fiscal years, we will
divide by the remaining number of fiscal years.
Although we are not making any proposals with respect to the
development of Factor 3 for FY 2020 and subsequent fiscal years, the
above methodology would have the effect of fully transitioning the
incorporation of data from Worksheet S-10 into the calculation of
Factor 3 if used in FY 2020. Starting with 1 year of Worksheet S-10
data in FY 2018, an additional year of Worksheet S-10 data could be
incorporated into the calculation of Factor 3 in FY 2019 if our
proposed methodology is finalized, and the use of low-income insured
days would be phased out by FY 2020 if the same methodology is proposed
and finalized for that year. It is also possible that when we examine
the FY 2016 Worksheet S-10 data, we may determine that the use of
multiple years of Worksheet S-10 data is no longer necessary in
calculating Factor 3 for FY 2020.
For new hospitals that do not have data for any of the three cost
reporting periods used in the Factor 3 calculation, we are proposing to
continue to apply the new hospital policy finalized in the FY 2014
IPPS/LTCH PPS final rule (78 FR 50643). That is, the hospital would not
receive either interim empirically justified Medicare DSH payments or
interim uncompensated care payments. However, if the hospital is later
determined to be eligible to receive empirically justified Medicare DSH
payments based on its FY 2019 cost report, the hospital would also
receive an uncompensated care payment calculated using a Factor 3,
where the numerator is the uncompensated care costs reported on
Worksheet S-10 of the hospital's FY 2019 cost report, and the
denominator is the sum of uncompensated care costs reported on
Worksheet S-10 of all DSH eligible hospitals' FY 2015 cost reports. Due
to the uncertainty regarding the completeness and accuracy of the FY
2019 uncompensated care cost data at the time this calculation would
need to be performed, we believe it would be more appropriate to use
the sum of the uncompensated care costs reported on Worksheet S-10 of
all DSH eligible hospitals' cost reports from FY 2015, the most recent
year of the 3-year time period used in the development of Factor 3, to
determine the denominator of Factor 3 for new hospitals. We note that,
given the time period of the data used to calculate Factor 3, any
hospitals with a CCN established after October 1, 2015 would be
considered new and subject to this policy.
As we have done for every proposed and final rule beginning in FY
2014, in conjunction with both the FY 2019 IPPS/LTCH PPS proposed rule
and final rule, we will publish on the CMS website a table listing
Factor 3 for all

[[Page 20401]]

hospitals that we estimate would receive empirically justified Medicare
DSH payments in FY 2019 (that is, those hospitals that would receive
interim uncompensated care payments during the fiscal year), and for
the remaining subsection (d) hospitals and subsection (d) Puerto Rico
hospitals that have the potential of receiving a Medicare DSH payment
in the event that they receive an empirically justified Medicare DSH
payment for the fiscal year as determined at cost report settlement. We
note that, at the time of the development of this proposed rule, the FY
2016 SSI ratios were available. Accordingly, for modeling purposes, we
computed the proposed Factor 3 for each hospital using the most recent
available data regarding SSI days from the FY 2016 SSI ratios.
We also will publish a supplemental data file containing a list of
the mergers that we are aware of and the computed uncompensated care
payment for each merged hospital. Hospitals have 60 days from the date
of public display of this FY 2019 IPPS/LTCH PPS proposed rule to review
the table and supplemental data file published on the CMS website in
conjunction with the proposed rule and to notify CMS in writing of any
inaccuracies. Comments can be submitted to the CMS inbox at
[email protected]. We will address these comments as
appropriate in the table and the supplemental data file that we will
publish on the CMS website in conjunction with the publication of the
FY 2019 IPPS/LTCH PPS final rule. After the publication of the FY 2019
IPPS/LTCH PPS final rule, hospitals will have until August 31, 2018, to
review and submit comments on the accuracy of the table and
supplemental data file published in conjunction with the final rule.
Comments may be submitted to the CMS inbox at
[email protected] through August 31, 2018, and any changes to
Factor 3 will be posted on the CMS website prior to October 1, 2018.
We are inviting public comments on our proposed methodology for
calculating Factor 3 for FY 2019, including, but not limited to, our
proposed use of the FY 2013 low[dash]income insured days proxy data,
and the FY 2014 and FY 2015 Worksheet S-10 data.

G. Sole Community Hospitals (SCHs) and Medicare-Dependent, Small Rural
Hospitals (MDHs) (Sec. Sec. 412.90, 412.92, and 412.108)

1. Background on SCHs and MDHs
Sections 1886(d)(5)(D) and (d)(5)(G) of the Act provide special
payment protections under the IPPS to sole community hospitals (SCHs)
and Medicare[dash]dependent, small rural hospitals (MDHs),
respectively. Section 1886(d)(5)(D)(iii) of the Act defines an SCH in
part as a hospital that the Secretary determines is located more than
35 road miles from another hospital or that, by reason of factors such
as isolated location, weather conditions, travel conditions, or absence
of other like hospitals (as determined by the Secretary), is the sole
source of inpatient hospital services reasonably available to Medicare
beneficiaries. The regulations at 42 CFR 412.92 set forth the criteria
that a hospital must meet to be classified as a SCH. For more
information on SCHs, we refer readers to the FY 2009 IPPS/LTCH PPS
final rule (74 FR 43894 through 43897).
Section 1886(d)(5)(G)(iv) of the Act defines an MDH as a hospital
that is located in a rural area, or is located in an all-urban State
but meets one of the specified statutory criteria for rural
reclassification (as added by section 50205 of the Bipartisan Budget
Act of 2018, Pub. L. 115-123), has not more than 100 beds, is not an
SCH, and has a high percentage of Medicare discharges (that is, not
less than 60 percent of its inpatient days or discharges during the
cost reporting period beginning in FY 1987 or two of the three most
recently audited cost reporting periods for which the Secretary has a
settled cost report were attributable to inpatients entitled to
benefits under Part A). The regulations at 42 CFR 412.108 set forth the
criteria that a hospital must meet to be classified as an MDH. For
additional information on the MDH program and the payment methodology,
we refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51683
through 51684).
2. Implementation of Legislation Relating to the MDH Program
a. Legislative Extension of the MDH Program
Since the extension of the MDH program through FY 2012 provided by
section 3124 of the Affordable Care Act, the MDH program has been
extended by subsequent legislation. Most recently, section 50205 of the
Bipartisan Budget Act of 2018 (Pub. L. 115-123), enacted on February 9,
2018, extended the MDH program for FYs 2018 through 2022 (that is, for
discharges occurring before October 1, 2022). (Additional information
on the extensions of the MDH program after FY 2012 and through FY 2017
can be found in the FY 2016 interim final rule with comment period (80
FR 49596).)
Section 50205 of the Bipartisan Budget Act of 2018 amended sections
1886(d)(5)(G)(i) and 1886(d)(5)(G)(ii)(II) of the Act to provide for an
extension of the MDH program for discharges occurring on or after
October 1, 2017, through FY 2022 (that is, for discharges occurring on
or before September 30, 2022).
We note that, consistent with the previous extensions of the MDH
program, generally, a provider that was classified as an MDH as of
September 30, 2017, was reinstated as an MDH effective October 1, 2017,
with no need to reapply for MDH classification. However, if the MDH had
classified as an SCH or cancelled its rural classification under Sec.
412.103(g) effective on or after October 1, 2017, the effective date of
MDH status may not be retroactive to October 1, 2017. We refer readers
to the notice (CMS-1677-N) that appears elsewhere in this issue of the
Federal Register for more information on the MDH extension in FY 2018.
b. MDH Classification for Hospitals in All-Urban States
In addition to extending the MDH program, section 50205 amended
section 1886(d)(5)(G)(iv) of the Act to include in the definition of an
MDH a hospital that is located in a State with no rural area (as
defined in paragraph (2)(D)) and satisfies any of the criteria in
section 1886(d)(8)(E)(ii)(I), (II), or (III) of the Act, in addition to
the other qualifying criteria.
Section 50205 of the Bipartisan Budget Act of 2018 also amended
section 1886(d)(5)(G)(iv) of the Act by adding a provision following
section 1886(d)(5)(G)(iv)(IV), which specifies that new section
1886(d)(5)(G)(iv)(I)(bb) of the Act applies for purposes of the MDH
payment under sections 1886(d)(5)(G)(ii) of the Act (that is, 75
percent of the amount by which the Federal rate is exceeded by the
updated hospital-specific rate from certain specified base years) only
for discharges of a hospital occurring on or after the effective date
of a determination of MDH status made with respect to the hospital
after the date of the enactment of this provision. We note that, under
existing regulations, the effective date for a determination of MDH
status is 30 days after the date the MAC provides written notification
of MDH status. We

[[Page 20402]]

also note that we are proposing in section IV.G.3. of the preamble of
this proposed rule to change the effective date for a determination of
MDH status. If the proposal is finalized, the policy would not be
effective until FY 2019 (October 1, 2018) and therefore would not apply
to hospitals applying for MDH classification before October 1, 2018.
Furthermore, this new provision also specifies that, for purposes of
new section 1886(d)(5)(G)(iv)(I)(bb) of the Act, section
1886(d)(8)(E)(ii)(II) of the Act shall be applied by inserting ``as of
January 1, 2018,'' after ``such State'' each place it appears. Section
50205 of the Bipartisan Budget Act also made conforming amendments to
sections 1886(b)(3)(D) (in the language proceeding clause (i)) and
1886(b)(3)(D)(iv) of the Act.
Section 1886(d)(8)(E) of the Act provides for an IPPS hospital that
is located in an urban area to be reclassified as a rural hospital if
it submits an application in accordance with CMS' established process
and meets certain criteria at section 1886(d)(8)(E)(ii)(I), (II), or
(III) of the Act (these statutory criteria are implemented in the
regulations at Sec. 412.103(a)(1) through (3)). A subsection (d)
hospital that is located in an urban area and meets one of the three
criteria under Sec. 412.103(a) can reclassify as rural and is treated
as being located in the rural area of the State in which it is located.
However, a hospital that is located in an all-urban State is ineligible
to reclassify as rural in accordance with the provisions of Sec.
412.103 because the State in which it is located does not have a rural
area into which it can reclassify. Prior to the amendments made by the
Bipartisan Budget Act, a hospital could only qualify for MDH status if
it was either geographically located in a rural area or if it
reclassified as rural under the regulations at Sec. 412.103. This
precluded hospitals in all[dash]urban States from being classified as
MDHs. The newly added provision in the Bipartisan Budget Act of 2018
allows a hospital in an all-urban State to be eligible for MDH
classification if, in addition to meeting the other criteria for MDH
eligibility, it satisfies one of the criteria for rural
reclassification under section 1886(d)(8)(E)(ii)(I), (II), or (III) of
the Act (as of January 1, 2018, where applicable), notwithstanding its
location in an all-urban State.
As noted earlier, prior to the enactment of the Bipartisan Budget
Act of 2018, a hospital in an all-urban State was ineligible for MDH
classification because it could not reclassify as rural. With the new
provision added by section 50205 of the Bipartisan Budget Act of 2018,
a hospital in an all-urban State can apply and be approved for MDH
classification if it can demonstrate that: (1) It meets the criteria at
Sec. 412.103(a)(1) or (3) or the criteria at Sec. 412.103(a)(2) as of
January 1, 2018, for the sole purposes of qualifying for MDH
classification; and (2) it meets the MDH classification criteria at
Sec. 412.108(a)(1)(i) through (iii), which, as amended, would be
redesignated as Sec. 412.108(a)(1)(i) through (iv). We note that for a
hospital in an all-urban State to demonstrate that it would have
qualified for rural reclassification notwithstanding its location in an
all-urban State (as of January 1, 2018, where applicable), it must
follow the applicable procedures for rural reclassification and MDH
classification at Sec. 412.103(b) and Sec. 412.108(b), respectively.
We also note that we are not proposing any changes to the
reclassification criteria under Sec. 412.103 and that a hospital in an
all-urban State that qualifies as an MDH under the newly added
statutory provision will not be considered as having reclassified as
rural but only as having satisfied one of the criteria at section
1886(d)(8)(E)(ii)(I), (II), or (III) of the Act (as of January 1, 2018,
as applicable) for purposes of MDH classification, in accordance with
amended section 1886(d)(5)(G)(iv) of the Act.
We are proposing to make conforming changes to the regulations at
Sec. 412.108(a)(1) and (c)(2)(iii) to reflect the extension of the MDH
program for FY 2018 through FY 2022 and the additional MDH
classification provision made for hospitals located in all-urban States
by section 50205 of the Bipartisan Budget Act of 2018. We are proposing
a similar conforming change to Sec. 412.90(j) to reflect the extension
of the MDH program through FY 2022.
3. Proposal Regarding Change to SCH and MDH Classification Status
Effective Dates
The regulations at 42 CFR 412.92(b)(2)(i) set forth an effective
date for SCH classification of 30 days after the date of CMS' written
notification of approval. Similarly, Sec. 412.92(b)(2)(iv) specifies
that a hospital classified as an SCH receives a payment adjustment
effective with discharges occurring on or after 30 days after the date
of CMS' approval of the classification.
Section 401 of the Medicare, Medicaid, and SCHIP Balanced Budget
Refinement Act (BBRA) of 1999 (Pub. L. 106-113, Appendix F) amended
section 1886(d)(8) of the Act to add paragraph (E) which authorizes
reclassification of certain urban hospitals as rural if the hospital
applies for such status and meets certain criteria. The effective date
for rural reclassification status under section 1886(d)(8)(E) of the
Act is set forth at 42 CFR 412.103(d)(1) as the filing date, which is
the date CMS receives the reclassification application (Sec.
412.103(b)(5)). One way that an urban hospital can reclassify as rural
under Sec. 412.103 (specifically, Sec. 412.103(a)(3)) is if the
hospital would qualify as a rural referral center (RRC) as set forth in
Sec. 412.96, or as an SCH as set forth in Sec. 412.92, if the
hospital were located in a rural area. A geographically urban hospital
may simultaneously apply for reclassification as rural under Sec.
412.103(a)(3) by meeting the criteria for SCH status (other than being
located in a rural area), and apply to obtain SCH status under Sec.
412.92 based on that acquired rural reclassification. However, the
rural reclassification is effective as of the filing date, while the
SCH status is effective 30 days after approval. In addition, while
Sec. 412.103(c) states that the CMS Regional Office will review the
application and notify the hospital of its approval or disapproval of
the request within 60 days of the filing date, the regulations do not
set a timeframe by which CMS must decide on an SCH request. Therefore,
geographically urban hospitals that obtain rural reclassification under
Sec. 412.103 for the purposes of obtaining SCH status may face a
payment disadvantage because they are paid as rural until the SCH
application is approved and the SCH classification and payment
adjustment become effective 30 days after approval.
To minimize the lag between the effective date of rural
reclassification under Sec. 412.103 and the effective date for SCH
status, we are proposing to revise Sec. 412.92(b)(2)(i) and (b)(2)(iv)
so that the effective date for SCH classification and for the payment
adjustment would be the date that CMS receives the complete SCH
application, effective for SCH applications received on or after
October 1, 2018. A complete application includes a request and all
supporting documentation needed to demonstrate that the hospital meets
criteria for SCH status as of the date of application, which includes
documentation of rural reclassification in the case of a geographically
urban hospital. For an application to be complete, all criteria must be
met as of the date CMS receives the SCH application. For example, a
hospital applying for SCH status on the basis of a Sec. 412.103 rural
reclassification must submit its Sec. 412.103 application no later
than its SCH application in order to be considered rural as of the date
CMS receives the SCH application.

[[Page 20403]]

Similar to rural reclassification obtained under Sec. 412.103, the
effective date for SCH status would be the date that CMS receives the
complete application. We also are proposing conforming changes to the
effective date at Sec. 412.92(b)(2)(ii) for instances when a court
order or a determination by the Provider Reimbursement Review Board
(PRRB) reverses a CMS denial of SCH status and no further appeal is
made. In the interest of a clear and consistent policy, we are
proposing that this change in the SCH effective date would also apply
for hospitals not reclassifying as rural under Sec. 412.103, such as
geographically rural hospitals obtaining SCH status. We believe that
these proposals to update the regulations at Sec. 412.92 to provide an
effective date for SCH status that is consistent with the effective
date for rural reclassification under Sec. 412.103 would benefit
hospitals by minimizing any payment disadvantage caused by the lag
between the effective date of rural reclassification and the effective
date of SCH status. We also believe this proposal to align the SCH
effective date with the Sec. 412.103 effective date supports agency
efforts to reduce regulatory burden because it would provide for a more
uniform policy.
In addition, we are proposing to make parallel changes to the
effective date for an MDH status determination under Sec.
412.108(b)(4). As discussed earlier, section 50205 of the Bipartisan
Budget Act of 2018 extended the MDH program through FY 2022 by amending
section 1886(d)(5)(G) of the Act. Similar to the proposed change in
effective date for SCH status approvals, we are proposing that a
determination of MDH status would be effective as of the date that CMS
receives the complete application, for applications received on or
after October 1, 2018, rather than the current effective date at Sec.
412.108(b)(4) of 30 days after the date the MAC provides written
notification to the hospital. Similar to applications for SCH status, a
complete application includes a request and all supporting
documentation needed to demonstrate that the hospital meets criteria
for MDH status as of the date of application. For an application to be
complete, all criteria must be met as of the date CMS receives the MDH
application. For example, a cost report must be settled at the time of
application for a hospital to use that cost report as one of the cost
reports required in Sec. 412.108(a)(1)(iii)(C), and a hospital
applying for MDH status on the basis of a Sec. 412.103 rural
reclassification must submit its Sec. 412.103 application no later
than its MDH application in order to be considered rural as of the date
CMS receives the MDH application. (We note that a hospital in an all-
urban State that applies for MDH status under the expanded definition
at section 50205 of the Bipartisan Budget Act of 2018 would need to
submit its application for a determination that it meets the criteria
at Sec. 412.103(a)(1) or (3) or the criteria at Sec. 412.103(a)(2) as
of January 1, 2018 (as discussed in the previous section) no later than
its MDH application in order for the application to be considered
complete.)
We believe that concurrently changing the SCH and MDH status
effective dates from 30 days after the date of approval to the date the
complete application is received would allow for consistency in the
regulations governing effective dates of special rural hospital status.
In addition, this proposal would benefit urban hospitals that are
requesting Sec. 412.103 rural reclassification at the same time as MDH
status because it would synchronize effective dates to eliminate any
payment consequences caused by a lag between effective dates for rural
reclassification and MDH status.
4. Proposed Conforming Technical Changes to Regulations
We note that, in this proposed rule, we also are proposing to make
technical conforming changes to the regulations in Sec. 412.92 and
Sec. 412.108 to reflect the change CMS made some time ago to identify
fiscal intermediaries as Medicare administrative contractors (MACs).

H. Hospital Readmissions Reduction Program: Proposed Updates and
Changes (Sec. Sec. 412.150 Through 412.154)

1. Statutory Basis for the Hospital Readmissions Reduction Program
Section 1886(q) of the Act, as added by section 3025 of the
Affordable Care Act as amended by section 10309 of the Affordable Care
Act, and further amended by section 15002 of the 21st Century Cures
Act, establishes the Hospital Readmissions Reduction Program. Under the
Program, Medicare payments under the acute inpatient prospective
payment system for discharges from an applicable hospital, as defined
under section 1886(d) of the Act, may be reduced to account for certain
excess readmissions. Section 15002 of the 21st Century Cures Act
requires the Secretary to compare peer groups of hospitals with respect
to the number of their Medicare-Medicaid dual-eligible beneficiaries
(dual-eligibles) in determining the extent of excess readmissions. We
refer readers to section IV.E.1. of the preamble of the FY 2016 IPPS/
LTCH PPS final rule (80 FR 49530 through 49531) and section V.I.1. of
the preamble of the FY 2018 IPPS/LTCH PPS final rule (82 FR38221
through 38240) for a detailed discussion of and additional information
on the statutory history of the Hospital Readmissions Reduction
Program.
2. Regulatory Background
We refer readers to the following final rules for detailed
discussions of the regulatory background and descriptions of the
current policies for the Hospital Readmissions Reduction Program:
FY 2012 IPPS/LTCH PPS final rule (76 FR 51660 through
51676);
FY 2013 IPPS/LTCH PPS final rule (77 FR 53374 through
53401);
FY 2014 IPPS/LTCH PPS final rule (78 FR 50649 through
50676);
FY 2015 IPPS/LTCH PPS final rule (79 FR 50024 through
50048);
FY 2016 IPPS/LTCH PPS final rule (80 FR 49530 through
49543);
FY 2017 IPPS/LTCH PPS final rule (81 FR 56973 through
56979); and
FY 2018 IPPS/LTCH PPS final rule (82 FR 38221 through
38240).
These rules describe the general framework for the implementation
of the Hospital Readmissions Reduction Program, including: (1) The
selection of measures for the applicable conditions/procedures; (2) the
calculation of the excess readmission ratio, which is used, in part, to
calculate the payment adjustment factor; (3) beginning in FY 2018, the
calculation of the proportion of ``dually eligible'' Medicare
beneficiaries (described below) which is used to stratify hospitals
into peer groups and establish the peer group median excess readmission
ratios (ERRs); (4) the calculation of the payment adjustment factor,
specifically addressing the base operating DRG payment amount,
aggregate payments for excess readmissions (including calculating the
peer group median ERRs), aggregate payments for all discharges, and the
neutrality modifier; (5) the opportunity for hospitals to review and
submit corrections using a process similar to what is currently used
for posting results on Hospital Compare; (6) the adoption of an
extraordinary circumstances exception policy to address hospitals that
experience a disaster or other extraordinary circumstance; (7) the
clarification that the public reporting of excess readmission ratios
will be posted on an annual basis to the Hospital Compare website as
soon as is feasible following the Review and Correction period; and (8)
the specification that the definition

[[Page 20404]]

of ``applicable hospital'' does not include hospitals and hospital
units excluded from the IPPS, such as LTCHs, cancer hospitals,
children's hospitals, IRFs, IPFs, CAHs, and hospitals in Puerto Rico.
We also have codified certain requirements of the Hospital
Readmissions Reduction Program at 42 CFR 412.152 through 412.154.
The Hospital Readmissions Reduction Program strives to put patients
first by ensuring they are empowered to make decisions about their own
healthcare along with their clinicians, using information from data-
driven insights that are increasingly aligned with meaningful quality
measures. We support technology that reduces costs and allows
clinicians to focus on providing high quality health care for their
patients. We also support innovative approaches to improve quality,
accessibility, and affordability of care, while paying particular
attention to improving clinicians' and beneficiaries' experiences when
interacting with CMS programs. In combination with other efforts across
the Department of Health and Human Services, we believe the Hospital
Readmissions Reduction Program incentivizes hospitals to improve health
care quality and value, while giving patients the tools and information
needed to make the best decisions for them.
3. Summary of Proposed Policies for the Hospital Readmissions Reduction
Program
In this proposed rule, we are proposing to: (1) Establish the
applicable period for FY 2019, FY 2020 and FY 2021; (2) codify the
previously adopted definition of ``dual[dash]eligible''; (3) codify the
previously adopted definition of ``proportion of dual[dash]eligibles'';
and (4) codify the previously adopted definition of ``applicable period
for dual-eligibility.''
These proposals are described in more detail below.
4. Current Measures for FY 2019 and Subsequent Years
The Hospital Readmissions Reduction Program currently includes six
applicable conditions/procedures: Acute myocardial infarction (AMI);
heart failure (HF); pneumonia; total hip arthroplasty/total knee
arthroplasty (THA/TKA); chronic obstructive pulmonary disease (COPD);
and coronary artery bypass graft (CABG).
By publicly reporting quality data, we strive to put patients
first, ensuring they, along with their clinicians, are empowered to
make decisions about their own healthcare using information aligned
with a meaningful quality measures. The Hospital Readmissions Reduction
Program, together with the Hospital VBP Program and the HAC Reduction
Program, represents a key component of the way that we bring quality
measurement, transparency, and improvement together with value-based
purchasing to the inpatient care setting. We have undertaken efforts to
review the existing measure set in the context of these other programs,
to identify how to reduce costs and complexity across programs while
continuing to incentivize improvement in the quality and value of care
provided to patients. To that end, we have begun reviewing our
programs' measures in accordance with the Meaningful Measures
Initiative we described in section I.A.2. of the preamble of this
proposed rule.
As part of this review, we have taken a holistic approach to
evaluating the appropriateness of the Hospital Readmissions Reduction
Program's current measures in the context of the measures used in two
other IPPS value-based purchasing programs (that is, the Hospital VBP
Program and the HAC Reduction Program), as well as the Hospital IQR
Program. We view the three value-based purchasing programs together as
a collective set of hospital value-based purchasing programs.
Specifically, we believe the goals of the three value-based purchasing
programs (the Hospital VBP, Hospital Readmissions Reduction, and HAC
Reduction Programs) and the measures used in these programs together
cover the Meaningful Measures Initiative quality priorities of making
care safer, strengthening person and family engagement, promoting
coordination of care, promoting effective prevention and treatment, and
making care affordable,--but that the programs should not add
unnecessary complexity or costs associated with duplicative measures
across programs. The Hospital Readmissions Reduction Program focuses on
care coordination measures, which address the quality priority of
promoting effective communication and care coordination within the
Meaningful Measures Initiative. The HAC Reduction Program focuses on
patient safety measures, which address the Meaningful Measures
Initiative quality priority of making care safer by reducing harm
caused in the delivery of care.
As part of this holistic quality payment program strategy, we
believe the Hospital VBP Program should focus on the measurement
priorities not covered by the Hospital Readmissions Reduction Program
or the HAC Reduction Program. The Hospital VBP Program would continue
to focus on measures related to: (1) The clinical outcomes, such as
mortality and complications (which address the Meaningful Measures
Initiative quality priority of promoting effective treatment); (2)
patient and caregiver experience, as measured using the HCAHPS survey
(which addresses the Meaningful Measures Initiative quality priority of
strengthening person and family engagement as partners in their care);
and (3) healthcare costs, as measured using the Medicare Spending per
Beneficiary measure (which addresses the Meaningful Measures Initiative
priority of making care affordable). We believe this framework will
allow hospitals and patients to continue to obtain meaningful
information about hospital performance and incentivize quality
improvement while also streamlining the measure sets to reduce
duplicative measures and program complexity so that the costs to
hospitals associated with participating in these programs does not
outweigh the benefits of improving beneficiary care.
Measures in the Hospital Readmissions Reduction Program are
important markers of quality of care, particularly of the care of a
patient in transition from an acute care setting to a non-acute care
setting. By including these measures in the Program, we seek to
encourage hospitals to address the serious problems indicated by the
necessity of a hospital readmission and to reduce them and improve care
coordination and communication. Therefore, after thoughtful review, we
have determined that the six readmission measures in the Hospital
Readmissions Reduction Program, which we are proposing for removal from
the Hospital IQR Program in section VIII.A.5.b.(3) of the preamble of
this proposed rule, are nevertheless appropriately included as part of
the Hospital Readmissions Reduction Program.
We continue to believe that the measures that we have adopted
adequately address the conditions and procedures specified in the
Hospital Readmissions Reduction Program statute. Therefore, we are not
proposing to adopt any new measures at this time.
5. Maintenance of Technical Specifications for Quality Measures
We refer readers to the FY 2015 IPPS/LTCH PPS final rule (79 FR
50039) for a discussion of the maintenance of technical specifications
for quality measures for the Hospital Readmissions Reduction Program.
Technical specifications of the readmission measures are provided on
our website in

[[Page 20405]]

the Measure Methodology Reports at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html. Additional resources
about the Hospital Readmissions Reduction Program and measure technical
specifications are on the QualityNet website on the Resources page at:
https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228772412995.
6. Proposed Applicable Periods for FY 2019, FY 2020, and FY 2021
Under section 1886(q)(5)(D) of the Act, the Secretary has the
authority to specify the applicable period with respect to a fiscal
year under the Hospital Readmissions Reduction Program. In the FY 2012
IPPS/LTCH PPS final rule (76 FR 51671), we finalized our policy to use
3 years of claims data to calculate the readmission measures. In the FY
2013 IPPS/LTCH PPS final rule (77 FR 53675), we codified the definition
of ``applicable period'' in the regulations at 42 CFR 412.152 as the 3-
year period from which data are collected in order to calculate excess
readmissions ratios and payment adjustment factors for the fiscal year,
which includes aggregate payments for excess readmissions and aggregate
payments for all discharges used in the calculation of the payment
adjustment. The applicable period for dual-eligibles is the same as the
applicable period that we otherwise adopt for purposes of the Program.
In this proposed rule, for FY 2019, consistent with the definition
specified at Sec. 412.152, we are proposing that the ``applicable
period'' for the Hospital Readmissions Reduction Program would be the
3-year period from July 1, 2014 through June 30, 2017. In other words,
we are proposing that the proportion of dual-eligibles, excess
readmissions ratios and the payment adjustment factors (including
aggregate payments for excess readmissions and aggregate payments for
all discharges) for FY 2019 would be calculated using data for
discharges occurring during the 3-year time period of July 1, 2014
through June 30, 2017.
In this proposed rule, for FY 2020, consistent with the definition
specified at Sec. 412.152, we are proposing that the ``applicable
period'' for the Hospital Readmissions Reduction Program would be the
3-year period from July 1, 2015 through June 30, 2018. As noted
earlier, we define the applicable period for dual-eligibles as the
applicable period that we otherwise adopted for purposes of the
Program; therefore, for FY 2020, the applicable period for dual-
eligibles would be the 3-year period from July 1, 2015 through June 30,
2018.
In addition, in this proposed rule, for FY 2021, consistent with
the definition specified at Sec. 412.152, we are proposing that the
``applicable period'' for the Hospital Readmissions Reduction Program
would be the 3-year period from July 1, 2016 through June 30, 2019. The
applicable period for dual-eligibles for FY 2021 would similarly be the
3-year period from July 1, 2016 through June 30, 2019.
We are inviting public comments on these proposals.
7. Identification of Aggregate Payments for Each Condition/Procedure
and All Discharges
When calculating the numerator (aggregate payments for excess
readmissions), we determine the base operating DRG payment amount for
an individual hospital for the applicable period for such condition/
procedure, using Medicare inpatient claims from the MedPAR file with
discharge dates that are within the applicable period. Under our
established methodology, we use the update of the MedPAR file for each
Federal fiscal year, which is updated 6 months after the end of each
Federal fiscal year within the applicable period, as our data source.
In identifying discharges for the applicable conditions/procedures
to calculate the aggregate payments for excess readmissions, we apply
the same exclusions to the claims in the MedPAR file as are applied in
the measure methodology for each of the applicable conditions/
procedures. For the FY 2019 applicable period, this includes the
discharge diagnoses for each applicable condition/procedure based on a
list of specific ICD-9-CM or ICD-10-CM and ICD-10-PCS code sets, as
applicable, for that condition/procedure, since diagnoses and procedure
codes for discharges occurring prior to October 1, 2015 were reported
under the ICD-9-CM code set, while discharges occurring on or after
October 1, 2015 (FY 2016), were reported under the ICD-10-CM and ICD-
10-PCS code sets.
We only identify Medicare Fee-for-Service (FFS) claims that meet
the criteria described above for each applicable condition/procedure to
calculate the aggregate payments for excess readmissions (that is,
claims paid for under Medicare Part C or Medicare Advantage, are not
included in this calculation). This policy is consistent with the
methodology to calculate excess readmissions ratios based solely on
admissions and readmissions for Medicare FFS patients. Therefore,
consistent with our established methodology, for FY 2019, we are
proposing to continue to exclude admissions for patients enrolled in
Medicare Advantage as identified in the Medicare Enrollment Database.
In this proposed rule, for FY 2019, we are proposing to determine
aggregate payments for excess readmissions, aggregate payments for all
discharges using data from MedPAR claims with discharge dates that are
on or after July 1, 2014, and no later than June 30, 2017. As we stated
in FY 2018 IPPS/LTCH PPS final rule (82 FR 38232), we will determine
the neutrality modifier using the most recently available full year of
MedPAR data. However, we note that, for the purpose of modeling the
proposed FY 2019 readmissions payment adjustment factors for this
proposed rule, we are using the proportion of dual-eligibles, excess
readmissions ratios, and aggregate payments for each condition/
procedure and all discharges for applicable hospitals from the FY 2018
Hospital Readmissions Reduction Program applicable period. For the FY
2019 program year, applicable hospitals will have the opportunity to
review and correct calculations based on the proposed FY 2019
applicable period of July 1, 2014 to June 30, 2017, before they are
made public under our policy regarding reporting of hospital-specific
information. Again, we reiterate this period is intended to review the
program calculations, and not the underlying data. For more information
on the review and corrections process, we refer readers to the FY 2013
IPPS/LTCH PPS final rule (77 FR 53399 through 53401).
In this proposed rule, for FY 2019, we are proposing to use MedPAR
data from July 1, 2014 through June 30, 2017 for FY 2019 Hospital
Readmissions Reduction Program calculations. Specifically--
March 2015 update of the FY 2014 MedPAR file to identify
claims within FY 2014 with discharges dates that are on or after July
1, 2014;
March 2016 update of the FY 2015 MedPAR file to identify
claims within FY 2015;
March 2017 update of the FY 2016 MedPAR file to identify
claims within FY 2016;
March 2018 update of the FY 2017 MedPAR file to identify
claims within FY 2017.
We are inviting public comments on this proposal.

[[Page 20406]]

8. Calculation of Payment Adjustment Factors for FY 2019 and Proposed
Codification of Certain Definitions
As we discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR
38226), section 1886(q)(3)(D) of the Act requires the Secretary to
group hospitals and apply a methodology that allows for separate
comparisons of hospitals within peer groups in determining a hospital's
adjustment factor for payments applied to discharges beginning in FY
2019.
To implement this provision, in the FY 2018 IPPS/LTCH PPS final
rule (82 FR 38226 through 38237), we finalized a number of changes to
the payment adjustment methodology for FY 2019. First, we finalized
that an individual would be counted as a full-benefit dual-eligible
patient if the beneficiary was identified as full[dash]benefit dual
status in the State Medicare Modernization Act (MMA) files for the
month he/she was discharged from the hospital (82 FR 38226 through
38228). Second, we finalized our policy to define the proportion of
full benefit dual-eligible beneficiaries as the proportion of dual-
eligible patients among all Medicare FFS and Medicare Advantage stays
(82 FR 38226 through 38228). Third, we finalized our policy to define
the data period for determining dual[dash]eligibility as the
3[dash]year data period corresponding to the Program's applicable
period (82 FR 38229). Fourth, we finalized our policy to stratify
hospitals into quintiles, or five peer groups, based on their
proportion of dual-eligible patients (82 FR 38229 through 38231).
Finally, we finalized our policy to use the median Excess Readmission
Ratio (ERR) for the hospital's peer group in place of 1.0 in the
payment adjustment formula and apply a uniform modifier to maintain
budget neutrality (82 FR 38231 through 38237). The payment adjustment
formula would then be:
[GRAPHIC] [TIFF OMITTED] TP07MY18.017

where dx is AMI, HF, pneumonia, COPD, THA/TKA or CABG and payments
refers to the base operating DRG payments. The payment reduction (1-P)
resulting from use of the median ERR for the peer group is scaled by a
neutrality modifier (NM) to achieve budget neutrality. We refer readers
to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38226 through 38237) for
a detailed discussion of the changes to the payment adjustment
methodology, including alternatives considered, for FY 2019. We are not
proposing any changes to the methodology for FY 2019 or subsequent
years. However, we are proposing to codify our previously finalized
definitions of ``applicable period for dual-eligibility'', ``dual-
eligible'', and ``proportion of dual-eligibles'' at 42 CFR 412.152. The
definitions which we are proposing to codify are as follows:
Applicable period for dual-eligibility is the 3-year data
period corresponding to the applicable period as established by the
Secretary for the Hospital Readmissions Reduction Program.
Dual-eligible is a patient beneficiary who has been
identified as having full benefit status in both the Medicare and
Medicaid programs in the State MMA files for the month the beneficiary
was discharged from the hospital.
Proportion of dual-eligibles is the number of dual-
eligible patients among all Medicare FFS and Medicare Advantage stays
during the applicable period.
We are inviting public comment on our proposal to codify these
definitions.
9. Proposed Calculation of Payment Adjustment for FY 2019
Section 1886(q)(3)(A) of the Act defines the payment adjustment
factor for an applicable hospital for a fiscal year as equal to the
greater of: (i) The ratio described in subparagraph (B) for the
hospital for the applicable period (as defined in paragraph (5)(D)) for
such fiscal year; or (ii) the floor adjustment factor specified in
subparagraph (C). Section 1886(q)(3)(B) of the Act, in turn, describes
the ratio used to calculate the adjustment factor. Specifically, it
states that the ratio is equal to 1 minus the ratio of--(i) the
aggregate payments for excess readmissions, and (ii) the aggregate
payments for all discharges, scaled by the neutrality modifier. The
calculation of this ratio is codified at Sec. 412.154(c)(1) of the
regulations and the floor adjustment factor is codified at Sec.
412.154(c)(2) of the regulations. Section 1886(q)(3)(C) of the Act
specifies the floor adjustment factor at 0.97 for FY 2015 and
subsequent fiscal years.
Consistent with section 1886(q)(3) of the Act, codified in our
regulations at Sec. 412.154(c)(2), for FY 2019, the payment adjustment
factor will be either the greater of the ratio or the floor adjustment
factor of 0.97. Under our established policy, the ratio is rounded to
the fourth decimal place. In other words, for FY 2019, a hospital
subject to the Hospital Readmissions Reduction Program would have an
adjustment factor that is between 1.0 (no reduction) and 0.9700
(greatest possible reduction).
We are inviting public comments on these proposals regarding the
calculation of payment adjustment factors for FY 2019.
10. Accounting for Social Risk Factors in the Hospital Readmissions
Reduction Program
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38237 through
38239), we discussed the importance of improving beneficiary outcomes
including reducing health disparities. We also discussed our commitment
to ensuring that medically complex patients, as well as those with
social risk factors, receive excellent care. We discussed how studies
show that social risk factors, such as being near or below the poverty
level as determined by HHS, belonging to a racial or ethnic minority
group, or living with a disability, can be associated with poor health
outcomes and how some of this disparity is related to the quality of
health care.\250\ Among our core objectives, we aim to improve health
outcomes, attain health equity for all beneficiaries, and ensure that
complex patients as well as those with social risk factors receive
excellent care. Within this context, reports by the Office of the
Assistant Secretary for Planning and Evaluation (ASPE) and the National
Academy of Medicine have examined the influence of social risk factors
in CMS value-based purchasing programs.\251\ As we noted in the FY

[[Page 20407]]

2018 IPPS/LTCH PPS final rule (82 FR 38404), ASPE's report to Congress
found that, in the context of value-based purchasing programs, dual
eligibility was the most powerful predictor of poor health care
outcomes among those social risk factors that they examined and tested.
In addition, as we noted in the FY 2018 IPPS/LTCH PPS final rule (82 FR
38237), the National Quality Forum (NQF) undertook a 2[dash]year trial
period in which certain new measures and measures undergoing
maintenance review have been assessed to determine if risk adjustment
for social risk factors is appropriate for these measures.\252\ The
trial period ended in April 2017 and a final report is available at:
https://www.qualityforum.org/SES_Trial_Period.aspx. The trial concluded
that ``measures with a conceptual basis for adjustment generally did
not demonstrate an empirical relationship'' between social risk factors
and the outcomes measured. This discrepancy may be explained in part by
the methods used for adjustment and the limited availability of robust
data on social risk factors. NQF has extended the socioeconomic status
(SES) trial,\253\ allowing further examination of social risk factors
in outcome measures.
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\250\ See, for example United States Department of Health and
Human Services. ``Healthy People 2020: Disparities. 2014.''
Available at: https://www.healthypeople.gov/2020/about/foundation-health-measures/Disparities; or National Academies of Sciences,
Engineering, and Medicine. Accounting for Social Risk Factors in
Medicare Payment: Identifying Social Risk Factors. Washington, DC:
National Academies of Sciences, Engineering, and Medicine 2016.
\251\ Department of Health and Human Services Office of the
Assistant Secretary for Planning and Evaluation (ASPE), ``Report to
Congress: Social Risk Factors and Performance Under Medicare's
Value-Based Purchasing Programs.'' December 2016. Available at:
https://aspe.hhs.gov/pdf-report/report-congress-social-risk-factors-and-performance-under-medicares-value-based-purchasing-programs.
\252\ Available at: https://www.qualityforum.org/SES_Trial_Period.aspx.
\253\ Available at: https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=86357.
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In the FY 2018 and CY 2018 proposed rules for our quality reporting
and value-based purchasing programs, we solicited feedback on which
social risk factors provide the most valuable information to
stakeholders and the methodology for illuminating differences in
outcomes rates among patient groups within a hospital or provider that
would also allow for a comparison of those differences, or disparities,
across providers. Feedback we received across our quality reporting
programs included encouraging CMS to explore whether factors that could
be used to stratify or risk adjust the measures (beyond dual
eligibility); considering the full range of differences in patient
backgrounds that might affect outcomes; exploring risk adjustment
approaches; and offering careful consideration of what type of
information display would be most useful to the public.
We also sought public comment on confidential reporting and future
public reporting of some of our measures stratified by patient dual
eligibility. In general, commenters noted that stratified measures
could serve as tools for hospitals to identify gaps in outcomes for
different groups of patients, improve the quality of health care for
all patients, and empower consumers to make informed decisions about
health care. Commenters encouraged us to stratify measures by other
social risk factors such as age, income, and educational attainment.
With regard to value-based purchasing programs, commenters also
cautioned to balance fair and equitable payment while avoiding payment
penalties that mask health disparities or discouraging the provision of
care to more medically complex patients. Commenters also noted that
value-based payment program measure selection, domain weighting,
performance scoring, and payment methodology must account for social
risk.
As a next step, CMS is considering options to improve health
disparities among patient groups within and across hospitals by
increasing the transparency of disparities as shown by quality
measures. We also are considering how this work applies to other CMS
quality programs in the future. We refer readers to the FY 2018 IPPS/
LTCH PPS final rule (82 FR 38403 through 38409) for more details, where
we discuss the potential stratification of certain Hospital IQR Program
outcome measures. Furthermore, we continue to consider options to
address equity and disparities in our value-based purchasing programs.
We plan to continue working with ASPE, the public, and other key
stakeholders on this important issue to identify policy solutions that
achieve the goals of attaining health equity for all beneficiaries and
minimizing unintended consequences.

I. Hospital Value-Based Purchasing (VBP) Program: Proposed Policy
Changes

1. Background
a. Statutory Background and Overview of Past Program Years
Section 1886(o) of the Act, as added by section 3001(a)(1) of the
Affordable Care Act, requires the Secretary to establish a hospital
value-based purchasing program (the Hospital VBP Program) under which
value-based incentive payments are made in a fiscal year (FY) to
hospitals that meet performance standards established for a performance
period for such fiscal year. Both the performance standards and the
performance period for a fiscal year are to be established by the
Secretary.
For more of the statutory background and descriptions of our
current policies for the Hospital VBP Program, we refer readers to the
Hospital Inpatient VBP Program final rule (76 FR 26490 through 26547);
the FY 2012 IPPS/LTCH PPS final rule (76 FR 51653 through 51660); the
CY 2012 OPPS/ASC final rule with comment period (76 FR 74527 through
74547); the FY 2013 IPPS/LTCH PPS final rule (77 FR 53567 through
53614); the FY 2014 IPPS/LTCH PPS final rule (78 FR 50676 through
50707); the CY 2014 OPPS/ASC final rule (78 FR 75120 through 75121);
the FY 2015 IPPS/LTCH PPS final rule (79 FR 50048 through 50087); the
FY 2016 IPPS/LTCH PPS final rule (80 FR 49544 through 49570); the FY
2017 IPPS/LTCH PPS final rule (81 FR 56979 through 57011); the CY 2017
OPPS/ASC final rule with comment period (81 FR 79855 through 79862);
and the FY 2018 IPPS/LTCH PPS final rule (82 FR 38240 through 38269).
We also have codified certain requirements for the Hospital VBP
Program at 42 CFR 412.160 through 412.167.
b. FY 2019 Program Year Payment Details
Section 1886(o)(7)(B) of the Act instructs the Secretary to reduce
the base operating DRG payment amount for a hospital for each discharge
in a fiscal year by an applicable percent. Under section 1886(o)(7)(A)
of the Act, the sum total of these reductions in a fiscal year must
equal the total amount available for value-based incentive payments for
all eligible hospitals for the fiscal year, as estimated by the
Secretary. We finalized details on how we would implement these
provisions in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53571 through
53573) and we refer readers to that rule for further details.
Under section 1886(o)(7)(C)(iv) of the Act, the applicable percent
for the FY 2019 program year is 2.00 percent. Using the methodology we
adopted in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53571 through
53573), we estimate that the total amount available for value-based
incentive payments for FY 2019 is approximately $1.9 billion, based on
the December 2017 update of the FY 2017 MedPAR file. We intend to
update this estimate for the FY 2019 IPPS/LTCH PPS final rule using the
March 2018 update of the FY 2017 MedPAR file.
As finalized in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53573
through 53576), we will utilize a linear exchange function to translate
this estimated amount available into a value-based incentive payment
percentage for

[[Page 20408]]

each hospital, based on its Total Performance Score (TPS). We will then
calculate a value-based incentive payment adjustment factor that will
be applied to the base operating DRG payment amount for each discharge
occurring in FY 2019, on a per-claim basis. We are publishing proxy
value-based incentive payment adjustment factors in Table 16 associated
with this proposed rule (which is available via the internet on the CMS
website). The proxy factors are based on the TPS from the FY 2018
program year. These FY 2018 performance scores are the most recently
available performance scores hospitals have been given the opportunity
to review and correct. The slope of the linear exchange function used
to calculate the proxy value-based incentive payment adjustment factors
in Table 16 is 2.8888347029. This slope, along with the estimated
amount available for value-based incentive payments is also published
in Table 16 (which is available via the internet on the CMS website).
We intend to update this table as Table 16A in the final rule
(which will be available on the CMS website) to reflect changes based
on the March 2018 update to the FY 2017 MedPAR file. We also intend to
update the slope of the linear exchange function used to calculate
those updated proxy value-based incentive payment adjustment factors.
The updated proxy value-based incentive payment adjustment factors for
FY 2019 will continue to be based on historic FY 2018 program year TPSs
because hospitals will not have been given the opportunity to review
and correct their actual TPSs for the FY 2019 program year until after
the FY 2019 IPPS/LTCH PPS final rule is published.
After hospitals have been given an opportunity to review and
correct their actual TPSs for FY 2019, we will post Table 16B (which
will be available via the internet on the CMS website) to display the
actual value-based incentive payment adjustment factors, exchange
function slope, and estimated amount available for the FY 2019 program
year. We expect Table 16B will be posted on the CMS website in the fall
of 2018.
2. Retention and Proposed Removal of Quality Measures
a. Retention of Previously Adopted Hospital VBP Program Measures and
Proposal To Clarify the Relationship Between the Hospital IQR and
Hospital VBP Program Measure Sets
In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53592), we finalized
a policy to retain measures from prior program years for each
successive program year, unless otherwise proposed and finalized. In
this proposed rule, we are not proposing any changes to this policy.
We are, however, proposing to revise our regulations at 42 CFR
412.164(a) to clarify that once we have complied with the statutory
prerequisites for adopting a measure for the Hospital VBP Program (that
is, we have selected the measure from the Hospital IQR Program measure
set and included data on that measure on Hospital Compare for at least
one year prior to its inclusion in a Hospital VBP Program performance
period), the Hospital VBP statute does not require that the measure
continue to remain in the Hospital IQR Program. The proposed revision
to the regulation text would clarify that Hospital VBP measures will be
selected from the measures specified under the Hospital IQR Program,
but the Hospital VBP Program measure set will not necessarily be a
subset of the Hospital IQR Program measure set. As discussed in section
I.A.2. of the preamble of this proposed rule, we are engaging in
efforts aimed at evaluating and streamlining regulations with the goal
to reduce unnecessary costs, increase efficiencies, and improve
beneficiary experience. This proposal would reduce costs, such as those
discussed in section IV.I.2.b. of the preamble of this proposed rule,
by allowing us to remove duplicative measures from the Hospital IQR
Program that are retained in the Hospital VBP Program.
We are inviting comment on this proposal.
b. Proposed Measure Removal Factors for the Hospital VBP Program
As discussed earlier, we have adopted a policy to generally retain
measures from prior year's Hospital VBP Program for subsequent years'
measure sets unless otherwise proposed and finalized. We have
previously removed measures from the Hospital VBP Program for reasons
such as being topped out (80 FR 49550), the measure does not align with
current clinical guidelines or practices (78 FR 50680 through 50681), a
more applicable measure was available (82 FR 38242 through 38244),
there was insufficient evidence that the measure leads to better
outcomes (78 FR 50680 through 50681), another measure was more closely
linked to better outcomes (77 FR 53582 through 53584, and 53592),
unintended consequences (82 FR 38242 through 38244), and impossibility
of calculating a score (82 FR 38242 through 38244).
The reasons we cited above to support the removal of measures from
the Hospital VBP Program generally align with measure removal factors
that have been adopted by the Hospital IQR Program. We believe that
these factors are also applicable in evaluating Hospital VBP Program
quality measures for removal, and that their adoption in the Hospital
VBP Program will help ensure consistency in our measure evaluation
methodology across our programs. Accordingly, we are proposing to adopt
the Hospital IQR Program measure removal factors that we finalized in
the FY 2011 IPPS/LTCH PPS final rule (75 FR 50185) and further refined
in the FY 2015 IPPS/LTCH PPS and FY 2016 IPPS/LTCH PPS final rules (79
FR 50203 through 50204 and 80 FR 49641 through 49643, respectively) for
use in determining whether to remove Hospital VBP Program measures:
Factor 1. Measure performance among hospitals is so high
and unvarying that meaningful distinctions and improvements in
performance can no longer be made (``topped out'' measures), defined
as: Statistically indistinguishable performance at the 75th and 90th
percentiles; and truncated coefficient of variation <=0.10; \254\
---------------------------------------------------------------------------

\254\ We previously adopted the two criteria for determining the
``topped-out'' status of Hospital VBP Program measures in the FY
2015 IPPS/LTCH PPS final rule (79 FR 50055).
---------------------------------------------------------------------------

Factor 2. A measure does not align with current clinical
guidelines or practice;
Factor 3. The availability of a more broadly applicable
measure (across settings, populations, or the availability of a measure
that is more proximal in time to desired patient outcomes for the
particular topic);
Factor 4. Performance or improvement on a measure does not
result in better patient outcomes;
Factor 5. The availability of a measure that is more
strongly associated with desired patient outcomes for the particular
topic;
Factor 6. Collection or public reporting of a measure
leads to negative unintended consequences other than patient harm; and
Factor 7. It is not feasible to implement the measure
specifications.
We note that these removal factors would be considerations taken
into account when deciding whether or not to remove measures, not firm
requirements. We continue to believe that there may be circumstances in
which a measure that meets one or more factors for removal should be
retained regardless, because the drawbacks of removing a measure could
be outweighed by other benefits to retaining the measure.

[[Page 20409]]

Also in alignment with proposals being made for other quality
reporting and value-based purchasing programs, we are proposing to
adopt the following additional factor to consider when evaluating
measures for removal from the Hospital VBP Program measure set: Factor
8, the costs associated with a measure outweigh the benefit of its
continued use in the program.
As we discuss in section I.A.2. of the preamble of this proposed
rule with respect to our new Meaningful Measures Initiative, we are
engaging in efforts to ensure that the Hospital VBP Program measure set
continues to promote improved health outcomes for beneficiaries while
minimizing the overall costs associated with the program. We believe
these costs are multifaceted and include not only the burden associated
with reporting, but also the costs associated with implementing and
maintaining the program. We have identified several different types of
costs, including, but not limited to: (1) Provider and clinician
information collection burden and related cost and burden associated
with the submission/reporting of quality measures to CMS; (2) the
provider and clinician cost associated with complying with other
quality programmatic requirements; (3) the provider and clinician cost
associated with participating in multiple quality programs, and
tracking multiple similar or duplicative measures within or across
those programs; (4) the CMS cost associated with the program oversight
of the measure, including measure maintenance and public display; and
(5) the provider and clinician cost associated with compliance with
other federal and/or state regulations (if applicable). For example, it
may be needlessly costly and/or of limited benefit to retain or
maintain a measure which our analyses show no longer meaningfully
supports program objectives (for example, informing beneficiary choice
or payment scoring). It may also be costly for health care providers to
track the confidential feedback, preview reports, and publicly reported
information on a measure where we use the measure in more than one
program. CMS may also have to expend unnecessary resources to maintain
the specifications for the measure, as well as the tools needed to
collect, validate, analyze, and publicly report the measure data.
Furthermore, beneficiaries may find it confusing to see public
reporting on the same measure in different programs.
When these costs outweigh the evidence supporting the continued use
of a measure in the Hospital VBP Program, we believe it may be
appropriate to remove the measure from the program. Although we
recognize that one of the main goals of the Hospital VBP Program is to
improve beneficiary outcomes by incentivizing health care providers to
focus on specific care issues and making public data related to those
issues, we also recognize that those goals can have limited utility
where, for example, the publicly reported data (including percentage
payment adjustment data) are of limited use because they cannot be
easily interpreted by beneficiaries to influence their choice of
providers. In these cases, removing the measure from the Hospital VBP
Program may better accommodate the costs of program administration and
compliance without sacrificing improved health outcomes and beneficiary
choice.
We are proposing that we would remove measures based on this factor
on a case-by-case basis. We might, for example, decide to retain a
measure that is burdensome for health care providers to report if we
conclude that the benefit to beneficiaries justifies the reporting
burden. Our goal is to move the program forward in the least burdensome
manner possible, while maintaining a parsimonious set of meaningful
quality measures and continuing to incentivize improvement in the
quality of care provided to patients.
We are inviting public comment on our proposals to adopt for the
Hospital VBP Program the measure removal factors currently adopted in
the Hospital IQR Program, and a measure removal factor where ``the
costs associated with a measure outweigh the benefit of its continued
use in the program,'' beginning with FY 2019.
In addition, to further align with policies adopted in the Hospital
IQR Program (74 FR 43864), we are proposing that if we believe
continued use of a measure in the Hospital VBP Program poses specific
patient safety concerns, we may promptly remove the measure from the
program without rulemaking and notify hospitals and the public of the
removal of the measure along with the reasons for its removal through
routine communication channels to hospital, vendors, and QIOs,
including, but not limited to, issuing memos, emails, and notices on
the QualityNet website. We would then confirm the removal of the
measure from the Hospital VBP Program measure set in the next IPPS
rulemaking. In circumstances where we do not believe that continued use
of a measure raises specific patient safety concerns, we would use the
regular rulemaking process to remove a measure.
We are inviting public comment on our proposal to allow the
Hospital VBP Program to promptly remove a measure without rulemaking if
we believe the measure poses specific patient safety concerns.
c. Proposed Removal of Ten Measures From the Hospital VBP Program
By publicly reporting quality data, we strive to put patients
first, ensuring they, along with their clinicians, are empowered to
make decisions about their own healthcare using information that are
aligned with meaningful quality measures. The Hospital VBP Program,
together with the Hospital Readmissions Reduction Program and the HAC
Reduction Program, represents a key component of the way that we bring
quality measurement, transparency, and improvement together with value-
based purchasing to the inpatient care setting. We have undertaken
efforts to review the existing Hospital VBP Program measure set in the
context of these other programs, to identify how to reduce costs and
complexity across programs while continuing to incentivize improvement
in the quality and value of care provided to patients. To that end, we
have begun reviewing our programs' measures in accordance with the
Meaningful Measures Initiative we describe in section I.A.2. of the
preamble of this proposed rule.
As part of this review, we have taken a holistic approach to
evaluating the appropriateness of the Hospital VBP Program's current
measures in the context of the measures used in two other IPPS value-
based purchasing programs (that is, the Hospital Readmissions Reduction
Program and the HAC Reduction Program), as well as in the Hospital IQR
Program. We view the three value-based purchasing programs together as
a collective set of hospital value-based purchasing programs.
Specifically, we believe the goals of the three value-based purchasing
programs (the Hospital VBP, Hospital Readmissions Reduction, and HAC
Reduction Programs) and the measures used in these programs together
cover the Meaningful Measures Initiative quality priorities of making
care safer, strengthening person and family engagement, promoting
coordination of care, promoting effective prevention and treatment, and
making care affordable, but that the programs should not add
unnecessary complexity or costs associated with duplicative measures
across programs. The Hospital Readmissions Reduction Program focuses on
care coordination measures, which address the quality priority of
promoting effective

[[Page 20410]]

communication and care coordination within the Meaningful Measures
Initiative. The HAC Reduction Program focuses on patient safety
measures, which address the Meaningful Measures Initiative quality
priority of making care safer by reducing harm caused in the delivery
of care.
As part of this holistic quality payment program strategy, we
believe the Hospital VBP Program should focus on the measurement
priorities not covered by the Hospital Readmissions Reduction Program
or the HAC Reduction Program. The Hospital VBP Program would continue
to focus on measures related to: (1) The clinical outcomes, such as
mortality and complications (which address the Meaningful Measures
Initiative quality priority of promoting effective treatment); (2)
patient and caregiver experience, as measured using the HCAHPS survey
(which addresses the Meaningful Measures Initiative quality priority of
strengthening person and family engagement as partners in their care);
and (3) healthcare costs, as measured using the Medicare Spending per
Beneficiary measure (which addresses the Meaningful Measures Initiative
priority of making care affordable). We believe this framework will
allow hospitals and patients to continue to obtain meaningful
information about hospital performance and incentivize quality
improvement while also streamlining the measure sets to reduce
duplicative measures and program complexity so that the costs to
hospitals associated with participating in these programs does not
outweigh the benefits of improving beneficiary care.
In this proposed rule, we are proposing to remove the following 10
measures previously adopted for the Hospital VBP Program:
Elective Delivery (NQF #0469) (PC-01);
National Healthcare Safety Network (NHSN) Catheter-
Associated Urinary Tract Infection (CAUTI) Outcome Measure (NQF #0138)
(CAUTI);
National Healthcare Safety Network (NHSN) Central Line-
Associated Bloodstream Infection (CLABSI) Outcome Measure (NQF #0139)
(CLABSI);
American College of Surgeons-Centers for Disease Control
and Prevention (ACS-CDC) Harmonized Procedure Specific Surgical Site
Infection (SSI) Outcome Measure (NQF #0753) (Colon and Abdominal
Hysterectomy SSI);
National Healthcare Safety Network (NHSN) Facility-wide
Inpatient Hospital-onset Methicillin-resistant Staphylococcus aureus
(MRSA) Bacteremia Outcome Measure (NQF #1716) (MRSA Bacteremia);
National Healthcare Safety Network (NHSN) Facility-wide
Inpatient Hospital-onset Clostridium difficile Infection (CDI) Outcome
Measure (NQF #1717) (CDI);
Patient Safety and Adverse Events (Composite) (NQF #0531)
(PSI 90); \255\
---------------------------------------------------------------------------

\255\ We note that measure stewardship of the recalibrated
version of the Patient Safety and Adverse Events Composite (PSI 90)
is transitioning from AHRQ to CMS and, as part of the transition,
the measure will be referred to as the CMS Recalibrated Patient
Safety Indicators and Adverse Events Composite (CMS PSI 90) when it
is used in CMS programs.
---------------------------------------------------------------------------

Hospital-Level, Risk-Standardized Payment Associated With
a 30-Day Episode-of-Care for Acute Myocardial Infarction (NQF #2431)
(AMI Payment);
Hospital-Level, Risk-Standardized Payment Associated With
a 30-Day Episode-of-Care for Heart Failure (NQF #2436) (HF Payment);
and
Hospital-Level, Risk-Standardized Payment Associated With
a 30-Day Episode-of-Care for Pneumonia (NQF #2579) (PN Payment).
(1) Proposed Removal of PC-01: Elective Delivery (NQF #0469)
We are proposing to remove the Elective Delivery (NQF #0469) (PC-
01) measure beginning with the FY 2021 program year because the costs
associated with the measure outweigh the benefit of its continued use
in the program--proposed removal Factor 8. In the FY 2018 IPPS/LTCH PPS
final rule (82 FR 38262), we finalized both the benchmark at 0.000000
and the achievement threshold at 0.000000 for the PC-01 measure for the
FY 2020 program year, meaning that at least 50 percent of hospitals
that met the case minimum performed 0 elective deliveries for the
measure during the baseline period of CY 2016. We refer readers to the
FY 2013, FY 2014, and FY 2015 IPPS/LTCH PPS final rules (77 FR 53599
through 53605; 78 FR 50694 through 50699; and 79 FR 50080 through
50081, respectively) for a more detailed discussion of the general
scoring methodology used in the Hospital VBP Program. Based on past
performance on the measure, we anticipate that continued use of the PC-
01 measure in the Hospital VBP Program would result in more than half
of hospitals with a calculable score for this measure earning the
maximum 10 achievement points. We anticipate that the remaining
hospitals with a calculable score would be awarded points based on
improvement only because they will not have met the achievement
threshold, earning zero to nine improvement points. Therefore, we
believe the measure no longer meaningfully differentiates performance
among most participating hospitals for scoring purposes in the Hospital
VBP Program.
We continue to believe that avoiding early elective delivery is
important; however, because overall performance on the PC-01 measure
has improved over time and we anticipate the measure will have little
meaningful effect on the TPS for most hospitals, we believe the measure
is no longer appropriate for the Hospital VBP Program. In order to
continue tracking and reporting rates of elective deliveries to
incentivize continued high performance on the measure, this measure
would remain in the Hospital IQR Program. We believe that maintaining
the measure in the Hospital IQR Program, which publicly reports measure
performance, will be sufficient to incentivize continued high
performance or improvement on the measure. At the same time, we believe
that removing the measure from the Hospital VBP Program will reduce
costs and potential confusion for providers and clinicians to track the
measure in both the Hospital IQR and Hospital VBP Programs, which may
include reviewing different reports and tracking slightly different
measure rates across programs.
Based on the reasons described above, we believe that under the
measure removal Factor 8, the costs associated with a measure outweigh
the benefit of its continued use in the program, which we are proposing
in section IV.I.2.b. of the preamble of this proposed rule, the costs
of keeping the PC-01 measure in the Hospital VBP Program outweigh the
benefits because the measure is costly for health care providers and
clinicians to review multiple reports on this measure that is being
retained in the Hospital IQR Program and our analyses show that the
measure no longer meaningfully differentiates performance among
participating hospitals for scoring purposes in the Hospital VBP
Program.
Therefore, we are proposing to remove the PC-01 measure from the
Hospital VBP Program beginning with the FY 2021 program year, with data
collection on this measure for purposes of the Hospital VBP Program
ending with December 31, 2018 discharges, based on proposed removal
Factor 8--because the costs associated with the measure outweigh the
benefit of its continued use in the program.
We are inviting public comment on this proposal to remove the
Elective Delivery (NQF #0469) (PC-01) measure from the Hospital VBP
Program as well as feedback on whether there are

[[Page 20411]]

reasons to retain the measure in the Hospital VBP Program.
(2) Proposed Removal of Healthcare-Associated Infection (HAI) Measures
and the Patient Safety and Adverse Events (Composite) Measure
We are proposing to remove the following five measures of
healthcare-associated infections (HAIs) from the Hospital VBP Program
beginning with the FY 2021 program year because the costs associated
with the measures outweigh the benefit of their continued use in the
program--proposed removal Factor 8:
National Healthcare Safety Network (NHSN) Catheter-
Associated Urinary Tract Infection (CAUTI) Outcome Measure (NQF #0138)
(CAUTI);
National Healthcare Safety Network (NHSN) Central Line-
Associated Bloodstream Infection (CLABSI) Outcome Measure (NQF #0139)
(CLABSI);
American College of Surgeons-Centers for Disease Control
and Prevention (ACS-CDC) Harmonized Procedure Specific Surgical Site
Infection Outcome Measure (NQF #0753) (Colon and Abdominal Hysterectomy
SSI);
National Healthcare Safety Network (NHSN) Facility-wide
Inpatient Hospital-onset Methicillin-resistant Staphylococcus aureus
(MRSA) Bacteremia Outcome Measure (NQF #1716) (MRSA Bacteremia); and
National Healthcare Safety Network (NHSN) Facility-wide
Inpatient Hospital-onset Clostridium difficile Infection (CDI) Outcome
Measure (NQF #1717) (CDI).
We are also proposing to remove the Patient Safety and Adverse
Events (Composite) (PSI 90) (NQF #0531) because the costs associated
with the measure outweigh the benefit of its continued use in the
program--proposed removal Factor 8.
As discussed in section IV.I.2.b. of the preamble of this proposed
rule, one of the main goals of our Meaningful Measures Initiative is to
apply a parsimonious set of the most meaningful measures available to
track patient outcomes and impact. While we continue to consider
patient safety and reducing HAIs as high priorities (as reflected in
the Meaningful Measures Initiative quality priority of making care
safer by reducing harms caused in the delivery of care), the six
measures listed above are all used in the HAC Reduction Program, which
specifically focuses on reducing hospital-acquired conditions and
improving patient safety outcomes. While there are differences in the
scoring methodology between the Hospital VBP Program and the HAC
Reduction Program, the HAC Reduction Program's incentive payment
structure, like the Hospital VBP Program, ties hospitals' payment
adjustments on claims paid under the IPPS to their performance on
selected measures, thereby incentivizing performance improvement on
these measures among participating hospitals. We believe removing these
measures from the Hospital VBP Program would reduce costs and
complexity for hospitals to separately track the confidential feedback,
preview reports, and publicly reported information on these measures in
both the Hospital VBP and HAC Reduction Programs. We further believe
retaining these measures in the HAC Reduction Program and removing them
from the Hospital VBP Program would best support the holistic approach
to the measures used in the three quality payment programs as described
above, while continuing to keep patient safety and improvements in
patient safety as high priorities. We refer readers to section IV.J.4
b., d., and h. of the preamble of this proposed rule for how the same
HAI measures in the HAC Reduction Program will continue to be reported
by hospitals via the CDC's NHSN and posted on our Hospital Compare
website. Therefore, we believe that removing these measures from the
Hospital VBP Program, but retaining them in the HAC Reduction Program,
strikes an appropriate balance of benefits and costs associated with
these measures across payment programs. We also refer readers to
section VIII.A.5.b.(2)(b) of the preamble of this proposed rule, where
we are proposing to remove these same measures from the Hospital IQR
Program.
Therefore, we are proposing to remove the CAUTI, CLABSI, Colon and
Abdominal Hysterectomy SSI, MRSA Bacteremia, and CDI measures from the
Hospital VBP Program beginning with the FY 2021 program year, with data
collection on these measures for purposes of the Hospital VBP Program
ending with December 31, 2018 discharges, based on proposed removal
Factor 8--because the costs associated with the measures outweigh the
benefit of their continued use in the program. We are also proposing to
remove the PSI 90 measure from the Hospital VBP Program effective with
the effective date of the FY 2019 IPPS/LTCH PPS final rule based on
proposed removal Factor 8--because the costs associated with the
measure outweigh the benefit of its continued use in the program.\256\
As the PSI 90 measure would not be incorporated into TPS calculations
until the FY 2023 program year, we can operationally remove the measure
from the program sooner than the HAI measures. We also refer readers to
section IV.I.4.a.(2) and b. of the preamble of this proposed rule,
where we are proposing to remove the Safety domain from the Hospital
VBP Program and to increase the weight of the Clinical Care domain
(which we are proposing to rename as the Clinical Outcomes domain) if
our proposals to remove all of the current Safety domain measures are
adopted, beginning with the FY 2021 program year.
---------------------------------------------------------------------------

\256\ In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38256), we
finalized the adoption of the PSI 90 measure beginning with the FY
2023 program year. We are proposing to remove this measure effective
with the effective date of the FY 2019 IPPS/LTCH PPS final rule,
meaning the measure would not be used in calculating hospitals' TPS
for any program year.
---------------------------------------------------------------------------

We are inviting public comment on these proposals to remove the
five HAI measures and the PSI 90 measure from the Hospital VBP Program,
as well as comments on whether the removal of these measures from this
program and their retention in the HAC Reduction Program would continue
to provide a strong incentive for performance on these patient safety
measures.
(3) Proposed Removal of Condition-Specific Payment Measures
We are proposing to remove the following three condition-specific
payment measures from the Hospital VBP Program, effective with the
effective date of the FY 2019 IPPS/LTCH PPS final rule, because the
costs associated with the measures outweigh the benefit of their
continued use in the program--proposed removal Factor 8:
Hospital-Level, Risk-Standardized Payment Associated With
a 30-Day Episode-of-Care for Acute Myocardial Infarction (NQF #2431)
(AMI Payment);
Hospital-Level, Risk-Standardized Payment Associated With
a 30-Day Episode-of-Care for Heart Failure (NQF #2436) (HF Payment);
and
Hospital-Level, Risk-Standardized Payment Associated With
a 30-Day Episode-of-Care for Pneumonia (NQF #2579) (PN Payment).
As discussed in section IV.I.2.b. of the preamble of this proposed
rule, one of the main goals of our Meaningful Measures Initiative is to
apply a parsimonious set of the most meaningful measures. We also seek
to reduce costs and complexity across the hospital quality programs.
Currently, the Hospital IQR and Hospital VBP Programs both include
the Medicare Spending Per Beneficiary (MSPB)--Hospital (NQF #2158)
(MSPB)

[[Page 20412]]

measure, as well as the three condition-specific payment measures
listed above. We continue to believe the condition-specific payment
measures provide important data for patients and hospitals, and we will
continue to use these measures in the Hospital IQR Program along with
the Hospital-Level, Risk-Standardized Payment Associated with an
Episode-of-Care for Primary Elective Total Hip and/or Total Knee
Arthroplasty measure, to provide more granular information to hospitals
for reducing costs and resource use while maintaining quality care.
However, we believe that continuing to retain the AMI Payment, HF
Payment, and PN Payment measures in both the Hospital VBP and Hospital
IQR Programs no longer aligns with current CMS and HHS policy
priorities for reducing program costs and complexity. We believe the
Hospital IQR Program's public reporting of these condition-specific
payment measures provide hospitals and patients with sufficient
information to make decisions about care and to drive resource use
improvement efforts, while removing them from the Hospital VBP Program
would reduce the costs and complexity for hospitals to separately track
the confidential feedback, preview reports, and publicly reported
information on these measures in both programs. We note that the
Hospital VBP Program would still retain the MSPB measure, which is an
overall hospital efficiency measure required under section
1886(o)(2)(B)(ii) of the Act. We also refer readers to section
VIII.A.5.b.(6) of the preamble of this proposed rule, where we are
proposing to remove the MSPB measure from the Hospital IQR Program.
Therefore, we are proposing to remove the AMI Payment, HF Payment,
and PN Payment measures from the Hospital VBP Program effective with
the effective date of the FY 2019 IPPS/LTCH PPS final rule based on
proposed removal Factor 8--because the costs associated with the
measures outweigh the benefit of their continued use in the program. As
the AMI Payment and HF Payment measures \257\ would not be incorporated
into TPS calculations until the FY 2021 program year and the PN Payment
measure \258\ would not be incorporated into TPS calculations until the
FY 2022 program year, we can operationally remove these measures from
the program sooner than the HAI measures.
---------------------------------------------------------------------------

\257\ In the FY 2017 IPPS/LTCH PPS final rule (81 FR 56987
through 56992), we adopted the AMI Payment and HF Payment measures
in the Hospital VBP Program beginning with the FY 2021 program year.
We are proposing to remove these measures effective with the
effective date of the FY 2019 IPPS/LTCH PPS final rule, meaning the
measures would not be used in calculating hospitals' TPS for any
program year.
\258\ In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38251), we
adopted the PN Payment measure in the Hospital VBP Program beginning
with the FY 2022 program year. We are proposing to remove this
measure effective with the effective date of the FY 2019 IPPS/LTCH
PPS final rule, meaning the measure would not be used in calculating
hospitals' TPS for any program year.
---------------------------------------------------------------------------

We are inviting public comment on this proposal to remove the three
condition-specific payment measures from the Hospital VBP Program, as
well as comments on whether there are potential reasons to retain these
condition-specific payment measures in the program.
d. Summary of Previously Adopted Measures for the FY 2020 Program Year
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38244), we finalized
the following measure set for the Hospital VBP Program for the FY 2020
program year. We note that we are not proposing any changes to this
measure set in this proposed rule.

Previously Adopted Measures for the FY 2020 Program Year
------------------------------------------------------------------------
Measure short name Domain/measure name NQF #
------------------------------------------------------------------------
Person and Community Engagement Domain
------------------------------------------------------------------------
HCAHPS...................... Hospital Consumer 0166
Assessment of Healthcare (0228)
Providers and Systems
(HCAHPS) (including Care
Transition Measure).
------------------------------------------------------------------------
Clinical Outcomes Domain *
------------------------------------------------------------------------
MORT-30-AMI................. Hospital 30-Day, All- 0230
Cause, Risk-Standardized
Mortality Rate Following
Acute Myocardial
Infarction (AMI)
Hospitalization.
MORT-30-HF.................. Hospital 30-Day, All- 0229
Cause, Risk-Standardized
Mortality Rate Following
Heart Failure (HF)
Hospitalization.
MORT-30-PN.................. Hospital 30-Day, All- 0468
Cause, Risk-Standardized
Mortality Rate Following
Pneumonia Hospitalization.
THA/TKA..................... Hospital-Level Risk- 1550
Standardized Complication
Rate Following Elective
Primary Total Hip
Arthroplasty (THA) and/or
Total Knee Arthroplasty
(TKA).
------------------------------------------------------------------------
Safety Domain **
------------------------------------------------------------------------
CAUTI....................... National Healthcare Safety 0138
Network (NHSN)
Catheter[dash]Associated
Urinary Tract Infection
(CAUTI) Outcome Measure.
CLABSI...................... National Healthcare Safety 0139
Network (NHSN) Central
Line[dash]Associated
Bloodstream Infection
(CLABSI) Outcome Measure.
Colon and Abdominal American College of 0753
Hysterectomy SSI. Surgeons--Centers for
Disease Control and
Prevention Harmonized
Procedure Specific
Surgical Site Infection
(SSI) Outcome Measure.
MRSA Bacteremia............. National Healthcare Safety 1716
Network (NHSN) Facility-
wide Inpatient Hospital-
onset Methicillin-
resistant Staphylococcus
aureus (MRSA) Bacteremia
Outcome Measure.
CDI......................... National Healthcare Safety 1717
Network (NHSN)
Facility[dash]wide
Inpatient Hospital-onset
Clostridium difficile
Infection (CDI) Outcome
Measure.
PC-01....................... Elective Delivery......... 0469
------------------------------------------------------------------------

[[Page 20413]]

Efficiency and Cost Reduction Domain
------------------------------------------------------------------------
MSPB........................ Medicare Spending Per 2158
Beneficiary (MSPB)--
Hospital.
------------------------------------------------------------------------
* We are proposing, in section IV.I.4.a.(1) of the preamble of this
proposed rule, to change the name of this domain from the Clinical
Care domain to the Clinical Outcomes domain beginning with the FY 2020
program year.
** As discussed in sections IV.I.4.a.(2) and IV.I.2.c.(1) and (2) of the
preamble of this proposed rule, respectively, we are proposing to
remove the Safety domain and the measures in the Safety domain,
beginning with the following program year (FY 2021).

e. Summary of Measures for the FY 2021, FY 2022, and FY 2023 Program
Years if Proposals for Removal of Measures are Finalized
For the FY 2021 program year, we are proposing to remove six
measures from the Safety domain (PC-01, CAUTI, CLABSI, Colon and
Abdominal Hysterectomy SSI, MRSA Bacteremia, and CDI), as all of the
HAI measures will be retained in the HAC Reduction Program, and to
remove the Safety domain itself, as there would be no measures
remaining in the domain, along with proposing to remove two measures
from the Efficiency and Cost Reduction domain (AMI Payment and HF
Payment). If these measure removals are finalized as proposed, the
Hospital VBP Program measure set for the FY 2021 program year would
contain the following measures:

Summary of Measures for the FY 2021 Program Year If Proposed Measure
Removals Are Finalized *
------------------------------------------------------------------------
Measure short name Domain/measure name NQF No.
------------------------------------------------------------------------
Person and Community Engagement Domain
------------------------------------------------------------------------
HCAHPS...................... Hospital Consumer 0166
Assessment of Healthcare (0228)
Providers and Systems
(HCAHPS) (including Care
Transition Measure).
------------------------------------------------------------------------
Clinical Outcomes Domain **
------------------------------------------------------------------------
MORT-30-AMI................. Hospital 30-Day, All- 0230
Cause, Risk-Standardized
Mortality Rate Following
Acute Myocardial
Infarction (AMI)
Hospitalization.
MORT-30-HF.................. Hospital 30-Day, All- 0229
Cause, Risk-Standardized
Mortality Rate Following
Heart Failure (HF)
Hospitalization.
MORT-30-PN (updated cohort). Hospital 30-Day, All- 0468
Cause, Risk-Standardized
Mortality Rate Following
Pneumonia Hospitalization.
MORT-30-COPD................ Hospital 30-Day, All- 1893
Cause, Risk-Standardized
Mortality Rate Following
Chronic Obstructive
Pulmonary Disease (COPD)
Hospitalization.
THA/TKA..................... Hospital-Level Risk- 1550
Standardized Complication
Rate Following Elective
Primary Total Hip
Arthroplasty (THA) and/or
Total Knee Arthroplasty
(TKA).
------------------------------------------------------------------------
Efficiency and Cost Reduction Domain
------------------------------------------------------------------------
MSPB........................ Medicare Spending Per 2158
Beneficiary (MSPB)--
Hospital.
------------------------------------------------------------------------
* As discussed in sections IV.I.2.c.(1) and (2) and IV.I.2.c.(3) of the
preamble of this proposed rule, respectively, we are proposing to
remove six measures in the Safety domain (PC-01, CAUTI, CLABSI, Colon
and Abdominal Hysterectomy SSI, MRSA Bacteremia, and CDI) beginning
with the FY 2021 program year, and two measures in the Efficiency and
Cost Reduction domain (AMI Payment and HF Payment), which would have
entered the program beginning with the FY 2021 program year. As
discussed in section IV.I.4.a.(2) of the preamble of this proposed
rule, we are also proposing to remove the Safety domain itself
beginning with the FY 2021 program year. Therefore, we did not include
these measures or the Safety domain in this summary table.
** We are proposing, in section IV.I.4.a.(1) of the preamble of this
proposed rule, to change the name of this domain from the Clinical
Care domain to the Clinical Outcomes domain beginning with the FY 2020
program year.

For the FY 2022 and FY 2023 program years, in addition to the eight
measures we are proposing to remove for the FY 2021 program year (PC-
01, CAUTI, CLABSI, Colon and Abdominal Hysterectomy SSI, MRSA
Bacteremia, CDI, AMI Payment, and HF Payment), we are also proposing to
remove the PN Payment measure, which would be entering the program
beginning with the FY 2022 program year, and the PSI 90 measure, which
would be entering the program beginning with the FY 2023 program year.
If all of these measure removals are finalized as proposed, the
Hospital VBP Program measure set for the FY 2022 and 2023 program years
would contain the following measures:

[[Page 20414]]

Summary of Measures for the FY 2022 and FY 2023 Program Years If
Proposed Measure Removals Are Finalized *
------------------------------------------------------------------------
Measure short name Domain/measure name NQF No.
------------------------------------------------------------------------
Person and Community Engagement Domain
------------------------------------------------------------------------
HCAHPS...................... Hospital Consumer 0166
Assessment of Healthcare (0228)
Providers and Systems
(HCAHPS) (including Care
Transition Measure).
------------------------------------------------------------------------
Clinical Outcomes Domain **
------------------------------------------------------------------------
MORT-30-AMI................. Hospital 30-Day, All- 0230
Cause, Risk-Standardized
Mortality Rate Following
Acute Myocardial
Infarction (AMI)
Hospitalization.
MORT-30-HF.................. Hospital 30-Day, All- 0229
Cause, Risk-Standardized
Mortality Rate Following
Heart Failure (HF)
Hospitalization.
MORT-30-PN (updated cohort). Hospital 30-Day, All- 0468
Cause, Risk-Standardized
Mortality Rate Following
Pneumonia Hospitalization.
MORT-30-COPD................ Hospital 30-Day, All- 1893
Cause, Risk-Standardized
Mortality Rate Following
Chronic Obstructive
Pulmonary Disease (COPD)
Hospitalization.
MORT-30-CABG................ Hospital 30-Day, All- 2558
Cause, Risk-Standardized
Mortality Rate Following
Coronary Artery Bypass
Graft (CABG) Surgery.
THA/TKA..................... Hospital-Level Risk- 1550
Standardized Complication
Rate Following Elective
Primary Total Hip
Arthroplasty (THA) and/or
Total Knee Arthroplasty
(TKA).
------------------------------------------------------------------------
Efficiency and Cost Reduction Domain
------------------------------------------------------------------------
MSPB........................ Medicare Spending Per 2158
Beneficiary (MSPB)--
Hospital.
------------------------------------------------------------------------
* As discussed in sections IV.I.2.c.(1) and (2) and IV.I.2.c.(3) of the
preamble of this proposed rule, respectively, we are proposing to
remove six measures in the Safety domain (PC-01, CAUTI, CLABSI, Colon
and Abdominal Hysterectomy SSI, MRSA Bacteremia, and CDI) beginning
with the FY 2021 program year, and two measures in the Efficiency and
Cost Reduction domain (AMI Payment and HF Payment), which would have
entered the program beginning with the FY 2021 program year; the PN
Payment measure, which would have entered the program beginning with
the FY 2022 program year; and the PSI 90 measure, which would have
entered the program beginning with the FY 2023 program year. As
discussed in section IV.I.4.a.(2) of the preamble of this proposed
rule, we are also proposing to remove the Safety domain itself
beginning with the FY 2021 program year. Therefore, we did not include
these measures or the Safety domain in this summary table.
** We are proposing, in section IV.I.4.a.(1) of the preamble of this
proposed rule, to change the name of this domain from the Clinical
Care domain to the Clinical Outcomes domain beginning with the FY 2020
program year.

3. Accounting for Social Risk Factors in the Hospital VBP Program
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38241 through
38242), we discussed the importance of improving beneficiary outcomes
including reducing health disparities. We also discussed our commitment
to ensuring that medically complex patients, as well as those with
social risk factors, receive excellent care. We discussed how studies
show that social risk factors, such as being near or below the poverty
level as determined by HHS, belonging to a racial or ethnic minority
group, or living with a disability, can be associated with poor health
outcomes and how some of this disparity is related to the quality of
health care.\259\ Among our core objectives, we aim to improve health
outcomes, attain health equity for all beneficiaries, and ensure that
complex patients as well as those with social risk factors receive
excellent care. Within this context, reports by the Office of the
Assistant Secretary for Planning and Evaluation (ASPE) and the National
Academy of Medicine have examined the influence of social risk factors
in CMS value-based purchasing programs.\260\ As we noted in the FY 2018
IPPS/LTCH PPS final rule (82 FR 38404), ASPE's report to Congress found
that, in the context of value-based purchasing programs, dual
eligibility was the most powerful predictor of poor health care
outcomes among those social risk factors that they examined and tested.
In addition, as we noted in the FY 2018 IPPS/LTCH PPS final rule (82 FR
38241), the National Quality Forum (NQF) undertook a 2-year trial
period in which certain new measures and measures undergoing
maintenance review have been assessed to determine if risk adjustment
for social risk factors is appropriate for these measures.\261\ The
trial period ended in April 2017 and a final report is available at:
https://www.qualityforum.org/SES_Trial_Period.aspx. The trial concluded
that ``measures with a conceptual basis for adjustment generally did
not demonstrate an empirical relationship'' between social risk factors
and the outcomes measured. This discrepancy may be explained in part by
the methods used for adjustment and the limited availability of robust
data on social risk factors. NQF has extended the socioeconomic status
(SES) trial,\262\ allowing further examination of social risk factors
in outcome measures.
---------------------------------------------------------------------------

\259\ See, for example United States Department of Health and
Human Services. ``Healthy People 2020: Disparities. 2014.''
Available at: https://www.healthypeople.gov/2020/about/foundation-health-measures/Disparities; or National Academies of Sciences,
Engineering, and Medicine. Accounting for Social Risk Factors in
Medicare Payment: Identifying Social Risk Factors. Washington, DC:
National Academies of Sciences, Engineering, and Medicine 2016.
\260\ Department of Health and Human Services Office of the
Assistant Secretary for Planning and Evaluation (ASPE), ``Report to
Congress: Social Risk Factors and Performance Under Medicare's
Value-Based Purchasing Programs.'' December 2016. Available at:
https://aspe.hhs.gov/pdf-report/report-congress-social-risk-factors-and-performance-under-medicares-value-based-purchasing-programs.
\261\ Available at: https://www.qualityforum.org/SES_Trial_Period.aspx.
\262\ Available at: https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=86357.
---------------------------------------------------------------------------

[[Page 20415]]

factors that could be used to stratify or risk adjust the measures
(beyond dual eligibility); to consider the full range of differences in
patient backgrounds that might affect outcomes; to explore risk
adjustment approaches; and to offer careful consideration of what type
of information display would be most useful to the public.
We also sought public comment on confidential reporting and future
public reporting of some of our measures stratified by patient dual
eligibility. In general, commenters noted that stratified measures
could serve as tools for hospitals to identify gaps in outcomes for
different groups of patients, improve the quality of health care for
all patients, and empower consumers to make informed decisions about
health care. Commenters encouraged us to stratify measures by other
social risk factors such as age, income, and educational attainment.
With regard to value-based purchasing programs, commenters also
cautioned CMS to balance fair and equitable payment while avoiding
payment penalties that mask health disparities or discouraging the
provision of care to more medically complex patients. Commenters also
noted that value-based purchasing program measure selection, domain
weighting, performance scoring, and payment methodology must account
for social risk.
As a next step, CMS is considering options to improve health
disparities among patient groups within and across hospitals by
increasing the transparency of disparities as shown by quality
measures. We also are considering how this work applies to other CMS
quality programs in the future. We refer readers to the FY 2018 IPPS/
LTCH PPS final rule (82 FR 38403 through 38409) for more details, where
we discuss the potential stratification of certain Hospital Inpatient
Quality Reporting Program outcome measures. Furthermore, we continue to
consider options to address equity and disparities in our value-based
purchasing programs.
We plan to continue working with ASPE, the public, and other key
stakeholders on this important issue to identify policy solutions that
achieve the goals of attaining health equity for all beneficiaries and
minimizing unintended consequences.
4. Scoring Methodology and Data Requirements
a. Proposed Changes to the Hospital VBP Program Domains
(1) Proposed Domain Name Change for the FY 2020 Program Year and
Subsequent Years
In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49553 through
49554), we renamed the Clinical Care--Outcomes subdomain as the
Clinical Care domain beginning with the FY 2018 program year. As
discussed in the section I.A.2. of the preamble of this proposed rule,
we strive to have measures in our programs that can drive improvement
in patients' health outcomes. We also strive to align quality
measurement and value-based payment programs with other national
strategies, such as the Meaningful Measures Initiative. As discussed in
section IV.I.2.c. of the preamble of this proposed rule, we believe
that one of the primary areas of focus for the Hospital VBP Program
should be on measures of clinical outcomes, such as measures of
mortality and complications, which address the Meaningful Measures
Initiative quality priority of promoting effective treatment. The
Clinical Care domain currently contains these types of measures;
therefore, to better align the name of the domain with our priority
area of focus, we are proposing to change the domain name from Clinical
Care to Clinical Outcomes, beginning with the FY 2020 program year. We
believe this proposed domain name better captures our goal of driving
improvement in health outcomes and focusing on those outcomes that are
most meaningful to patients and their providers.
We are inviting public comment on this proposal.
(2) Proposed Removal of the Safety Domain for the FY 2021 Program Year
and Subsequent Years
We previously adopted five HAI measures and the PC-01 measure for
the Safety domain (82 FR 38242 through 38244). We also previously
adopted PSI 90 as a measure in the Safety domain beginning with the FY
2023 program year (82 FR 38251 through 38256). However, as discussed in
section IV.I.2.c.(1) and (2) of the preamble of this proposed rule,
above, we are proposing to remove the PC-01 measure and the five HAI
measures from the Hospital VBP Program beginning with the FY 2021
program year and to remove the PSI 90 measure effective with the
effective date of the FY 2019 IPPS/LTCH PPS final rule, as the PSI 90
measure and all five of the HAI measures will be retained in the HAC
Reduction Program. We are not proposing any new measures for the Safety
domain in this proposed rule. In addition, as discussed in section
IV.I.2.c. of the preamble of this proposed rule, by taking a holistic
approach to evaluating the appropriateness of the measures used in the
three hospital value-based purchasing programs--the Hospital VBP,
Hospital Readmissions Reduction, and HAC Reduction Programs--we believe
the HAC Reduction Program is the primary part of the quality payment
framework that should focus on the safety aspect of care quality for
the inpatient hospital setting (Meaningful Measures Initiative quality
priority of making care safer by reducing harm caused in the delivery
of care). We believe this framework will allow hospitals and patients
to continue to obtain meaningful information about hospital performance
and incentivize quality improvement while also streamlining the measure
sets to reduce the costs of duplicative measures and program
complexity.
In the FY 2015 IPPS/LTCH PPS final rule (79 FR 50056) and FY 2016
IPPS/LTCH PPS final rule (80 FR 49546), we noted that hospital acquired
condition measures comprise some of the most critical patient safety
areas, therefore justifying the use of the measures in more than one
program. However, we have also stated that we will monitor the HAC
Reduction and Hospital VBP Programs and analyze the impact of our
measures selection, including any unintended consequences with having a
measure in more than one program, and will revise the measure set in
one or both programs if needed (79 FR 50056). We have continued to
receive stakeholder feedback expressing concern about overlapping
measures amongst different payment programs, such as the Hospital VBP
and HAC Reduction Programs. For the Hospital VBP Program, specifically,
we believe removing the measures in the Safety domain and retaining
them in the HAC Reduction Program directly addresses the concerns
expressed by stakeholders about the costs to hospitals participating in
these programs so that the costs of participation do not outweigh the
benefits of improving beneficiary care.
In this proposed rule, we are proposing to remove the Safety domain
from the Hospital VBP Program, beginning with the FY 2021 program year,
because there would no longer be any measures in that domain if our
measure removal proposals are finalized. We acknowledge that by
removing the Safety domain and its

[[Page 20416]]

measures from the Hospital VBP Program, the overall effect would be to
decrease the total percent of hospital payment at risk that is based on
performance on these measures (by no longer tying performance on them
to Hospital VBP Program reimbursement), and that it might reduce the
current incentive for hospitals to perform as well on them. However, we
believe hospitals will still be sufficiently incentivized to perform
well on the measures even if they are only in one value-based
purchasing program, and we intend to monitor the effects of this
proposal, if finalized, as the patient safety measures would be
maintained in the HAC Reduction Program, validated, and publicly
reported on the Hospital Compare website.
We also refer readers to section IV.I.4.b.(2) of the preamble of
this proposed rule, where we discuss how we considered keeping the
Safety domain and the current domain weighting of 25 percent weight for
each of the four domains with proportionate reweighting if a hospital
has sufficient data on only three domains, which would include
retaining in the Hospital VBP Program one or more of the measures in
the Safety domain (such as measures which are also used in the HAC
Reduction Program). However, based on the considerations discussed
above, we decided to propose removal of the Safety domain measures and
the Safety domain from the Hospital VBP Program. If our proposals to
remove the Safety domain measures (PC-01, the five HAI measures, and
PSI 90) are adopted, there would be no measures left in the Safety
domain beginning with the FY 2021 program year.
Therefore, we are proposing to remove the Safety domain from the
Hospital VBP Program beginning with the FY 2021 program year.
We are inviting public comment on this proposal and whether we
should keep the Safety domain along with one or more of its measures.
b. Proposed Domain Weighting With Increased Weight to Clinical Outcomes
and Alternatives Considered for the FY 2021 Program Year and Subsequent
Years
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38266), we finalized
our proposal to retain the equal weight of 25 percent for each of the
four domains in the FY 2020 program year and subsequent years for
hospitals that receive a score in all domains. For the FY 2017 program
year and subsequent years, we adopted a policy that hospitals must
receive domain scores on at least three of four quality domains in
order to receive a TPS, and hospitals with sufficient data on only
three domains will have their TPSs proportionately reweighted (79 FR
50084 through 50085).
As discussed above, we are proposing to remove the Hospital VBP
Program Safety domain beginning with the FY 2021 program year in
connection with our proposal to remove all of the measures previously
adopted for the Safety domain. We are also proposing to remove the
three condition-specific payment measures (AMI Payment, HF Payment, and
PN Payment) effective with the effective date of the FY 2019 IPPS/LTCH
PPS final rule. If these proposals are adopted, there would be only
three domains remaining in the Hospital VBP Program, beginning with the
FY 2021 program year--Clinical Outcomes (proposed name change;
currently referred to as the Clinical Care domain), Person and
Community Engagement, and Efficiency and Cost Reduction. The Clinical
Outcomes domain would have five measures of mortality and complications
for the FY 2021 program year and 6 measures beginning with the FY 2022
program year, the Person and Community Engagement domain would have the
HCAHPS survey with its eight dimensions of patient experience, and the
Efficiency and Cost Reduction domain would include only the MSPB
measure. To account for these changes, we assessed the weighting of
scores on the three remaining domains in constituting each hospital's
TPS. Specifically, we considered: (1) Weighting the Clinical Outcomes
domain at 50 percent of a hospital's TPS, and to weight the Person and
Community Engagement and Efficiency and Cost Reduction at 25 percent
each; and (2) weighting all three domains equally, each as one-third
(\1/3\) of a hospital's TPS. Because there would be only three domains
if our proposals to remove the Safety domain and all of the Safety
domain measures are adopted, we are not proposing any changes to the
requirement that a hospital must receive domain scores on at least
three domains to receive a TPS. Historically, when the Hospital VBP
Program had three domains, scores in all three were required to receive
a TPS (76 FR 74534; 76 FR 74544). We also discuss in this section that
we considered keeping the current domain weighting (25 percent for each
of the four domains--Safety, Clinical Outcomes (proposed name change),
Person and Community Engagement, and Efficiency and Cost Reduction--
with proportionate reweighting if a hospital has sufficient data on
only three domains), which would require keeping at least one or more
of the measures in the Safety domain and the Safety domain itself.
(1) Proposed Domain Weighting With Increased Weight to Clinical
Outcomes
For the reasons discussed below, in this proposed rule, we are
proposing to weight the domains as follows beginning with the FY 2021
program year:

Proposed Domain Weights for the FY 2021 Program Year and Subsequent
Years
------------------------------------------------------------------------
Weight
Domain (percent)
------------------------------------------------------------------------
Clinical Outcomes *..................................... 50
Person and Community Engagement......................... 25
Efficiency and Cost Reduction........................... 25
------------------------------------------------------------------------
* We are proposing, in section IV.I.4.a.(1) of the preamble of this
proposed rule, to change the name of this domain from the Clinical
Care domain to the Clinical Outcomes domain beginning with the FY 2020
program year.

We believe this proposed domain weighting best aligns with our
emphasis on clinical outcomes, which address the Meaningful Measures
Initiative quality priority of promoting effective treatment, and
provides a greater weight for the domain with the greatest number of
measures (Clinical Outcomes), while providing appropriate weighting to
the domains that focus on patient experience and cost reduction
commensurate with their continued importance. In proposing to increase
the weight of the Clinical Outcomes domain from 25 percent to 50
percent of hospitals' TPSs, we took into account that the Clinical
Outcomes domain will include five outcome measures for the FY 2021
program year (MORT-30-AMI, MORT-30-HF, MORT-30-COPD, MORT-30-PN
(updated cohort), and THA/TKA) and six outcome measures for the FY 2022
program year (MORT-30-CABG, MORT-30-AMI, MORT-30-HF, MORT-30-COPD,
MORT-30-PN (updated cohort), and THA/TKA), while the Person and
Community Engagement domain includes the HCAHPS survey measure, and the
Efficiency and Cost Reduction domain would include only one measure
(MSPB) if our proposals to remove the condition-specific payment
measures, discussed in section IV.I.2.c.(3) of the preamble of this
proposed rule, above, are adopted.
Under this proposed domain weighting, each measure in the Clinical
Outcomes domain (measures of mortality and complications) would

[[Page 20417]]

comprise 10 percent of each hospital's TPS for the FY 2021 program year
and 8.33 percent for the FY 2022 program year and subsequent years, if
a hospital meets the case minimum for each measure in the domain, and
no more than 25 percent for each measure if a hospital can only meet
the minimum two measure scores for the Clinical Outcomes domain. The
MSPB measure would continue to be weighted at 25 percent, if our
proposals to remove the condition specific payment measures are
adopted; and each of the eight HCAHPS dimensions would continue to be
weighted at 3.125 percent for a total of 25 percent for the Person and
Community Engagement domain. We believe the proposed domain weighting
better balances the contributing weights of each individual measure
that would be retained in the Hospital VBP Program compared to the
alternative weighting we considered of equal weights (one-third (\1/3\)
for each domain), as discussed in more detail below.
We also believe the proposal to increase the weight of the Clinical
Outcomes domain would help address concerns expressed by the Government
Accountability Office (GAO) in a June 2017 report.\263\ In the report,
GAO observed that high scores in the Efficiency and Cost Reduction
domain resulted in positive payment adjustments for some hospitals that
had composite quality scores below the median (the GAO assessed each
hospital's composite quality score as its TPS minus its weighted
Efficiency and Cost Reduction domain score). GAO also expressed concern
that proportionate reweighting of the Efficiency and Cost Reduction
domain (for example, from 25 percent to one-third (\1/3\) of a
hospital's TPS in FY 2016), due to a missing domain score for another
domain, amplified the contribution of the Efficiency and Cost Reduction
domain to the TPS. GAO recommended that CMS take action to avoid
disproportionate impact of the Efficiency and Cost Reduction domain on
the TPS, and to change the proportionate reweighting policy so it does
not facilitate positive payment adjustments for hospitals with lower
quality scores. Other stakeholders and researchers have expressed
similar concerns.\264\
---------------------------------------------------------------------------

\263\ Hospital Value-Based Purchasing: CMS Should Take Steps to
Ensure Lower Quality Hospitals Do Not Quality for Bonuses: Report to
Congressional Committees. (GAO Publication No. GAO-17-551) Retrieved
from U.S. Government Accountability Office: Available at: https://www.gao.gov/assets/690/685586.pdf.
\264\ For example, Ryan AM, Krinsky S, Maurer KA, Dimick JB.
Changes in Hospital Quality Associated with Hospital Value-Based
Purchasing. N Engl J Med. 2017 June 15;376(24):2358-2366.
---------------------------------------------------------------------------

Using actual FY 2018 program data,\265\ we analyzed the estimated
potential impacts to hospital TPSs and payment adjustment. Based on
this analysis, we estimate that with the proposed domain weighting,
approximately 200 hospitals with composite quality scores below the
median composite quality score for all Hospital VBP Program-eligible
hospitals would no longer receive a positive payment adjustment mainly
driven by their high performance on the Efficiency and Cost Reduction
domain. This represents an approximate 50 percent reduction in the
percent of hospitals receiving positive payment adjustments that have
composite quality scores below the median (from 21 percent of hospitals
receiving payment adjustments to 11 percent). We refer readers to the
table in the section IV.I.4.b.(3) below summarizing the results of this
analysis.
---------------------------------------------------------------------------

\265\ Only eligible hospitals were included in this analysis.
Excluded hospitals (for example, hospitals not meeting the minimum
domains required for calculation, hospitals receiving three or more
immediate jeopardy citations in the FY 2018 performance period,
hospitals subject to payment reductions under the Hospital IQR
Program in FY 2018, and hospitals located in the State of Maryland)
were removed from this analysis.
---------------------------------------------------------------------------

In further analyzing the potential impacts of the proposed domain
weighting on hospitals' TPSs using actual FY 2018 program data, our
analysis showed that, on average, hospitals with large bed size,
hospitals in urban areas, teaching hospitals, and safety net status
hospitals,\266\ which have historically received lower overall TPSs on
average (generally due to lower average performance on the Efficiency
and Cost Reduction and Patient and Community Engagement domains), moved
closer to the average TPS under the proposed domain weighting
(generally due to their higher average performance on the Clinical
Outcomes domain). With average scores for these types of hospitals
moving closer to the average TPS for all hospitals, this would increase
their TPSs, on average, and thereby increase their chances for a
positive payment adjustment.
---------------------------------------------------------------------------

\266\ For purposes of this analysis, ``safety net'' status is
defined as those hospitals with top 10 percentile of
Disproportionate Share Hospital (DSH) patient percentage from the FY
2018 IPPS/LTCH PPS final rule impact file, available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-Items/FY2018-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending.
---------------------------------------------------------------------------

On average, hospitals with small bed size, rural hospitals, and
non-teaching hospitals, which were historically high scorers on average
(generally due to higher average performance on the Efficiency and Cost
Reduction and Patient and Community Engagement domains), also moved
closer to the average TPS under the proposed domain weighting
(generally due to lower average performance on the Clinical Outcomes
domain). With average scores for these types of hospitals also moving
closer to the average TPS for all hospitals, this would decrease their
TPSs, on average, and thereby decrease their chances for a positive
payment adjustment. This would also be consistent with our analysis
discussed above that the proposed domain weighting would better address
GAO's recommendations for the Hospital VBP Program by reducing the
percent of hospitals receiving positive payment adjustments that have
composite quality scores below the median.
Our analysis also simulated that removing the Safety domain and
increasing the weight of the Clinical Outcomes domain would have
decreased the slope of the linear exchange function from 2.89 (actual
FY 2018) to 2.78 (estimated using actual FY 2018 program data) and
would have decreased the percent of hospitals receiving a positive
payment adjustment from 57 percent to 45 percent. We believe this is
mainly due to hospitals with greater total MS-DRGs payments (such as
larger hospitals that generally have higher average performance on the
Clinical Outcomes domain) earning higher TPSs relative to hospitals
with smaller total MS-DRGs payments in this estimated budget-neutral
program. We refer readers to the tables in section IV.I.4.b.(3) below
summarizing the results of these analyses.
(2) Alternatives Considered
As an alternative, we also considered weighting each of the three
domains equally, meaning that each domain (Clinical Outcomes, Person
and Community Engagement, and Efficiency and Cost Reduction) would be
weighted as one-third (\1/3\) of a hospital's TPS, which is similar to
the proportionate reweighting policy when a hospital is missing one
domain score due to insufficient cases to score enough measures for the
domain. Our analysis showed that, on average, hospitals with small bed
size, rural hospitals, non-teaching hospitals, and non-safety net
status hospitals would earn TPSs relatively closer to or better than
historic levels of performance, particularly with increased weighting
of the Patient and Community Engagement and Efficiency and Cost
Reduction domains from 25 percent each to one-third (\1/3\) each,
domains in which these

[[Page 20418]]

types of hospitals historically perform better than average compared to
large bed size, hospitals in urban areas, teaching hospitals, and
safety net status hospitals.\267\ In addition, our analysis showed that
equally weighting the domains does not address the GAO's concern of
positive payment adjustments for hospitals with composite quality
scores below the median. Based on our analyses, we estimate that
approximately 20 percent of hospitals with composite quality scores
below the median composite quality score for all Hospital VBP Program-
eligible hospitals would receive a positive payment adjustment mainly
driven by their high performance on the Efficiency and Cost Reduction
domain, if we weighted the domains equally. This is approximately
double the number of hospitals that we estimate would receive a
positive payment adjustment with composite quality scores below the
median as compared to our proposed domain weighting of increasing the
Clinical Outcomes domain to 50 percent and keeping the Patient and
Community Engagement and Efficiency and Cost Reduction domains at 25
percent each. We refer readers to the tables in section IV.I.4.b.(3) of
the preamble of this proposed rule summarizing the results of these
analyses.
---------------------------------------------------------------------------

\267\ For purposes of this analysis, `safety net' status is
defined as those hospitals with top 10 percentile of
Disproportionate Share Hospital (DSH) patient percentage from the FY
2018 IPPS final rule impact file, available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-Items/FY2018-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending.
---------------------------------------------------------------------------

We also considered keeping the Safety domain and the current domain
weighting (25 percent weight for each of the four domains with
proportionate reweighting if a hospital has sufficient data on only
three domains), which would include retaining in the Hospital VBP
Program one or more of the measures in the Safety domain (such as
measures which are also used in the HAC Reduction Program). As
discussed in section IV.I.2.c. of the preamble of this proposed rule,
we continue to consider patient safety and reducing HAIs as high
priorities, which is why the PSI 90 and five HAI measures being
proposed for removal from the Hospital VBP Program will continue to be
used in the HAC Reduction Program.
As discussed earlier, we believe the more holistic quality payment
program strategy we seek to undertake will allow hospitals and patients
to continue to obtain meaningful information about hospital performance
and incentivize quality improvement while also streamlining the measure
sets to reduce duplicative measures and program complexity. For the
Hospital VBP Program, specifically, we believe removing the measures in
the Safety domain and retaining them in the HAC Reduction Program
directly addresses the concerns expressed by provider stakeholders
about the costs to hospitals participating in these programs so that
the costs of participation do not outweigh the benefits of improving
beneficiary care.
(3) Analysis
Our priority is to adopt a domain weighting policy that
appropriately reflects hospital performance under the Hospital VBP
Program, aligns with CMS policy goals, including the more holistic
quality payment program strategy for hospitals discussed above, and
continues to incentivize quality improvement. As noted above, to
understand the potential impacts of the proposed domain weighting on
hospitals' TPSs, we conducted analyses using FY 2018 program data that
estimated the potential impacts of our proposed domain weighting policy
to increase the weight of the Clinical Outcomes domain from 25 percent
to 50 percent of a hospital's TPS and an alternative weighting policy
we considered of equal weights whereby each domain would constitute
one-third (\1/3\) of a hospital's TPS. The table below provides an
overview of the estimated impact on hospitals' TPS by certain hospital
characteristics and as they would compare to actual FY 2018 TPSs, which
include scoring on four domains, including the Safety domain, and
applying proportionate reweighting if a hospital has sufficient data on
only three domains.

Comparison of Estimated Average TPSs and Unweighted Domain Scores *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed
Actual FY 2018 Actual FY 2018 increased
Actual FY 2018 average person average Actual FY 2018 weighting of Alternative
Hospital characteristic average and community efficiency and average TPS (4 clinical care weighting:
clinical care engagement cost reduction domains) \+\ domain: estimated
domain score domain score domain score estimated average TPS
average TPS
--------------------------------------------------------------------------------------------------------------------------------------------------------
All Hospitals **........................................ 43.2 33.5 18.8 37.4 34.6 31.8
Bed Size:
1-99................................................ 33.4 46.0 35.7 44.6 37.2 38.4
100-199............................................. 42.2 34.5 21.0 39.2 35.0 32.6
200-299............................................. 44.5 27.9 12.9 34.4 32.4 28.4
300-399............................................. 48.2 27.3 10.0 33.3 33.4 28.5
400+................................................ 50.9 26.9 7.6 31.9 34.1 28.5
Geographic Location:
Urban............................................... 46.8 30.7 13.7 35.7 34.5 30.4
Rural............................................... 33.7 40.5 31.7 41.9 34.9 35.3
Safety Net Status: ***
Non-Safety Net...................................... 42.7 35.4 19.0 37.9 34.9 32.4
Safety Net.......................................... 45.1 25.7 18.1 35.6 33.5 29.6
Teaching Status:
Non-Teaching........................................ 39.9 36.7 22.9 39.4 34.9 33.2
Teaching............................................ 48.7 27.9 11.8 34.1 34.3 29.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Analysis based on FY 2018 Hospital VBP Program data.
** Only eligible hospitals are included in this analysis. Excluded hospitals (for example, hospitals not meeting the minimum domains required for
calculation, hospitals receiving three or more immediate jeopardy citations in the FY 2018 performance period, hospitals subject to payment reductions
under the Hospital IQR Program in FY 2018, and hospitals located in the state of Maryland) were removed from this analysis.

[[Page 20419]]

\+\ Based on current policies, which includes the Safety domain, and proportionate reweighting for hospitals with sufficient data on only three domains.
*** For purposes of this analysis, `safety net' status is defined as those hospitals with top 10 percentile of Disproportionate Share Hospital (DSH)
patient percentage from the FY 2018 IPPS/LTCH PPS final rule impact file: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-Items/FY2018-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending.

The table below provides a summary of the estimated impacts on
average TPSs and payment adjustments for all hospitals,\268\ including
as they would compare to actual FY 2018 program results under current
domain weighting policies.
---------------------------------------------------------------------------

\268\ Only eligible hospitals are included in this analysis.
Excluded hospitals (for example, hospitals not meeting the minimum
domains required for calculation, hospitals receiving three or more
immediate jeopardy citations in the FY 2018 performance period,
hospitals subject to payment reductions under the Hospital IQR
Program in FY 2018, and hospitals located in the state of Maryland)
were removed from this analysis.

----------------------------------------------------------------------------------------------------------------
Proposed
increased Equal
Summary of estimated impacts on average TPS and payment Actual (4 weight for weighting
adjustments using FY 2018 program data domains) \+\ clinical alternative (3
outcomes (3 domains)
domains)
----------------------------------------------------------------------------------------------------------------
Total number of hospitals with a payment adjustment............. 2,808 2,701 2,701
Number of hospitals receiving a positive payment adjustment 1,597 (57%) 1,209 (45%) 1,337 (50%)
(percent)......................................................
Average positive payment adjustment percentage.................. 0.60% 0.58% 0.70%
Estimated average positive payment adjustment................... $128,161 $233,620 $204,038
Number of hospitals receiving a negative payment adjustment 1,211 (43%) 1,492 (55%) 1,364 (50%)
(percent)......................................................
Average negative payment adjustment percentage.................. -0.41% -0.60% -0.57%
Estimated average negative payment adjustment................... $169,011 $189,307 $200,000
Number of hospitals receiving a positive payment adjustment with 341 (21%) 134 (11%) 266 (20%)
a composite quality score * below the median (percent).........
Average TPS..................................................... 37.4 34.6 31.8
Lowest TPS receiving a positive payment adjustment.............. 34.6 35.9 30.9
Slope of the linear exchange function........................... 2.8908851882 2.7849297316 3.2405954322
----------------------------------------------------------------------------------------------------------------
\+\ Based on current policies, which includes the Safety domain, and proportionate reweighting for hospitals
with sufficient data on only three domains.
* ``Composite quality score'' is defined as a hospital's TPS minus the hospital's weighted Efficiency and Cost
Reduction domain score.

The estimated total number of hospitals with a payment adjustment
is lower under the proposed domain weighting and equal weighting
alternative considered (2,701), compared to the current four domain
policy (2,808), because under the proposed domain weighting and equal
weighting alternative, scores would be required on all three domains
(Clinical Care (proposed Clinical Outcomes), Person and Community
Engagement, and Efficiency and Cost Reduction) to receive a TPS and
hence, a payment adjustment, whereas under the current scoring policy,
if a hospital has sufficient data on any three of the four domains it
can receive a TPS and payment adjustment. For example, under the
current scoring policy, if a hospital does not have sufficient data for
a score on the Clinical Care (Clinical Outcomes) domain, but receives a
score on the other three domains (Safety, Person and Community
Engagement, and Efficiency and Cost Reduction), the hospital could have
its domain scores proportionately reweighted and receive a TPS and
payment adjustment, whereas under the proposed domain weighting and
equal weighting alternative considered (which do not include the Safety
domain and retain the requirement for at least three domain scores to
receive a TPS), a hospital that does not have sufficient data for a
score on the Clinical Care (Clinical Outcomes) domain would not receive
a TPS or payment adjustment.
We also refer readers to section I.H.6.b. of Appendix A of this
proposed rule for a detailed discussion regarding the estimated impacts
of the proposed domain weighting and equal weighting alternative on
hospital percentage payment adjustments.
(4) Summary
Based on our analyses and all of the other considerations discussed
above, we believe our proposed domain weighting policy to increase the
weight of the Clinical Outcomes domain from 25 percent to 50 percent of
a hospital's TPS best aligns with the goal of the Hospital VBP Program
to make value-based incentive payment adjustments based on hospitals'
performance on quality and cost, as well as emphasizes the Meaningful
Measures Initiative's focus on high impact areas that are meaningful to
patients and providers. As discussed in sections IV.I.4.a.(2),
IV.I.2.c.(1) and (2) of the preamble of this proposed rule, we believe
removing the Safety domain and its measures from the Hospital VBP
Program supports the holistic approach to the measures collectively
used in the three quality payment programs. Patient safety and reducing
HAIs continues to be a high priority for us, which is why we believe
retaining the PSI 90 and HAI measures in the HAC Reduction Program is
important and will continue to incentivize quality improvement in this
area, directly addressing the Meaningful Measures Initiative quality
priority of making care safer by reducing harm caused in the delivery
of care. We believe removing the same measures from the Hospital VBP
Program would also reduce program costs and complexity for hospitals,
and directly address their concerns about high program costs and their
feedback to reduce duplicative measures between programs.
Because we are proposing to remove the Safety domain and its
measures from the Hospital VBP Program, we considered the two options
for weighting the three remaining domains. Increasing the weight of the
Clinical Outcomes domain from 25 percent to 50 percent of each
hospital's TPS emphasizes our priority and focus on improving patients'
health outcomes, without decreasing the weight of the

[[Page 20420]]

Efficiency and Cost Reduction or Person and Communities Engagement
domains. By contrast, equally weighting each of the three domains at
one-third (\1/3\) of each hospital's TPS would result in the MSPB
measure and the HCAHPS survey measure together accounting for two-
thirds (\2/3\) of each hospital's TPS.
If our proposal to remove the Safety domain beginning with the FY
2021 program year is adopted, we are proposing to weight the three
remaining domains as follows: Clinical Outcomes domain--50 percent;
Person and Community Engagement domain--25 percent; and Efficiency and
Cost Reduction domain--25 percent--beginning with the FY 2021 program
year.
We are inviting comment on our proposal and alternatives
considered.
c. Minimum Numbers of Measures for Hospital VBP Program Domains for the
FY 2021 Program Year and Subsequent Years
Based on previously finalized policies (82 FR 38266), for a
hospital to receive a TPS for the FY 2021 program year and subsequent
years:
A hospital must report a minimum number of 100 completed
HCAHPS surveys for a hospital to receive a Person and Community
Engagement domain score.
A hospital must receive a minimum of two measure scores
within the Clinical Outcomes domain (currently referred to as the
Clinical Care domain).
A hospital must receive a minimum of one measure score
within the Efficiency and Cost Reduction domain.
As discussed in section IV.I.4.a.(2) of the preamble of this
proposed rule, we are proposing to remove the Safety domain from the
Hospital VBP Program beginning with the FY 2021 program year. We note
that if our proposal to remove the condition-specific payment measures
from the Hospital VBP Program is finalized as proposed, a hospital's
Efficiency and Cost Reduction domain scores would be based solely on
its MSPB measure score.
In this proposed rule, we are not proposing any changes to this
policy.
d. Minimum Numbers of Cases for Hospital VBP Program Measures for the
FY 2021 Program Year and Subsequent Years
(1) Background
Section 1886(o)(1)(C)(ii)(IV) of the Act requires the Secretary to
exclude for the fiscal year hospitals that do not report a minimum
number (as determined by the Secretary) of cases for the measures that
apply to the hospital for the performance period for the fiscal year.
For additional discussion of the previously finalized minimum numbers
of cases for measures under the Hospital VBP Program, we refer readers
to the Hospital Inpatient VBP Program final rule (76 FR 26527 through
26531); the CY 2012 OPPS/ASC final rule (76 FR 74532 through 74534);
the FY 2013 IPPS/LTCH PPS final rule (77 FR 53608 through 53609); the
FY 2015 IPPS/LTCH PPS final rule (79 FR 50085); the FY 2016 IPPS/LTCH
PPS final rule (80 FR 49570); the FY 2017 IPPS/LTCH PPS final rule (81
FR 57011); and the FY 2018 IPPS/LTCH PPS final rule (82 FR 38266
through 38267).
(2) Clinical Care Domain (Proposed Clinical Outcomes Domain)
In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53608 through
53609), we adopted a minimum number of 25 cases for the MORT-30-AMI,
MORT-30-HF, and MORT-30-PN measures. We adopted the same 25-case
minimum for the MORT-30-COPD measure in the FY 2016 IPPS/LTCH PPS final
rule (80 FR 49570), and for the MORT-30-CABG, MORT-30-PN (updated
cohort), and THA/TKA measures in the FY 2017 IPPS/LTCH PPS final rule
(81 FR 57011).
In this proposed rule, we are not proposing any changes to these
policies.
(3) Person and Community Engagement Domain
In the Hospital Inpatient VBP Program final rule (76 FR 26527
through 26531), we adopted a minimum number of 100 completed HCAHPS
surveys for a hospital to receive a score on the HCAHPS measure.
In this proposed rule, we are not proposing any changes to this
policy.
(4) Efficiency and Cost Reduction Domain
In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53609 through
53610), we adopted a minimum of 25 cases in order to receive a score
for the MSPB measure. In the FY 2015 IPPS/LTCH PPS final rule (79 FR
50085 through 50086), we retained the same MSPB measure case minimum
for the FY 2016 program year and subsequent years. In the FY 2018 IPPS/
LTCH PPS final rule (82 FR 38267), we adopted a policy that hospitals
must report a minimum number of 25 cases per measure in order to
receive a measure score for the condition-specific payment measures
(namely, the AMI Payment, HF Payment, and PN Payment measures), for the
FY 2021 program year, FY 2022 program year, and subsequent years.
In this proposed rule, we are not proposing any changes to these
policies for the MSPB measure; however, as discussed in section
IV.I.2.c.(3) of the preamble of this proposed rule, we are proposing to
remove the three condition-specific payment measures (AMI Payment, HF
Payment, and PN Payment) from the Hospital VBP Program effective with
the effective date of the FY 2019 IPPS/LTCH PPS final rule.
(5) Summary of Previously Adopted Minimum Numbers of Cases for the FY
2021 Program Year and Subsequent Years
The previously adopted minimum numbers of cases for these measures
are set forth in the table below.

Previously Adopted Minimum Case Number Requirements for the FY 2021
Program Year and Subsequent Years
------------------------------------------------------------------------
Measure short name Minimum number of cases
------------------------------------------------------------------------
Person and Community Engagement Domain
------------------------------------------------------------------------
HCAHPS.................... Hospitals must report a minimum number of
100 completed HCAHPS surveys.
------------------------------------------------------------------------
Clinical Outcomes Domain *
------------------------------------------------------------------------
MORT-30-AMI............... Hospitals must report a minimum number of 25
cases.
MORT-30-HF................ Hospitals must report a minimum number of 25
cases.
MORT-30-PN (updated Hospitals must report a minimum number of 25
cohort). cases.

[[Page 20421]]

MORT-30-COPD.............. Hospitals must report a minimum number of 25
cases.
MORT-30-CABG.............. Hospitals must report a minimum number of 25
cases.
THA/TKA................... Hospitals must report a minimum number of 25
cases.
------------------------------------------------------------------------
Efficiency and Cost Reduction Domain
------------------------------------------------------------------------
MSPB...................... Hospitals must report a minimum number of 25
cases.
------------------------------------------------------------------------
* We are proposing, in section IV.I.4.a.(1) of the preamble of this
proposed rule, to change the name of this domain from the Clinical
Care domain to the Clinical Outcomes domain beginning with the FY 2020
program year.

5. Previously Adopted Baseline and Performance Periods
a. Background
Section 1886(o)(4) of the Act requires the Secretary to establish a
performance period for the Hospital VBP Program that begins and ends
prior to the beginning of such fiscal year. We refer readers to the FY
2017 IPPS/LTCH PPS final rule (81 FR 56998 through 57003) for baseline
and performance periods that we have adopted for the FY 2019, FY 2020,
FY 2021, and FY 2022 program years. In the same rule, we finalized a
schedule for all future baseline and performance periods for previously
adopted measures. We refer readers to the FY 2018 IPPS/LTCH PPS final
rule (82 FR 38256 through 38261) for additional baseline and
performance periods that we have adopted for the FY 2022, FY 2023, and
subsequent program years.
b. Person and Community Engagement Domain
Since the FY 2015 program year, we have adopted a 12-month baseline
period and 12-month performance period for measures in the Person and
Community Engagement domain (previously referred to as the Patient- and
Caregiver-Centered Experience of Care/Care Coordination domain) (77 FR
53598; 78 FR 50692; 79 FR 50072; 80 FR 49561). In the FY 2017 IPPS/LTCH
PPS final rule (81 FR 56998), we finalized our proposal to adopt a 12-
month performance period for the Person and Community Engagement domain
that runs on the calendar year 2 years prior to the applicable program
year and a 12-month baseline period that runs on the calendar year 4
years prior to the applicable program year, for the FY 2019 program
year and subsequent years.
In this proposed rule, we are not proposing any changes to these
policies.
c. Efficiency and Cost Reduction Domain
Since the FY 2016 program year, we have adopted a 12-month baseline
period and 12-month performance period for the MSPB measure in the
Efficiency and Cost Reduction domain (78 FR 50692; 79 FR 50072; 80 FR
49562). In the FY 2017 IPPS/LTCH PPS final rule, we finalized our
proposal to adopt a 12-month performance period for the MSPB measure
that runs on the calendar year 2 years prior to the applicable program
year and a 12-month baseline period that runs on the calendar year 4
years prior to the applicable program year for the FY 2019 program year
and subsequent years (81 FR 56998).
In this proposed rule, we are not proposing any changes to these
policies.
d. Clinical Care Domain (Proposed Clinical Outcomes Domain)
For the FY 2020 and FY 2021 program years, we adopted a 36-month
baseline period and 36-month performance period for measures in the
Clinical Outcomes domain (currently referred to as the Clinical Care
domain) (78 FR 50692 through 50694; 79 FR 50073; 80 FR 49563).\269\ In
the FY 2017 IPPS/LTCH PPS final rule (81 FR 57000), we finalized our
proposal to adopt a 36-month performance period and 36-month baseline
period for the FY 2022 program year for each of the previously
finalized measures in the Clinical Outcomes domain--that is, the MORT-
30-AMI, MORT-30-HF, MORT-30-COPD, THA/TKA, and MORT-30-CABG measures.
In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57001), we also adopted
a 22-month performance period for the MORT-30-PN (updated cohort)
measure and a 36-month baseline period for the FY 2021 program year. In
the same final rule, we adopted a 34-month performance period and 36-
month baseline period for the MORT-30-PN (updated cohort) measure for
the FY 2022 program year.
---------------------------------------------------------------------------

\269\ The THA/TKA measure was added for the FY 2019 program year
with a 36-month baseline period and a 24-month performance period
(79 FR 50072), but we have since adopted 36-month baseline and
performance periods for the FY 2021 program year (80 FR 49563).
---------------------------------------------------------------------------

In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38259), we adopted a
36-month performance period and 36-month baseline period for the MORT-
30-AMI, MORT-30-HF, MORT-30-COPD, MORT-30-CABG, MORT-30-PN (updated
cohort), and THA/TKA measures for the FY 2023 program year and
subsequent years. Specifically, for the mortality measures (MORT-30-
AMI, MORT-30-HF, MORT-30-COPD, MORT-30-CABG, and MORT-30-PN (updated
cohort)), the performance period runs for 36 months from July 1, five
years prior to the applicable fiscal program year, to June 30, two
years prior to the applicable fiscal program year, and the baseline
period runs for 36 months from July 1, ten years prior to the
applicable fiscal program year, to June 30, seven years prior to the
applicable fiscal program year. For the THA/TKA measure, the
performance period runs for 36 months from April 1, five years prior to
the applicable fiscal program year, to March 31, two years prior to the
applicable fiscal program year, and the baseline period runs for 36
months from April 1, ten years prior to the applicable fiscal program
year, to March 31, seven years prior to the applicable fiscal program
year.
In this proposed rule, we are not proposing any changes to the
length of these performance or baseline periods.
e. Safety Domain
In the FY 2017 IPPS/LTCH PPS final rule, we finalized our proposal
to adopt a performance period for all measures in the Safety domain--
with the exception of the PSI 90 measure--that runs on the calendar
year two years prior to the applicable program year and a baseline
period that runs on the calendar year 4 years prior to the applicable
program year for the FY 2019 program year and

[[Page 20422]]

subsequent program years (81 FR 57000). In the FY 2018 IPPS/LTCH PPS
final rule (82 FR 38242 through 38244, 38251 through 38256), we removed
the former PSI 90 measure beginning with the FY 2019 program year, and
adopted the Patient Safety and Adverse Events (Composite) (PSI 90)
measure beginning with the FY 2023 program year, along with baseline
and performance periods for the measure (80 FR 38258 through 38259).
As discussed in sections IV.I.4.a.(2), IV.I.2.c.(1) and (2) of the
preamble of this proposed rule, we are proposing to remove the Safety
domain and remove the PC-01 and the HAI measures (CAUTI, CLABSI, Colon
and Abdominal Hysterectomy SSI, CDI, and MRSA Bacteremia) beginning
with the FY 2021 program year, and to remove the PSI 90 measure
effective with the effective date of the FY 2019 IPPS/LTCH PPS final
rule.
f. Summary of Previously Adopted Baseline and Performance Periods for
the FY 2020 Through FY 2024 Program Years
The tables below summarize the baseline and performance periods
that we have previously adopted.

Previously Adopted Baseline and Performance Periods for the FY 2020
Program Year: Person and Community Engagement; Clinical Outcomes;
Safety; and Efficiency and Cost Reduction Domains
------------------------------------------------------------------------
Domain Baseline period Performance period
------------------------------------------------------------------------
Person and Community
Engagement:
HCAHPS......... January 1, January 1,
2016-December 31, 2018-December 31,
2016. 2018.
Clinical Outcomes: *
Mortality (MORT- July 1, July 1,
30-AMI, MORT-30-HF, 2010-June 30, 2013. 2015-June 30, 2018.
MORT-30-PN) July 1, July 1,
THA/TKA. 2010-June 30, 2013. 2015-June 30, 2018.
Safety: **
PC-01 and NHSN January 1, January 1,
measures (CAUTI, 2016-December 31, 2018-December 31,
CLABSI, Colon and 2016. 2018.
Abdominal Hysterectomy
SSI, CDI, MRSA
Bacteremia).
Efficiency and Cost
Reduction:
MSPB........... January 1, January 1,
2016-December 31, 2018-December 31,
2016. 2018.
------------------------------------------------------------------------
* We are proposing, in section IV.I.4.a.(1) of the preamble of this
proposed rule, to change the name of this domain from the Clinical
Care domain to the Clinical Outcomes domain beginning with the FY 2020
program year.
** As discussed in sections IV.I.2.c.(1) and (2) of the preamble of this
proposed rule, we are proposing to remove PC-01, CAUTI, CLABSI, Colon
and Abdominal Hysterectomy SSI, CDI, and MRSA Bacteremia measures
beginning with the FY 2021 program year.

Previously Adopted Baseline and Performance Periods for the FY 2021
Program Year: Person and Community Engagement; Clinical Outcomes; * and
Efficiency and Cost Reduction Domains **
------------------------------------------------------------------------
Domain Baseline period Performance Period
------------------------------------------------------------------------
Person and Community
Engagement:
HCAHPS......... January 1, January 1,
2017-December 31, 2019-December 31,
2017. 2019.
Clinical Outcomes: *
Mortality (MORT- July 1, July 1,
30-AMI, MORT-30-HF, 2011-June 30, 2014. 2016-June 30, 2019.
MORT-30-COPD).
MORT-30-PN July 1, September
(updated cohort). 2012-June 30, 2015. 1, 2017-June 30,
2019.
THA/TKA........ April 1, April 1,
2011-March 31, 2014. 2016-March 31,
2019.
Efficiency and Cost
Reduction: ***
MSPB........... January 1, January 1,
2017-December 31, 2019-December 31,
2017. 2019.
------------------------------------------------------------------------
* We are proposing, in section IV.I.4.a.(1) of the preamble of this
proposed rule, to change the name of this domain from the Clinical
Care domain to the Clinical Outcomes domain beginning with the FY 2020
program year.
** As discussed in section IV.I.2.c.(1) and (2) of the preamble of this
proposed rule, we are proposing to remove PC-01, CAUTI, CLABSI, Colon
and Abdominal Hysterectomy SSI, CDI, and MRSA Bacteremia measures
beginning with the FY 2021 program year, which would leave no measures
in the Safety domain. As a result, the Safety domain and the
previously finalized performance and baseline periods for those six
measures are not included in this table.
*** As discussed in section IV.I.2.c.(3) of the preamble of this
proposed rule, we are proposing to remove AMI Payment and HF Payment
measures effective with the effective date of the FY 2019 IPPS/LTCH
PPS final rule. As a result, the previously finalized performance and
baseline periods for those measures are not included in this table.

Previously Adopted Baseline and Performance Periods for the FY 2022
Program Year: Person and Community Engagement; Clinical Outcomes; * and
Efficiency and Cost Reduction Domains **
------------------------------------------------------------------------
Domain Baseline period Performance period
------------------------------------------------------------------------
Person and Community
Engagement:
HCAHPS......... January 1, January 1,
2018-December 31, 2020-December 31,
2018. 2020.
Clinical Outcomes: *
Mortality (MORT- July 1, July 1,
30-AMI, MORT-30-HF, 2012-June 30, 2015. 2017-June 30, 2020.
MORT-30-COPD, MORT-30-
CABG).
MORT-30-PN July 1, September
(updated cohort). 2012-June 30, 2015. 1, 2017-June 30,
2020.
THA/TKA........ April 1, April 1,
2012-March 31, 2015. 2017-March 31,
2020.
Efficiency and Cost
Reduction: ***

[[Page 20423]]

MSPB........... January 1, January 1,
2018-December 31, 2020-December 31,
2018. 2020.
------------------------------------------------------------------------
* We are proposing, in section IV.I.4.a.(1) of the preamble of this
proposed rule, to change the name of this domain from the Clinical
Care domain to the Clinical Outcomes domain beginning with the FY 2020
program year.
** As discussed in section IV.I.2.c.(1) and (2) of the preamble of this
proposed rule, we are proposing to remove PC-01, CAUTI, CLABSI, Colon
and Abdominal Hysterectomy SSI, CDI, and MRSA Bacteremia measures
beginning with the FY 2021 program year, which would leave no measures
in the Safety domain. As a result, the Safety domain and the
previously finalized performance and baseline periods for those six
measures are not included in this table.
*** As discussed in section IV.I.2.c.(3) of the preamble of this
proposed rule, we are proposing to remove AMI Payment, HF Payment, and
PN Payment measures effective with the effective date of the FY 2019
IPPS/LTCH PPS final rule. As a result, the previously finalized
performance and baseline periods for these three measures are not
included in this table.

Previously Adopted Baseline and Performance Periods for the FY 2023
Program Year: Person and Community Engagement; Clinical Outcomes; * and
Efficiency and Cost Reduction Domains **
------------------------------------------------------------------------
Domain Baseline period Performance period
------------------------------------------------------------------------
Person and Community
Engagement:
HCAHPS......... January 1, January 1,
2019-December 31, 2021-December 31,
2019. 2021.
Clinical Outcomes: *
Mortality (MORT- July 1, July 1,
30-AMI, MORT-30-HF, 2013-June 30, 2016. 2018-June 30, 2021.
MORT-30-COPD, MORT-30-
CABG, MORT-30-PN
(updated cohort).
THA/TKA........ April 1, April 1,
2013-March 31, 2016. 2018-March 31,
2021.
Efficiency and Cost
Reduction: ***
MSPB........... January 1, January 1,
2019-December 31, 2021-December 31,
2019. 2021.
------------------------------------------------------------------------
* We are proposing, in section IV.I.4.a.(1) of the preamble of this
proposed rule, to change the name of this domain from the Clinical
Care domain to the Clinical Outcomes domain beginning with the FY 2020
program year.
** As discussed in sections IV.I.2.c.(1) and (2) of the preamble of this
proposed rule, we are proposing to remove PC-01 and the NHSN measures
(CAUTI, CLABSI, Colon and Abdominal Hysterectomy SSI, CDI, MRSA
Bacteremia) beginning with the FY 2021 program year and we are
proposing to remove the PSI 90 measure effective with the effective
date of the FY 2019 IPPS/LTCH PPS final rule. If finalized these
proposals would leave no measures in the Safety domain. As a result,
the Safety Domain and these seven measures are not included in this
table.
*** As discussed in section IV.I.2.c.(3) of the preamble of this
proposed rule, we are proposing to remove AMI Payment, HF Payment, and
PN Payment measures effective with the effective date of the FY 2019
IPPS/LTCH PPS final rule. As a result, the previously finalized
performance and baseline periods for these three measures are not
included in this table.

Previously Adopted Baseline and Performance Periods for the FY 2024
Program Year: Person and Community Engagement; Clinical Outcomes; * and
Efficiency and Cost Reduction Domains **
------------------------------------------------------------------------
Domain Baseline period Performance period
------------------------------------------------------------------------
Person and Community
Engagement:
HCAHPS......... January 1, January 1,
2020-December 31, 2022-December 31,
2020. 2022.
Clinical Outcomes: *
Mortality (MORT- July 1, July 1,
30-AMI, MORT-30-HF, 2014-June 30, 2017. 2019-June 30, 2022.
MORT-30-COPD, MORT-30-
CABG, MORT-30-PN
(updated cohort).
THA/TKA........ April 1, April 1,
2014-March 31, 2017. 2019-March 31,
2022.
Efficiency and Cost
Reduction: ***
MSPB........... January 1, January 1,
2020-December 31, 2022-December 31,
2020. 2022.
------------------------------------------------------------------------
* We are proposing, in section IV.I.4.a.(1) of the preamble of this
proposed rule, to change the name of this domain from the Clinical
Care domain to the Clinical Outcomes domain beginning with the FY 2020
program year.
** As discussed in section IV.I.2.c.(1) and (2) of the preamble of this
proposed rule, we are proposing to remove PC-01 and the NHSN measures
(CAUTI, CLABSI, Colon and Abdominal Hysterectomy SSI, CDI, MRSA
Bacteremia) beginning with the FY 2021 program year and we are
proposing to remove the PSI 90 effective with the effective date of
the FY 2019 IPPS/LTCH PPS final rule. If finalized these proposals
would leave no measures in the Safety domain. As a result, the Safety
Domain and these seven measures are not included in this table.
*** As discussed in section IV.I.2.c.(3) of the preamble of this
proposed rule, we are proposing to remove AMI Payment, HF Payment, and
PN Payment measures effective with the effective date of the FY 2019
IPPS/LTCH PPS final rule. As a result, the previously finalized
performance and baseline periods for these three measures are not
included in this table.

6. Previously Adopted and Proposed Performance Standards for the
Hospital VBP Program
a. Background
Section 1886(o)(3)(A) of the Act requires the Secretary to
establish performance standards for the measures selected under the
Hospital VBP Program for a performance period for the applicable fiscal
year. The performance standards must include levels of achievement and
improvement, as required by section 1886(o)(3)(B) of the Act, and must
be established no later than 60 days before the beginning of the
performance period for the fiscal year involved, as required by section
1886(o)(3)(C) of the Act. We refer readers to the Hospital Inpatient
VBP Program final rule (76 FR 26511 through 26513) for further
discussion of achievement and improvement standards under the Hospital
VBP Program.
In addition, when establishing the performance standards, section

[[Page 20424]]

1886(o)(3)(D) of the Act requires the Secretary to consider appropriate
factors, such as: (1) Practical experience with the measures, including
whether a significant proportion of hospitals failed to meet the
performance standard during previous performance periods; (2)
historical performance standards; (3) improvement rates; and (4) the
opportunity for continued improvement.
We refer readers to the FY 2013, FY 2014, and FY 2015 IPPS/LTCH PPS
final rules (77 FR 53599 through 53605; 78 FR 50694 through 50699; and
79 FR 50080 through 50081, respectively) for a more detailed discussion
of the general scoring methodology used in the Hospital VBP Program.
b. Previously Adopted and Proposed Performance Standards for the FY
2021 Program Year
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38263), we
summarized the previously adopted performance standards for the FY 2021
program year for the Clinical Care domain (proposed Clinical Outcome
domain) measures (MORT-30-HF, MORT-30-AMI, MORT-30-COPD, THA/TKA, and
MORT-30-PN (updated cohort)) and the Efficiency and Cost Reduction
domain measure (MSPB). We note that the performance standards for the
MSPB measure are based on performance period data; therefore, we are
unable to provide numerical equivalents for the standards at this time.
The previously adopted performance standards for the measures in the
Clinical Care (proposed Clinical Outcome domain) and Efficiency and
Cost Reduction domains for the FY 2021 program year are set out in the
tables below.

Previously Adopted Performance Standards for the FY 2021 Program Year:
Clinical Outcomes [caret] and Efficiency and Cost Reduction Domains
------------------------------------------------------------------------
Achievement
Measure short name threshold Benchmark
------------------------------------------------------------------------
Clinical Outcomes Domain [caret]*
------------------------------------------------------------------------
MORT-30-AMI................. 0.860355............ 0.879714
MORT-30-HF.................. 0.883803............ 0.906144
MORT-30-PN (updated cohort). 0.836122............ 0.870506
MORT-30-COPD................ 0.923253............ 0.938664
THA/TKA **.................. 0.031157............ 0.022418
------------------------------------------------------------------------
Efficiency and Cost Reduction Domain
------------------------------------------------------------------------
MSPB **..................... Median Medicare Mean of the lowest
Spending per decile Medicare
Beneficiary ratio Spending per
across all Beneficiary ratios
hospitals during across all
the performance hospitals during
period. the performance
period.
------------------------------------------------------------------------
[caret] We are proposing, in section IV.I.4.a.(1) of the preamble of
this proposed rule, to change the name of this domain from the
Clinical Care domain to the Clinical Outcomes domain beginning with
the FY 2020 program year.
As discussed in section IV.I.2.c.(3) of the preamble of this proposed
rule, we are proposing to remove the AMI Payment and HF Payment
measures effective with the effective date of the FY 2019 IPPS/LTCH
PPS final rule. As a result, the previously finalized performance
standards for those measures are not included in this table.
* We note that the mortality measures in the Hospital VBP Program use
survival rates rather than mortality rates; as a result, higher values
indicate better performance on these measures.
** Lower values represent better performance.

The eight dimensions of the HCAHPS measure are calculated to
generate the HCAHPS Base Score. For each of the eight dimensions,
Achievement Points (0-10 points) and Improvement Points (0-9 points)
are calculated, the larger of which is then summed across the eight
dimensions to create the HCAHPS Base Score (0-80 points). Each of the
eight dimensions is of equal weight, thus the HCAHPS Base Score ranges
from 0 to 80 points. HCAHPS Consistency Points are then calculated,
which range from 0 to 20 points. The Consistency Points take into
consideration the scores of all eight Person and Community Engagement
dimensions. The final element of the scoring formula is the summation
of the HCAHPS Base Score and the HCAHPS Consistency Points, which
results in the Person and Community Engagement Domain score that ranges
from 0 to 100 points.
In accordance with our finalized methodology for calculating
performance standards (discussed more fully in the Hospital Inpatient
VBP Program final rule (76 FR 26511 through 26513)), we are proposing
to adopt performance standards for the FY 2021 program year for the
Person and Community Engagement domain. We note that the numerical
values for the proposed performance standards displayed in this
proposed rule represent estimates based on the most recently available
data, and we intend to update the numerical values in the FY 2019 IPPS/
LTCH PPS final rule.

Proposed Performance Standards for the FY 2021 Program Year: Person and Community Engagement Domain
----------------------------------------------------------------------------------------------------------------
Achievement
HCAHPS survey dimension Floor threshold Benchmark
(percent) (percent) (percent)
----------------------------------------------------------------------------------------------------------------
Communication with Nurses....................................... 55.75 79.05 87.27
Communication with Doctors...................................... 56.94 80.11 88.17
Responsiveness of Hospital Staff................................ 40.36 65.41 80.39
Communication about Medicines................................... 20.95 63.64 74.40
Hospital Cleanliness & Quietness................................ 42.76 65.63 79.74
Discharge Information........................................... 68.87 87.49 92.18
Care Transition................................................. 6.65 51.68 63.24

[[Page 20425]]

Overall Rating of Hospital...................................... 36.42 71.76 85.64
----------------------------------------------------------------------------------------------------------------
The performance standards displayed in this table were calculated using one quarter (Q4) CY 2016
data and three quarters (Q1, Q2, and Q3) CY 2017 data. We will update this table's performance standards using
four quarters of CY 2017 data in the final rule.

We are inviting public comments on these proposed performance
standards for the FY 2021 program year.
c. Previously Adopted Performance Standards for Certain Measures for
the FY 2022 Program Year
We have adopted certain measures for the Clinical Care (proposed
Clinical Outcome domain) and Efficiency and Cost Reduction domains for
future program years in order to ensure that we can adopt baseline and
performance periods of sufficient length for performance scoring
purposes. In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57009), we
adopted performance standards for the FY 2022 program year for the
Clinical Care domain (proposed Clinical Outcome domain) measures (THA/
TKA, MORT-30-HF, MORT-30-AMI, MORT-30-PN (updated cohort), MORT-30-
COPD, and MORT-30-CABG) and the Efficiency and Cost Reduction domain
measure (MSPB). We note that the performance standards for the MSPB
measure are based on performance period data; therefore, we are unable
to provide numerical equivalents for the standards at this time. The
previously adopted performance standards for these measures are set out
in the table below.

Previously Adopted Performance Standards for the FY 2022 Program Year
------------------------------------------------------------------------
Achievement
Measure short name threshold Benchmark
------------------------------------------------------------------------
Clinical Outcomes Domain [caret]*
------------------------------------------------------------------------
MORT-30-AMI................. 0.861793............ 0.881305
MORT-30-HF.................. 0.879869............ 0.903608
MORT-30-PN (updated cohort). 0.836122............ 0.870506
MORT-30-COPD................ 0.920058............ 0.936962
MORT-30-CABG [dagger]....... 0.968210............ 0.979000
THA/TKA **.................. 0.029833............ 0.021493
------------------------------------------------------------------------
Efficiency and Cost Reduction Domain #
------------------------------------------------------------------------
MSPB **..................... Median Medicare Mean of the lowest
Spending per decile Medicare
Beneficiary ratio Spending per
across all Beneficiary ratios
hospitals during across all
the performance hospitals during
period. the performance
period.
------------------------------------------------------------------------
[caret] We are proposing, in section IV.I.4.a.(1) of the preamble of
this proposed rule, to change the name of this domain from the
Clinical Care domain to the Clinical Outcomes domain beginning with
the FY 2020 program year.
[dagger] After publication of the FY 2017 IPPS/LTCH PPS final rule, we
determined there was a display error in the performance standards for
this measure. Specifically, the Achievement Threshold and Benchmark
values, while accurate, were presented in the wrong categories. We
corrected this issue in the FY 2018 IPPS/LTCH PPS final rule, and the
correct performance standards are displayed here in the table above.
* The mortality measures in the Hospital VBP Program use survival rates
rather than mortality rates; as a result, higher values indicate
better performance on these measures.
** Lower values represent better performance.
As discussed in section IV.I.2.c.(3) of the preamble of this proposed
rule, we are proposing to remove the AMI Payment, HF Payment, and PN
Payment measures effective with the effective date of the FY 2019 IPPS/
LTCH PPS final rule. As a result, the previously finalized performance
standards for those three measures are not included in this table.

d. Previously Adopted Performance Standards for Certain Measures for
the FY 2023 Program Year
We have adopted certain measures for the Clinical Care (proposed
Clinical Outcome domain) and Efficiency and Cost Reduction domains for
future program years in order to ensure that we can adopt baseline and
performance periods of sufficient length for performance scoring
purposes. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38264 through
38265), we adopted the following performance standards for the FY 2023
program year for the Clinical Care domain (proposed Clinical Outcome
domain) measures (THA/TKA, MORT-30-AMI, MORT-30-HF, MORT-30-PN (updated
cohort), MORT-30-COPD, and MORT-30-CABG) and for the Efficiency and
Cost Reduction domain measure (MSPB). In the FY 2018 IPPS/LTCH PPS
final rule (82 FR 38264), we stated our intent to propose performance
standards for the PSI 90 measure in this year's rulemaking. However, as
discussed in section IV.I.2.c.(2) of the preamble of this proposed
rule, we are proposing to remove the PSI 90 measure from the Hospital
VBP Program effective with the effective date of the FY 2019 IPPS/LTCH
PPS final rule. For this reason, we are not including proposed
performance standards for this measure in this proposed rule. We note
that the performance standards for the MSPB measure is based on
performance period data; therefore, we are unable to provide numerical
equivalents for the standards at this time. The previously adopted
performance standards for these measures are set out in the table
below.

[[Page 20426]]

Previously Adopted Performance Standards for the FY 2023 Program Year
------------------------------------------------------------------------
Achievement
Measure short name threshold Benchmark
------------------------------------------------------------------------
Clinical Outcomes Domain [caret]*
------------------------------------------------------------------------
MORT-30-AMI................. 0.866548............ 0.885499
MORT-30-HF.................. 0.881939............ 0.906798
MORT-30-PN (updated cohort). 0.840138............ 0.871741
MORT-30-COPD................ 0.919769............ 0.936349
MORT-30-CABG................ 0.968747............ 0.979620
THA/TKA **.................. 0.027428............ 0.019779
------------------------------------------------------------------------
Efficiency and Cost Reduction Domain #
------------------------------------------------------------------------
MSPB **..................... Median Medicare Mean of the lowest
Spending per decile Medicare
Beneficiary ratio Spending per
across all Beneficiary ratios
hospitals during across all
the performance hospitals during
period. the performance
period.
------------------------------------------------------------------------
[caret] We are proposing, in section IV.I.4.a.(1) of the preamble of
this proposed rule, to change the name of this domain from the
Clinical Care domain to the Clinical Outcomes domain beginning with
the FY 2020 program year.
* The mortality measures in the Hospital VBP Program use survival rates
rather than mortality rates; as a result, higher values indicate
better performance on these measures.
** Lower values represent better performance.
# As discussed in section IV.I.2.c.(3) of the preamble of this proposed
rule, we are proposing to remove the AMI Payment, HF Payment, and PN
Payment measures effective with the effective date of the FY 2019 IPPS/
LTCH PPS final rule. As a result, the previously finalized performance
standards for those three measures are not included in this table.

e. Proposed Performance Standards for Certain Measures for the FY 2024
Program Year
We have adopted certain measures for the Clinical Care (proposed
Clinical Outcome domain) and Efficiency and Cost Reduction domains for
future program years in order to ensure that we can adopt baseline and
performance periods of sufficient length for performance scoring
purposes. We are proposing the following performance standards for the
FY 2024 program year for the Clinical Care domain (proposed Clinical
Outcome domain) and the Efficiency and Cost Reduction domain. We note
that the performance standards for the MSPB measure is based on
performance period data; therefore, we are unable to provide numerical
equivalents for the standards at this time. These newly proposed
performance standards for these measures are set out in the table
below.

Proposed Performance Standards for the FY 2024 Program Year
------------------------------------------------------------------------
Achievement
Measure short name threshold Benchmark
------------------------------------------------------------------------
Clinical Outcomes Domain [caret]*
------------------------------------------------------------------------
MORT-30-AMI................. 0.869247............ 0.887868
MORT-30-HF.................. 0.882308............ 0.907733
MORT-30-PN (updated cohort). 0.840281............ 0.872976
MORT-30-COPD................ 0.916491............ 0.934002
MORT-30-CABG................ 0.969499............ 0.980319
THA/TKA **.................. 0.025396............ 0.018159
------------------------------------------------------------------------
Efficiency and Cost Reduction Domain
------------------------------------------------------------------------
MSPB **..................... Median Medicare Mean of the lowest
Spending per decile Medicare
Beneficiary ratio Spending per
across all Beneficiary ratios
hospitals during across all
the performance hospitals during
period. the performance
period.
------------------------------------------------------------------------
[caret] We are proposing, in section IV.I.4.a.(1) of the preamble of
this proposed rule, to change the name of this domain from the
Clinical Care domain to the Clinical Outcomes domain beginning with
the FY 2020 program year.
* The mortality measures in the Hospital VBP Program use survival rates
rather than mortality rates; as a result, higher values indicate
better performance on these measures.
** Lower values represent better performance.

We are inviting public comments on these proposed performance
standards for the FY 2024 program year.

J. Hospital-Acquired Condition (HAC) Reduction Program

1. Background
We refer readers to section V.I.1.a. of the preamble of the FY 2014
IPPS/LTCH PPS final rule (78 FR 50707 through 50708) for a general
overview of the HAC Reduction Program. For a detailed discussion of the
statutory basis of the HAC Reduction Program, we refer readers to
section V.I.2. of the preamble of the FY 2014 IPPS/LTCH PPS final rule
(78 FR 50708 through 50709). For a further description of our
previously finalized policies for the HAC Reduction Program, we refer
readers to the FY 2014 IPPS/LTCH PPS final rule (78 FR 50707 through
50729), the FY 2015 IPPS/LTCH PPS final rule (79 FR 50087 through
50104), the FY 2016 IPPS/LTCH PPS final rule (80 FR 49570 through
49581), the FY 2017 IPPS/LTCH PPS final rule (81 FR 57011 through
57026) and the FY 2018 IPPS/LTCH PPS final rule (82 FR 38269 through
38278). These policies describe the general framework for
implementation of the HAC Reduction Program, including: (1) The
relevant definitions applicable to

[[Page 20427]]

the program; (2) the payment adjustment under the program; (3) the
measure selection process and conditions for the program, including a
risk-adjustment and scoring methodology; (4) performance scoring; (5)
the process for making hospital-specific performance information
available to the public, including the opportunity for a hospital to
review the information and submit corrections; and (6) limitation of
administrative and judicial review.
We also have codified certain requirements of the HAC Reduction
Program at 42 CFR 412.170 through 412.172.
By publicly reporting quality data, we strive to put patients first
by ensuring they, along with their clinicians, are empowered to make
decisions about their own healthcare using information aligned with
meaningful quality measures. The HAC Reduction Program, together with
the Hospital VBP Program and the Hospital Readmissions Reduction
Program, represents a key component of the way that we bring quality
measurement, transparency, and improvement together with value-based
purchasing programs to the inpatient care setting. We have undertaken
efforts to review the existing HAC Reduction Program measure set in the
context of these other programs, to identify how to reduce costs and
complexity across programs while continuing to incentivize improvement
in the quality and value of care provided to patients. To that end, we
have begun reviewing our programs' measures in accordance with the
Meaningful Measures Initiative we described in section I.A.2. of the
preamble of this proposed rule.
As part of this review, we have taken a holistic approach to
evaluating the appropriateness of the HAC Reduction Program's current
measures in the context of the measures used in two other IPPS value-
based purchasing programs (that is, the Hospital VBP Program and the
Hospital Readmissions Reduction Program), as well as in the Hospital
IQR Program. We view the three value-based purchasing programs together
as a collective set of hospital value-based purchasing programs.
Specifically, we believe the goals of the three value-based purchasing
programs (the Hospital VBP, Hospital Readmissions Reduction, and HAC
Reduction Programs) and the measures used in these programs together
cover the Meaningful Measures Initiative quality priorities of making
care safer, strengthening person and family engagement, promoting
coordination of care, promoting effective prevention and treatment, and
making care affordable--but that the programs should not add
unnecessary complexity or costs associated with duplicative measures
across programs. The Hospital Readmissions Reduction Program focuses on
care coordination measures, which address the quality priority of
promoting effective communication and care coordination within the
Meaningful Measures Initiative. The HAC Reduction Program focuses on
patient safety measures, which address the Meaningful Measures
Initiative quality priority of making care safer by reducing harm
caused in the delivery of care. As part of this holistic quality
payment program strategy, we believe the Hospital VBP Program should
focus on the measurement priorities not covered by the Hospital
Readmissions Reduction Program or the HAC Reduction Program. The
Hospital VBP Program would continue to focus on measures related to:
(1) The clinical outcomes, such as mortality and complications (which
address the Meaningful Measures Initiative quality priority of
promoting effective treatment); (2) patient and caregiver experience,
as measured using the HCAHPS survey (which addresses the Meaningful
Measures Initiative quality priority of strengthening person and family
engagement as partners in their care); and (3) healthcare costs, as
measured using the Medicare Spending per Beneficiary measure (which
addresses the Meaningful Measures Initiative priority of making care
affordable). We believe this framework will allow hospitals and
patients to continue to obtain meaningful information about hospital
performance and incentivize quality improvement while also streamlining
the measure sets to reduce duplicative measures and program complexity
so that the costs to hospitals associated with participating in these
programs does not outweigh the benefits of improving beneficiary care.
As previously stated, the HAC Reduction Program focuses on making
care safer by reducing harm caused in the delivery of care. Measures in
the HAC Reduction Program, generally represent ``never events'' \270\
and often, if not always, assess preventable conditions. By including
these measures in the Program, we seek to encourage hospitals to
address the serious harm caused by these adverse events and to reduce
them. Therefore, after thoughtful review, we have determined that the
Patient Safety and Adverse Events Composite (PSI 90) and the Centers
for Disease Control and Prevention (CDC) National Healthcare Safety
Network (NHSN) Healthcare-Associated Infection (HAI) measures (NHSN HAI
measures) are most appropriately included as part of the HAC Reduction
Program, and we are proposing to remove these measures from the
Hospital IQR and VBP Programs. We believe this framework will allow
hospitals and patients to continue to obtain meaningful information
about hospital performance while streamlining the measure sets.
---------------------------------------------------------------------------

\270\ ``The term ``Never Event'' was first introduced in 2001 by
Ken Kizer, MD, former CEO of the National Quality Forum (NQF), in
reference to particularly shocking medical errors (such as wrong-
site surgery) that should never occur. Over time, the list has been
expanded to signify adverse events that are unambiguous (clearly
identifiable and measurable), serious (resulting in death or
significant disability), and usually preventable. The NQF initially
defined 27 such events in 2002. The list has been revised since
then, most recently in 2011, and now consists of 29 events grouped
into 7 categories: surgical, product or device, patient protection,
care management, environmental, radiologic, and criminal.'' Never
Events, Available at: https://psnet.ahrq.gov/primers/primer/3/never-events.
---------------------------------------------------------------------------

The HAC Reduction Program has historically relied on Hospital IQR
Program processes for administrative support; we therefore are
proposing HAC Reduction Program-specific healthcare-associated
infection measure data collection and validation requirements, and
scoring associated with data completeness, timeliness, and accuracy.
Contingent upon the Hospital IQR Program finalizing its proposal to
remove NHSN HAI measures from its program (section VIII.A.5.b.(2)(b) of
the preamble of this proposed rule), the HAC Reduction Program is
proposing to formally adopt analogous processes and independently
manage these administrative processes to receive CDC NHSN data and
begin validation seamlessly with January 1, 2019 infectious events. We
note that if the Hospital IQR Program does not finalize its proposal to
remove NHSN HAI measures from its program, then the HAC Reduction
Program would subsequently not finalize its proposals to manage the
associated administrative processes.
In this proposed rule, for the HAC Reduction Program, we are
proposing to: (1) Establish administrative policies for the HAC
Reduction Program to collect, validate, and publicly report quality
measure data independently instead of conducting these activities
through the Hospital IQR Program; (2) adjust the scoring methodology by
removing domains and assigning equal weighting to each measure for
which a hospital has a measure score in order to improve fairness
across hospital types in the Program; (3) establish the data collection
period for the FY 2021 Program Year; and (4) solicit

[[Page 20428]]

stakeholder feedback regarding the potential future inclusion of
additional measures, including eCQMs.
2. Accounting for Social Risk Factors in the HAC Reduction Program
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38273 through
38276), we discussed the importance of improving beneficiary outcomes
including reducing health disparities. We also discussed our commitment
to ensuring that medically complex patients, as well as those with
social risk factors, receive excellent care. We discussed how studies
show that social risk factors, such as being near or below the poverty
level as determined by HHS, belonging to a racial or ethnic minority
group, or living with a disability, can be associated with poor health
outcomes and how some of this disparity is related to the quality of
health care.\271\ Among our core objectives, we aim to improve health
outcomes, attain health equity for all beneficiaries, and ensure that
complex patients as well as those with social risk factors receive
excellent care. Within this context, reports by the Office of the
Assistant Secretary for Planning and Evaluation (ASPE) and the National
Academy of Medicine have examined the influence of social risk factors
in CMS value-based purchasing programs.\272\ As we noted in the FY 2018
IPPS/LTCH PPS final rule (82 FR 38404), ASPE's report to Congress found
that, in the context of value-based purchasing programs, dual
eligibility was the most powerful predictor of poor health care
outcomes among those social risk factors that they examined and tested.
In addition, as we noted in the FY 2018 IPPS/LTCH PPS final rule (82 FR
38274), the National Quality Forum (NQF) undertook a 2-year trial
period in which certain new measures and measures undergoing
maintenance review have been assessed to determine if risk adjustment
for social risk factors is appropriate for these measures.\273\ The
trial period ended in April 2017 and a final report is available at:
https://www.qualityforum.org/SES_Trial_Period.aspx. The trial concluded
that ``measures with a conceptual basis for adjustment generally did
not demonstrate an empirical relationship'' between social risk factors
and the outcomes measured. This discrepancy may be explained in part by
the methods used for adjustment and the limited availability of robust
data on social risk factors. NQF has extended the socioeconomic status
(SES) trial,\274\ allowing further examination of social risk factors
in outcome measures.
---------------------------------------------------------------------------

\271\ See, for example United States Department of Health and
Human Services. ``Healthy People 2020: Disparities. 2014.''
Available at: https://www.healthypeople.gov/2020/about/foundation-health-measures/Disparities; or National Academies of Sciences,
Engineering, and Medicine. Accounting for Social Risk Factors in
Medicare Payment: Identifying Social Risk Factors. Washington, DC:
National Academies of Sciences, Engineering, and Medicine 2016.
\272\ Department of Health and Human Services Office of the
Assistant Secretary for Planning and Evaluation (ASPE), ``Report to
Congress: Social Risk Factors and Performance Under Medicare's
Value-Based Purchasing Programs.'' December 2016. Available at:
https://aspe.hhs.gov/pdf-report/report-congress-social-risk-factors-and-performance-under-medicares-value-based-purchasing-programs.
\273\ Available at: https://www.qualityforum.org/SES_Trial_Period.aspx.
\274\ Available at: https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=86357.
---------------------------------------------------------------------------

In the FY 2018 and CY 2018 proposed rules for our quality reporting
and value-based purchasing programs, we solicited feedback on which
social risk factors provide the most valuable information to
stakeholders and the methodology for illuminating differences in
outcomes rates among patient groups within a hospital or provider that
would also allow for a comparison of those differences, or disparities,
across providers. Feedback we received across our quality reporting
programs included encouraging CMS to explore whether factors that could
be used to stratify or risk adjust the measures (beyond dual
eligibility); considering the full range of differences in patient
backgrounds that might affect outcomes; exploring risk adjustment
approaches; and offering careful consideration of what type of
information display would be most useful to the public.
We also sought public comment on confidential reporting and future
public reporting of some of our measures stratified by patient dual
eligibility. In general, commenters noted that stratified measures
could serve as tools for hospitals to identify gaps in outcomes for
different groups of patients, improve the quality of health care for
all patients, and empower consumers to make informed decisions about
health care. Commenters encouraged us to stratify measures by other
social risk factors such as age, income, and educational attainment.
With regard to value-based purchasing programs, commenters also
cautioned to balance fair and equitable payment while avoiding payment
penalties that mask health disparities or discouraging the provision of
care to more medically complex patients. Commenters also noted that
value-based purchasing program measure selection, domain weighting,
performance scoring, and payment methodology must account for social
risk.
As a next step, CMS is considering options to improve health
disparities among patient groups within and across hospitals by
increasing the transparency of disparities as shown by quality
measures. We also are considering how this work applies to other CMS
quality programs in the future. We refer readers to the FY 2018 IPPS/
LTCH PPS final rule (82 FR 38403 through 38409) for more details, where
we discuss the potential stratification of certain Hospital IQR Program
outcome measures. Furthermore, we continue to consider options to
address equity and disparities in our value-based purchasing programs.
We plan to continue working with ASPE, the public, and other key
stakeholders on this important issue to identify policy solutions that
achieve the goals of attaining health equity for all beneficiaries and
minimizing unintended consequences.
3. Previously-Adopted Measures for FY 2019 and Subsequent Years
In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57013 through
57020), we finalized the Patient Safety and Adverse Events Composite
(PSI 90) \275\ measure for use in the FY 2018 program and subsequent
years for Domain 1. In the FY 2014 IPPS/LTCH PPS final rule (78 FR
50717), we finalized the use of Centers for Disease Control and
Prevention (CDC) National Healthcare Safety Network (NHSN) measures for
Domain 2 for use in the FY 2015 program and subsequent years.
Currently, the Program utilizes five NHSN measures: CAUTI, CDI, CLABSI,
Colon and Abdominal Hysterectomy SSI, and MRSA Bacteremia. These
previously finalized measures, with their full measure names, are shown
in the table below.
---------------------------------------------------------------------------

\275\ We note that measure stewardship of the recalibrated
version of the Patient Safety and Adverse Events Composite (PSI 90)
is transitioning from AHRQ to CMS and, as part of the transition,
the measure will be referred to as the CMS Recalibrated Patient
Safety Indicators and Adverse Events Composite (CMS PSI 90) when it
is used in CMS quality programs.

[[Page 20429]]

HAC Reduction Program Measures for FY 2019
------------------------------------------------------------------------
Short name Measure name NQF No.
------------------------------------------------------------------------
Domain 1:
CMS PSI 90................. Patient Safety and 0531
Adverse Events
Composite.
Domain 2:
CAUTI...................... NHSN Catheter- 0138
associated Urinary
Tract Infection
(CAUTI) Outcome
Measure.
CDI........................ NHSN Facility-wide 1717
Inpatient Hospital-
onset Clostridium
difficile Infection
(CDI) Outcome Measure.
CLABSI..................... NHSN Central Line- 0139
Associated Bloodstream
Infection (CLABSI)
Outcome Measure.
Colon and Abdominal American College of 0753
Hysterectomy SSI. Surgeons--Centers for
Disease Control and
Prevention (ACS-CDC)
Harmonized Procedure
Specific Surgical Site
Infection (SSI)
Outcome Measure.
MRSA Bacteremia............ NHSN Facility-wide 1716
Inpatient Hospital-
onset Methicillin-
resistant
Staphylococcus aureus
(MRSA) Bacteremia
Outcome Measure.
------------------------------------------------------------------------

4. Administrative Policies for the HAC Reduction Program for FY 2019
and Subsequent Years
a. Measure Specifications
As we stated in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53504
through 53505) for the Hospital IQR Program and subsequently finalized
for the HAC Reduction Program in the FY 2015 IPPS/LTCH PPS final rule
(79 FR 50100 through 50101), we will use a subregulatory process to
make nonsubstantive updates to measures used for the HAC Reduction
Program and to use rulemaking to adopt substantive updates to measures.
As with the Hospital IQR Program, we will determine what constitutes a
substantive versus nonsubstantive change on a case-by-case basis. As we
have stated in past rulemaking (79 FR 50100), examples of
nonsubstantive changes to measures might include updated diagnosis or
procedure codes, medication updates for categories of medications,
broadening of age ranges, and exclusions for a measure (such as the
addition of a hospice exclusion to the 30-day mortality measures). We
believe nonsubstantive changes may also include nonsubstantive updates
to NQF-endorsed measures based upon changes to the measures' underlying
clinical guidelines.
We will continue to use rulemaking to adopt substantive updates,
and a subregulatory process to make nonsubstantive updates, to measures
we have adopted for the HAC Reduction Program. As stated in past rules
(78 FR 50776), examples of changes that we might consider to be
substantive would be those in which the changes are so significant that
the measure is no longer the same measure, or when a standard of
performance assessed by a measure becomes more stringent (for example,
changes in acceptable timing of medication, procedure/process, or test
administration). Another example of a substantive change would be where
the NQF has extended its endorsement of a previously endorsed measure
to a new setting, such as extending a measure from the inpatient
setting to hospice. These policies regarding what is considered
substantive versus nonsubstantive would apply to all measures in the
HAC Reduction Program.
We also note that the NQF process incorporates an opportunity for
public comment and engagement in the measure maintenance process, which
is available through its website at: https://www.qualityforum.org/projectlisting.aspx. We believe this policy adequately balances our
need to incorporate updates to HAC Reduction Program measures in the
most expeditious manner possible while preserving the public's ability
to comment on updates that so fundamentally change an endorsed measure
that it is no longer the same measure that we originally adopted.
Technical specifications for the CMS PSI 90 in Domain 1 can be
found on the QualityNet website at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetBasic&cid=1228695355425. Technical specifications for the NHSN HAI measures in Domain 2
can be found at CDC's NHSN website at: https://www.cdc.gov/nhsn/acute-care-hospital/. Both websites provide measure updates and
other information necessary to guide hospitals participating in the
collection of HAC Reduction Program data.
b. Proposed Data Collection Beginning CY 2019
We are proposing to adopt data collection processes for the HAC
Reduction Program to receive CDC NHSN data beginning with January 1,
2019 infection events to correspond with the Hospital IQR Program's
calendar year reporting period and maintain the HAC Reduction Program's
annual performance period start date. All reporting requirements,
including quarterly frequency, CDC collection system, and deadlines
would not change from current Hospital IQR Program requirements to aid
continued hospital reporting through clear and consistent requirements.
This proposed start date aligns with the effective date of the Hospital
IQR Program's proposed removal of these measures beginning with CY 2019
reporting period/FY 2021 payment determination as discussed in section
VIII.A.5.b.(2)(b) of the preamble of this rule and should allow for a
seamless transition.
The HAC Reduction Program identifies the worst-performing quartile
of hospitals by calculating a Total HAC Score derived from the CMS PSI
90 and NHSN HAI measures, which require that we collect claims-based
and chart-abstracted measures data, respectively. No additional
collection mechanisms are required for the CMS PSI 90 measure because
it is a claims-based measure calculated using data submitted to CMS by
hospitals for Medicare payment, and therefore imposes no additional
administrative or reporting requirements on participating hospitals.
For the NHSN HAI measures, if the Hospital IQR Program finalizes its
proposal to remove them from its program, we are proposing to adopt the
HAI data collection process established in the Hospital IQR Program. We
refer readers to the FY 2011 IPPS/LTCH PPS final rule (75 FR 50190),
where we finalized the CDC NHSN as the mechanism to submit data on the
NHSN HAI measures to the Hospital IQR Program, and to the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50723), where the HAC Reduction Program
stated that it would obtain HAI measure results that hospitals
submitted to the CDC NHSN for the Hospital IQR Program. Hospitals would
continue to submit data through the CDC NHSN portal located by
selecting ``NHSN Reporting'' after

[[Page 20430]]

signing in at: https://sams.cdc.gov, and the HAC Reduction Program
would receive the NHSN data directly from the CDC instead of through
the Hospital IQR Program as an intermediary.
We also are proposing to adopt the Hospital IQR Program's exception
policy to reporting and data submission requirements for the CAUTI,
CLABSI, and Colon and Abdominal Hysterectomy SSI measures. As noted in
FY 2013 IPPS/LTCH PPS final rule (77 FR 53539) and in FY 2014 IPPS/LTCH
PPS final rule (78 FR 50821 through 50822) for the Hospital IQR Program
and in FY 2015 IPPS/LTCH PPS final rule (79 FR 50096) for the HAC
Reduction Program, CMS acknowledges that some hospitals may not have
locations that meet the NHSN criteria for CLABSI or CAUTI reporting and
that some hospitals may perform so few procedures requiring
surveillance under the Colon and Abdominal Hysterectomy SSI measure
that the data may not be meaningful for public reporting nor
sufficiently reliable to be utilized for a program year. If a hospital
does not have adequate locations or procedures, it should submit the
Measure Exception Form to the HAC Reduction Program beginning on
January 1, 2019. The IPPS Quality Reporting Programs Measure Exception
Form is located using the link located on the QualityNet website under
the Hospitals - Inpatient > Hospital Inpatient Quality Reporting
Program tab at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228760487021. As has been the case under the Hospital IQR Program, hospitals
seeking an exception would submit this form at least annually to be
considered.
Beginning in FY 2019, the HAC Reduction Program would provide the
same NHSN HAI measures quarterly reports that stakeholders are
accustomed to under the Hospital IQR Program. However, some hospitals
that elected not to participate in the Hospital IQR Program may be
unfamiliar with them. These reports, provided via the QualityNet Secure
Portal at: https://cportal.qualitynet.org/QNet/pgm_select.jsp, provide
hospitals with their facility's quarterly measure data as well as
facility-, State- and national-level results for the measures. To
access their reports, hospitals must register for a QualityNet Secure
Portal Account. We anticipate the transition to occur without
interruption, with the only change to stakeholders being that they
would receive reports from both the HAC Reduction Program and the
Hospital IQR Program for the respective measures adopted in each
program.
c. Review and Correction of Claims Data Used in the HAC Reduction
Program for FY 2019 and Subsequent Years
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50726 through
50727), we detailed the process for the review and correction of
claims-based data, and we are not proposing any changes. We calculate
the measure in Domain 1 using a static snapshot (data extract) taken
after the 90-day period following the last date of discharge used in
the applicable period. We create data extracts using claims in CMS'
Common Working File (CWF) 90 days after the last discharge date in the
applicable period which we will use for the calculations. For example,
if the last discharge date in the applicable period for a measure is
June 30, 2018, we would create the data extract on September 30, 2018,
and use those data to calculate the claims based measures for that
applicable period.
Hospitals are not able to submit corrections to the underlying
claims snapshot used for the Domain 1 measure calculations after the
extract date, and are not be able to add claims to this data set.
Therefore, hospitals are encouraged to ensure that their claims are
accurate prior to the snapshot date. We consider hospitals' claims data
to be complete for purposes of calculating the Domain 1 for the HAC
Reduction Program after the 90-day period following the last date of
discharge used in the applicable period.
For more information, we refer readers to FY 2014 IPPS/LTCH PPS
final rule (78 FR 50726 through 50727). We reiterate that under this
process, hospitals retain the ability to submit new claims and
corrections to submitted claims for payment purposes in line with CMS'
timely claims filing policies, but the administrative claims data used
to calculate the Domain 1 measure and the resulting Domain Score
reflect the state of the claims at the time of extraction from CMS'
CWF.
We are not proposing any change to our current administrative
policy regarding the submission, review, and correction of claims data.
d. Review and Correction of Chart-Abstracted NHSN HAI Data Used in the
HAC Reduction Program for FY 2019 and Subsequent Years
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50726), we stated
that the HAC Reduction Program would use the same process as the
Hospital IQR Program for hospitals to submit, review, and correct data
for chart-abstracted NHSN HAI measures. In the FY 2018 IPPS/LTCH PPS
final rule (82 FR 38270 through 38271), we clarified that hospitals had
an opportunity to submit, review, and correct any of the chart-
abstracted information for the full 4 \1/2\ months after the end of the
reporting quarter. We also noted that for the purposes of fulfilling
CMS quality measurement reporting requirements, each facility's data
must be entered into NHSN no later than 4 \1/2\ months after the end of
the reporting quarter.
For a detailed description of the process, we refer readers to FY
2014 IPPS/LTCH PPS final rule (78 FR 50726) where we explained that
hospitals can begin submitting data on the first discharge day of any
reporting quarter. Hospitals are encouraged to submit data early in the
submission schedule not only to allow them sufficient time to identify
errors and resubmit data before the quarterly submission deadline, but
also to identify opportunities for continued improvement. Users may
view and make corrections to the data that they submit starting
immediately following submission. The data are populated into reports
that are updated immediately with all data that have been submitted
successfully. We believe that 4\1/2\ months is sufficient time for
hospitals to submit, review, and make corrections to their HAI data. We
also balance the correction needs of hospitals with the need to
publicly report and refresh measure information on Hospital Compare in
a timely manner. Historically, CMS has generally refreshed HAI data on
a quarterly basis on Hospital Compare in the Hospital IQR Program.
We wish to clarify that this HAI review and correction process is
intended to permit hospitals review of measure performance and data
submission feedback. Hospitals can use the NHSN system during the
quarterly data submission period to identify any errors made in the
reporting of a patient's specific ``infection event,'' the denominator
(that is, overall admissions data), and other NHSN protocol data used
to calculate measure results before the quarterly submission deadline.
The HAI review and correction process is different than and occurs
prior to the annual Scoring Calculations Review and Correction Process,
which is intended to ensure the accurate calculation of measure scoring
used for payment, and is discussed in section IV.J.4.g. of the preamble
of this proposed rule.
We are not proposing any changes to our current administrative
policy regarding the submission, review, and correction of chart-
abstracted HAI data.

[[Page 20431]]

e. Proposed Changes to Existing Validation Processes
As discussed in above in section IV.J.1. of the preamble of this
proposed rule, we are proposing to adopt processes to validate the NHSN
HAI measure data used in the HAC Reduction Program if the Hospital IQR
Program finalizes its proposals to remove NHSN HAI measures from its
program. While the HAC Reduction Program cannot adopt the Hospital IQR
Program's process as is for various reasons as discussed below, we
intend for the HAC Reduction Program's processes to reflect, to the
greatest extent possible, the current processes previously established
the Hospital IQR Program. We refer readers to the FY 2013 IPPS/LTCH PPS
final rule (77 FR 53539 through 53553), the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50822 through 50835), the FY 2015 IPPS/LTCH PPS final rule
(79 FR 50262 through 50273), the FY 2016 IPPS/LTCH PPS final rule (80
FR 49710 through 49712), the FY 2017 IPPS/LTCH PPS final rule (81 FR
57173 through 57181), and the FY 2018 IPPS/LTCH PPS final rule (82 FR
38398 through 38403) for detailed information on the Hospital IQR
Program's validation processes.
Currently, CMS estimates accuracy for the hospital-reported data
submitted to the clinical warehouse and data submitted to NHSN as
reproduced by a trained abstractor using a standardized NHSN HAI
measure abstraction protocol created by CDC and CMS and posted on the
QualityNet website at: https://www.qualitynet.org/dcs/ContentServer?cid=%201228776288808&pagename=QnetPublic%2FPage%2FQnetTier3&c=Page. We are proposing to adopt the validation processes into the
HAC Reduction Program as previously established by the Hospital IQR
Program (with some exceptions as discussed below) in this section as
follows: Section IV.J.4.e.(1) of the preamble of this proposed rule
(proposed measures subject to validation); section IV.J.4.e.(2) of the
preamble of this proposed rule (proposed provider selection); section
(IV.J.4.e.(3) of the preamble of this proposed rule (proposed targeting
criteria); section IV.J.4.e.(4) of the preamble of this proposed rule
(proposed calculation of the confidence period); section IV.J.4.e.(5)
of the preamble of this proposed rule (proposed educational review
process); section IV.J.4.e.(6) of the preamble of this proposed rule
(proposed application of validation penalty); and section IV.J.4.e.(7)
of the preamble of this proposed rule (proposed validation period).
(1) Proposed Measures Subject to Validation
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50828 through 50832)
and the FY 2015 IPPS/LTCH PPS final rule (79 FR 50264 through 50265),
the Hospital IQR Program identified the following chart-abstracted NHSN
HAI measures submitted via NHSN as being subject to validation: CAUTI,
CDI, CLABSI, Colon and Abdominal Hysterectomy SSI, and MRSA Bacteremia.
In this proposed rule, we are proposing that chart-abstracted NHSN
HAI measures submitted via NHSN would be subject to validation in the
HAC Reduction Program beginning with the Q3 2019 discharges for FY
2022. As stated in section IV.J.3. of the preamble of this proposed
rule, above, and as finalized in the FY 2014 IPPS/LTCH PPS final rule
(78 FR 50717), the HAC Reduction Program currently includes five NHSN
HAI measures: CAUTI, CDI, CLABSI, Colon and Abdominal Hysterectomy SSI,
and MRSA Bacteremia.
We are inviting public comment on our proposal.
(2) Proposed Provider Selection
For chart-abstracted data validation in the Hospital IQR Program,
CMS currently performs a random and targeted selection of participating
hospitals on an annual basis, as initially set out in the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50833 through 50834). For example, in
December of 2017, CMS randomly selected 400 hospitals for validation
for the FY 2020 payment determination. In April/May of 2018, an
additional targeted provider sample of up to 200 hospitals are selected
(78 FR 50833 through 50834). We intend to mirror these policies for the
HAC Reduction Program, and thus, we are proposing annual random
selection of 400 hospitals and the annual targeted selection of 200
hospitals using the targeting criteria proposed below in section
IV.J.4.e.(3) of the preamble of this proposed rule.
Unlike the Hospital IQR Program, which includes only hospitals with
active Notices of Participation (77 FR 53536), we intend to include all
subsection (d) hospitals in these proposed validation procedures, since
all subsection (d) hospitals are subject to the HAC Reduction Program.
Therefore, for the HAC Reduction Program, we are proposing to include
all subsection (d) hospitals in the provider sample for validation
beginning with the Q3 2019 discharges for FY 2022. We believe this
would be better representative of hospitals impacted by the Program. We
note that for the FY 2018 HAC Reduction Program, which uses CY 2015 and
2016 NHSN HAI data, 44 hospitals were subject to the HAC Reduction
Program, but chose not to participate in the Hospital IQR Program.
These hospitals would be included in the validation process.
We are inviting public comment on our proposal.
(3) Proposed Targeting Criteria
As stated above, the Hospital IQR Program currently performs a
random and targeted selection of hospitals for validation on an annual
basis (78 FR 50833 through 50834). In the FY 2011 IPPS/LTCH PPS final
rule (75 FR 50227 through 50229), the Hospital IQR finalized that the
targeted selection will include all hospitals that failed validation
the previous year. In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53552
through 53553), the Hospital IQR Program finalized additional criteria
for selecting targeted hospitals: Any hospital with abnormal or
conflicting data patterns; any hospital with rapidly changing data
patterns; any hospital that submits data to NHSN after the Hospital IQR
Program data submission deadline has passed; any hospital that joined
the Hospital IQR Program within the previous 3 years, and which has not
been previously validated; any hospital that has not been randomly
selected for validation in any of the previous 3 years; and any
hospital that passed validation in the previous year, but had a two-
tailed confidence interval that included 75 percent. In the FY 2014
IPPS/LTCH PPS final rule, the Hospital IQR Program expanded its
targeting criteria to include any hospital which failed to report to
NHSN at least half of actual HAI events detected as determined during
the previous year's validation effort. We intend to propose similar
policies for the HAC Reduction Program.
Therefore, we are proposing the following targeting criteria for
the HAC Reduction Program beginning with the Q3 2019 discharges for FY
2022:
Any hospital that failed validation the previous year;
Any hospital that submits data to NHSN after the HAC
Reduction Program data submission deadline has passed;
Any hospital that not been randomly selected for
validation in the past 3 years;
Any hospital that passed validation in the previous year,
but had a two-

[[Page 20432]]

tailed confidence interval that included 75 percent; \276\ and
---------------------------------------------------------------------------

\276\ We will devise a two-tailed confidence interval formula
using only NHSN HAI measures for the HAC Reduction Program. This
will be posted to the QualityNet website.
---------------------------------------------------------------------------

Any hospital which failed to report to NHSN at least half
of actual HAI events detected as determined during the previous year's
validation effort.
We are inviting public comment on our proposals.
(4) Proposed Calculation of the Confidence Interval
The Hospital IQR Program scores hospitals based on an agreement
rate between hospital-reported infections compared to events identified
as infections by a trained CMS abstractor using a standardized protocol
(77 FR 53548). As finalized in the FY 2013 IPPS/LTCH PPS final rule (77
FR 53550 through 53551), the Hospital IQR Program uses the upper bound
of a two-tailed 90 percent confidence interval around the combined
clinical process of care and HAI scores to determine if a hospital
passes or fails validation; if this number is greater than or equal to
75 percent, then the hospital passes validation.
We believe that a similar computation of the confidence interval is
appropriate for the HAC Reduction Program, but that it include only the
NHSN HAI measures and not the clinical process of care measures, which
are not a part of the Program's measure set. Therefore, we are
proposing that for the HAC Reduction Program beginning in FY 2022: (1)
We would score hospitals based on an agreement rate between hospital-
reported infections compared to events identified as infections by a
trained CMS abstractor using a standardized protocol; (2) we would
compute a confidence interval; (3) if the upper bound of this
confidence interval is 75 percent or higher, the hospital would pass
the HAC Reduction Program validation requirement; and (4) if the upper
bound is below 75 percent, the hospital would fail the HAC Reduction
Program validation requirement.
We are inviting public comment on our proposals.
(5) Proposed Educational Review Process
Under the Hospital IQR Program, within 30 days of validation
results being posted on the QualityNet Secure Portal at: https://cportal.qualitynet.org/QNet/pgm_select.jsp, if a hospital has a
question or needs further clarification on a particular outcome, the
hospital may request an educational review (82 FR 38402 through 38403).
Furthermore, if an educational review that is requested for any of the
first three quarters of validation yields incorrect CMS validation
results for chart-abstracted measures, the corrected quarterly score
will be used to compute the final confidence interval (82 FR 38402
through 38403).
We plan to have similar procedures under the HAC Reduction Program.
Therefore, for the HAC Reduction Program beginning with the Q3 2019
data validation, we are proposing to have an educational review
process, such that hospitals selected for validation would have a 30-
day period following the receipt of quarterly validation results to
seek educational review. During this 30-day period, hospitals may
review, seek clarification, and potentially identify a CMS validation
error. In addition, like the Hospital IQR Program, we are proposing
that if an educational review is timely requested for any of the first
three quarters and the review yields an incorrect CMS validation
result, the corrected quarterly score would be used to compute the
final confidence interval. Unlike the Hospital IQR Program educational
review process (82 FR 38402), we are also proposing that if an
educational review is timely requested and an error is identified in
the 4th quarter of review, we would use the corrected quarterly score
to compute the final confidence interval.
We are inviting public comment on our proposals.
(6) Proposed Application of Validation Penalty
Currently, under the Hospital IQR Program, we randomly assign half
of the hospitals selected for validation to submit CLABSI and CAUTI
Validation Templates and the other half of hospitals to submit MRSA and
CDI Validation Templates (78 FR 50826 through 50834). CMS selects up to
four candidate NHSN HAI cases per hospital from each of the assigned
Validation Templates (79 FR 50263 through 50265). CMS also selects up
to two candidate Colon and Abdominal Hysterectomy SSI cases from
Medicare claims data for patients who had colon surgeries or abdominal
hysterectomies that appear suspicious of infection (78 FR 50826 through
50834). The Hospital IQR Program applies a full payment reduction if a
hospital fails to meet any part of the validation process (75 FR 50219
through 50220; 81 FR 57180).
For the HAC Reduction Program, if a hospital does not meet the
overall validation requirement, we are proposing to penalize hospitals
that fail validation by assigning the maximum Winsorized z-score only
for the set of measures CMS validated. For example, if a hospital was
in the half selected to submit CLABSI and CAUTI Validation Templates
but failed the validation, we are proposing that hospital receive the
maximum Winsorized z-score for CLABSI, CAUTI, and Colon and Abdominal
Hysterectomy SSI. Although it would better align with the Hospital IQR
Program's current ``all or nothing'' approach (75 FR 50219 through
50220; 81 FR 57180) to penalize hospitals by assigning the maximum
Winsorized z-scores for the entire domain, we believe that our chosen
approach would be fairer to hospitals and would lessen the likelihood
of their automatically ranking in the worst-performing quartile based
on validation results. Furthermore, we believe our proposed approach
better aligns with the current HAC Reduction Program policy of
assigning the maximum Winsorized z-score if hospitals do not submit
data to NHSN for a given NHSN HAI measure (81 FR 57013).
(7) Proposed Validation Period
The Hospital IQR Program currently uses a calendar year reporting
period for NHSN HAI measures (76 FR 51644). For example, the FY 2020
measure reporting quarters include Q1 2018, Q2 2018, Q3 2018, and Q4
2018. Under the Hospital IQR Program, FY 2020 data validation consists
of the following quarters: Q3 2017, Q4 2017, Q1 2018, and Q2 2018, the
Hospital IQR Program schedule is available on QualityNet at: https://www.qualitynet.org/dcs/ContentServer?cid=%201228776288808&pagename=QnetPublic%2FPage%2FQnetTier3&c=Page. Currently, the HAC Reduction Program utilizes NHSN HAI data
from two calendar years to calculate measure results. For example, the
FY 2021 measure reporting quarters include Q1 2018 through Q4 2019.
When determining the proposed validation period for the HAC
Reduction Program, we considered the performance and validation cycles
currently in place under the Hospital IQR Program, and we considered
key public reporting dates for the HAC Reduction Program. HAC Reduction
Program scores must be calculated in time for hospital specific reports
(HSRs) to be issued annually, usually in July, and the 30-day Scoring
Calculations Review and Correction period of the HSRs serves as the
preview period for Hospital Compare. Then, HAC Reduction Program data
published on Hospital Compare is refreshed annually as soon as feasible
following the review period.

[[Page 20433]]

After consideration, we are proposing that the HAC Reduction
Program's performance period would remain 2 calendar years and that the
validation period would include the four middle quarters in the HAC
Reduction Program performance period (that is, third quarter through
second quarter). This approach aligns with current the HAC Reduction
Program performance period, it also aligns with current NHSN HAI
validation quarters, and because we would continue to collect eight
quarters of measure data, we anticipate no impact on the reliability of
NHSN HAI results.
Because our validation sample of hospitals is selected annually and
because of the time needed to build the required infrastructure, we
believe the earliest opportunity to seamlessly begin this work under
the HAC Reduction Program is Q3 2019. Therefore, we are proposing that
the HAC Reduction Program would begin validation of NHSN HAI measures
data with July 2019 infection event data. The proposed commencement of
validation, along with key validation dates, is shown in the table
below.

Proposed Validation Period for the HAC Reduction Program
[* Dates are subject to change]
----------------------------------------------------------------------------------------------------------------
Current NHSN Current NHSN Estimated date Estimated
Discharge quarters by fiscal HAI submission HAI validation Estimated CDAC records due to validation
year (FY) deadline * templates * record request CDAC completion
----------------------------------------------------------------------------------------------------------------
FY 2022:
Q1 2019..................... 08/15/2019
Q2 2019..................... 11/15/2019
Q3 2019[caret].............. 02/15/2020 02/01/2020 02/28/2020 03/30/2020 06/15/2020
Q4 2019[caret].............. 05/15/2020 05/01/2020 05/30/2020 06/29/2020 09/15/2020
Q1 2020[caret].............. 08/15/2020 08/01/2020 08/30/2020 09/29/2020 12/15/2020
Q2 2020[caret].............. 11/15/2020 11/01/2020 11/29/2020 12/29/2020 03/15/2021
Q3 2020..................... 02/15/2021
Q4 2020..................... 05/15/2021
FY 2023:
Q1 2020..................... 08/15/2020
Q2 2020..................... 11/15/2020
Q3 2020[caret].............. 02/15/2021 02/01/2021 02/28/2021 03/30/2021 06/15/2021
Q4 2020[caret].............. 05/15/2021 05/01/2021 05/30/2021 06/29/2021 09/15/2021
Q1 2021[caret].............. 08/15/2021 08/01/2021 08/30/2021 09/29/2021 12/15/2021
Q2 2021[caret].............. 11/15/2021 11/01/2021 11/29/2021 12/29/2021 03/15/2022
Q3 2021..................... 02/15/2022
Q4 2021..................... 05/15/2022
----------------------------------------------------------------------------------------------------------------
Bolded rows with dates in each column, denoted with the [caret] symbol next to the date in the Discharge Quarter
by Fiscal Year (FY) column, indicate the validation cycle for the FY.

To maintain symmetry with the current Hospital IQR Program
validation schedule as set forth on QualityNet at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier4&cid=1140537256076, we are proposing that for hospitals selected for validation, the
NHSN HAI validation templates would be due before the HAC Reduction
Program NHSN HAI data submission deadlines. To the greatest extent
possible, we are proposing to keep the processes the same as they are
currently implemented in the Hospital IQR Program. Because these
deadlines would function in the same manner as the current policy under
the Hospital IQR Program, we expect that most providers are familiar
with this process. For more information, we refer readers to the Chart-
Abstracted Data Validation Resources information available at: https://www.qualitynet.org/dcs/ContentServer?cid=1140537256076&pagename=QnetPublic%2FPage%2FQnetTier3&c=Page.
We are inviting public comment regarding our validation proposals.
f. Proposed Data Accuracy and Completeness Acknowledgement (DACA)
We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR
53554) for DACA requirements previously adopted by the Hospital IQR
Program. We are proposing that if the Hospital IQR Program finalizes
its proposal to remove NHSN HAI measures from its program, then the HAC
Reduction Program would adopt this same process. Hospitals would have
to electronically acknowledge the data submitted are accurate and
complete to the best of their knowledge. Hospitals would be required to
complete and sign the DACA on an annual basis via the QualityNet Secure
Portal: https://cportal.qualitynet.org/QNet/pgm_select.jsp. The
submission period for signing and completing the DACA is April 1
through May 15, with respect to the time period of January 1 through
December 31 of the preceding year. The initial HAC Reduction Program
proposed annual DACA signing and completing period would be April 1
through May 15, 2020 for calendar year 2019 data.
We are inviting public comment regarding our proposal to adopt DACA
requirements.
g. Scoring Calculations Review and Correction Period
Although we are not proposing any changes to the review and
correction procedures for FY 2019, we intend to rename the annual 30-
day review and correction period to the ``Scoring Calculations Review
and Correction Period.'' The purpose of the annual 30-day review and
corrections period is to allow hospitals to review the calculation of
their HAC Reduction Program scores, and the new name would more clearly
convey both the intent and limitation. The naming convention would
further distinguish this period from earlier opportunities during which
hospitals can review and correct their underlying data.
The HAC Reduction Program will continue to provide annual
confidential hospital-specific reports and discharge level information
used in the calculation of their Total HAC Scores

[[Page 20434]]

via the QualityNet Secure Portal. As noted in section IV.J.4.b. of the
preamble of this proposed rule regarding quarterly reports, hospitals
must also register at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1138115992011 for a QualityNet Secure Portal account in order to access their
annual hospital-specific reports.
As we stated in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50725
through 50728), hospitals have a period of 30 days after the
information is posted to the QualityNet Secure Portal to review their
HAC Reduction Program scores, submit questions about the calculation of
their results, and request corrections for their HAC Reduction Program
scores prior to public reporting. Hospitals may use the 30-day Scoring
Calculations Review and Correction Period to request corrections to the
following information prior to public reporting:

CMS PSI 90 measure score
CMS PSI 90 measure result and Winsorized measure result
Domain 1 score
CLABSI measure score
CAUTI measure score
Colon and Abdominal Hysterectomy SSI measure score
MRSA Bacteremia measure score
CDI measure score
Domain 2 score
Total HAC Score

As we clarified in the FY 2018 IPPS/LTCH PPS final rule (82 FR
38270 through 38271), this 30-day period is not an opportunity for
hospitals to submit additional corrections related to the underlying
claims data for the CMS PSI 90, or to add new claims to the data
extract used to calculate the results. Hospitals have an opportunity to
review and correct claims data used in the HAC Reduction Program as
described in section IV.J.4.c. of the preamble of this proposed rule,
and detailed in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50726
through 50727).
As we also clarified in the FY 2018 IPPS/LTCH PPS final rule (82 FR
38270 through 38271), this 30-day period is not an opportunity for
hospitals to submit additional corrections related to the underlying
NHSN HAI data used to calculate the scores, including: Reported number
of NSHN HAIs; Standardized Infection Ratios (SIRs); or reported
central-line days, urinary catheter days, surgical procedures
performed, or patient days. Hospitals would have an opportunity to
review and correct chart-abstracted NHSN HAI data used in the HAC
Reduction Program as described in section IV.J.4.d. of the preamble of
this proposed rule.

h. Proposed Public Reporting of Hospital-Specific Data Beginning FY
2019

(1) Proposed Public Reporting of Hospital-Specific Data Beginning FY
2019
Section 1886(p)(6)(A) of the Act requires the Secretary to ``make
information available to the public regarding HAC rates of each
subsection (d) hospital'' under the HAC Reduction Program. Section
1886(p)(6)(B) of the Act also requires the Secretary to ``ensure that
an applicable hospital has the opportunity to review, and submit
corrections for, the HAC information to be made public for each
hospital.'' Section 1886(p)(6)(C) of the Act requires the Secretary to
post the HAC information for each applicable hospital on the Hospital
Compare website in an easily understood format.
Generally, data collected during the first quarter of a calendar
year are publicly reported annually. As finalized in FY 2014 IPPS/LTCH
PPS final rule (78 FR 50725), we will make the following information
public on the Hospital Compare website: (1) Hospital scores with
respect to each measure; (2) each hospital's domain-specific score; and
(3) the hospital's Total HAC Score. If the Hospital IQR Program
finalizes its proposal to remove the CMS PSI 90 from the Program, the
CMS PSI 90 individual indicator measure results (that is, the child
measures) would be reported under the HAC Reduction Program. The CMS
PSI 90 measure is reported on the Hospital Compare web pages; however,
the child measures are reported in the downloadable database on
Hospital Compare. Similarly, we believe the NHSN HAI measures represent
important quality data consumers of healthcare can use to make informed
decisions. Therefore, we intend to continue making NHSN HAI data
available to the public on a quarterly basis. As we stated in FY 2018
IPPS/LTCH PPS final rule (82 FR 38324), our current policy has been to
report data under the Hospital IQR Program as soon as it is feasible on
CMS websites such as the Hospital Compare website, https://www.medicare.gov/hospitalcompare, after a 30-day preview period. We are
proposing to make data available in the same form and manner as
currently displayed under the Hospital IQR Program.
We intend to maintain as much consistency as possible in how the
measures are currently reported on Hospital Compare, including how they
are displayed and the frequency of reporting.
(2) Clarification of Location of Publicly-Reported HAC Reduction
Program Information
Section 1886(p)(6)(C) of the Act, as codified at 42 CFR 412.172(f),
requires that HAC information is posted on the Hospital Compare website
in an easily understandable format. Hospital Compare is the official
website for the publication of the required HAC Reduction Program data,
and the location where the HAC Reduction Program will continue to post
data. We believe the above approach complies with the Act and provides
hospitals and the public sufficient access to information.
i. Limitation on Administrative and Judicial Review
Section 1886(p)(7) of the Act, as codified at 42 CFR 412.172(g),
provides that there will be no administrative or judicial review under
section 1869 of the Act, under section 1878 of the Act, or otherwise
for any of the following:
The criteria describing an applicable hospital in
paragraph 1886(p)(2)(A) of the Act;
The specification of hospital acquired conditions under
paragraph 1886(p)(3) of the Act;
The specification of the applicable period under paragraph
1886(p)(4) of the Act;
The provision of reports to applicable hospitals under
paragraph 1886(p)(5) of the Act; and
The information made available to the public under
paragraph 1886(p)(6) of the Act.
For additional information, we refer readers to FY 2014 IPPS/LTCH
PPS final rule (78 FR 50729) and FY 2015 IPPS/LTCH PPS final rule (79
FR 50100).
5. Proposed Changes to the HAC Reduction Program Scoring Methodology
We regularly examine the HAC Reduction Program's scoring
methodology for opportunities for improvement. This year, we examined
several alternative scoring options that would allow the scoring
methodology to continue to fairly assess all hospitals.
a. Current Methodology
In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57022 through
57025), we adopted a Winsorized z-score scoring methodology for FY 2018
in which we rank hospitals by calculating a Total HAC Score based on
hospitals' performance on two domains: patient

[[Page 20435]]

safety (Domain 1) and NHSN HAIs (Domain 2). Domain 1 includes the CMS
PSI 90 measure. Domain 2 includes the CLABSI, CAUTI, Colon and
Abdominal Hysterectomy SSI,\277\ MRSA Bacteremia, and CDI measures.
Under the current scoring methodology, hospitals' Total HAC Scores are
calculated as a weighted average of Domain 1 (15 percent) and Domain 2
(85 percent). Hospitals with a measure score for at least one Domain 2
measure receive a Domain 2 score. Hospitals with 3 or more discharges
for at least one component indicator for the CMS PSI 90 receive a
Domain 1 score. The first table below illustrates the weight CMS
applies to each measure for the roughly 99 percent of non-Maryland
hospitals with a Domain 1 score and the second table below illustrates
the weight CMS applies to each measure for the one percent of non-
Maryland hospitals without a Domain 1 score.
---------------------------------------------------------------------------

\277\ Colon and Abdominal Hysterectomy SSI is reported as one
score under the HAC Reduction Program.

Weight Applied to Each Measure by Number of Domain 2 Measures With Measure Scores for Hospitals With a Domain 1
Score in FY 2018
[N = 3,147]
----------------------------------------------------------------------------------------------------------------
Number Weight applied to:
(percent) of -------------------------------
Number of Domain 2 measures with measure scores hospitals in Each Domain 2
FY 2018 \a\ CMS PSI 90 measure
----------------------------------------------------------------------------------------------------------------
0............................................................... 188 (5.9%) 100.0 N/A
1............................................................... 288 (9.1%) 15.0 85.0
2............................................................... 218 (6.9%) 15.0 42.5
3............................................................... 196 (6.2%) 15.0 28.3
4............................................................... 251 (7.9%) 15.0 21.3
5............................................................... 2,006 (63.0%) 15.0 17.0
----------------------------------------------------------------------------------------------------------------
\a\ The denominator for percentage calculations is all non-Maryland hospitals with a FY 2018 Total HAC Score.

Weight Applied to Each Measure by Number of Domain 2 Measures With Measure Scores for Hospitals Without a Domain
1 Score in FY 2018
[N = 36]
----------------------------------------------------------------------------------------------------------------
Number Weight applied to:
(percent) of -------------------------------
Number of Domain 2 measures with measure scores hospitals in Each Domain 2
FY 2018 \a\ CMS PSI 90 measure
----------------------------------------------------------------------------------------------------------------
1............................................................... 8 (0.3%) N/A 100.0
2............................................................... 7 (0.2%) N/A 50.0
3............................................................... 2 (0.1%) N/A 33.3
4............................................................... 2 (0.1%) N/A 25.0
5............................................................... 16 (0.5%) N/A 20.0
----------------------------------------------------------------------------------------------------------------
\a\ The denominator for percentage calculations is all non-Maryland hospitals with a FY 2018 Total HAC Score.

As shown in the first table above, under the currently methodology,
the weight applied to the CMS PSI 90 and each Domain 2 measure is
almost the same (15.0 and 17.0 percent, respectively) for hospitals
with measure scores for all six program measures. However, for
hospitals with between one and four Domain 2 measures, the weight
applied to the CMS PSI 90 is lower (and in some cases much lower) than
the weight applied to each Domain 2 measure. For hospitals with a
measure score for only one or two Domain 2 measures (that is, low-
volume hospitals in particular), a disproportionately large weight is
applied to each Domain 2 measure. Several stakeholders voiced concerns
about the disproportionately large weight applied to the one or two
Domain 2 measures for which low-volume hospitals have a measure score.
As seen in the tables above; under the currently methodology, the
weighting for the Domain 2 measures is dependent on the number of
measures with data for those hospitals without a Domain 1 score.
In this proposed rule, we are discussing two alternative scoring
methodologies for calculating hospitals' Total HAC Scores. Our
preferred approach, the Equal Measure Weights policy, involves removing
domains and applying an equal weight to each measure for which a
hospital has a measure score in Total HAC Score calculations. However,
we are seeking public comment on an additional approach: applying a
different weight to each domain depending on the number of measures for
which a hospital has a measure score (Variable Domain Weights).
b. Equal Measure Weights
In this proposed rule, our preferred approach is the Equal Measure
Weights Policy. We would remove domains from the HAC Reduction Program
and simply assign equal weight to each measure for which a hospital has
a measure score. We would calculate each hospital's Total HAC Score as
the equally weighted average of the hospital's measure scores. The
table below displays the weights applied to each measure under this
approach. All other aspects of the HAC Reduction Program scoring
methodology would remain the same, including the calculation of measure
scores as Winsorized z-scores, the determination of the 75th percentile
Total HAC Score, and the determination of the worst-performing
quartile.

[[Page 20436]]

Weight Applied to Each Measure by Number of Measures With Measure Score
for Hospitals With and Without a CMS PSI 90 Score Under Equal Measure
Weights Approach
------------------------------------------------------------------------
Weight applied to:
Number of NHSN HAI measures with -------------------------------------
measure score Each NHSN HAI
CMS PSI 90 measure
------------------------------------------------------------------------
0................................. 100.0 N/A
1................................. 50.0 50.0
2................................. 33.3 33.3
3................................. 25.0 25.0
4................................. 20.0 20.0
5................................. 16.7 16.7
Any number........................ N/A 100.0 (equally
divided among each
NHSN HAI measure).
------------------------------------------------------------------------

As shown in the table above, by applying an equal weight to each
measure for all hospitals, the Equal Measure Weights approach addresses
stakeholders' concerns about the disproportionately large weight
applied to Domain 2 measures for certain hospitals under the current
scoring methodology.
c. Alternative Methodology Considered: Variable Domain Weights
We also analyzed a Variable Domain Weights approach. Under this
approach, the weights applied to Domain 1 and Domain 2 depend upon the
number of measure scores a hospital has in each domain. The table below
displays the weights applied to each domain under this approach.

Weight Applied to Each Measure by Number of Domain 2 Measures With Measure Scores for Hospitals With and Without
a Domain 1 Score Under Variable Domain Weights Approach
----------------------------------------------------------------------------------------------------------------
Weight applied to:
Number of Domain 2 measures with -------------------------------------------------------------------------
measure score Domain 1 (CMS
PSI 90) Domain 2 Each Domain 2 measure
----------------------------------------------------------------------------------------------------------------
0..................................... 100.0 N/A N/A
1..................................... 40.0 60.0 60.0
2..................................... 30.0 70.0 35.0
3..................................... 20.0 80.0 26.7
4..................................... 15.0 85.0 21.3
5..................................... 15.0 85.0 17.0
Any number............................ N/A 100.0 Equally divided.
----------------------------------------------------------------------------------------------------------------

As shown in the table above, under the Variable Domain Weights
approach, the difference in the weight applied to the CMS PSI 90 and
each Domain 2 measure is smaller than the difference under the current
scoring methodology for hospitals that have a Domain 1 score (the first
table under the Equal Measure Weights approach discussion, above).
d. Analysis
Our priority is to adopt a policy that improves the scoring
methodology and increases fairness for all hospitals. Both proposed
approaches address stakeholders' concerns about the disproportionate
weight applied to Domain 2 measures for low-volume hospitals. We
simulated results under each scoring approach using FY 2018 HAC
Reduction Program data. We compared the percentage of hospitals in the
worst-performing quartile in FY 2018 to the percentage that would be in
the worst-performing quartile under each scoring approach. The table
below provides a high-level overview of the impact of these approaches
on several key groups of hospitals.

Estimated Impact of Scoring Approaches on Percentage of Hospitals in
Worst-Performing Quartile by Hospital Group
------------------------------------------------------------------------
Equal measure Variable domain
Hospital group \a\ weights weights
------------------------------------------------------------------------
Teaching hospitals: 100 or more 2.4% 1.6%
residents (N = 248)..............
Safety-net \b\ (N = 644).......... 0.6% 0.8%
Urban hospitals: 400 or more beds 2.2% 1.1%
(N = 360)........................
Hospitals with 100 or fewer beds -1.8% -0.9%
(N = 1,169)......................
Hospitals with a measure score
for:
Zero Domain 2 measures (N = 0.0% 0.0%
188).........................
One Domain 2 measure (N = 269) -4.2% -1.9%
Two Domain 2 measures (N = -0.8% -0.4%
225).........................
Three Domain 2 measures (N = -2.5% -2.5%
198).........................
Four Domain 2 measures (N = -0.4% 0.4%
253).........................
Five Domain 2 measures (N = 1.0% 0.5%
2,022).......................
------------------------------------------------------------------------
\a\ The number of hospitals in the given hospital group for FY 2018 is
specified in parenthesis in this column (for example, N = 248).
\b\ Hospitals are considered safety-net hospitals if they are in the top
quintile for DSH percent.

[[Page 20437]]

As shown in the table above, the Equal Measure Weights approach
generally has a larger impact than the Variable Domain Weights
approach. Under the Equal Measure Weights Approach, as compared to the
current methodology using FY2018 HAC Reduction Program data, the
percentage of hospitals in the worst-performing quartile decreases by
1.8 percent for small hospitals (that is, 100 or fewer beds), 4.2
percent for hospitals with one Domain 2 measure, 0.8 percent for
hospitals with two Domain 2 measures, while it increases by 2.2 percent
for large urban hospitals (that is, 400 or more beds) and 2.4 percent
for large teaching hospitals (that is, 100 or more residents). The
Variable Domain Weights approach changes the percentage of hospitals in
the worst-performing quartile by less than two percent for these groups
of hospitals.
We prefer the Equal Measure Weights approach because it reduces the
percentage of low-volume hospitals in the worst-performing quartile in
the simplest manner to hospitals, while not greatly increasing the
potential costs on other hospital groups. In addition, should we add
measures or remove measures from the program in the future, we would
not need to modify the weighting scheme under the Equal Measure Weights
approach, unlike the current scoring methodology or the Variable Domain
Weights approach.
Finally, the Equal Measure Weights policy aligns with the intent of
the original program design to apply a similar weight to each measure.
That is, we applied a weight of 35 percent to Domain 1 and 65 percent
to Domain 2 in FY 2015, so that the weight applied to each measure
would be roughly the same for hospitals with measure scores for all
measures. When we added Colon and Abdominal Hysterectomy SSI to Domain
2 in FY 2016 and CDI and MRSA Bacteremia in FY 2017, we increased the
weight of Domain 2 to 75 percent and 85 percent, respectively, so that
the weight applied to each measure would be nearly the same for
hospitals with measure scores for all measures. However, the static
domain weights we applied for these program years led to a
substantially lower weight being applied to the CMS PSI 90 compared
with Domain 2 measures for hospitals with only one or two Domain 2
measures. After assessing the results of our analysis and these
additional considerations, we are proposing to adopt the Equal Measure
Weights Policy starting in FY 2020.
We also recognize that under this proposal the NHSN HAI portfolio
of up to five measures would continue to be weighted much more highly
than the CMS PSI 90 for the vast majority of hospitals with more than
one NHSN HAI data meeting minimum precision criteria (MPC) of 1.0. For
example, hospitals reporting five NHSN HAI measures meeting the MPC of
1.0 and CMS PSI 90 would be weighted as 83.33 percent using the equal
weighting proposal for the set of NHSN HAI measures and 16.67 percent
for the CMS PSI 90. Hospitals reporting fewer NHSN HAIs meeting the MPC
of 1.0 would receive lower total HAI weighting to account for the
reduced number of NHSN HAI measures.
This proposal is intended to address the impact of disproportionate
weighting at the measure level for the subset of hospitals with
relatively few NHSN HAI measures. Under the current weighting
methodology, hospitals reporting on a single NHSN HAI measure receive
85 percent measure level weight for that one measure.
We are inviting public comment on our proposed preferred change to
the HAC Reduction Program scoring methodology and the alternative
considered.
6. Proposed Applicable Period for FY 2021
Consistent with the definition specified at Sec. 412.170, we are
proposing to adopt the applicable period for the FY 2021 HAC Reduction
Program for the CMS PSI 90 as the 24-month period from July 1, 2017
through June 30, 2019, and the applicable period for NHSN HAI measures
as the 24-month period from January 1, 2018 through December 31, 2019.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38271), we finalized
a return to a 24-month data collection period for the calculation of
HAC Reduction Program measure results. As we stated then, we believe
that using 24 months of data for the CMS PSI 90 and the NHSN HAI
measures balances the Program's needs against the burden imposed on
hospitals' data-collection processes, and allows for sufficient time to
process the data for each measure and calculate the measure results.
We are inviting public comment on this proposal.
7. Request for Comments on Additional Measures for Potential Future
Adoption
As we did in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19986
through 19990), and as part of our ongoing efforts to evaluate and
strengthen the HAC Reduction Program, we seek stakeholder feedback on
the adoption of additional Program measures.
We welcome public comment and suggestions for additional HAC
Reduction Program measures, specifically on whether electronic clinical
quality measures (eCQMs) would benefit the program at some point in the
future. We first raised the potential future consideration of
electronically specified measures in the FY 2015 IPPS/LTCH PPS final
rule (79 FR 50104), and stated that we would continue to review the
viability of including electronic measures. We are now specifically
interested in stakeholder comments regarding the potential for the
Program's future adoption of eCQMs. These measures use data from
electronic health records (EHRs) and/or health information technology
systems to measure health care quality. We believe eCQMs will allow for
the improved measurement of processes, observations, treatments and
outcomes. Measuring and reporting eCQMs provide information on the
safety, effectiveness, and timeliness of care. We are also interested
in adopting eCQMs because we support technology that reduces burden and
allows clinicians to focus on providing high-quality healthcare for
their patients. We also support innovative approaches to improve
quality, accessibility, and affordability of care while paying
attention to improving clinicians' and beneficiaries' experience when
interacting with CMS programs. We believe eCQMs offer many benefits to
clinicians and quality reporting and are an improvement over
traditional quality measures because they leverage the EHR to generate
chart-abstracted data, which is less resource intensive and likely to
produce fewer human errors than traditional chart-abstraction.
We believe that our continued efforts to reduce HACs are vital to
improving patients' quality of care and reducing complications and
mortality, while simultaneously decreasing costs. The reduction of HACs
is an important marker of quality of care and has a positive impact on
both patient outcomes and cost of care. Our goal for the HAC Reduction
Program is to heighten the awareness of HACs and reduce the number of
incidences that occur.
We are inviting public comments and suggestions on future measures,
including eCQMs, for the HAC Reduction Program.

[[Page 20438]]

K. Payments for Indirect and Direct Graduate Medical Education Costs
(Sec. Sec. 412.105 and 413.75 Through 413.83)

1. Background
Section 1886(h) of the Act, as added by section 9202 of the
Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 (Pub. L.
99-272), establishes a methodology for determining payments to
hospitals for the direct costs of approved graduate medical education
(GME) programs. Section 1886(h)(2) of the Act sets forth a methodology
for the determination of a hospital-specific base-period per resident
amount (PRA) that is calculated by dividing a hospital's allowable
direct costs of GME in a base period by its number of full-time
equivalent (FTE) residents in the base period. The base period is, for
most hospitals, the hospital's cost reporting period beginning in FY
1984 (that is, October 1, 1983 through September 30, 1984). The base
year PRA is updated annually for inflation. In general, Medicare direct
GME payments are calculated by multiplying the hospital's updated PRA
by the weighted number of FTE residents working in all areas of the
hospital complex (and at nonprovider sites, when applicable), and the
hospital's Medicare share of total inpatient days. The provisions of
section 1886(h) of the Act are implemented in regulations at 42 CFR
413.75 through 413.83.
Section 1886(d)(5)(B) of the Act provides for a payment adjustment
known as the indirect medical education (IME) adjustment under the IPPS
for hospitals that have residents in an approved GME program, in order
to account for the higher indirect patient care costs of teaching
hospitals relative to nonteaching hospitals. The regulations regarding
the calculation of this additional payment are located at 42 CFR
412.105. The hospital's IME adjustment applied to the DRG payments is
calculated based on the ratio of the hospital's number of FTE residents
training in either the inpatient or outpatient departments of the IPPS
hospital to the number of inpatient hospital beds.
The calculation of both direct GME and IME payments is affected by
the number of FTE residents that a hospital is allowed to count.
Generally, the greater the number of FTE residents a hospital counts,
the greater the amount of Medicare direct GME and IME payments the
hospital will receive. Therefore, Congress, through the Balanced Budget
Act of 1997 (Pub. L. 105-33), established a limit (that is, a cap) on
the number of allopathic and osteopathic residents that a hospital may
include in its FTE resident count for direct GME and IME payment
purposes. Under section 1886(h)(4)(F) of the Act, for cost reporting
periods beginning on or after October 1, 1997, a hospital's unweighted
FTE count of residents for purposes of direct GME may not exceed the
hospital's unweighted FTE count for direct GME in its most recent cost
reporting period ending on or before December 31, 1996. Under section
1886(d)(5)(B)(v) of the Act, a similar limit based on the FTE count for
IME during that cost reporting period is applied effective for
discharges occurring on or after October 1, 1997. Dental and podiatric
residents are not included in this statutorily mandated cap.
2. Proposed Changes to Medicare GME Affiliated Groups for New Urban
Teaching Hospitals
Section 1886(h)(4)(H)(ii) of the Act authorizes the Secretary to
prescribe rules that allow hospitals that form affiliated groups to
elect to apply direct GME caps on an aggregate basis, and such
authority applies for purposes of aggregating IME caps under section
1886(d)(5)(B)(viii) of the Act. Under such authority, the Secretary
promulgated rules to allow hospitals that are members of the same
Medicare GME affiliated group to elect to apply their direct GME and
IME FTE caps on an aggregate basis. As specified in Sec. Sec.
412.105(f)(1)(vi) and 413.79(f) of the regulations, hospitals that are
part of the same Medicare GME affiliated group are permitted to apply
their IME and direct GME FTE caps on an aggregate basis, and to
temporarily adjust each hospital's caps to reflect the rotation of
residents among affiliated hospitals during an academic year. Sections
413.75(b) and 413.79(f) specify the rules for Medicare GME affiliated
groups. Generally, two or more hospitals may form a Medicare GME
affiliated group if the hospitals are located in the same urban or
rural area or in contiguous urban or rural areas, if they are under
common ownership, or if they are jointly listed as program sponsors or
major participating institutions in the same program.
Sections[thinsp]413.75(b) and 413.79(f) also address emergency Medicare
GME affiliation agreements, which can apply in the event of a section
1135 waiver and if certain conditions are met.
For a new urban teaching hospital that qualifies for an adjustment
to its FTE cap under Sec. 412.105(f)(1)(vii) or Sec. 413.79(e)(1), or
both, Sec. 413.79(e)(1)(iv) provides that the new urban hospital may
enter into a Medicare GME affiliation agreement only if the resulting
adjustment is an increase to its direct GME and IME FTE caps (for
purposes of this discussion, the term ``urban'' is defined as that term
is described at Sec. 412.64(b) of the regulations). We adopted this
policy in the FY 2006 IPPS final rule (70 FR 47452 through 47454).
Prior to that final rule, new urban teaching hospitals were not
permitted to participate in a Medicare GME affiliation agreement (63 FR
26333). In modifying our rules to allow new urban teaching hospitals to
participate in Medicare GME affiliation agreements, we noted our
concerns about such affiliation agreements (70 FR 47452). Specifically,
we were concerned that hospitals with existing medical residency
training programs could otherwise, with the cooperation of new teaching
hospitals, circumvent the statutory FTE resident caps by establishing
new medical residency programs in the new teaching hospitals solely for
the purpose of affiliating with the new teaching hospitals to receive
an upward adjustment to their FTE caps under an affiliation agreement.
This would effectively allow existing teaching hospitals to achieve an
increase in their FTE resident caps beyond the number allowed by their
statutory caps (70 FR 47452). Accordingly, we adopted the restriction
under Sec. 413.79(e)(1)(iv). We refer readers to the FY 2006 IPPS
final rule for a discussion of the regulatory history of this provision
(70 FR 47452 through 47454).
We have received questions about whether two (or more) new urban
teaching hospitals can form a Medicare GME affiliated group; that is,
whether an affiliated group consisting solely of new urban teaching
hospitals is permissible, considering that, under Sec.
413.79(e)(1)(iv), a new urban teaching hospital may only enter into a
Medicare GME affiliation agreement if the resulting adjustments to its
direct GME and IME FTE caps are increases to those caps. The type of
Medicare GME affiliated group contemplated under the regulation at
Sec. 413.79(e)(1)(iv) involves an existing teaching hospital(s) (a
hospital with cap(s) based on training occurring in 1996) and a new
teaching hospital(s), and therefore, we do not believe a Medicare GME
affiliation agreement consisting solely of new urban teaching hospitals
is permissible under Sec. 413.79(e)(1)(iv). However, we believe it is
important to provide flexibility with regard to Medicare GME
affiliation agreements in light of the statutorily mandated caps on the
number of FTE residents a hospital may

[[Page 20439]]

count for direct GME and IME payment purposes. As we noted in the FY
2006 IPPS final rule, while the rules we established in Sec.
413.79(e)(1)(iv) were meant to prevent gaming on the part of existing
teaching hospitals, we did not wish to preclude affiliations that
clearly are designed to facilitate additional training at a new
teaching hospital. We believe allowing two (or more) new urban teaching
hospitals to form a Medicare GME affiliated group will enable these
hospitals to provide residents training at their facilities with both
the required and more varied training experiences necessary to complete
their residency training programs. Furthermore, we believe the proposed
change would facilitate increased training within local, smaller-sized
communities because generally new urban teaching hospitals are smaller-
sized, community-based hospitals compared with existing urban teaching
hospitals, which are generally large academic medical centers.
Accordingly, under our authority in section 1886(h)(4)(H)(ii) of the
Act, we are proposing to revise the regulation to specify that new
urban teaching hospitals (that is, hospitals that qualify for an
adjustment under Sec. 412.105(f)(1)(vii) or Sec. 413.79(e)(1), or
both) may form a Medicare GME affiliated group and therefore be
eligible to receive both decreases and increases to their FTE caps.
We emphasize that the existing restriction under Sec.
413.79(e)(1)(iv) would still apply to Medicare GME affiliated groups
composed of existing and new urban teaching hospitals, given our
concerns about gaming. We do not share the same level of concern in
regards to Medicare GME affiliated groups consisting solely of new
urban teaching hospitals because we believe these teaching hospitals
are similarly situated in terms of size and scope of residency training
programs and, therefore, less likely to participate in a Medicare GME
affiliated group where the outcome of that agreement would only provide
advantages to one of the participating hospitals. However, we still
believe it is important to ensure that Medicare GME affiliation
agreements entered into between new urban teaching hospitals are
consistent with the intent of the Medicare GME affiliation agreement
provision; that is, to promote the cross-training of residents at the
participating hospitals and not to provide for an unfair advantage of
one participating hospital at the expense of another hospital.
Therefore, we are proposing to revise Sec. 413.79(e)(1)(iv) by
designating the existing provision of paragraph (iv) as paragraph (A)
and adding proposed paragraph (B) to specify that an urban hospital
that qualifies for an adjustment to its FTE cap under this section is
permitted to be part of a Medicare GME affiliated group for purposes of
establishing an aggregate FTE cap and receive an adjustment that is a
decrease to the urban hospital's FTE cap only if the decrease results
from a Medicare GME affiliated group consisting solely of two or more
urban hospitals that qualify to receive adjustments to their FTE caps
under this paragraph (e)(1). Because Medicare GME affiliation
agreements can only be entered into at the start of an academic year
(that is, July 1), we are proposing that this proposed change would be
effective beginning with affiliation agreements entered into for the
July 1, 2019 through June 30, 2020 residency training year. We note
that, if adopted, the proposed change discussed in this proposed rule
would apply to both Medicare GME affiliation agreements and emergency
Medicare GME affiliation agreements.
3. Notice of Closure of Two Teaching Hospitals and Opportunity To Apply
for Available Slots
a. Background
Section 5506 of the Patient Protection and Affordable Care Act
(Pub. L. 111-148), as amended by the Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111-152) (collectively, the
``Affordable Care Act''), authorizes the Secretary to redistribute
residency slots after a hospital that trained residents in an approved
medical residency program closes. Specifically, section 5506 of the
Affordable Care Act amended the Act by adding subsection (vi) to
section 1886(h)(4)(H) of the Act and modifying language at section
1886(d)(5)(B)(v) of the Act, to instruct the Secretary to establish a
process to increase the FTE resident caps for other hospitals based
upon the FTE resident caps in teaching hospitals that closed ``on or
after a date that is 2 years before the date of enactment'' (that is,
March 23, 2008). In the CY 2011 Outpatient Prospective Payment System
(OPPS) final rule (75 FR 72212), we established regulations (42 CFR
413.79(o)) and an application process for qualifying hospitals to apply
to CMS to receive direct GME and IME FTE resident cap slots from the
hospital that closed. We made certain modifications to those
regulations in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53434), and
we made changes to the section 5506 application process in the FY 2015
IPPS/LTCH PPS final rule (79 FR 50122 through 50134). The procedures we
established apply both to teaching hospitals that closed on or after
March 23, 2008, and on or before August 3, 2010, and to teaching
hospitals that close after August 3, 2010.
b. Notice of Closure of Affinity Medical Center, Located in Massillon,
OH, and the Application Process--Round 11
CMS has learned of the closure of Affinity Medical Center, located
in Massillon, OH (CCN 360151). Accordingly, this notice serves to
notify the public of the closure of this teaching hospital and initiate
another round of the section 5506 application and selection process.
This round will be the 11th round (``Round 11'') of the application and
selection process. The table below contains the identifying information
and IME and direct FTE GME resident caps for the closed teaching
hospital, which is part of the Round 11 application process under
section 5506 of the Affordable Care Act.

--------------------------------------------------------------------------------------------------------------------------------------------------------
Direct GME FTE
IME FTE resident cap resident cap
CBSA (including +/- MMA (including +/- MMA
CCN Provider name City and state code Terminating date Sec. 422 \1\ and ACA Sec. 422 \1\ and ACA
Sec. 5503 \2\ Sec. 5503 \2\
adjustments) adjustments)
--------------------------------------------------------------------------------------------------------------------------------------------------------
#151............................. Affinity Medical Massillon, OH....... 15940 February 11, 2018... 28.63-4.27 sec. 422 29.49-4.79 sec. 422
Center. reduction-2.00 sec. reduction-2.22 sec.
5503 reduction = 5503 reduction =
22.36 \3\. 22.48 \4\.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Section 422 of the MMA, Public Law 108-173, redistributed unused IME and direct GME residency slots effective July 1, 2005.
\2\ Section 5503 of the Affordable Care Act of 2010, Public Law 111-148 and Public Law 111-152, redistributed unused IME and direct GME residency slots
effective July 1, 2011.
\3\ Affinity Medical Center's 1996 IME FTE resident cap is 28.63. Under section 422 of the MMA, the hospital received a reduction of 4.27 to its IME FTE
resident cap, and under section 5503 of the Affordable Care Act, the hospital received a reduction of 2.00 to its IME FTE resident cap: 28.63-4.27-
2.00 = 22.36.

[[Page 20440]]

\4\ Affinity Medical Center's 1996 direct GME FTE resident cap is 29.49. Under section 422 of the MMA, the hospital received a reduction of 4.79 to its
direct GME FTE resident cap, and under section 5503 of the Affordable Care Act, the hospital received a reduction of 2.22 to its direct GME FTE
resident cap: 29.49-4.79-2.22 = 22.48.

c. Notice of Closure of Baylor Scott & White Medical Center--Garland,
Located in Garland, TX, and the Application Process--Round 12
CMS has learned of the closure of Baylor Scott & White Medical
Center--Garland, located in Garland, TX (CCN 450280). Accordingly, this
notice serves to notify the public of the closure of this teaching
hospital and initiate another round of the section 5506 application and
selection process. This round will be the 12th round (``Round 12'') of
the application and selection process. The table below contains the
identifying information and the IME and direct GME FTE resident caps
for the closed teaching hospital, which is part of the Round 12
application process under section 5506 of the Affordable Care Act:

--------------------------------------------------------------------------------------------------------------------------------------------------------
Direct GME FTE
IME FTE resident cap resident cap
CBSA (including +/- MMA (including +/- MMA
CCN Provider name City and state code Terminating date Sec. 422 \1\ and ACA Sec. 422 \1\ and ACA
Sec. 5503 \2\ Sec. 5503 \2\
Adjustments) Adjustments)
--------------------------------------------------------------------------------------------------------------------------------------------------------
450280........................... Baylor Scott & White Garland, TX......... 19124 February 28, 2018... 3.91 + 12.96-0.05 3.91 + 14.09-1.88
Medical Center sec. 422 reduction- sec. 422 reduction-
Garland. 4.30 sec. 5503 2.59 sec. 5503
reduction = 12.52 reduction = 13.53
\3\. \4\.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Section 422 of the MMA, Public Law 108-173, redistributed unused IME and direct GME residency slots effective July 1, 2005.
\2\ Section 5503 of the Affordable Care Act, Public Law 111-148 and Public Law 111-152, redistributed unused IME and direct GME residency slots
effective July 1, 2011.
\3\ Baylor Scott & White Medical Center Garland's 1996 IME FTE resident cap is 3.91. The hospital received a new program IME FTE resident cap add-on of
12.96. Under section 422 of the MMA, the hospital received a reduction of 0.05 to its IME FTE resident cap, and under section 5503 of the Affordable
Care Act, the hospital received a reduction of 4.30 to its IME FTE resident cap: 3.91 + 12.96-0.05-4.30 = 12.52.
\4\ Baylor Scott & White Medical Center Garland's 1996 direct GME FTE resident cap is 3.91. The hospital received a new program direct GME FTE resident
cap add-on of 14.09. Under section 422 of the MMA, the hospital received a reduction of 1.88 to its direct GME FTE resident cap, and under section
5503 of the Affordable Care Act, the hospital received a reduction of 2.59 to its direct GME FTE resident cap: 3.91 + 14.09- 1.88-2.59 = 13.53.

d. Application Process for Available Resident Slots
The application period for hospitals to apply for slots under
section 5506 of the Affordable Care Act is 90 days following
notification to the public of a hospital closure (77 FR 53436).
Therefore, hospitals that wish to apply for and receive slots from the
above hospitals' FTE resident caps must submit applications (Section
5506 Application Form posted on Direct Graduate Medical Education
(DGME) website as noted at the end of this section) directly to the CMS
Central Office no later than July 23, 2018. The mailing address for the
CMS Central Office is included on the application form. Applications
must be received by the CMS Central Office by the July 23, 2018
deadline date. It is not sufficient for applications to be postmarked
by this date.
We note that an applying hospital may apply for either or both of
the two rounds of section 5506 slot applications that are being
announced in this proposed rule. However, a separate application must
be submitted for each round for which a hospital wishes to apply.
After an applying hospital sends a hard copy of a section 5506 slot
application to the CMS Central Office mailing address, the hospital is
strongly encouraged to notify the CMS Central Office of the mailed
application by sending an email to: [email protected]. In
the email, the hospital should state: ``On behalf of [insert hospital
name and Medicare CCN#], I, [insert your name], am sending this email
to notify CMS that I have mailed to CMS a hard copy of a section 5506
application under Round [11 or 12] due to the closure of [Affinity
Medical Center or Baylor Scott & White Medical Center Garland]. If you
have any questions, please contact me at [insert phone number] or
[insert your email address].'' An applying hospital should not attach
an electronic copy of the application to the email. The email will only
serve to notify the CMS Central Office to expect a hard copy
application that is being mailed to the CMS Central Office.
We have not established a deadline by when CMS will issue the final
determinations to hospitals that receive slots under section 5506 of
the Affordable Care Act. However, we review all applications received
by the deadline and notify applicants of our determinations as soon as
possible.
We refer readers to the CMS Direct Graduate Medical Education
(DGME) website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/DGME.html to download a copy of the
section 5506 application form (Section 5506 CMS Application Form) that
hospitals must use to apply for slots under section 5506 of the
Affordable Care Act. Hospitals should also access this same website for
a list of additional section 5506 guidelines for the policy and
procedures for applying for slots, and the redistribution of the slots
under sections 1886(h)(4)(H)(vi) and 1886(d)(5)(B)(v) of the Act.

L. Rural Community Hospital Demonstration Program

1. Introduction
The Rural Community Hospital Demonstration was originally
authorized for a 5-year period by section 410A of the Medicare
Prescription Drug, Improvement, and Modernization Act of 2003 (MMA)
(Pub. L. 108-173), and extended for another 5-year period by sections
3123 and 10313 of the Affordable Care Act (Pub. L. 111-148).
Subsequently, section 15003 of the 21st Century Cures Act (Pub. L. 114-
255), enacted December 13, 2016, amended section 410A of Public Law
108-173 to require a 10-year extension period (in place of the 5-year
extension required by the Affordable Care Act, as further discussed
below). Section 15003 also requires that, no later than 120 days after
enactment of Public Law 114-255, the Secretary must issue a
solicitation for applications to select additional hospitals to
participate in the demonstration program for the second 5 years of the
10-year extension period, so long as the maximum number of 30 hospitals
stipulated by the Affordable Care Act is not exceeded. In this

[[Page 20441]]

proposed rule, we are providing a summary of the previous legislative
provisions and their implementation; a description of the provisions of
section 15003 of Public Law 114-255; our final policies for
implementation; the finalized budget neutrality methodology for the
extension period authorized by section 15003 of Public Law 114-255,
including a discussion of the budget neutrality methodology used in
previous final rules for periods prior to the extension period; and an
update on the reconciliation of actual and estimated costs of the
demonstration for previous years (2011, 2012, and 2013).
2. Background
Section 410A(a) of Public Law 108-173 required the Secretary to
establish a demonstration program to test the feasibility and
advisability of establishing rural community hospitals to furnish
covered inpatient hospital services to Medicare beneficiaries. The
demonstration pays rural community hospitals under a reasonable cost-
based methodology for Medicare payment purposes for covered inpatient
hospital services furnished to Medicare beneficiaries. A rural
community hospital, as defined in section 410A(f)(1), is a hospital
that--
Is located in a rural area (as defined in section
1886(d)(2)(D) of the Act) or is treated as being located in a rural
area under section 1886(d)(8)(E) of the Act;
Has fewer than 51 beds (excluding beds in a distinct part
psychiatric or rehabilitation unit) as reported in its most recent cost
report;
Provides 24-hour emergency care services; and
Is not designated or eligible for designation as a CAH
under section 1820 of the Act.
Section 410A(a)(4) of Public Law 108-173 specified that the
Secretary was to select for participation no more than 15 rural
community hospitals in rural areas of States that the Secretary
identified as having low population densities. Using 2002 data from the
U.S. Census Bureau, we identified the 10 States with the lowest
population density in which rural community hospitals were to be
located in order to participate in the demonstration: Alaska, Idaho,
Montana, Nebraska, Nevada, New Mexico, North Dakota, South Dakota,
Utah, and Wyoming (Source: U.S. Census Bureau, Statistical Abstract of
the United States: 2003).
CMS originally solicited applicants for the demonstration in May
2004; 13 hospitals began participation with cost reporting periods
beginning on or after October 1, 2004. In 2005, 4 of these 13 hospitals
withdrew from the demonstration program and converted to CAH status.
This left 9 hospitals participating at that time. In 2008, we announced
a solicitation for up to 6 additional hospitals to participate in the
demonstration program. Four additional hospitals were selected to
participate under this solicitation. These 4 additional hospitals began
under the demonstration payment methodology with the hospitals' first
cost reporting period starting on or after July 1, 2008. At that time,
13 hospitals were participating in the demonstration.
Five hospitals withdrew from the demonstration program during CYs
2009 and 2010. In CY 2011, one hospital among this original set of
participating hospitals withdrew. These actions left 7 of the hospitals
that were selected to participate in either 2004 or 2008 participating
in the demonstration program as of June 1, 2011.
Sections 3123 and 10313 of the Affordable Care Act (Pub. L. 111-
148) amended section 410A of Public Law 108-173, changing the Rural
Community Hospital Demonstration program in several ways. First, the
Secretary was required to conduct the demonstration program for an
additional 5-year period, to begin on the date immediately following
the last day of the initial 5-year period. Further, the Affordable Care
Act required the Secretary to provide for the continued participation
of such rural community hospital in the demonstration program during
the 5-year extension period, in the case of a rural community hospital
participating in the demonstration program as of the last day of the
initial 5-year period, unless the hospital made an election to
discontinue participation.
In addition, the Affordable Care Act required, during the 5-year
extension period, that the Secretary expand the number of States with
low population densities determined by the Secretary to 20. Further,
the Secretary was required to use the same criteria and data that the
Secretary used to determine the States for purposes of the initial 5-
year period. The Affordable Care Act also allowed not more than 30
rural community hospitals in such States to participate in the
demonstration program during the 5-year extension period.
We published a solicitation for applications for additional
participants in the Rural Community Hospital Demonstration program in
the Federal Register on August 30, 2010 (75 FR 52960). The 20 States
with the lowest population density that were eligible for the
demonstration program were: Alaska, Arizona, Arkansas, Colorado, Idaho,
Iowa, Kansas, Maine, Minnesota, Mississippi, Montana, Nebraska, Nevada,
New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Utah, and
Wyoming (Source: U.S. Census Bureau, Statistical Abstract of the United
States: 2003). Sixteen new hospitals began participation in the
demonstration with the first cost reporting period beginning on or
after April 1, 2011.
In addition to the 7 hospitals that were selected in either 2004 or
2008, the new selection led to a total of 23 hospitals in the
demonstration. During CY 2013, one additional hospital of the set
selected in 2011 withdrew from the demonstration, which left 22
hospitals participating in the demonstration, effective July 1, 2013,
all of which continued their participation through December 2014.
Starting from that date and extending through the end of FY 2015, the 7
hospitals that were selected in either 2004 or 2008 ended their
scheduled 5-year periods of performance authorized by the Affordable
Care Act on a rolling basis. Likewise, the participation period for the
14 hospitals that entered the demonstration following the mandate of
the Affordable Care Act and that were still participating ended their
scheduled periods of performance on a rolling basis according to the
end dates of the hospitals' cost report periods, respectively, from
April 30, 2016 through December 31, 2016. (One hospital among this
group closed in October 2015.)
3. Provisions of the 21st Century Cures Act (Pub. L. 114-255) and
Finalized Policies for Implementation
a. Statutory Provisions
As stated earlier, section 15003 of Public Law 114-255 further
amended section 410A of Public Law 108-173 to require the Secretary to
conduct the Rural Community Hospital Demonstration for a 10-year
extension period (in place of the 5-year extension period required by
the Affordable Care Act), beginning on the date immediately following
the last day of the initial 5-year period under section 410A(a)(5) of
Public Law 108-173. Thus, the Secretary is required to conduct the
demonstration for an additional 5-year period. Specifically, section
15003 of Public Law 114-255 amended section 410A(g)(4) of Public Law
108-173 to require that, for hospitals participating in the
demonstration as of the last day of the initial 5-year period, the
Secretary shall provide for continued participation of such rural
community hospitals in the demonstration during the 10-year extension
period, unless the hospital makes an election, in such form

[[Page 20442]]

and manner as the Secretary may specify, to discontinue participation.
Furthermore, section 15003 of Public Law 114-255 added subsection
(g)(5) to section 410A of Public Law 108-173 to require that, during
the second 5 years of the 10-year extension period, the Secretary shall
apply the provisions of section 410A(g)(4) of Public Law 108-173 to
rural community hospitals that are not described in subsection (g)(4)
but that were participating in the demonstration as of December 30,
2014, in a similar manner as such provisions apply to hospitals
described in subsection (g)(4).
In addition, section 15003 of Public Law 114-255 amended section
410A of Public Law 108-173 to add paragraph (g)(6)(A) which requires
that the Secretary issue a solicitation for applications no later than
120 days after enactment of paragraph (g)(6), to select additional
rural community hospitals located in any State to participate in the
demonstration program for the second 5 years of the 10-year extension
period, without exceeding the maximum number of hospitals (that is, 30)
permitted under section 410A(g)(3) of Public Law 108-173 (as amended by
the Affordable Care Act). Paragraph 410A(g)(6)(B) provides that, in
determining which hospitals submitting an application pursuant to this
solicitation are to be selected for participation in the demonstration,
the Secretary must give priority to rural community hospitals located
in one of the 20 States with the lowest population densities, as
determined using the 2015 Statistical Abstract of the United States.
The Secretary may also consider closures of hospitals located in rural
areas in the State in which an applicant hospital is located during the
5-year period immediately preceding the date of enactment of the 21st
Century Cures Act (December 13, 2016), as well as the population
density of the State in which the rural community hospital is located.
b. Solicitation for Additional Participants
As required under section 15003 of Public Law 114-255, we issued a
solicitation for additional hospitals to participate in the
demonstration. We released this solicitation on April 17, 2017. As
described in the FY 2018 IPPS/LTCH PPS proposed rule, the solicitation
identified the 20 States with the lowest population density according
to the population estimates from the Census Bureau for 2013, from the
ProQuest Statistical Abstract of the United States, 2015. These 20
States are: Alaska, Arizona, Arkansas, Colorado, Idaho, Iowa, Kansas,
Maine, Mississippi, Montana, Nebraska, Nevada, New Mexico, North
Dakota, Oklahoma, Oregon, South Dakota, Utah, Vermont, and Wyoming.
Applications were due May 17, 2017. Applications were assessed in
accordance with the information requested in the solicitation; that is,
the problem description, plan for financial viability, goals for the
demonstration, contributions to quality of care, and collaboration with
other providers and organizations. In accordance with the authorizing
statute, closure of hospitals within the State of the applicant
hospital and population density were considered in assessing
applications.
c. Terms of Participation for the Extension Period Authorized by Public
Law 114-255
In the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19994), we stated
that our goal was to finalize the selection of participants for the
extension period authorized by Public Law 114-255 by June 2017, in time
to include in the FY 2018 IPPS/LTCH PPS final rule an estimate of the
costs of the demonstration during FY 2018 and the resulting budget
neutrality offset amount, for these newly participating hospitals, as
well as for those hospitals among the previously participating
hospitals that decided to participate in the extension period. (The
specific method for ensuring budget neutrality under section 410A of
Public Law 108-173 was described in the FY 2018 IPPS proposed rule,
consistent with general policies adopted in previous years). We
indicated that upon announcing the selection of new participants, we
would confirm the start dates for the periods of performance for these
newly selected hospitals and for previously participating hospitals. We
stated, on the other hand, that if final selection were not to occur by
June 2017, we would not be able to include an estimate of the costs of
the demonstration or an estimate of the budget neutrality offset amount
for FY 2018 for these additional hospitals in the FY 2018 IPPS/LTCH PPS
final rule.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38280), we finalized
our policy with regard to the effective date for the application of the
reasonable cost-based payment methodology under the demonstration for
those previously participating hospitals choosing to participate in the
second 5-year extension period. According to our finalized policy, each
previously participating hospital began the second 5 years of the 10-
year extension period and the cost-based payment methodology under
section 410A of Public Law 108-173 (as amended by section 15003 of Pub.
L. 114-255) on the date immediately after the date the period of
performance under the first 5-year extension period ended. However, by
the time of the FY 2018 IPPS/LTCH PPS final rule, we had not been able
to verify which among the previously participating hospitals would be
continuing participation, and thus were not able to estimate the costs
of the demonstration for that year's final rule. We stated in the final
rule that we would instead include the estimated costs of the
demonstration for all participating hospitals for FY 2018, along with
those for FY 2019, in the budget neutrality offset amount for the FY
2019 proposed and final rules.
Seventeen of the 21 hospitals that completed their periods of
participation under the extension period authorized by the Affordable
Care Act have elected to continue in the second 5-year extension period
for the full second 5-year extension period. Of the four hospitals that
did not elect to continue participating, three hospitals converted to
CAH status during the time period of the second 5-year extension
period. Thus, the 5-year period of performance for each of these
hospitals started on dates beginning May 1, 2015 and extending through
January 1, 2017. On November 20, 2017, we announced that, as a result
of the solicitation issued earlier in the year, 13 additional hospitals
were selected to participate in the demonstration in addition to these
17 hospitals continuing participation from the first 5-year extension
period. (Hereafter, these two groups are referred to as ``newly
participating'' and ``previously participating'' hospitals,
respectively.) We announced, as well, that each of these newly
participating hospitals would begin its 5-year period of participation
effective the start of the first cost reporting period on or after
October 1, 2017. Thus, 30 hospitals are participating in the
demonstration during FY 2018.
4. Budget Neutrality
a. Statutory Budget Neutrality Requirement
Section 410A(c)(2) of Public Law 108-173 requires that, in
conducting the demonstration program under this section, the Secretary
shall ensure that the aggregate payments made by the Secretary do not
exceed the amount which the Secretary would have paid if the
demonstration program under this section was not implemented. This
requirement is commonly referred to as ``budget neutrality.''
Generally, when we implement a demonstration program

[[Page 20443]]

on a budget neutral basis, the demonstration program is budget neutral
on its own terms; in other words, the aggregate payments to the
participating hospitals do not exceed the amount that would be paid to
those same hospitals in the absence of the demonstration program.
Typically, this form of budget neutrality is viable when, by changing
payments or aligning incentives to improve overall efficiency, or both,
a demonstration program may reduce the use of some services or
eliminate the need for others, resulting in reduced expenditures for
the demonstration program's participants. These reduced expenditures
offset increased payments elsewhere under the demonstration program,
thus ensuring that the demonstration program as a whole is budget
neutral or yields savings. However, the small scale of this
demonstration program, in conjunction with the payment methodology,
made it extremely unlikely that this demonstration program could be
held to budget neutrality under the methodology normally used to
calculate it--that is, cost-based payments to participating small rural
hospitals were likely to increase Medicare outlays without producing
any offsetting reduction in Medicare expenditures elsewhere. In
addition, a rural community hospital's participation in this
demonstration program would be unlikely to yield benefits to the
participants if budget neutrality were to be implemented by reducing
other payments for these same hospitals. Therefore, in the 12 IPPS
final rules spanning the period from FY 2005 through FY 2016, we
adjusted the national inpatient PPS rates by an amount sufficient to
account for the added costs of this demonstration program, thus
applying budget neutrality across the payment system as a whole rather
than merely across the participants in the demonstration program. (A
different methodology was applied for FY 2017.) As we discussed in the
FYs 2005 through 2017 IPPS IPPS/LTCH PPS final rules (69 FR 49183; 70
FR 47462; 71 FR 48100; 72 FR 47392; 73 FR 48670; 74 FR 43922, 75 FR
50343, 76 FR 51698, 77 FR 53449, 78 FR 50740, 77 FR 50145; 80 FR 49585;
and 81 FR 57034, respectively), we believe that the language of the
statutory budget neutrality requirements permits the agency to
implement the budget neutrality provision in this manner.
b. Methodology Used In Previous Final Rules for Periods Prior to the
Extension Period Authorized by the 21st Century Cures Act (Pub. L. 114-
255)
We have generally incorporated two components into the budget
neutrality offset amounts identified in the final IPPS rules in
previous years. First, we have estimated the costs of the demonstration
for the upcoming fiscal year, generally determined from historical,
``as submitted'' cost reports for the hospitals participating in that
year. Update factors representing nationwide trends in cost and volume
increases have been incorporated into these estimates, as specified in
the methodology described in the final rule for each fiscal year.
Second, as finalized cost reports became available, we have determined
the amount by which the actual costs of the demonstration for an
earlier, given year differed from the estimated costs for the
demonstration set forth in the final IPPS rule for the corresponding
fiscal year, and we have incorporated that amount into the budget
neutrality offset amount for the upcoming fiscal year. If the actual
costs for the demonstration for the earlier fiscal year exceeded the
estimated costs of the demonstration identified in the final rule for
that year, this difference was added to the estimated costs of the
demonstration for the upcoming fiscal year when determining the budget
neutrality adjustment for the upcoming fiscal year. Conversely, if the
estimated costs of the demonstration set forth in the final rule for a
prior fiscal year exceeded the actual costs of the demonstration for
that year, this difference was subtracted from the estimated cost of
the demonstration for the upcoming fiscal year when determining the
budget neutrality adjustment for the upcoming fiscal year. (We note
that we have calculated this difference for FYs 2005 through 2010
between the actual costs of the demonstration as determined from
finalized cost reports once available, and estimated costs of the
demonstration as identified in the applicable IPPS final rules for
these years.)
c. Budget Neutrality Methodology for the Extension Period Authorized by
the 21st Century Cures Act (Pub. L. 114-255)
(1) General Approach
We finalized our budget neutrality methodology for periods of
participation under the second 5 years of the 10-year extension period
in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38285 through 38287).
Similar to previous years, we will incorporate an estimate of the costs
of the demonstration, generally determined from historical, ``as
submitted'' cost reports for the participating hospitals and
appropriate update factors, into a budget neutrality offset amount to
be applied to the national IPPS rates for the upcoming fiscal year. In
addition, we will continue to apply our general policy from previous
years of including, as a second component to the budget neutrality
offset amount, the amount by which the actual costs of the
demonstration for an earlier, given year (as determined from finalized
cost reports when available) differed from the estimated costs for the
demonstration set forth in the final IPPS rule for the corresponding
fiscal year. As we described in the FY 2018 final rule, we will be
incorporating several distinct components into the budget neutrality
offset amount for FY 2019:
For each previously participating hospital that has
decided to participate in the second 5 years of the 10-year extension
period, the cost-based payment methodology under the demonstration
began on the date immediately following the end date of its period of
performance for the first 5-year extension period. In addition, for
previously participating hospitals that converted to CAH status during
the time period of the second 5-year extension period, the
demonstration payment methodology has been applied to the date
following the end date of its period of performance for the first
extension period to the date of conversion. As we finalized in the FY
2018 IPPS/LTCH PPS final rule, we are applying a specific methodology
for ensuring that the budget neutrality requirement under section 410A
of Public Law 108-173 is met. To reflect the costs of the demonstration
for the previously participating hospitals, for their cost reporting
periods starting in FYs 2015, 2016, and 2017, we will use available
finalized cost reports that detail the actual costs of the
demonstration for each of these fiscal years. We will then incorporate
these amounts in the budget neutrality offset amount to be included in
a future IPPS final rule. We expect to do this in either FY 2020 or FY
2021, based on the availability of finalized reports.
In addition, we will include a component to our overall
methodology similar to previous years, according to which an estimate
of the costs of the demonstration for both previously and newly
participating hospitals for the upcoming fiscal year is incorporated
into a budget neutrality offset amount to be applied to the national
IPPS rates for the upcoming fiscal year. For FY 2019,

[[Page 20444]]

we will include the estimated costs of the demonstration for FYs 2018
and 2019 in accordance with the methodology finalized in the FY 2018
IPPS/LTCH PPS final rule.
Similar to previous years, in order to meet the budget
neutrality requirement in section 410A(c)(2) of Public Law 108-173 with
respect to the second 5-year extension period, we will continue to
implement the policy according to when finalized cost reports become
available for each of the second 5 years of the 10-year extension
period for the newly participating hospitals and for cost reporting
periods starting in or after FY 2018 that occur during the second 5-
year extension period for the previously participating hospitals. We
will determine the difference between the actual costs of the
demonstration as determined from these finalized cost reports and the
estimated cost indicated in the corresponding fiscal year IPPS final
rule, and include that difference either as a positive or negative
adjustment in the upcoming year's final rule.
As described earlier, we have calculated this difference for FYs
2005 through 2010 between the actual costs of the demonstration, as
determined from finalized cost reports and estimated costs of the
demonstration set forth in the applicable IPPS final rules for these
years, and then incorporated that amount into the budget neutrality
offset amount for an upcoming fiscal year. In this FY 2019 IPPS/LTCH
PPS proposed rule, we are proposing to include this difference based on
finalized cost reports for FYs 2011, 2012, and 2013 in the budget
neutrality offset adjustment to be applied to the national IPPS rates
for FY 2019. In future IPPS rules, we will continue this
reconciliation, calculating the difference between actual and estimated
costs for the remaining years of the first extension period (that is,
FYs 2014 through 2016), and, as described above, the further years of
the demonstration under the second extension period, applying this
difference to the budget neutrality offset adjustments identified in
future years' final rules.
(2) Methodology for the Budget Neutrality Adjustment for the Previously
Participating Hospitals for FYs 2015 Through 2017
As we finalized in the FY 2018 IPPS/LTCH PPS final rule, for each
previously participating hospital, the cost-based payment methodology
under the demonstration will be applied to the date immediately
following the end date of its period of performance for the first 5-
year extension period. We are applying the same methodology as
previously finalized to account for the costs of the demonstration and
ensure that the budget neutrality requirement under section 410A of
Public Law 108-173 is met for the previously participating hospitals
for cost reporting periods starting in FYs 2015, 2016, and 2017. We
believe it is appropriate to determine such a specific methodology
applicable to these cost reporting periods because they are a component
of the payment methodology for the demonstration under the second
extension period, authorized by section 15003 of Public Law 114-255,
yet encompass the provision of services and incurred costs occurring
prior to the start of FY 2018, when the terms of continuation for these
hospitals under this second extension period were finalized.
To reflect the costs of the demonstration for the previously
participating hospitals for their cost reporting periods under the
second extension period starting before FY 2018 (that is, cost
reporting periods starting in FYs 2015, 2016, and 2017), we will
determine the actual costs of the demonstration for each of these
fiscal years when finalized cost reports become available. Thus, for a
hospital with an end date of June 30, 2015 for the first participation
period, we will determine from finalized cost reports the specific
amount contributing to the total costs of the demonstration for the 3
cost reporting years from July 1, 2015 through June 30, 2018; for a
hospital with an end date of June 30, 2016, we will determine from
finalized cost reports the amount contributing to costs of the
demonstration for the 2 cost reporting periods from July 1, 2016
through June 30, 2018.
We note that, for these hospitals, this last cost report period may
include services occurring since the enactment of Public Law 114-255
and also during FY 2018. However, we believe that applying a uniform
method for determining costs across a cost report year would be more
reasonable from the standpoint of operational feasibility and
consistent application of cost determination principles. Under this
approach, we will incorporate these amounts for the previously
participating hospitals for cost reporting periods starting in FYs
2015, 2016, and 2017 into a single amount to be included in the
calculation of the budget neutrality offset amount to the national IPPS
rates in a future final rule after such finalized cost reports become
available. As noted above, we expect to do this in FY 2020 or FY 2021.
(3) Methodology for Estimating Demonstration Costs for FY 2018
As discussed earlier, in this FY 2019 IPPS/LTCH PPS proposed rule,
as a component of the overall budget neutrality methodology, we are
using a methodology similar to previous years, according to which an
estimate of the costs of the demonstration for the upcoming fiscal year
is incorporated into a budget neutrality offset amount to be applied to
the national IPPS rates for the upcoming fiscal year. As explained
above, for FY 2019, we will be including the estimated costs of the
demonstration for FYs 2018 and 2019.
As described in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38286),
we will incorporate a specific calculation to account for the fact that
the cost reporting periods for the participating hospitals applicable
to the estimate of the costs of the demonstration for FY 2018 would
start at different points of time during FY 2018. That is, we will be
prorating estimated reasonable cost amounts and amounts that would be
paid without the demonstration for FY 2018 according to the fraction of
the number of months within the hospital's cost reporting period
starting in FY 2018 that fall within the total number of months in the
fiscal year. For example, if a hospital started its cost reporting
period on January 1, 2018, we will multiply the estimated cost and
payment amounts, derived as described below, by a factor of 0.75. (In
this discussion of how the overall calculations are conducted, this
factor is referred to as ``the hospital-specific prorating factor.'')
The methodology for calculating the amount applicable to FY 2018 to be
incorporated into the budget neutrality offset amount for FY 2019 was
described in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38286) and
proceeds according to the following steps:
Step 1: For each of the 30 participating hospitals, we will
identify the reasonable cost amount calculated under the reasonable
cost methodology for covered inpatient hospital services, including
swing beds, as indicated on the ``as submitted'' cost report for the
most recent cost reporting period available. (For each of these
hospitals, these ``as submitted'' cost reports are those with cost
report period end dates in CY 2016.) We believe these most recent
available cost reports to be an accurate predictor of the costs of the
demonstration in FY 2018 because they give us a recent picture of the
participating hospitals' costs.
For each hospital, we will multiply each of these amounts by the FY
2017

[[Page 20445]]

and 2018 IPPS market basket percentage increases, which are formulated
by the CMS Office of the Actuary. For each of FYs 2017 and 2018, we
would then multiply these products (for covered inpatient hospital
services, including swing beds), of the estimated reasonable cost
amounts for each participating hospital and the market basket
percentage increases applicable to the years involved by a 3-percent
annual volume adjustment. The result for each participating hospital
would be the general estimated reasonable cost amount for covered
inpatient hospital services for FY 2018.
Consistent with our methods in previous years for formulating this
estimate, we will apply the IPPS market basket percentage increases for
FYs 2017 through 2018 to the applicable estimated reasonable cost
amounts (described above) in order to model the estimated FY 2018
reasonable cost amount under the demonstration. We believe that the
IPPS market basket percentage increases appropriately indicate the
trend of increase in inpatient hospital operating costs under the
reasonable cost methodology for the years involved. The 3-percent
annual volume adjustment was stipulated by the CMS Office of the
Actuary and is intended to reflect the tendency of hospitals' inpatient
caseloads to increase. We acknowledge the possibility that inpatient
caseloads for small hospitals may fluctuate, and therefore we are
incorporating into the estimate of demonstration costs a factor to
allow for a potential increase in inpatient hospital services.
Step 2: For each of the participating hospitals, we will identify
the estimated amount that would otherwise be paid in FY 2018 under
applicable Medicare payment methodologies for covered inpatient
hospital services, including swing beds (as indicated on the same set
of ``as submitted'' cost reports as in Step 1), if the demonstration
were not implemented. We then will multiply each of these hospital-
specific amounts (for covered inpatient hospital services including
swing-bed services), by the FYs 2017 and 2018 (in accordance with the
discussion above) IPPS applicable percentage increases. This
methodology differs from Step 1, in which we will be applying the
market basket percentage increases to the hospitals' applicable
estimated reasonable cost amount for covered inpatient hospital
services. We believe that the IPPS applicable percentage increases are
appropriate factors to update the estimated amounts that generally
would otherwise be paid without the demonstration. This is because IPPS
payments would constitute the majority of payments that would otherwise
be made without the demonstration and the applicable percentage
increase is the factor used under the IPPS to update the inpatient
hospital payment rates. Then, for the same reasons discussed in Step 1,
we would multiply these hospital-specific products of the applicable
estimated payments that generally would otherwise be made without the
demonstration and the IPPS applicable percentage increases applicable
to the years involved by the 3-percent annual volume adjustment for
each of FYs 2017 through 2018.
Step 3: We will subtract the amounts derived in Step 2 from the
amount derived in Step 1. According to our methodology, each of these
resulting amounts indicates the difference for the hospital (for
covered inpatient hospital services, including swing beds), which would
be the general estimated amount of the costs of the demonstration for
FY 2018.
Step 4: For each hospital, we will multiply the amount derived in
Step 3 by the hospital-specific prorating factor. The resulting amount
represents for each hospital the cost of the demonstration applicable
to the cost reporting period beginning in FY 2018, on the basis of
which the specific component of the budget neutrality offset amount
applicable to FY 2018 will be derived.
Step 5: We will then sum the hospital-specific amounts derived in
Step 4 across all 30 hospitals participating in the demonstration in FY
2018. This resulting sum will be the proposed estimated costs of the
demonstration applicable to FY 2018 to be incorporated in the budget
neutrality offset amount for rulemaking in FY 2019.
For this proposed rule, the resulting amount applicable to FY 2018
is $33,254,247, which we are proposing to include in the budget
neutrality offset adjustment for FY 2019. This estimated amount is
based on the specific assumptions regarding the data sources used, that
is, ``as submitted'' recently available cost reports and historical and
specific update factors described for cost, payment, and volume. If
updated data become available prior to the FY 2019 IPPS/LTCH PPS final
rule, we will use them to the extent appropriate to estimate the costs
for the demonstration program applicable to FY 2018 in accordance with
our methodology for determining the budget neutrality estimate. In
particular, we are evaluating the appropriateness of the 3-percent
annual volume adjustment in light of empirical trends specific to the
participating hospitals. Therefore, the estimated budget neutrality
offset amount may change in the final rule, depending on the
availability of updated data.
(4) Methodology for Estimating Demonstration Costs for FY 2019
To estimate the costs of the demonstration for FY 2019, we will
apply two differences specific to the application of adjustment factors
to the methodology described for FY 2018. We will use the same set of
``as submitted'' cost reports in determining preliminary cost and
payment amounts for covered inpatient hospital services. However, in
updating these amounts to reflect increases in cost, payment, and
volume, our methodology for determining the component of the budget
neutrality offset amount applicable to FY 2019 entails applying the
market basket percentage increase and applicable percentage increase
for FY 2019, in addition to these update factors for FYs 2017 and 2018.
The proposed amounts for FY 2019 for these respective update factors
are found in sections IV.L.4.c.(2) and (3) of the preamble to this
proposed rule. In addition, consistent with the methodology for FY
2018, we would again apply the 3-percent volume adjustment to reflect
possible increases for FY 2019, in addition to applying this factor for
each of FYs 2017 and 2018. In addition, because we are expecting all of
the participating hospitals to participate for the entire 12-month
period encompassing FY 2019, there will be no application of any
prorating factor in determining the estimated costs of the
demonstration for FY 2019.
For this proposed rule, the resulting amount for FY 2019 is
$78,409,842, which we are likewise proposing to include in the budget
neutrality offset adjustment for FY 2019. This estimated amount is
based on the specific assumptions regarding the data sources used, that
is, ``as submitted'' recently available cost reports and historical and
proposed update factors for cost, payment, and volume. If updated data
become available prior to the FY 2019 IPPS/LTCH PPS final rule, we will
use them to the extent appropriate to estimate the costs for the
demonstration program in FY 2019 in accordance with our finalized
methodology. Again, we are considering the appropriateness of applying
the 3-percent annual volume adjustment. Therefore, the estimated budget
neutrality offset amount may change in the final rule, depending on the
availability of updated data.

[[Page 20446]]

(5) Reconciling Actual and Estimated Costs for the Years of the
Extension Period
Similar to previous years, as finalized in the FY 2018 IPPS/LTCH
PPS final rule, we plan to operationalize the second specific component
to the budget neutrality requirement. That is, when finalized cost
reports become available for each of the second 5 years of the 10-year
extension period for the newly participating hospitals and for cost
reporting periods starting in or after FY 2018 that occur during the
second 5-year extension period for the previously participating
hospitals, we will calculate the difference between the actual costs of
the demonstration as determined from these finalized cost reports and
the estimated cost indicated in the corresponding fiscal year IPPS
final rule, and include that difference either as a positive or
negative adjustment in the upcoming year's final rule.
Therefore, in keeping with the methodologies used in previous final
rules, we will continue to use a methodology for calculating the budget
neutrality offset amount for the second 5 years of the 10-year
extension period consisting of two components: (1) The estimated
demonstration costs in the upcoming fiscal year (as described above);
and (2) the amount by which the actual demonstration costs
corresponding to an earlier, given year (which would be known once
finalized cost reports became available for that year) differed from
the budget neutrality offset amount finalized in the corresponding
year's IPPS final rule.
d. Reconciling Actual and Estimated Costs of the Demonstration for
Previous Years (2011, 2012, and 2013)
As described earlier, we have calculated the difference for FYs
2005 through 2010 between the actual costs of the demonstration, as
determined from finalized cost reports once available, and estimated
costs of the demonstration as identified in the applicable IPPS final
rules for these years. In the FY 2017 IPPS/LTCH PPS final rule (81 FR
57037), we finalized a proposal to reconcile the budget neutrality
offset amounts identified in the IPPS final rules for FYs 2011 through
2016 with the actual costs of the demonstration for those years,
considering the fact that the demonstration was scheduled to end
December 31, 2016. In that final rule, we stated that we believed it
would be appropriate to conduct this analysis for FYs 2011 through 2016
at one time, when all of the finalized cost reports for cost reporting
periods beginning in FYs 2011 through 2016 are available. We stated
that such an aggregate analysis encompassing the cost experience
through the end of the period of performance of the demonstration would
represent an administratively streamlined method, allowing for the
determination of any appropriate adjustment to the IPPS rates and
obviating the need for multiple, fiscal year-specific calculations and
regulatory actions. Given the general lag of 3 years in finalizing cost
reports, we stated that we expected any such analysis would be
conducted in FY 2020.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38287), with the
extension of the demonstration for another 5-year period, as authorized
by section 15003 of Public Law 114-255, we modified the plan outlined
in the FY 2017 IPPS/LTCH PPS final rule, and instead returned to the
general procedure in previous final rules; that is, as finalized cost
reports become available, we would determine the amount by which the
actual costs of the demonstration for an earlier, given year differ
from the estimated costs for the demonstration set forth in the IPPS
final rule for the corresponding fiscal year, and then incorporate that
amount into the budget neutrality offset amount for an upcoming fiscal
year. We finalized a policy that if the actual costs of the
demonstration for the earlier fiscal year exceeded the estimated costs
of the demonstration identified in the final rule for that year, this
difference would be added to the estimated costs of the demonstration
for the upcoming fiscal year when determining the budget neutrality
adjustment for the final rule. Likewise, we finalized a policy that if
the estimated costs of the demonstration set forth in the final rule
for a prior fiscal year exceeded the actual costs of the demonstration
for that year, this difference would be subtracted from the estimated
cost of the demonstration for the upcoming fiscal year when determining
the budget neutrality adjustment for an upcoming fiscal year. However,
given that this adjustment for specific years could be positive or
negative, we would combine this reconciliation for multiple prior years
into one adjustment to be applied to the budget neutrality offset
amount for a single fiscal year, thus reducing the possibility of both
positive and negative adjustments to be applied in consecutive years,
and enhancing administrative feasibility. Specifically, when finalized
cost reports for FYs 2011, 2012, and 2013 are available, we stated that
we would include this difference for these years in the budget
neutrality offset adjustment to be applied to the national IPPS rates
in a future final rule. We stated that we expected that this would
occur in FY 2019. We also stated that when finalized cost reports for
FYs 2014 through 2016 are available, we would include the difference
between the actual costs as reflected on these cost reports and the
amounts included in the budget neutrality offset amounts for these
fiscal years in a future final rule. We stated that we plan to provide
an update in a future final rule regarding the year that we would
expect that this analysis would occur.
Therefore, in this proposed rule, we are identifying the
differences between the total cost of the demonstration as indicated on
finalized FY 2011 and 2012 cost reports and the estimates for the costs
of the demonstration for the corresponding year in each of these years'
final rules, and we are proposing to adjust the current year's budget
neutrality offset amount by the combined difference. If any information
relevant to the determination of these amounts (for example, a cost
report reopening) would necessitate a revision of these amounts, we
will make the appropriate change and include the determination in the
FY 2019 IPPS/LTCH PPS final rule. Furthermore, if the needed costs
reports are available in time for the FY 2019 IPPS/LTCH PPS final rule,
we will also identify the difference between the total cost of the
demonstration based on finalized FY 2013 cost reports and the estimates
for the costs of the demonstration for that year, and incorporate that
amount into the budget neutrality offset amount for FY 2019.
Currently, finalized cost reports are now available for the 16
hospitals that completed a cost reporting period beginning in FY 2011
according to the demonstration cost-based payment methodology. We note
that the estimate of the costs of the demonstration for FY 2011 that
was incorporated into the budget neutrality offset amount was
formulated prior to the selection of hospitals under the expansion of
the demonstration authorized by the Affordable Care Act. Accordingly,
we based the estimate of the costs of the demonstration for FY 2011 on
projected costs for 30 hospitals, the maximum number allowed by the
authorizing statute in the Affordable Care Act. The actual costs of the
demonstration for FY 2011 (that is, the amount from finalized cost
reports for the 16 hospitals that were paid under the demonstration
payment methodology for cost reporting periods with start dates during
FY

[[Page 20447]]

2011), fell short of the estimated amount that was finalized in the FY
2011 IPPS/LTCH PPS final rule for FY 2011 by $29,971,829.
In addition, finalized cost reports for the 23 hospitals that
completed a cost reporting period under the demonstration payment
methodology beginning in FY 2012 are also now available. The actual
costs of the demonstration as determined from these finalized cost
reports fell short of the estimated amount that was finalized in the FY
2012 final rule by $8,500,373.
We note that, for this proposed rule, the amounts identified for
the actual cost of the demonstration for each of FYs 2011 and 2012
(determined from current finalized cost reports) is less than the
amounts that were identified in the final rule for these fiscal years.
Therefore, in keeping with previous policy finalized in similar
situations when the costs of the demonstration fell short of the amount
estimated in the corresponding year's final rule, we will be including
this component as a negative adjustment to the budget neutrality offset
amount for the current fiscal year.
e. Total Proposed Budget Neutrality Offset Amount for FY 2019
Therefore, for this FY 2019 IPPS/LTCH PPS proposed rule, we are
incorporating the following components into the calculation of the
total budget neutrality offset for FY 2019:
Step 1: The amount determined under subsection IV.4.c.(3) of the
preamble of this proposed rule, representing the difference applicable
to FY 2018 between the sum of the estimated reasonable cost amounts
that would be paid under the demonstration to participating hospitals
for covered inpatient hospital services and the sum of the estimated
amounts that would generally be paid if the demonstration had not been
implemented. The determination of this amount includes prorating to
reflect for each participating hospital the fraction of the number of
months for the cost report year starting in FY 2018 falling into the
overall 12 months of the fiscal year. This estimated amount is
$33,254,247.
Step 2: The amount, determined under section IV.4.c.(4) of the
preamble of this proposed rule representing the corresponding
difference of these estimated amounts for FY 2019. No prorating is
applied in the determination of this amount. This estimated amount is
$78,409,842.
Step 3: The amount determined under section IV.4.d. of the preamble
of this proposed rule according to which the actual costs of the
demonstration for FY 2011 for the 16 hospitals that completed a cost
reporting period beginning in FY 2011 differ from the estimated amount
that was incorporated into the budget neutrality offset amount for FY
2011 in the FY 2011 IPPS/LTCH PPS final rule. Analysis of this set of
cost reports shows that the actual costs of the demonstration fell
short of the estimated amount finalized in the FY 2011 IPPS/LTCH PPS
final rule by $29,971,829.
Step 4: The amount, also determined under subsection IV.4.d. of the
preamble of this proposed rule according to which the actual costs for
the demonstration for FY 2012 for the 23 hospitals that completed a
cost reporting period beginning in FY 2012 differ from the estimated
amount in the FY 2012 final rule. Analysis of this set of cost reports
shows that the actual costs of the demonstration for FY 2012 fell short
of the estimated amount finalized in the FY 2012 IPPS/LTCH PPS final
rule by $8,500,373.
In keeping with previously finalized policy, we will be applying
these differences, according to which the actual costs of the
demonstration for each of FYs 2011 and 2012 fell short of the estimated
amount determined in the final rule for each of these fiscal years, by
reducing the budget neutrality offset amount to the national IPPS rates
for FY 2019 by these amounts.
Thus, for FY 2019, the total budget neutrality offset amount that
we are proposing to apply is: The amount determined under Step 1
($33,254,247) plus the amount determined under Step 2 ($78,409,842)
minus the amount determined under Step 3 ($29,971,829) minus the amount
determined under Step 4 ($8,500,373). This total is $73,191,887. If
updated data become available prior to the FY 2019 IPPS/LTCH PPS final
rule, we would use them to the extent appropriate to determine the
budget neutrality offset amount for FY 2019. Therefore, the amount of
the budget neutrality offset amount may change in the FY 2019 IPPS/LTCH
PPS final rule. Furthermore, if the needed costs reports are available
in time for the FY 2019 IPPS/LTCH PPS final rule, we will also identify
the difference between the total cost of the demonstration based on
finalized FY 2013 cost reports and the estimates for the costs of the
demonstration for that year, and incorporate that amount into the
budget neutrality offset amount for FY 2019.
In addition, in accordance with the policy finalized in the FY 2018
final IPPS/LTCH PPS final rule, we will incorporate the actual costs of
the demonstration for the previously participating hospitals for cost
reporting periods starting in FYs 2015, 2016, and 2017 into a single
amount to be included in the calculation of the budget neutrality
offset amount to the national IPPS rates in a future final rule after
such finalized cost reports become available. We expect to do this in
FY 2020 or FY 2021.

M. Proposed Revision of Hospital Inpatient Admission Orders
Documentation Requirements Under Medicare Part A

1. Background
In the CY 2013 OPPS/ASC final rule with comment period (77 FR 68426
through 68433), we solicited public comments for potential policy
changes to improve clarity and consensus among providers, Medicare, and
other stakeholders regarding the relationship between hospital
admission decisions and appropriate Medicare payment, such as when a
Medicare beneficiary is appropriately admitted to the hospital as an
inpatient and the cost to hospitals associated with making this
decision. In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50938 through
50942), we adopted a set of policies widely referred to as the ``2
midnight'' payment policy. Among the finalized changes, we codified
through regulations at 42 CFR 412.3 the longstanding policy that a
beneficiary becomes a hospital inpatient if formally admitted pursuant
to the order of a physician (or other qualified practitioner as
provided in the regulations) in accordance with the hospital conditions
of participation (CoPs). In addition, we required that a written
inpatient admission order be present in the medical record as a
specific condition of Medicare Part A payment. In response to public
comments that the requirement of a written admission order as a
condition of payment is duplicative and burdensome on hospitals, we
responded that the physician order reflects affirmation by the ordering
physician or other qualified practitioner that hospital inpatient
services are medically necessary, and the ``order serves the unique
purpose of initiating the inpatient admission and documenting the
physician's (or other qualified practitioner as provided in the
regulations) intent to admit the patient, which impacts its required
timing.'' Therefore, we finalized the policy requiring a written
inpatient order for all hospital admissions as a specific condition of
payment. We acknowledged that in the extremely rare circumstance the
order to admit is missing or defective, yet the intent, decision, and
recommendation of the

[[Page 20448]]

ordering physician or other qualified practitioner to admit the
beneficiary as an inpatient can clearly be derived from the medical
record, medical review contractors are provided with discretion to
determine that this information constructively satisfies the
requirement that a written hospital inpatient admission order be
present in the medical record.
2. Proposed Revisions Regarding Admission Order Documentation
Requirements
Despite the discretion granted to medical reviewers to determine
that admission order information derived from the medical record
constructively satisfies the requirement that a written hospital
inpatient admission order is present in the medical record, as we have
gained experience with the policy, it has come to our attention that
some otherwise medically necessary inpatient admissions are being
denied payment due to technical discrepancies with the documentation of
inpatient admission orders. Common technical discrepancies consist of
missing practitioner admission signatures, missing co-signatures or
authentication signatures, and signatures occurring after discharge. We
have become aware that, particularly during the case review process,
these discrepancies have occasionally been the primary reason for
denying Medicare payment of an individual claim. In looking to reduce
unnecessary administrative burden on physicians and providers and
having gained experience with the policy since it was implemented, we
have concluded that if the hospital is operating in accordance with the
hospital CoPs, medical reviews should primarily focus on whether the
inpatient admission was medically reasonable and necessary rather than
occasional inadvertent signature documentation issues unrelated to the
medical necessity of the inpatient stay. It was not our intent when we
finalized the admission order documentation requirements that they
should by themselves lead to the denial of payment for otherwise
medically reasonable necessary inpatient stay, even if such denials
occur infrequently.
Therefore, we are proposing to revise the admission order
documentation requirements by removing the requirement that written
inpatient admission orders are a specific requirement for Medicare Part
A payment. Specifically, we are proposing to revise the inpatient
admission order policy to no longer require a written inpatient
admission order to be present in the medical record as a specific
condition of Medicare Part A payment. Hospitals and physicians are
already required to document relevant orders in the medical record to
substantiate medical necessity requirements. If other available
documentation, such as the physician certification statement when
required, progress notes, or the medical record as a whole, supports
that all the coverage criteria (including medical necessity) are met,
and the hospital is operating in accordance with the hospital
conditions of participation (CoPs), we believe it is no longer
necessary to also require specific documentation requirements of
inpatient admission orders as a condition of Medicare Part A payment.
This proposal does not change the requirement that an individual is
considered an inpatient if formally admitted as an inpatient under an
order for inpatient admission. While this continues to be a
requirement, as indicated earlier, technical discrepancies with the
documentation of inpatient admission orders have led to the denial of
otherwise medically necessary inpatient admission. To reduce this
unnecessary administrative burden on physicians and providers, we are
no longer requiring that the specific documentation requirements of
inpatient admission orders be present in the medical record as a
condition of Medicare Part A payment.
Therefore, we are proposing to revise the regulations at 42 CFR
412.3(a) to remove the language stating that a physician order must be
present in the medical record and be supported by the physician
admission and progress notes, in order for the hospital to be paid for
hospital inpatient services under Medicare Part A. We note that we are
not proposing any changes with respect to the ``2 midnight'' payment
policy.

V. Proposed Changes to the IPPS for Capital-Related Costs

A. Overview

Section 1886(g) of the Act requires the Secretary to pay for the
capital-related costs of inpatient acute hospital services in
accordance with a prospective payment system established by the
Secretary. Under the statute, the Secretary has broad authority in
establishing and implementing the IPPS for acute care hospital
inpatient capital-related costs. We initially implemented the IPPS for
capital-related costs in the FY 1992 IPPS final rule (56 FR 43358). In
that final rule, we established a 10-year transition period to change
the payment methodology for Medicare hospital inpatient capital-related
costs from a reasonable cost-based payment methodology to a prospective
payment methodology (based fully on the Federal rate).
FY 2001 was the last year of the 10-year transition period that was
established to phase in the IPPS for hospital inpatient capital-related
costs. For cost reporting periods beginning in FY 2002, capital IPPS
payments are based solely on the Federal rate for almost all acute care
hospitals (other than hospitals receiving certain exception payments
and certain new hospitals). (We refer readers to the FY 2002 IPPS final
rule (66 FR 39910 through 39914) for additional information on the
methodology used to determine capital IPPS payments to hospitals both
during and after the transition period.)
The basic methodology for determining capital prospective payments
using the Federal rate is set forth in the regulations at 42 CFR
412.312. For the purpose of calculating capital payments for each
discharge, the standard Federal rate is adjusted as follows:
(Standard Federal Rate) x (DRG Weight) x (Geographic Adjustment
Factor (GAF)) x (COLA for hospitals located in Alaska and Hawaii) x (1
+ Capital DSH Adjustment Factor + Capital IME Adjustment Factor, if
applicable).
In addition, under Sec. 412.312(c), hospitals also may receive
outlier payments under the capital IPPS for extraordinarily high-cost
cases that qualify under the thresholds established for each fiscal
year.

B. Additional Provisions

1. Exception Payments
The regulations at 42 CFR 412.348 provide for certain exception
payments under the capital IPPS. The regular exception payments
provided under Sec. Sec. 412.348(b) through (e) were available only
during the 10-year transition period. For a certain period after the
transition period, eligible hospitals may have received additional
payments under the special exceptions provisions at Sec. 412.348(g).
However, FY 2012 was the final year hospitals could receive special
exceptions payments. For additional details regarding these exceptions
policies, we refer readers to the FY 2012 IPPS/LTCH PPS final rule (76
FR 51725).
Under Sec. 412.348(f), a hospital may request an additional
payment if the hospital incurs unanticipated capital expenditures in
excess of $5 million due to extraordinary circumstances beyond the
hospital's control. Additional information on the exception payment for
extraordinary circumstances in

[[Page 20449]]

Sec. 412.348(f) can be found in the FY 2005 IPPS final rule (69 FR
49185 and 49186).
2. New Hospitals
Under the capital IPPS, the regulations at 42 CFR 412.300(b) define
a new hospital as a hospital that has operated (under previous or
current ownership) for less than 2 years and lists examples of
hospitals that are not considered new hospitals. In accordance with
Sec. 412.304(c)(2), under the capital IPPS, a new hospital is paid 85
percent of its allowable Medicare inpatient hospital capital-related
costs through its first 2 years of operation, unless the new hospital
elects to receive full prospective payment based on 100 percent of the
Federal rate. We refer readers to the FY 2012 IPPS/LTCH PPS final rule
(76 FR 51725) for additional information on payments to new hospitals
under the capital IPPS.
3. Payments for Hospitals Located in Puerto Rico
In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57061), we revised
the regulations at 42 CFR 412.374 relating to the calculation of
capital IPPS payments to hospitals located in Puerto Rico beginning in
FY 2017 to parallel the change in the statutory calculation of
operating IPPS payments to hospitals located in Puerto Rico, for
discharges occurring on or after January 1, 2016, made by section 601
of the Consolidated Appropriations Act, 2016 (Pub. L. 114-113). Section
601 of Public Law 114-113 increased the applicable Federal percentage
of the operating IPPS payment for hospitals located in Puerto Rico from
75 percent to 100 percent and decreased the applicable Puerto Rico
percentage of the operating IPPS payments for hospitals located in
Puerto Rico from 25 percent to zero percent, applicable to discharges
occurring on or after January 1, 2016. As such, under revised Sec.
412.374, for discharges occurring on or after October 1, 2016, capital
IPPS payments to hospitals located in Puerto Rico are based on 100
percent of the capital Federal rate.

C. Proposed Annual Update for FY 2019

The proposed annual update to the national capital Federal rate, as
provided for in Sec. 412.308(c), for FY 2019 is discussed in section
III. of the Addendum to this proposed rule.
In section II.D. of the preamble of this proposed rule, we present
a discussion of the MS-DRG documentation and coding adjustment,
including previously finalized policies and historical adjustments, as
well as the adjustment to the standardized amount under section 1886(d)
of the Act that we are proposing for FY 2019, in accordance with the
amendments made to section 7(b)(1)(B) of Public Law 110-90 by section
414 of the MACRA. Because these provisions require us to make an
adjustment only to the operating IPPS standardized amount, we are not
proposing to make a similar adjustment to the national capital Federal
rate (or to the hospital-specific rates).

VI. Proposed Changes for Hospitals Excluded From the IPPS

A. Proposed Rate-of-Increase in Payments to Excluded Hospitals for FY
2019

Certain hospitals excluded from a prospective payment system,
including children's hospitals, 11 cancer hospitals, and hospitals
located outside the 50 States, the District of Columbia, and Puerto
Rico (that is, hospitals located in the U.S. Virgin Islands, Guam, the
Northern Mariana Islands, and American Samoa) receive payment for
inpatient hospital services they furnish on the basis of reasonable
costs, subject to a rate-of-increase ceiling. A per discharge limit
(the target amount, as defined in Sec. 413.40(a) of the regulations)
is set for each hospital based on the hospital's own cost experience in
its base year, and updated annually by a rate-of-increase percentage.
For each cost reporting period, the updated target amount is multiplied
by total Medicare discharges during that period and applied as an
aggregate upper limit (the ceiling as defined in Sec. 413.40(a)) of
Medicare reimbursement for total inpatient operating costs for a
hospital's cost reporting period. In accordance with Sec. 403.752(a)
of the regulations, religious nonmedical health care institutions
(RNHCIs) also are subject to the rate-of-increase limits established
under Sec. 413.40 of the regulations discussed previously.
Furthermore, in accordance with Sec. 412.526(c)(3) of the regulations,
extended neoplastic disease care hospitals also are subject to the
rate-of-increase limits established under Sec. 413.40 of the
regulations discussed previously.
As explained in the FY 2006 IPPS final rule (70 FR 47396 through
47398), beginning with FY 2006, we use the percentage increase in the
IPPS operating market basket to update the target amounts for
children's hospitals, cancer hospitals, and RNHCIs. Consistent with the
regulations at Sec. Sec. 412.23(g), 413.40(a)(2)(ii)(A), and
413.40(c)(3)(viii), we also use the percentage increase in the IPPS
operating market basket to update target amounts for short-term acute
care hospitals located in the U.S. Virgin Islands, Guam, the Northern
Mariana Islands, and American Samoa. In the FYs 2014 and 2015 IPPS/LTCH
PPS final rules (78 FR 50747 through 50748 and 79 FR 50156 through
50157, respectively), we adopted a policy of using the percentage
increase in the FY 2010-based IPPS operating market basket to update
the target amounts for FY 2014 and subsequent fiscal years for
children's hospitals, cancer hospitals, RNHCIs, and short-term acute
care hospitals located in the U.S. Virgin Islands, Guam, the Northern
Mariana Islands, and American Samoa. However, in the FY 2018 IPPS/LTCH
PPS final rule, we rebased and revised the IPPS operating basket to a
2014 base year, effective for FY 2018 and subsequent years (82 FR 38158
through 38175), and finalized the use of the percentage increase in the
2014-based IPPS operating market basket to update the target amounts
for children's hospitals, the 11 cancer hospitals, RNHCIs, and short-
term acute care hospitals located in the U.S. Virgin Islands, Guam, the
Northern Mariana Islands, and American Samoa for FY 2018 and subsequent
years. Accordingly, for FY 2019, the rate-of-increase percentage to be
applied to the target amount for these hospitals would be the FY 2019
percentage increase in the 2014-based IPPS operating market basket.
Based on IGI's 2017 fourth quarter forecast, for this proposed rule, we
estimate that the 2014-based IPPS operating market basket update for FY
2019 is 2.8 percent (that is, the estimate of the market basket rate-
of-increase). Therefore, the FY 2019 rate-of-increase percentage that
would be applied to the FY 2018 target amounts in order to calculate
the FY 2019 target amounts for children's hospitals, cancer hospitals,
RNCHIs, and short-term acute care hospitals located in the U.S. Virgin
Islands, Guam, the Northern Mariana Islands, and American Samoa would
be 2.8 percent, in accordance with the applicable regulations at 42 CFR
413.40. We are proposing that if more recent data become available for
the final rule, we would use them to calculate the final IPPS operating
market basket update for FY 2019.
In addition, payment for inpatient operating costs for hospitals
classified under section 1886(d)(1)(B)(vi) of the Act (which we refer
to as ``extended neoplastic disease care hospitals'') for cost
reporting periods beginning on or after January 1, 2015, is to be made
as described in 42 CFR 412.526(c)(3), and payment for capital costs for
these hospitals is to be made as described in

[[Page 20450]]

42 CFR 412.526(c)(4). (For additional information on these payment
regulations, we refer readers to the FY 2018 IPPS/LTCH PPS final rule
(82 FR 38321 through 38322).) Section 412.526(c)(3) provides that the
hospital's Medicare allowable net inpatient operating costs for that
period are paid on a reasonable cost basis, subject to that hospital's
ceiling, as determined under Sec. 412.526(c)(1), for that period.
Under section 412.526(c)(1), for each cost reporting period, the
ceiling was determined by multiplying the updated target amount, as
defined in Sec. 412.526(c)(2), for that period by the number of
Medicare discharges paid during that period. Section 412.526(c)(2)(i)
describes the method for determining the target amount for cost
reporting periods, beginning during FY 2015. Section 412.526(c)(2)(ii)
specifies that, for cost reporting periods beginning during fiscal
years after FY 2015, the target amount will equal the hospital's target
amount for the previous cost reporting period updated by the applicable
annual rate-of-increase percentage specified in Sec. 413.40(c)(3) for
the subject cost reporting period (79 FR 50197).
For FY 2019, in accordance with Sec. 412.22(i) and Sec.
412.526(c)(2)(ii) of the regulations, for cost reporting periods
beginning during FY 2019, the update to the target amount for long-term
care neoplastic disease hospitals (that is, hospitals described under
Sec. 412.22(i)) is the applicable annual rate-of-increase percentage
specified in Sec. 413.40(c)(3) for FY 2019, which would be equal to
the percentage increase in the hospital market basket index. As
described earlier, for this proposed rule, the percentage increase in
the hospital market basket index is estimated to be the percentage
increase in the 2014-based IPPS operating market basket (that is, the
estimate of the market basket rate-of-increase). Accordingly, for this
proposed rule, the proposed update to an extended neoplastic disease
care hospital's target amount for FY 2019 is 2.8 percent, which is
based on IGI's 2017 fourth quarter forecast. Furthermore, we are
proposing that if more recent data become available for the final rule,
we would use that updated data to calculate the IPPS operating market
basket update for FY 2019.

B. Proposed Changes to Regulations Governing Satellite Facilities

In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38292 through
38294), we finalized a change to our hospital-within-hospital (HwH)
regulations at 42 CFR 412.22(e) to only require, as of October 1, 2017,
that IPPS-excluded HwHs that are co-located with IPPS hospitals comply
with the separateness and control requirements in those regulations. We
adopted this change because we believe that the policy concerns that
underlay the previous HwH regulations (that is, inappropriate patient
shifting and hospitals acting as illegal de facto units) are
sufficiently moderated in situations where IPPS-excluded hospitals are
co-located with each other, in large part due to changes that have been
made to the way most types of IPPS-excluded hospitals are paid under
Medicare. In response to our proposal on this issue, we received some
public comments requesting that CMS make analogous changes to the rules
governing satellite facilities, and we responded in the FY 2018 IPPS/
LTCH PPS final rule that we would take that request under consideration
for future rulemaking.
Under 42 CFR 412.22(h), a satellite facility is defined as part of
a hospital that provides inpatient services in a building also used by
another hospital, or in one or more entire buildings located on the
same campus as buildings used by another hospital.
There are significant similarities between the definition of a
satellite facility and the definition of an HwH as those definitions
relate to their co-location with host hospitals. Our policies on
satellite facilities have also been premised on many of the same
concerns that formed the basis for our HwH policies. That is, the
separateness and control policies for satellite facilities at 42 CFR
412.22(h) were aimed at mitigating our concern that the co-location of
a satellite facility and a host hospital raised a potential for
inappropriate patient shifting that we believed could be guided more by
attempts to maximize Medicare reimbursements than by patient welfare
(71 FR 48107). However, just as changes to the way most types of IPPS-
excluded hospitals are paid under Medicare have sufficiently moderated
this concern in situations where IPPS-excluded hospitals are co-located
with each other, we believe that these payment changes also
sufficiently moderate these concerns in situations where IPPS-excluded
satellite facilities are co-located with IPPS-excluded host hospitals.
Furthermore, we believe that there is no compelling policy rational for
treating satellite facilities and HwHs differently on the issue of
separateness and control because there is no meaningful distinction
between these types of facilities that would justify a satellite
facility having to comply with separateness and control requirements in
a situation in which an HwH would not be required to comply (we note
that the separateness and control requirements for satellite facilities
are not the same as those for HwHs; however, they are similar).
Therefore, we are proposing to revise our regulations at Sec.
412.22(h)(2)(iii)(A) to only require IPPS-excluded satellite facilities
that are co-located with IPPS hospitals to comply with the separateness
and control requirements. Specifically, we are proposing to add a new
paragraph (4) to Sec. 412.22(h)(2)(iii)(A) to specify that, effective
on or after October 1, 2018, a satellite facility that is part of an
IPPS-excluded hospital that provides inpatient services in a building
also used by an IPPS-excluded hospital, or in one or more entire
buildings located on the same campus as buildings used by an IPPS-
excluded hospital, is not required to meet the criteria in Sec.
412.22(h)(2)(iii)(A)(1) through (3) in order to be excluded from the
IPPS. Proposed new Sec. 412.22(h)(2)(iii)(A)(4) would also specify
that a satellite facility that is part of an IPPS-excluded hospital
which is located in a building also used by an IPPS hospital, or in one
or more entire buildings located on the same campus as buildings used
by an IPPS hospital, is still required to meet the criteria in Sec.
412.22 (h)(2)(iii)(A)(1) through (3) in order to be excluded from the
IPPS.
As described in further detail in section VI.C. of the preamble of
this proposed rule, we are proposing that, for cost reporting periods
beginning on or after October 1, 2019, an IPPS excluded hospital would
no longer be precluded from having an excluded psychiatric and/or
rehabilitation unit. Consistent with our proposed changes to the
regulations governing satellite facilities discussed earlier, we also
are proposing to add new paragraph (iv) to Sec. 412.25(e)(2) to
specify that an IPPS-excluded satellite facility of an IPPS-excluded
unit of an IPPS-excluded hospital would not have to comply with the
separateness and control requirements so long as the satellite of the
excluded unit is not co-located with an IPPS hospital, and to make
conforming revisions to Sec. 412.25(e)(2)(iii)(A) to subject that
provision to paragraph (iv).
It is important to point out that payment rules, such as the HwH or
satellite facility rules, never waive or supersede the requirement that
all hospitals must comply with the hospital conditions of participation
(CoPs). All hospitals, regardless of payment status, must always
demonstrate separate and independent compliance with the

[[Page 20451]]

hospital CoPs, even when an entire hospital or a part of a hospital is
located in a building also used by another hospital, or in one or more
entire buildings located on the same campus as buildings used by
another hospital. We further note that this proposal would not affect
IPPS-excluded satellite facilities that are co-located with IPPS
hospitals that are currently grandfathered under Sec. 412.22
(h)(2)(iii)(A)(2). Those satellite facilities would continue to
maintain their IPPS-excluded status without complying with the
separateness and control requirements so long as all applicable
requirements at Sec. 412.22(h) are met.

C. Proposed Changes to Regulations Governing Excluded Units of
Hospitals

Under existing regulations at 42 CFR 412.25, an excluded
psychiatric or rehabilitation unit cannot be part of an institution
that is excluded in its entirety from the IPPS. These regulations were
codified in the FY 1994 IPPS final rule (58 FR 46318). However, as we
explained in that rule, while this prohibition was not explicitly
stated in the regulations until that time, the prohibition had been our
longstanding policy. This policy was adopted at that time because it
would have been redundant to allow an IPPS-excluded hospital to have an
IPPS-excluded unit because both the hospital and the unit would have
been paid under the same Tax Equity and Fiscal Responsibility Act of
1982 (TEFRA) payment system methodology, described in section VI.A. of
this proposed rule. In addition, we were concerned about the
possibility of IPPS-excluded hospitals artificially inflating their
target amounts by operating IPPS-excluded units (58 FR 46318).
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38292 through
38294), we finalized a change to the HwH regulations to only require,
as of October 1, 2017, that IPPS-excluded HwHs that are co-located with
IPPS hospitals comply with the separateness and control requirements in
those regulations. In this proposed rule, we are proposing to make
similar changes to the regulations governing satellite facilities,
which would allow these facilities, including satellite facilities of
hospital units, to maintain their IPPS-excluded status without
complying with the separateness and control requirements so long as
they are not co-located with an IPPS hospital. In conjunction with the
HwH regulation changes and the proposed satellite facilities regulation
changes, and as part of our continued efforts to reduce regulatory
burden and achieve program simplification, we believe it is appropriate
to propose changes to our regulations for the establishment of IPPS-
excluded units in IPPS-excluded hospitals. Given the introduction of
prospective payment systems for both inpatient rehabilitation
facilities and units (collectively IRFs) and psychiatric hospitals and
units (collectively IPFs), we no longer believe it is redundant for an
IPPS-excluded hospital to have an IPPS-excluded unit, nor is it
possible for IPPS-excluded hospitals to use units to artificially
inflate their target amounts, because Medicare payment for discharges
from the units would not be based on reasonable cost. For example,
under our proposal, an LTCH operating a psychiatric unit would receive
payment under the IPF PPS for discharges from the psychiatric unit and
payment under the LTCH PPS for discharges not from the psychiatric
unit. Payment for discharges from the psychiatric unit would be made
under the IPF PPS rather than the LTCH PPS because Medicare pays for
services provided by an excluded hospital unit under a separate payment
system from the hospital in which the unit is a part. For the purposes
of payment, services furnished by a unit are considered to be inpatient
hospital services provided by the unit and not inpatient hospital
services provided by the hospital operating the unit.
In this proposed rule, we are proposing to revise Sec.
412.25(a)(1)(ii) to specify that the requirement that an excluded
psychiatric or rehabilitation unit cannot be part of an IPPS-excluded
hospital is only effective through cost reporting periods beginning on
or before September 30, 2019. Under this proposal, effective with cost
reporting periods beginning on or after October 1, 2019, an IPPS-
excluded hospital would be permitted to have an excluded psychiatric
and/or rehabilitation unit. In addition, we are proposing to revise
Sec. 412.25(d) to specify that an IPPS-excluded hospital may not have
an IPPS-excluded unit of the same type (psychiatric or rehabilitation)
as the hospital (for example, an IRF may not have an IRF unit). We
believe that this proposed change would be consistent with the current
preclusion in Sec. 412.25(d) that prevents one hospital from having
more than one of the same type of IPPS-excluded unit. However, we note
that if these proposed changes to the payment rules are finalized, an
IPPS-excluded hospital operating an IPPS-excluded unit must continue to
be in compliance with other Medicare regulations and CoPs applicable to
the hospital or unit. An IPPS-excluded unit within a hospital is part
of the hospital. Noncompliance with any of the hospital CoPs at 42 CFR
482.1 through 482.58 at any part of a certified hospital is
noncompliance for the entire Medicare-certified hospital. Therefore,
noncompliance with the hospital CoPs in an IPPS excluded unit is CoP
noncompliance for the entire certified hospital. For example, the CoPs
that govern IPFs would apply to an IPF that operates an excluded
rehabilitation unit, and those CoPs require that certain psychiatric
treatment protocols apply to every IPF patient (including those in the
rehabilitation unit).
We are proposing cost reporting periods beginning on or after
October 1, 2019 would be the effective date of these changes to allow
sufficient time for both CMS and IPPS-excluded hospitals to make the
necessary administrative and operational changes to fully implement the
proposed changes. We believe this proposed effective date would, to the
best of our ability, ensure that these units can begin to operate
without unnecessary administrative issues and delays.

D. Critical Access Hospitals (CAHs)

1. Background
Section 1820 of the Act provides for the establishment of Medicare
Rural Hospital Flexibility Programs (MRHFPs), under which individual
States may designate certain facilities as critical access hospitals
(CAHs). Facilities that are so designated and meet the CAH conditions
of participation under 42 CFR part 485, subpart F, will be certified as
CAHs by CMS. Regulations governing payments to CAHs for services to
Medicare beneficiaries are located in 42 CFR part 413.
2. Frontier Community Health Integration Project (FCHIP) Demonstration
Section 123 of the Medicare Improvements for Patients and Providers
Act of 2008 (Pub. L. 110-275), as amended by section 3126 of the
Affordable Care Act, authorizes a demonstration project to allow
eligible entities to develop and test new models for the delivery of
health care services in eligible counties in order to improve access to
and better integrate the delivery of acute care, extended care and
other health care services to Medicare beneficiaries. The demonstration
is titled ``Demonstration Project on Community Health Integration
Models in Certain Rural Counties,'' and is commonly known as the
Frontier Community Health

[[Page 20452]]

Integration Project (FCHIP) demonstration.
The authorizing statute states the eligibility criteria for
entities to be able to participate in the demonstration. An eligible
entity, as defined in section 123(d)(1)(B) of Public Law 110-275, as
amended, is an MRHFP grantee under section 1820(g) of the Act (that is,
a CAH); and is located in a State in which at least 65 percent of the
counties in the State are counties that have 6 or less residents per
square mile.
The authorizing statute stipulates several other requirements for
the demonstration. Section 123(d)(2)(B) of Public Law 110-275, as
amended, limits participation in the demonstration to eligible entities
in not more than 4 States. Section 123(f)(1) of Public Law 110-275
requires the demonstration project to be conducted for a 3-year period.
In addition, section 123(g)(1)(B) of Public Law 110-275 requires that
the demonstration be budget neutral. Specifically, this provision
states that in conducting the demonstration project, the Secretary
shall ensure that the aggregate payments made by the Secretary do not
exceed the amount which the Secretary estimates would have been paid if
the demonstration project under the section were not implemented.
Furthermore, section 123(i) of Public Law 110-275 states that the
Secretary may waive such requirements of titles XVIII and XIX of the
Act as may be necessary and appropriate for the purpose of carrying out
the demonstration project, thus allowing the waiver of Medicare payment
rules encompassed in the demonstration.
In January 2014, CMS released a request for applications (RFA) for
the FCHIP demonstration. Using 2013 data from the U.S. Census Bureau,
CMS identified Alaska, Montana, Nevada, North Dakota, and Wyoming as
meeting the statutory eligibility requirement for participation in the
demonstration. The RFA solicited CAHs in these five States to
participate in the demonstration, stating that participation would be
limited to CAHs in four of the States. To apply, CAHs were required to
meet the eligibility requirements in the authorizing legislation, and,
in addition, to describe a proposal to enhance health-related services
that would complement those currently provided by the CAH and better
serve the community's needs. In addition, in the RFA, CMS interpreted
the eligible entity definition in the statute as meaning a CAH that
receives funding through the MHRFP. The RFA identified four
interventions, under which specific waivers of Medicare payment rules
would allow for enhanced payment for telehealth, skilled nursing
facility/nursing facility beds, ambulance services, and home health
services, respectively. These waivers were formulated with the goal of
increasing access to care with no net increase in costs.
Ten CAHs were selected for participation in the demonstration,
which started on August 1, 2016. These CAHs are located in Montana,
Nevada, and North Dakota, and they are participating in three of the
four interventions identified in the FY 2017 IPPS/LTCH PPS final rule
(81 FR 57064 through 57065) and FY 2018 IPPS/LTCH PPS final rule (82 FR
38294 through 38296). Eight CAHs are participating in the telehealth
intervention, three CAHs are participating in the skilled nursing
facility/nursing facility bed intervention, and two CAHs are
participating in the ambulance services intervention. Each CAH is
allowed to participate in more than one of the interventions. None of
the selected CAHs are participants in the home health intervention,
which was the fourth intervention included in the RFA.
In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57064 through 57065)
and FY 2018 IPPS/LTCH PPS final rule (82 FR 38294 through 38296), we
finalized a policy to address the budget neutrality requirement for the
demonstration. As explained in the FY 2018 IPPS/LTCH PPS final rule, we
based our selection of CAHs for participation with the goal of
maintaining the budget neutrality of the demonstration on its own terms
(that is, the demonstration will produce savings from reduced transfers
and admissions to other health care providers, thus offsetting any
increase in payments resulting from the demonstration). However,
because of the small size of this demonstration and uncertainty
associated with projected Medicare utilization and costs, we adopted a
contingency plan to ensure that the budget neutrality requirement in
section 123 of Public Law 110-275 is met. If analysis of claims data
for Medicare beneficiaries receiving services at each of the
participating CAHs, as well as from other data sources, including cost
reports for these CAHs, shows that increases in Medicare payments under
the demonstration during the 3-year period are not sufficiently offset
by reductions elsewhere, we will recoup the additional expenditures
attributable to the demonstration through a reduction in payments to
all CAHs nationwide. Because of the small scale of the demonstration,
we indicated that we did not believe it would be feasible to implement
budget neutrality by reducing payments to only the participating CAHs.
Therefore, in the event that this demonstration is found to result in
aggregate payments in excess of the amount that would have been paid if
this demonstration were not implemented, we will comply with the budget
neutrality requirement by reducing payments to all CAHs, not just those
participating in the demonstration. We stated that we believe it is
appropriate to make any payment reductions across all CAHs because the
FCHIP demonstration is specifically designed to test innovations that
affect delivery of services by the CAH provider category. We explained
our belief that the language of the statutory budget neutrality
requirement at section 123(g)(1)(B) of Public Law 110-275 permits the
agency to implement the budget neutrality provision in this manner. The
statutory language merely refers to ensuring that aggregate payments
made by the Secretary do not exceed the amount which the Secretary
estimates would have been paid if the demonstration project was not
implemented, and does not identify the range across which aggregate
payments must be held equal.
Based on actuarial analysis using cost report settlements for FYs
2013 and 2014, the demonstration is projected to satisfy the budget
neutrality requirement and likely yield a total net savings. As we
estimated for the FY 2018 IPPS/LTCH PPS final rule, for this FY 2019
IPPS/LTCH PPS proposed rule, we estimate that the total impact of the
payment recoupment would be no greater than 0.03 percent of CAHs' total
Medicare payments within one fiscal year (that is, Medicare Part A and
Part B). The final budget neutrality estimates for the FCHIP
demonstration will be based on the demonstration period, which is
August 1, 2016 through July 31, 2019.
The demonstration is projected to impact payments to participating
CAHs under both Medicare Part A and Part B. As stated in the FY 2018
IPPS/LTCH PPS final rule, in the event the demonstration is found not
to have been budget neutral, any excess costs will be recouped over a
period of 3 cost reporting years, beginning in CY 2020. The 3-year
period for recoupment will allow for a reasonable timeframe for the
payment reduction and to minimize any impact on CAHs' operations.
Therefore, because any reduction to CAH payments in order to recoup
excess costs under the demonstration will not begin until CY 2020, this
policy will have no impact for any national payment system for FY 2019.

[[Page 20453]]

VII. Proposed Changes to the Long-Term Care Hospital Prospective
Payment System (LTCH PPS) for FY 2019

A. Background of the LTCH PPS

1. Legislative and Regulatory Authority
Section 123 of the Medicare, Medicaid, and SCHIP (State Children's
Health Insurance Program) Balanced Budget Refinement Act of 1999 (BBRA)
(Pub. L. 106-113), as amended by section 307(b) of the Medicare,
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000
(BIPA) (Pub. L. 106-554), provides for payment for both the operating
and capital-related costs of hospital inpatient stays in long-term care
hospitals (LTCHs) under Medicare Part A based on prospectively set
rates. The Medicare prospective payment system (PPS) for LTCHs applies
to hospitals that are described in section 1886(d)(1)(B)(iv) of the
Act, effective for cost reporting periods beginning on or after October
1, 2002.
Section 1886(d)(1)(B)(iv)(I) of the Act originally defined an LTCH
as a hospital which has an average inpatient length of stay (as
determined by the Secretary) of greater than 25 days. Section
1886(d)(1)(B)(iv)(II) of the Act (``subclause II'' LTCHs) also provided
an alternative definition of LTCHs. However, section 15008 of the 21st
Century Cures Act (Pub. L. 114-255) amended section 1886 of the Act to
exclude former ``subclause II'' LTCHs from being paid under the LTCH
PPS and created a new category of IPPS-excluded hospitals, which we
refer to as ``extended neoplastic disease care hospitals''), to be paid
as hospitals that were formally classified as ``subclause (II)'' LTCHs
(82 FR 38298).
Section 123 of the BBRA requires the PPS for LTCHs to be a ``per
discharge'' system with a diagnosis-related group (DRG) based patient
classification system that reflects the differences in patient
resources and costs in LTCHs.
Section 307(b)(1) of the BIPA, among other things, mandates that
the Secretary shall examine, and may provide for, adjustments to
payments under the LTCH PPS, including adjustments to DRG weights, area
wage adjustments, geographic reclassification, outliers, updates, and a
disproportionate share adjustment.
In the August 30, 2002 Federal Register, we issued a final rule
that implemented the LTCH PPS authorized under the BBRA and BIPA (67 FR
55954). For the initial implementation of the LTCH PPS (FYs 2003
through FY 2007), the system used information from LTCH patient records
to classify patients into distinct long-term care diagnosis-related
groups (LTC-DRGs) based on clinical characteristics and expected
resource needs. Beginning in FY 2008, we adopted the Medicare severity
long-term care diagnosis-related groups (MS-LTC-DRGs) as the patient
classification system used under the LTCH PPS. Payments are calculated
for each MS-LTC-DRG and provisions are made for appropriate payment
adjustments. Payment rates under the LTCH PPS are updated annually and
published in the Federal Register.
The LTCH PPS replaced the reasonable cost-based payment system
under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA)
(Pub. L. 97-248) for payments for inpatient services provided by an
LTCH with a cost reporting period beginning on or after October 1,
2002. (The regulations implementing the TEFRA reasonable cost-based
payment provisions are located at 42 CFR part 413.) With the
implementation of the PPS for acute care hospitals authorized by the
Social Security Amendments of 1983 (Pub. L. 98-21), which added section
1886(d) to the Act, certain hospitals, including LTCHs, were excluded
from the PPS for acute care hospitals and were paid their reasonable
costs for inpatient services subject to a per discharge limitation or
target amount under the TEFRA system. For each cost reporting period, a
hospital-specific ceiling on payments was determined by multiplying the
hospital's updated target amount by the number of total current year
Medicare discharges. (Generally, in this section of the preamble of
this proposed rule, when we refer to discharges, we describe Medicare
discharges.) The August 30, 2002 final rule further details the payment
policy under the TEFRA system (67 FR 55954).
In the August 30, 2002 final rule, we provided for a 5-year
transition period from payments under the TEFRA system to payments
under the LTCH PPS. During this 5-year transition period, an LTCH's
total payment under the PPS was based on an increasing percentage of
the Federal rate with a corresponding decrease in the percentage of the
LTCH PPS payment that is based on reasonable cost concepts, unless an
LTCH made a one-time election to be paid based on 100 percent of the
Federal rate. Beginning with LTCHs' cost reporting periods beginning on
or after October 1, 2006, total LTCH PPS payments are based on 100
percent of the Federal rate.
In addition, in the August 30, 2002 final rule, we presented an in-
depth discussion of the LTCH PPS, including the patient classification
system, relative weights, payment rates, additional payments, and the
budget neutrality requirements mandated by section 123 of the BBRA. The
same final rule that established regulations for the LTCH PPS under 42
CFR part 412, subpart O, also contained LTCH provisions related to
covered inpatient services, limitation on charges to beneficiaries,
medical review requirements, furnishing of inpatient hospital services
directly or under arrangement, and reporting and recordkeeping
requirements. We refer readers to the August 30, 2002 final rule for a
comprehensive discussion of the research and data that supported the
establishment of the LTCH PPS (67 FR 55954).
In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49601 through
49623), we implemented the provisions of the Pathway for Sustainable
Growth Rate (SGR) Reform Act of 2013 (Pub. L. 113-67), which mandated
the application of the ``site neutral'' payment rate under the LTCH PPS
for discharges that do not meet the statutory criteria for exclusion
beginning in FY 2016. For cost reporting periods beginning on or after
October 1, 2015, discharges that do not meet certain statutory criteria
for exclusion are paid based on the site neutral payment rate.
Discharges that do meet the statutory criteria continue to receive
payment based on the LTCH PPS standard Federal payment rate. For more
information on the statutory requirements of the Pathway for SGR Reform
Act of 2013, we refer readers to the FY 2016 IPPS/LTCH PPS final rule
(80 FR 49601 through 49623) and the FY 2017 IPPS/LTCH PPS final rule
(81 FR 57068 through 57075).
In the FY 2018 IPPS/LTCH PPS final rule, we implemented several
provisions of the 21st Century Cures Act (``the Cures Act'') (Pub. L.
114-255) that affected the LTCH PPS:
Section 15004(a), which changed the moratorium on
increasing the number of beds in existing LTCHs and LTCH satellite
facilities. However, we note that this moratorium expired effective
October 1, 2017.
Section 15004(b), which specifies that, beginning in FY
2018, the estimated aggregate amount of HCO payments in a given year is
equal to 99.6875 percent of the 8 percent estimated aggregate payments
for standard Federal payment rate cases (that is, 7.975 percent) while
requiring that we adjust the standard Federal payment rate each year to
ensure budget neutrality for HCO payments as if estimated aggregate HCO
payments

[[Page 20454]]

made for standard Federal payment rate discharges remained at 8 percent
as done through our previous regulatory requirement. (We note these
provisions do not apply with respect to the computation of the
applicable site neutral payment rate under section 1886(m)(6) of the
Act.)
Section 15006, which amended sections 114(c)(1)(A) and
(c)(2) of the MMSEA, which provided a statutory extension on the
moratoria on the full implementation of the 25-percent threshold policy
on LTCH PPS discharges for LTCHs governed under Sec. 412.534, Sec.
412.536, and Sec. 412.538 based on the LTCH's cost reporting period
beginning dates. In addition to the statutory moratorium, in the FY
2018 IPPS/LTCH PPS final rule, we also implemented a 1-year regulatory
delay on the full implementation of the 25-percent threshold policy
under Sec. 412.538 (82 FR 38318 through 38320).
Section 15007, which extends the exclusion of Medicare
Advantage plans' and site neutral payment rate discharges from the
calculation of the average length of stay for all LTCHs, for discharges
occurring in any cost reporting period beginning on or after October 1,
2015.
Section 15008, which changed the classification of certain
hospitals. Specifically, section 15008 of Pub. L. 114-255 provided for
the change in Medicare classification for ``subclause (II)'' LTCHs by
redesignating such hospitals from section 1886(d)(1)(B)(iv)(II) of the
Act to section 1886(d)(1)(B)(vi) of the Act, which is described
earlier.
Section 15009, which provides for a temporary exception to
the site neutral payment rate for certain spinal cord specialty
hospitals for discharges occurring in cost reporting periods beginning
during FY 2018 and 2019 for LTCHs that meet specified statutory
criteria to be excepted from the site neutral payment rate.
Section 15010, which created a new temporary exception to
the site neutral payment rate for certain severe wound discharges from
certain LTCHs during such LTCHs' cost reporting periods beginning
during FY 2018.
In this FY 2019 IPPS/LTCH PPS proposed rule, we are proposing to
make conforming changes to our regulations to implement the provisions
of section 51005 of the Bipartisan Budget Act of 2018, Pub. L. 115-123,
which extends the transitional blended payment rate for site neutral
payment rate cases for an additional 2 years.
2. Criteria for Classification as an LTCH
a. Classification as an LTCH
Under the regulations at Sec. 412.23(e)(1), to qualify to be paid
under the LTCH PPS, a hospital must have a provider agreement with
Medicare. Furthermore, Sec. 412.23(e)(2)(i), which implements section
1886(d)(1)(B)(iv) of the Act, requires that a hospital have an average
Medicare inpatient length of stay of greater than 25 days to be paid
under the LTCH PPS. In accordance with section 1206(a)(3) of the
Pathway for SGR Reform Act of 2013 (Pub. L. 113-67), as amended by
section 15007 of Public Law 114-255, we amended our regulations to
specify that Medicare Advantage plans' and site neutral payment rate
discharges are excluded from the calculation of the average length of
stay for all LTCHs, for discharges occurring in cost reporting period
beginning on or after October 1, 2015.
b. Hospitals Excluded From the LTCH PPS
The following hospitals are paid under special payment provisions,
as described in Sec. 412.22(c) and, therefore, are not subject to the
LTCH PPS rules:
Veterans Administration hospitals.
Hospitals that are reimbursed under State cost control
systems approved under 42 CFR part 403.
Hospitals that are reimbursed in accordance with
demonstration projects authorized under section 402(a) of the Social
Security Amendments of 1967 (Pub. L. 90-248) (42 U.S.C. 1395b-1),
section 222(a) of the Social Security Amendments of 1972 (Pub. L. 92-
603) (42 U.S.C. 1395b&1 (note)) (Statewide all-payer systems, subject
to the rate-of-increase test at section 1814(b) of the Act), or section
3201 of the Patient Protection and Affordable Care Act (Pub. L. 111-148
(42 U.S.C. 1315a).
Nonparticipating hospitals furnishing emergency services
to Medicare beneficiaries.
3. Limitation on Charges to Beneficiaries
In the August 30, 2002 final rule, we presented an in-depth
discussion of beneficiary liability under the LTCH PPS (67 FR 55974
through 55975). This discussion was further clarified in the RY 2005
LTCH PPS final rule (69 FR 25676). In keeping with those discussions,
if the Medicare payment to the LTCH is the full LTC-DRG payment amount,
consistent with other established hospital prospective payment systems,
Sec. 412.507 currently provides that an LTCH may not bill a Medicare
beneficiary for more than the deductible and coinsurance amounts as
specified under Sec. Sec. 409.82, 409.83, and 409.87 and for items and
services specified under Sec. 489.30(a). However, under the LTCH PPS,
Medicare will only pay for days for which the beneficiary has coverage
until the short-stay outlier (SSO) threshold is exceeded. If the
Medicare payment was for a SSO case (Sec. 412.529), and that payment
was less than the full LTC-DRG payment amount because the beneficiary
had insufficient remaining Medicare days, the LTCH is currently also
permitted to charge the beneficiary for services delivered on those
uncovered days (Sec. 412.507). In the FY 2016 IPPS/LTCH PPS final rule
(80 FR 49623), we amended our regulations to expressly limit the
charges that may be imposed on beneficiaries whose discharges are paid
at the site neutral payment rate under the LTCH PPS. In the FY 2017
IPPS/LTCH PPS final rule (81 FR 57102), we amended the regulations
under Sec. 412.507 to clarify our existing policy that blended
payments made to an LTCH during its transitional period (that is,
payment for discharges occurring in cost reporting periods beginning in
FY 2016 or 2017) are considered to be site neutral payment rate
payments.

B. Proposed Medicare Severity Long-Term Care Diagnosis-Related Group
(MS-LTC-DRG) Classifications and Relative Weights for FY 2019

1. Background
Section 123 of the BBRA required that the Secretary implement a PPS
for LTCHs to replace the cost-based payment system under TEFRA. Section
307(b)(1) of the BIPA modified the requirements of section 123 of the
BBRA by requiring that the Secretary examine the feasibility and the
impact of basing payment under the LTCH PPS on the use of existing (or
refined) hospital DRGs that have been modified to account for different
resource use of LTCH patients.
When the LTCH PPS was implemented for cost reporting periods
beginning on or after October 1, 2002, we adopted the same DRG patient
classification system utilized at that time under the IPPS. As a
component of the LTCH PPS, we refer to this patient classification
system as the ``long-term care diagnosis-related groups (LTC-DRGs).''
Although the patient classification system used under both the LTCH PPS
and the IPPS are the same, the relative weights are different. The
established relative weight methodology and data used under the LTCH
PPS result in relative weights under the LTCH PPS that reflect the

[[Page 20455]]

differences in patient resource use of LTCH patients, consistent with
section 123(a)(1) of the BBRA (Pub. L. 106-113).
As part of our efforts to better recognize severity of illness
among patients, in the FY 2008 IPPS final rule with comment period (72
FR 47130), the MS-DRGs and the Medicare severity long-term care
diagnosis-related groups (MS-LTC-DRGs) were adopted under the IPPS and
the LTCH PPS, respectively, effective beginning October 1, 2007 (FY
2008). For a full description of the development, implementation, and
rationale for the use of the MS-DRGs and MS-LTC-DRGs, we refer readers
to the FY 2008 IPPS final rule with comment period (72 FR 47141 through
47175 and 47277 through 47299). (We note that, in that same final rule,
we revised the regulations at Sec. 412.503 to specify that for LTCH
discharges occurring on or after October 1, 2007, when applying the
provisions of 42 CFR part 412, subpart O applicable to LTCHs for policy
descriptions and payment calculations, all references to LTC-DRGs would
be considered a reference to MS-LTC-DRGs. For the remainder of this
section, we present the discussion in terms of the current MS-LTC-DRG
patient classification system unless specifically referring to the
previous LTC-DRG patient classification system that was in effect
before October 1, 2007.)
The MS-DRGs adopted in FY 2008 represent an increase in the number
of DRGs by 207 (that is, from 538 to 745) (72 FR 47171). The MS-DRG
classifications are updated annually. There are currently 757 MS-DRG
groupings. For FY 2019, there would be 761 MS-DRG groupings based on
the proposed changes discussed in section II.F. of the preamble of this
FY 2019 IPPS/LTCH PPS proposed rule. Consistent with section 123 of the
BBRA, as amended by section 307(b)(1) of the BIPA, and Sec. 412.515 of
the regulations, we use information derived from LTCH PPS patient
records to classify LTCH discharges into distinct MS-LTC-DRGs based on
clinical characteristics and estimated resource needs. We then assign
an appropriate weight to the MS-LTC-DRGs to account for the difference
in resource use by patients exhibiting the case complexity and multiple
medical problems characteristic of LTCHs.
In this section of the proposed rule, we provide a general summary
of our existing methodology for determining the proposed FY 2019 MS-
LTC-DRG relative weights under the LTCH PPS.
In this proposed rule, in general, for FY 2019, we are proposing to
continue to use our existing methodology to determine the proposed MS-
LTC-DRG relative weights (as discussed in greater detail in section
VII.B.3. of the preamble of this proposed rule). As we established when
we implemented the dual rate LTCH PPS payment structure codified under
Sec. 412.522, which began in FY 2016, we are proposing that the annual
recalibration of the MS-LTC-DRG relative weights are determined: (1)
Using only data from available LTCH PPS claims that would have
qualified for payment under the new LTCH PPS standard Federal payment
rate if that rate had been in effect at the time of discharge when
claims data from time periods before the dual rate LTCH PPS payment
structure applies are used to calculate the relative weights; and (2)
using only data from available LTCH PPS claims that qualify for payment
under the new LTCH PPS standard Federal payment rate when claims data
from time periods after the dual rate LTCH PPS payment structure
applies are used to calculate the relative weights (80 FR 49624). That
is, under our current methodology, our MS-LTC-DRG relative weight
calculations would not use data from cases paid at the site neutral
payment rate under Sec. 412.522(c)(1) or data from cases that would
have been paid at the site neutral payment rate if the dual rate LTCH
PPS payment structure had been in effect at the time of that discharge.
For the remainder of this discussion, we use the phrase ``applicable
LTCH cases'' or ``applicable LTCH data'' when referring to the
resulting claims data set used to calculate the relative weights (as
described later in greater detail in section VII.B.3.c. of the preamble
of this proposed rule). In addition, in this FY 2019 IPPS/LTCH PPS
proposed rule, for FY 2019, we are proposing to continue to exclude the
data from all-inclusive rate providers and LTCHs paid in accordance
with demonstration projects, as well as any Medicare Advantage claims
from the MS-LTC-DRG relative weight calculations for the reasons
discussed in section VII.B.3.c. of the preamble of this proposed rule.
Furthermore, for FY 2019, in using data from applicable LTCH cases
to establish MS-LTC-DRG relative weights, we are proposing to continue
to establish low-volume MS-LTC-DRGs (that is, MS-LTC-DRGs with less
than 25 cases) using our quintile methodology in determining the MS-
LTC-DRG relative weights because LTCHs do not typically treat the full
range of diagnoses as do acute care hospitals. Therefore, for purposes
of determining the relative weights for the large number of low-volume
MS-LTC-DRGs, we group all of the low-volume MS-LTC-DRGs into five
quintiles based on average charges per discharge. Then, under our
existing methodology, we account for adjustments made to LTCH PPS
standard Federal payments for short-stay outlier (SSO) cases (that is,
cases where the covered length of stay at the LTCH is less than or
equal to five-sixths of the geometric average length of stay for the
MS-LTC-DRG), and we make adjustments to account for nonmonotonically
increasing weights, when necessary. The methodology is premised on more
severe cases under the MS-LTC-DRG system requiring greater expenditure
of medical care resources and higher average charges such that, in the
severity levels within a base MS-LTC-DRG, the relative weights should
increase monotonically with severity from the lowest to highest
severity level. (We discuss each of these components of our MS-LTC-DRG
relative weight methodology in greater detail in section VII.B.3.g. of
the preamble of this proposed rule.)
2. Patient Classifications Into MS-LTC-DRGs
a. Background
The MS-DRGs (used under the IPPS) and the MS-LTC-DRGs (used under
the LTCH PPS) are based on the CMS DRG structure. As noted previously
in this section, we refer to the DRGs under the LTCH PPS as MS-LTC-DRGs
although they are structurally identical to the MS-DRGs used under the
IPPS.
The MS-DRGs are organized into 25 major diagnostic categories
(MDCs), most of which are based on a particular organ system of the
body; the remainder involve multiple organ systems (such as MDC 22,
Burns). Within most MDCs, cases are then divided into surgical DRGs and
medical DRGs. Surgical DRGs are assigned based on a surgical hierarchy
that orders operating room (O.R.) procedures or groups of O.R.
procedures by resource intensity. The GROUPER software program does not
recognize all ICD-10-PCS procedure codes as procedures affecting DRG
assignment. That is, procedures that are not surgical (for example,
EKGs), or minor surgical procedures (for example, a biopsy of skin and
subcutaneous tissue (procedure code 0JBH3ZX)) do not affect the MS-LTC-
DRG assignment based on their presence on the claim.
Generally, under the LTCH PPS, a Medicare payment is made at a
predetermined specific rate for each discharge that varies based on the
MS-LTC-DRG to which a beneficiary's discharge is assigned. Cases are

[[Page 20456]]

classified into MS-LTC-DRGs for payment based on the following six data
elements:
Principal diagnosis;
Additional or secondary diagnoses;
Surgical procedures;
Age;
Sex; and
Discharge status of the patient.
Currently, for claims submitted using version ASC X12 5010 format,
up to 25 diagnosis codes and 25 procedure codes are considered for an
MS-DRG assignment. This includes one principal diagnosis and up to 24
secondary diagnoses for severity of illness determinations. (For
additional information on the processing of up to 25 diagnosis codes
and 25 procedure codes on hospital inpatient claims, we refer readers
to section II.G.11.c. of the preamble of the FY 2011 IPPS/LTCH PPS
final rule (75 FR 50127).)
Under the HIPAA transactions and code sets regulations at 45 CFR
parts 160 and 162, covered entities must comply with the adopted
transaction standards and operating rules specified in subparts I
through S of part 162. Among other requirements, by January 1, 2012,
covered entities were required to use the ASC X12 Standards for
Electronic Data Interchange Technical Report Type 3--Health Care Claim:
Institutional (837), May 2006, ASC X12N/005010X223, and Type 1 Errata
to Health Care Claim: Institutional (837) ASC X12 Standards for
Electronic Data Interchange Technical Report Type 3, October 2007, ASC
X12N/005010X233A1 for the health care claims or equivalent encounter
information transaction (45 CFR 162.1102(c)).
HIPAA requires covered entities to use the applicable medical data
code set requirements when conducting HIPAA transactions (45 CFR
162.1000). Currently, upon the discharge of the patient, the LTCH must
assign appropriate diagnosis and procedure codes from the most current
version of the International Classification of Diseases, 10th Revision,
Clinical Modification (ICD-10-CM) for diagnosis coding and the
International Classification of Diseases, 10th Revision, Procedure
Coding System (ICD-10-PCS) for inpatient hospital procedure coding,
both of which were required to be implemented October 1, 2015 (45 CFR
162.1002(c)(2) and (3)). For additional information on the
implementation of the ICD-10 coding system, we refer readers to section
II.F.1. of the FY 2017 IPPS/LTCH PPS final rule (81 FR 56787 through
56790) and section II.F.1. of the preamble of this proposed rule.
Additional coding instructions and examples are published in the AHA's
Coding Clinic for ICD-10-CM/PCS.
To create the MS-DRGs (and by extension, the MS-LTC-DRGs), base
DRGs were subdivided according to the presence of specific secondary
diagnoses designated as complications or comorbidities (CCs) into one,
two, or three levels of severity, depending on the impact of the CCs on
resources used for those cases. Specifically, there are sets of MS-DRGs
that are split into 2 or 3 subgroups based on the presence or absence
of a CC or a major complication or comorbidity (MCC). We refer readers
to section II.D. of the FY 2008 IPPS final rule with comment period for
a detailed discussion about the creation of MS-DRGs based on severity
of illness levels (72 FR 47141 through 47175).
MACs enter the clinical and demographic information submitted by
LTCHs into their claims processing systems and subject this information
to a series of automated screening processes called the Medicare Code
Editor (MCE). These screens are designed to identify cases that require
further review before assignment into a MS-LTC-DRG can be made. During
this process, certain cases are selected for further explanation (74 FR
43949).
After screening through the MCE, each claim is classified into the
appropriate MS-LTC-DRG by the Medicare LTCH GROUPER software on the
basis of diagnosis and procedure codes and other demographic
information (age, sex, and discharge status). The GROUPER software used
under the LTCH PPS is the same GROUPER software program used under the
IPPS. Following the MS-LTC-DRG assignment, the MAC determines the
prospective payment amount by using the Medicare PRICER program, which
accounts for hospital-specific adjustments. Under the LTCH PPS, we
provide an opportunity for LTCHs to review the MS-LTC-DRG assignments
made by the MAC and to submit additional information within a specified
timeframe as provided in Sec. 412.513(c).
The GROUPER software is used both to classify past cases to measure
relative hospital resource consumption to establish the MS-LTC-DRG
relative weights and to classify current cases for purposes of
determining payment. The records for all Medicare hospital inpatient
discharges are maintained in the MedPAR file. The data in this file are
used to evaluate possible MS-DRG and MS-LTC-DRG classification changes
and to recalibrate the MS-DRG and MS-LTC-DRG relative weights during
our annual update under both the IPPS (Sec. 412.60(e)) and the LTCH
PPS (Sec. 412.517), respectively.
b. Proposed Changes to the MS-LTC-DRGs for FY 2019
As specified by our regulations at Sec. 412.517(a), which require
that the MS-LTC-DRG classifications and relative weights be updated
annually, and consistent with our historical practice of using the same
patient classification system under the LTCH PPS as is used under the
IPPS, in this FY 2019 IPPS/LTCH PPS proposed rule, we are proposing to
update the MS-LTC-DRG classifications effective October 1, 2018,
through September 30, 2019 (FY 2019), consistent with the proposed
changes to specific MS-DRG classifications presented in section II.F.
of the preamble of this proposed rule. Accordingly, the proposed MS-
LTC-DRGs for FY 2019 presented in this proposed rule are the same as
the proposed MS-DRGs that are being used under the IPPS for FY 2019. In
addition, because the MS-LTC-DRGs for FY 2019 are the same as the
proposed MS-DRGs for FY 2019, the other proposed changes that affect
MS-DRG (and by extension MS-LTC-DRG) assignments under proposed GROUPER
Version 36 as discussed in section II.F. of the preamble of this
proposed rule, including the proposed changes to the MCE software and
the ICD-10-CM/PCS coding system, also would be applicable under the
LTCH PPS for FY 2019.
3. Development of the Proposed FY 2019 MS-LTC-DRG Relative Weights
a. General Overview of the Development of the MS-LTC-DRG Relative
Weights
One of the primary goals for the implementation of the LTCH PPS is
to pay each LTCH an appropriate amount for the efficient delivery of
medical care to Medicare patients. The system must be able to account
adequately for each LTCH's case-mix in order to ensure both fair
distribution of Medicare payments and access to adequate care for those
Medicare patients whose care is more costly (67 FR 55984). To
accomplish these goals, we have annually adjusted the LTCH PPS standard
Federal prospective payment rate by the applicable relative weight in
determining payment to LTCHs for each case. In order to make these
annual adjustments under the dual rate LTCH PPS payment structure,
beginning with FY 2016, we recalibrate the MS-LTC-DRG relative
weighting factors annually using data from applicable LTCH cases (80 FR
49614 through 49617). Under this policy, the resulting MS-LTC-DRG
relative weights would continue to be

[[Page 20457]]

used to adjust the LTCH PPS standard Federal payment rate when
calculating the payment for LTCH PPS standard Federal payment rate
cases.
The established methodology to develop the MS-LTC-DRG relative
weights is generally consistent with the methodology established when
the LTCH PPS was implemented in the August 30, 2002 LTCH PPS final rule
(67 FR 55989 through 55991). However, there have been some
modifications of our historical procedures for assigning relative
weights in cases of zero volume and/or nonmonotonicity resulting from
the adoption of the MS-LTC-DRGs, along with the change made in
conjunction with the implementation of the dual rate LTCH PPS payment
structure beginning in FY 2016 to use LTCH claims data from only LTCH
PPS standard Federal payment rate cases (or LTCH PPS cases that would
have qualified for payment under the LTCH PPS standard Federal payment
rate if the dual rate LTCH PPS payment structure had been in effect at
the time of the discharge). (For details on the modifications to our
historical procedures for assigning relative weights in cases of zero
volume and/or nonmonotonicity, we refer readers to the FY 2008 IPPS
final rule with comment period (72 FR 47289 through 47295) and the FY
2009 IPPS final rule (73 FR 48542 through 48550).) For details on the
change in our historical methodology to use LTCH claims data only from
LTCH PPS standard Federal payment rate cases (or cases that would have
qualified for such payment had the LTCH PPS dual payment rate structure
been in effect at the time) to determine the MS-LTC-DRG relative
weights, we refer readers to the FY 2016 IPPS/LTCH PPS final rule (80
FR 49614 through 49617). Under the LTCH PPS, relative weights for each
MS-LTC-DRG are a primary element used to account for the variations in
cost per discharge and resource utilization among the payment groups
(Sec. 412.515). To ensure that Medicare patients classified to each
MS-LTC-DRG have access to an appropriate level of services and to
encourage efficiency, we calculate a relative weight for each MS-LTC-
DRG that represents the resources needed by an average inpatient LTCH
case in that MS-LTC-DRG. For example, cases in an MS-LTC-DRG with a
relative weight of 2 would, on average, cost twice as much to treat as
cases in an MS-LTC-DRG with a relative weight of 1.
b. Development of the Proposed MS-LTC-DRG Relative Weights for FY 2019
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38303 through
38304), we presented our policies for the development of the MS-LTC-DRG
relative weights for FY 2018.
In this FY 2019 IPPS/LTCH PPS proposed rule, we are proposing to
continue to use our current methodology to determine the proposed MS-
LTC-DRG relative weights for FY 2019, including the continued
application of established policies related to: The hospital-specific
relative value methodology, the treatment of severity levels in the
proposed MS-LTC-DRGs, proposed low-volume and no-volume MS-LTC-DRGs,
proposed adjustments for nonmonotonicity, the steps for calculating the
proposed MS-LTC-DRG relative weights with a proposed budget neutrality
factor, and only using data from applicable LTCH cases (which includes
our policy of only using cases that would meet the criteria for
exclusion from the site neutral payment rate (or, for discharges
occurring prior to the implementation of the dual rate LTCH PPS payment
structure, would have met the criteria for exclusion had those criteria
been in effect at the time of the discharge)).
In this section, we present our proposed application of our
existing methodology for determining the proposed MS-LTC-DRG relative
weights for FY 2019, and we discuss the effects of our proposals
concerning the data used to determine the proposed FY 2019 MS-LTC-DRG
relative weights on the various components of our existing methodology
in the discussion that follows.
In previous fiscal years, Table 13A--Composition of Low-Volume
Quintiles for MS-LTC-DRGs (which was listed in section VI. of the
Addendum to the proposed and final rules and available via the internet
on the CMS website) listed the composition of the low-volume quintiles
for MS-LTC-DRGs for the respective year, and Table 13B--No-Volume MS-
LTC-DRG Crosswalk (also listed in section VI. of the Addendum to the
proposed rule final rules and available via the internet on the CMS
website) listed the no-volume MS-LTC-DRGs and the MS-LTC-DRGs to which
each was cross-walked (that is, the cross-walked MS-LTC-DRGs). The
information contained in Tables 13A and 13B is used in the development
Table 11--MS-LTC-DRGs, Relative Weights, Geometric Average Length of
Stay, and Short-Stay Outlier (SSO) Threshold for LTCH PPS Discharges,
which contains the proposed MS-LTC-DRGs and their respective proposed
relative weights, geometric mean length of stay, and five-sixths of the
geometric mean length of stay (used to identify SSO cases) for the
respective fiscal year (and also is listed in section VI. of the
Addendum to the proposed and final rules and is available via the
internet on the CMS website). Because the information contained in
Tables 13A and 13B does not contain proposed payment rates or factors
for the applicable payment year, we are proposing to generally provide
the data previously published in Tables 13A and 13B for each annual
proposed and final rule as one of our supplemental IPPS/LTCH PPS
related data files that are made available for public use via the
internet on the CMS website for the respective rule and fiscal year
(that is, FY 2019 and subsequent fiscal years) at: https://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/. To streamline the information made
available to the public that is used in the annual development of Table
11, we believe that this proposed change in the presentation of the
information contained in Tables 13A and 13B will make it easier for the
public to navigate and find the relevant data and information used for
the development of proposed payment rates or factors for the applicable
payment year while continuing to furnish the same information the
tables provided in previous fiscal years.
c. Data
For this proposed rule, consistent with our proposals regarding the
calculation of the proposed MS-LTC-DRG relative weights for FY 2019, we
obtained total charges from FY 2017 Medicare LTCH claims data from the
December 2017 update of the FY 2017 MedPAR file, which are the best
available data at this time, and we are proposing to use Version 36 of
the GROUPER to classify LTCH cases. Consistent with our historical
practice, we are proposing that if more recent data become available,
we would use those data and the finalized Version 36 of the GROUPER in
establishing the FY 2019 MS-LTC-DRG relative weights in the final rule.
To calculate the proposed FY 2019 MS-LTC-DRG relative weights under the
dual rate LTCH PPS payment structure, we are proposing to continue to
use applicable LTCH data, which includes our policy of only using cases
that meet the criteria for exclusion from the site neutral payment rate
(or would have met the criteria had they been in effect at the time of
the discharge) (80 FR 49624). Specifically, we began by first
evaluating the LTCH claims data in the December 2017 update of the FY
2017 MedPAR file to determine which LTCH cases would meet the criteria
for exclusion from the site neutral payment

[[Page 20458]]

rate under Sec. 412.522(b) had the dual rate LTCH PPS payment
structure applied to those cases at the time of discharge. We
identified the FY 2017 LTCH cases that were not assigned to MS-LTC-DRGs
876, 880, 881, 882, 883, 884, 885, 886, 887, 894, 895, 896, 897, 945
and 946, which identify LTCH cases that do not have a principal
diagnosis relating to a psychiatric diagnosis or to rehabilitation; and
that either--
The admission to the LTCH was ``immediately preceded'' by
discharge from a subsection (d) hospital and the immediately preceding
stay in that subsection (d) hospital included at least 3 days in an
ICU, as we define under the ICU criterion; or
The admission to the LTCH was ``immediately preceded'' by
discharge from a subsection (d) hospital and the claim for the LTCH
discharge includes the applicable procedure code that indicates at
least 96 hours of ventilator services were provided during the LTCH
stay, as we define under the ventilator criterion. Claims data from the
FY 2017 MedPAR file that reported ICD-10-PCS procedure code 5A1955Z
were used to identify cases involving at least 96 hours of ventilator
services in accordance with the ventilator criterion. We note that, for
purposes of developing the proposed FY 2019 MS-LTC-DRG relative weights
using our current methodology, we are not making any proposals
regarding the identification of cases that would have been excluded
from the site neutral payment rate under the statutory provisions that
provided for temporary exception from the site neutral payment rate
under the LTCH PPS for certain severe wound care discharges from
certain LTCHs or for certain spinal cord specialty hospitals provided
by sections 15009 and 15010 of Public Law 114-255, respectively, had
our implementation of that law and the dual rate LTCH PPS payment
structure been in effect at the time of the discharge. At this time, it
is uncertain how many LTCHs and how many cases in the claims data we
are using for this proposed rule meet the criteria to be excluded from
the site neutral payment rate under those exceptions (or would have met
the criteria for exclusion had the dual rate LTCH PPS payment structure
been in effect at the time of the discharge). Therefore, for the
remainder of this section, when we refer to LTCH claims only from cases
that meet the criteria for exclusion from the site neutral payment rate
(or would have met the criteria had the applicable statutes been in
effect at the time of the discharge), such data do not include any
discharges that would have been paid based on the LTCH PPS standard
Federal payment rate under the provisions of sections 15009 and 15010
of Public Law 114-255, had the exception been in effect at the time of
the discharge.
Furthermore, consistent with our historical methodology, we are
excluding any claims in the resulting data set that were submitted by
LTCHs that are all-inclusive rate providers and LTCHs that are paid in
accordance with demonstration projects authorized under section 402(a)
of Public Law 90-248 or section 222(a) of Public Law 92-603. In
addition, consistent with our historical practice and our policies, we
are excluding any Medicare Advantage (Part C) claims in the resulting
data. Such claims were identified based on the presence of a GHO Paid
indicator value of ``1'' in the MedPAR files. The claims that remained
after these three trims (that is, the applicable LTCH data) were then
used to calculate the proposed MS-LTC-DRG relative weights for FY 2019.
In summary, in general, we identified the claims data used in the
development of the proposed FY 2019 MS-LTC-DRG relative weights in this
proposed rule, as we are proposing, by trimming claims data that were
paid the site neutral payment rate (or would have been paid the site
neutral payment rate had the dual payment rate structure been in
effect, except for discharges which would have been excluded from the
site neutral payment under the temporary exception for certain severe
wound care discharges from certain LTCHs and under the temporary
exception for certain spinal cord specialty hospitals), as well as the
claims data of 9 all-inclusive rate providers reported in the December
2017 update of the FY 2017 MedPAR file and any Medicare Advantage
claims data. (We note that there were no data from any LTCHs that are
paid in accordance with a demonstration project reported in the
December 2017 update of the FY 2017 MedPAR file. However, had there
been we would trim the claims data from those LTCHs as well, in
accordance with our established policy.) We are proposing to use the
remaining data (that is, the applicable LTCH data) to calculate the
proposed relative weights for FY 2019.
d. Hospital-Specific Relative Value (HSRV) Methodology
By nature, LTCHs often specialize in certain areas, such as
ventilator-dependent patients. Some case types (MS-LTC-DRGs) may be
treated, to a large extent, in hospitals that have, from a perspective
of charges, relatively high (or low) charges. This nonrandom
distribution of cases with relatively high (or low) charges in specific
MS-LTC-DRGs has the potential to inappropriately distort the measure of
average charges. To account for the fact that cases may not be randomly
distributed across LTCHs, consistent with the methodology we have used
since the implementation of the LTCH PPS, in this FY 2019 IPPS/LTCH PPS
proposed rule, we are proposing to continue to use a hospital-specific
relative value (HSRV) methodology to calculate the proposed MS-LTC-DRG
relative weights for FY 2019. We believe that this method removes this
hospital-specific source of bias in measuring LTCH average charges (67
FR 55985). Specifically, under this methodology, we are proposing to
reduce the impact of the variation in charges across providers on any
particular MS-LTC-DRG relative weight by converting each LTCH's charge
for an applicable LTCH case to a relative value based on that LTCH's
average charge for such cases.
Under the HSRV methodology, we standardize charges for each LTCH by
converting its charges for each applicable LTCH case to hospital-
specific relative charge values and then adjusting those values for the
LTCH's case-mix. The adjustment for case-mix is needed to rescale the
hospital-specific relative charge values (which, by definition, average
1.0 for each LTCH). The average relative weight for an LTCH is its
case-mix; therefore, it is reasonable to scale each LTCH's average
relative charge value by its case-mix. In this way, each LTCH's
relative charge value is adjusted by its case-mix to an average that
reflects the complexity of the applicable LTCH cases it treats relative
to the complexity of the applicable LTCH cases treated by all other
LTCHs (the average LTCH PPS case-mix of all applicable LTCH cases
across all LTCHs).
In accordance with our established methodology, for FY 2019, we are
proposing to continue to standardize charges for each applicable LTCH
case by first dividing the adjusted charge for the case (adjusted for
SSOs under Sec. 412.529 as described in section VII.B.3.g. (Step 3) of
the preamble of this proposed rule) by the average adjusted charge for
all applicable LTCH cases at the LTCH in which the case was treated.
SSO cases are cases with a length of stay that is less than or equal to
five-sixths the average length of stay of the MS-LTC-DRG (Sec. 412.529
and Sec. 412.503). The average adjusted charge reflects the average
intensity of the health care services delivered by a particular LTCH
and the average cost level of that LTCH. The resulting ratio is
multiplied by that

[[Page 20459]]

LTCH's case-mix index to determine the standardized charge for the
case.
Multiplying the resulting ratio by the LTCH's case-mix index
accounts for the fact that the same relative charges are given greater
weight at an LTCH with higher average costs than they would at an LTCH
with low average costs, which is needed to adjust each LTCH's relative
charge value to reflect its case-mix relative to the average case-mix
for all LTCHs. By standardizing charges in this manner, we count
charges for a Medicare patient at an LTCH with high average charges as
less resource intensive than they would be at an LTCH with low average
charges. For example, a $10,000 charge for a case at an LTCH with an
average adjusted charge of $17,500 reflects a higher level of relative
resource use than a $10,000 charge for a case at an LTCH with the same
case-mix, but an average adjusted charge of $35,000. We believe that
the adjusted charge of an individual case more accurately reflects
actual resource use for an individual LTCH because the variation in
charges due to systematic differences in the markup of charges among
LTCHs is taken into account.
e. Treatment of Severity Levels in Developing the Proposed MS-LTC-DRG
Relative Weights
For purposes of determining the MS-LTC-DRG relative weights, under
our historical methodology, there are three different categories of MS-
DRGs based on volume of cases within specific MS-LTC-DRGs: (1) MS-LTC-
DRGs with at least 25 applicable LTCH cases in the data used to
calculate the relative weight, which are each assigned a unique
relative weight; (2) low-volume MS-LTC-DRGs (that is, MS-LTC-DRGs that
contain between 1 and 24 applicable LTCH cases that are grouped into
quintiles (as described later in this section of the proposed rule) and
assigned the relative weight of the quintile); and (3) no-volume MS-
LTC-DRGs that are cross-walked to other MS-LTC-DRGs based on the
clinical similarities and assigned the relative weight of the cross-
walked MS-LTC-DRG (as described in greater detail below). For FY 2019,
we are proposing to continue to use applicable LTCH cases to establish
the same volume-based categories to calculate the FY 2019 MS-LTC-DRG
relative weights.
In determining the proposed FY 2019 MS-LTC-DRG relative weights,
when necessary, as is our longstanding practice, we are proposing to
make adjustments to account for nonmonotonicity, as discussed in
greater detail later in Step 6 of section VII.B.3.g. of the preamble of
this proposed rule. We refer readers to the discussion in the FY 2010
IPPS/RY 2010 LTCH PPS final rule for our rationale for including an
adjustment for nonmonotonicity (74 FR 43953 through 43954).
f. Proposed Low-Volume MS-LTC-DRGs
In order to account for proposed MS-LTC-DRGs with low-volume (that
is, with fewer than 25 applicable LTCH cases), consistent with our
existing methodology, we are proposing to continue to employ the
quintile methodology for proposed low-volume MS-LTC-DRGs, such that we
group the proposed ``low-volume MS-LTC-DRGs'' (that is, proposed MS-
LTC-DRGs that contain between 1 and 24 applicable LTCH cases into one
of five categories (quintiles) based on average charges (67 FR 55984
through 55995; 72 FR 47283 through 47288; and 81 FR 25148)). In cases
where the initial assignment of a proposed low-volume MS-LTC-DRG to a
quintile results in nonmonotonicity within a base-DRG, we are proposing
to make adjustments to the resulting low-volume proposed MS-LTC-DRGs to
preserve monotonicity, as discussed in detail in section VII.B.3.g.
(Step 6) of the preamble of this proposed rule.
In this proposed rule, based on the best available data (that is,
the December 2017 update of the FY 2017 MedPAR files), we identified
271 proposed MS-LTC-DRGs that contained between 1 and 24 applicable
LTCH cases. This list of proposed MS-LTC-DRGs was then divided into 1
of the proposed 5 low-volume quintiles, each containing at least 54 MS-
LTC-DRGs (271/5 = 54 with a remainder of 1). We assigned the proposed
low-volume MS-LTC-DRGs to specific proposed low-volume quintiles by
sorting the proposed low-volume MS-LTC-DRGs in ascending order by
average charge in accordance with our established methodology. Based on
the data available for this proposed rule, the number of proposed MS-
LTC-DRGs with less than 25 applicable LTCH cases was not evenly
divisible by 5 and, therefore, we are proposing to employ our
historical methodology for determining which of the proposed low-volume
quintiles contain the additional proposed low-volume MS-LTC-DRG.
Specifically for this proposed rule, after organizing the proposed MS-
LTC-DRGs by ascending order by average charge, we would assign the
first 54 (1st through 54th) of proposed low-volume MS-LTC-DRGs (with
the lowest average charge) into Quintile 1. The 54 proposed MS-LTC-DRGs
with the highest average charge cases would be assigned into Quintile
5. Because the average charge of the 216th proposed low-volume MS-LTC-
DRG in the sorted list was closer to the average charge of the 215th
proposed low-volume MS-LTC-DRG (assigned to Quintile 4) than to the
average charge of the 217th proposed low-volume MS-LTC-DRG (assigned to
Quintile 5), we assigned it to Quintile 4 (such that Quintile 4
contains 55 proposed low-volume MS-LTC-DRGs before any adjustments for
nonmonotonicity, as discussed below). This results in 4 of the 5
proposed low-volume quintiles containing 54 proposed MS-LTC-DRGs
(Quintiles 1, 2, 3, and 5) and 1 proposed low-volume quintile
containing 55 MS-LTC-DRGs (Quintile 4). As discussed earlier, for this
proposed rule, we are proposing to provide the list of the proposed
composition of the low-volume quintiles for MS-LTC-DRGs for FY 2019
(previously displayed in Table 13A, which was in previous fiscal years
listed in section VI. of the Addendum to the respective proposed and
final rules and available via the internet on the CMS website) in a
supplemental data file for public use posted via the internet on the
CMS website for this proposed rule at: https://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/ in order
to streamline the information made available to the public that is used
in the annual development of Table 11.
In order to determine the proposed FY 2019 relative weights for the
proposed low-volume MS-LTC-DRGs, consistent with our historical
practice, we are proposing to use the five low-volume quintiles
described previously. We determined a proposed relative weight and
(geometric) average length of stay for each of the five proposed low-
volume quintiles using the proposed methodology described in section
VII.B.3.g. of the preamble of this proposed rule. We are proposing to
assign the same proposed relative weight and average length of stay to
each of the proposed low-volume MS-LTC-DRGs that make up an individual
low-volume quintile. We note that, as this system is dynamic, it is
possible that the number and specific type of MS-LTC-DRGs with a low-
volume of applicable LTCH cases will vary in the future. Furthermore,
we note that we continue to monitor the volume (that is, the number of
applicable LTCH cases) in the low-volume quintiles to ensure that our
quintile assignments used in determining the MS-LTC-DRG relative
weights result in appropriate payment for LTCH cases grouped to
proposed

[[Page 20460]]

low-volume MS-LTC-DRGs and do not result in an unintended financial
incentive for LTCHs to inappropriately admit these types of cases.
g. Steps for Determining the Proposed FY 2019 MS-LTC-DRG Relative
Weights
In this proposed rule, we are proposing to continue to use our
current methodology to determine the proposed FY 2019 MS-LTC-DRG
relative weights.
In summary, to determine the proposed FY 2019 MS-LTC-DRG relative
weights, we are proposing to group applicable LTCH cases to the
appropriate proposed MS-LTC-DRG, while taking into account the proposed
low-volume quintiles (as described above) and cross-walked proposed no-
volume MS-LTC-DRGs (as described later in this section). After
establishing the appropriate proposed MS-LTC-DRG (or proposed low-
volume quintile), we are proposing to calculate the FY 2019 relative
weights by first removing cases with a length of stay of 7 days or less
and statistical outliers (Steps 1 and 2 below). Next, we are proposing
to adjust the number of applicable LTCH cases in each proposed MS-LTC-
DRG (or proposed low-volume quintile) for the effect of SSO cases (Step
3 below). After removing applicable LTCH cases with a length of stay of
7 days or less (Step 1 below) and statistical outliers (Step 2 below),
which are the SSO-adjusted applicable LTCH cases and corresponding
charges (step 3 below), we are proposing to calculate proposed
``relative adjusted weights'' for each proposed MS-LTC-DRG (or proposed
low-volume quintile) using the HSRV method.
Step 1--Remove cases with a length of stay of 7 days or less.
The first step in our proposed calculation of the proposed FY 2019
MS-LTC-DRG relative weights is to remove cases with a length of stay of
7 days or less. The MS-LTC-DRG relative weights reflect the average of
resources used on representative cases of a specific type. Generally,
cases with a length of stay of 7 days or less do not belong in an LTCH
because these stays do not fully receive or benefit from treatment that
is typical in an LTCH stay, and full resources are often not used in
the earlier stages of admission to an LTCH. If we were to include stays
of 7 days or less in the computation of the FY 2019 MS-LTC-DRG relative
weights, the value of many proposed relative weights would decrease
and, therefore, payments would decrease to a level that may no longer
be appropriate. We do not believe that it would be appropriate to
compromise the integrity of the payment determination for those LTCH
cases that actually benefit from and receive a full course of treatment
at an LTCH by including data from these very short stays. Therefore,
consistent with our existing relative weight methodology, in
determining the proposed FY 2019 MS-LTC-DRG relative weights, we are
proposing to remove LTCH cases with a length of stay of 7 days or less
from applicable LTCH cases. (For additional information on what is
removed in this step of the relative weight methodology, we refer
readers to 67 FR 55989 and 74 FR 43959.)
Step 2--Remove statistical outliers.
The next step in our proposed calculation of the proposed FY 2019
MS-LTC-DRG relative weights is to remove statistical outlier cases from
the LTCH cases with a length of stay of at least 8 days. Consistent
with our existing relative weight methodology, we are proposing to
continue to define statistical outliers as cases that are outside of
3.0 standard deviations from the mean of the log distribution of both
charges per case and the charges per day for each MS-LTC-DRG. These
statistical outliers are removed prior to calculating the proposed
relative weights because we believe that they may represent aberrations
in the data that distort the measure of average resource use. Including
those LTCH cases in the calculation of the proposed relative weights
could result in an inaccurate relative weight that does not truly
reflect relative resource use among those MS-LTC-DRGs. (For additional
information on what is removed in this step of the proposed relative
weight methodology, we refer readers to 67 FR 55989 and 74 FR 43959.)
After removing cases with a length of stay of 7 days or less and
statistical outliers, we are left with applicable LTCH cases that have
a length of stay greater than or equal to 8 days. In this proposed
rule, we refer to these cases as ``trimmed applicable LTCH cases.''
Step 3--Adjust charges for the effects of SSOs.
As the next step in the proposed calculation of the proposed FY
2019 MS-LTC-DRG relative weights, consistent with our historical
approach, we are proposing to adjust each LTCH's charges per discharge
for those remaining cases (that is, trimmed applicable LTCH cases) for
the effects of SSOs (as defined in Sec. 412.529(a) in conjunction with
Sec. 412.503). Specifically, we are proposing to make this adjustment
by counting an SSO case as a fraction of a discharge based on the ratio
of the length of stay of the case to the average length of stay for the
MS-LTC-DRG for non-SSO cases. This has the effect of proportionately
reducing the impact of the lower charges for the SSO cases in
calculating the average charge for the MS-LTC-DRG. This process
produces the same result as if the actual charges per discharge of an
SSO case were adjusted to what they would have been had the patient's
length of stay been equal to the average length of stay of the MS-LTC-
DRG.
Counting SSO cases as full LTCH cases with no adjustment in
determining the proposed FY 2019 MS-LTC-DRG relative weights would
lower the proposed FY 2019 MS-LTC-DRG relative weight for affected MS-
LTC-DRGs because the relatively lower charges of the SSO cases would
bring down the average charge for all cases within a MS-LTC-DRG. This
would result in an ``underpayment'' for non-SSO cases and an
``overpayment'' for SSO cases. Therefore, we are proposing to continue
to adjust for SSO cases under Sec. 412.529 in this manner because it
would result in more appropriate payments for all LTCH PPS standard
Federal payment rate cases. (For additional information on this step of
the relative weight methodology, we refer readers to 67 FR 55989 and 74
FR 43959.)
Step 4--Calculate the proposed FY 2019 MS-LTC-DRG relative weights
on an iterative basis.
Consistent with our historical relative weight methodology, we are
proposing to calculate the proposed FY 2019 MS-LTC-DRG relative weights
using the HSRV methodology, which is an iterative process. First, for
each SSO-adjusted trimmed applicable LTCH case, we calculate a
hospital-specific relative charge value by dividing the charge per
discharge after adjusting for SSOs of the LTCH case (from Step 3) by
the average charge per SSO-adjusted discharge for the LTCH in which the
case occurred. The resulting ratio is then multiplied by the LTCH's
case-mix index to produce an adjusted hospital-specific relative charge
value for the case. We used an initial case-mix index value of 1.0 for
each LTCH.
For each proposed MS-LTC-DRG, we calculated the proposed FY 2019
relative weight by dividing the SSO-adjusted average of the hospital-
specific relative charge values for applicable LTCH cases for the
proposed MS-LTC-DRG (that is, the sum of the hospital-specific relative
charge value from above divided by the sum of equivalent cases from
Step 3 for each proposed MS-LTC-DRG) by the overall SSO-adjusted
average hospital-specific relative charge value across all

[[Page 20461]]

applicable LTCH cases for all LTCHs (that is, the sum of the hospital-
specific relative charge value from above divided by the sum of
equivalent applicable LTCH cases from Step 3 for each proposed MS-LTC-
DRG). Using these recalculated MS-LTC-DRG relative weights, each LTCH's
average relative weight for all of its SSO-adjusted trimmed applicable
LTCH cases (that is, its case-mix) was calculated by dividing the sum
of all the LTCH's MS-LTC-DRG relative weights by its total number of
SSO-adjusted trimmed applicable LTCH cases. The LTCHs' hospital-
specific relative charge values (from previous) are then multiplied by
the hospital-specific case-mix indexes. The hospital-specific case-mix
adjusted relative charge values are then used to calculate a new set of
proposed MS-LTC-DRG relative weights across all LTCHs. This iterative
process continued until there was convergence between the relative
weights produced at adjacent steps, for example, when the maximum
difference was less than 0.0001.
Step 5--Determine a proposed FY 2019 relative weight for MS-LTC-
DRGs with no applicable LTCH cases.
Using the trimmed applicable LTCH cases, consistent with our
historical methodology, we identified the proposed MS-LTC-DRGs for
which there were no claims in the December 2017 update of the FY 2017
MedPAR file and, therefore, for which no charge data was available for
these proposed MS-LTC-DRGs. Because patients with a number of the
diagnoses under these proposed MS-LTC-DRGs may be treated at LTCHs,
consistent with our historical methodology, we generally assign a
proposed relative weight to each of the proposed no-volume MS-LTC-DRGs
based on clinical similarity and relative costliness (with the
exception of ``transplant'' proposed MS-LTC-DRGs, ``error'' proposed
MS-LTC-DRGs, and proposed MS-LTC-DRGs that indicate a principal
diagnosis related to a psychiatric diagnosis or rehabilitation
(referred to as the ``psychiatric or rehabilitation'' MS-LTC-DRGs), as
discussed later in this section of this proposed rule). (For additional
information on his step of the proposed relative weight methodology, we
refer readers to 67 FR 55991 and 74 FR 43959 through 43960.)
We are proposing to cross-walk each proposed no-volume MS-LTC-DRG
to another proposed MS-LTC-DRG for which we calculated a proposed
relative weight (determined in accordance with the methodology
described above). Then, the ``no-volume'' proposed MS-LTC-DRG was
assigned the same proposed relative weight (and average length of stay)
of the proposed MS-LTC-DRG to which it was cross-walked (as described
in greater detail in this section of this proposed rule).
Of the 761 proposed MS-LTC-DRGs for FY 2019, we identified 347 MS-
LTC-DRGs for which there are no trimmed applicable LTCH cases (the
number identified includes the 8 ``transplant'' MS-LTC-DRGs, the 2
``error'' MS-LTC-DRGs, and the 15 ``psychiatric or rehabilitation'' MS-
LTC-DRGs, which are discussed below). We are proposing to assign
proposed relative weights to each of the 347 no-volume proposed MS-LTC-
DRGs that contained trimmed applicable LTCH cases based on clinical
similarity and relative costliness to 1 of the remaining 414 (761 - 347
= 414) proposed MS-LTC-DRGs for which we calculated proposed relative
weights based on the trimmed applicable LTCH cases in the FY 2017
MedPAR file data using the steps described previously. (For the
remainder of this discussion, we refer to the ``cross-walked'' proposed
MS-LTC-DRGs as the proposed MS-LTC-DRGs to which we cross-walked 1 of
the 347 ``no volume'' proposed MS-LTC-DRGs.) Then, we are generally
proposing to assign the 347 no-volume proposed MS-LTC-DRGs the proposed
relative weight of the cross-walked proposed MS-LTC-DRG. (As explained
below in Step 6, when necessary, we made adjustments to account for
nonmonotonicity.)
We cross-walked the no-volume proposed MS-LTC-DRG to a proposed MS-
LTC-DRG for which we calculated proposed relative weights based on the
December 2017 update of the FY 2017 MedPAR file, and to which it is
similar clinically in intensity of use of resources and relative
costliness as determined by criteria such as care provided during the
period of time surrounding surgery, surgical approach (if applicable),
length of time of surgical procedure, postoperative care, and length of
stay. (For more details on our process for evaluating relative
costliness, we refer readers to the FY 2010 IPPS/RY 2010 LTCH PPS final
rule (73 FR 48543).) We believe in the rare event that there would be a
few LTCH cases grouped to one of the no-volume proposed MS-LTC-DRGs in
FY 2018, the proposed relative weights assigned based on the cross-
walked proposed MS-LTC-DRGs would result in an appropriate LTCH PPS
payment because the crosswalks, which are based on clinical similarity
and relative costliness, would be expected to generally require
equivalent relative resource use.
We then assigned the proposed relative weight of the cross-walked
proposed MS-LTC-DRG as the proposed relative weight for the no-volume
proposed MS-LTC-DRG such that both of these proposed MS-LTC-DRGs (that
is, the no-volume proposed MS-LTC-DRG and the cross-walked proposed MS-
LTC-DRG) have the same proposed relative weight (and average length of
stay) for FY 2019. We note that, if the cross-walked proposed MS-LTC-
DRG had 25 applicable LTCH cases or more, its proposed relative weight
(calculated using the methodology described in Steps 1 through 4 above)
is assigned to the no-volume proposed MS-LTC-DRG as well. Similarly, if
the proposed MS-LTC-DRG to which the no-volume proposed MS-LTC-DRG was
cross-walked had 24 or less cases and, therefore, is designated to 1 of
the proposed low-volume quintiles for purposes of determining the
proposed relative weights, we assigned the proposed relative weight of
the applicable proposed low-volume quintile to the no-volume proposed
MS-LTC-DRG such that both of these proposed MS-LTC-DRGs (that is, the
no-volume proposed MS-LTC-DRG and the cross-walked proposed MS-LTC-DRG)
have the same proposed relative weight for FY 2019. (As we noted
previously, in the infrequent case where nonmonotonicity involving a
no-volume proposed MS-LTC-DRG resulted, additional adjustments as
described in Step 6 are required in order to maintain monotonically
increasing proposed relative weights.)
As discussed earlier, for this proposed rule, we are proposing to
provide the list of the no-volume proposed MS-LTC-DRGs and the proposed
MS-LTC-DRGs to which each was cross-walked (that is, the cross-walked
proposed MS-LTC-DRGs) for FY 2019 (previously displayed in Table 13B,
which was in previous fiscal years listed in section VI. of the
Addendum to the respective proposed and final rules and available via
the internet on the CMS website) in a supplemental data file for public
use posted via the internet on the CMS website for this proposed rule
at: https://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/ in order to streamline the information
made available to the public that is used in the annual development of
Table 11.
To illustrate this methodology for determining the proposed
relative weights for the proposed FY 2019 MS-LTC-DRGs with no
applicable LTCH cases, we are providing the following example, which
refers to the no-volume proposed MS-LTC-DRGs crosswalk information for
FY 2019 (which, as

[[Page 20462]]

previously stated, we are proposing to provide in a supplemental data
file posted via the internet on the CMS website for this proposed
rule).
Example: There were no trimmed applicable LTCH cases in the FY 2017
MedPAR file that we are proposing to use for this proposed rule for
proposed MS-LTC-DRG 061 (Acute Ischemic Stroke with Use of Thrombolytic
Agent with MCC). We determined that proposed MS-LTC-DRG 070
(Nonspecific Cerebrovascular Disorders with MCC) is similar clinically
and based on resource use to proposed MS-LTC-DRG 061. Therefore, we
assigned the same proposed relative weight (and average length of stay)
of proposed MS-LTC-DRG 70 of 0.8881 for FY 2019 to proposed MS-LTC-DRG
061 (we refer readers to Table 11, which is listed in section VI. of
the Addendum to this proposed rule and is available via the internet on
the CMS website).
Again, we note that, as this system is dynamic, it is entirely
possible that the number of MS-LTC-DRGs with no volume will vary in the
future. Consistent with our historical practice, we used the most
recent available claims data to identify the trimmed applicable LTCH
cases from which we determined the proposed relative weights in this
proposed rule.
For FY 2019, consistent with our historical relative weight
methodology, we are proposing to establish a relative weight of 0.0000
for the following transplant MS-LTC-DRGs: Heart Transplant or Implant
of Heart Assist System with MCC (MS-LTC-DRG 001); Heart Transplant or
Implant of Heart Assist System without MCC (MS-LTC-DRG 002); Liver
Transplant with MCC or Intestinal Transplant (MS-LTC-DRG 005); Liver
Transplant without MCC (MS-LTC-DRG 006); Lung Transplant (MS-LTC-DRG
007); Simultaneous Pancreas/Kidney Transplant (MS-LTC-DRG 008);
Pancreas Transplant (MS-LTC-DRG 010); and Kidney Transplant (MS-LTC-DRG
652). This is because Medicare only covers these procedures if they are
performed at a hospital that has been certified for the specific
procedures by Medicare and presently no LTCH has been so certified. At
the present time, we include these eight proposed transplant MS-LTC-
DRGs in the GROUPER program for administrative purposes only. Because
we use the same GROUPER program for LTCHs as is used under the IPPS,
removing these MS-LTC-DRGs would be administratively burdensome. (For
additional information regarding our treatment of transplant MS-LTC-
DRGs, we refer readers to the RY 2010 LTCH PPS final rule (74 FR
43964).) In addition, consistent with our historical policy, we are
proposing to establish a relative weight of 0.0000 for the 2 ``error''
MS-LTC-DRGs (that is, MS-LTC-DRG 998 (Principal Diagnosis Invalid as
Discharge Diagnosis) and MS-LTC-DRG 999 (Ungroupable)) because
applicable LTCH cases grouped to these MS-LTC-DRGs cannot be properly
assigned to an MS-LTC-DRG according to the grouping logic.
As discussed in section VII.C. of the preamble of this proposed
rule, section 51005 of the Bipartisan Budget Act of 2018 (Public Law
115-123) extended the transitional blended payment rate for site
neutral payment rate cases for an additional 2 years (that is,
discharges occurring in cost reporting periods beginning in FYs 2018
and 2019 will continue to be paid under the blended payment rate).
Therefore, in this proposed rule, consistent with our practice in FYs
2016 through 2018, we are proposing to establish a proposed relative
weight for FY 2019 equal to the respective FY 2015 relative weight of
the MS-LTC-DRGs for the following ``psychiatric or rehabilitation'' MS-
LTC-DRGs: proposed MS-LTC-DRG 876 (O.R. Procedure with Principal
Diagnoses of Mental Illness); proposed MS-LTC-DRG 880 (Acute Adjustment
Reaction & Psychosocial Dysfunction); proposed MS-LTC-DRG 881
(Depressive Neuroses); proposed MS-LTC-DRG 882 (Neuroses Except
Depressive); MS-LTC-DRG 883 (Disorders of Personality & Impulse
Control); proposed MS-LTC-DRG 884 (Organic Disturbances & Mental
Retardation); proposed MS-LTC-DRG 885 (Psychoses); proposed MS-LTC-DRG
886 (Behavioral & Developmental Disorders); proposed MS-LTC-DRG 887
(Other Mental Disorder Diagnoses); proposed MS-LTC-DRG 894 (Alcohol/
Drug Abuse or Dependence, Left Ama); proposed MS-LTC-DRG 895 (Alcohol/
Drug Abuse or Dependence, with Rehabilitation Therapy); proposed MS-
LTC-DRG 896 (Alcohol/Drug Abuse or Dependence, without Rehabilitation
Therapy with MCC); proposed MS-LTC-DRG 897 (Alcohol/Drug Abuse or
Dependence, without Rehabilitation Therapy without MCC); proposed MS-
LTC-DRG 945 (Rehabilitation with CC/MCC); and proposed MS-LTC-DRG 946
(Rehabilitation without CC/MCC). As we discussed when we implemented
the dual rate LTCH PPS payment structure, LTCH discharges that are
grouped to these 15 ``psychiatric and rehabilitation'' proposed MS-LTC-
DRGs do not meet the criteria for exclusion from the site neutral
payment rate. As such, under the criterion for a principal diagnosis
relating to a psychiatric diagnosis or to rehabilitation, there are no
applicable LTCH cases to use in calculating a proposed relative weight
for the ``psychiatric and rehabilitation'' proposed MS-LTC-DRGs. In
other words, any LTCH PPS discharges grouped to any of the 15
``psychiatric and rehabilitation'' proposed MS-LTC-DRGs would always be
paid at the site neutral payment rate, and, therefore, those proposed
MS-LTC-DRGs would never include any LTCH cases that meet the criteria
for exclusion from the site neutral payment rate. However, section
1886(m)(6)(B) of the Act establishes a transitional payment method for
cases that would be paid at the site neutral payment rate for LTCH
discharges occurring in cost reporting periods beginning during FY 2016
or FY 2017, which was extended to include FYs 2018 and 2019 under
Public Law 115-123. (We refer readers to section VII.C. of the preamble
of this proposed rule for a detailed discussion of the extension of the
transitional blended payment method provisions under Public Law 115-123
and our proposals for FY 2019. Under the transitional payment method
for site neutral payment rate cases, for LTCH discharges occurring in
cost reporting periods beginning on or after October 1, 2018, and on or
before September 30, 2019, site neutral payment rate cases are paid a
blended payment rate, calculated as 50 percent of the applicable site
neutral payment rate amount for the discharge and 50 percent of the
applicable LTCH PPS standard Federal payment rate. Because the LTCH PPS
standard Federal payment rate is based on the relative weight of the
MS-LTC-DRG, in order to determine the transitional blended payment for
site neutral payment rate cases grouped to one of the ``psychiatric or
rehabilitation'' proposed MS-LTC-DRGs in FY 2019, we assigned a
proposed relative weight to these proposed MS-LTC-DRGs for FY 2019 that
is the same as the FY 2018 relative weight (which is also the same as
the FYs 2016 and 2017 relative weight). We believe that using the
respective FY 2015 relative weight for each of the ``psychiatric or
rehabilitation'' proposed MS-LTC-DRGs results in appropriate payments
for LTCH cases that are paid at the site neutral payment rate under the
transition policy provided by the statute because there are no
clinically similar MS-LTC-DRGs for which we are able to determine
proposed relative weights based on applicable LTCH cases in the
December 2017 update of the FY 2017 MedPAR file data using the steps

[[Page 20463]]

described above. Furthermore, we believe that it would be
administratively burdensome and introduce unnecessary complexity to the
proposed MS-LTC-DRG relative weight calculation to use the LTCH
discharges in the MedPAR file data to calculate a proposed relative
weight for those 15 ``psychiatric and rehabilitation'' proposed MS-LTC-
DRGs to be used for the sole purposes of determining half of the
transitional blended payment for site neutral payment rate cases during
the transition period (80 FR 49631 through 49632) or payment for
discharges from spinal cord specialty hospitals under Sec.
412.522(b)(4).
In summary, for FY 2019, we are proposing to establish a proposed
relative weight (and average length of stay thresholds) equal to the
respective FY 2015 relative weight of the proposed MS-LTC-DRGs for the
15 ``psychiatric or rehabilitation'' proposed MS-LTC-DRGs listed
previously (that is, proposed MS-LTC-DRGs 876, 880, 881, 882, 883, 884,
885, 886, 887, 894, 895, 896, 897, 945, and 946). Table 11, which is
listed in section VI. of the Addendum to this proposed rule and is
available via the internet on the CMS website, reflects this policy.
Step 6--Adjust the proposed FY 2019 MS-LTC-DRG relative weights to
account for nonmonotonically increasing relative weights.
The MS-DRGs contain base DRGs that have been subdivided into one,
two, or three severity of illness levels. Where there are three
severity levels, the most severe level has at least one secondary
diagnosis code that is referred to as an MCC (that is, major
complication or comorbidity). The next lower severity level contains
cases with at least one secondary diagnosis code that is a CC (that is,
complication or comorbidity). Those cases without an MCC or a CC are
referred to as ``without CC/MCC.'' When data do not support the
creation of three severity levels, the base MS-DRG is subdivided into
either two levels or the base MS-DRG is not subdivided. The two-level
subdivisions may consist of the MS-DRG with CC/MCC and the MS-DRG
without CC/MCC. Alternatively, the other type of two-level subdivision
may consist of the MS-DRG with MCC and the MS-DRG without MCC.
In those base MS-LTC-DRGs that are split into either two or three
severity levels, cases classified into the ``without CC/MCC'' MS-LTC-
DRG are expected to have a lower resource use (and lower costs) than
the ``with CC/MCC'' MS-LTC-DRG (in the case of a two-level split) or
both the ``with CC'' and the ``with MCC'' MS-LTC-DRGs (in the case of a
three-level split). That is, theoretically, cases that are more severe
typically require greater expenditure of medical care resources and
would result in higher average charges. Therefore, in the three
severity levels, relative weights should increase by severity, from
lowest to highest. If the relative weights decrease as severity
increases (that is, if within a base MS-LTC-DRG, an MS-LTC-DRG with CC
has a higher relative weight than one with MCC, or the MS-LTC-DRG
``without CC/MCC'' has a higher relative weight than either of the
others), they are nonmonotonic. We continue to believe that utilizing
nonmonotonic relative weights to adjust Medicare payments would result
in inappropriate payments because the payment for the cases in the
higher severity level in a base MS-LTC-DRG (which are generally
expected to have higher resource use and costs) would be lower than the
payment for cases in a lower severity level within the same base MS-
LTC-DRG (which are generally expected to have lower resource use and
costs). Therefore, in determining the proposed FY 2019 MS-LTC-DRG
relative weights, consistent with our historical methodology, we are
proposing to continue to combine MS-LTC-DRG severity levels within a
base MS-LTC-DRG for the purpose of computing a relative weight when
necessary to ensure that monotonicity is maintained. For a
comprehensive description of our existing methodology to adjust for
nonmonotonicity, we refer readers to the FY 2010 IPPS/RY 2010 LTCH PPS
final rule (74 FR 43964 through 43966). Any adjustments for
nonmonotonicity that were made in determining the proposed FY 2018 MS-
LTC-DRG relative weights in this proposed rule by applying this
methodology are denoted in Table 11, which is listed in section VI. of
the Addendum to this proposed rule and is available via the internet on
the CMS website.
Step 7-- Calculate the proposed FY 2019 MS-LTC-DRG reclassification
and recalibration budget neutrality factor.
In accordance with the regulations at Sec. 412.517(b) (in
conjunction with Sec. 412.503), the annual update to the MS-LTC-DRG
classifications and relative weights is done in a budget neutral manner
such that estimated aggregate LTCH PPS payments would be unaffected,
that is, would be neither greater than nor less than the estimated
aggregate LTCH PPS payments that would have been made without the MS-
LTC-DRG classification and relative weight changes. (For a detailed
discussion on the establishment of the budget neutrality requirement
for the annual update of the MS-LTC-DRG classifications and relative
weights, we refer readers to the RY 2008 LTCH PPS final rule (72 FR
26881 and 26882).)
The MS-LTC-DRG classifications and relative weights are updated
annually based on the most recent available LTCH claims data to reflect
changes in relative LTCH resource use (Sec. 412.517(a) in conjunction
with Sec. 412.503). To achieve the budget neutrality requirement at
Sec. 412.517(b), under our established methodology, for each annual
update, the MS-LTC-DRG relative weights are uniformly adjusted to
ensure that estimated aggregate payments under the LTCH PPS would not
be affected (that is, decreased or increased). Consistent with that
provision, we are proposing to update the MS-LTC-DRG classifications
and relative weights for FY 2019 based on the most recent available
LTCH data for applicable LTCH cases, and continue to apply a budget
neutrality adjustment in determining the proposed FY 2019 MS-LTC-DRG
relative weights.
In this FY 2019 IPPS/LTCH PPS proposed rule, to ensure budget
neutrality in the update to the MS-LTC-DRG classifications and relative
weights under Sec. 412.517(b), we are proposing to continue to use our
established two-step budget neutrality methodology.
To calculate the proposed normalization factor for FY 2019, we
grouped applicable LTCH cases using the proposed FY 2019 Version 36
GROUPER, and the recalibrated proposed FY 2019 MS-LTC-DRG relative
weights to calculate the average case-mix index (CMI); we grouped the
same applicable LTCH cases using the FY 2018 GROUPER Version 35 and MS-
LTC-DRG relative weights and calculated the average CMI; and computed
the ratio by dividing the average CMI for FY 2018 by the average CMI
for proposed FY 2019. That ratio is the proposed normalization factor.
Because the calculation of the proposed normalization factor involves
the proposed relative weights for the proposed MS-LTC-DRGs that
contained applicable LTCH cases to calculate the average CMIs, any low-
volume proposed MS-LTC-DRGs are included in the calculation (and the
proposed MS-LTC-DRGs with no applicable LTCH cases are not included in
the calculation).
To calculate the proposed budget neutrality adjustment factor, we
simulated estimated total FY 2019 LTCH PPS standard Federal payment
rate payments for applicable LTCH cases using the proposed FY 2019
normalized relative weights and proposed GROUPER Version 36; simulated
estimated total FY 2018

[[Page 20464]]

LTCH PPS standard Federal payment rate payments for applicable LTCH
cases using the FY 2018 MS-LTC-DRG relative weights and the FY 2018
GROUPER Version 35; and calculated the ratio of these estimated total
payments by dividing the simulated estimated total LTCH PPS standard
Federal payment rate payments for FY 2018 by the simulated estimated
total LTCH PPS standard Federal payment rate payments for FY 2019. The
resulting ratio is the proposed budget neutrality adjustment factor.
The calculation of the proposed budget neutrality factor involves the
proposed relative weights for the LTCH cases used in the payment
simulation, which includes any cases grouped to low-volume proposed MS-
LTC-DRGs or to proposed MS-LTC-DRGs with no applicable LTCH cases, and
generally does not include payments for cases grouped to a proposed MS-
LTC-DRG with no applicable LTCH cases. (Occasionally, a few LTCH cases
(that is, those with a covered length of stay of 7 days or less, which
are removed from the proposed relative weight calculation in step 2)
that are grouped to a proposed MS-LTC-DRG with no applicable LTCH cases
are included in the payment simulations used to calculate the proposed
budget neutrality factor. However, the number and payment amount of
such cases have a negligible impact on the proposed budget neutrality
factor calculation).
In this proposed rule, to ensure budget neutrality in the update to
the MS-LTC-DRG classifications and relative weights under Sec.
412.517(b), we are proposing to continue to use our established two-
step budget neutrality methodology. Therefore, in this proposed rule,
in the first step of our proposed MS-LTC-DRG budget neutrality
methodology, for FY 2019, we are proposing to calculate and apply a
proposed normalization factor to the recalibrated proposed relative
weights (the result of Steps 1 through 6 discussed previously) to
ensure that estimated payments are not affected by changes in the
composition of case types or the proposed changes to the classification
system. That is, the proposed normalization adjustment is intended to
ensure that the recalibration of the proposed MS-LTC-DRG relative
weights (that is, the process itself) neither increases nor decreases
the average case-mix index.
To calculate the proposed normalization factor for FY 2019 (the
first step of our proposed budget neutrality methodology), we used the
following three steps: (1.a.) used the most recent available applicable
LTCH cases from the most recent available data (that is, LTCH
discharges from the FY 2017 MedPAR file) and grouped them using the
proposed FY 2019 GROUPER (that is, Version 36 for FY 2019) and the
recalibrated proposed FY 2019 MS-LTC-DRG relative weights (determined
in Steps 1 through 6 above) to calculate the average case-mix index;
(1.b.) grouped the same applicable LTCH cases (as are used in Step
1.a.) using the FY 2018 GROUPER (Version 35) and FY 2018 MS-LTC-DRG
relative weights and calculated the average case-mix index; and (1.c.)
computed the ratio of these average case-mix indexes by dividing the
average CMI for FY 2018 (determined in Step 1.b.) by the average case-
mix index for FY 2019 (determined in Step 1.a.). As a result, in
determining the proposed MS-LTC-DRG relative weights for FY 2019, each
recalibrated proposed MS-LTC-DRG relative weight is multiplied by the
proposed normalization factor of 1.27598 (determined in Step 1.c.) in
the first step of the proposed budget neutrality methodology, which
produced ``normalized relative weights.''
In the second step of our proposed MS-LTC-DRG budget neutrality
methodology, we calculate a second proposed budget neutrality factor
consisting of the ratio of estimated aggregate FY 2019 LTCH PPS
standard Federal payment rate payments for applicable LTCH cases (the
sum of all calculations under Step 1.a. mentioned previously) after
reclassification and recalibration to estimated aggregate payments for
FY 2019 LTCH PPS standard Federal payment rate payments for applicable
LTCH cases before reclassification and recalibration (that is, the sum
of all calculations under Step 1.b. mentioned previously).
That is, for this proposed rule, for FY 2019, under the second step
of the proposed budget neutrality methodology, we are proposing to
determine the proposed budget neutrality adjustment factor using the
following three steps: (2.a.) simulated estimated total FY 2018 LTCH
PPS standard Federal payment rate payments for applicable LTCH cases
using the proposed normalized relative weights for FY 2019 and GROUPER
Version 35 (as described above); (2.b.) simulated estimated total FY
2018 LTCH PPS standard Federal payment rate payments for applicable
LTCH cases using the FY 2018 GROUPER (Version 35) and the FY 2018 MS-
LTC-DRG relative weights in Table 11 of the FY 2018 IPPS/LTCH PPS final
rule available on the internet, as described in section VI. of the
Addendum of that final rule; and (2.c.) calculated the ratio of these
estimated total payments by dividing the value determined in Step 2.b.
by the value determined in Step 2.a. In determining the proposed FY
2019 MS-LTC-DRG relative weights, each normalized proposed relative
weight is then multiplied by a budget neutrality factor of 0.992183
(the value determined in Step 2.c.) in the second step of the proposed
budget neutrality methodology to achieve the budget neutrality
requirement at Sec. 412.517(b).
Accordingly, in determining the proposed FY 2019 MS-LTC-DRG
relative weights in this proposed rule, consistent with our existing
methodology, we are proposing to apply a normalization factor of
1.27598 and a budget neutrality factor of 0.992183. Table 11, which is
listed in section VI. of the Addendum to this proposed rule and is
available via the internet on the CMS website, lists the proposed MS-
LTC-DRGs and their respective proposed relative weights, geometric mean
length of stay, and five-sixths of the geometric mean length of stay
(used to identify SSO cases under Sec. 412.529(a)) for FY 2019.

C. Proposed Modifications to the Application of the Site Neutral
Payment Rate (Sec. 412.522)

Section 1206 of Pathway for SGR Reform Act (Public Law 113-67)
mandated the new dual rate payment system under the LTCH PPS beginning
with LTCH discharges occurring in cost reporting periods beginning on
or after October 1, 2015. In addition, the statute established a
transitional blended payment method for cases that would be paid the
site neutral payment rate for LTCH discharges occurring in cost
reporting periods beginning during FY 2016 or FY 2017. For those
discharges, the applicable site neutral payment rate is the
transitional blended payment rate specified in section
1886(m)(6)(B)(iii) of the Act. Section 1886(m)(6)(B)(iii) of the Act
specifies that the transitional blended payment rate is comprised of 50
percent of the site neutral payment rate for the discharge under
section 1886(m)(6)(B)(ii) of the Act and 50 percent of the LTCH PPS
standard Federal payment rate that would have applied to the discharge
if paragraph (6) of section 1886(m) of the Act had not been enacted.
In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49610 through
49612), we specified under Sec. 412.522(c)(3), for LTCH discharges
occurring in cost reporting periods beginning on or after October 1,
2015, and on or before September 30, 2017 (that is, discharges
occurring in cost reporting periods beginning during FYs 2016 and
2017),

[[Page 20465]]

that the payment amount for site neutral payment rate cases is a
blended payment rate, which is calculated as 50 percent of the
applicable site neutral payment rate amount for the discharge as
determined under Sec. 412.522(c)(1) and 50 percent of the applicable
LTCH PPS standard Federal payment rate determined under Sec. 412.523.
In addition, we established that the payment amounts determined under
Sec. 412.522(c)(1) (the site neutral payment rate) and under Sec.
412.523 (the LTCH PPS standard Federal rate) include any applicable
adjustments, such as HCO payments, as applicable.
Section 51005 of the Bipartisan Budget Act of 2018 (Public Law 115-
123) extended the transitional blended payment rate period for site
neutral payment rate cases for 2 years, and provided for an adjustment
to the payment for discharges paid under the site neutral payment rate
through FY 2026. Specifically, section 51005(a) of Public Law 115-123
amended section 1886(m)(6)(B)(i) of the Act to extend the transitional
blended payment rate for site neutral payment rate cases for an
additional 2 years; that is, discharges occurring in cost reporting
periods beginning in FYs 2018 and 2019 will continue to be paid under
the blended payment rate. To codify the provisions of section 51005(a)
of Public Law 115-123, we are proposing to revise our regulations at
Sec. 412.522(c)(3) to reflect the extension of the transitional
blended payment rate period for discharges paid at the site neutral
payment rate to include discharges occurring in cost reporting periods
beginning on or before September 30, 2019.
In addition, as initially enacted, section 1886(m)(6)(B)(iii) of
the Act specified that, for LTCH discharges occurring in cost reporting
periods beginning during FY 2018 or later, the applicable site neutral
payment rate would be the site neutral payment rate as defined in
section 1886(m)(6)(B)(ii) of the Act. Section 51005(b) of Public Law
115-123 amended section 1886(m)(6)(B) by adding new clause (iv), which
specifies that the IPPS comparable amount defined at section
1886(m)(6)(B)(ii)(I) shall be reduced by 4.6 percent for FYs 2018
through 2026. In order to implement section 51005(b) of Public Law 115-
123, we are proposing to revise Sec. 412.522(c)(1) by adding new
paragraph (iii) to specify that, for discharges occurring in FYs 2018
through 2026, the amount payable under Sec. 412.522(c)(1)(i) (that is,
the IPPS comparable amount) will be reduced by 4.6 percent.
We also are proposing to make a conforming amendment to Sec.
412.500, which specifies the basis and scope of subpart O of 42 CFR
part 412, by adding paragraph (a)(9) to reflect the provisions of
section 51005 of the Bipartisan Budget Act of 2018.

D. Proposed Changes to the LTCH PPS Payment Rates and Other Proposed
Changes to the LTCH PPS for FY 2019

1. Overview of Development of the LTCH PPS Standard Federal Payment
Rates
The basic methodology for determining LTCH PPS standard Federal
payment rates is currently set forth at 42 CFR 412.515 through 412.538.
In this section, we discuss the factors that we are proposing to use to
update the LTCH PPS standard Federal payment rate for FY 2019, that is,
effective for LTCH discharges occurring on or after October 1, 2018
through September 30, 2019. Under the dual rate LTCH PPS payment
structure required by statute, beginning with discharges in cost
reporting periods beginning in FY 2016, only LTCH discharges that meet
the criteria for exclusion from the site neutral payment rate are paid
based on the LTCH PPS standard Federal payment rate specified at Sec.
412.523. (For additional details on our finalized policies related to
the dual rate LTCH PPS payment structure required by statute, we refer
readers to the FY 2016 IPPS/LTCH PPS final rule (80 FR 49601 through
49623).)
Prior to the implementation of the dual payment rate system in FY
2016, all LTCHs were paid similarly to those now exempt from the site
neutral payment rate. That legacy payment rate was called the standard
Federal rate. For details on the development of the initial standard
Federal rate for FY 2003, we refer readers to the August 30, 2002 LTCH
PPS final rule (67 FR 56027 through 56037). For subsequent updates to
the standard Federal rate (FYs 2003 through 2015)/LTCH PPS standard
Federal payment rate (FY 2016 through present) as implemented under
Sec. 412.523(c)(3), we refer readers to the following final rules: RY
2004 LTCH PPS final rule (68 FR 34134 through 34140); RY 2005 LTCH PPS
final rule (68 FR 25682 through 25684); RY 2006 LTCH PPS final rule (70
FR 24179 through 24180); RY 2007 LTCH PPS final rule (71 FR 27819
through 27827); RY 2008 LTCH PPS final rule (72 FR 26870 through
27029); RY 2009 LTCH PPS final rule (73 FR 26800 through 26804); FY
2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 44021 through 44030); FY
2011 IPPS/LTCH PPS final rule (75 FR 50443 through 50444); FY 2012
IPPS/LTCH PPS final rule (76 FR 51769 through 51773); FY 2013 IPPS/LTCH
PPS final rule (77 FR 53479 through 53481); FY 2014 IPPS/LTCH PPS final
rule (78 FR 50760 through 50765); FY 2015 IPPS/LTCH PPS final rule (79
FR 50176 through 50180); FY 2016 IPPS/LTCH PPS final rule (80 FR 49634
through 49637); FY 2017 IPPS/LTCH PPS final rule (81 FR 57296 through
57310); and the FY 2018 IPPS/LTCH PPS final rule (82 FR 58536 through
58547).
In this FY 2019 IPPS/LTCH PPS proposed rule, we present our
proposals related to the proposed annual update to the LTCH PPS
standard Federal payment rate for FY 2019.
The proposed update to the LTCH PPS standard Federal payment rate
for FY 2019 is presented in section V.A. of the Addendum to this
proposed rule. The components of the proposed annual update to the LTCH
PPS standard Federal payment rate for FY 2019 are discussed below,
including the statutory reduction to the annual update for LTCHs that
fail to submit quality reporting data for FY 2019 as required by the
statute (as discussed in section VII.E.2.c. of the preamble of this
proposed rule). In addition, we are proposing to make an adjustment to
the LTCH PPS standard Federal payment rate to account for the estimated
effect of the changes to the area wage level adjustment for FY 2019 on
estimated aggregate LTCH PPS payments, in accordance with Sec.
412.523(d)(4) (as discussed in section V.B. of the Addendum to this
proposed rule).
2. Proposed FY 2019 LTCH PPS Standard Federal Payment Rate Annual
Market Basket Update
a. Overview
Historically, the Medicare program has used a market basket to
account for input price increases in the services furnished by
providers. The market basket used for the LTCH PPS includes both
operating and capital related costs of LTCHs because the LTCH PPS uses
a single payment rate for both operating and capital-related costs. We
adopted the 2013-based LTCH market basket for use under the LTCH PPS
beginning in FY 2017 (81 FR 57100 through 57102). For additional
details on the historical development of the market basket used under
the LTCH PPS, we refer readers to the FY 2013 IPPS/LTCH PPS final rule
(77 FR 53467 through 53476), and for a complete discussion of the LTCH
market basket and a description of the methodologies used to determine
the operating and capital-related portions of the 2013-based LTCH
market basket, we refer readers to section VII.D. of the

[[Page 20466]]

preamble of the FY 2017 IPPS/LTCH PPS proposed and final rules (81 FR
25153 through 25167 and 81 FR 57086 through 57099, respectively).
Section 3401(c) of the Affordable Care Act provides for certain
adjustments to any annual update to the LTCH PPS standard Federal
payment rate and refers to the timeframes associated with such
adjustments as a ``rate year'' We note that because the annual update
to the LTCH PPS policies, rates, and factors now occurs on October 1,
we adopted the term ``fiscal year'' (FY) rather than ``rate year'' (RY)
under the LTCH PPS beginning October 1, 2010, to conform with the
standard definition of the Federal fiscal year (October 1 through
September 30) used by other PPSs, such as the IPPS (75 FR 50396 through
50397). Although the language of sections 3004(a), 3401(c), 10319, and
1105(b) of the Affordable Care Act refers to years 2010 and thereafter
under the LTCH PPS as ``rate year,'' consistent with our change in the
terminology used under the LTCH PPS from ``rate year'' to ``fiscal
year,'' for purposes of clarity, when discussing the annual update for
the LTCH PPS standard Federal payment rate, including the provisions of
the Affordable Care Act, we use ``fiscal year'' rather than ``rate
year'' for 2011 and subsequent years.
b. Proposed Annual Update to the LTCH PPS Standard Federal Payment Rate
for FY 2019
CMS has used an estimated market basket increase to update the LTCH
PPS. As noted above, we adopted the 2013-based LTCH market basket for
use under the LTCH PPS beginning in FY 2017. The 2013-based LTCH market
basket is based solely on the Medicare cost report data submitted by
LTCHs and, therefore, specifically reflects the cost structures of only
LTCHs. (For additional details on the development of the 2013-based
LTCH market basket, we refer readers to the FY 2017 IPPS/LTCH PPS final
rule (81 FR 57101 through 57102).) We continue to believe that the
2013-based LTCH market basket appropriately reflects the cost structure
of LTCHs for the reasons discussed when we adopted its use in the FY
2017 IPPS/LTCH PPS final rule (81 FR 57100). Therefore, in this
proposed rule, we are proposing to use the 2013-based LTCH market
basket to update the LTCH PPS standard Federal payment rate for FY
2019.
Section 1886(m)(3)(A) of the Act provides that, beginning in FY
2010, any annual update to the LTCH PPS standard Federal payment rate
is reduced by the adjustments specified in clauses (i) and (ii) of
subparagraph (A). Clause (i) of section 1886(m)(3)(A) of the Act
provides for a reduction, for FY 2012 and each subsequent rate year, by
the productivity adjustment described in section 1886(b)(3)(B)(xi)(II)
of the Act (that is, ``the multifactor productivity (MFP)
adjustment''). Clause (ii) of section 1886(m)(3)(A) of the Act provides
for a reduction, for each of FYs 2010 through 2019, by the ``other
adjustment'' described in section 1886(m)(4)(F) of the Act.
Section 1886(m)(3)(B) of the Act provides that the application of
paragraph (3) of section 1886(m) of the Act may result in the annual
update being less than zero for a rate year, and may result in payment
rates for a rate year being less than such payment rates for the
preceding rate year.
c. Proposed Adjustment to the LTCH PPS Standard Federal Payment Rate
Under the Long-Term Care Hospital Quality Reporting Program (LTCH QRP)
In accordance with section 1886(m)(5) of the Act, the Secretary
established the Long-Term Care Hospital Quality Reporting Program (LTCH
QRP). The reduction in the annual update to the LTCH PPS standard
Federal payment rate for failure to report quality data under the LTCH
QRP for FY 2014 and subsequent fiscal years is codified under 42 CFR
412.523(c)(4). The LTCH QRP, as required for FY 2014 and subsequent
fiscal years by section 1886(m)(5)(A)(i) of the Act, applies a 2.0
percentage point reduction to any update under Sec. 412.523(c)(3) for
an LTCH that does not submit quality reporting data to the Secretary in
accordance with section 1886(m)(5)(C) of the Act with respect to such a
year (that is, in the form and manner and at the time specified by the
Secretary under the LTCH QRP) (Sec. 412.523(c)(4)(i)). Section
1886(m)(5)(A)(ii) of the Act provides that the application of the 2.0
percentage points reduction may result in an annual update that is less
than 0.0 for a year, and may result in LTCH PPS payment rates for a
year being less than such LTCH PPS payment rates for the preceding
year. Furthermore, section 1886(m)(5)(B) of the Act specifies that the
2.0 percentage points reduction is applied in a noncumulative manner,
such that any reduction made under section 1886(m)(5)(A) of the Act
shall apply only with respect to the year involved, and shall not be
taken into account in computing the LTCH PPS payment amount for a
subsequent year). These requirements are codified in the regulations at
Sec. 412.523(c)(4). (For additional information on the history of the
LTCH QRP, including the statutory authority and the selected measures,
we refer readers to section VIII.C. of the preamble of this proposed
rule.)
d. Proposed Annual Market Basket Update Under the LTCH PPS for FY 2019
Consistent with our historical practice and our proposal, we
estimate the market basket increase and the MFP adjustment based on
IGI's forecast using the most recent available data. Based on IGI's
fourth quarter 2017 forecast, the FY 2019 full market basket estimate
for the LTCH PPS using the 2013-based LTCH market basket is 2.7
percent. The current estimate of the MFP adjustment for FY 2019 based
on IGI's fourth quarter 2017 forecast is 0.8 percent.
For FY 2019, section 1886(m)(3)(A)(i) of the Act requires that any
annual update to the LTCH PPS standard Federal payment rate be reduced
by the productivity adjustment (``the MFP adjustment'') described in
section 1886(b)(3)(B)(xi)(II) of the Act. Consistent with the statute,
we are proposing to reduce the full estimated FY 2019 market basket
increase by the proposed FY 2019 MFP adjustment. To determine the
proposed market basket increase for LTCHs for FY 2019, as reduced by
the proposed MFP adjustment, consistent with our established
methodology, we are subtracting the proposed FY 2019 MFP adjustment
from the estimated FY 2019 market basket increase. Furthermore,
sections 1886(m)(3)(A)(ii) and 1886(m)(4)(E) of the Act requires that
any annual update to the LTCH PPS standard Federal payment rate for FY
2019 be reduced by the ``other adjustment'' described in paragraph (4),
which is 0.75 percent for FY 2019. Therefore, following application of
the proposed productivity adjustment, we are proposing to further
reduce the proposed adjusted market basket update (that is, the
proposed full FY 2019 market basket increase less the proposed MFP
adjustment) by the ``other adjustment'' specified by sections
1886(m)(3)(A)(ii) and 1886(m)(4) of the Act. (For additional details on
our established methodology for adjusting the market basket increase by
the MFP adjustment and the ``other adjustment'' required by the
statute, we refer readers to the FY 2012 IPPS/LTCH PPS final rule (76
FR 51771).)
For FY 2019, section 1886(m)(5) of the Act requires that for LTCHs
that do not submit quality reporting data as required under the LTCH
QRP, any annual update to an LTCH PPS standard Federal payment rate,
after application of the adjustments required by section 1886(m)(3) of
the Act, shall be further reduced by 2.0 percentage points.

[[Page 20467]]

Therefore, the proposed update to the LTCH PPS standard Federal payment
rate for FY 2019 for LTCHs that fail to submit quality reporting data
under the LTCH QRP, the full LTCH PPS market basket increase estimate,
subject to the MFP adjustment as required under section
1886(m)(3)(A)(i) of the Act and an additional reduction required by
sections 1886(m)(3)(A)(ii) and 1886(m)(4) of the Act, is also further
reduced by 2.0 percentage points.
In this FY 2019 IPPS/LTCH PPS proposed rule, in accordance with the
statute, we are proposing to reduce the proposed FY 2019 full market
basket estimate of 2.7 percent (based on IGI's fourth quarter 2017
forecast of the 2013-based LTCH market basket) by the proposed FY 2019
MFP adjustment of 0.8 percentage point (based on IGI's fourth quarter
2017 forecast). Following application of the proposed MFP adjustment,
we are proposing to reduce the proposed adjusted market basket update
of 1.9 percent (2.7 percent minus 0.8 percentage point) by 0.75
percentage point, as required by sections 1886(m)(3)(A)(ii) and
1886(m)(4)(F) of the Act. Therefore, under the authority of section 123
of the BBRA as amended by section 307(b) of the BIPA, we are proposing
an annual market basket update to the LTCH PPS standard Federal payment
rate for FY 2019 of 1.15 percent (that is, the most recent estimate of
the proposed LTCH PPS market basket increase of 2.7 percent, less the
proposed MFP adjustment of 0.8 percentage point, and less the 0.75
percentage point required under section 1886(m)(4)(F) of the Act).
Accordingly, we are proposing to revise Sec. 412.523(c)(3) by adding a
new paragraph (xv), which would specify that the LTCH PPS standard
Federal payment rate for FY 2019 is the LTCH PPS standard Federal
payment rate for the previous LTCH PPS payment year updated by 1.15
percent, and as further adjusted, as appropriate, as described in Sec.
412.523(d) (including the proposed budget neutrality adjustment for the
proposed elimination of the 25-percent threshold policy under proposed
Sec. 412.523(d)(6) discussed in section VII.E. of the preamble of this
proposed rule). For LTCHs that fail to submit quality reporting data
under the LTCH QRP, under proposed Sec. 412.523(c)(3)(xv) in
conjunction with Sec. 412.523(c)(4), we are proposing to further
reduce the proposed annual update to the LTCH PPS standard Federal
payment rate by 2.0 percentage points, in accordance with section
1886(m)(5) of the Act. Accordingly, we are proposing an annual update
to the LTCH PPS standard Federal payment rate of -0.85 percent (that
is, 1.15 percent minus 2.0 percentage points) for FY 2019 for LTCHs
that fail to submit quality reporting data as required under the LTCH
QRP. As stated earlier, consistent with our historical practice, we are
proposing to use a more recent estimate of the market basket and the
MFP adjustment to establish an annual update to the LTCH PPS standard
Federal payment rate for FY 2019 under Sec. 412.523(c)(3)(xv) in the
FY 2019 IPPS/LTCH PPS final rule. (We note that, consistent with
historical practice, we also are proposing to adjust the proposed FY
2019 LTCH PPS standard Federal payment rate by an area wage level
budget neutrality factor in accordance with Sec. 412.523(d)(4) (as
discussed in section V.B.5. of the Addendum to this proposed FY 2019
rule).)

E. Proposed Elimination of the ``25-Percent Threshold Policy''
Adjustment (Sec. 412.538)

The ``25-percent threshold policy'' is a per discharge payment
adjustment in the LTCH PPS that is applied to payments for Medicare
patient discharges from an LTCH when the number of such patients
originating from any single referring hospital is in excess of the
applicable threshold for a given cost reporting period (such threshold
is generally set at 25 percent, with exceptions for rural and urban
single or MSA-dominant hospitals). If an LTCH exceeds the applicable
threshold during a cost reporting period, payment for the discharge
that puts the LTCH over its threshold and all discharges subsequent to
that discharge in the cost reporting period from the referring hospital
are adjusted at cost report settlement (discharges not in excess of the
threshold are unaffected by the 25-percent threshold policy). The 25-
percent threshold policy was originally established in the FY 2005 IPPS
final rule for LTCH HwHs and satellites (69 FR 49191 through 49214). We
later expanded the 25-percent threshold policy in the RY 2008 LTCH PPS
final rule to include all LTCHs and LTCH satellite facilities (72 FR
26919 through 26944). Several laws have mandated delayed implementation
of the 25-percent threshold policy. For more details on the various
laws that delayed the full implementation of the 25-percent threshold
policy, we refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR
38318 through 38319).
In light of the further statutory delays and our continued
consideration of public comments received in response to our proposal
to consolidate and streamline the 25-percent threshold policy in the FY
2017 IPPS/LTCH PPS proposed rule, in the FY 2018 IPPS/LTCH PPS final
rule (82 FR 38320), we adopted a 1-year regulatory moratorium on the
implementation of the 25-percent threshold policy; that is, we imposed
a regulatory moratorium on our implementation of the provisions of
Sec. 412.538 until October 1, 2018.
Since the introduction of the site neutral payment rate in FY 2016,
many public commenters have asserted that the new site neutral payment
rate would alleviate the policy concerns underlying the establishment
of the 25-percent threshold policy. As we stated in our response to
those comments in the FY 2017 IPPS/LTCH PPS final rule (81 FR 57106)
and in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38320), at that
time, we were not convinced that this was the case. In addition, we
received many public comments urging CMS to permanently rescind the 25-
percent threshold policy in response to the Request for Information on
CMS Flexibilities and Efficiencies that was included in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR 20159). These public comments also
asserted that this policy is no longer necessary in light of the new
dual payment rate system.
As discussed in the FY 2018 IPPS/LTCH PPS proposed and final rules
(82 FR 20028 and 82 FR 38318 through 38319, respectively), the best
available LTCH claims data at the time of the development of both rules
(FY 2016 discharges) included many LTCH discharges that occurred during
FY 2016 that were not yet subject to the site neutral payment rate
because the statute provides that the site neutral payment rate be
phased in, effective with LTCH cost reporting periods beginning on or
after October 1, 2015 (that is, LTCH cost reporting periods beginning
in FY 2016). Therefore, all FY 2016 discharges that occurred in a LTCH
cost reporting period that began prior to October 1, 2016 were not
subject to the site neutral payment rate.
Given these widespread concerns, the longstanding statutory delays,
and the limited experience under the new dual rate payment system, we
implemented the 1-year regulatory moratorium for FY 2018 to allow for
the opportunity to do an analysis of LTCH admission practices under the
new dual payment rate under the LTCH PPS based on more complete data.
This implementation plan was, in part, intended to avoid confusion and
expending unnecessary resources in implementation should our analysis
ultimately conclude that the policy concerns underlying the 25-percent

[[Page 20468]]

threshold policy have been moderated (82 FR 38320).
Since establishing the current regulatory moratorium in the FY 2018
IPPS/LTCH PPS rulemaking, we have continued to receive additional
communications seeking an end to our 25-percent threshold policy. We
have considered these requests, along with reconsidering the many
requests and public comments received through rulemaking, as we have
reviewed our policies in the context of our ongoing initiative to
reduce unnecessary regulatory burden. Our review also took note of the
significant changes to LTCH admission practices and the LTCH PPS
payment structure since the advent of the 25-percent threshold policy's
adoption, such as the introduction of the site neutral payment rate
beginning in FY 2016. One effect of these changes is the creation of a
financial incentive for LTCHs to limit admissions according to the
criteria for payment at the LTCH PPS standard Federal payment rate.
While these changes do not specifically address our regulatory
requirement to ensure that an LTCH does not act as an IPPS step-down
unit, we believe that the creation of these financial incentives likely
results in LTCH providers closely considering the appropriateness of
admitting a potential transfer to an LTCH setting, regardless of the
referral source, thereby lessening the concerns that led to the
introduction of the 25-percent threshold policy.
In light of these factors, we recognize that the policy concerns
that led to the 25-percent threshold policy may have been ameliorated,
and that implementation of the 25-percent threshold policy would place
a regulatory burden on providers. Therefore, we believe it is
appropriate at this time to propose the removal of this payment
adjustment policy. For these same reasons, we believe the specific
regulatory framework of the 25-percent threshold policy at Sec.
412.538 is no longer an appropriate mechanism to ensure that the
statutory requirement that an LTCH does not act as a defacto unit of an
IPPS hospital is not violated. Therefore, in this proposed rule, we are
proposing to eliminate the 25-percent threshold policy under Sec.
412.538.
The goal of our proposal to eliminate the 25-percent threshold
policy is to reduce unnecessary regulatory burden. Independent of this
goal, we continue to believe aggregate LTCH PPS payments are
sufficient. Therefore, we do not believe that it would be appropriate
to change the aggregate amount of LTCH PPS payments on a permanent
basis. As described earlier, the 25-percent threshold policy would have
reduced the LTCH PPS payments for certain discharges, and if finalized,
this proposal to eliminate the 25-percent threshold policy would be
expected to result in an increase in aggregate LTCH PPS payments. As a
result, we believe that this proposal should be accomplished in a
budget-neutral manner.
With respect to the issue about the adequacy of LTCH payment
levels, we note that MedPAC, in each of its annual updates to Congress
since 2011, has concluded that current LTCH PPS payment levels are
appropriate, and thus has recommended since 2011 the elimination of the
annual update to the LTCH payment rates. (For example, we refer readers
to MedPAC's March 2011 ``Report to the Congress: Medicare Payment
Policy,'' Chapter 10, page 246, and MedPAC's March 2018 ``Report to the
Congress: Medicare Payment Policy,'' Chapter 11, page 315.) We believe
application of this burden reduction-related proposal to eliminate the
25-percent threshold policy would result in an unwarranted increase in
aggregate payment levels. Therefore, if we finalize our proposal to
eliminate the 25-percent threshold policy, under the broad authority of
section 123 of the BBRA, as amended by section 307(b) of the BIPA, we
also are proposing to make a one-time, permanent adjustment to the
proposed FY 2019 LTCH PPS standard Federal payment rate. That
adjustment would be set such that our projection of aggregate LTCH
payments in FY 2019 that would have been paid if the 25-percent
threshold policy had gone into effect (that is, as if the 25-percent
threshold policy under Sec. 412.538 remained in effect during FY 2019)
are equal to our projection of aggregate LTCH payments in FY 2019
payments for such cases in the absence of that policy.
To do this, we are proposing to remove the provisions of Sec.
412.538, reserve this section, and add a new paragraph (d)(6) to Sec.
412.523 to provide for a one-time permanent budget neutrality factor
adjustment to the LTCH PPS standard Federal payment rate to ensure that
removal of the 25-percent threshold policy at existing Sec. 412.538 is
budget neutral. (We note that, in the proposed Sec. 412.523(d)(6), we
refer to the 25-percent threshold policy as ``limitation on long-term
care hospital admissions from referring hospitals'', which is the title
of existing Sec. 412.538.) In addition, we are proposing to make
conforming technical changes to remove paragraph (c)(2)(v) of Sec.
412.522 and paragraph (d)(6) of Sec. 412.525.
Under this proposal, the budget neutrality adjustment would only be
applied to the LTCH PPS standard Federal payment rate (or such portion
of a blended payment) because payments made under the site neutral
payment rate would be unaffected by the 25-percent threshold policy.
(Discharges in excess of the 25-percent threshold policy would be paid
the lesser of the applicable LTCH payment or an IPPS equivalent
payment. The site neutral payment rate would remain set at the lesser
of the IPPS comparable amount or cost, neither of which would exceed
the IPPS equivalent payment amount.) However, because the applicable
site neutral payment rate for all LTCHs during all of FY 2019 is based
on the transitional blended payment rate (that is, 50 percent of the
site neutral payment rate and 50 percent of the LTCH PPS standard
Federal payment rate), any adjustment applied to the LTCH PPS standard
Federal payment rate would also need to be applied to the LTCH PPS
standard Federal rate portion of payments that affect site neutral
payment rate cases.
Therefore, as noted earlier, we must account for the change in
payments to both LTCH PPS standard Federal payment rate cases and site
neutral payment rate cases when determining the proposed budget
neutrality adjustment. To do so, we are proposing to use the following
methodology to determine the proposed budget neutrality factor that
would be applied to the proposed FY 2019 LTCH PPS standard Federal
payment rate using the best available LTCH claims data (the December
2017 update of the FY 2017 MedPAR files). Consistent with historical
practice, if more recent data become available, we are proposing to use
such data for the final rule.
Step 1--Simulate estimated aggregate FY 2019 LTCH PPS payments
(that is, both LTCH PPS standard Federal payment rate payment cases and
site neutral payment rate cases) without the 25-percent threshold
policy at Sec. 412.538.
Step 2--Estimate aggregate payments incorporating the payment
reduction under the 25-percent threshold policy at Sec. 412.538 as
follows:
Step 2a--Determine the applicable percentage threshold for
each LTCH. In general, the applicable percentage threshold is 25
percent; however, the applicable percentage threshold is 50 percent for
exclusively rural LTCHs, and LTCHs located in an MSA with an MSA-
dominant hospital get an adjusted threshold (Sec. 412.538(e)). To
determine the applicable percentage threshold for LTCHs located in an
MSA with an MSA-dominant hospital, we used IPPS claims data from the
March 2017 update

[[Page 20469]]

of the FY 2016 MedPAR files to determine, for each CBSA, the highest
discharge percentage among all IPPS providers within that CBSA. (As
discussed in section V. of the Addendum to this proposed rule, the
CBSA-based geographic classifications currently used under the LTCH PPS
are based on the OMB labor market area delineations based on the 2010
Decennial Census data (that is, are an MSA under Sec. 412.503). The
applicable percentage threshold for a given CBSA is this highest
discharge percentage unless this percentage is higher than 50 percent
or lower than 25 percent. In those cases, the threshold is 50 percent
or 25 percent, respectively (Sec. 412.538(e)(3)).
Step 2b--For each LTCH, determine the percentage of
Medicare discharges admitted from any single referring IPPS hospital,
consistent with Sec. 412.538(d)(2). To do so, we used the March 2017
update of the FY 2016 MedPAR files to determine the total discharges
for each LTCH and the number of applicable transfers from each
referring IPPS hospital. The referring IPPS hospital's applicable
transfers are the LTCH's Medicare discharges that were admitted from
that single referring IPPS hospital where an outlier payment was not
made to that referring hospital and for whom payment was not made by a
Medicare Advantage plan. The ratio of the referring IPPS hospital's
applicable transfers to the LTCH's total Medicare discharges,
multiplied by 100, is the percentage of Medicare discharges admitted
from any single referring IPPS hospital.
Step 2c--Estimate the aggregate payment reduction under
the 25-percent threshold policy:
(i) Determine the LTCH's discharges that are in excess of the
applicable percentage threshold by comparing the LTCH's percentage of
Medicare discharges admitted from each single referring IPPS hospital
(Step 2b) to the LTCH's applicable percentage threshold (Step 2a).
(ii) Estimate the aggregate payment reduction under the 25-percent
threshold policy for the Medicare discharges that caused the LTCH to
exceed or remain in excess of the threshold by summing the difference
between:
The original LTCH PPS payment amount (that is, the
otherwise applicable LTCH PPS payment without an adjustment under the
25-percent threshold policy); and
The estimated adjusted payment amount under the 25-percent
threshold policy. (We note that there is no payment adjustment under
the 25-percent threshold policy for discharges that are not in excess
of the LTCH's applicable percentage threshold.)
Step 3--Calculate the ratio of the estimated aggregate FY 2019 LTCH
PPS payments with and without the estimated aggregate payment reduction
under the 25-percent threshold policy to determine the adjustment
factor that would need to be applied to the proposed FY 2019 LTCH PPS
standard Federal payment rate to achieve budget neutrality (that is,
the adjustment that would have to be applied to the proposed FY 2019
LTCH PPS standard Federal payment rate so that the estimated aggregate
payments calculated in Step 1 are equal to the estimated aggregate
payments with the reduction as calculated in Step 2). This ratio is
calculated by dividing the estimated FY 2019 payments without
incorporating the estimated aggregate payment reduction under the 25-
percent threshold policy at Sec. 412.538 (calculated in Step 1) by the
estimated FY 2019 payments incorporating the estimated aggregate
payment reduction under the 25-percent threshold policy at Sec.
412.538 (calculated in Step 2). We note that, under Step 3, an
iterative process is used to determine the adjustment factor that would
need to be applied to the proposed FY 2019 LTCH PPS standard Federal
payment rate to achieve budget neutrality because the portion of
estimated FY 2019 payments that are not based on the LTCH PPS standard
Federal payment rate (that is, the IPPS comparable amount portion under
the SSO payment methodology and the site neutral payment rate portion
of the transitional blended payment rate payment for site neutral
payment rate discharges in FY 2019) are not affected by the application
of budget neutrality factor.
We also note that, under this step, the proposed budget neutrality
factor is applied to the proposed FY 2019 LTCH PPS standard Federal
payment rate after the application of the proposed FY 2019 annual
update and the proposed FY 2019 area wage level adjustment budget
neutrality factor (discussed in section V. of the Addendum to this
proposed rule).
Based on the FY 2017 LTCH claims data used for this proposed rule,
we estimate that our proposed elimination of the 25-percent threshold
policy would increase aggregate LTCH PPS payments by approximately $36
million. For this proposed rule, using the steps in the proposed
methodology described above, we have determined a proposed budget
neutrality factor for the proposed elimination of the 25-percent
threshold policy of 0.990535. Accordingly, in section V. of the
Addendum to this proposed rule, to determine the proposed FY 2019 LTCH
PPS standard Federal payment rate, we are proposing to apply a one-
time, permanent budget neutrality factor of 0.990535 for the proposed
elimination of the 25-percent threshold policy. The proposed FY 2019
LTCH PPS standard Federal payment rate shown in Table 1E reflects this
proposed adjustment.
As part of the reexamination and review of the 25-percent threshold
policy described earlier, we also considered proposing an additional 1-
year regulatory moratorium on the full implementation of the 25-percent
threshold policy. Such a policy would also have resulted in an
unwarranted increase in LTCH payments for the reasons discussed
earlier, and for these same reasons we also would have proposed to
implement such a moratorium in a budget neutral manner. We calculated
the budget neutrality factor that would have had to be applied to
address such increases during that 1-year delay in implementation using
the proposed methodology outlined above (that is, a factor of 0.990535)
to the LTCH PPS standard Federal payment rate for 1 year, FY 2019.
Furthermore, under such a proposal, we would have proposed to modify
Sec. 412.538 by revising the effective date to apply to discharges
occurring on or after October 1, 2019, and we would have proposed to
amend Sec. 412.523(d) to specify that the LTCH PPS standard Federal
payment rate would be adjusted for FY 2019 by a factor that would
ensure the 1-year delay in the implementation of the 25-percent
threshold policy at Sec. 412.538 for discharges occurring during FY
2019 would be budget neutral.
We are inviting public comments on our proposal to permanently
eliminate the 25-percent threshold policy in a budget neutral manner,
or, in the alternative, the adoption of an additional 1-year delay on
the implementation of the policy with a budget neutrality adjustment.
In addition, we are inviting public comments on whether the 25-percent
threshold policy should be retained in FY 2019 and subsequent years.

VIII. Quality Data Reporting Requirements for Specific Providers and
Suppliers

In section VIII. of the preamble of this proposed rule, we are
proposing changes to the following Medicare quality reporting systems:
In section VIII.A., the Hospital IQR Program;
In section VIII.B., the PCHQR Program; and

[[Page 20470]]

In section VIII.C., the LTCH QRP Program.
In addition, in section VIII.D. of the preamble of this proposed
rule, we are proposing changes to the Medicare and Medicaid Promoting
Interoperability Programs (previously known as the Medicare and
Medicaid EHR Incentive Programs) for eligible hospitals and critical
access hospitals (CAHs).
We refer readers to section I.A.2. of the preamble of this proposed
rule for a discussion of the Meaningful Measures Initiative.

A. Hospital Inpatient Quality Reporting (IQR) Program

1. Background
a. History of the Hospital IQR Program
The Hospital IQR Program strives to put patients first by ensuring
they are empowered to make decisions about their own healthcare along
with their clinicians using information from data-driven insights that
are increasingly aligned with meaningful quality measures. We support
technology that reduces burden and allows clinicians to focus on
providing high quality health care for their patients. We also support
innovative approaches to improve quality, accessibility, and
affordability of care, while paying particular attention to improving
clinicians' and beneficiaries' experiences when interacting with CMS
programs. In combination with other efforts across the Department of
Health and Human Services, we believe the Hospital IQR Program
incentivizes hospitals to improve health care quality and value, while
giving patients the tools and information needed to make the best
decisions for them.
We seek to promote higher quality and more efficient health care
for Medicare beneficiaries. This effort is supported by the adoption of
widely-agreed upon quality measures. We have worked with relevant
stakeholders to define measures of quality in almost every setting and
currently measure some aspect of care for almost all Medicare
beneficiaries. These measures assess structural aspects of care,
clinical processes, patient experiences with care, and outcomes. We
have implemented quality measure reporting programs for multiple
settings of care. To measure the quality of hospital inpatient
services, we implemented the Hospital IQR Program, previously referred
to as the Reporting Hospital Quality Data for Annual Payment Update
(RHQDAPU) Program. We refer readers to the FY 2010 IPPS/LTCH PPS final
rule (74 FR 43860 through 43861) and the FY 2011 IPPS/LTCH PPS final
rule (75 FR 50180 through 50181) for detailed discussions of the
history of the Hospital IQR Program, including the statutory history,
and to the FY 2015 IPPS/LTCH PPS final rule (79 FR 50217 through
50249), the FY 2016 IPPS/LTCH PPS final rule (80 FR 49660 through
49692), the FY 2017 IPPS/LTCH PPS final rule (81 FR 57148 through
57150), and the FY 2018 IPPS/LTCH PPS final rule (82 FR 38326 through
38328 and 82 FR 38348) for the measures we have adopted for the
Hospital IQR Program measure set through the FY 2019 and FY 2020
payment determinations and subsequent years.
b. Maintenance of Technical Specifications for Quality Measures
The technical specifications for chart-abstracted clinical process
of care measures used in the Hospital IQR Program, or links to websites
hosting technical specifications, are contained in the CMS/The Joint
Commission (TJC) Specifications Manual for National Hospital Inpatient
Quality Measures (Specifications Manual). This Specifications Manual is
posted on the QualityNet website at: https://www.qualitynet.org/. We
generally update the Specifications Manual on a semiannual basis and
include in the updates detailed instructions and calculation algorithms
for hospitals to use when collecting and submitting data on required
chart-abstracted clinical process of care measures.
The technical specifications for electronic clinical quality
measures (eCQMs) used in the Hospital IQR Program are contained in the
CMS Annual Update for Hospital Quality Reporting Programs (Annual
Update). This Annual Update is posted on the Electronic Clinical
Quality Improvement (eCQI) Resource Center web page at: https://ecqi.healthit.gov/. We generally update the measure specifications on
an annual basis through the Annual Update, which includes code updates,
logic corrections, alignment with current clinical guidelines, and
additional guidance for hospitals and EHR vendors to use in order to
collect and submit data on eCQMs from hospital EHRs. We refer readers
to section VIII.A.11.d.(1) of the preamble of this proposed rule in
which we discuss the transition to Clinical Quality Language (CQL)
beginning with the Annual Update that will be published in the spring
of 2018 and for implementation in CY 2019.
In addition, we believe that it is important to have in place a
subregulatory process to incorporate nonsubstantive updates to the
measure specifications for measures we have adopted for the Hospital
IQR Program so that these measures remain up-to-date. We refer readers
to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53504 through 53505) and
the FY 2015 IPPS/LTCH PPS final rule (79 FR 50203) for our policy for
using a subregulatory process to make nonsubstantive updates to
measures used for the Hospital IQR Program.
We recognize that some changes made to measures undergoing
maintenance review are substantive in nature and might not be
appropriate for adoption using a subregulatory process. For substantive
measure updates, after submission to the Measures Under Consideration
list and evaluation by the Measure Applications Partnership (MAP), we
will continue to use rulemaking to adopt those substantive measure
updates for the Hospital IQR Program. We refer readers to the FY 2017
IPPS/LTCH PPS final rule (81 FR 57111) for additional discussion of the
maintenance of technical specifications for quality measures for the
Hospital IQR Program. We also refer readers to the FY 2015 IPPS/LTCH
PPS final rule (79 FR 50202 through 50203) for additional details on
the measure maintenance process.
We are not proposing any changes to our policies on the measure
maintenance process in this proposed rule.
c. Public Display of Quality Measures
Section 1886(b)(3)(B)(viii)(VII) of the Act was amended by the
Deficit Reduction Act (DRA) of 2005. Section 5001(a) of the DRA
requires that the Secretary establish procedures for making information
regarding measures available to the public after ensuring that a
hospital has the opportunity to review its data before they are made
public. Our current policy is to report data from the Hospital IQR
Program as soon as it is feasible on CMS websites such as the Hospital
Compare website, https://www.medicare.gov/hospitalcompare after a 30-day
preview period (78 FR50776 through 50778).
Information is available to the public on the Hospital Compare
website. Hospital Compare is an interactive web tool that assists
beneficiaries and providers by providing information on hospital
quality of care to those who need to select a hospital and to support
quality improvement efforts. The Hospital IQR Program currently
includes measures capturing performance data on many aspects of care
provided in the acute inpatient hospital setting. For more information
on measures reported to Hospital Compare, we refer readers to the

[[Page 20471]]

website at: https://www.medicare.gov/hospitalcompare.
Other information that may not be as relevant to or easily
understood by beneficiaries and information for which there are
unresolved display issues or design considerations are not reported on
the Hospital Compare website and may be made available on other CMS
websites, such as https://data.medicare.gov. CMS also provides
stakeholders access to archived data from the Hospital Compare website,
which can be found at: https://data.medicare.gov/data/archives/hospital-compare. In this proposed rule, we are not proposing any
changes to these policies.
We note that in section VIII.A.10. of the preamble of this proposed
rule, we discuss our efforts to provide stratified data in hospital
confidential feedback reports and potentially making stratified data
publicly available on the Hospital Compare website in the future.
d. Meaningful Measures Initiative and the Hospital IQR Program
In this proposed rule, we are proposing a number of new policies
for the Hospital IQR Program. We developed these proposals after
conducting an overall review of the Program under our new ``Meaningful
Measures Initiative,'' which is discussed in more detail in section
I.A.2. of the preamble of this proposed rule. The proposals reflect our
efforts to ensure that the Hospital IQR Program measure set continues
to promote improved health outcomes for our beneficiaries while
minimizing costs, which can consist of several different types of
costs, including, but not limited to: (1) Provider and clinician
information collection burden and related cost and burden associated
with the submitting/reporting of quality measures to CMS; (2) the
provider and clinician cost associated with complying with other
quality programmatic requirements; (3) the provider and clinician cost
associated with participating in multiple quality programs, and
tracking multiple similar or duplicative measures within or across
those programs; (4) the CMS cost associated with the program oversight
of the measure, including measure maintenance and public display; and
(5) the provider and clinician cost associated with compliance with
other federal and/or State regulations (if applicable). They also
reflect our efforts to improve the usefulness of the data that we
publicly report in the Hospital IQR Program. Our goal is to improve the
usefulness and usability of CMS quality program data by streamlining
how providers are reporting and accessing data, while maintaining or
improving consumer understanding of the data publicly reported on a
Compare website.
As part of this review, we have taken a holistic approach to
evaluating the Hospital IQR Program's current measures in the context
of the measures used in the other IPPS quality programs (that is, the
Hospital Readmissions Reduction Program, the HAC Reduction Program, and
the Hospital VBP Program). We view the value-based purchasing programs
together as a collective set of hospital value-based programs.
Specifically, we believe the goals of the three value-based purchasing
programs (the Hospital VBP, Hospital Readmissions Reduction, and HAC
Reduction Programs) and the measures used in these programs together
cover the Meaningful Measures Initiative quality priorities of making
care safer, strengthening person and family engagement, promoting
coordination of care, promoting effective prevention and treatment of
illness, and making care affordable--but that the programs should not
add unnecessary complexity or costs associated with duplicative
measures across programs.
The Hospital Readmissions Reduction Program focuses on care
coordination measures, which address the quality priority of promoting
effective communication and care coordination within the Meaningful
Measures Initiative. The HAC Reduction Program focuses on patient
safety measures, which address the Meaningful Measures Initiative
quality priority of making care safer by reducing harm caused in the
delivery of care. As part of this holistic quality payment program
strategy, we believe the Hospital VBP Program should focus on the
measurement priorities not covered by the Hospital Readmissions
Reduction Program or the HAC Reduction Program. The Hospital VBP
Program would continue to focus on measures related to: (1) The
clinical outcomes, such as mortality and complications (which address
the Meaningful Measures Initiative quality priority of promoting
effective treatment); (2) patient and caregiver experience, as measured
using the HCAHPS Survey (which addresses the Meaningful Measures
Initiative quality priority of strengthening person and family
engagement as partners in their care); and (3) healthcare costs, as
measured using the Medicare Spending Per Beneficiary (MSPB)--Hospital
measure (which addresses the Meaningful Measures Initiative priority of
making care affordable). As part of this larger quality program
strategy, we believe the Hospital IQR Program should focus on measure
topics not covered in the other programs' measures. Although new
Hospital VBP measures will be selected from the measures specified
under the Hospital IQR Program, the Hospital VBP Program measure set
will no longer necessarily be a subset of the Hospital IQR Program
measure set. As discussed in section I.A.2. of the preamble of this
proposed rule, we are engaging in efforts aimed at evaluating and
streamlining regulations with the goal to reduce unnecessary costs,
increase efficiencies, and improve beneficiary experience. While there
may be some overlap between the Hospital IQR Program measure set and
the Hospital VBP measure set, allowing removal of duplicative measures
from the Hospital IQR Program once they have been adopted into the
Hospital VBP Program would further these goals. We believe this
framework will allow hospitals and patients to continue to obtain
meaningful information about hospital performance and incentivize
quality improvement while also streamlining the measure sets to reduce
duplicative measures and program complexity so that the costs to
hospitals associated with participating in these programs does not
outweigh the benefits of improving beneficiary care.
2. Retention of Previously Adopted Hospital IQR Program Measures for
Subsequent Payment Determinations
We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR
53512 through 53513) for our finalized measure retention policy.
Pursuant to this policy, when we adopt measures for the Hospital IQR
Program beginning with a particular payment determination, we
automatically readopt these measures for all subsequent payment
determinations unless we propose to remove, suspend, or replace the
measures. In this proposed rule, we are not proposing any changes to
this policy.
3. Considerations in Expanding and Updating Quality Measures
We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR
53510 through 53512) for a discussion of the previous considerations we
have used to expand and update quality measures under the Hospital IQR
Program. In this proposed rule, we are not proposing any changes to
these policies. We also refer readers to section I.A.2. of the preamble
of this proposed rule, in which we describe the quality topics that we
have identified as high impact measurement

[[Page 20472]]

areas that are relevant and meaningful to both patients and providers.
Furthermore, in selecting measures for the Hospital IQR Program, we
are mindful of the conceptual framework we have developed for the
Hospital VBP Program. Because measures adopted for the Hospital VBP
Program must first have been adopted under the Hospital IQR Program and
publicly reported on the Hospital Compare website for at least one
year, these two programs are linked. We view the value-based purchasing
programs, including the Hospital VBP Program, as the next step in
promoting higher quality care for Medicare beneficiaries by
transforming Medicare from a passive payer of claims into an active
purchaser of quality healthcare for its beneficiaries.
4. Removal Factors for Hospital IQR Program Measures
a. Current Policy
We most recently updated our measure removal and retention factors
in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49641 through
49643).\278\ The previously adopted removal factors are:
---------------------------------------------------------------------------

\278\ As discussed above, we generally retain measures from the
previous year's Hospital IQR Program measure set for subsequent
years' measure sets except when we specifically propose to remove,
suspend, or replace a measure. We refer readers to the FY 2011 IPPS/
LTCH PPS final rule (75 FR 50185) and the FY 2015 IPPS/LTCH PPS
final rule (79 FR 50203 through 50204) for more information on the
criteria we consider for removing quality measures. We refer readers
to the FY 2016 IPPS/LTCH PPS final rule (80 FR 49641 through 49643)
for more information on the additional factors we consider in
removing quality measures and the factors we consider in order to
retain measures. We note in the FY 2015 IPPS/LTCH PPS final rule (79
FR 50203 through 50204), we clarified the criteria for determining
when a measure is ``topped-out.''
---------------------------------------------------------------------------

Factor 1. Measure performance among hospitals is so high
and unvarying that meaningful distinctions and improvements in
performance can no longer be made (that is, ``topped-out'' measures):
statistically indistinguishable performance at the 75th and 90th
percentiles; and truncated coefficient of variation <= 0.10.
Factor 2. A measure does not align with the current
clinical guidelines or practice.
Factor 3. The availability of a more broadly applicable
measure (across settings, populations, or the availability of a measure
that is more proximal in time to desired patient outcomes for the
particular topic).
Factor 4. Performance or improvement on a measure does not
result in better patient outcomes.
Factor 5. The availability of a measure that is more
strongly associated with desired patient outcomes for the particular
topic.
Factor 6. Collection or public reporting of a measure
leads to negative unintended consequences other than patient harm.
Factor 7. It is not feasible to implement the measure
specifications.
We are not proposing to modify any existing removal factors.
b. Proposed New Measure Removal Factor
We are proposing to adopt an additional factor to consider when
evaluating measures for removal from the Hospital IQR Program measure
set: Factor 8, the costs associated with a measure outweigh the benefit
of its continued use in the program.
As we discuss in section I.A.2. of the preamble of this proposed
rule with respect to our new ``Meaningful Measures Initiative,'' we are
engaging in efforts to ensure that the Hospital IQR Program measure set
continues to promote improved health outcomes for beneficiaries while
minimizing the overall costs associated with the program. We believe
these costs are multifaceted and include not only the burden associated
with reporting, but also the costs associated with implementing and
maintaining the program. We have identified several different types of
costs, including, but not limited to: (1) Provider and clinician
information collection burden and related cost and burden associated
with the submission/reporting of quality measures to CMS; (2) the
provider and clinician cost associated with complying with other
quality programmatic requirements; (3) the provider and clinician cost
associated with participating in multiple quality programs, and
tracking multiple similar or duplicative measures within or across
those programs; (4) the CMS cost associated with the program oversight
of the measure, including measure maintenance and public display; and
(5) the provider and clinician cost associated with compliance with
other federal and/or State regulations (if applicable). For example, it
may be needlessly costly and/or of limited benefit to retain or
maintain a measure which our analyses show no longer meaningfully
supports program objectives (for example, informing beneficiary choice
or payment scoring). It may also be costly for health care providers to
track confidential feedback preview reports and publicly reported
information on a measure where we use the measure in more than one
program. CMS may also have to expend unnecessary resources to maintain
the specifications for the measure, as well as the tools needed to
collect, validate, analyze, and publicly report the measure data.
Furthermore, beneficiaries may find it confusing to see public
reporting on the same measure in different programs.
When these costs outweigh the evidence supporting the continued use
of a measure in the Hospital IQR Program, we believe it may be
appropriate to remove the measure from the Program. Although we
recognize that one of the main goals of the Hospital IQR Program is to
improve beneficiary outcomes by incentivizing health care providers to
focus on specific care issues and making public data related to those
issues, we also recognize that those goals can have limited utility
where, for example, the publicly reported data (including payment
determination data) are of limited use because they cannot be easily
interpreted by beneficiaries to influence their choice of providers. In
these cases, removing the measure from the Hospital IQR Program may
better accommodate the costs of program administration and compliance
without sacrificing improved health outcomes and beneficiary choice.
We are proposing that we would remove measures based on this factor
on a case-by-case basis. We might, for example, decide to retain a
measure that is burdensome for health care providers to report if we
conclude that the benefit to beneficiaries justifies the reporting
burden. Our goal is to move the program forward in the least burdensome
manner possible, while maintaining a parsimonious set of meaningful
quality measures and continuing to incentivize improvement in the
quality of care provided to patients.
We are inviting public comment on our proposal to adopt an
additional measure removal factor, ``the costs associated with a
measure outweigh the benefit of its continued use in the program,''
beginning with the effective date of the FY 2019 IPPS/LTCH PPS final
rule. We refer readers to section VIII.A.5.b. of the preamble of this
proposed rule, where we are proposing to remove a number of measures
based on this proposed removal factor.
5. Proposed Removal of Hospital IQR Program Measures
We refer readers to section VIII.A.4. of the preamble of this
proposed rule for a discussion of our current and proposed measure
removal criteria. In this proposed rule, we are proposing to remove a
total of 39 measures from the Hospital IQR Program across the FYs 2020,
2021, 2022, and 2023 payment

[[Page 20473]]

determinations as further discussed below.
a. Proposed Removal of Measure--Removal Factor 4, Performance or
Improvement on a Measure Does Not Result in Better Patient Outcomes:
Hospital Survey on Patient Safety Culture
We are proposing to remove the Hospital Survey on Patient Safety
Culture measure beginning with the CY 2018 reporting period/FY 2020
payment determination based on removal Factor 4, ``performance or
improvement on a measure does not result in better patient outcomes.''
The Hospital Survey on Patient Safety Culture measure was adopted in
the FY 2016 IPPS/LTCH PPS final rule (80 FR 49662 through 49664) for
the FY 2018 payment determination and subsequent years, to allow us to
assess whether and which patient safety culture surveys were being
utilized by hospitals and the frequency of their use. In that rule, we
stated our belief that this would be a time-limited measure that would
assist us in assessing the feasibility of implementing a single survey
on patient safety culture in the future (80 FR 49661). When we adopted
the measure, we acknowledged that we had not yet determined for how
many years we would keep the measure in the Hospital IQR Program (80 FR
49664). By design, this structural measure does not provide information
on patient outcomes, because hospitals are asked only whether they
administer a patient safety culture survey, and therefore, does not
result in better patient outcomes, removal Factor 4.
Our data indicate that 98 percent of hospitals have reported they
use some version of a patient safety culture survey; a large majority
of hospitals (69.6 percent) that reported on the measure for the CY
2016 reporting period/FY 2018 payment determination use the AHRQ
Surveys on Patient Safety Culture (SOPS).\279\ While we are proposing
to remove this measure, the data already collected would still help
inform consideration of a potential future patient safety culture
measure for the Hospital IQR Program. However, at this time, we believe
that the burden of reporting this measure outweighs the benefits of
continued data collection. Therefore, we are proposing to remove the
Hospital Survey on Patient Safety Culture measure for the CY 2018
reporting period/FY 2020 payment determination (for which the data
submission period is April 1, 2019 through May 15, 2019) and subsequent
years.
---------------------------------------------------------------------------

\279\ The Agency for Healthcare Research and Quality (AHRQ)
sponsored the development of patient safety culture assessment tools
for various healthcare organizations which assess patient safety
culture in a health care setting. Patient safety culture is the
extent to which an organization's culture supports and promotes
patient safety. The survey tools are measured by what is rewarded,
supported, and accepted, expected, and accepted in an organization
as it relates to patient safety. (https://www.ahrq.gov/sops/quality-patient-safety/patientsafetyculture/).
---------------------------------------------------------------------------

We are inviting public comment on our proposal.
b. Proposed Removal of Measures--Proposed Removal Factor 8, the Costs
Associated With a Measure Outweigh the Benefit of Its Continued Use in
the Program
We are proposing to remove a number of measures under our proposed
new removal Factor 8, the costs associated with a measure outweigh the
benefit of its continued use in the program, across the FYs 2020, 2021,
2022, and 2023 payment determinations. These proposals are presented by
measure type: (1) Structural measure: safe surgery checklist use; (2)
patient safety; (3) claims-based readmission; (4) claims-based
mortality; (5) hip/knee complications; (6) Medicare Spending Per
Beneficiary (MSPB)--Hospital (NQF #2158); (7) clinical episode-based
payment; (8) chart-abstracted clinical process of care; and (9) eCQMs.
These are discussed in detail below.
(1) Structural Measure: Safe Surgery Checklist Use
We refer readers to the FY 2013 IPPS/LTCH PPS final rule where we
adopted the Safe Surgery Checklist Use measure (77 FR 53531 through
53533). We are proposing to remove the Safe Surgery Checklist Use
measure beginning with the CY 2018 reporting period/FY 2020 payment
determination under proposed removal Factor 8, the costs associated
with a measure outweigh the benefit of its continued use in the
program.
We refer readers to section VIII.A.4.b. of the preamble of this
proposed rule, where we acknowledge that costs are multi-faceted and
include not only the burden associated with reporting, but also the
costs associated with implementing and maintaining the program. For
example, we believe it may be unnecessarily costly for health care
providers to report a measure for which our analyses show that there is
no meaningful difference in performance or there is little room for
continued improvement.
Based on our review of reported data on this measure, there is no
meaningful difference in performance or there is little room for
continued improvement. Our analysis is captured by the table below:

--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of 75th 90th
Payment determination Encounters hospitals Rate percentile percentile Truncated COV
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2017................................... CY 2015 Q1-Q4............... 3,201 0.961 100.00 100.00 0.201
FY 2018................................... CY 2016 Q1-Q4............... 3,195 0.968 100.00 100.00 0.181
--------------------------------------------------------------------------------------------------------------------------------------------------------

Based on the analysis above, the national rate of ``Yes'' response
for this measure is nearly 1.0, or 100 percent, nationwide, and has
remained at this level for the last two years, such that there is no
distinguishable difference in hospital performance between the 75th and
90th percentiles. In addition, the truncated coefficient of variation
has decreased such that it is trending towards 0.10. Our analysis
indicates that performance on this measure is trending towards topped-
out status, that is to say, safe surgery checklists for surgical
procedures are widely in use and there is little room for improvement
on this structural measure.
In addition, we believe this measure is of more limited utility for
internal hospital quality improvement efforts. This structural measure
of hospital process determines whether a hospital utilizes a safe
surgery checklist that assesses whether effective communication and
safe practices are performed during three distinct perioperative
periods. For the measure, hospitals indicate by ``Yes'' or ``No''
whether or not they use a safe surgery checklist for surgical
procedures that includes safe surgery practices during each of the
aforementioned perioperative periods. The measure does not require a
hospital to report whether it uses a checklist in connection with each
individual inpatient procedure.
Furthermore, removal of this measure would alleviate burden to
hospitals associated with reporting on this measure. We anticipate a
reduction in information collection burden because

[[Page 20474]]

reporting on this measure takes hospitals approximately two minutes
each year (77 FR 53666). As such, we believe the costs associated with
reporting on this measure outweigh the associated benefits of keeping
it in the Hospital IQR Program because it no longer meaningfully
supports the Program objective of informing beneficiary choice since
safe surgery checklists are widely in use.
Therefore, we are proposing to remove the Safe Surgery Checklist
Use measure beginning with the CY 2018 reporting period/FY 2020 payment
determination, for which the data submission period is April 1, 2019
through May 15, 2019, under proposed removal Factor 8, the costs
associated with a measure outweigh the benefit of its continued use in
the program. We also refer readers to the CY 2018 OPPS/ASC PPS final
rule in which the Hospital OQR and ASCQR Programs finalized removal of
the Safe Surgery Checklist Use measure beginning with the CY 2018
reporting period/CY 2020 payment determination for the Hospital OQR
Program and with the CY 2019 payment determination for the ASCQR
Program (82 FR 52363 through 52364; 82 FR 52571 through 52572; and 82
FR 52588 through 52589). We note that if the proposed removal Factor 8
is not finalized, removal of this measure would not be finalized.
We are inviting public comment on our proposal.
(2) Patient Safety Measures
We are proposing to remove the Patient Safety and Adverse Events
Composite \280\ (PSI 90) beginning with the CY 2018 reporting period/FY
2020 payment determination and five National Health and Safety Network
(NHSN) hospital-acquired infection (HAI) measures beginning with the CY
2019 reporting period/FY 2021 payment determination under the proposed
removal Factor 8, the costs associated with a measure outweigh the
benefit of its continued use in the program.
---------------------------------------------------------------------------

\280\ We note that measure stewardship of the recalibrated
version of the Patient Safety and Adverse Events Composite (PSI 90)
is transitioning from AHRQ to CMS and, as part of the transition,
the measure will be referred to as the CMS Recalibrated Patient
Safety Indicators and Adverse Events Composite (CMS PSI 90) when it
is used in CMS quality programs.
---------------------------------------------------------------------------

(a) Proposed Removal for CY 2018 Reporting Period/FY 2020 Payment
Determination--Patient Safety and Adverse Events Composite (PSI 90)
(NQF #0531) (Adopted at 73 FR 48602, Refined at 81 FR 57128 Through
57133)
We are proposing to remove PSI 90 beginning with the FY 2020
payment determination (which would use a performance period of July 1,
2016 through June 30, 2018). As PSI 90 is a claims-based measure, it
uses claims and administrative data to calculate the measure without
any additional data collection from hospitals. Thus, operationally, we
would be able to remove the PSI 90 measure sooner than the NHSN HAI
measures. Our reasons for proposing to remove this measure are
discussed further below.
(b) Proposed Removals for the CY 2019 Reporting Period/FY 2021 Payment
Determination
National Healthcare Safety Network (NHSN) Facility-wide
Inpatient Hospital-onset Clostridium difficile Infection (CDI) Outcome
Measure (NQF #1717) (adopted at 76 FR 51630 through 51631);
National Healthcare Safety Network (NHSN) Catheter-
Associated Urinary Tract Infection (CAUTI) Outcome Measure (NQF #0138)
(adopted at 76 FR 51616 through 51618);
National Healthcare Safety Network (NHSN) Central Line-
Associated Bloodstream Infection (CLABSI) Outcome Measure (NQF #0139)
(adopted at 75 FR 50200 through 50202);
National Healthcare Safety Network (NHSN) Facility-wide
Inpatient Hospital-onset Methicillin-Resistant Staphylococcus Aureus
Bacteremia (MRSA) Outcome Measure (NQF # 1716) (adopted at 76 FR
51630); and
American College of Surgeons--Centers for Disease Control
and Prevention (ACS-CDC) Harmonized Procedure Specific Surgical Site
Infection (SSI) Outcome Measure (NQF #0753) (Colon and Abdominal
Hysterectomy SSIs) (adopted at 75 FR 50200 through 50202).
We are proposing to remove the CDI, CAUTI, CLABSI, MRSA Bacteremia,
and Colon and Abdominal Hysterectomy SSI measures from the Hospital IQR
Program beginning with the CY 2019 reporting period/FY 2021 payment
determination. These measures would remain in the Hospital IQR Program
until that time, and their reporting would still be tied to FY 2019 and
FY 2020 payment adjustments under the Hospital IQR Program. Although we
are proposing to remove these measures from the Hospital IQR Program,
we are not proposing to remove them from the HAC Reduction Program, and
they will continue to be tied to the payment adjustment under that
program (section IV.J.1. of the preamble of this proposed rule). After
removal from the Hospital IQR Program, these measures would continue to
be reported on the Hospital Compare website under the public reporting
requirements of the HAC Reduction Program. We are proposing to remove
these measures beginning with the FY 2021 payment determination because
hospitals already would have collected and reported data for the first
three quarters of the CY 2018 reporting period for the FY 2020 payment
determination by the time of publication of the FY 2019 IPPS/LTCH PPS
final rule. Removing these five NHSN HAI measures in the proposed
timeline would allow us to use the data already reported by hospitals
in the CY 2018 reporting period for purposes of the FY 2020 payment
adjustment.
We are proposing to remove these six measures under proposed
removal Factor 8, the costs associated with a measure outweigh the
benefit of its continued use in the program. We believe that removing
the PSI 90, CDI, CAUTI, CLABSI, MRSA, and Colon and Abdominal
Hysterectomy SSI measures from one program would eliminate development
and release of duplicative and potentially confusing CMS confidential
feedback reports provided to hospitals across multiple hospital quality
and value-based purchasing programs. We refer readers to section
VIII.A.4.b. of the preamble of this proposed rule where we discuss
examples of the costs associated with implementing and maintaining
these measures for the programs. For example, it may be costly for
health care providers to track the confidential feedback, preview
reports, and publicly reported information on a measure where we use
the measure in more than one program. Health care providers incur
additional cost to monitor measure performance in multiple programs for
internal quality improvement and financial planning purposes when
measures are used across value-based purchasing programs. Hospitals
currently review multiple feedback reports for the NHSN HAI measures
from three different hospital quality programs that use three different
reporting periods, which result in interpreting slightly different
measure rates for the same measures (under the Hospital IQR Program, a
rolling four quarters of data are used to update the Hospital Compare
website;

[[Page 20475]]

under the Hospital VBP Program, 1-year periods are used for each of the
baseline period and the performance period; and under the HAC Reduction
Program, a 2-year performance period is used). Beneficiaries may also
find it confusing to see public reporting on the same measures in
different programs. In addition, maintaining the specifications for the
measures, as well as the tools we need to collect, validate, analyze,
and publicly report the measure data result in costs to CMS.
We believe the costs as discussed above outweigh the associated
benefit to beneficiaries of receiving the same information from
multiple programs, because that information can be captured through
inclusion of these measures solely in the HAC Reduction Program.
Although we are proposing to remove these six patient safety measures
from the Hospital IQR Program, we continue to recognize that improving
patient safety and reducing NHSN HAIs is an important quality area, and
we still believe these measures provide significant data on patient
safety outcomes during inpatient hospitalization. For these reasons,
and as discussed below, we intend to continue to use these measures in
the HAC Reduction Program. Unlike the Hospital IQR Program, performance
data on measures maintained in the HAC Reduction Program are used both
to assess the quality of care provided at a hospital and to calculate
incentive payment adjustments for a given year of the Program based on
performance. Also, the HAC Reduction Program's incentive payment
structure ties hospitals' payment adjustments on claims paid under the
IPPS to their performance on selected quality measures, including the
above measures which are already included in the HAC Reduction Program,
sufficiently incentivizing performance improvement on these measures
among participating hospitals. By keeping the measures in the HAC
Reduction Program, patients, hospitals, and the public continue to
receive information about the quality of care provided with respect to
these measures.
We believe that removing these measures from the Hospital IQR
Program, while keeping them in the HAC Reduction Program, strikes an
appropriate balance of benefits in driving improvement on patient
safety and costs associated with retaining these measures in more than
one program, while continuing to keep patient safety improvement and
reducing NHSN HAIs as high priorities. We refer readers to section
IV.J.1. of the preamble of this proposed rule where we discuss safety
measures included in the HAC Reduction Program. As discussed in section
VIII.A.4.b. of the preamble of this proposed rule, one of our main
goals is to move forward in the least burdensome manner possible, while
maintaining a parsimonious set of the most meaningful quality measures
and continuing to incentivize improvement in the quality of care
provided to patients. We believe retaining these measures in the HAC
Reduction Program addresses the Meaningful Measures Initiative quality
priority of making care safer by reducing harm caused in the delivery
of care.\281\ In addition, as discussed in section I.A.2. of the
preamble of this proposed rule, we believe keeping these measures in
both programs no longer aligns with our goal of not adding unnecessary
complexity or cost with duplicative measures across programs.
---------------------------------------------------------------------------

\281\ https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/MMF/General-info-Sub-Page.html.
---------------------------------------------------------------------------

Therefore, we are proposing to remove the: (1) PSI 90 measure for
the FY 2020 payment determination (which applies to the performance
period of July 1, 2016 through June 30, 2018) and subsequent years; and
(2) CDI, CAUTI, CLABSI, MRSA, and Colon and Abdominal Hysterectomy SSI
measures for the CY 2019 reporting period/FY 2021 payment determination
and subsequent years. We refer readers to section IV.I.2.c.(2) of the
preamble of this proposed rule, where we also are proposing to remove
these same measures from the Hospital VBP Program. We note that if the
proposed removal Factor 8 is not finalized, removal of this measure
would not be finalized.
We are inviting public comment on our proposals.
(3) Claims-Based Readmission Measures
We are proposing to remove the following seven claims-based
readmission measures beginning with the FY 2020 payment determination:
Hospital 30-Day, All-Cause, Risk-Standardized Readmission
Rate (RSRR) Following Acute Myocardial Infarction (AMI) Hospitalization
(NQF #0505) (READM-30-AMI) (adopted at 73 FR 68781);
Hospital 30-Day, All-Cause, Risk-Standardized Readmission
Rate (RSRR) Following Coronary Artery Bypass Graft (CABG) Surgery (NQF
#2515) (READM-30-CABG) (adopted at 79 FR 50220 through 50224);
Hospital 30-Day, All-Cause, Risk-Standardized Readmission
Rate (RSRR) Following Chronic Obstructive Pulmonary Disease (COPD)
Hospitalization (NQF #1891) (READM-30-COPD) (adopted at 78 FR 50790
through 50792);
Hospital 30-Day, All-Cause, Risk-Standardized Readmission
Rate (RSRR) Following Heart Failure (HF) Hospitalization (NQF #0330)
(READM-30-HF) (adopted at 73 FR 48606);
Hospital 30-Day, All-Cause, Risk-Standardized Readmission
Rate (RSRR) Following Pneumonia Hospitalization (NQF #0506) (READM-30-
PN) (adopted at 73 FR 68780 through 68781);
Hospital-Level 30-Day, All-Cause, Risk-Standardized
Readmission Rate (RSRR) Following Elective Primary Total Hip
Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) (NQF #1551)
(READM-30-THA/TKA) (adopted at 77 FR 53519 through 53521); and
30-Day Risk-Standardized Readmission Rate Following Stroke
Hospitalization (READM-30-STK) (adopted at 78 FR 50794 through 50798).
We are proposing to remove READM-30-AMI, READM-30-CABG, READM-30-
COPD, READM-30-HF, READM-30-PN, and READM-30-THA/TKA under proposed
removal Factor 8, the costs associated with a measure outweigh the
benefit of its continued use in the program. (The READM-30-STK measure
is discussed further below.) We believe removing these measures from
the Hospital IQR Program would eliminate costs associated with
implementing and maintaining these measures for the program, and in
particular, development and release of duplicative and potentially
confusing CMS confidential feedback reports provided to hospitals
across multiple hospital quality and value-based purchasing programs.
We refer readers to section VIII.A.4.b. of the preamble of this
proposed rule where we discuss examples of the costs associated with
implementing and maintaining these measures for the programs. For
example, it may be costly for health care providers to track the
confidential feedback, preview reports, and publicly reported
information on a measure where we use the measure in more than one
program. Health care providers incur additional cost to monitor measure
performance in multiple programs for internal quality improvement and
financial planning purposes when measures are used across value-based
purchasing programs. Beneficiaries may also find it confusing to see
public reporting on the same measures in different programs. In
addition, maintaining the specifications

[[Page 20476]]

for the measures, as well as the tools we need to analyze and publicly
report the measure data result in costs to CMS. We believe the costs as
described above outweigh the associated benefit to beneficiaries of
receiving the same information from multiple programs, because that
information can be captured through inclusion of these measures solely
in the Hospital Readmissions Reduction Program. We believe the benefit
to beneficiaries of keeping this measure in the Hospital IQR Program is
limited because the public would continue to receive measure
information via another CMS quality program.
Because we continue to believe these measures provide important
data on patient outcomes following inpatient hospitalization
(addressing the Meaningful Measures Initiative quality priority of
promoting effective communication and coordination of care), we will
continue to use these measures in the Hospital Readmissions Reduction
Program. By keeping the measures in the Hospital Readmissions Reduction
Program, patients, hospitals, and the public would continue to receive
information about the quality of care provided with respect to these
measures.
Unlike the Hospital IQR Program, performance data on measures
maintained in the Hospital Readmissions Reduction Program are used both
to assess the quality and value of care provided at a hospital and to
calculate incentive payment adjustments for a given year of the program
based on performance. The Hospital Readmissions Reduction Program's
incentive payment structure ties hospitals' payment adjustments on
claims paid under the IPPS to their performance on selected quality
measures, including the above measures which are already in the
Hospital Readmissions Reduction Program, sufficiently incentivizing
performance improvement on these measures among participating
hospitals. As discussed in section VIII.A.4.b. of the preamble of this
proposed rule, one of our main goals is to move the program forward in
the least burdensome manner possible, while maintaining a parsimonious
set of the most meaningful quality measures and continuing to
incentivize improvement in the quality of care provided to patients,
and we believe removing these measures from the Hospital IQR Program is
the best way to achieve this. In addition, as discussed in section
I.A.2. of the preamble of this proposed rule, we believe keeping these
measures in both programs no longer aligns with our goal of not adding
unnecessary complexity or cost with duplicative measures across
programs.
Furthermore, we are proposing to remove the READM-30-STK measure
under proposed removal Factor 8, the costs associated with a measure
outweigh the benefit of its continued use in the program. The READM-30-
STK measure collects important hospital-level, risk-standardized
readmission rates following inpatient hospitalizations for strokes (78
FR 50794). However, these data also are captured in the Hospital-Wide
All-Cause Unplanned Readmission Measure (HWR) adopted into the Hospital
IQR Program in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53521
through 53528), because that measure comprises a single summary score,
derived from the results of different models for each of the following
specialty cohorts: medicine; surgery/gynecology; cardiorespiratory;
cardiovascular; and neurology (77 FR 53522). These cohorts cover
conditions and procedures defined by the AHRQ CCS, which collapsed more
than 17,000 different ICD-9-CM diagnoses and procedure codes into 285
clinically-coherent, mutually-exclusive condition categories and 231
mutually-exclusive procedure categories (77 FR 53525). Readmission
rates following inpatient hospitalizations for strokes are captured in
that information, specifically, the neurology cohort. We believe that
the costs associated with interpreting the requirements for two
measures with overlapping data points outweigh the benefit to
beneficiaries of the additional information provided by this measure,
because the measure data are already captured within another measure in
the Hospital IQR Program. Also, maintaining the specifications for this
measure, as well as the tools we need to analyze and publicly report
the measure data result in costs to CMS. Thus, removing the READM-30-
STK measure would help to reduce duplicative data and produce a more
harmonized and streamlined measure set. As discussed in section
VIII.A.4.b. of the preamble of this proposed rule, one of our main
goals is to move forward in the least burdensome manner possible, while
maintaining a parsimonious set of the most meaningful quality measures
and continuing to incentivize improvement in the quality of care
provided to patients, and we believe removing this measure from the
Hospital IQR Program is the best way to do that.
We recognize, however, that including condition- and procedure-
specific clinical quality measure data can provide hospitals with
actionable feedback to better equip them to implement targeted
improvements in comparison to an overall quality measure. In addition,
condition- and procedure-specific measures can provide valuable data to
specialty societies by clearly assessing performance for their
specialty, and may be valuable to persons and families who prefer
information on certain conditions and procedures relevant to them. The
Hospital-Wide Readmission measure, unlike condition- and procedure-
specific measures, also requires improvement in quality across multiple
service lines to produce improvement in the overall rate, which may
give the perception of slower or smaller gains in hospital quality.
Conversely, hospitals would still have a strong motivation to improve
stroke readmissions performance if they want to improve their overall
performance on the Hospital-Wide Readmission measure posted on Hospital
Compare.
Therefore, we are proposing to remove the READM-30-AMI, READM-30-
CABG, READM-30-COPD, READM-30-HF, READM-30-PN, READM-30-THA/TKA, and
READM-30-STK measures for the FY 2020 payment determination (which
would apply to the performance period of July 1, 2015 through June 30,
2018) and subsequent years. We note that if the proposed removal Factor
8 is not finalized, removal of these measures would not be finalized.
We are inviting public comment on our proposal to remove these
measures from the Hospital IQR Program as well as feedback on whether
there are reasons to retain one or more of the measures in the Hospital
IQR Program.
(4) Claims-Based Mortality Measures
We are proposing to remove five claims-based mortality measures
across the FYs 2020, 2021, and 2022 payment determinations and
subsequent years:
Hospital 30-Day, All-Cause, Risk-Standardized Mortality
Rate Following Acute Myocardial Infarction (AMI) Hospitalization (NQF
#0230) (MORT-30-AMI) beginning with the FY 2020 payment determination
(adopted at 71 FR 68206);
Hospital 30-Day, All-Cause, Risk-Standardized Mortality
Rate Following Heart Failure (HF) Hospitalization Surgery (NQF #0229)
(MORT-30-HF) beginning with the FY 2020 payment determination (adopted
at 71 FR 68206);
Hospital 30-Day, All-Cause, Risk-Standardized Mortality
Rate Following Chronic Obstructive Pulmonary Disease (COPD) (NQF #1893)
(MORT-30-COPD) beginning with the FY 2021 payment determination
(adopted at 78 FR 50792 through 50794);

[[Page 20477]]

Hospital 30-Day, All-Cause, Risk-Standardized Mortality
Rate Following Pneumonia Hospitalization (NQF #0468) (MORT-30-PN)
beginning with the FY 2021 payment determination (adopted at 72 FR
47351); and,
Hospital 30-Day, All-Cause, Risk-Standardized Mortality
Rate Following Coronary Artery Bypass Graft (CABG) Surgery (NQF #2515)
(MORT-30-CABG) beginning with the FY 2022 payment determination
(adopted at 79 FR 50224 through 50227).
We are proposing to remove MORT-30-AMI, MORT-30-HF, MORT-30-COPD,
MORT-30-PN, and MORT-30-CABG under proposed removal Factor 8, the costs
associated with a measure outweigh the benefit of its continued use in
the program. Removing these measures from the Hospital IQR Program
would eliminate costs associated with implementing and maintaining
these measures for the program, and in particular, development and
release of duplicative and potentially confusing CMS confidential
feedback reports provided to hospitals for both the Hospital IQR and
Hospital VBP Programs. We refer readers to section VIII.A.4.b. of this
proposed rule where we discuss examples of the costs associated with
implementing and maintaining these measures for the programs. For
example, it may be costly for health care providers to track the
confidential feedback, preview reports, and publicly reported
information on a measure where we use the measure in more than one
program. Health care providers incur additional cost to monitor measure
performance in multiple programs for internal quality improvement and
financial planning purposes when measures are used across value-based
purchasing programs. Beneficiaries may also find it confusing to see
public reporting on the same measures using different reporting periods
in different programs. In addition, maintaining the specifications for
the measures, as well as the tools we need to analyze and publicly
report the measure data result in costs to CMS. We believe the costs
associated with reviewing multiple feedback reports on these measures
for more than one program outweigh the associated benefit to
beneficiaries of receiving the same information from multiple programs,
because that information can be captured through inclusion of these
measures solely in the Hospital VBP Program.
We continue to believe these measures provide important data on
patient outcomes following inpatient hospitalization (addressing the
Meaningful Measures Initiative quality priority of promoting effective
communication and coordination of care), which is why we will continue
to use these measures in the Hospital VBP Program. Unlike the Hospital
IQR Program, performance data on measures maintained in the Hospital
VBP Program are used both to assess the quality and value of care
provided at a hospital and to calculate incentive payment adjustments
for a given year of the program based on performance. The Hospital VBP
Program's incentive payment structure ties hospitals' payment
adjustments on claims paid under the IPPS to their performance on
selected quality measures, including the above listed measures,
sufficiently incentivizing performance improvement on these measures
among participating hospitals. By keeping the measures in the Hospital
VBP Program, patients, hospitals, and the public continue to receive
information about the quality of care provided with respect to these
measures.
As discussed in section VIII.A.4.b. of the preamble of this
proposed rule, one of our main goals is to move forward in the least
burdensome manner possible, while maintaining a parsimonious set of the
most meaningful quality measures and continuing incentivize improvement
in the quality of care provided to patients, and we believe removing
these measures from the Hospital IQR Program is the best way to achieve
that goal. In addition, as discussed in section I.A.2. of the preamble
of this proposed rule, we believe keeping these measures in both
programs no longer aligns with our goal of not adding unnecessary
complexity or cost with duplicative measures across programs.
We note that the Hospital VBP Program has adopted the MORT-30-COPD
measure beginning with the FY 2021 program year (80 FR 49558), the
MORT-30-PN measure (modified with the expanded cohort) beginning with
the FY 2021 program year (81 FR 56996), and the MORT-30-CABG measure
beginning with the FY 2022 program year (81 FR 56998). Therefore, we
are proposing to stagger the beginning date of the removals of these
measures from the Hospital IQR Program to avoid a gap in public
reporting of measure data. For the Hospital IQR Program, we are
proposing to remove the: (1) MORT-30-AMI and MORT-30-HF measures for
the FY 2020 payment determination (which would use a performance period
of July 1, 2015 through June 30, 2018) and subsequent years; (2) MORT-
30-COPD and MORT-30-PN measures for the FY 2021 payment determination
(which would use a performance period of July 1, 2016 through June 30,
2019) and subsequent years; and (3) MORT-30-CABG measure for the FY
2022 payment determination (which would use a performance period of
July 1, 2017 through June 30, 2020) and subsequent years. We note that
if the proposed removal Factor 8 is not finalized, removal of these
measures would not be finalized.
We are inviting public comment on our proposal.
(5) Hospital-Level Risk-Standardized Complication Rate (RSCR) Following
Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee
Arthroplasty (TKA) (NQF #1550) (Hip/Knee Complications) Measure
We are proposing to remove one complications measure, Hospital-
level Risk-Standardized Complication Rate (RSCR) Following Elective
Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty
(TKA) (NQF #1550) (Hip/Knee Complications), beginning with the FY 2023
payment determination, under proposed removal Factor 8, the costs
associated with a measure outweigh the benefit of its continued use in
the program. We refer readers to FY 2013 IPPS/LTCH PPS final rule (77
FR 53516 through 53518), where we adopted this measure.
We believe that removing this measure from the Hospital IQR Program
would eliminate costs associated with implementing and maintaining the
measure for the program, and in particular, development and release of
duplicative and potentially confusing CMS confidential feedback reports
provided to hospitals across multiple hospital quality and value-based
purchasing programs. We refer readers to section VIII.A.4.b. of the
preamble of this proposed rule where we discuss examples of the costs
associated with implementing and maintaining these measures for the
programs. For example, it may be costly for health care providers to
track the confidential feedback, preview reports, and publicly reported
information on this measure as we also use the measure in the Hospital
VBP Program and the Comprehensive Care for Joint Replacement model (CJR
model). Health care providers incur additional cost to monitor measure
performance in multiple programs for internal quality improvement and
financial planning purposes when measures are used across value-based
purchasing programs. Beneficiaries may also find it confusing to see
public reporting on the same measure in different programs. In
addition, maintaining the specifications for the measure, as well as
the tools we need to

[[Page 20478]]

analyze and publicly report the measure data result in cost to CMS. We
believe the costs as discussed above outweigh the associated benefit to
beneficiaries of receiving the same information from more than one
program, because that information can be captured through inclusion of
this measure in the Hospital VBP Program.
As discussed in section VIII.A.4.b. of the preamble of this
proposed rule, one of our main goals is to move the program forward in
the least burdensome manner possible, while maintaining a parsimonious
set of the most meaningful quality measures and continuing to
incentivize improvement in the quality of care provided to patients,
and we believe removing this measure from the Hospital IQR Program is
the best way to achieve this goal. We believe retaining the Hip/Knee
Complications measure in both the Hospital IQR Program and the Hospital
VBP Program no longer aligns with our current goal of not adding
unnecessary complexity or cost with duplicative measures across
programs, as stated in section I.A.2. of the preamble of this proposed
rule.
We continue to believe this measure provides important data on
patient outcomes following inpatient hospitalization (addressing the
Meaningful Measures Initiative quality priority of promoting effective
treatment), which is why we will continue to use this measure in the
Hospital VBP Program. Unlike the Hospital IQR Program, performance data
on measures maintained in the Hospital VBP Program are used both to
assess the quality and value of care provided at a hospital and to
calculate incentive payment adjustments for a given year of the program
based on performance. The Hospital VBP Program's incentive payment
structure ties hospitals' payment adjustments on claims paid under the
IPPS to their performance on selected quality measures, including the
Hip/Knee Complications measure, sufficiently incentivizing performance
improvement on this measure among participating hospitals. By keeping
the measure in the Hospital VBP Program, patients, hospitals, and the
public continue to receive information about the quality of care
provided with respect to this measure.
Therefore, we are proposing to remove the Hip/Knee Complications
measure from the Hospital IQR Program beginning with the FY 2023
payment determination (which applies to the performance period of April
1, 2018 through March 31, 2021) and subsequent years. We chose to
propose this timeframe because the Comprehensive Care for Joint
Replacement model (CJR model) previously adopted the same measure and
requires use of data collected under the Hospital IQR Program through
the FY 2022 payment determination (which would use a performance period
of April 1, 2017 through March 31, 2020) (80 FR 73507). After removal
from the Hospital IQR Program, we note that this measure would continue
to be reported on the Hospital Compare website under the public
reporting requirements of the Hospital VBP Program. In addition, if the
proposed removal Factor 8 is not finalized, removal of this measure
would not be finalized.
We are inviting public comment on our proposal.
(6) Medicare Spending Per Beneficiary (MSPB)--Hospital Measure (NQF
#2158) (MSPB)
We are proposing to remove one resource use measure, Medicare
Spending Per Beneficiary (MSPB)--Hospital (NQF #2158) (MSPB), from the
Hospital IQR Program beginning with the FY 2020 payment determination,
under the proposed removal Factor 8, the costs associated with a
measure outweigh the benefit of its continued use in the program. We
refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51619)
where we adopted this measure.
We believe that removing this measure from the Hospital IQR Program
would eliminate costs associated with implementing and maintaining the
measure, and in particular, development and release of duplicative and
potentially confusing CMS confidential feedback reports provided to
hospitals across multiple hospital quality and value-based purchasing
programs. We refer readers to section VIII.A.4.b. of the preamble of
this proposed rule where we discuss examples of the costs associated
with implementing and maintaining these measures for the programs. For
example, it may be costly for health care providers to track the
confidential feedback, preview reports, and publicly reported
information on this measure as we use the measure in the Hospital VBP
Program. Health care providers incur additional cost to monitor measure
performance in multiple programs for internal quality improvement and
financial planning purposes when measures are used across value-based
purchasing programs. Beneficiaries may also find it confusing to see
public reporting on the same measure in different programs. In
addition, maintaining the specifications for the measure, as well as
the tools we need to analyze and publicly report the measure data
result in costs to CMS. We believe the costs as discussed above
outweigh the associated benefit to beneficiaries of receiving the same
information from multiple programs, because that information can be
captured through inclusion of this measure solely in the Hospital VBP
Program.
As discussed in section VIII.A.4.b. of the preamble of this
proposed rule, one of our main goals is to move the program forward in
the least burdensome manner possible, while maintaining a parsimonious
set of the most meaningful quality measures and continuing to
incentivize improvement in the quality of care provided to patients,
and we believe removing this measure from the Hospital IQR Program
helps achieve that goal. In addition, as discussed in section I.A.2. of
the preamble of this proposed rule, we believe keeping this measure in
both programs no longer aligns with our goal of not adding unnecessary
complexity or cost with duplicative measures across programs.
We continue to believe this measure provides important data on
resource use (addressing the Meaningful Measures Initiative priority of
making care affordable), which is why we will continue to use this
measure in the Hospital VBP Program. Unlike the Hospital IQR Program,
performance data on measures maintained in the Hospital VBP Program are
used both to assess the quality and value of care provided at a
hospital and to calculate incentive payment adjustments for a given
year of the program based on performance. The Hospital VBP Program's
incentive payment structure ties hospitals' payment adjustments on
claims paid under the IPPS to their performance on selected quality
measures, including the MSPB measure, sufficiently incentivizing
performance improvement on this measure among participating hospitals.
By keeping the measure in the Hospital VBP Program, patients,
hospitals, and the public continue to receive information about the
quality of care provided with respect to these measures.
Therefore, we are proposing to remove the MSPB measure from the
Hospital IQR Program beginning with the FY 2020 payment determination
(which applies to the performance period of January 1, 2018 through
December 31, 2018) and subsequent years. As a claims-based measure,
which uses claims and administrative data to calculate the measure
without any additional data collection from hospitals, we can
operationally remove the MSPB measure sooner than certain

[[Page 20479]]

other measures we are proposing for removal in this proposed rule. We
note that if proposed removal Factor 8 is not finalized, removal of
this measure would not be finalized.
We are inviting public comment on our proposal.
(7) Clinical Episode-Based Payment Measures
We are proposing to remove six clinical episode-based payment
measures from the Hospital IQR Program beginning with the FY 2020
payment determination:
Cellulitis Clinical Episode-Based Payment Measure
(Cellulitis Payment) (adopted at 80 FR 49664 through 49674);
Gastrointestinal Hemorrhage Clinical Episode-Based Payment
Measure (GI Payment) (adopted at 80 FR 49664 through 49674);
Kidney/Urinary Tract Infection Clinical Episode-Based
Payment Measure (Kidney/UTI Payment) (adopted at 80 FR 49664 through
49674);
Aortic Aneurysm Procedure Clinical Episode-Based Payment
Measure (AA Payment) (adopted at 81 FR 57133 through 57142);
Cholecystectomy and Common Duct Exploration Clinical
Episode-Based Payment Measure (Chole and CDE Payment) (adopted at 81 FR
57133 through 57142); and
Spinal Fusion Clinical Episode-Based Payment Measure
(SFusion Payment) (adopted at 81 FR 57133 through 57142).
We are proposing to remove the Cellulitis Payment, GI Payment,
Kidney/UTI Payment, AA Payment, Chole and CDE Payment, and SFusion
Payment measures under proposed removal Factor 8, the costs associated
with a measure outweigh the benefit of its continued use in the
program. We refer readers to section VIII.A.4.b. of the preamble of
this proposed rule where we discuss examples of the costs associated
with implementing and maintaining these measures for the programs.
Specifically, maintaining the specifications for the measure, as well
as the tools we need to analyze and publicly report the measure data
result in costs to CMS. We believe the costs associated with
interpreting the requirements for multiple measures with overlapping
data points outweigh the benefit to beneficiaries and providers of the
additional information provided by these measures, because the measure
data are already captured within the overall hospital MSPB measure,
which will be retained in the Hospital VBP Program.
These measures are clinically coherent groupings of health care
services that can be used to assess providers' resource use associated
with the clinically coherent groupings (80 FR 49664). Specifically,
these measures all use Part A and Part B Medicare administrative claims
data from Medicare FFS beneficiaries hospitalized for a clinical issue
associated with the respective clinical groupings (80 FR 49664 through
49668; 81 FR 57133 through 57140). However, these data also are
captured in the MSPB measure, which uses claims data for hospital
discharges, including Medicare Part A and Part B payments for services
rendered to Medicare beneficiaries during the Medicare spending per
beneficiary episode surrounding an index hospitalization (76 FR 51618
through 51627). Although the MSPB measure does not provide the same
level of granularity that these individual measures do, the most
essential data elements will be captured by and publicly reported under
the MSPB measure in the Hospital VBP Program. We understand that some
hospitals may appreciate receiving more granular payment measure data
from individual episode-based payment measures, while other hospitals
may not benefit from the use of individual measures in addition to MSPB
because they do not have a sufficient number of cases for those
measures to be calculated. We are proposing to remove these measures
because we believe that in balancing the costs of keeping these
measures in the program compared to the benefit, providers would prefer
to focus their improvement efforts on total payment, rather than both
total payment and the payments associated with these individual types
of clinical episodes. While we are proposing to remove the MSPB measure
from the Hospital IQR Program as discussed in the section above, the
measure would continue to be included in the Hospital VBP Program
(section IV.I.2.e. of the preamble of this proposed rule). We also note
that the Hospital IQR Program will retain certain condition- and
procedure-specific payment measures (specifically, focusing on patients
hospitalized for heart failure, AMI, pneumonia, and elective hip and/or
knee replacement procedures) with readmissions and mortality measure
data for the same patient cohorts. Since the MSPB measure would still
be reported for the Hospital VBP Program, patients, hospitals, and the
public would continue to receive information about the data provided by
these resource measures. Thus, removing these six measures from the
Hospital IQR Program would help to reduce duplicative data and produce
a more harmonized and streamlined measure set. Further, and as
explained above, the Hospital VBP Program's incentive payment structure
ties hospitals' payment adjustments on claims paid under the IPPS to
their performance on selected quality measures, including the MSPB
measure, sufficiently incentivizing performance improvement on this
measure among participating hospitals.
As discussed in section VIII.A.4.b. of the preamble of this
proposed rule, above, one of our main goals is to move forward in the
least burdensome manner possible, while maintaining a parsimonious set
of the most meaningful quality measures and continuing to incentivize
improvement in the quality of care provided to patients, and we believe
that removing these measures from the Hospital IQR Program helps
achieve that goal. We recognize, however, that including specific
episode-based payment measure data can provide hospitals with
actionable feedback to better equip them to implement targeted
improvements in comparison to an overall payment measure. In addition,
these measures were only recently implemented in the Hospital IQR
Program in the FY 2017 IPPS/LTCH PPS final rule and data have not yet
become publicly available on the Hospital Compare website. However,
because these episode-based payment measures are not tied directly with
other clinical quality measures that could contribute to the overall
picture of providers' clinical effectiveness and efficiency, we believe
that the data derived from these measures may be of lower utility to
patients in deciding where to seek care, as well as to providers in
gaining feedback to reduce cost and improve efficiency while
maintaining high quality care; they address resource use which is not
directly tied to clinical quality, unless combined with other clinical
quality measures (81 FR 57133 through 57134).
Therefore, we are proposing to remove the Cellulitis Payment, GI
Payment, Kidney/UTI Payment, AA Payment, Chole and CDE Payment, and
SFusion Payment measures for the FY 2020 payment determination (which
applies to the performance period of January 1, 2018 through December
31, 2018) and subsequent years. Because these are claims-based
measures, operationally, we are able to remove them sooner than certain
other measures we are proposing for removal in this proposed rule. We
note that if the proposed removal Factor 8 is not

[[Page 20480]]

finalized, removal of these measures would not be finalized.
We are inviting public comment on our proposal to remove these
measures from the Hospital IQR Program as well as feedback on whether
there are reasons to retain one or more of the measures in the Hospital
IQR Program.
(8) Chart-Abstracted Clinical Process of Care Measures
In this proposed rule, we are proposing to remove the Influenza
Immunization, Incidence of Potentially Preventable Venous
Thromboembolism, Median Time from ED Arrival to ED Departure for
Admitted ED Patients, and Admit Decision Time to ED Departure Time for
Admitted Patients measures as discussed in detail below. Manual
abstraction of these chart-abstracted measures is highly burdensome. We
have previously stated our intent to move away from chart-abstracted
measures in order to reduce this information collection burden (78 FR
50808; 79 FR 50242; 80 FR 49693). We refer readers to our discussion
below and to section XIV.B.3.b. of the preamble of this proposed rule,
where we discuss the information collection burden associated with each
of these measures with greater specificity.
(a) Influenza Immunization Measure (NQF #1659) (IMM-2)
We refer readers to the FY 2011 IPPS/LTCH PPS final rule (75 FR
50211) where we adopted the Influenza Immunization measure (NQF #1659)
(IMM-2). In this proposed rule, we are proposing to remove IMM-2
beginning with the CY 2019 reporting period/FY 2021 payment
determination under removal Factor 1--topped-out measure and under
proposed removal Factor 8, the costs associated with a measure outweigh
the benefit of its continued use in the program.
Hospital performance on IMM-2 is statistically ``topped-out''--
removal Factor 1. The Hospital IQR Program previously finalized two
criteria for determining when a measure is ``topped out'': (1) When
there is statistically indistinguishable performance at the 75th and
90th percentiles; and (2) when the measure's truncated coefficient of
variation is less than or equal to 0.10 (79 FR 50203). Our analysis
indicates that performance on this measure has been topped-out for the
past three payment determination years and also for Q1 and Q2 of 2017
encounters. This analysis is captured by the table below:

--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of 75th 90th
Payment determination Encounters hospitals Mean percentile percentile Truncated COV
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2016................................... 2014 (Q1-Q4)................ 3326 0.9292 0.9867 0.9965 0.0560
FY 2017................................... 2015 (Q1-Q4)................ 3293 0.9372 0.9890 0.9970 0.0494
FY 2018................................... 2016 (Q1-Q4)................ 3258 0.9370 0.9890 0.9970 0.0500
--------------------------------------------------------------------------------------------------------------------------------------------------------

Our topped-out analysis shows that administration of the influenza
vaccination to admitted patients is widely in practice and there is
little room for improvement. We believe that hospitals will continue
this practice even after the measure is removed; thus, utility in the
program is limited.
Moreover, we are proposing to remove this measure under proposed
removal Factor 8, ``the costs associated with a measure outweigh the
benefit of its continued use in the program. We believe the information
collection burden associated with manual chart abstraction, as
discussed above, outweighs the associated benefit to beneficiaries of
receiving this information, because: (1) It is topped out and there is
little room for improvement (discussed above); and (2) it does not
directly measure patient outcomes.
As discussed in section I.A.2. of the preamble of this proposed
rule, one of the goals of the Meaningful Measures Initiative is to
reduce costs associated with payment policy, quality measures,
documentation requirements, conditions of participation, and health
information technology. Another goal of the Meaningful Measures
Initiative is to utilize measures that are ``outcome-based where
possible.'' IMM-2 is a process measure that tracks patients assessed
and given an influenza vaccination with their consent, but does not
directly measure patient outcomes.
We recognize and agree that influenza prevention is an important
public health issue. We note that the Influenza Vaccination Coverage
Among Healthcare Personnel (HCP) measure (adopted at 76 FR 51631
through 51633), which assesses the percentage of healthcare personnel
at a facility who receive the influenza vaccination, remains in the
Hospital IQR Program. Although the HCP measure is focused on
vaccination of providers and other hospital personnel and not
beneficiaries, it promotes improved health outcomes among beneficiaries
because: (1) Health care personnel that have received the influenza
vaccination are less likely to transmit influenza to patients under
their care; and (2) vaccination of health care personnel reduces the
probability that hospitals may experience staffing shortages as a
result of illness that would impact ability to provide adequate patient
care. Thus, we believe the costs associated with reporting this chart-
abstracted measure outweighs the associated benefits of keeping it in
the Hospital IQR Program.
We are proposing to remove the IMM-2 measure beginning with the CY
2019 reporting period/FY 2021 payment determination (which applies to
the performance period of January 1, 2019 through December 31, 2019)
because hospitals already would have collected and reported data for
the first three quarters of the CY 2018 reporting period for the FY
2020 payment determination by the time of publication of the FY 2019
IPPS/LTCH PPS final rule. In addition, there are operational
limitations associated with updating CMS systems in time to remove this
measure sooner for the CY 2018 reporting period/FY 2020 payment
determination. This proposed timeline (that is, beginning with the CY
2019 reporting period/FY 2021 payment determination) would subsequently
allow us to use the data already reported by hospitals in the CY 2018
reporting period for public reporting on our Hospital Compare website
and for data validation.
Therefore, we are proposing to remove the IMM-2 measure from the
Hospital IQR Program for the CY 2019 reporting period/FY 2021 payment
determination and subsequent years.
We are inviting public comment on our proposal.
(b) Incidence of Potentially Preventable Venous Thromboembolism
Measure (VTE-6); Median Time From ED Arrival to ED Departure for
Admitted ED Patients Measure (NQF #0495) (ED-1); and Admit Decision
Time to ED Departure Time for Admitted Patients Measure (NQF #0497)
(ED-2)
We refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR
51634 through 51636), where we adopted the Incidence of Potentially
Preventable Venous Thromboembolism measure

[[Page 20481]]

(VTE-6), and to the FY 2011 IPPS/LTCH PPS final rule (75 FR 50210
through 50211), where we adopted both the chart-abstracted version of
the Median Time from ED Arrival to ED Departure for Admitted ED
Patients measure (NQF #0495) (ED-1) and the Admit Decision Time to ED
Departure Time for Admitted Patients measure (NQF #0497) (ED-2). In
this proposed rule, we are proposing to remove VTE-6 and the chart-
abstracted version of ED-1 beginning with the CY 2019 reporting period/
FY 2021 payment determination; in addition, we are proposing to remove
the chart-abstracted version of ED-2 beginning with the CY 2020
reporting period/FY 2022 payment determination. We are proposing to
remove these three measures under proposed removal Factor 8, the costs
associated with a measure outweigh the benefit of its continued use in
the program.
As discussed in section I.A.2. of the preamble of this proposed
rule, one of the goals of our Meaningful Measures Initiative is to
reduce costs associated with payment policy, quality measures,
documentation requirements, conditions of participation, and health
information technology. We believe the information collection burden
associated with manual chart abstraction, as discussed above, outweighs
the associated benefit to beneficiaries of receiving information
provided by these measures because much of the information provided by
these measures is available through other Program measure data (as
further discussed below).
Furthermore, in the case of ED-2, hospitals still would have the
opportunity to submit data since the eCQM version will remain part of
the Hospital IQR Program measure set. We note that in section
VIII.A.5.b.(9)(c) of the preamble of this proposed rule, below, we are
proposing to remove the eCQM version of ED-1, but to retain the eCQM
version of ED-2 due to the continued importance of assessing ED wait
times for admitted patients. Although ED-1 is an important metric for
patients, ED-2 has greater clinical significance for quality
improvement because it provides more actionable information such that
hospitals have greater ability to allocate resources to consistently
reduce the time between decision to admit and time of inpatient
admission. Hospitals have somewhat less control to consistently reduce
wait time between ED arrival and decision to admit, as measured by ED-
1, due to the need to triage and prioritize more complex or urgent
patients. Also, the Hospital OQR Program includes an ED throughput
measure, OP-18: Median Time from ED Arrival to ED Departure for
Discharged ED Patients (81 FR 79755), which publicly reports similar
data as captured by ED-1. Therefore, we believe the costs to providers
for submitting data on the chart-abstracted ED-1 and ED-2 measures
outweigh the associated benefits of keeping the measures in the program
given that other measures in the Hospital IQR Program and in other CMS
hospital quality programs are able to capture actionable data on ED
wait times.
Furthermore, although the eCQM version of VTE-6 is not included in
the Hospital IQR Program, hospitals still would have the opportunity to
submit data for two other VTE related measures (eCQMs), which were
already adopted in the Hospital IQR Program measure set--Venous
Thromboembolism Prophylaxis (VTE-1) (NQF #0371) eCQM (adopted at 78 FR
50809) and Intensive Care Unit Venous Thromboembolism Prophylaxis (VTE-
2) (NQF #0372) eCQM (adopted at 78 FR 50809). The VTE-1 eCQM assesses
the number of patients who received venous thromboembolism (VTE)
prophylaxis or have documentation why no VTE prophylaxis was given the
day of or day after hospital admission or surgery end date for
surgeries that start the day of or the day after hospital admission;
the VTE-2 eCQM assesses the number of patients who received VTE
prophylaxis or have documentation why no VTE prophylaxis was given on
the day of or the day after the initial admission (or transfer) to the
Intensive Care Unit (ICU) or surgery end date for surgeries that start
the day of or the day after ICU admission (or transfer). The VTE-1 and
VTE-2 measures will be retained in the Hospital IQR Program to
encourage best clinical practices to those patients in this high risk
population by providing prophylactic steps which will decrease the
incidence of preventable VTE. In contrast, the VTE-6 measure assesses
the number of patients diagnosed with confirmed VTE during
hospitalization (not present at admission) who did not receive VTE
prophylaxis between hospital admission and the day before the VTE
diagnostic testing order date. While awareness of the occurrence of
preventable VTE is valuable knowledge, the prevention of the initial
occurrence is more actionable and meaningful for both providers and
beneficiaries. Therefore, we believe the costs to providers of
submitting data on this chart-abstracted measure outweigh its limited
clinical utility given other VTE measures in the Program are able to
capture more actionable data on VTE.
As discussed in section VIII.A.4.b. of the preamble of this
proposed rule, one of our main goals is to move the program forward in
the least burdensome manner possible, while maintaining a parsimonious
set of the most meaningful quality measures and continuing to
incentivize improvement in the quality of care provided to patients.
Therefore, we believe removing the chart-abstracted versions of the
VTE-6, ED-1, and ED-2 measures from the Hospital IQR Program measure
set helps achieve that goal.
We are proposing to remove the VTE-6 measure and chart-abstracted
version of the ED-1 measure beginning with the CY 2019 reporting
period/FY 2021 payment determination, because hospitals already would
have collected and reported data for the first three quarters of the CY
2018 reporting period for the FY 2020 payment determination by the time
of publication of the FY 2019 IPPS/LTCH PPS final rule. Moreover, we
would not be able to overcome operational limitations associated with
updating our systems in time to support removal of the VTE-6 and chart-
abstracted version of the ED-1 measures for the CY 2018 reporting
period/FY 2020 payment determination. In addition, we are proposing to
remove the chart-abstracted version of the ED-2 measure beginning with
the CY 2020 reporting period/FY 2022 payment determination, because the
first results from validation of ED-2 eCQM data will be available
beginning with the FY 2021 payment determination. We believe it is
important to keep the chart-abstracted version of ED-2 in the program
until after the validated data from the eCQM version of ED-2 is
available for comparative analysis to evaluate the accuracy and
completeness of the eCQM data. Further, removing these three measures
on the proposed timelines would allow us to use the data already
reported by hospitals in the CY 2018 reporting period for public
reporting on our Hospital Compare website and for data validation.
Therefore, we are proposing to remove: (1) VTE-6 and the chart-
abstracted version of ED-1 beginning with the CY 2019 reporting period/
FY 2021 payment determination; and (2) the chart-abstracted version of
ED-2 beginning with the CY 2020 reporting period/FY 2022 payment
determination. We note that if the proposed removal Factor 8 is not
finalized, removal of these measures would not be finalized.
We are inviting public comment on our proposals.
(9) Proposed Removal of Electronic Clinical Quality Measures (eCQMs)
In alignment with the Medicare and Medicaid Promoting
Interoperability

[[Page 20482]]

Programs (previously known as the Medicare and Medicaid EHR Incentive
Programs) for eligible hospitals and CAHs, we are proposing to reduce
the number of electronic Clinical Quality Measures (eCQMs) in the
Hospital IQR Program eCQM measure set from which hospitals must select
four to report, by proposing to remove seven eCQMs (of the 15 measures
currently in the measure set) beginning with the CY 2020 reporting
period/FY 2022 payment determination. The seven eCQMs we are proposing
to remove are:
Primary PCI Received Within 90 Minutes of Hospital Arrival
(AMI-8a) (adopted at 79 FR 50246);
Home Management Plan of Care Document Given to Patient/
Caregiver (CAC-3) (adopted at 79 FR 50243 through 50244);
Median Time from ED Arrival to ED Departure for Admitted
ED Patients (NQF #0495) (ED-1) (adopted at 78 FR 50807 through 50710);
Hearing Screening Prior to Hospital Discharge (NQF #1354)
(EHDI-1a) (adopted at 79 FR 50242);
Elective Delivery (NQF #0469) (PC-01) (adopted at 78 FR
50807 through 50810);
Stroke Education (STK-08) (adopted at 78 FR 50807 through
50810); and,
Assessed for Rehabilitation (NQF #0441) (STK-10) (adopted
at 78 FR 50807 through 50810).
We are proposing to remove all seven eCQMs under proposed removal
Factor 8, the costs associated with a measure outweigh the benefit of
its continued use in the program. As discussed in section I.A.2. of the
preamble of this proposed rule, two of the goals of our Meaningful
Measures Initiative are to: (1) Reduce costs associated with payment
policy, quality measures, documentation requirements, conditions of
participation, and health information technology; and (2) to apply a
parsimonious set of the most meaningful measures available to track
patient outcomes and impact. In section VIII.A.11.d.(2) of the preamble
of this proposed rule, for the CY 2019 reporting period/FY 2021 payment
determination, we are proposing to extend the same eCQM reporting
requirements finalized for the CY 2018 reporting period/FY 2020 payment
determination, such that hospitals submit one, self-selected calendar
quarter of data on four self-selected eCQMs. Thus, we anticipate the
collection of information burden associated with eCQM data reporting
for the CY 2019 reporting period/FY 2021 payment determination will be
the same as for the CY 2018 reporting period/FY 2020 payment
determination. However, in section VIII.A.4.b. of the preamble of this
proposed rule, we discuss our belief that costs associated with program
requirements are multi-faceted and include not only the burden
associated with reporting, but also the costs associated with
implementing and maintaining the measures for the Program, such as
staying current on clinical guidelines and maintaining measure
specifications in hospitals' EHR systems for all of the eCQMs available
for use in the Hospital IQR Program. With respect to eCQMs, we believe
that a coordinated reduction in the overall number of eCQMs in both the
Hospital IQR and Medicare and Medicaid Promoting Interoperability
Programs (previously known as the Medicare and Medicaid EHR Incentive
Programs) would reduce costs and improve the quality of reported data
by enabling hospitals to focus on a smaller, more specific subset of
eCQMs, while still allowing hospitals some flexibility to select which
eCQMs to report that best reflect their patient populations and support
internal quality improvement efforts. We refer readers to the FY 2017
IPPS/LTCH PPS final rule (81 FR 57116 through 57120) where we
previously removed 13 eCQMs from the eCQM measure set in order to
develop a smaller, more specific subset of eCQMs.
In order to move the program forward in the least burdensome manner
possible, while maintaining a parsimonious set of the most meaningful
quality measures and continuing to incentivize improvement in the
quality of care provided to patients, we believe it is appropriate to
propose to remove additional eCQMs at this time to develop an even more
streamlined set of the most meaningful eCQMs for hospitals. In
selecting which eCQMs to propose for removal, we considered the
relative benefits and costs associated with each eCQM in the measure
set. Individual eCQMs are discussed in more detail below.
(a) AMI-8a
We are proposing to remove AMI-8a because the costs associated with
implementing and maintaining this eCQM outweigh the associated benefit
to beneficiaries because too few hospitals select to report on this
measure. Only a single hospital reported on this measure for the CY
2016 reporting period. Because we do not receive enough data to conduct
meaningful, statistically significant analysis, we believe the costs of
maintaining this measure in the Program outweigh any associated benefit
to patients, consumers, and providers--proposed removal Factor 8.
(b) CAC-3, STK-08, and STK-10
We are proposing to remove the CAC-3, STK-08, and STK-10 eCQMs,
because we believe the costs associated with implementing and
maintaining these eCQMs outweigh the benefit to beneficiaries because
they do not provide information evaluating the clinical quality of the
activity. Home Management Plan of Care Document Given to Patient/
Caregiver (CAC-3) assesses the proportion of pediatric asthma patients
discharged from an inpatient hospital stay with a Home Management Plan
of Care (HMPC) document given to the pediatric asthma patient/
caregiver. Stroke Education (STK-08) captures ischemic or hemorrhagic
stroke patients or their caregivers who were given educational
materials during the hospital stay and at discharge. Assessed for
Rehabilitation (STK-10) captures ischemic or hemorrhagic stroke
patients who were assessed for rehabilitation.
We have issued guidance that measure developers should avoid
selecting or constructing measures that can be met primarily through
documentation without evaluating the clinical quality of the activity--
often satisfied with a checkbox, date, or code--for example, a
completed assessment, care plan, or delivered instruction.\282\ CAC-3,
STK-08, and STK-10 are examples of those types of measures. In our
effort to create a more parsimonious measure set, we assessed which
measures are the least costly to report and most effective in
particular priority areas, including stroke, and we believe these
measures provide less benefit to providers and Beneficiaries, relative
to their costs.
---------------------------------------------------------------------------

\282\ https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/Downloads/Blueprint-120.pdf.
---------------------------------------------------------------------------

Furthermore, if our proposals to remove the STK-08 and STK-10 eCQMs
are finalized as proposed, we believe the resulting set of four stroke
eCQMs (STK-02, STK-03, STK-05, and STK-06) will be more meaningful to
both patients and providers because they capture the proportion of
ischemic stroke patients who are prescribed a statin medication,\283\
specific anti-thrombolytic therapy,\284\ and/or

[[Page 20483]]

anticoagulation therapy \285\ at hospital discharges, which would
address follow-up care and promote future preventative actions.
Moreover, these remaining stroke eCQMs continue to be meaningful
because ischemic strokes account for 87 percent of all strokes, and
strokes are the fifth leading cause of death and disability.\286\ We
also note that the STK-08 and STK-10 eCQMs already have been removed
from The Joint Commission's eCQM measure set.\287\
---------------------------------------------------------------------------

\283\ Measure specifications for STK-06 available at: https://ecqi.healthit.gov/ecqm/measures/cms105v6.
\284\ Measure specifications for STK-02 and STK-05 available at:
https://ecqi.healthit.gov/ecqm/measures/cms104v6 and https://ecqi.healthit.gov/ecqm/measures/cms072v6.
\285\ Measure specifications for STK-03 available at: https://ecqi.healthit.gov/ecqm/measures/cms071v7.
\286\ https://www.strokassociation.org/STROKEORG/AboutStroke/Impact-of-Stroke-Stroke-statistics_UCM_310728_Article.jsp#.WtDzy42Wzg9.
\287\ https://www.jointcommission.org/the_joint_commission_measures_effective_january_1_2018/.
---------------------------------------------------------------------------

(c) ED-1
We are proposing to remove the Median Time from ED Arrival to ED
Departure for Admitted ED Patients (ED-1) eCQM because we believe that
among the ED measures in the eCQM measure set, Median Time from ED
Arrival to ED Departure for Admitted ED Patients (ED-2) is more
effective at driving quality improvement. We note that in section
VIII.A.5.b.(8)(b) of the preamble of this proposed rule, above, we are
proposing to remove the chart-abstracted versions of ED-1 and ED-2. As
stated above, we believe that although ED-1 is an important metric for
patients, ED-2 has greater clinical significance for quality
improvement because it provides more actionable information--hospitals
have greater ability to allocate resources and align inter-departmental
communication to consistently reduce the time between decision to admit
and time of inpatient admission. Hospitals have somewhat less ability
to consistently reduce wait time between ED arrival and decision to
admit, as measured by ED-1, due to the need to triage and prioritize
more complex or urgent patients, which might inadvertently prolong ED
wait times for less urgent patients. Also, the Hospital OQR Program
includes an ED throughput measure, OP-18: Median Time from ED Arrival
to ED Departure for Discharged ED Patients (81 FR 79755), which
publicly reports similar data as captured by ED-1. Therefore, we
believe the costs of implementing and maintaining the eCQM, as
discussed above, outweigh the limited benefits of keeping the measure
in the Program given that other measures in the Hospital IQR Program
and in other CMS hospital quality programs are able to capture
actionable data on ED wait times.
(d) EHDI-1a
We are proposing to remove the EHDI-1a eCQM because we believe the
costs associated with implementing and maintaining the measure, as
discussed above, outweigh the benefits to beneficiaries because newborn
hearing screening is already widely practiced by hospitals as the
standard of care and already mandated by many State laws. Forty-three
States currently have statutes or rules related to newborn hearing
screening and 28 of the 43 States require babies to be screened.\288\
Thus, this measure may be duplicative with local regulations for most
hospitals. Therefore, we believe the costs associated with the measure
outweigh the associated benefits of keeping the measure in the Hospital
IQR Program.
---------------------------------------------------------------------------

\288\ https://www.infanthearing.org/ehdi-ebook/2017_ebook/1b%20Chapter1Evolution EHDI2017.pdf.
---------------------------------------------------------------------------

(e) PC-01
We are proposing to remove the eCQM version of PC-01. Due to the
importance of child and maternal health, we are not proposing to also
remove the chart-abstracted version of the measure because we believe
all hospitals with a sufficient number of cases should be required to
report data on this measure (adopted at 77 FR 53530). Although we have
expressed in section XIII.A.4.b.ii.(8) of the preamble of this proposed
rule our intent to move away from the use of chart-abstracted measures
in quality reporting programs, our previously adopted policy requires
that hospitals should need less time to submit data for this measure
because, unlike the other chart-abstracted measures, hospitals are only
required to submit several aggregate counts instead of potentially
numerous patient-level charts. We note that submission of this measure
places less information collection burden on hospitals than the other
chart-abstracted measures because of the ease with which hospitals can
simply submit their aggregate counts using our Web-Based Measure Tool
through the QualityNet website (77 FR 53537). In addition, if the
chart-abstracted version of this measure were removed from the Program,
and hospitals could only elect to report the eCQM version of this
measure as one of four required eCQMs, we believe that due to the low
volume of patients relative to total adult hospital population, we
would not receive enough data to produce meaningful analyses. Also, PC-
01 is one of only two measures of child and maternal health in the
Hospital IQR Program measure set (PC-05 eCQM being the other) and since
eCQM data are not currently publicly reported, the chart-abstracted
version of PC-01 is currently the only publicly reported measure of
child and maternal health in the Program. However, retaining this
measure in both eCQM and chart-abstracted form may be duplicative and
costly. Consequently, we are proposing to remove the eCQM version of
PC-01 while retaining the chart-abstracted version of PC-01.
Therefore, we believe the costs associated with implementing and
maintaining the eCQM, as discussed above, outweigh the associated
benefit to beneficiaries because the information is already collected
and publicly reported in the chart-abstracted form of this measure for
the Hospital IQR Program.
Thus, we are proposing to remove seven eCQMs as discussed above
beginning with the CY 2020 reporting period/FY 2022 payment
determination. If our proposals are finalized as proposed, the eCQMs
remaining in the eCQM measure set would focus on: (a) ED wait times for
admitted patients (ED-2), which addresses the Meaningful Measures
Initiative quality priority of promoting effective communication and
coordination of care; (b) Exclusive Breast Milk Feeding (PC-05), which
addresses the Meaningful Measures Initiative quality priority that care
is personalized and aligned with patients' goals; and (c) stroke care
(STK-02, STK-03, STK-05, and STK-06) and VTE care (VTE-1 and VTE-2),
which address the Meaningful Measures Initiative quality priority of
promoting effective prevention and treatment.
In crafting our proposals to remove these seven eCQMs from the
Hospital IQR Program for the CY 2020 reporting period/FY 2022 payment
determination and subsequent years, we also considered proposing to
remove these seven eCQMs one year earlier, beginning with the CY 2019
reporting period/FY 2021 payment determination. We establish program
requirements considering all hospitals that participate in the Hospital
IQR Program at a national level, which involves a wide spectrum of
capabilities and resources with respect to eCQM reporting. In
establishing our eCQM policies, we must balance the needs of hospitals
with variable preferences and capabilities. Overall, across the range
of capabilities and resources for eCQM reporting, stakeholders have
expressed that they want more time to prepare for eCQM changes.
Specifically, as noted in

[[Page 20484]]

the FY 2018 IPPS/LTCH PPS final rule, we have continued to receive
frequent feedback (via email, webinar questions, help desk questions,
and conference call discussions) from hospitals and health IT vendors
about ongoing challenges of implementing eCQM reporting, including, ``a
need for at least one year between new EHR requirements due to the
varying 6- to 24-month cycles needed for vendors to code new measures,
test and institute measure updates, train hospital staff, and rollout
other upgraded features (82 FR 38355).''
We recognize that some hospitals and health IT vendors may prefer
earlier removal in order to forgo maintenance on those eCQMs proposed
for removal. In preparation for this proposed rule, we weighed the
relative burdens and costs associated with removing these measures
beginning with the CY 2019 reporting period/FY 2021 payment
determination or beginning with the CY 2020 reporting period/FY 2021
payment determination. Ultimately, in order to be responsive to the
previous stakeholder feedback we have received, we are proposing to
remove these seven eCQMs beginning with the CY 2020 reporting period/FY
2022 payment determination and subsequent years, even if as a result
some hospitals may have to perform measure maintenance on measures that
would be removed the following year. We believe our proposal to remove
these eCQMs would spare hospitals that have already allocated and
expended resources in 2018 in preparation for the CY 2019 reporting
period that begins January 1, 2019 from the burden of unnecessarily
expended resources or expending additional time and resources to update
their EHR systems or adjust the eCQMs they selected to report for the
CY 2019 reporting period/FY 2021 payment determination.
In this proposed rule, we are striving to establish program
requirements that reflect the wide range of capabilities and resources
of hospitals for eCQM reporting. Our proposal would allow more advanced
notice of eCQMs that would and would not be available to report for the
CY 2020 reporting period/FY 2022 payment determination. Therefore, we
are proposing to remove the AMI-8a, CAC-3, ED-1, EHDI-1a, PC-01, STK-
08, and STK-10 eCQMs from the Hospital IQR Program for the CY 2020
reporting period/FY 2022 payment determination and subsequent years. We
refer readers to section VIII.A.5.b.(9) of the preamble of this
proposed rule for our proposals to remove these seven eCQMs from the
Medicare and Medicaid Promoting Interoperability Programs (previously
known as the Medicare and Medicaid EHR Incentive Programs). We also
refer readers to sections VIII.A.11.d. of the preamble of this proposed
rule for our proposals on the eCQM reporting requirements for the CY
2019 reporting period/FY 2021 payment determination, including further
discussion on the 2015 Edition of CEHRT.
We are inviting public comment on our proposal as discussed above,
including the specific measures proposed for removal and the timing of
removal from the Program.
c. Summary of Hospital IQR Program Measures Proposed for Removal
In this proposed rule, we are proposing to remove a total of 39
measures from the program, as summarized in the table below:

Summary of Hospital IQR Program Measures Proposed for Removal
----------------------------------------------------------------------------------------------------------------
First payment determination
Short name Measure name year proposed for removal NQF #
----------------------------------------------------------------------------------------------------------------
Structural Patient Safety Measures
----------------------------------------------------------------------------------------------------------------
Safe Surgery Checklist.............. Safe Surgery Checklist Use.. FY 2020..................... N/A
Patient Safety Culture.............. Hospital Survey on Patient FY 2020..................... N/A
Safety Culture.
----------------------------------------------------------------------------------------------------------------
Patient Safety Measures
----------------------------------------------------------------------------------------------------------------
PSI 90.............................. Patient Safety and Adverse FY 2020..................... 0531
Events Composite.
CAUTI............................... National Healthcare Safety FY 2021..................... 0138
Network (NHSN) Catheter-
associated Urinary Tract
Infection (CAUTI) Outcome
Measure.
CDI................................. National Healthcare Safety FY 2021..................... 1717
Network (NHSN) Facility-
wide Inpatient Hospital-
onset Clostridium difficile
Infection (CDI) Outcome
Measure.
CLABSI.............................. National Healthcare Safety FY 2021..................... 0139
Network (NHSN) Central Line-
Associated Bloodstream
Infection (CLABSI) Outcome
Measure.
Colon and Abdominal Hysterectomy SSI American College of FY 2021..................... 0753
Surgeons--Centers for
Disease Control and
Prevention (ACS-CDC)
Harmonized Procedure
Specific Surgical Site
Infection (SSI) Outcome
Measure.
MRSA Bacteremia..................... National Healthcare Safety FY 2021..................... 1716
Network (NHSN) Facility-
wide Inpatient Hospital-
onset Methicillin-resistant
Staphylococcus aureus
(MRSA) Bacteremia Outcome
Measure.
----------------------------------------------------------------------------------------------------------------
Claims-Based Coordination of Care Measures
----------------------------------------------------------------------------------------------------------------
READM-30-AMI........................ Hospital 30-Day All-Cause FY 2020..................... 0505
Risk[dash]Standardized
Readmission Rate Following
Acute Myocardial Infarction
(AMI) Hospitalization.
READM-30-CABG....................... Hospital 30-Day, All-Cause, FY 2020..................... 2515
Unplanned, Risk-
Standardized Readmission
Rate Following Coronary
Artery Bypass Graft (CABG)
Surgery.
READM-30-COPD....................... Hospital 30-Day, All-Cause, FY 2020..................... 1891
Risk[dash]Standardized
Readmission Rate Following
Chronic Obstructive
Pulmonary Disease (COPD)
Hospitalization.
READM-30-HF......................... Hospital 30-Day, All-Cause, FY 2020..................... 0330
Risk[dash]Standardized
Readmission Rate Following
Heart Failure (HF)
Hospitalization.
READM-30-PNA........................ Hospital 30-Day, All-Cause, FY 2020..................... 0506
Risk[dash]Standardized
Readmission Rate Following
Pneumonia Hospitalization.

[[Page 20485]]

READM-30-THA/TKA.................... Hospital-Level 30-Day, All- FY 2020..................... 1551
Cause
Risk[dash]Standardized
Readmission Rate Following
Elective Primary Total Hip
Arthroplasty (THA) and/or
Total Knee Arthroplasty
(TKA).
READM-30-STK........................ 30-Day Risk Standardized FY 2020..................... N/A
Readmission Rate Following
Stroke Hospitalization.
----------------------------------------------------------------------------------------------------------------
Claims-Based Mortality Measures
----------------------------------------------------------------------------------------------------------------
MORT-30-AMI......................... Hospital 30-Day, All-Cause, FY 2020..................... 0230
Risk[dash]Standardized
Mortality Rate Following
Acute Myocardial Infarction
(AMI) Hospitalization.
MORT-30-HF.......................... Hospital 30-Day, All-Cause, FY 2020..................... 0229
Risk[dash]Standardized
Mortality Rate Following
Heart Failure (HF)
Hospitalization.
MORT-30-COPD........................ Hospital 30-Day, All-Cause, FY 2021..................... 1893
Risk[dash]Standardized
Mortality Rate Following
Chronic Obstructive
Pulmonary Disease (COPD)
Hospitalization.
MORT-30-PN.......................... Hospital 30-Day, All-Cause, FY 2021..................... 0468
Risk[dash]Standardized
Mortality Rate Following
Pneumonia Hospitalization.
MORT-30-CABG........................ Hospital 30-Day, All-Cause, FY 2022..................... 2558
Risk[dash]Standardized
Mortality Rate Following
Coronary Artery Bypass
Graft (CABG) Surgery.
----------------------------------------------------------------------------------------------------------------
Claims-Based Patient Safety Measure
----------------------------------------------------------------------------------------------------------------
Hip/Knee Complications.............. Hospital-Level Risk- FY 2023..................... 1550
Standardized Complication
Rate Following Elective
Primary Total Hip
Arthroplasty (THA) and/or
Total Knee Arthroplasty
(TKA).
----------------------------------------------------------------------------------------------------------------
Claims-Based Payment Measures
----------------------------------------------------------------------------------------------------------------
MSPB................................ Medicare Spending Per FY 2020..................... 2158
Beneficiary (MSPB)--
Hospital Measure.
Cellulitis Payment.................. Cellulitis Clinical Episode- FY 2020..................... N/A
Based Payment Measure.
GI Payment.......................... Gastrointestinal Hemorrhage FY 2020..................... N/A
Clinical Episode-Based
Payment Measure.
Kidney/UTI Payment.................. Kidney/Urinary Tract FY 2020..................... N/A
Infection Clinical Episode-
Based Payment Measure.
AA Payment.......................... Aortic Aneurysm Procedure FY 2020..................... N/A
Clinical Episode-Based
Payment Measure.
Chole and CDE Payment............... Cholecystectomy and Common FY 2020..................... N/A
Duct Exploration Clinical
Episode-Based Payment
Measure.
SFusion Payment..................... Spinal Fusion Clinical FY 2020..................... N/A
Episode-Based Payment
Measure.
----------------------------------------------------------------------------------------------------------------
Chart-Abstracted Clinical Process of Care Measures
----------------------------------------------------------------------------------------------------------------
IMM-2............................... Influenza Immunization...... FY 2021..................... 1659
VTE-6............................... Incidence of Potentially FY 2021..................... +
Preventable VTE [Venous
Thromboembolism].
ED-1................................ Median Time from ED Arrival FY 2021..................... 0495
to ED Departure for
Admitted ED Patients.
ED-2 *.............................. Admit Decision Time to ED FY 2022..................... 0497
Departure Time for Admitted
Patients.
----------------------------------------------------------------------------------------------------------------
EHR-Based Clinical Process of Care Measures (that is, Electronic Clinical Quality Measures (eCQMs))
----------------------------------------------------------------------------------------------------------------
AMI-8a.............................. Primary PCI Received Within FY 2022..................... +
90 Minutes of Hospital
Arrival.
CAC-3............................... Home Management Plan of Care FY 2022..................... +
Document Given to Patient/
Caregiver.
ED-1................................ Median Time from ED Arrival FY 2022..................... 0495
to ED Departure for
Admitted ED Patients.
EHDI-1a............................. Hearing Screening Prior to FY 2022..................... 1354
Hospital Discharge.
PC-01............................... Elective Delivery........... FY 2022..................... 0469
STK-08.............................. Stroke Education............ FY 2022..................... +
STK-10.............................. Assessed for Rehabilitation. FY 2022..................... 0441
----------------------------------------------------------------------------------------------------------------
* Measure is proposed for removal in chart-abstracted form, but will be retained in eCQM form.
+ NQF endorsement removed.

6. Summary of Previously Adopted Hospital IQR Program Measures for the
FY 2020 Payment Determination
The table below summarizes the Hospital IQR Program measure set for
the FY 2020 payment determination (including previously adopted
measures, but not including measures proposed for removal beginning
with the FY 2020 payment determination in this proposed rule):
---------------------------------------------------------------------------

\289\ We note that measure stewardship of the recalibrated
version of the Death Rate among Surgical Inpatients with Serious
Treatable Complications measure is transitioning from AHRQ to CMS
and, as part of the transition, the measure will be referred to as
the CMS Recalibrated Death Rate among Surgical Inpatients with
Serious Treatable Complications (CMS PSI 04) when it is used in CMS
quality programs.

[[Page 20486]]

Previously Adopted Measures for the FY 2020 Payment Determination *
------------------------------------------------------------------------
Short name Measure name NQF #
------------------------------------------------------------------------
Healthcare-Associated Infection Measures
------------------------------------------------------------------------
CAUTI........................ National Healthcare 0138
Safety Network Catheter-
associated Urinary Tract
Infection (CAUTI)
Outcome Measure.
CDI.......................... National Healthcare 1717
Safety Network Facility-
wide Inpatient Hospital-
onset Clostridium
difficile Infection
(CDI) Outcome Measure.
CLABSI....................... National Healthcare 0139
Safety Network Central
Line-Associated
Bloodstream Infection
(CLABSI) Outcome Measure.
Colon and Abdominal American College of 0753
Hysterectomy SSI. Surgeons--Centers for
Disease Control and
Prevention Harmonized
Procedure Specific
Surgical Site Infection
(SSI) Outcome Measure.
HCP.......................... Influenza Vaccination 0431
Coverage Among
Healthcare Personnel.
MRSA Bacteremia.............. National Healthcare 1716
Safety Network Facility-
wide Inpatient Hospital-
onset Methicillin-
resistant Staphylococcus
aureus (MRSA) Bacteremia
Outcome Measure.
------------------------------------------------------------------------
Claims-Based Patient Safety Measures
------------------------------------------------------------------------
Hip/Knee Complications....... Hospital-Level Risk- 1550
Standardized
Complication Rate
Following Elective
Primary Total Hip
Arthroplasty (THA) and/
or Total Knee
Arthroplasty (TKA).
PSI 04....................... Death Rate among Surgical 0351
Inpatients with Serious
Treatable Complications
\289\.
------------------------------------------------------------------------
Claims-Based Mortality Measures
------------------------------------------------------------------------
MORT-30-CABG................. Hospital 30-Day, All- 2558
Cause,
Risk[dash]Standardized
Mortality Rate Following
Coronary Artery Bypass
Graft (CABG) Surgery.
MORT-30-COPD................. Hospital 30-Day, All- 1893
Cause, Risk Standardized
Mortality Rate Following
Chronic Obstructive
Pulmonary Disease (COPD)
Hospitalization.
MORT-30-PN................... Hospital 30-Day, All- 0468
Cause, Risk Standardized
Mortality Rate Following
Pneumonia
Hospitalization.
MORT-30-STK.................. Hospital 30-Day, All- N/A
Cause, Risk Standardized
Mortality Rate Following
Acute Ischemic Stroke.
------------------------------------------------------------------------
Claims-Based Coordination of Care Measures
------------------------------------------------------------------------
READM-30-HWR................. Hospital-Wide All-Cause 1789
Unplanned Readmission
Measure (HWR).
AMI Excess Days.............. Excess Days in Acute Care 2881
after Hospitalization
for Acute Myocardial
Infarction.
HF Excess Days............... Excess Days in Acute Care 2880
after Hospitalization
for Heart Failure.
PN Excess Days............... Excess Days in Acute Care 2882
after Hospitalization
for Pneumonia.
------------------------------------------------------------------------
Claims-Based Payment Measures
------------------------------------------------------------------------
AMI Payment.................. Hospital-Level, Risk- 2431
Standardized Payment
Associated with a 30-Day
Episode-of-Care for
Acute Myocardial
Infarction (AMI).
HF Payment................... Hospital-Level, Risk- 2436
Standardized Payment
Associated with a 30-Day
Episode-of-Care For
Heart Failure (HF).
PN Payment................... Hospital-Level, Risk- 2579
Standardized Payment
Associated with a 30-day
Episode-of-Care For
Pneumonia.
THA/TKA Payment.............. Hospital[hyphen]Level, N/A
Risk[hyphen]Standardized
Payment Associated with
an Episode-of-Care for
Primary Elective Total
Hip Arthroplasty and/or
Total Knee Arthroplasty.
------------------------------------------------------------------------
Chart-Abstracted Clinical Process of Care Measures
------------------------------------------------------------------------
ED-1 **...................... Median Time from ED 0495
Arrival to ED Departure
for Admitted ED Patients.
ED-2 **...................... Admit Decision Time to ED 0497
Departure Time for
Admitted Patients.
IMM-2........................ Influenza Immunization... 1659
PC-01 **..................... Elective Delivery........ 0469
Sepsis....................... Severe Sepsis and Septic 0500
Shock: Management Bundle
(Composite Measure).
VTE-6........................ Incidence of Potentially \+\
Preventable Venous
Thromboembolism.
------------------------------------------------------------------------
EHR-Based Clinical Process of Care Measures (that is, Electronic
Clinical Quality Measures (eCQMs))
------------------------------------------------------------------------
AMI-8a....................... Primary PCI Received \+\
Within 90 Minutes of
Hospital Arrival.
CAC-3........................ Home Management Plan of \+\
Care Document Given to
Patient/Caregiver.
ED-1 **...................... Median Time from ED 0495
Arrival to ED Departure
for Admitted ED Patients.
ED-2 **...................... Admit Decision Time to ED 0497
Departure Time for
Admitted Patients.
EHDI-1a...................... Hearing Screening Prior 1354
to Hospital Discharge.

[[Page 20487]]

PC-01 **..................... Elective Delivery........ 0469
PC-05........................ Exclusive Breast Milk 0480
Feeding.
STK-02....................... Discharged on 0435
Antithrombotic Therapy.
STK-03....................... Anticoagulation Therapy 0436
for Atrial Fibrillation/
Flutter.
STK-05....................... Antithrombotic Therapy by 0438
the End of Hospital Day
Two.
STK-06....................... Discharged on Statin 0439
Medication.
STK-08....................... Stroke Education......... \+\
STK-10....................... Assessed for 0441
Rehabilitation.
VTE-1........................ Venous Thromboembolism 0371
Prophylaxis.
VTE-2........................ Intensive Care Unit 0372
Venous Thromboembolism
Prophylaxis.
------------------------------------------------------------------------
Patient Experience of Care Survey Measures
------------------------------------------------------------------------
HCAHPS....................... Hospital Consumer 0166 (0228)
Assessment of Healthcare
Providers and Systems
Survey (including Care
Transition Measure).
------------------------------------------------------------------------
* As discussed in section VIII.A.5. of the preamble of this proposed
rule, we are proposing to remove 19 measures--17 claims-based measures
and two structural measures--beginning with the FY 2020 payment
determination. These measures, which had previously been finalized for
the FY 2020 payment determination are not included in this summary
table.
** Measure listed twice, as both chart-abstracted and eCQM versions.
\+\ NQF endorsement has been removed.

7. Summary of Previously Adopted Hospital IQR Program Measures for the
FY 2021 Payment Determination
The table below summarizes the Hospital IQR Program measure set for
the FY 2021 payment determination (including previously adopted
measures, but not including measures proposed for removal beginning
with the FY 2021 payment determination in this proposed rule):

Previously Adopted Measures for the FY 2021 Payment Determination
------------------------------------------------------------------------
Short name Measure name NQF #
------------------------------------------------------------------------
Healthcare-Associated Infection Measures
------------------------------------------------------------------------
HCP.......................... Influenza Vaccination 0431
Coverage Among
Healthcare Personnel.
------------------------------------------------------------------------
Claims-Based Patient Safety Measures
------------------------------------------------------------------------
Hip/Knee Complications....... Hospital-Level Risk- 1550
Standardized
Complication Rate
Following Elective
Primary Total Hip
Arthroplasty (THA) and/
or Total Knee
Arthroplasty (TKA).
PSI 04....................... Death Rate among Surgical \+\
Inpatients with Serious
Treatable Complications.
------------------------------------------------------------------------
Claims-Based Mortality Measures
------------------------------------------------------------------------
MORT-30-STK.................. Hospital 30-Day, All- N/A
Cause,
Risk[dash]Standardized
Mortality Rate Following
Acute Ischemic Stroke *.
------------------------------------------------------------------------
Claims-Based Coordination of Care Measures
------------------------------------------------------------------------
READM-30-HWR................. Hospital-Wide All-Cause 1789
Unplanned Readmission
Measure (HWR).
AMI Excess Days.............. Excess Days in Acute Care 2881
after Hospitalization
for Acute Myocardial
Infarction.
HF Excess Days............... Excess Days in Acute Care 2880
after Hospitalization
for Heart Failure.
PN Excess Days............... Excess Days in Acute Care 2882
after Hospitalization
for Pneumonia.
------------------------------------------------------------------------
Claims-Based Payment Measures
------------------------------------------------------------------------
AMI Payment.................. Hospital-Level, Risk- 2431
Standardized Payment
Associated with a 30-Day
Episode-of-Care for
Acute Myocardial
Infarction (AMI).
HF Payment................... Hospital-Level, Risk- 2436
Standardized Payment
Associated with a 30-Day
Episode-of-Care For
Heart Failure (HF).
PN Payment................... Hospital-Level, Risk- 2579
Standardized Payment
Associated with a 30-day
Episode-of-Care For
Pneumonia.
THA/TKA Payment.............. Hospital[hyphen]Level, N/A
Risk[hyphen]Standardized
Payment Associated with
an Episode-of-Care for
Primary Elective Total
Hip Arthroplasty and/or
Total Knee Arthroplasty.
------------------------------------------------------------------------
Chart-Abstracted Clinical Process of Care Measures
------------------------------------------------------------------------
ED-2 *....................... Admit Decision Time to ED 0497
Departure Time for
Admitted Patients.
PC-01 *...................... Elective Delivery........ 0469
Sepsis....................... Severe Sepsis and Septic 0500
Shock: Management Bundle
(Composite Measure).
------------------------------------------------------------------------

[[Page 20488]]

EHR-Based Clinical Process of Care Measures (that is, Electronic
Clinical Quality Measures (eCQMs))
------------------------------------------------------------------------
AMI-8a....................... Primary Percutaneous \+\
Coronary Intervention
Received within 90
minutes of Hospital
Arrival.
CAC-3........................ Home Management and Plan \+\
of Care Document Given
to Patient/Caregiver.
ED-1......................... Median Time From ED 0495
Arrival to ED Departure
for Admitted ED Patients
(ED-1).
ED-2 *....................... Admit Decision Time to ED 0497
Departure Time for
Admitted Patients (ED-2).
EHDI-1a...................... Hearing Screening Prior 1354
to Hospital Discharge.
PC-01 *...................... Elective Delivery........ 0469
PC-05........................ Exclusive Breast Milk 0480
Feeding.
STK-02....................... Discharged on 0435
Antithrombotic Therapy.
STK-03....................... Anticoagulation Therapy 0436
for Atrial Fibrillation/
Flutter.
STK-05....................... Antithrombotic Therapy by 0438
the End of Hospital Day
Two.
STK-06....................... Discharged on Statin 0438
Medication.
STK-08....................... Stroke Education......... \+\
STK-10....................... Assessed for 0441
Rehabilitation.
VTE-1........................ Venous Thromboembolism 0371
Prophylaxis.
VTE-2........................ Intensive Care Unit 0372
Thromboembolism
Prophylaxis.
------------------------------------------------------------------------
Patient Experience of Care Survey Measures
------------------------------------------------------------------------
HCAHPS....................... Hospital Consumer 0166 (0228)
Assessment of Healthcare
Providers and Systems
Survey (including Care
Transition Measure).
------------------------------------------------------------------------
* Measure listed twice, as both chart-abstracted and eCQM versions.
\+\ NQF endorsement has been removed.

8. Summary of Previously Adopted Hospital IQR Program Measures for the
FY 2022 Payment Determination and Subsequent Years

The table below summarizes the Hospital IQR Program measure set for
the FY 2022 payment determination (including previously adopted
measures, but not including measures proposed for removal beginning
with the FY 2022 payment determination in this proposed rule) and
subsequent years:

Previously Adopted Measures for the FY 2022 Payment Determination and
Subsequent Years
------------------------------------------------------------------------
Short name Measure name NQF #
------------------------------------------------------------------------
Healthcare-Associated Infection Measures
------------------------------------------------------------------------
HCP.......................... Influenza Vaccination 0431
Coverage Among
Healthcare Personnel.
------------------------------------------------------------------------
Claims-Based Patient Safety Measures
------------------------------------------------------------------------
Hip/Knee Complications *..... Hospital-Level Risk- 1550
Standardized
Complication Rate (RSCR)
Following Elective
Primary Total Hip
Arthroplasty (THA) and/
or Total Knee
Arthroplasty (TKA).
PSI 04....................... Death Rate among Surgical 0351
Inpatients with Serious
Treatable Complications.
------------------------------------------------------------------------
Claims-Based Mortality Measures
------------------------------------------------------------------------
MORT-30-STK.................. Hospital 30-Day, All- N/A
Cause,
Risk[dash]Standardized
Mortality Rate Following
Acute Ischemic Stroke.
------------------------------------------------------------------------
Claims-Based Coordination of Care Measures
------------------------------------------------------------------------
READM-30-HWR................. Hospital-Wide All-Cause 1789
Unplanned Readmission
Measure (HWR).
AMI Excess Days.............. Excess Days in Acute Care 2881
after Hospitalization
for Acute Myocardial
Infarction.
HF Excess Days............... Excess Days in Acute Care 2880
after Hospitalization
for Heart Failure.
PN Excess Days............... Excess Days in Acute Care 2882
after Hospitalization
for Pneumonia.
------------------------------------------------------------------------
Claims-Based Payment Measures
------------------------------------------------------------------------
AMI Payment.................. Hospital-Level, Risk- 2431
Standardized Payment
Associated with a 30-Day
Episode-of-Care for
Acute Myocardial
Infarction (AMI).
HF Payment................... Hospital-Level, Risk- 2436
Standardized Payment
Associated with a 30-Day
Episode-of-Care For
Heart Failure (HF).
PN Payment................... Hospital-Level, Risk- 2579
Standardized Payment
Associated with a 30-day
Episode-of-Care For
Pneumonia.
THA/TKA Payment.............. Hospital[hyphen]Level, N/A
Risk[hyphen]Standardized
Payment Associated with
an Episode-of-Care for
Primary Elective Total
Hip Arthroplasty and/or
Total Knee Arthroplasty.
------------------------------------------------------------------------

[[Page 20489]]

Chart-Abstracted Clinical Process of Care Measures
------------------------------------------------------------------------
PC-01........................ Elective Delivery........ 0469
Sepsis....................... Severe Sepsis and Septic 0500
Shock: Management Bundle
(Composite Measure).
------------------------------------------------------------------------
EHR-based Clinical Process of Care Measures (that is, Electronic
Clinical Quality Measures (eCQMs))
------------------------------------------------------------------------
ED-2......................... Admit Decision Time to ED 0497
Departure Time for
Admitted Patients.
PC-05........................ Exclusive Breast Milk 0480
Feeding.
STK-02....................... Discharged on 0435
Antithrombotic Therapy.
STK-03....................... Anticoagulation Therapy 0436
for Atrial Fibrillation/
Flutter.
STK-05....................... Antithrombotic Therapy by 0438
the End of Hospital Day
Two.
STK-06....................... Discharged on Statin 0439
Medication.
VTE-1........................ Venous Thromboembolism 0371
Prophylaxis.
VTE-2........................ Intensive Care Unit 0372
Venous Thromboembolism
Prophylaxis.
------------------------------------------------------------------------
Patient Experience of Care Survey Measures
------------------------------------------------------------------------
HCAHPS....................... Hospital Consumer 0166 (0228)
Assessment of Healthcare
Providers and Systems
Survey (including Care
Transition Measure).
------------------------------------------------------------------------
* Proposed for removal from the Hospital IQR Program beginning with the
FY 2023 payment determination, as discussed in section VIII.A.5.b.(5)
of the preamble of this proposed rule.

9. Possible New Quality Measures, Measure Topics, and Other Future
Considerations
In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53510 through
53512), we outlined considerations to guide us in selecting new quality
measures to adopt into the Hospital IQR Program. We also refer readers
to section I.A.2. of the preamble of this proposed rule where we
describe the Meaningful Measures Initiative--quality priorities that we
have identified as high impact measurement areas that are relevant and
meaningful to both patients and providers.
In keeping with these considerations, we are inviting public
comment on the potential future inclusion of a hospital-wide mortality
measure in the Hospital IQR Program, specifically whether to propose to
adopt a Claims-Only, Hospital-Wide, All-Cause, Risk-Standardized
Mortality measure or a Hybrid Hospital-Wide, All-Cause, Risk-
Standardized Mortality measure. We are also considering a newly
specified eCQM for possible concurrent inclusion in future years of the
Hospital IQR and Medicare and Medicaid Promoting Interoperability
Programs (previously known as the Medicare and Medicaid EHR Incentive
Programs), the Opioid Harm Electronic Clinical Quality Measure (eCQM).
We also seek public input on the future development and adoption of
eCQMs more generally (for example, burdens, incentives). These topics
are discussed in more detail below.
a. Potential Inclusion of Claims-Only Hospital-Wide Mortality Measure
and/or Hybrid Hospital-Wide Mortality Measure With Electronic Health
Record Data
(1) Background
Mortality is an important health outcome that is meaningful to
patients and providers, and the vast majority of patients admitted to
the hospital have survival as a primary goal. However, estimates using
data from 2002 to 2008 suggest that more than 400,000 patients die each
year from preventable harm in hospitals.\290\ While we do not expect
mortality rates to be zero, studies have shown that mortality within 30
days of hospital admission is related to quality of care, and that high
and variable mortality rates across hospitals indicate opportunities
for improvement.^{291 292} In addition to the harm to
individuals, their families, and caregivers resulting from preventable
death, there are also significant financial costs to the healthcare
system associated with high and variable mortality rates. While
capturing monetary savings for preventable mortality events is
challenging, using two recent estimates of the number of deaths due to
preventable medical errors and assuming an average of ten lost years of
life per death (valued at $75,000 per year in lost quality adjusted
life years), the annual direct and indirect cost of potentially
preventable deaths could be as much as $73.5 to $735
billion.^{293 294 295}
---------------------------------------------------------------------------

\290\ James JT. A new, evidence-based estimate of patient harms
associated with hospital care. Journal of patient safety.
2013;9(3):122-128.
\291\ Peterson ED, Roe MT, Mulgund J, et al. Association between
hospital process performance and outcomes among patients with acute
coronary syndromes. JAMA. 2006;295(16):1912-1920.
\292\ Writing Group for the Checklist- I.C.U. Investigators,
Brazilian Research in Intensive Care Network. Effect of a quality
improvement intervention with daily round checklists, goal setting,
and clinician prompting on mortality of critically ill patients: A
randomized clinical trial. JAMA. 2016;315(14):1480-1490.
\293\ Institute of Medicine. To Err is Human: Building a Safer
Health System. 1999; Available at: https://
iom.nationalacademies.org/~/media/Files/Report%20Files/1999/To-Err-
is-Human/To%20Err%20is%20Human%201999%20%20report%20brief.pdf.
\294\ Classen DC, Resar R, Griffin F, et al. `Global trigger
tool' shows that adverse events in hospitals may be ten times
greater than previously measured. Health Affairs. 2011;30(4):581-
589.
\295\ Andel C, Davidow SL, Hollander M, Moreno DA. The economics
of health care quality and medical errors. Journal of health care
finance. 2012;39(1):39-50.
---------------------------------------------------------------------------

Existing condition-specific mortality measures adopted into the
Hospital IQR Program support quality improvement work targeted toward
patients with a set of common medical conditions, such as heart
failure, acute myocardial infarction, or pneumonia. The use of these
measures may have contributed to national declines in hospital
mortality rates for the measured conditions and/or procedures.\296\
However, a measure of hospital-wide mortality captures a hospital's
performance across a broader set of patients and across more areas of
the hospital. Because more patients are included in the measure, a
hospital-

[[Page 20490]]

wide mortality measure also captures the performance for smaller volume
hospitals that would otherwise not have sufficient cases to calculate
condition- or procedure-specific mortality measures.
---------------------------------------------------------------------------

\296\ Suter LG, Li SX, Grady JN, et al. National patterns of
risk-standardized mortality and readmission after hospitalization
for acute myocardial infarction, heart failure, and pneumonia:
update on publicly reported outcomes measures based on the 2013
release. Journal of general internal medicine. 2014;29(10):1333-
1340.
---------------------------------------------------------------------------

We developed two versions of a hospital-wide, all-cause, risk-
standardized mortality measure: one that is calculated using only
claims data (the Claims-Only Hospital-Wide All-Cause Risk Standardized
Mortality Measure (hereinafter referred to as the ``Claims-Only HWM
measure'')); and a hybrid version that uses claims data to define the
measure cohort and a combination of data from electronic health records
(EHRs) and claims for risk adjustment (Hybrid Hospital-Wide All-Cause
Risk Standardized Mortality Measure (hereinafter referred to as the
``Hybrid HWM measure'')). The goal of developing hospital-wide
mortality measures is to assess hospital performance on patient
outcomes among patients for whom mortality is likely to present an
important quality signal and those where the hospital can positively
influence the outcome for the patient. Both versions of the measure
address the Meaningful Measures Initiative quality priority of
promoting effective treatment to reduce risk-adjusted mortality.
Several stakeholder groups were engaged throughout the development
process, including a Technical Work Group and a Patient and Family Work
Group, as well as a national, multi-stakeholder Technical Expert Panel
consisting of a diverse set of stakeholders, including providers and
patients. These groups were convened by the measure developer under
contract with us and provided feedback on the measure concept, outcome,
cohort, risk model variables, and reporting results. The measure
developer also solicited stakeholder feedback during measure
development as required in the Measures Management System (MMS)
Blueprint.\297\
---------------------------------------------------------------------------

\297\ CMS Measures Management System Blueprint (Blueprint v
13.0). CMS. 2017. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/Downloads/Blueprint-130.pdf.
---------------------------------------------------------------------------

We developed a Hybrid HWM measure in addition to a Claims-Only HWM
measure in order to move toward greater use of EHR data for quality
measurement, and in response to stakeholder feedback that is important
to include clinical data in outcome measures (80 FR 49702 through
49703). The Hybrid HWM measure is harmonized with the Claims-Only HWM
measure. Both measures use the same cohort definition, outcome
assessment, and claims-based risk variables (discussed in more detail
below). The Hybrid HWM measure builds upon prior efforts to use of a
set of core clinical data elements extracted from hospital EHRs for
each hospitalized Medicare FFS beneficiary over the age of 65 years, as
outlined in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49698). The
core clinical data elements are data which are routinely collected on
hospitalized adults, extraction from hospital EHRs is feasible, and the
data can be utilized as part of specific quality outcome measures. The
Hybrid HWM measure's core clinical data elements are very similar to,
but not precisely that same as, those used in the Hybrid Hospital-Wide
Readmission Measure with Claims and Electronic Health Record Data
measure (NQF #2879), for which we are currently collecting data from
hospitals on a voluntary basis and are considering proposing as a
required measure as early as the FY 2023 payment determination (82 FR
38350 through 38355). For more detail about the core clinical data
elements used in the Hybrid Hospital-Wide Readmission Measure with
Claims and Electronic Health Record Data measure (NQF #2879), we refer
readers to our discussion in the FY 2016 IPPS/LTCH PPS final rule (80
FR 49698 through 49704) and the Hybrid Hospital-Wide Readmission
Measure with Electronic Health Record Extracted Risk Factors report
(available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html).
The Claims-Only Hospital-Wide All-Cause Risk Standardized Mortality
Measure (MUC17-195) and the Hybrid Hospital-Wide All-Cause Risk
Standardized Mortality Measure (MUC17-196) were included in a publicly
available document entitled ``2017 Measures Under Consideration List''
(available at: https://www.qualityforum.org/ProjectMaterials.aspx?projectID=75367) and have been reviewed by the
NQF MAP Hospital Workgroup. The MAP conditionally supported both
measures pending NQF review and endorsement, as referenced in the 2017-
2018 Spreadsheet of Final Recommendations to HHS and CMS (available at:
https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=86972). The MAP also recommended
the Hybrid HWM measure have a voluntary reporting period before
mandatory implementation.\298\
---------------------------------------------------------------------------

\298\ Measure Application Partnership. MAP 2018 Considerations
for Implementing Measures in Federal Programs: Hospitals.
Washington, DC: NQF; 2018. Available at: https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=87083.
---------------------------------------------------------------------------

The MAP noted both measures are important measures for patient
safety, and that these measures could help reduce deaths due to medical
errors.\299\ We agree with MAP stakeholder concerns regarding the need
for the NQF endorsement process to ensure the measures have appropriate
clinical and social risk factors in the risk adjustment models and
address necessary exclusions to ensure the measure does not
disproportionately penalize facilities that may treat more complex
patients.\300\ The MAP also expressed concern regarding the potential
unintended consequences of unnecessary interventions for patients at
the end of life; \301\ however, this issue was carefully addressed
during measure development by excluding patients at the end of life and
for whom survival is unlikely to be the goal of care from the measure
cohort based upon the TEP and patient work group input. Specifically,
the measure does not include patients enrolled in hospice in the 12
months prior to admission, on admission, or within 2 days of admission;
the measure also does not include patients admitted primarily for
cancer that are enrolled in hospice at any time during the admission,
those admitted primarily for metastatic cancer, and those admitted for
specific diagnoses with limited chances of survival.
---------------------------------------------------------------------------

\299\ Ibid.
\300\ Ibid.
\301\ Ibid.
---------------------------------------------------------------------------

The MAP further suggested that condition-specific mortality
measures may be more actionable for providers and informative for
consumers.\302\ While service-line divisions may not be as granular as
condition-specific measures, we believe a single comprehensive marker
of hospital quality encourages organization-wide improvement, allows
more hospitals to meet volume requirements for inclusion, offers more
rapid detection of changes in performance due to performance being
based on the most recent year of data available, and aligns with to the
Meaningful Measures Initiative by creating the framework for
stakeholders to have fewer measures to track and a single score to
reference. We plan to submit both measures to NQF for endorsement
proceedings as part of the Patient Safety Committee as early as

[[Page 20491]]

FY 2019, after the measures have been fully specified for use with ICD-
10 data.
---------------------------------------------------------------------------

\302\ Ibid.
---------------------------------------------------------------------------

(2) Overview of Measures
Both the Claims-Only HWM measure and the Hybrid HWM measure capture
hospital-level, risk-standardized mortality within 30 days of hospital
admission for most conditions or procedures. The measures are reported
as a single summary score, derived from the results of risk-adjustment
models for 13 mutually exclusive service-line divisions (categories of
admissions grouped based on discharge diagnoses or procedures), with a
separate risk model for each of the 13 service-line divisions. The 13
service-line divisions include: 8 non-surgical divisions and 5 surgical
divisions. The non-surgical divisions are: Cancer; cardiac;
gastrointestinal; infectious disease; neurology; orthopedics;
pulmonary; and renal. The surgical divisions are: Cancer;
cardiothoracic; general; neurosurgery; and orthopedics.
Hospitalizations are eligible for inclusion in the measure if the
patient was hospitalized at a non-Federal, short-stay acute care
hospital. To compare mortality performance across hospitals, the
measure accounts for differences in patient characteristics (patient
case mix) as well as differences in the medical services provided and
procedures performed by hospitals (hospital service mix). In addition,
the Hybrid HWM Measure employs a combination of administrative claims
data and clinical EHR data to enhance clinical case mix adjustment with
additional clinical data.
Our goal is to more comprehensively measure the mortality rates of
hospitals, including to improve the ability to measure mortality rates
in smaller volume hospitals. The cohort definition attempts to capture
as many admissions as possible for which survival would be a reasonable
indicator of quality and for which adequate risk adjustment is
possible. We assume survival would be a reasonable indicator of quality
for admissions fulfilling two criteria: (1) Survival is most likely the
primary goal of the patient when they enter the hospital; and (2) the
hospital can reasonably influence the patient's chance of survival
through quality of care. These measures would provide information to
hospitals that can facilitate quality improvement efforts for hospital
settings, types of care, and types of patients not included in
currently available condition-and procedure-specific mortality
measures. Also, these measures would provide more transparency about
the quality of care in clinical areas not captured in the current
condition- and procedure-specific measures.
Additional information on the development of both the Claims-Only
and Hybrid versions of the HWM measure can be found on the CMS website
at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/PC-Updates-on-Previous-Comment-Periods.html.
(3) Data Sources
Both the Claims-Only and Hybrid versions of the HWM measure use
Part A Medicare administrative claims data from Medicare FFS
beneficiaries aged between 65 and 94 years, and use one year of data.
Part A data from the 12 months prior to the index admission are used
for risk adjustment.
The Hybrid HWM measure uses two sources of data for the calculation
of the measure: Medicare Part A claims and a set of core clinical data
elements from hospitals' EHRs. Claims and enrollment data are used to
identify index admissions included in the measure cohort, in the risk-
adjustment model, and to assess the 30-day mortality outcome. These
data are merged with the core clinical data elements for eligible
patient admissions from each hospital's EHR. The data elements are the
values for a set of vital signs and common laboratory tests collected
at presentation and used for risk-adjustment of patients' severity of
illness (for Medicare FFS beneficiaries who are aged between 65 and 94
years), in addition to data from claims.
(4) Outcome
The outcome of interest for both the Claims-Only and Hybrid
versions of the HWM measure is the same, all-cause 30-day mortality. We
define all-cause mortality as death from any cause within 30 days of
the index hospital admission date.
(5) Cohort
The cohorts for both the Claims-Only HWM and Hybrid versions of the
HWM measure are the same. The measure cohorts consist of Medicare FFS
beneficiaries, aged between 65 and 94 years, discharged from non-
federal acute care hospitals.
The Claims-Only HWM measure and Hybrid HWM measure were developed
using ICD-9 codes. The measures are currently being updated for use
with ICD-10 codes; ICD-10 updates will be completed prior to NQF
submission and potential future implementation. Similar to the existing
Hospital-Wide All-Cause Unplanned Readmission measure (NQF #1789),
which was adopted into the Hospital IQR Program in the FY 2013 IPPS/
LTCH PPS final rule beginning with the FY 2015 payment determination
(77 FR 53521 through 53528), the Claims-Only HWM measure and Hybrid HWM
measure include a large and diverse number of admissions represented by
thousands of included ICD-9 codes. We used the AHRQ Clinical
Classification Software (CCS) \303\ to group numerous diagnostic and
procedural ICD-9 codes into the clinically meaningful categories
defined by the AHRQ grouper. Both the Claims-Only and Hybrid versions
of the HWM measure use those CCS categories as part of cohort
specification and risk-adjustment, including the 13 service-line risk
models.
---------------------------------------------------------------------------

\303\ Clinical Classifications Software (CCS) for ICD-9-CM Fact
Sheet. Accessed at: https://www.hcup-us.ahrq.gov/toolssoftware/ccs/ccsfactsheet.jsp.
---------------------------------------------------------------------------

For the AHRQ CCSs and individual ICD-9-CM codes that define the
measure development cohort, we refer readers to the measure methodology
reports on our website at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/PC-Updates-on-Previous-Comment-Periods.html.
(6) Inclusion and Exclusion Criteria
The inclusion and exclusion criteria for both the Claims-Only and
Hybrid versions of the HWM measure are the same. For both versions of
the HWM measure, the cohort currently includes Medicare FFS patients
who: (1) Were enrolled in Medicare FFS Part A for the 12 months prior
to the date of admission and during the index admission; (2) have not
been transferred from another inpatient facility; (3) were admitted for
acute care (do not have a principal discharge diagnosis of a
psychiatric disease or do not have a principal discharge diagnosis of
``rehabilitation care; fitting of prostheses and adjustment devices'');
(4) are aged between 65 and 94 years; (5) are not enrolled in hospice
at the time of or in the 12 months prior to their index admission; (6)
are not enrolled in hospice within two days of admission; (7) are
without a principal diagnosis of cancer and enrolled in hospice during
their index admission; (8) are without any diagnosis of metastatic
cancer; and (9) are without a principal discharge diagnosis of a
condition which hospitals have limited ability to influence survival,
including: Anoxic brain damage; persistent vegetative state; prion
diseases such as Creutzfeldt-Jakob disease, Cheyne-Stokes respiration;
brain death; respiratory arrest; or

[[Page 20492]]

cardiac arrest without a secondary diagnosis of acute myocardial
infarction.
Both the Claims-Only and Hybrid versions of the HWM measure
currently exclude the following index admissions for patients: (1) With
inconsistent or unknown vital status; (2) discharged against medical
advice; (3) with an admission for crush injury, burn, intracranial
injury, or spinal cord injury; (4) with specific principal discharge
diagnosis codes for which mortality may not be a quality signal; (5)
with an admission in a CCS condition or procedure categorized as in the
service-line divisions: Other Surgical Procedures or Other Non-Surgical
Conditions (this exclusion is being reassessed to include these
patients in the final measure); and (6) with an admission in a low-
volume CCS (within a particular service-line division), defined as
equal to or less than 100 patients with that principle diagnosis across
all hospitals.
For both the Claims-Only and Hybrid versions of the HWM measure,
each index admission is assigned to one of 13 mutually exclusive
service-line divisions. For details on how each admission is assigned
to a specific service-line division, and for a complete description and
rationale of the inclusion and exclusion criteria, we refer readers to
the methodology reports found on the CMS website at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/PC-Updates-on-Previous-Comment-Periods.html.
(7) Risk-Adjustment
Both the Claims-Only and Hybrid versions of the HWM measure adjust
for both case mix differences (clinical status of the patient,
accounted for by adjusting for age and comorbidities) and service-mix
differences (the types of conditions and procedures cared for and
procedures conducted by the hospital, accounted for by the discharge
condition category), and use the same patient comorbidities in the risk
models. Patient comorbidities are based on inpatient hospital
administrative claims during the 12 months prior to and including the
index admission derived from ICD-9 codes grouped into the CMS condition
categories (CMS-CCs). The measures are currently being updated for use
with ICD-10 codes; ICD-10 updates will be completed prior to NQF
submission and potential future adoption.
The Hybrid HWM measure also includes the core clinical data
elements from patients' EHRs in the case mix adjustment. The core
clinical data elements are derived from information captured in the EHR
during the index admission only, and are listed below.

Currently Specified Core Clinical Data Element Variables
----------------------------------------------------------------------------------------------------------------
Time window for first captured
Data elements Units of measurement values
----------------------------------------------------------------------------------------------------------------
Heart Rate.............................. Beats per minute................ 0-2 hours.
Systolic Blood Pressure................. mmHg............................ 0-2 hours.
Temperature............................. Degrees (Fahrenheit or Celsius). 0-2 hours.
Oxygen Saturation....................... Percent......................... 0-2 hours.
Hemoglobin.............................. g/dL............................ 0-24 hours.
Platelet................................ Count........................... 0-24 hours.
White Blood Cell Count.................. Cells/mL........................ 0-24 hours.
Sodium.................................. mEq/L........................... 0-24 hours.
Bicarbonate............................. mmol/L.......................... 0-24 hours.
Creatinine.............................. mg/dL........................... 0-24 hours.
----------------------------------------------------------------------------------------------------------------

The core clinical data elements are clinical information meant to
reflect a patient's clinical status upon arrival to the hospital. For
more details on how the risk variables in each measure were chosen, we
refer readers to the methodology reports found on the CMS website at:
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/PC-Updates-on-Previous-Comment-Periods.html.
(8) Calculating the Risk-Standardized Mortality Rate (RSMR)
The method for calculating the RSMR for both the Claims-Only and
the Hybrid versions of the HWM measure is the same. Index admissions
are assigned to one of 13 mutually exclusive service-line divisions
consisting of related conditions or procedures. For each service-line
division, the standardized mortality ratio (SMR) is calculated as the
ratio of the number of ``predicted'' deaths to the number of
``expected'' deaths at a given hospital. For each hospital, the
numerator of the ratio is the number of deaths within 30 days predicted
based on the hospital's performance with its observed case mix and
service mix, and the denominator is the number of deaths expected based
on the nation's performance with that hospital's case mix and service
mix. This approach is analogous to a ratio of ``observed'' to
``expected'' used in other types of statistical analyses.
The service-line SMRs are then pooled for each hospital using an
inverse variance-weighted mean to create a hospital-wide composite SMR.
The inverse variance-weighted mean can be interpreted as a weighted
average of all SMRs that takes into account the precision of SMRs. The
composite SMR is multiplied by the national observed mortality rate to
produce the RSMR. For additional details regarding the measure
specifications to calculate the RSMR, we refer readers to the Claims-
Only Hospital-Wide (All-Condition, All-Procedure) Risk-Standardized
Mortality Measure: Measure Methodology for Public Comment report and
Hybrid Hospital-Wide (All-Condition, All-Procedure) Risk-Standardized
Mortality Measure with Electronic Health Record Extracted Risk Factors:
Measure Methodology for Public Comment report, which are posted on the
CMS website at: https://cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
We are inviting public comment on the possible future inclusion of
one or both hospital-wide mortality measures in the Hospital IQR
Program simultaneously. We are also considering possible future
inclusion of the Hybrid HWM measure in the Medicare and Medicaid
Promoting Interoperability Programs (previously known as the Medicare
and Medicaid EHR Incentive Programs) for Clinical Quality Measures
(CQM) electronic reporting by eligible hospitals and CAHs. We are also
inviting public comment on other aspects of the measure. Specifically,
we are seeking public comment on the following: (1) Feedback about the

[[Page 20493]]

service-line division structure of the measure; (2) input on the
measure testing approach, particularly if there is any additional
validity testing that would be meaningful; and (3) how the measure
results might be presented to the public, including ways that we could
present supplemental hospital performance information in public
reporting, such as service-line division-level results, to create a
more meaningful and usable measure and ways that we could report more
information about hospitals in a No Different From National Average
group (defined using 95 percent confidence intervals) to help
clinicians and patients use the measure results to improve patient care
and make informed choices.
b. Potential Future Inclusion of the Hospital Harm--Opioid-Related
Adverse Events Electronic Clinical Quality Measure (eCQM)
(1) Background
Opioids are among the most frequently implicated medications in
adverse drug events among hospitalized patients. The most serious
opioid-related adverse events include those with respiratory
depression, which can lead to brain damage and death. Opioid-related
adverse events have both negative patient impacts and financial
implications. These patients have been noted to have 55 percent longer
lengths of stay, 47 percent higher costs, 36 percent higher risk of 30-
day readmission, and 3.4 times higher payments than patients without
these adverse events.\304\ While noting that data are limited, The
Joint Commission suggested that opioid-induced respiratory arrest may
contribute substantially to the 350,000-750,000 in-hospital cardiac
arrests annually.\305\
---------------------------------------------------------------------------

\304\ Kessler ER, Shah M, Gruschkkus SK, et al. Cost and quality
implications of opioid-based postsurgical pain control using
administrative claims data from a large health system: opioid-
related adverse events and their impact on clinical and economic
outcomes. Pharmacotherapy. 2013; 33(4):383-391.
\305\ Overdyk FJ. Postoperative respiratory depression and
opioids. Initiatives in Safe Patient Care. 2009; Available at:
https://files.sld.cu/anestesiologia/files/2012/01/postoperative-respiratory-depression-opioids.pdf.
---------------------------------------------------------------------------

Most opioid-related adverse events are preventable. Of the opioid-
related adverse drug events reported to The Joint Commission's Sentinel
Event database,\306\ 47 percent were due to a wrong medication dose, 29
percent to improper monitoring, and 11 percent to other causes (for
example, medication interactions and/or drug reactions). In addition,
in an analysis of a malpractice claims database, a review of cases in
which there was opioid-induced respiratory depression among post-
operative surgical patients, 97 percent of these adverse events were
judged preventable with better monitoring and response.\307\ While
hospital quality interventions such as, proper dosing, adequate
monitoring, and attention to potential drug interactions that can lead
to overdose are key to prevention of opioid-related respiratory events,
the use of these practices can vary substantially across hospitals.
---------------------------------------------------------------------------

\306\ The Joint Commission. Safe use of opioids in hospitals.
The Joint Commission Sentinel Event Alert. 2012; 49:1-5. https://www.jointcommission.org/assets/1/18/SEA_49_opioids_8_2_12_final.pdf.
\307\ Lee LA, Caplan RA, Stephens LS, et al. Postoperative
opioid-induced respiratory depression: a closed claims analysis.
Anesthesiology. 2015; 122(3):659-665.
---------------------------------------------------------------------------

Administration of opioids also varies widely by hospital, ranging
from 5 percent in the lowest-use hospital to 72 percent in the highest-
use hospital.\308\ Notably, hospitals that use opioids most frequently
have increased adjusted risk of severe opioid-related adverse
events.\309\ Surgical patients are at particular risk of these adverse
events because opioid administration is common in this population. For
example, among a diverse group of surgical patients undergoing common
surgical procedures at a large medical center, 98.6 percent received
opioids and 13.6 percent of those patients experienced an opioid-
related adverse drug event.\310\ Reduction of adverse events in
surgical and non-surgical patients receiving opioids, may be enhanced
by measuring the rates of these events at each hospital in a
systematic, comparable way. We have developed the Hospital Harm--
Opioid-Related Adverse Events eCQM to assess the rates of these adverse
events as well as the variation in rates among hospitals.
---------------------------------------------------------------------------

\308\ Herzig SJ, Rothberg MB, Cheung M, et al. Opioid
utilization and opioid-related adverse events in nonsurgical
patients in US hospitals. J Hosp Med. 2014; 9(2):73-81.
\309\ Ibid.
\310\ Kessler ER, Shah M, Gruschkkus SK, et al. Cost and quality
implications of opioid-based postsurgical pain control using
administrative claims data from a large health system: opioid-
related adverse events and their impact on clinical and economic
outcomes. Pharmacotherapy. 2013; 33(4):383-391.
---------------------------------------------------------------------------

(2) Overview of Measure
The Hospital Harm--Opioid-Related Adverse Events eCQM outcome
measure assesses, by hospital, the proportion of patients who had an
opioid-related adverse event. This measure addresses the Meaningful
Measures Initiative quality priority of making care safer by reducing
harm caused in the delivery of care. The measure uses the
administration of naloxone, an opioid reversal agent that has been used
in a number of studies as an indicator of opioid-related adverse
respiratory events, to indicate a harm to a patient.^{311 312}
The intent of this measure is for hospitals to track and improve their
monitoring and response to patients administered opioids during
hospitalization, and to avoid harm, such as respiratory depression,
which can lead to brain damage and death. This measure focuses
specifically on in-hospital opioid-related adverse events, rather than
opioid overdose events that happen in the community and may bring a
patient into the emergency department. We acknowledge that some
stakeholders have expressed concern that some providers could withhold
the use of naloxone, believing that may help those providers avoid poor
performance on this quality measure. This measure is not intended to
incentivize hospitals to not administer naloxone to patients who are in
respiratory depression, but rather incentivize hospitals to closely
monitor patients who receive opioids during their hospitalization to
prevent respiratory depression. In addition, the aim of this measure is
not to identify preventability of an individual harm instance or
whether each instance of harm was an error, but rather to assess the
overall rate of the harm within a hospital incorporating a definition
of harm that is likely to be reduced as a result of hospital best
practice.
---------------------------------------------------------------------------

\311\ Eckstrand JA, Habib AS, Williamson A, et al. Computerized
surveillance of opioid-related adverse drug events in perioperative
care: a cross-sectional study. Patient Saf Surg. 2009; 3:18.
\312\ Nwulu U, Nirantharakumar K, Odesanya R, et al. Improvement
in the detections of adverse drug events by the use of electronic
health and prescription records: an evaluation of two trigger tools.
Eur J Clin Pharmacol. 2013; 69(2):255-259.
---------------------------------------------------------------------------

As with all quality measures we develop, testing was performed to
establish the feasibility of the measure, data elements, and validity
of the numerator. Clinical adjudicators reviewed medical records on
each instance of a harm identified through query of the EHR data to
confirm naloxone was in fact administered to reverse symptoms of opioid
overdose. Additional testing is currently being performed to establish
the data element validity using output from the Measure Authoring Tool
(MAT) \313\ in multiple hospitals, using multiple EHR systems. The MAT
is a web-based tool used to develop the electronic measure

[[Page 20494]]

specifications, which expresses complicated measure logic in several
formats including a human-readable document. The electronically
extracted data would be validated by comparison to medical chart
abstracted data.
---------------------------------------------------------------------------

\313\ The Measure Authoring Tool (MAT) is a web-based tool used
by measure developers in the creation of eMeasures. For additional
information, we refer readers to: https://www.emeasuretool.cms.gov/.
---------------------------------------------------------------------------

This measure addresses the Meaningful Measures Initiative quality
priority of making care safer by reducing harm caused in the delivery
of care discussed in section I.A.2. of the preamble of this proposed
rule. The Hospital Harm--Opioid-related Adverse Events (MUC17-210) was
included in a publicly available document entitled ``2017 Measures
Under Consideration List'' (available at: https://www.qualityforum.org/ProjectMaterials.aspx?projectID=75367). This measure was reviewed by
the NQF MAP Hospital Workgroup in December 2017 and received the
recommendation to refine and resubmit for consideration for
programmatic inclusion, as referenced in the 2017-2018 Spreadsheet of
Final Recommendations to HHS and CMS (available at: https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=86972). For additional information
and discussion of concerns and considerations raised by the MAP related
to this measure, we refer readers to the December 2017 NQF MAP Hospital
Workgroup meeting transcript (available at: https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=87148).
MAP stakeholders acknowledged the significant health risks
associated with opioid-related adverse events, but recommended
adjusting the numerator to consider the impact on chronic opioid
users.\314\ Accordingly, we will address this issue in upcoming testing
and NQF review. Regarding MAP stakeholder concern that the measure
needs to be tested in more facilities to demonstrate reliability and
validity, as stated previously, we are currently testing the MAT output
for this measure in multiple hospitals that use a variety of EHR
systems.\315\ We plan to submit this measure for NQF endorsement as
part of the Patient Safety Committee in November 2018.
---------------------------------------------------------------------------

\314\ Measure Application Partnership. MAP 2018 Considerations
for Implementing Measures in Federal Programs: Hospitals.
Washington, DC: NQF; 2018. Available at: https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=87083.
\315\ Ibid.
---------------------------------------------------------------------------

(3) Cohort
The measure denominator includes all patients 18 years or older
discharged from an inpatient hospital encounter during the 1-year
measurement period. The measure includes inpatient admissions that were
initially seen in the emergency department or in observational status
and then admitted to the hospital.
(4) Outcome
The numerator for this electronic outcome measure is the number of
patients who received naloxone outside of the operating room either:
(1) After 24 hours from hospital arrival; or (2) during the first 24
hours after hospital arrival with evidence of hospital opioid
administration prior to the naloxone administration. We narrowed cases
to exclude naloxone use in the operating room where it could be part of
the sedation plan as administered by an anesthesiologist. Use of
naloxone for procedures outside of the operating room (such as bone
marrow biopsy) are counted in the numerator as it would indicate the
patient was over sedated. These criteria exist to ensure patients are
not considered to have experienced harm if they receive naloxone in the
first 24 hours due to an opioid overdose that occurred in the community
prior to hospital arrival. We do not require the administration of an
opioid prior to naloxone after 24 hours from hospital arrival because
an event occurring 24 hours after admission is most likely due to
hospitals' administration of opioids. By limiting the requirement of
documented opioid administration to the first 24 hours of the
encounter, we are reducing the complexity of the measure logic and
therefore the burden of implementation for hospitals. For more
information about the measure specifications, we refer readers to our
MAT Header (measure specs) and framing document (available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/Public-Comments.html).
We are inviting public comment on the possible future inclusion of
the Hospital Harm--Opioid-related Adverse Events eCQM in the Hospital
IQR Program. Specifically, we are seeking public comment on whether to:
(1) Initially introduce this measure as voluntary; (2) adopt the
measure into the existing eCQM measure set from which hospitals
currently select four to report; or (3) adopt the measure as mandatory
for all hospitals to report. In addition, we are seeking public comment
on ways to address any potential unintended consequences resulting from
future implementation of this measure. We are also considering future
adoption of this measure in the Medicare and Medicaid Promoting
Interoperability Programs (previously known as the Medicare and
Medicaid EHR Incentive Programs) for Clinical Quality Measures (CQM)
electronic reporting by eligible hospitals and CAHs.
c. Potential Future Development and Adoption of eCQMs Generally
Stakeholders continue to identify areas for improvement in the
implementation of eCQMs under a variety of CMS programs, including the
Hospital IQR Program and the Medicare and Medicaid Promoting
Interoperability Programs (previously known as the Medicare and
Medicaid EHR Incentive Programs). While effective utilization of eCQMs
promises greater efficiency and more timely access to data to support
quality improvement activities, various types of costs associated with
these measurement approaches detract from these benefits. Moreover,
some providers may have low awareness of the resources and tools
available to help address issues that arise in utilizing eCQMs.
Program design and operations associated with measurement aspects
of these programs can be a significant source of cost for providers.
Uncertainty around rapidly shifting timelines and requirements can pose
significant financial and operational planning challenges for
organizations, while lack of alignment across programs results in
further complexity. In addition, the implementation of eCQMs within the
EHR is a significant source of cost. Health IT products vary widely in
the eCQMs they offer, and incorporating new measure specifications into
a product, along with validation and testing of the updates, can be
challenging and time-consuming. Lack of transparency from developers
around data sources within the EHR, mapping, measure calculations, and
reporting schemas, can hinder providers' ability to implement eCQMs and
ensure the accuracy of results. Moreover, challenges in extracting data
from the EHR and integrating with other applications can serve as a
source of cost for providers seeking to bring together different
technology solutions and work with other third party services to
complete reporting and quality improvement activities.
Stakeholders have expressed support for increasing the availability
of new eCQMs, developing eCQMs that focus on patient outcomes and
higher impact measurement areas, and exploring how eCQMs can reduce the
costs and information collection burden associated with chart-
abstracted

[[Page 20495]]

measures. However, they have also identified barriers which may
contribute to a lack of adequate development of eCQMs and limit their
potential, including long development timelines, lack of guidelines/
prioritization of and participation in eCQM development, limited field
testing, and program policies that limit innovation by focusing on
``least common denominator'' approaches.
We are seeking stakeholder feedback on ways that we could address
these and other challenges related to eCQM use. Specifically, we are
inviting comment on the following questions: (1) What aspects of the
use of eCQMs are most costly to hospitals and health IT vendors?; (2)
What program and policy changes, such as improved regulatory alignment,
would have the greatest impact on addressing eCQM costs?; (3) What are
the most significant barriers to the availability and use of new eCQMs
today?; (4) What specifically would stakeholders like to see us do to
reduce costs and maximize the benefits of eCQMs?; (5) How could we
encourage hospitals and health IT vendors to engage in improvements to
existing eCQMs?; (6) How could we encourage hospitals and health IT
vendors to engage in testing new eCQMs?; (7) Would hospitals and health
IT vendors be interested in or willing to participate in pilots or
models of alternative approaches to quality measurement that would
explore less burdensome ways of approaching quality measurement, such
as sharing data with third parties that use machine learning and
natural language processing to classify quality of care or other
approaches?; (8) What ways could we incentivize or reward innovative
uses of health IT that could reduce costs for hospitals?; and (9) What
additional resources or tools would hospitals and health IT vendors
like to have publicly available to support testing, implementation, and
reporting of eCQMs?
10. Accounting for Social Risk Factors in the Hospital IQR Program
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38324 through
38326), we discussed the importance of improving beneficiary outcomes
including reducing health disparities. We also discussed our commitment
to ensuring that medically complex patients, as well as those with
social risk factors, receive excellent care. We discussed how studies
show that social risk factors, such as being near or below the poverty
level as determined by HHS, belonging to a racial or ethnic minority
group, or living with a disability, can be associated with poor health
outcomes and how some of this disparity is related to the quality of
health care.\316\ Among our core objectives, we aim to improve health
outcomes, attain health equity for all beneficiaries, and ensure that
complex patients as well as those with social risk factors receive
excellent care. Within this context, reports by the Office of the
Assistant Secretary for Planning and Evaluation (ASPE) and the National
Academy of Medicine have examined the influence of social risk factors
in our value-based purchasing programs.\317\ As we noted in the FY 2018
IPPS/LTCH PPS final rule (82 FR 38404), ASPE's report to Congress,
which was required by the IMPACT Act of 2014, found that, in the
context of value-based purchasing programs, dual eligibility was the
most powerful predictor of poor health care outcomes among those social
risk factors that they examined and tested. ASPE is continuing to
examine this issue in its second report required by the IMPACT Act of
2014, which is due to Congress in the fall of 2019. In addition, as we
noted in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38324), the
National Quality Forum (NQF) undertook a 2-year trial period in which
certain new measures and measures undergoing maintenance review have
been assessed to determine if risk adjustment for social risk factors
is appropriate for these measures.\318\ The trial period ended in April
2017 and a final report is available at: https://www.qualityforum.org/SES_Trial_Period.aspx. The trial concluded that ``measures with a
conceptual basis for adjustment generally did not demonstrate an
empirical relationship'' between social risk factors and the outcomes
measured. This discrepancy may be explained in part by the methods used
for adjustment and the limited availability of robust data on social
risk factors. NQF has extended the socioeconomic status (SES)
trial,\319\ allowing further examination of social risk factors in
outcome measures.
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\316\ See, for example, United States Department of Health and
Human Services. ``Healthy People 2020: Disparities. 2014.''
Available at: https://www.healthypeople.gov/2020/about/foundation-health-measures/Disparities; or National Academies of Sciences,
Engineering, and Medicine. Accounting for Social Risk Factors in
Medicare Payment: Identifying Social Risk Factors. Washington, DC:
National Academies of Sciences, Engineering, and Medicine 2016.
\317\ Department of Health and Human Services Office of the
Assistant Secretary for Planning and Evaluation (ASPE), ``Report to
Congress: Social Risk Factors and Performance Under Medicare's
Value-Based Purchasing Programs.'' December 2016. Available at:
https://aspe.hhs.gov/pdf-report/report-congress-social-risk-factors-and-performance-under-medicares-value-based-purchasing-programs.
\318\ Available at: https://www.qualityforum.org/SES_Trial_Period.aspx.
\319\ Available at: https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=86357.
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[[Page 20496]]

the Pneumonia Mortality measure (NQF #0468); (3) a potential
methodology for illuminating differences in outcomes rates among
patient groups within a hospital that would also allow for a comparison
of those differences, or disparities, across hospitals; (4) an
alternative methodology that compares performance for patient subgroups
across hospitals but does not provide information on within hospital
disparities and any additional suggested methodologies for calculating
stratified results by patient dual eligibility status; and (5) future
public reporting of these same measures stratified by patient dual
eligibility status on the Hospital Compare website (82 FR 38407). For
the Hospital IQR Program in general, commenters noted that stratified
measures could serve as tools for hospitals to identify gaps in
outcomes for different groups of patients, improve the quality of
health care for all patients, and empower consumers to make informed
decisions about health care (82 FR 38404). Commenters encouraged us to
stratify measures by other social risk factors such as age, income, and
educational attainment (82 FR 38404).
As a next step, we are considering options to reduce health
disparities among patient groups within and across hospitals by
increasing the transparency of disparities as shown by quality
measures. We are considering implementing the two above-mentioned
methods to promote health equity and improve healthcare quality for
patients with social risk factors. The first method (the hospital-
specific disparity method) would promote quality improvement by
calculating differences in outcome rates among patient groups within a
hospital while accounting for their clinical risk factors. This method
would also allow for a comparison of those differences, or disparities,
across hospitals, so hospitals could assess how well they are closing
disparities gaps compared to other hospitals. The second methodological
approach is complementary and would assess hospitals' outcome rates for
subgroups of patients, such as dual eligible patients, across
hospitals, allowing for a comparison among hospitals on their
performance caring for their patients with social risk factors.
We acknowledge the complexity of interpreting stratified outcome
measures. As we discussed in the FY 2018 IPPS/LTCH PPS final rule (82
FR 38404 through 38409), due to this complexity, and prior to any
future public reporting of stratified measure data, we plan to stratify
the Pneumonia Readmission measure (NQF #0506) data by highlighting both
hospital-specific disparities and readmission rates specific for dual-
eligible beneficiaries across hospitals for dual-eligible patients in
hospitals' confidential feedback reports beginning Fall 2018. In FY
2018 IPPS/LTCH PPS final rule (82 FR 38402 through 38409), we explained
that we believe the Pneumonia Readmission measure and the Pneumonia
Mortality measure are appropriate first measures to stratify, because
we currently publicly report the results of both measures for a large
cohort of hospitals. In addition, both measures include a large number
of admissions per hospital and therefore have sufficiently large sample
sizes for most hospitals to support adequate reliability of stratified
calculations. As a first step, in the interest of simplicity and to
minimize confusion for hospitals, we are planning to provide
confidential feedback reports for the Pneumonia Readmission measure
only, using both methodologies.
For the future, we are considering: (1) Expanding our efforts to
provide stratified data in hospital confidential feedback reports for
other measures; (2) including other social risk factors beyond dual-
eligible status in hospital confidential feedback reports; and (3)
eventually, making stratified data publicly available on the Hospital
Compare website, as mentioned in previous rules, to allow consumers and
other stakeholders to view critical information about the care and
outcomes of subgroups of patients with social risk factors. We believe
the stratified results will provide hospitals with information that
could illuminate disparities in care or outcome, which could
subsequently be targeted through quality improvement efforts. We
further believe that public display of this information could drive
consumer choice and spark additional improvement efforts. A CMS
contractor will convene a Technical Expert Panel (TEP) in the spring of
2018 to solicit feedback from stakeholders on approaches to consider
for stratification for the Hospital IQR Program. We anticipate
receiving additional input from hospitals when they receive
confidential feedback reports of the stratified results and will
encourage stakeholders to submit comments during this process. We are
also considering how these methodologies may be adapted to apply to
other CMS quality programs in the future. We refer readers to the FY
2018 IPPS/LTCH PPS final rule (82 FR 38403 through 38409) for more
details, where we discuss the potential stratification of certain
Hospital IQR Program outcome measures. Furthermore, we continue to
consider options to address equity and disparities in our value-based
purchasing programs.
We plan to continue working with ASPE, the public, and other key
stakeholders on this important issue to identify policy solutions that
achieve the goals of attaining health equity for all beneficiaries and
minimizing unintended consequences.
We are inviting public comments on these considerations for the
future.
11. Form, Manner, and Timing of Quality Data Submission
a. Background
Sections 1886(b)(3)(B)(viii)(I) and (b)(3)(B)(viii)(II) of the Act
state that the applicable percentage increase for FY 2015 and each
subsequent year shall be reduced by one-quarter of such applicable
percentage increase (determined without regard to sections
1886(b)(3)(B)(ix), (xi), or (xii) of the Act) for any subsection (d)
hospital that does not submit data required to be submitted on measures
specified by the Secretary in a form and manner, and at a time,
specified by the Secretary. Previously, the applicable percentage
increase for FY 2007 and each subsequent fiscal year until FY 2015 was
reduced by 2.0 percentage points for subsection (d) hospitals failing
to submit data in accordance with the description above. In accordance
with the statute, the FY 2019 payment determination will begin the
fifth year that the Hospital IQR Program will reduce the applicable
percentage increase by one-quarter of such applicable percentage
increase.
In order to participate in the Hospital IQR Program, hospitals must
meet specific procedural, data collection, submission, and validation
requirements. For each Hospital IQR Program payment determination, we
require that hospitals submit data on each specified measure in
accordance with the measure's specifications for a particular period of
time. The data submission requirements, Specifications Manual, and
submission deadlines are posted on the QualityNet website at: https://
www.QualityNet.org/. The annual update of electronic clinical quality
measure (eCQM) specifications and implementation guidance documents are
available on the Electronic Clinical Quality Improvement (eCQI)
Resource Center website at: https://ecqi.healthit.gov/. Hospitals must
register and submit quality data through the secure portion of the
QualityNet website. There are safeguards in place in accordance with
the HIPAA Security

[[Page 20497]]

Rule to protect patient information submitted through this website.
b. Procedural Requirements
The Hospital IQR Program's procedural requirements are codified in
regulation at 42 CFR 412.140. We refer readers to these codified
regulations for participation requirements, as further explained by the
FY 2014 IPPS/LTCH PPS final rule (78 FR 50810 through 50811) and the FY
2017 IPPS/LTCH PPS final rule (81 FR 57168). We are not proposing any
changes to these procedural requirements in this proposed rule.
c. Data Submission Requirements for Chart-Abstracted Measures
We refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR
51640 through 51641), the FY 2013 IPPS/LTCH PPS final rule (77 FR 53536
through 53537), and the FY 2014 IPPS/LTCH PPS final rule (78 FR 50811)
for details on the Hospital IQR Program data submission requirements
for chart-abstracted measures. We are not proposing any changes to the
data submission requirements for chart-abstracted measures in this
proposed rule.
d. Reporting and Submission Requirements for eCQMs
For a discussion of our previously finalized eCQMs and policies, we
refer readers to the FY 2014 IPPS/LTCH PPS final rule (78 FR 50807
through 50810; 50811 through 50819), the FY 2015 IPPS/LTCH PPS final
rule (79 FR 50241 through 50253; 50256 through 50259; and 50273 through
50276), the FY 2016 IPPS/LTCH PPS final rule (80 FR 49692 through
49698; and 49704 through 49709), the FY 2017 IPPS/LTCH PPS final rule
(81 FR 57150 through 57161; and 57169 through 57172), and the FY 2018
IPPS/LTCH PPS final rule (82 FR 38355 through 38361; 38386 through
38394; 38474 through 38485; and 38487 through 38493).
In this proposed rule, we are: Clarifying measure logic used in
eCQM development; proposing to extend previously established eCQM
reporting and submission requirements for the CY 2019 reporting period/
FY 2021 payment determination; and proposing to require hospitals to
use the 2015 Edition certification criteria for CEHRT beginning with
the CY 2019 reporting period/FY 2021 payment determination. These
matters are discussed in detail below.
(1) Clarification of the Measure Logic Used in eCQM Development--
Transition to Clinical Quality Language (CQL)
Although the measure logic, which represents the lines of logic
that comprise a single AND/OR statement composing each population, used
in eCQM development is not generally specified through notice and
comment rulemaking, we wish to notify the public that all eCQM
specifications published in CY 2018 for the CY 2019 reporting period/FY
2021 payment determination and subsequent years (beginning with the
Annual Update that will be published in Spring 2018 and for
implementation in CY 2019) will use the Clinical Quality Language
(CQL). CQL is a Health Level Seven (HL7) International standard \320\
and aims to unify the expression of logic for eCQMs and Clinical
Decision Support (CDS).\321\ CQL provides the ability to better express
logic defining measure populations to improve the accuracy and clarity
of eCQMs. In addition, CQL is a high-level authoring language that is
intended to be human-readable and allows measure developers to express
data criteria and represent it in a manner suitable for language
processing.
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\320\ Additional details about HL7 are available at: https://www.hl7.org/about/index.cfm?ref=nav. In addition, readers may learn
more under ``Where can I find more information on CQL'' on the eCQI
Resource Center website at: https://ecqi.healthit.gov/cql.
\321\ Additional details about CDS is available on the eCQI
Resource Center website at: https://ecqi.healthit.gov/cds.
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Prior to CY 2017, eCQM logic was defined by ``Quality Data Model
(QDM) Logic,'' an information model that defines relationships between
patients and clinical concepts in a standardized format to enable
electronic quality performance measurement.\322\ We believe that
compared to CQL, QDM logic is more complex and difficult to compute.
QDM logic limits a measure developer's ability to express the type of
comparisons needed to truly evaluate outcomes of care because QDM logic
cannot request patient results that indicate outcomes and assess
improvement over time; in contrast, CQL's mathematical expression logic
allows this type of comparison over time and is independent of the
model.\323\ Moreover, CQL: (1) Offers improved expressivity; (2) is
more precise/unambiguous; (3) can share logic between measures; (4)
allows for measure logic to be shared with CDS tools; (5) can be used
with multiple information data models (for example, QDM, Fast
Healthcare Interoperability Resources (FHIR) \324\); and (6) simplifies
calculation engine implementation.\325\ CQL replaces the logic
expressions defined in the QDM, and QDM (beginning with v5.3 \326\)
includes only the conceptual model for defining the data elements.
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\322\ Additional details about QDM Logic are available at:
https://ecqi.healthit.gov/qdm.
\323\ Additional details about how CQL Logic is Different from
QDM Logic are available at: https://ecqi.healthit.gov/qdm/qdm-Qs%26As#QualityDataModelQDMforusewithClinicalQualityLanguageCQL.
\324\ FHIR, developed by Health Level Seven International (HL7),
is designed to enable information exchange to support the provision
of healthcare in a wide variety of settings. The specification
builds on and adapts modern, widely used RESTful practices to enable
the provision of integrated healthcare across a wide range of teams
and organizations. Additional information available at: https://hl7.org/fhir/overview-dev.html.
\325\ Additional details on the benefits of Clinical Quality
Language (CQL) are available at: https://ecqi.healthit.gov/system/files/Benefits_of_CQL_May2017-508.pdf.
\326\ Additional details about QDM v5.3 available at: https://ecqi.healthit.gov/qdm/qdm-news-0/now-available-quality-data-model-qdm-v53.
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Measure developers successfully tested CQL for expressing eCQMs
from 2016 through 2017.\327\ Based on the results, the Measure
Authoring Tool (MAT) \328\ and the Bonnie \329\ tool have been updated
to use CQL. We believe replacing the measure logic used in eCQM
development from QDM to CQL will enable measure developers to engineer
more precise, more interoperable measures that interface with CDS
tools, which in turn, will result in availability of better measures of
patient outcomes for use in the Hospital IQR Program and other CMS
programs. We note that utilization of CQL for the eCQMs currently
available for reporting in the Hospital IQR Program measure set would
not affect the intent of the measure, the numerator, denominator, or
any measure exclusions or exceptions.
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\327\ Additional details about the Timeline for the Transition
to CQL are available at: https://ecqi.healthit.gov/cql.
\328\ The Measure Authoring Tool (MAT) is a web-based tool that
allows measure developers to author electronic Clinical Quality
Measures (eCQMs). Using the tool, authors create Clinical Quality
Language (CQL) expressions, which have the conceptual portion of the
Quality Data Model (QDM) as their foundation (https://www.emeasuretool.cms.gov/).
\329\ Bonnie is a tool for testing electronic clinical quality
measures (eCQMs) designed to support streamlined and efficient pre-
testing of eCQMs, particularly those used in the CMS quality
programs (https://bonnie.healthit.gov/).
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For additional information about the CQL transition and its impact
on eCQM development, we refer readers to the eCQI Resource Center
website at: https://ecqi.healthit.gov/cql.

[[Page 20498]]

(2) Reporting and Submission Requirements for eCQMs for the CY 2019
Reporting Period/FY 2021 Payment Determination
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38361), we finalized
eCQM reporting and submission requirements such that hospitals are
required to report only one, self-selected calendar quarter of data for
four self-selected eCQMs for the CY 2018 reporting period/FY 2020
payment determination. In this proposed rule, in alignment with the
Medicare and Medicaid Promoting Interoperability Programs (previously
known as the Medicare and Medicaid EHR Incentive Programs), we are
proposing to extend the same eCQM reporting and submission
requirements, such that hospitals would be required to report one,
self-selected calendar quarter of data for four self-selected eCQMs for
the CY 2019 reporting period/FY 2021 payment determination. We believe
continuing the same eCQM reporting and submission requirements is
appropriate because doing so continues to offer hospitals reporting
flexibility and does not increase the information collection burden on
data submitters, allowing them to shift resources to support system
upgrades, data mapping, and staff training related to eCQM
documentation and reporting. We also refer readers to section VIII.D.9.
of the preamble of this proposed rule where similar proposals are
discussed for the Medicare and Medicaid Promoting Interoperability
Programs (previously known as the Medicare and Medicaid EHR Incentive
Programs).
We are inviting public comment on our proposal.
(3) Changes to the Certification Requirements for eCQM Reporting
Beginning With the CY 2019 Reporting Period/FY 2021 Payment
Determination
In the FY 2018 IPPS/LTCH PPS final rule, we finalized a policy to
allow flexibility for hospitals to use the 2014 Edition certification
criteria, the 2015 Edition certification criteria, or a combination of
both for the CY 2018 reporting period/FY 2020 payment determination
only (82 FR 38388). This was a change to the policy previously
finalized in the FY 2017 IPPS/LTCH PPS final rule that required
hospitals to use the 2015 Edition certification criteria for CEHRT for
the CY 2018 reporting period/FY 2020 payment determination and
subsequent years (81 FR 57171).
In this proposed rule, to align with the Medicare and Medicaid
Promoting Interoperability Programs (previously known as the Medicare
and Medicaid EHR Incentive Programs), for the Hospital IQR Program, we
are proposing to require hospitals to use only the 2015 Edition
certification criteria for CEHRT beginning with the CY 2019 reporting
period/FY 2021 payment determination. We refer readers to section
VIII.D.3. of the preamble of this proposed rule in which the Medicare
and Medicaid Promoting Interoperability Programs discuss more broadly
the reasons for and benefits of requiring hospitals to use the 2015
Edition certification criteria for CEHRT, beginning with the CY 2019
reporting period/FY 2021 payment determination. There are certain
functionalities in the 2015 Edition of certified electronic health
record technology that were not available in the 2014 Edition that we
believe will increase interoperability and the flow of information
between providers and patients.
In addition, as we discussed in the FY 2018 IPPS/LTCH PPS final
rule (82 FR 38387 through 38388), specifically as to eCQM reporting,
the 2015 Edition includes updates to standards for structured data
capture as well as data elements in the common clinical data set which
can be captured in a structured format. We continue to believe the use
of relevant, up-to-date, standards-based structured data capture with
an EHR certified to the 2015 Edition supports electronic clinical
quality measurement.
The 2015 Edition certification criteria (that make up CEHRT) within
the certification testing process includes features that are designed
to improve the functionality and quality of eCQM data.\330\
Specifically, systems must demonstrate they can import and allow a user
to export one or more QRDA files. This allows systems to share files
and extract data for reporting into another system or send to another
system. In addition, testing coverage is much more robust; all measures
have >80 percent of test pathways tested in the test bundle with most
>95 percent. In addition, the 2015 Edition includes a revised
requirement that products must be able to export data from one patient,
a set of patients, or a subset of patients, which is responsive to
health care provider feedback that their data is unable to carry over
from a previous EHR. The 2014 Edition did not include a requirement
that the vendor allow the provider to export the data themselves. In
the 2015 Edition, the provider has the autonomy to export data
themselves without intervention by their vendor, resulting in increased
interoperability and data exchange between the two Editions. This
includes a new function that supports increased patient access to their
health information through email transmission. The increased
interoperability in this requirement provides patients more control of
their health data to inform the decisions that they make regarding
their health.
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\330\ For CEHRT definition, see 42 CFR 495.4. For additional
details about the updates to the 2015 Edition, we refer readers to
ONC's Common Clinical Data Set resource, available at: https://www.healthit.gov/sites/default/files/commonclinicaldataset_ml_11-4-5.pdf.
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The 2015 Edition certification criteria for CEHRT also includes
optional certification criteria and program specific testing which can
also support electronic clinical quality reporting. The filter criteria
ensure a product can filter an electronic file based on demographics
like sex or race, based on provider or site characteristics like TIN/
NPI, and based on a diagnosis or problem. The testing for this function
checks that patients are appropriately aggregated and calculated for
this new function which supports flexibility, specificity, and more
robust analysis of eCQM data. Finally, the 2015 Edition provides
optional testing to CMS requirements for reporting, such as form and
manner specifications and implementation guides. For these reasons, in
this proposed rule, we are proposing to require hospitals to use the
2015 Edition certification criteria for CEHRT beginning with the CY
2019 reporting period/FY 2021 payment determination.
We note that the Medicare and Medicaid Promoting Interoperability
Programs (previously known as the Medicare and Medicaid EHR Incentive
Programs) previously finalized a requirement that hospitals use the
2015 Edition certification criteria for CEHRT beginning with the CY
2019 reporting period/FY 2021 payment determination (80 FR 62873
through 62875), such that hospitals participating in both the Hospital
IQR Program and the Medicare and Medicaid Promoting Interoperability
Programs already would be required to use the 2015 Edition
certification criteria for CEHRT beginning with the CY 2019 reporting
period/FY 2021 payment determination.
We are inviting public comment on our proposal to require hospitals
to use the 2015 Edition certification criteria for CEHRT beginning with
the CY 2019 reporting period/FY 2021 payment determination.
e. Electronic Submission Deadlines
We refer readers to the FY 2015 IPPS/LTCH PPS final rule (79 FR
50256 through 50259) and the FY 2016 IPPS/LTCH PPS final rule (80 FR
49705 through 49708) for our previously

[[Page 20499]]

adopted policies to align eCQM data reporting periods and submission
deadlines for both the Hospital IQR Program and the Medicare Promoting
Interoperability Program (previously known as the Medicare EHR
Incentive Program). In the FY 2017 IPPS/LTCH PPS final rule (81 FR
57172), we established eCQM submission deadlines for the Hospital IQR
Program. We are not proposing any changes to the eCQM submission
deadlines in this proposed rule.
f. Sampling and Case Thresholds
We refer readers to the FY 2011 IPPS/LTCH PPS final rule (75 FR
50221), the FY 2012 IPPS/LTCH PPS final rule (76 FR 51641), the FY 2013
IPPS/LTCH PPS final rule (77 FR 53537), the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50819), and the FY 2016 IPPS/LTCH PPS final rule (80 FR
49709) for details on our sampling and case thresholds for the FY 2016
payment determination and subsequent years. We are not proposing any
changes to our sampling and case threshold policies in this proposed
rule.
g. HCAHPS Administration and Submission Requirements
We refer readers to the FY 2011 IPPS/LTCH PPS final rule (75 FR
50220), the FY 2012 IPPS/LTCH PPS final rule (76 FR 51641 through
51643), the FY 2013 IPPS/LTCH PPS final rule (77 FR 53537 through
53538), and the FY 2014 IPPS/LTCH PPS final rule (78 FR 50819 through
50820) for details on previously-adopted HCAHPS requirements. We also
refer hospitals and HCAHPS Survey vendors to the official HCAHPS
website at: https://www.hcahpsonline.org for new information and program
updates regarding the HCAHPS Survey, its administration, oversight, and
data adjustments. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38328
through 38342), we finalized refinements to the three questions of the
Pain Management measure in the HCAHPS Survey (now referred to as the
Communication About Pain measure). We are not proposing any changes to
the HCAHPS Survey administration and submission requirements in this
proposed rule.
h. Data Submission Requirements for Structural Measures
We refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR
51643 through 51644) and the FY 2013 IPPS/LTCH PPS final rule (77 FR
53538 through 53539) for details on the data submission requirements
for structural measures. We are not proposing any changes to those
requirements in this proposed rule; however, we refer readers to
sections VIII.A.5.a. and VIII.A.5.b.(1) of the preamble of this
proposed rule, in which we are proposing to remove two structural
measures from the Hospital IQR Program. If our proposals to remove two
structural measures are adopted, no structural measures would remain in
the Hospital IQR Program and hospitals would not be required to submit
any data for structural measures for the CY 2019 reporting period/FY
2021 payment determination or subsequent years.
i. Data Submission and Reporting Requirements for HAI Measures Reported
via NHSN
For details on the data submission and reporting requirements for
HAI measures reported via the CDC's NHSN website, we refer readers to
the FY 2012 IPPS/LTCH PPS final rule (76 FR 51629 through 51633; 51644
through 51645), the FY 2013 IPPS/LTCH PPS final rule (77 FR 53539), the
FY 2014 IPPS/LTCH PPS final rule (78 FR 50821 through 50822), and the
FY 2015 IPPS/LTCH PPS final rule (79 FR 50259 through 50262). The data
submission deadlines are posted on the QualityNet website at: https://
www.QualityNet.org/.
While we are not proposing any changes to these requirements, we
refer readers to section VIII.A.5.b.(2)(b) of the preamble of this
proposed rule, in which we are proposing to remove five HAI measures
reported via NHSN from the Hospital IQR Program. If our proposals to
remove these five measures are adopted, there would be no HAI measures
reported via NHSN and hospitals would not be required to submit any
data for HAI measures via NHSN for the Hospital IQR Program for the CY
2019 reporting period/FY 2021 payment determination or subsequent
years. We note that the HCP measure remains in the Hospital IQR Program
and will continue to be reported via NHSN. In addition, we note that
the five HAI measures being proposed for removal in the Hospital IQR
Program will still remain in the HAC Reduction Program. We refer
readers to section IV.J. of the preamble of this proposed rule for more
information about how those measures will be collected and validated
under the HAC Reduction Program.
12. Validation of Hospital IQR Program Data
a. Background
In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53539 through
53553), we finalized the processes and procedures for validation of
chart-abstracted measures in the Hospital IQR Program for the FY 2015
payment determination and subsequent years. The FY 2013 IPPS/LTCH PPS
final rule also contains a comprehensive summary of all procedures
finalized in previous years that are still in effect. We refer readers
to the FY 2014 IPPS/LTCH PPS final rule (78 FR 50822 through 50835),
the FY 2015 IPPS/LTCH PPS final rule (79 FR 50262 through 50273), and
the FY 2016 IPPS/LTCH PPS final rule (80 FR 49710 through 49712) for
detailed information on the modifications to these processes finalized
for the FY 2016, FY 2017, and FY 2018 payment determinations and
subsequent years. We are not proposing any changes to the existing
processes for validation of either eCQM or chart-abstracted measure
data in this proposed rule.
b. Existing Processes for Validation of Hospital IQR Program eCQM Data
In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57173 through
57181), we finalized updates to the validation procedures in order to
incorporate a process for validating eCQM data for the FY 2020 payment
determination and subsequent years (starting with the validation of CY
2017 eCQM data that would impact FY 2020 payment determinations). We
also refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38398
through 38403), in which we finalized several proposals regarding
processes and procedures for validation of CY 2017 eCQM data for the FY
2020 payment determination, validation of CY 2018 eCQM data for the FY
2021 payment determination, and eCQM data validation for subsequent
years. We are not proposing any changes to the existing processes for
validation of Hospital IQR Program eCQM data in this proposed rule.
c. Existing Process for Chart-Abstracted Measures Validation
In the FY 2015 IPPS/LTCH PPS final rule, we stated that we rely on
hospitals to request an educational review or appeal cases to identify
any potential CDAC or CMS errors (79 FR 50260). We refer readers to the
FY 2018 IPPS/LTCH PPS final rule (82 FR 38402 through 38403) for more
details on the formalized Educational Review Process for Chart-
Abstracted Measures Validation. We are not proposing any changes to the
validation of chart-abstracted measures, including the educational
review process.
While we are not proposing any changes to our previously
established validation procedures in this proposed rule, we refer
readers to: (1) Section VIII.A.5.b.(8) of the preamble of this proposed
rule, in which we are

[[Page 20500]]

proposing to remove three clinical process of care measures beginning
with the CY 2019 reporting period/FY 2021 payment determination, and
one clinical process of care measure beginning with the CY 2020
reporting period/FY 2022 payment determination; and (2) section
VIII.A.5.b.(2)(b) of the preamble of this proposed rule, in which we
are proposing to remove five Hospital-Acquired Infection (HAI) chart-
abstracted measures from the Hospital IQR Program beginning with the CY
2019 reporting period/FY 2021 payment determination. If our proposals
to remove these measures are adopted, only two chart-abstracted
clinical process of care measures would remain in the Hospital IQR
Program that would require validation for the FY 2022 payment
determination (ED-2 and Sepsis measures), and only one chart-abstracted
clinical process of care measure would remain in the program that would
require validation for the FY 2023 payment determination and subsequent
years (Sepsis measure). As our validation processes remain unchanged,
we will continue to sample up to 8 cases for each selected chart-
abstracted clinical process of care measure. We plan to evaluate our
existing validation scoring methodology to ensure that there will be no
significant impact to the estimated reliability (ER) of Hospital IQR
Program chart-abstracted data validation activities despite any measure
removals.
In addition, the CY 2019 reporting period/FY 2021 payment
determination would be the last year for which validation would occur
under the Hospital IQR Program with respect to the CDI, CAUTI, CLABSI,
MRSA Bacteremia, and Colon and Abdominal Hysterectomy SSI measures, if
our proposed measure removals are finalized in section
VIII.A.5.b.(2)(b) of the preamble of this proposed rule. Beyond the FY
2021 payment determination, we intend for validation of those measures
to occur under the HAC Reduction Program, as further discussed in
section IV.J.4.e. of the preamble of this proposed rule.
13. Data Accuracy and Completeness Acknowledgement (DACA) Requirements
We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR
53554) for previously adopted details on DACA requirements. We are not
proposing any changes to the DACA requirements in this proposed rule.
14. Public Display Requirements
We refer readers to the FY 2008 IPPS/LTCH PPS final rule (72 FR
47364), the FY 2011 IPPS/LTCH PPS final rule (75 FR 50230), the FY 2012
IPPS/LTCH PPS final rule (76 FR 51650), the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53554), the FY 2014 IPPS/LTCH PPS final rule (78 FR 50836),
the FY 2015 IPPS/LTCH PPS final rule (79 FR 50277), the FY 2016 IPPS/
LTCH PPS final rule (80 FR 49712 through 49713), and the FY 2018 IPPS/
LTCH PPS final rule (82 FR 38403 through 38409) for details on public
display requirements. The Hospital IQR Program quality measures are
typically reported on the Hospital Compare website at: https://www.medicare.gov/hospitalcompare, but on occasion are reported on other
CMS websites such as: https://data.medicare.gov.
We are not proposing any changes to the public display requirements
in this proposed rule. However, we note that in section VIII.A.10. of
the preamble of this proposed rule, we discuss our efforts to provide
stratified data by patient dual eligibility status in hospital
confidential feedback reports and considerations to make stratified
data publicly available on the Hospital Compare website in the future.
15. Reconsideration and Appeal Procedures
We refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR
51650 through 51651), the FY 2014 IPPS/LTCH PPS final rule (78 FR
50836), and 42 CFR 412.140(e) for details on reconsideration and appeal
procedures for the FY 2017 payment determination and subsequent years.
We are not proposing any changes to the reconsideration and appeals
procedures in this proposed rule.
16. Hospital IQR Program Extraordinary Circumstances Exceptions (ECE)
Policy
We refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR
51651 through 51652), the FY 2014 IPPS/LTCH PPS final rule (78 FR 50836
through 50837), the FY 2015 IPPS/LTCH PPS final rule (79 FR 50277), the
FY 2016 IPPS/LTCH PPS final rule (80 FR 49713), the FY 2017 IPPS/LTCH
PPS final rule (81 FR 57181 through 57182), the FY 2018 IPPS/LTCH PPS
final rule (82 FR 38409 through 38411), and 42 CFR 412.140(c)(2) for
details on the current Hospital IQR Program ECE policy. We also refer
readers to the QualityNet website at: https://www.QualityNet.org/ for
our current requirements for submission of a request for an exception.
We are not proposing any changes to the ECE policy in this proposed
rule.

B. PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program

1. Background
Section 1866(k) of the Act establishes a quality reporting program
for hospitals described in section 1886(d)(1)(B)(v) of the Act
(referred to as ``PPS-Exempt Cancer Hospitals'' or ``PCHs'') that
specifically applies to PCHs that meet the requirements under 42 CFR
412.23(f). Section 1866(k)(1) of the Act states that, for FY 2014 and
each subsequent fiscal year, a PCH must submit data to the Secretary in
accordance with section 1866(k)(2) of the Act with respect to such
fiscal year.
The PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program
strives to put patients first by ensuring they, along with their
clinicians, are empowered to make decisions about their own health care
using data-driven insights that are increasingly aligned with
meaningful quality measures. To this end, we support technology that
reduces burden and allows clinicians to focus on providing high quality
health care to their patients. We also support innovative approaches to
improve quality, accessibility, and affordability of care, while paying
particular attention to improving clinicians' and beneficiaries'
experiences when participating in CMS programs. In combination with
other efforts across the Department of Health and Human Services, we
believe the PCHQR Program incentivizes PCHs to improve their health
care quality and value, while giving patients the tools and information
needed to make the best decisions.
For additional background information, including previously
finalized measures and other policies for the PCHQR Program, we refer
readers to the following final rules: The FY 2013 IPPS/LTCH PPS final
rule (77 FR 53556 through 53561); the FY 2014 IPPS/LTCH PPS final rule
(78 FR 50838 through 50846); the FY 2015 IPPS/LTCH PPS final rule (79
FR 50277 through 50288); the FY 2016 IPPS/LTCH PPS final rule (80 FR
49713 through 49723); the FY 2017 IPPS/LTCH PPS final rule (81 FR 57182
through 57193); and the FY 2018 IPPS/LTCH PPS final rule (82 FR 38411
through 38425).
In this proposed rule, we are proposing a number of new policies
for the PCHQR Program. We developed these proposals after conducting an
overall review of the program under our new Meaningful Measures
Initiative, which is discussed in more detail in section I.A.2. of the
preamble of this proposed rule. The proposals reflect our efforts to
ensure that the PCHQR

[[Page 20501]]

Program measure set continues to promote improved health outcomes for
our beneficiaries while minimizing the following: (1) The reporting
burden associated with submitting/reporting quality measures; (2) the
burden associated with complying with other programmatic requirements;
and/or (3) the burden associated with compliance with other Federal
and/or State regulations (if applicable). In addition, we aim to reduce
beneficiary confusion by reducing duplicative reporting, thereby
streamlining the process of analyzing publicly reported quality
measures data. They also reflect our efforts to improve the usefulness
of the data that we publicly report in the PCHQR Program, which are
guided by the following two goals: (1) To improve the usefulness of CMS
quality program data by providing providers with adequate measure
information from one program; and (2) to improve consumer understanding
of the data publicly reported on a Compare other website by eliminating
the reporting of duplicative measure data in more than one program that
applies to the same provider setting.
2. Factors for Removal and Retention of PCHQR Program Measures
a. Background and Current Measure Removal Factors
In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57182 through
57183), we adopted policies for measure retention and removal. We
generally retain measures from the previous year's PCHQR Program
measure set for subsequent years' measure sets, except when we
specifically propose to remove or replace a measure. We adopted the
following measure removal factors \331\ for the PCHQR Program, which
are based on factors adopted for the Hospital IQR Program (80 FR 49641
through 49642):
---------------------------------------------------------------------------

\331\ We note that we previously referred to these factors as
``criteria'' (for example, 81 FR 57182 through 57183); we now use
the term ``factors'' in order to align the PCHQR Program terminology
with the terminology we use in other CMS quality reporting and pay
for performance value-based purchasing programs.
---------------------------------------------------------------------------

Factor 1. Measure performance among PCHs is so high and
unvarying that meaningful distinctions and improvements in performance
can no longer be made (``topped-out'' measures);
Factor 2. A measure does not align with current clinical
guidelines or practice;
Factor 3. The availability of a more broadly applicable
measure (across settings or populations) or the availability of a
measure that is more proximal in time to desired patient outcomes for
the particular topic;
Factor 4. Performance or improvement on a measure does not
result in better patient outcomes;
Factor 5. The availability of a measure that is more
strongly associated with desired patient outcomes for the particular
topic;
Factor 6. Collection or public reporting of a measure
leads to negative unintended consequences other than patient harm; and
Factor 7. It is not feasible to implement the measure
specifications.
For the purposes of considering measures for removal from the
program, we consider a measure to be ``topped-out'' if there is
statistically indistinguishable performance at the 75th and 90th
percentiles and the truncated coefficient of variation is less than or
equal to 0.10.
b. Measure Retention Factors
We have also recognized that there are times when measures may meet
some of the outlined criteria for removal from the program, but
continue to bring value to the program. Therefore, we have adopted the
following factors for consideration in determining whether to retain a
measure in the PCHQR Program, which also are based on factors
established in the Hospital IQR Program (80 FR 49641 through 49642):
Measure aligns with other CMS and HHS policy goals;
Measure aligns with other CMS programs, including other
quality reporting programs; and
Measure supports efforts to move PCHs towards reporting
electronic measures.
c. Proposed New Measure Removal Factor
We are proposing to adopt an additional factor to consider when
evaluating potential measures for removal from the PCHQR measure set:
Factor 8, the costs associated with the measure outweigh the benefit of
its continued use in the program.
As we discussed in section I.A.2. of the preamble of this proposed
rule, with respect to our new Meaningful Measures Initiative, we are
engaging in efforts to ensure that the PCHQR measure set continues to
promote improved health outcomes for beneficiaries while minimizing the
overall costs associated with the program. We believe these costs are
multifaceted and include not only the burden associated with reporting,
but also the costs associated with implementing and maintaining the
program. We have identified several different types of costs,
including, but not limited to: (1) Provider and clinician information
collection burden and burden associated with the submission/reporting
of quality measures to CMS; (2) the provider and clinician cost
associated with complying with other programmatic requirements; (3) the
provider and clinician cost associated with participating in multiple
quality programs, and tracking multiple similar or duplicative measures
within or across those programs; (4) the cost to CMS associated with
the program oversight of the measure including measure maintenance and
public display; and (5) the provider and clinician cost associated with
compliance with other Federal and/or State regulations (if applicable).
For example, it may be needlessly costly and/or of limited benefit to
retain or maintain a measure which our analyses show no longer
meaningfully supports program objectives (for example, informing
beneficiary choice or payment scoring). It may also be costly for
health care providers to track the confidential feedback, preview
reports, and publicly reported information on a measure where we use
the measure in more than one program. CMS may also have to expend
unnecessary resources to maintain the specifications for the measure,
as well as the tools we need to collect, validate, analyze, and
publicly report the measure data. Furthermore, beneficiaries may find
it confusing to see public reporting on the same measure in different
programs.
When these costs outweigh the evidence supporting the continued use
of a measure in the PCHQR Program, we believe it may be appropriate to
remove the measure from the program. Although we recognize that one of
the main goals of the PCHQR Program is to improve beneficiary outcomes
by incentivizing health care providers to focus on specific care issues
and making public data related to those issues, we also recognize that
those goals can have limited utility where, for example, the publicly
reported data is of limited use because it cannot be easily interpreted
by beneficiaries and used to influence their choice of providers. In
these cases, removing the measure from the PCHQR Program may better
accommodate the costs of program administration and compliance without
sacrificing improved health outcomes and beneficiary choice.
We are proposing that we would remove measures based on this factor
on a case-by-case basis. We might, for example, decide to retain a
measure that is burdensome for health care providers to report if we
conclude that the benefit to beneficiaries justifies the reporting

[[Page 20502]]

burden. Our goal is to move the program forward in the least burdensome
manner possible, while maintaining a parsimonious set of meaningful
quality measures and continuing to incentivize improvement in the
quality of care provided to patients.
We are inviting public comment on our proposal to adopt an
additional measure removal factor, ``the costs associated with a
measure outweigh the benefit of its continued use in the program,''
beginning with the effective date of the FY 2019 IPPS/LTCH PPS final
rule.
3. Retention and Proposed Removal of Previously Finalized Quality
Measures for PCHs Beginning With the FY 2021 Program Year
a. Background
In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53556 through
53561), we finalized five quality measures for the FY 2014 program year
and subsequent years. In the FY 2014 IPPS/LTCH PPS final rule (78 FR
50837 through 50847), we finalized one new quality measure for the FY
2015 program year and subsequent years and 12 new quality measures for
the FY 2016 program year and subsequent years. In the FY 2015 IPPS/LTCH
PPS final rule (79 FR 50278 through 50280), we finalized one new
quality measure for the FY 2017 program year and subsequent years. In
the FY 2016 IPPS/LTCH PPS final rule (80 FR 49713 through 49719), we
finalized three new Centers for Disease Control and Prevention (CDC)
National Healthcare Safety Network (NHSN) measures for the FY 2018
program year and subsequent years, and finalized the removal of six
previously finalized measures for fourth quarter (Q4) 2015 discharges
and subsequent years. In the FY 2017 IPPS/LTCH PPS final rule (81 FR
57183 through 57184), for the FY 2019 program year and subsequent
years, we finalized one additional quality measure and updated the
Oncology: Radiation Dose Limits to Normal Tissues (NQF #0382) measure.
In the FY 2018 IPPS/LTCH PPS final rule, we finalized four new quality
measures (82 FR 38414 through 38420), for the FY 2020 program year and
subsequent years, and finalized the removal of three previously
finalized measures (82 FR 38412 through 38414).
b. Proposed Removal of Measures From the PCHQR Program Beginning With
the FY 2021 Program Year
We are proposing to remove four web-based, structural measures from
the PCHQR Program beginning with the FY 2021 program year because they
are topped-out:
Oncology: Radiation Dose Limits to Normal Tissues (PCH-14/
NQF #0382);
Oncology: Medical and Radiation--Pain Intensity Quantified
(PCH-16/NQF #0384);
Prostate Cancer: Adjuvant Hormonal Therapy for High Risk
Patients (PCH-17/NQF #0390); and
Prostate Cancer: Avoidance of Overuse of Bone Scan for
Staging Low-Risk Patients (PCH-18/NQF #0389).
We also are proposing to apply the newly proposed measure removal
factor to two National Healthcare Safety Network (NHSN) chart-
abstracted measures and, if that factor is finalized, to remove both
measures from the PCHQR Program beginning with the FY 2021 program year
because we have concluded that the costs associated with these measures
outweigh the benefit of their continued use in the program.
NHSN Catheter-Associated Urinary Tract Infection (CAUTI)
Outcome Measure (PCH-5/NQF #0138); and
NHSN Central Line-Associated Bloodstream Infection
(CLABSI) Outcome Measure (PCH-4/NQF #0139).
(1) Proposed Removal of Web-Based Structural Measures
We are proposing to remove the following web-based, structural
measures beginning with the FY 2021 program year because they are
topped-out: (1) Oncology: Radiation Dose Limits to Normal Tissues (PCH-
14/NQF #0382); (2) Oncology: Medical and Radiation--Pain Intensity
Quantified (PCH-16/NQF #0384); (3) Prostate Cancer: Adjuvant Hormonal
Therapy for High Risk Patients (PCH-17/NQF #0390); and (4) Prostate
Cancer: Avoidance of Overuse of Bone Scan for Staging Low-Risk Patients
(PCH-18/NQF #0389). We first adopted these measures for the FY 2016
program year in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50841
through 50844). We refer readers to that rule for a detailed discussion
of the measures.
Based on an analysis of data from January 1, 2015 through December
31, 2016, we have determined that these three measures meet our topped-
out criteria. This analysis evaluated data sets and calculated the 5th,
10th, 25th, 50th, 75th, 90th, and 95th percentiles of national facility
performance for each measure. For measures where higher values indicate
better performance, the percent relative difference (PRD) between the
75th and 90th percentiles were obtained by taking their absolute
difference divided by the average of their values and multiplying the
result by 100. To calculate the truncated coefficient of variation
(TCV), the lowest 5 percent and the highest 5 percent of hospital rates
were discarded before calculating the mean and standard deviation for
each measure.
The following criteria were applied to the results:
For measures ranging from 0-100 percent, with 100 percent
being best, national measure data for the 75th and 90th percentiles
have a relative difference of <=5 percent, or for measures ranging from
0-100 percent, with 100 percent being the best, performance achieved by
the median hospital is >=95 percent, and national measure data have a
truncated coefficient of variation <=0.10.
For measures ranging from 0-100 percent, with 0 percent
being best, national measure data for the complement of the 10th and
25th percentiles have a relative difference of <=5 percent, or for
measures ranging from 0-100 percent, with 0 percent being best,
national measure data for the median hospital is <=5 percent, or for
other measures with a low number indicating good performance, national
measure data for the 10th and 25th percentiles have a relative
difference of <=5 percent, and national measure data have a truncated
coefficient of variation <=0.10.
The results for 2015 and 2016 are set out in the tables below.

Topped-Out Analysis Results for PCHQR Measures (2015)
--------------------------------------------------------------------------------------------------------------------------------------------------------
75th 90th Relative
Measure Mean Median Percentile Percentile difference (%) Topped-out
--------------------------------------------------------------------------------------------------------------------------------------------------------
PCH-14.................................................. 98.4 99.6 100 100 0 Yes
PCH-16.................................................. 92.5 92.3 93.1 94.3 1.2 Yes
PCH-17.................................................. 99.7 100 100 100 0 Yes
PCH-18.................................................. 98.9 99.4 100 100 0 Yes
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 20503]]

Topped-Out Analysis Results for PCHQR Measures (2016)
--------------------------------------------------------------------------------------------------------------------------------------------------------
75th 90th Relative
Measure Mean Median Percentile Percentile difference (%) Topped--out
--------------------------------------------------------------------------------------------------------------------------------------------------------
PCH-14.................................................. 99.8 100 100 100 0 Yes
PCH-16.................................................. 96.8 96.8 97.3 97.4 0.1 Yes
PCH-17.................................................. 99.4 99.6 100 100 0 Yes
PCH-18.................................................. 99.0 100 100 100 0 Yes
--------------------------------------------------------------------------------------------------------------------------------------------------------

Based on this analysis, we have concluded that these four measures
are topped-out and, as discussed below, we believe that collecting PCH
data on these measures does not further program goals.
We also believe that continuing to collect PCH data on these
measures does not further program goals of improving quality, given
that performance on the measures is so high and unvarying that
meaningful distinctions and improvements in performance can no longer
be made. We believe that these measures also do not meet the criteria
for retention of an otherwise topped-out measure, as they: Do not align
with the HHS and CMS policy goal to focus our measure set on outcome
measures; do not align with measures used in other CMS programs; and do
not support our efforts to develop electronic clinical quality measure
reporting for PCHs. If we determine at a subsequent point in the future
that PCH adherence to the aforementioned HHS and CMS policy goals, the
aforementioned program efforts, and the standard of care established by
the measure has unacceptably declined, we may propose to readopt these
measures in future rulemaking.
We are inviting public comment on our proposal to remove these four
measures from the PCHQR Program beginning with the FY 2021 program
year.
(2) Proposed Removal of National Healthcare Safety Network (NHSN)
Chart-Abstracted Measures
We are proposing to remove two measures from the PCHQR Program
beginning with the FY 2021 program year if the measure removal factor
``the costs associated with the measure outweigh the benefit of its
continued use in the program'' proposed for adoption in section
VIII.B.2.c. of the preamble of this proposed rule, is finalized because
we have concluded that the costs associated with these measures
outweigh the benefit of their continued use in the PCHQR Program. These
measures are: (1) Catheter-Associated Urinary Tract Infection (CAUTI)
Outcome Measure (PCH-5/NQF #0138); and (2) Central Line-Associated
Bloodstream Infection (CLABSI) Outcome Measure (PCH-4/NQF #0139). We
first adopted the CAUTI and CLABSI measures for the FY 2014 program
year in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53557 through
53559); we refer readers to this rule for a detailed discussion of the
measures.
As discussed in section I.A.2. of the preamble of this proposed
rule, above, our Meaningful Measures Initiative is intended to reduce
costs and minimize burden. We continue to believe the CAUTI and CLABSI
measures provide important data for patients and hospitals in making
decisions about care and informing quality improvement efforts.
However, we believe that removing these measures in the PCHQR Program
will reduce program costs and complexity. We believe the costs, coupled
with the high technical and administrative burden on PCHs, associated
with collecting and reporting this measure data outweigh the benefits
to continued use in the program. As a result of these costs, it has
become difficult to publicly report these measures due to the low
volume of data produced and reported by the small number of facilities
participating in the PCHQR Program and the corresponding lack of an
appropriate methodology to publicly report this data. Consequently, we
have been unable to offer beneficiaries the benefit of pertinent
information on how these measures assess hospital-acquired infections
and impact patient safety.
As we state in section I.A.2. of the preamble of this proposed
rule, we strive to ensure that patients are empowered to make decisions
about their health care along using information from data-driven
insights. We continue to believe that these measures evaluate important
aspects of patient safety. However, as discussed earlier, we believe
the high costs, reporting burden, and difficulties associated with
publicly reporting this data for use by patients in making decisions
about their care outweigh the benefit associated with the measures'
continued use in the PCHQR Program. Therefore, if our proposal to adopt
the new measure removal factor described in section VIII.B.2.c. of the
preamble of this proposed rule is finalized as proposed, we are
proposing that under that factor, we would remove the CAUTI and CLABSI
measures from the PCHQR Program beginning with the FY 2021 program
year.
We are inviting public comment on our proposal to remove these two
measures from the PCHQR Program beginning with the FY 2021 program
year.
4. Proposed New Quality Measures Beginning With the FY 2021 Program
Year
a. Considerations in the Selection of Quality Measures
In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53556), the FY 2014
IPPS/LTCH PPS final rule (78 FR 50837 through 50838), and the FY 2015
IPPS/LTCH PPS final rule (79 FR 50278), we indicated that we take many
principles into consideration when developing and selecting measures
for the PCHQR Program, and that many of these principles are modeled on
those we use for measure development and selection under the Hospital
IQR Program. In section I.A.2. of the preamble of this proposed rule,
we also discuss our Meaningful Measures Initiative, and its relation to
how we will assess and select quality measures for the PCHQR Program.
Section 1866(k)(3)(A) of the Act requires that any measure
specified by the Secretary must have been endorsed by the entity with a
contract under section 1890(a) of the Act (the NQF is the entity that
currently holds this contract). Section 1866(k)(3)(B) of the Act
provides an exception under which, in the case of a specified area or
medical topic determined appropriate by the Secretary for which a
feasible and practical measure has not been endorsed by the entity with
a contract under section 1890(a) of the Act, the Secretary may specify
a measure that is not so endorsed as long as due consideration is given
to measures that have been endorsed or adopted by a consensus
organization.
Using these principles for measure selection in the PCHQR Program,
we are

[[Page 20504]]

proposing one new measure, described below.
b. Proposed New Quality Measure Beginning With the FY 2021 Program
Year: 30-Day Unplanned Readmissions for Cancer Patients (NQF #3188)
In an effort to expand the PCHQR measure set to include measures
that are less burdensome to report to CMS, but provide valuable
information for beneficiaries, we are proposing to adopt the 30-Day
Unplanned Readmissions for Cancer Patients measure (NQF #3188) for the
FY 2021 program year and subsequent years. This measure meets the
requirement under section 1866(k)(3)(A) of the Act that measures
specified for the PCHQR Program be endorsed by the entity with a
contract under section 1890(a) of the Act (currently the NQF). This
measure aligns with recent initiatives to incorporate more outcome
measures in quality reporting programs. This measure also aligns with
the Promote Effective Communication and Coordination of Care domain of
our Meaningful Measures Initiative,\332\ and would fill an existing gap
area of risk-adjusted readmission measures in the PCHQR Program.
---------------------------------------------------------------------------

\332\ Overview of the CMS Meaningful Measures Initiative
available at: https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2017-Press-releases-items/2017-10-30.html.
---------------------------------------------------------------------------

In compliance with section 1890A(a)(2) of the Act, the proposed
measure was included on a publicly available document entitled ``2017
Measures under Consideration Spreadsheet,'' \333\ a list of quality and
efficiency measures under consideration for use in various Medicare
programs, and was reviewed by the Measures Application Partnership
(MAP) Hospital Workgroup.
---------------------------------------------------------------------------

\333\ 2017 Spreadsheet of Measures Under Consideration.
Available at: https://www.qualityforum.org/Show_Content.aspx?id=30279.
---------------------------------------------------------------------------

(1) Background
Cancer is the second leading cause of death in the United States,
with nearly 600,000 cancer-related deaths expected this year. It is
estimated roughly 1.7 million Americans will be diagnosed with cancer
in 2016, and the number of Americans living with a cancer diagnosis
reached nearly 14.5 million in 2014.\334\ Cancer disproportionately
affects older Americans, with 86 percent of all cancers diagnosed in
people 50 years of age and older.\335\ It is now the leading cause of
death among adults age 40 to 79 years nationwide, and the leading cause
of death among all adults in 21 States.\336\ Oncology care contributes
greatly to Medicare spending, and accounted for an estimated $125
billion in health care spending in 2010.\337\ This figure is projected
to rise to between $173 billion and $207 billion by 2020.\338\ A 2012
audit from the US Government Accountability Office (GAO) revealed that
the estimated differences in Medicare payment between PCHs and local
PPS teaching hospitals varied greatly across the PCHs; with the largest
payment difference at 90.9 percent and the smallest payment difference
at 6.7 percent. Overall, the difference between the amount Medicare
paid PCHs and the estimated amount Medicare would have paid PPS
hospitals for treating comparable cancer patients suggests that
Medicare would have saved approximately $166 million in 2012.\339\
Further, GAO calculated that, if PCHs were paid for outpatient services
in the same way as PPS teaching hospitals, Medicare would have saved
approximately $303 million in 2012.\340\
---------------------------------------------------------------------------

\334\ NIH's National Cancer Institute Statistics. Available at:
https://www.cancer.gov/about-cancer/understanding/statistics.
\335\ American Cancer Society. Cancer facts and figures 2016.
2016. Available at: https://www.cancer.org/acs/groups/content/@research/documents/document/acspc-047079.pdf.
\336\ Siegel RL, Miller KD, Jemal A. Cancer statistics, 2016. CA
Cancer J Clin. 2016;66(1):7-30.
\337\ Mariotto AB, Yabroff KR, Shao Y, Feuer EJ, Brown ML.
Projections of the cost of cancer care in the United States: 2010-
2020. J Natl Cancer Inst. 2011;103(2):117-128.
\338\ Ibid.
\339\ US Government Accountability Office. ``Medicare Payments
to Certain Cancer Hospitals.'' Accessed on March 9, 2018. Available
at: https://www.gao.gov/modules/ereport/handler.php?1=1&path=/ereport/GAO-15-404SP/data_center_savings/Health/19._Medicare_Payments_to_Certain_Cancer_Hospitals.
\340\ Ibid.
---------------------------------------------------------------------------

Given the current and projected increases in cancer prevalence and
costs of care, it is essential that health care providers look for
opportunities to lower the costs of cancer care. Reducing readmissions
after hospital discharge has been proposed as an effective means of
lowering health care costs and improving the outcomes of care.\341\
Research suggests that between 9 percent and 48 percent of all hospital
readmissions are preventable, owing to inadequate treatment during the
patient's original admission or after discharge.\342\ It is estimated
that all-cause, unplanned readmissions cost the Medicare program $17.4
billion in 2004.\343\ Unnecessary hospital readmissions also negatively
impact cancer patients by compromising their quality of life, placing
them at risk for health-acquired infections, and increasing the costs
of their care.\344\ Furthermore, unplanned readmissions during
treatment can delay treatment completion and, potentially, worsen
patient prognosis.\345\
---------------------------------------------------------------------------

\341\ Benbassat J, Taragin M. Hospital readmissions as a measure
of quality of health care: advantages and limitations. Arch Intern
Med. 2000;160(8):1074-108.
\342\ Ibid.
\343\ Jencks SF, Williams MV, Coleman EA. Rehospitalizations
among patients in the Medicare fee-for-service program. N Engl J
Med. 2009;360(14):1418-1428.
\344\ Ibid.
\345\ Ibid.
---------------------------------------------------------------------------

Preventing these readmissions improves the quality of care for
cancer patients. Existing studies in cancer patients have largely
focused on postoperative readmissions, reporting readmission rates of
between 6.5 percent and 25 percent.\346\ One study noted that surgical
cancer patients were most often readmitted for surgical complications,
while nonsurgical patients were typically readmitted for the same
condition treated during the index admission.\347\ Together, these
studies suggest that certain readmissions in cancer patients are
preventable and should be routinely measured for purposes of quality
improvement and accountability.
---------------------------------------------------------------------------

\346\ Rochefort MM, Tomlinson JS. Unexpected readmissions after
major cancer surgery: an evaluation of readmissions as a quality-of-
care indicator. Surg Oncol Clin N Am. 2012;21(3):397-405, viii.
\347\ Ji H, Abushomar H, Chen XK, Qian C, Gerson D. All-cause
readmission to acute care for cancer patients. Healthc Q.
2012;15(3):14-16.
---------------------------------------------------------------------------

(2) Overview of Measure
Readmission rates have been developed for pneumonia, acute
myocardial infarction, and heart failure. However, the development of
validated readmission rates for cancer patients has lagged. In 2012,
the Comprehensive Cancer Center Consortium for Quality Improvement, or
C4QI (a group of 18 academic medical centers that collaborate to
measure and improve the quality of cancer care in their centers), began
development of a cancer-specific unplanned readmissions measure: 30-Day
Unplanned Readmissions for Cancer Patients. This measure incorporates
the unique clinical characteristics of oncology patients and results in
readmission rates that more accurately reflect the quality of cancer
care delivery, when compared with broader readmissions measures.
Likewise, this measure addresses gaps in existing readmissions measures
(such as the Hospital-Wide All-Cause Unplanned Readmission Measure
(HWR) stewarded by CMS) related to the evaluation of hospital
readmissions associated cancer patients. The 30-Day Unplanned
Readmissions for Cancer

[[Page 20505]]

Patients measure can be used by PCHs to inform their quality
improvement efforts. Through adoption in the PCHQR Program, it can
increase transparency around the quality of care delivered to patients
with cancer.
The 30-Day Unplanned Readmissions for Cancer Patients measure is
NQF-endorsed (NQF #3188). The MAP Hospital Workgroup reviewed this
measure on December 14, 2017 and supported the inclusion of this
measure in the PCHQR Program. The MAP acknowledged that this measure is
fully developed and tested and further noted this measure fills a
current gap in the PCHQR Program by addressing unplanned readmissions
of cancer patients.^{348 349}
---------------------------------------------------------------------------

\348\ 2018 Considerations for Implementing Measures Draft
Report-Hospitals. Available at: https://www.qualityforum.org/Show_Content.aspx?id=30279.
\349\ 2017-2018 Spreadsheet of Final Recommendations to HHS and
CMS. Available at: https://www.qualityforum.org/ProjectMaterials.aspx?projectID=75367.
---------------------------------------------------------------------------

The proposed readmission measure fits within the Promote Effective
Communication and Coordination of Care measurement domain (categorical
area), and specifically applies to the associated clinical topic of
``Admissions and Readmissions to Hospitals'' of our Meaningful Measures
Initiative. This measure is intended to assess the rate of unplanned
readmissions among cancer patients treated at PCHs and to support
improved care delivery and quality of life for this patient population.
By providing an accurate and comprehensive assessment of unplanned
readmissions within 30 days of discharge, PCHs can better identify and
address preventable readmissions. Through routine monitoring of these
performance data by PCHs, this measure can be used to improve patient
outcomes and quality of care.
(3) Data Sources
The proposed 30-Day Unplanned Readmissions for Cancer Patients
measure is claims-based. Therefore, PCHs would not be required to
submit any new data for purposes of reporting this measure. We are
proposing that we would calculate this measure on a yearly basis using
Medicare administrative claims data. Specifically, we are proposing
that the data collection period for each program year would span from
July 1 of the year 3 years prior to the program year to June 30 of the
year 2 years prior to the program year. Therefore, for the FY 2021
program year, we would calculate measure rates using PCH claims data
from July 1, 2018 through June 30, 2019.
We assessed the measure's reliability, and set a minimum case count
of 50 index admissions (25 per subset) per PCH. There were 3,502
facilities \350\ included in the 100 split-half simulations for CY 2013
through CY 2015. In our reliability assessment, we examined the
reliability of the measure by testing the hypothesis that the mean S-B
statistic from each year was greater than 0.5. The S-B statistic allows
us to project what the reliability would be if the entire sample were
used instead of the split sample.
---------------------------------------------------------------------------

\350\ We note that hospital testing occurred prior to our
proposal for PCHQR Program inclusion. As such, the sample size is
far greater than the number of applicable PCHs for which
implementation this measure is being proposed for use to ensure data
reliability.
---------------------------------------------------------------------------

Overall, the consistent calculations between the two data randomly-
split subsets for each period provided evidence that performance
variations between PCHs were attributable to hospital-level factors,
rather than patient-level factors. Regarding the validity of this
measure, global sensitivity and specificity scores of 0.879 and 0.896,
respectively, confirmed the validity of the Type of Admission/Visit
reported via the UB-04 Uniform Bill Locator 14 (Claim Inpatient
Admission Type Code \351\ in the Medicare SAF) to accurately identify
planned and unplanned readmissions, as validated by chart review.
Together, these statistics indicate that there are opportunities to
utilize this measure to reduced unplanned readmissions in cancer
patients, making it useful for performance improvement and public
reporting. Additional details on the testing results for this measure
are provided in the testing attachment, which is available at: https://www.qualityforum.org/ProjectMeasures.aspx?projectID=86089.
---------------------------------------------------------------------------

\351\ Claim Inpatient Admission Type Code available at: https://www.resdac.org/cms-data/variables/Claim-Inpatient-Admission-Type-Code.
---------------------------------------------------------------------------

(4) Measure Calculation
This outcome measure utilizes claims data to demonstrate the rate
at which adult cancer patients have unplanned readmissions within 30
days of discharge from an eligible index admission. The numerator
includes all eligible unplanned readmissions to the PCH within 30 days
of the discharge date from an index admission to the PCH that is
included in the measure denominator. The denominator includes inpatient
admissions for all adult Medicare fee-for-service (FFS) beneficiaries
where the patient is discharged from a short-term acute care hospital
(PCH, short-term acute care PPS hospital, or CAH) with a principal or
secondary diagnosis (that is, not admitting diagnosis) of malignant
cancer within the defined measurement period. The measure excludes
readmissions for patients readmitted for chemotherapy or radiation
therapy treatment or with disease progression. The measure will be
calculated as the numerator divided by the denominator. Measure
specifications for the proposed measure can be accessed on the NQF's
website at: https://www.qualityforum.org/ProjectMeasures.aspx?projectID=86089.
(5) Cohort
This measure includes inpatient admissions for all adult Medicare
FFS beneficiaries where the patient is discharged from a short-term
acute care hospital (PCH, short-term acute care PPS hospital, or CAH)
with a principal or secondary diagnosis (that is, not admitting
diagnosis) of malignant cancer within the defined measurement period.
Additional methodology and measure development details are available on
the NQF's website at: https://www.qualityforum.org/ProjectMeasures.aspx?projectID=86089.
(6) Risk Adjustment
This measure is risk-adjusted based on a comparison of observed
versus expected readmission rates. Logistic regression analysis is used
to estimate the probability of an unplanned readmission, based on the
measure specifications and risk factors described herein. The
probability of unplanned readmission is then summed over the index
admissions for each hospital to calculate the expected unplanned
readmission rate. Subsequently, the actual or observed unplanned
readmissions for each hospital are summed and used to calculate the
ratio of observed unplanned readmissions to expected unplanned
readmissions for each hospital. Each hospital's ratio was then
multiplied by the national or standard unplanned readmissions rate to
generate the risk-adjusted 30-Day Unplanned Readmissions for Cancer
Patients rate (as specified in the following formula):

[[Page 20506]]

[GRAPHIC] [TIFF OMITTED] TP07MY18.018

We are inviting public comment on our proposal to adopt the 30-Day
Unplanned Readmissions for Cancer Patients measure (NQF #3188) for the
FY 2021 program year and subsequent years.
c. Summary of Previously Finalized and Proposed PCHQR Program Measures
for the FY 2021 Program Year and Subsequent Years
The table below summarizes what the PCHQR Program measure set would
look like for the FY 2021 program year if we finalized our measure
removal proposals and our proposal to adopt the 30-Day Unplanned
Readmissions for Cancer Patients measure (NQF #3188):

FY 2021 PCHQR Program Measure Set if Proposals To Remove Four Measures and Adopt a New Readmissions Measure Are
Finalized
----------------------------------------------------------------------------------------------------------------
Short name NQF No. Measure name
----------------------------------------------------------------------------------------------------------------
Safety and Healthcare-Associated Infection (HAI)
----------------------------------------------------------------------------------------------------------------
Colon and Abdominal Hysterectomy SSI.......... 0753 American College of Surgeons--Centers for
Disease Control and Prevention (ACS-CDC)
Harmonized Procedure Specific Surgical Site
Infection (SSI) Outcome Measure [currently
includes SSIs following Colon Surgery and
Abdominal Hysterectomy Surgery].
CDI........................................... 1717 National Healthcare Safety Network (NHSN)
Facility[dash]wide Inpatient Hospital-onset
Clostridium difficile Infection (CDI) Outcome
Measure.
MRSA.......................................... 1716 National Healthcare Safety Network (NHSN)
Facility[dash]wide Inpatient Hospital-onset
Methicillin[dash]resistant Staphylococcus
aureus Bacteremia Outcome Measure.
HCP........................................... 0431 National Healthcare Safety Network (NHSN)
Influenza Vaccination Coverage Among Healthcare
Personnel.
----------------------------------------------------------------------------------------------------------------
Clinical Process/Oncology Care Measures
----------------------------------------------------------------------------------------------------------------
N/A........................................... 0383 Oncology: Plan of Care for Pain--Medical
Oncology and Radiation Oncology.
EOL-Chemo..................................... 0210 Proportion of Patients Who Died from Cancer
Receiving Chemotherapy in the Last 14 Days of
Life.
EOL-Hospice................................... 0215 Proportion of Patients Who Died from Cancer Not
Admitted to Hospice.
----------------------------------------------------------------------------------------------------------------
Intermediate Clinical Outcome Measures
----------------------------------------------------------------------------------------------------------------
EOL-ICU....................................... 0213 Proportion of Patients Who Died from Cancer
Admitted to the ICU in the Last 30 Days of
Life.
EOL-3DH....................................... 0216 Proportion of Patients Who Died from Cancer
Admitted to Hospice for Less Than Three Days.
----------------------------------------------------------------------------------------------------------------
Patient Engagement/Experience of Care
----------------------------------------------------------------------------------------------------------------
HCAHPS........................................ 0166 HCAHPS.
----------------------------------------------------------------------------------------------------------------
Clinical Effectiveness Measure
----------------------------------------------------------------------------------------------------------------
EBRT.......................................... 1822 External Beam Radiotherapy for Bone Metastases.
----------------------------------------------------------------------------------------------------------------
Claims Based Outcome Measures
----------------------------------------------------------------------------------------------------------------
N/A........................................... N/A Admissions and Emergency Department (ED) Visits
for Patients Receiving Outpatient Chemotherapy.
N/A *......................................... 3188 30-Day Unplanned Readmissions for Cancer
Patients.
----------------------------------------------------------------------------------------------------------------
* Measure proposed for adoption for the FY 2021 program year and subsequent years.

5. Accounting for Social Risk Factors in the PCHQR Program
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38428 through
38429), we discussed the importance of improving beneficiary outcomes
including reducing health disparities. We also discussed our commitment
to ensuring that medically complex patients, as well as those with
social risk factors, receive excellent care. We discussed how studies
show that social risk factors, such as being near or below the poverty
level as determined by HHS, belonging to a racial or ethnic minority
group, or living with a disability, can be associated with poor health
outcomes and how some of this disparity is related to the quality of
health care.\352\ Among our core objectives, we aim to improve health
outcomes, attain health equity for all beneficiaries, and ensure that
complex patients as well as those with social risk factors receive
excellent care. Within this context, reports by the Office of the
Assistant Secretary for Planning and Evaluation (ASPE) and the National
Academy of Medicine have examined the influence of social risk factors
in CMS value-based purchasing

[[Page 20507]]

programs.\353\ As we noted in the FY 2018 IPPS/LTCH PPS final rule (82
FR 38428 through 38429), ASPE's report to Congress found that, in the
context of value-based purchasing programs, dual eligibility was the
most powerful predictor of poor health care outcomes among those social
risk factors that they examined and tested. In addition, as we noted in
the FY 2018 IPPS/LTCH PPS final rule (82 FR 38428), the National
Quality Forum (NQF) undertook a 2-year trial period in which certain
new measures and measures undergoing maintenance review have been
assessed to determine if risk adjustment for social risk factors is
appropriate for these measures.\354\ The trial period ended in April
2017 and a final report is available at: https://www.qualityforum.org/SES_Trial_Period.aspx. The trial concluded that ``measures with a
conceptual basis for adjustment generally did not demonstrate an
empirical relationship'' between social risk factors and the outcomes
measured. This discrepancy may be explained in part by the methods used
for adjustment and the limited availability of robust data on social
risk factors. NQF has extended the socioeconomic status (SES)
trial,\355\ allowing further examination of social risk factors in
outcome measures.
---------------------------------------------------------------------------

\352\ See, for example United States Department of Health and
Human Services. ``Healthy People 2020: Disparities. 2014.''
Available at: https://www.healthypeople.gov/2020/about/foundation-health-measures/Disparities; or National Academies of Sciences,
Engineering, and Medicine. Accounting for Social Risk Factors in
Medicare Payment: Identifying Social Risk Factors. Washington, DC:
National Academies of Sciences, Engineering, and Medicine 2016.
\353\ Department of Health and Human Services Office of the
Assistant Secretary for Planning and Evaluation (ASPE), ``Report to
Congress: Social Risk Factors and Performance Under Medicare's
Value-Based Purchasing Programs.'' December 2016. Available at:
https://aspe.hhs.gov/pdf-report/report-congress-social-risk-factors-and-performance-under-medicares-value-based-purchasing-programs.
\354\ Available at: https://www.qualityforum.org/SES_Trial_Period.aspx.
\355\ Available at: https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=86357.
---------------------------------------------------------------------------

In the FY 2018/CY 2018 proposed rules for our quality reporting and
value-based purchasing programs, we solicited feedback on which social
risk factors provide the most valuable information to stakeholders and
the methodology for illuminating differences in outcomes rates among
patient groups within a hospital or provider that would also allow for
a comparison of those differences, or disparities, across providers.
Feedback we received across our quality reporting programs included
encouraging CMS to explore whether factors that could be used to
stratify or risk adjust the measures (beyond dual eligibility);
considering the full range of differences in patient backgrounds that
might affect outcomes; exploring risk adjustment approaches; and
offering careful consideration of what type of information display
would be most useful to the public. We also sought public comment on
confidential reporting and future public reporting of some of our
measures stratified by patient dual eligibility. In general, commenters
noted that stratified measures could serve as tools for hospitals to
identify gaps in outcomes for different groups of patients, improve the
quality of health care for all patients, and empower consumers to make
informed decisions about health care. Commenters encouraged us to
stratify measures by other social risk factors such as age, income, and
educational attainment. With regard to value-based purchasing programs,
commenters also cautioned to balance fair and equitable payment while
avoiding payment penalties that mask health disparities or discouraging
the provision of care to more medically complex patients. Commenters
also noted that value-based purchasing program measure selection,
domain weighting, performance scoring, and payment methodology must
account for social risk.
As a next step, CMS is considering options to improve health
disparities among patient groups within and across hospitals by
increasing the transparency of disparities as shown by quality
measures. We also are considering how this work applies to other CMS
quality programs in the future. We refer readers to the FY 2018 IPPS/
LTCH PPS final rule (82 FR 38403 through 38409) for more details, where
we discuss the potential stratification of certain Hospital IQR Program
outcome measures. Furthermore, we continue to consider options to
address equity and disparities in our value-based purchasing programs.
We plan to continue working with ASPE, the public, and other key
stakeholders on this important issue to identify policy solutions that
achieve the goals of attaining health equity for all beneficiaries and
minimizing unintended consequences.
6. Possible New Quality Measure Topics for Future Years
a. Background
As discussed in sections section I.A.2. of the preamble of this
proposed rule, we have begun analyzing our programs' measures using the
framework we developed for the Meaningful Measures Initiative. We have
also discussed future quality measure topics and quality measure domain
areas in the FY 2015 IPPS/LTCH PPS final rule (79 FR 50280), the FY
2016 IPPS/LTCH PPS final rule (80 FR4979), the FY 2017 IPPS/LTCH PPS
final rule (81 FR 25211), and the FY 2018 IPPS/LTCH PPS final rule (82
FR 38421 through 38423). Specifically, we discussed public comment and
suggestions for measure topics addressing: (1) Making care affordable;
(2) communication and care coordination; and (3) working with
communities to promote best practices of healthy living. In addition,
in the FY 2018 IPPS/LTCH PPS final rule, we welcomed public comment and
specific suggestions for measure topics that we should consider for
future rulemaking, including considerations related to risk adjustment
and the inclusion of social risk factors in risk adjustment for any
individual performance measures.
In this proposed rule, we are again seeking public comment on the
types of measure topics we should consider for future rulemaking. We
also are seeking public comment on two measures for potential future
inclusion in the PCHQR Program:
Risk-Adjusted Morbidity and Mortality for Lung Resection
for Lung Cancer (NQF #1790); and
Shared Decision Making Process (NQF #2962).
We discuss these measures and measurement topic areas in more
detail below.
b. Risk-Adjusted Morbidity and Mortality for Lung Resection for Lung
Cancer (NQF #1790)
The Risk-Adjusted Morbidity and Mortality for Lung Resection for
Lung Cancer (NQF #1790) measure is an outcome measure. It assesses
postoperative complications and operative mortality, which are
important negative outcomes associated with lung cancer resection
surgery. Specifically, the measure assesses the number of patients 18
years of age or older undergoing elective lung resection (Open or
video-assisted thoracoscopic surgery (VATS) wedge resection,
segmentectomy, lobectomy, bilobectomy, sleeve lobectomy, pneumonectomy)
for lung cancer who developed one of the listed postoperative
complications described in the measure's specifications.\356\ The lung
cancer resection risk model utilized in this measure identifies
predictors of these outcomes, including patient age, smoking status,
comorbid medical conditions, and other patient characteristics, as well
as operative approach and the extent of pulmonary resection. Knowledge
of these predictors informs clinical decision-making by

[[Page 20508]]

enabling physicians and patients to understand the associations between
individual patient characteristics and outcomes. Further, with
continuous feedback of performance data over time, knowledge of these
predictors and their relationship with patient outcomes also will
foster quality improvement.
---------------------------------------------------------------------------

\356\ Risk-Adjusted Morbidity and Mortality for Lung Resection
for Lung Cancer (NQF #1790) Measure Specifications. Available at:
https://www.qualityforum.org/Projects/Cancer_Endorsement_Maintenance_2011.aspx#t=2&s=&p=3%7C.
---------------------------------------------------------------------------

This measure aligns with recent initiatives to incorporate more
outcome measures in quality reporting programs. This measure also
aligns with the Promote Effective Prevention and Treatment of Chronic
Disease domain of our Meaningful Measures Initiative,\357\ and would
fill an existing gap area of risk-adjusted mortality measures in the
PCHQR Program. This measure has not yet been reviewed by the MAP.
Additional information on this measure is available at: https://www.qualityforum.org/Projects/Cancer_Endorsement_Maintenance_2011.aspx#t=2&s=&p=3%7C, under the
``Candidate Consensus Standards Review: Phase-1'' section.
---------------------------------------------------------------------------

\357\ Overview of CMS ``Meaningful Measures'' Initiative
available at: https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2017-Press-releases-items/2017-10-30.html.
---------------------------------------------------------------------------

We are requesting public comment on the possible inclusion of this
measure in future years of the program.
c. Shared Decision-Making Process (NQF #2962)
The Shared Decision-Making Process (NQF #2962) measure is a
patient-reported outcome measure. This measure asks patients who had
any of seven preference-sensitive surgical interventions to report on
the interactions they had with their providers when the decision was
made to have the surgery. Specifically, this measure assesses patient
answers to four questions about whether three essential elements of
shared decision-making: (1) Laying out options; (2) discussing the
reasons to have the intervention and not to have the intervention; and
(3) asking for patient input--were part of the patient's interactions
with providers when the decision was made to have the procedure. When
faced with a medical problem for which there is more than one
reasonable approach to treatment or management, shared decision-making
means providers should outline for patients that there is a choice to
be made, discuss the pros and cons of the available options, and make
sure that patients have input into the final decision. The result will
be decisions that align better with patient goals, concerns, and
preferences.
This measure aligns with recent initiatives to include patient-
reported outcomes and experience of care into quality reporting
programs, as well as to incorporate more outcome measures generally.
This measure also aligns with the Strengthen Person and Family
Engagement as Partners in Their Care domain of our Meaningful Measures
Initiative,\358\ and would fill an existing gap area of care aligned
with the person's goals in the PCHQR Program. This measure has not yet
been reviewed by the MAP. Additional information on this measure is
available at: https://www.qualityforum.org/ProjectMeasures.aspx?projectID=80842.
---------------------------------------------------------------------------

\358\ Ibid.
---------------------------------------------------------------------------

We are requesting public comment on the possible inclusion of this
measure in future years of the program.
d. Future Measurement Topic Areas
As discussed in section I.A.2. of the preamble of this proposed
rule, we intend to review and assess the quality measures that we
collect and score in our quality programs. As a part of the review
process, we are continually evaluating the existing PCHQR measures
portfolio and identifying gap areas for future measure adoption and/or
development. In tandem with this portfolio evaluation, we have
conducted a measure environmental scan. We believe that staying abreast
of the cancer measurement environment and staying in communication with
the cancer measure development community are vital to the ensure that
the PCHQR Program measure portfolio remains aligned with current CMS
and HHS goals. As a part of our efforts to include a comprehensive set
of cancer measures in the PCHQR Program, we are currently assessing
whether we should redefine the scope of new quality metrics we
implement in the PCHQR Program in future years. Specifically, we are
trying to determine whether the PCHQR Program would most benefit from
the inclusion of more quality measures that examine general cancer care
(that is, outcome measures that assess cancer care) or more measures
that examine cancer-specific clinical conditions (such as prostate
cancer, esophageal cancer, colon cancer, or uterine cancer).
We welcome public comment and specific suggestions on the inclusion
of quality measures that examine general cancer care versus the
inclusion of quality measures that examine cancer-specific clinical
conditions in future rulemaking.
7. Maintenance of Technical Specifications for Quality Measures
We maintain technical specifications for the PCHQR Program
measures, and we periodically update those specifications. The
specifications may be found on the QualityNet website at: https://qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228774479863.
We also refer readers to the FY 2015 IPPS/LTCH PPS final rule (79
FR 50281), where we adopted a policy under which we use a subregulatory
process to make nonsubstantive updates to measures used for the PCHQR
Program.
8. Public Display Requirements
a. Background
Under section 1866(k)(4) of the Act, we are required to establish
procedures for making the data submitted under the PCHQR Program
available to the public. Such procedures must ensure that a PCH has the
opportunity to review the data that are to be made public with respect
to the PCH prior to such data being made public. Section 1866(k)(4) of
the Act also provides that the Secretary must report quality measures
of process, structure, outcome, patients' perspective on care,
efficiency, and costs of care that relate to services furnished in such
hospitals on the CMS website.
In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57191 through
57192), we finalized that although we would continue to use rulemaking
to establish what year we would first publicly report data on each
measure, we would actually publish the data as soon as feasible during
that year. We also stated that our intent is to make the data available
on at least a yearly basis, and that the time period for PCHs to review
their data before the data are made public would be approximately 30
days in length. We announce the exact data review and public reporting
timeframes on a CMS website and/or on our applicable Listservs.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38422 through
38424), we listed our finalized public display requirements for the FY
2020 program year.

[[Page 20509]]

Previously Finalized Public Display Requirements for the FY 2020 Program
Year
------------------------------------------------------------------------
Summary of previously finalized public display requirements
-------------------------------------------------------------------------
Measures Public reporting
------------------------------------------------------------------------
Oncology: Radiation Dose Limits to
Normal Tissues (NQF #0382). *
Oncology: Plan of Care for Pain--
Medical Oncology and Radiation Oncology
(NQF #0383).
Oncology: Medical and Radiation--
Pain Intensity Quantified (NQF #0384). *
Prostate Cancer: Avoidance of
Overuse of Bone Scan for Staging Low Risk
Prostate Cancer Patients (NQF #0389). *
Prostate Cancer: Adjuvant Hormonal
Therapy for High Risk Prostate Cancer
Patients (NQF #0390). *
HCAHPS (NQF #0166)................ 2016 and subsequent years.
CLABSI (NQF #0139). *
CAUTI (NQF #0138). *.............. Deferred.
External Beam Radiotherapy for Beginning when feasible in
Bone Metastases (NQF #1822). 2017 and for subsequent
years.
------------------------------------------------------------------------
* Measure proposed for removal beginning with the FY 2021 program year.

We recognize the importance of being transparent with stakeholders
and keeping them abreast of any changes that arise with the PCHQR set.
As such, we provide a discussion of some recent changes affecting the
timetable for the public displaying of data for specific PCHQR measures
in the section below.
b. Proposed Deferment of Public Display of Four Measures
We adopted the Colon and Abdominal Hysterectomy SSI (NQF #0753)
measure in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50839 through
50840) and the MRSA measure (NQF #1716), the CDI measure (NQF #1717)
and the HCP measure (NQF #0431) in the FY 2016 IPPS/LTCH PPS final rule
(80 FR 49715 through 49718).
At present, all PCHs are reporting Colon and Abdominal Hysterectomy
SSI, MRSA, CDI, and HCP data to the NHSN under the PCHQR Program.
However, performance data for these measures are new, and do not span a
long enough measurement period to draw conclusions about their
statistical significance at this point. Specifically, in 2016, the
Centers for Disease Control and Prevention (CDC) announced that HAI
data reported to NHSN for 2015 will be used as the new baseline,
serving as a new ``reference point'' for comparing progress.\359\ These
current rebaselining efforts make year-to-year data comparisons
inappropriate at this time. However, in FY 2019, we will have 2 years
of comparable data to properly assess trends.\360\ Therefore, we are
proposing to delay the public reporting of data for the SSI, MRSA, CDI,
and HCP measures until CY 2019.
---------------------------------------------------------------------------

\359\ Centers for Disease Control and Prevention. ``Paving Path
Forward: 2015 Rebase line.'' Available at: https://www.cdc.gov/nhsn/2015rebaseline/.
\360\ Rebase line Timeline FAQ Document. Available at: https://www.cdc.gov/nhsn/pdfs/rebaseline/faq-timeline-rebaseline.pdf.
---------------------------------------------------------------------------

We are inviting public comment on our proposal to delay public
reporting of these four measures until CY 2019.
c. Clarification of Public Display of External Beam Radiotherapy for
Bone Metastases (EBRT) (NQF #1822) Measure
In the FY 2015 IPPS/LTCH PPS final rule (79 FR 50282 through
50283), we finalized that PCHs would begin reporting the External Beam
Radiotherapy for Bone Metastases (EBRT) (NQF #1822) measure beginning
with January 1, 2015 discharges and for subsequent years. We finalized
that PCHs would report this measure to us via a CMS web-based tool on
an annual basis (July 1 through August 15 of each respective year).
Lastly, we finalized in the FY 2017 IPPS/LTCH PPS final rule (81 FR
57192) that we would begin to display the measure data during CY 2017,
and that we would use a CMS website and/or our applicable Listservs to
announce the exact timeframe.
We publicly reported data on this measure in December of 2017, and
that data can be accessed on Hospital Compare at: https://www.medicare.gov/hospitalcompare/cancer-measures.html. We note that
this measure is updated on an annual basis, and that new Hospital
Compare data is published four times each year: April, July, October,
and December. As such, we anticipate an update of EBRT measure data to
be available in December of 2018.
d. Summary of Proposed Public Display Requirements for the FY 2021
Program Year
Our proposed public display requirements for the FY 2021 program
year are shown in the following table:

Proposed Public Display Requirements for the FY 2021 Program Year
------------------------------------------------------------------------
Summary of newly proposed public display requirements
-------------------------------------------------------------------------
Measures Public reporting
------------------------------------------------------------------------
HCAHPS (NQF #0166)................ 2016 and subsequent years.
Oncology: Plan of Care for Pain--
Medical Oncology and Radiation Oncology
(NQF #0383).
American College of Surgeons-- * Deferred Until Calendar
Centers for Disease Control and Prevention Year 2019.
(ACS-CDC) Harmonized Procedure Specific
Surgical Site Infection (SSI) Outcome
Measure [currently includes SSIs following
Colon Surgery and Abdominal Hysterectomy
Surgery] (NQF #0753).
National Healthcare Safety Network
(NHSN) Facility[dash]wide Inpatient
Hospital-onset Methicillin[dash]resistant
Staphylococcus aureus Bacteremia Outcome
Measure (NQF #1716).
National Healthcare Safety Network
(NHSN) Facility[dash]wide Inpatient
Hospital-onset Clostridium difficile
Infection (CDI) Outcome Measure (NQF
#1717).
National Healthcare Safety Network
(NHSN) Influenza Vaccination Coverage
Among Healthcare Personnel (NQF #0431).

[[Page 20510]]

External Beam Radiotherapy for 2017 and subsequent years.
Bone Metastases (EBRT) (NQF #1822).
------------------------------------------------------------------------
* Newly proposed in this FY 2019 IPPS/LTCH PPS proposed rule.

9. Form, Manner, and Timing of Data Submission
a. Background
Data submission requirements and deadlines for the PCHQR Program
are generally posted on the QualityNet website at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228772864228.
b. Proposed Reporting Requirements for the Newly Proposed 30-Day
Unplanned Readmissions for Cancer Patients Measure
As further described in section VIII.B.4.b. of the preamble of this
proposed rule, we are proposing the adoption of a new measure beginning
with the FY 2021 program year, the 30-Day Unplanned Readmissions for
Cancer Patients measure. This is a claims-based measure, therefore,
there will be no separate data submission requirements for PCHs related
to this measure as CMS will calculate measure rates from PCH claims
data. We are proposing that the data collection period would be from
July 1 of the year 3 years prior to the program year to June 30 of the
year 2 years prior to the program year. Therefore, for the FY 2021
program year, we would collect data from October 1, 2018 through
September 30, 2019.
We are inviting public comment on this proposal.
10. Extraordinary Circumstances Exceptions (ECE) Policy Under the PCHQR
Program
In our experience with other quality reporting and performance
programs, we have noted occasions when providers have been unable to
submit required quality data due to extraordinary circumstances that
are not within their control (for example, natural disasters). We do
not wish to increase their burden unduly during these times. Therefore,
in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50848), we finalized our
policy that, for the FY 2014 program year and subsequent years, PCHs
may request and we may grant exceptions (formerly referred to as
waivers) \361\ with respect to the reporting of required quality data
when extraordinary circumstances beyond the control of the PCH warrant.
The PCH may request a reporting extension or a complete exception from
the requirement to submit quality data for one or more quarters. In the
FY 2018 IPPS/LTCH PPS final rule (82 FR 38424 through 38425), we
finalized modifications to the extraordinary circumstances exceptions
(ECE) policy to extend the deadline for a PCH to submit a request for
an extension or exception from 30 days following the date that the
extraordinary circumstance occurred to 90 days following the date that
the extraordinary circumstance occurred and to allow CMS to grant an
exception or extension due to CMS data system issues which affect data
submission. In addition, to ensure transparency and understanding of
our process, we have clarified that we will strive to provide our
response to an ECE request within 90 days of receipt.
---------------------------------------------------------------------------

\361\ ECEs were originally referred to as ``waivers.'' This term
was changed to ``exceptions'' in the FY 2015 IPPS/LTCH PPS final
rule (79 FR 50286).
---------------------------------------------------------------------------

C. Long-Term Care Hospital Quality Reporting Program (LTCH QRP)

1. Background
The LTCH QRP is authorized by section 1886(m)(5) of the Act, and it
applies to all hospitals certified by Medicare as long-term care
hospitals (LTCHs). Under the LTCH QRP, the Secretary reduces by two
percentage points the annual update to the LTCH PPS standard Federal
rate for discharges for an LTCH during a fiscal year if the LTCH has
not complied with the LTCH QRP requirements specified for that fiscal
year. For more detailed information on the requirements we have adopted
for the LTCH QRP, we refer readers to the FY 2012 IPPS/LTCH PPS final
rule (76 FR 51743 through 51744), the FY 2013 IPPS/LTCH PPS final rule
(77 FR 53614), the FY 2014 IPPS/LTCH PPS final rule (78 FR 50853), the
FY 2015 IPPS/LTCH PPS final rule (79 FR 50286), the FY 2016 IPPS/LTCH
PPS final rule (80 FR 49723 through 49725), the FY 2017 IPPS/LTCH PPS
final rule (81 FR 57193), and the FY 2018 IPPS/LTCH PPS final rule (82
FR 38425 through 38426).
Although we have historically used the preamble to the IPPS/LTCH
PPS proposed and final rules each year to remind stakeholders of all
previously finalized program requirements, we have concluded that
repeating the same discussion each year is not necessary for every
requirement, especially if we have codified it in our regulations.
Accordingly, the following discussion is limited as much as possible to
a discussion of our proposals for future years of the LTCH QRP, and
represents the approach we intend to use in our rulemakings for this
program going forward.
2. General Considerations Used for the Selection of Measures for the
LTCH QRP
a. Background
For a detailed discussion of the considerations we historically
used for the selection of LTCH QRP quality, resource use, and other
measures, we refer readers to the FY 2016 IPPS/LTCH PPS final rule (80
FR 49728).
b. Accounting for Social Risk Factors in the LTCH QRP
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38428 through
38429), we discussed the importance of improving beneficiary outcomes
including reducing health disparities. We also discussed our commitment
to ensuring that medically complex patients, as well as those with
social risk factors, receive excellent care. We discussed how studies
show that social risk factors, such as being near or below the poverty
level as determined by HHS, belonging to a racial or ethnic minority
group, or living with a disability, can be associated with poor health
outcomes and how some of this disparity is related to the quality of
health care.\362\ Among our core objectives, we aim to improve health
outcomes, attain health

[[Page 20511]]

equity for all beneficiaries, and ensure that complex patients as well
as those with social risk factors receive excellent care. Within this
context, reports by the Office of the Assistant Secretary for Planning
and Evaluation (ASPE) and the National Academy of Medicine have
examined the influence of social risk factors in our value-based
purchasing programs.\363\ As we noted in the FY 2018 IPPS/LTCH PPS
final rule (82 FR 38404), ASPE's report to Congress, which was required
by the IMPACT Act, found that, in the context of value-based purchasing
programs, dual eligibility was the most powerful predictor of poor
health care outcomes among those social risk factors that they examined
and tested. ASPE is continuing to examine this issue in its second
report required by the IMPACT Act, which is due to Congress in the fall
of 2019. In addition, as we noted in the FY 2018 IPPS/LTCH PPS final
rule (82 FR 38428), the National Quality Forum (NQF) undertook a 2-year
trial period in which certain new measures and measures undergoing
maintenance review have been assessed to determine if risk adjustment
for social risk factors is appropriate for these measures.\364\ The
trial period ended in April 2017 and a final report is available at:
https://www.qualityforum.org/SES_Trial_Period.aspx. The trial concluded
that ``measures with a conceptual basis for adjustment generally did
not demonstrate an empirical relationship'' between social risk factors
and the outcomes measured. This discrepancy may be explained in part by
the methods used for adjustment and the limited availability of robust
data on social risk factors. NQF has extended the socioeconomic status
(SES) trial,\365\ allowing further examination of social risk factors
in outcome measures.
---------------------------------------------------------------------------

\362\ See, for example United States Department of Health and
Human Services. ``Healthy People 2020: Disparities. 2014.''
Available at: https://www.healthypeople.gov/2020/about/foundation-health-measures/Disparities; or National Academies of Sciences,
Engineering, and Medicine. Accounting for Social Risk Factors in
Medicare Payment: Identifying Social Risk Factors. Washington, DC:
National Academies of Sciences, Engineering, and Medicine 2016.
\363\ Department of Health and Human Services Office of the
Assistant Secretary for Planning and Evaluation (ASPE), ``Report to
Congress: Social Risk Factors and Performance Under Medicare's
Value-Based Purchasing Programs.'' December 2016. Available at:
https://aspe.hhs.gov/pdf-report/report-congress-social-risk-factors-and-performance-under-medicares-value-based-purchasing-programs.
\364\ Available at: https://www.qualityforum.org/SES_Trial_Period.aspx.
\365\ Available at: https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=86357.
---------------------------------------------------------------------------

In the FY 2018/CY 2018 proposed rules for our quality reporting and
value-based purchasing programs, we solicited feedback on which social
risk factors provide the most valuable information to stakeholders and
the methodology for illuminating differences in outcomes rates among
patient groups within a provider that would also allow for a comparison
of those differences, or disparities, across providers. Feedback we
received across our quality reporting programs included encouraging
CMS: To explore whether factors that could be used to stratify or risk
adjust the measures (beyond dual eligibility); to consider the full
range of differences in patient backgrounds that might affect outcomes;
to explore risk adjustment approaches; and to offer careful
consideration of what type of information display would be most useful
to the public.
We also sought public comment on confidential reporting and future
public reporting of some of our measures stratified by patient dual
eligibility. In general, commenters noted that stratified measures
could serve as tools for hospitals to identify gaps in outcomes for
different groups of patients, improve the quality of health care for
all patients, and empower consumers to make informed decisions about
health care. Commenters encouraged us to stratify measures by other
social risk factors such as age, income, and educational attainment.
With regard to value-based purchasing programs, commenters also
cautioned CMS to balance fair and equitable payment while avoiding
payment penalties that mask health disparities or discouraging the
provision of care to more medically complex patients. Commenters also
noted that value-based payment program measure selection, domain
weighting, performance scoring, and payment methodology must account
for social risk.
As a next step, we are considering options to improve health
disparities among patient groups within and across hospitals by
increasing the transparency of disparities as shown by quality
measures. We also are considering how this work applies to other CMS
quality programs in the future. We refer readers to the FY 2018 IPPS/
LTCH PPS final rule (82 FR 38403 through 38409) for more details, where
we discuss the potential stratification of certain Hospital IQR Program
outcome measures. Furthermore, we continue to consider options to
address equity and disparities in our value-based purchasing programs.
We plan to continue working with ASPE, the public, and other key
stakeholders on this important issue to identify policy solutions that
achieve the goals of attaining health equity for all beneficiaries and
minimizing unintended consequences.
3. Proposed New Measure Removal Factor for Previously Adopted LTCH QRP
Measures
As a part of our Meaningful Measures Initiative, discussed in
section I.A.2. of the preamble of this proposed rule, we strive to put
patients first, ensuring that they, along with their clinicians, are
empowered to make decisions about their own healthcare using data-
driven information that is increasingly aligned with a parsimonious set
of meaningful quality measures. We began reviewing the LTCH QRP's
measures in accordance with the Meaningful Measures Initiative, and we
are working to identify how to move the LTCH QRP forward in the least
burdensome manner possible, while continuing to incentivize improvement
in the quality of care provided to patients.
Specifically, we believe the goals of the LTCH QRP and the measures
used in the program cover most of the Meaningful Measures Initiative
priorities, including making care safer, strengthening person and
family engagement, promoting coordination of care, promoting effective
prevention and treatment, and making care affordable.
We also evaluated the appropriateness and completeness of the LTCH
QRP's current measure removal factors. We have previously finalized
that we would use notice and comment rulemaking to remove measures from
the LTCH QRP based on the following factors (77 FR 53614 through
53615): \366\
---------------------------------------------------------------------------

\366\ We refer readers to the FY 2013 IPPS/LTCH PPS final rule
(77 FR 53614 through 53615) for more information on the factors we
consider for removing measures.
---------------------------------------------------------------------------

Factor 1. Measure performance among LTCHs is so high and
unvarying that meaningful distinctions in improvements in performance
can no longer be made.
Factor 2. Performance or improvement on a measure does not
result in better patient outcomes.
Factor 3. A measure does not align with current clinical
guidelines or practice.
Factor 4. A more broadly applicable measure (across
settings, populations, or conditions) for the particular topic is
available.
Factor 5. A measure that is more proximal in time to
desired patient outcomes for the particular topic is available.
Factor 6. A measure that is more strongly associated with
desired patient outcomes for the particular topic is available.
Factor 7. Collection or public reporting of a measure
leads to negative

[[Page 20512]]

unintended consequences other than patient harm.
We continue to believe that these measure removal factors are
appropriate for use in the LTCH QRP. However, even if one or more of
the measure removal factors applies, we may nonetheless choose to
retain the measure for certain specified reasons. Examples of such
instances could include when a particular measure addresses a gap in
quality that is so significant that removing the measure could, in
turn, result in poor quality, or in the event that a given measure is
statutorily required. We note further that, consistent with other
quality reporting programs, we apply these factors on a case-by-case
basis.
We are proposing to adopt an additional factor to consider when
evaluating potential measures for removal from the LTCH QRP measure
set: Factor 8, the costs associated with a measure outweigh the benefit
of its continued use in the program.
As we discussed in section I.A.2. of the preamble of this proposed
rule, with respect to our new Meaningful Measures Initiative, we are
engaging in efforts to ensure that the LTCH QRP measure set continues
to promote improved health outcomes for beneficiaries while minimizing
the overall costs associated with the program. We believe these costs
are multi-faceted and include not only the burden associated with
reporting, but also the costs associated with implementing and
maintaining the program. We have identified several different types of
costs, including, but not limited to: (1) The provider and clinician
information collection burden and burden associated with the
submission/reporting of quality measures to CMS; (2) the provider and
clinician cost associated with complying with other programmatic
requirements; (3) the provider and clinician cost associated with
participating in multiple quality programs, and tracking multiple
similar or duplicative measures within or across those programs; (4)
the cost to CMS associated with the program oversight of the measure
including measure maintenance and public display; and (5) the provider
and clinician cost associated with compliance with other federal and/or
state regulations (if applicable).
For example, it may be needlessly costly and/or of limited benefit
to retain or maintain a measure which our analyses show no longer
meaningfully supports program objectives (for example, informing
beneficiary choice). It may also be costly for health care providers to
track the confidential feedback, preview reports, and publicly reported
information on a measure where we use the measure in more than one
program. CMS may also have to expend unnecessary resources to maintain
the specifications for the measure, as well as the tools we need to
collect, validate, analyze, and publicly report the measure data.
Furthermore, beneficiaries may find it confusing to see public
reporting on the same measure in different programs.
When these costs outweigh the evidence supporting the continued use
of a measure in the LTCH QRP, we believe it may be appropriate to
remove the measure from the program. Although we recognize that one of
the main goals of the LTCH QRP is to improve beneficiary outcomes by
incentivizing health care providers to focus on specific care issues
and making public data related to those issues, we also recognize that
those goals can have limited utility where, for example, the publicly
reported data is of limited use because it cannot be easily interpreted
by beneficiaries and used to influence their choice of providers. In
these cases, removing the measure from the LTCH QRP may better
accommodate the costs of program administration and compliance without
sacrificing improved health outcomes and beneficiary choice.
We are proposing that we would remove measures based on this factor
on a case-by-case basis. We might, for example, decide to retain a
measure that is burdensome for health care providers to report if we
conclude that the benefit to beneficiaries justifies the reporting
burden. Our goal is to move the program forward in the least burdensome
manner possible, while maintaining a parsimonious set of meaningful
quality measures and continuing to incentivize improvement in the
quality of care provided to patients.
We are inviting public comment on our proposal to adopt an
additional measure removal Factor 8, the costs associated with a
measure outweigh the benefit of its continued use in the program.
We also are proposing to codify both the removal factors we
previously finalized for the LTCH QRP, as well as the new the measure
removal factor that we are proposing to adopt in this rule, at Sec.
412.560(b)(3) of our regulations.
We are inviting public comment on these proposals.
4. Quality Measures Currently Adopted for the FY 2020 LTCH QRP
The LTCH QRP currently has 19 measures for the FY 2020 program
year, which are outlined in the following table:

Quality Measures Currently Adopted for the FY 2020 LTCH QRP
------------------------------------------------------------------------
Short name Measure name and data source
------------------------------------------------------------------------
LTCH CARE Data Set
------------------------------------------------------------------------
Pressure Ulcer............... Percent of Residents or Patients With
Pressure Ulcers That Are New or Worsened
(Short Stay) (NQF #0678). *
Pressure Ulcer/Injury........ Changes in Skin Integrity Post-Acute
Care: Pressure Ulcer/Injury.
Patient Influenza Vaccine.... Percent of Residents or Patients Who Were
Assessed and Appropriately Given the
Seasonal Influenza Vaccine (Short Stay)
(NQF #0680).
Application of Falls......... Application of Percent of Residents
Experiencing One or More Falls with
Major Injury (Long Stay) (NQF #0674).
Functional Assessment........ Percent of Long-Term Care Hospital (LTCH)
Patients with an Admission and Discharge
Functional Assessment and a Care Plan
That Addresses Function (NQF #2631).
Application of Functional Application of Percent of Long-Term Care
Assessment. Hospital (LTCH) Patients with an
Admission and Discharge Functional
Assessment and a Care Plan That
Addresses Function (NQF #2631).
Change in Mobility........... Functional Outcome Measure: Change in
Mobility Among Long-Term Care Hospital
(LTCH) Patients Requiring Ventilator
Support (NQF #2632).
DRR.......................... Drug Regimen Review Conducted With Follow-
Up for Identified Issues--Post Acute
Care (PAC) Long-Term Care Hospital
(LTCH) Quality Reporting Program (QRP).
Compliance with SBT.......... Compliance with Spontaneous Breathing
Trial (SBT) by Day 2 of the LTCH Stay.

[[Page 20513]]

Ventilator Liberation........ Ventilator Liberation Rate.
------------------------------------------------------------------------
NHSN
------------------------------------------------------------------------
CAUTI........................ National Healthcare Safety Network (NHSN)
Catheter-Associated Urinary Tract
Infection (CAUTI) Outcome Measure (NQF
#0138).
CLABSI....................... National Healthcare Safety Network (NHSN)
Central Line-associated Bloodstream
Infection (CLABSI) Outcome Measure (NQF
#0139).
MRSA......................... National Healthcare Safety Network (NHSN)
Facility-wide Inpatient Hospital-onset
Methicillin-resistant Staphylococcus
aureus (MRSA) Bacteremia Outcome Measure
(NQF #1716).
CDI.......................... National Healthcare Safety Network (NHSN)
Facility-wide Inpatient Hospital-onset
Clostridium difficile Infection (CDI)
Outcome Measure (NQF #1717).
HCP Influenza Vaccine........ Influenza Vaccination Coverage among
Healthcare Personnel (NQF #0431).
VAE.......................... National Healthcare Safety Network (NHSN)
Ventilator-Associated Event (VAE)
Outcome Measure.
------------------------------------------------------------------------
Claims-Based
------------------------------------------------------------------------
MSPB LTCH.................... Medicare Spending Per Beneficiary (MSPB)-
Post Acute Care (PAC) Long-Term Care
Hospital (LTCH) Quality Reporting
Program (QRP).
DTC.......................... Discharge to Community-Post Acute Care
(PAC) Long-Term Care Hospital (LTCH)
Quality Reporting Program (QRP).
PPR.......................... Potentially Preventable 30-Day Post-
Discharge Readmission Measure for Long-
Term Care Hospital (LTCH) Quality
Reporting Program (QRP).
------------------------------------------------------------------------
* The measure will be replaced with the Changes in Skin Integrity Post-
Acute Care: Pressure Ulcer/Injury measure, effective July 1, 2018.

5. Proposed Removal of Three LTCH QRP Measures
We are proposing to remove three measures from the LTCH QRP measure
set. Beginning with the FY 2020 LTCH QRP, we are proposing to remove
two measures: (1) National Healthcare Safety Network (NHSN) Facility-
wide Inpatient Hospital-onset Methicillin-resistant Staphylococcus
aureus (MRSA) Bacteremia Outcome Measure (NQF #1716); and (2) National
Healthcare Safety Network (NHSN) Ventilator-Associated Event (VAE)
Outcome Measure. We are proposing to remove one measure beginning with
the FY 2021 LTCH QRP: Percent of Residents or Patients Who Were
Assessed and Appropriately Given the Seasonal Influenza Vaccine (Short
Stay) (NQF #0680). We discuss these proposals below.
a. Proposed Removal of the National Healthcare Safety Network (NHSN)
Facility-Wide Inpatient Hospital-Onset Methicillin-Resistant
Staphylococcus aureus (MRSA) Bacteremia Outcome Measure (NQF #1716)
We are proposing to remove the measure, National Healthcare Safety
Network (NHSN) Facility-wide Inpatient Hospital-onset Methicillin-
Resistant Staphylococcus aureus (MRSA) Bacteremia Outcome Measure (NQF
#1716), from the LTCH QRP beginning with the FY 2020 LTCH QRP.
As discussed in section VIII.C.3. of the preamble of this proposed
rule, one of the main goals of our Meaningful Measures Initiative is to
apply a parsimonious set of the most meaningful measures available to
track patient outcomes and impact. We currently collect data on two
measures of healthcare-associated bacteremia infections in the LTCH
QRP: (1) NHSN Central line-associated Bloodstream Infection (CLABSI)
Outcome Measure (NQF #0139); and (2) NHSN Facility-wide Inpatient
Hospital-onset Methicillin-resistant Staphylococcus aureus (MRSA)
Bacteremia Outcome Measure (NQF #1716).
In our review of these measures used in the LTCH QRP, we believe
that it is appropriate to remove the NHSN Facility-wide Inpatient
Hospital-onset Methicillin-resistant Staphylococcus aureus (MRSA)
Bacteremia Outcome Measure (NQF #1716) based on: (1) Factor 6, a
measure that is more strongly associated with desired patient outcomes
for the particular topic is available; and (2) proposed Factor 8, the
costs associated with a measure outweigh the benefit of its continued
use in the program.
We believe that the NHSN CLABSI Outcome Measure (NQF #0139) is more
strongly associated with the desired patient outcome for bloodstream
infections than the NHSN Facility-wide Inpatient Hospital-Onset MRSA
Bacteremia Outcome Measure (NQF #1716). Bloodstream infections are
serious infections typically causing a prolongation of hospital stay
and increased cost and risk of mortality. The NHSN CLABSI Outcome
Measure (NQF #0139) assesses the results of the quality of care
provided to patients, and it is risk-adjusted to compare the infection
rate for a particular location or locations in a hospital with an
expected infection rate for those locations (which is calculated using
national NHSN data for those locations in a predictive model). The NHSN
CLABSI Outcome Measure (NQF #0139) is more strongly associated with the
desired patient outcome of better results in the quality of care
provided to patients because it covers a wide range of blood-stream
infections, while the NHSN Facility-wide Inpatient Hospital-Onset MRSA
Bacteremia Outcome Measure (NQF #1716) only covers MRSA observed
hospital-onset unique blood source MRSA laboratory-identified events.
The NHSN CLABSI Outcome Measure (NQF #0139) also captures the MRSA
blood-stream events, creating potential duplicative collection and
reporting.
We also believe that the costs associated with the NHSN Facility-
wide Inpatient Hospital-Onset MRSA Bacteremia Outcome Measure (NQF
#1716) outweigh the benefit of its continued use in the LTCH QRP. The
NHSN Facility-wide Inpatient Hospital-Onset MRSA Bacteremia Outcome
Measure (NQF #1716) was adopted to assess MRSA infections caused by a
strain of MRSA bacteremia that has become resistant to antibiotics
commonly used to treat MRSA infections. The NHSN Facility-wide
Inpatient Hospital-Onset MRSA Bacteremia Outcome Measure (NQF #1716)
and NHSN CLABSI Outcome Measure (NQF #0139) capture the same

[[Page 20514]]

type of MRSA infection. This overlap results in the data submission on
two measures that cover the same quality issue. We believe that this
results in redundant efforts on the part of LTCHs that are costly and
burdensome. In addition, the maintenance of these two measures in the
LTCH QRP is costly for CMS. Lastly, we believe that the removal of the
NHSN Facility-wide Inpatient Hospital-Onset MRSA Bacteremia Outcome
Measure (NQF #1716) would benefit the public by eliminating the
potential confusion of seeing two different measure rates on LTCH
Compare that capture MRSA bacteremia.
If finalized, LTCHs would continue to report MRSA bacteremia events
associated with central line use as part of the NHSN CLABSI Outcome
Measure (NQF #0139), and LTCHs would additionally report as part of
that measure other acquired central line-associated bloodstream
infections. As a result, duplication of data submission of the same
MRSA bacteremia event for these two measures would be eliminated and
only a single bacteremia outcome measure would be publicly reported on
LTCH Compare.
Therefore, we are proposing to remove the NHSN Facility-wide
Inpatient Hospital-onset MRSA Bacteremia Outcome Measure (NQF #1716)
from the LTCH QRP beginning with the FY 2020 LTCH QRP under: (1) Factor
6, a measure that is more strongly associated with desired patient
outcomes for the particular topic is available; and (2) proposed
measure removal Factor 8, the costs associated with a measure outweigh
the benefit of its continued use in the program.
If finalized as proposed, LTCHs would no longer be required to
submit data on this measure for the purposes of the LTCH QRP beginning
with October 1, 2018 admissions and discharges.
We are inviting public comment on this proposal.
b. Proposed Removal of the National Healthcare Safety Network (NHSN)
Ventilator-Associated-Event (VAE) Outcome Measure
We are proposing to remove the National Healthcare Safety Network
(NHSN) Ventilator-Associated Event (VAE) Outcome Measure from the LTCH
QRP beginning with the FY 2020 LTCH QRP based on Factor 6, a measure
that is more strongly associated with desired patient outcomes for the
particular topic is available.
We finalized the National Healthcare Safety Network (NHSN)
Ventilator-Associated Event (VAE) Outcome Measure in the FY 2015 IPPS/
LTCH PPS final rule (79 FR 50301 through 50305) to assess whether LTCHs
monitor ventilator use and identify improvements in preventing
complications associated with mechanical ventilation. We have also
adopted for the LTCH QRP three other assessment-based quality measures
on the topic of ventilator support: (1) Functional Outcome Measure:
Change in Mobility among Long-Term Care Hospital Patients Requiring
Ventilator Support (NQF #2632) (79 FR 50298 through 50301); (2)
Compliance with Spontaneous Breathing Trials (SBT) by Day 2 of the LTCH
Stay (82 FR 38439 through 38443); and (3) Ventilator Liberation Rate
(82 FR 38443 through 38446).
We believe that these three other assessment-based quality measures
are more strongly associated with desired patient outcomes than the
National Healthcare Safety Network (NHSN) Ventilator-Associated Event
(VAE) Outcome Measure that we are proposing to remove. The three
assessment-based measures assess activities that reduce the potential
for serious complications and other adverse events as a result of
mechanical ventilation. Specifically, the Functional Outcome Measure:
Change in Mobility among Long-Term Care Hospital Patients Requiring
Ventilator Support (NQF #2632) focuses on improvement in functional
mobility for patients requiring mechanical ventilation. The Compliance
with SBT by Day 2 of the LTCH Stay measure focuses on successfully
liberating patients from mechanical ventilation as soon as possible,
which reduces the risk associated with events as a result of prolonged
ventilator support. The Ventilator Liberation Rate measure assesses
whether the patient was fully liberated from mechanical ventilation at
discharge. Together, these three ventilator-related assessment-based
quality measures assess positive outcomes and track patient goals of
avoiding adverse outcomes associated with mechanical ventilation and
successful ventilator weaning.
The inclusion in the LTCH QRP measure set of these three
ventilator-related assessment-based measures, which focus on quality of
care through promotion of positive outcomes, have reduced poor outcomes
associated with the complications of ventilator care, which is the same
focus of the National Healthcare Safety Network (NHSN) Ventilator-
Associated Event (VAE) Outcome Measure (for example, worsening
oxygenation, infection or inflammation, ventilator-associated
pneumonia, or even death). As a result, we do not believe that it is
necessary to retain all four of these measures in the LTCH QRP. By
retaining the three ventilator-related assessment-based measures but
removing the National Healthcare Safety Network (NHSN) Ventilator-
Associated Event (VAE) Outcome Measure, we believe that we can focus
our mechanical ventilation topic measures on measures that promote
positive outcomes while indirectly promoting a reduction in ventilator
support complications.
For these reasons, we are proposing to remove the National
Healthcare Safety Network (NHSN) Ventilator-Associated Event (VAE)
Outcome Measure from the LTCH QRP beginning with the FY 2020 LTCH QRP
under Factor 6, the measure that is more strongly associated with
desired patient outcomes for the particular topic is available.
If finalized as proposed, LTCHs would no longer be required to
submit data on this measure for the purposes of the LTCH QRP beginning
with October 1, 2018 admissions and discharges.
c. Proposed Removal of the Percent of Residents or Patients Who Were
Assessed and Appropriately Given the Seasonal Influenza Vaccine (Short
Stay) (NQF #0680) Measure
We are proposing to remove the process measure, Percent of
Residents or Patients Who Were Assessed and Appropriately Given the
Seasonal Influenza Vaccine (Short Stay) (NQF #0680), beginning with the
FY 2021 LTCH QRP under proposed measure removal Factor 8, the costs
associated with a measure outweigh the benefit of its continued use in
the program.
This process measure reports the percentage of stays in which a
patient was assessed and appropriately given the influenza vaccine for
the most recent influenza vaccination season and was adopted in the FY
2013 IPPS/LTCH PPS final rule (77 FR 53624 through 53627) to assess
vaccination rates among older adults with the goal of reducing the
incidence of influenza in this population. Specifically, adoption of
the measure in the LTCH QRP was intended to act as a safeguard for
patients who did not receive vaccinations prior to admission to an
LTCH, since many patients receiving care in the LTCH setting are older
adults, those 65 years and older, considered to be the target
population for the influenza vaccination.
In our evaluation of the LTCH QRP measure set, our analysis of this
particular measure revealed that for the 2016-2017 influenza season,
nearly every patient was assessed by the LTCH upon admission and that
less than 0.04 percent of patients were not assessed for

[[Page 20515]]

the vaccination. Of those assessed, the data show that most patients
who could receive the vaccine had already received the vaccine outside
of the LTCH facility, prior to admission.
In addition, we have heard from stakeholders that the data
collection associated with this measure is administratively costly and
burdensome for LTCHs, and that the process of assessing whether
vaccination is needed is often a duplicative process for patients who
were already screened during their proximal stay at an acute care
facility. We believe that removing this measure would reduce provider
costs and burden by eliminating duplicative patient assessments across
healthcare settings, minimizing data collection and reporting, and
avoiding potentially confusing public reporting of other influenza-
related quality measures, such as the Influenza Vaccination Coverage
Among Healthcare Personnel (NQF #0431) measure.
We recognize that influenza is a major public health issue.
However, based on our analysis of the Percent of Residents or Patients
Who Were Assessed and Appropriately Given the Seasonal Influenza
Vaccine (Short Stay) (NQF #0680) measure, including data showing that
most LTCH patients are vaccinated before they are admitted to the LTCH,
we believe that LTCH patients will continue to be assessed and
immunized when appropriate in the absence of this measure. As a result,
removal of this measure would alleviate the operational costs and
burden that LTCHs currently incur with respect to collecting the data
necessary to report this measure.
Therefore, we are proposing to remove this measure from the LTCH
QRP beginning with the FY 2021 LTCH QRP under proposed measure removal
Factor 8, the costs associated with a measure outweigh the benefit of
its continued use in the program.
If finalized as proposed, LTCHs would no longer be required to
report the data elements necessary to calculate this measure beginning
with October 1, 2018 \367\ admissions and discharges. We plan to remove
the data elements from the LTCH CARE Data Set as soon as feasible.
Beginning with October 1, 2018 admissions and discharges, LTCHs should
enter a dash ( - ) for O0250A, O0250B, and O0250C until the next LTCH
CARE Data Set is released.
---------------------------------------------------------------------------

\367\ The October 1, 2018 date is proposed as the date in which
LTCHs would no longer be required to report the data elements
necessary to calculate this measure because the influenza
vaccination season for the Percent of Residents or Patients Who Were
Assessed and Appropriately Given the Seasonal Influenza Vaccine
(Short Stay) (NQF #0680) measure begins October 1, 2018 and ends
March 31, 2019, and includes all patients who were in an LTCH for
one or more days during the influenza vaccination season.
---------------------------------------------------------------------------

We are inviting public comment on this proposal.
6. IMPACT Act Implementation Update
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38449), we stated
that we intended to specify two measures that would satisfy the domain
of accurately communicating the existence and provision of the transfer
of health information and care preferences under section 1899B(c)(1)(E)
of the Act no later than October 1, 2018, and intended to propose to
adopt them for the FY 2021 LTCH QRP with data collection beginning on
or about April 1, 2019.
As a result of the input provided during a public comment period
initiated by our contractor between November 10, 2016 and December 11,
2016, input provided by a technical expert panel (TEP) convened by our
contractor, and pilot measure testing conducted in 2017, we are
engaging in continued development work on these two measures, including
supplementary measure testing and providing the public with an
opportunity for comment in 2018. Further, we expect to reconvene a TEP
for these measures in mid-2018. We now intend to specify the measures
under section 1899B(c)(1)(E) of the Act no later than October 1, 2019
and intend to propose to adopt the measures for the FY 2022 LTCH QRP,
with data collection beginning with April 1, 2020 admissions and
discharges. For more information on the pilot testing, we refer readers
to: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
7. Form, Manner, and Timing of Data Submission Under the LTCH QRP
Under our current policy, LTCHs report data on LTCH QRP assessment-
based measures and standardized patient assessment data by reporting
the designated data elements for each applicable patient on the LTCH
CARE Data Set patient assessment instrument and then submitting the
completed instruments to CMS using the Quality Improvement and
Evaluation System (QIES) Assessment and Submission Processing (ASAP)
system. Data on LTCH QRP measures that are also collected by the
Centers for Disease Control and Prevention (CDC) for other purposes are
reported by LTCHs to the CDC through the NHSN, and the CDC then
transmits the relevant data to CMS. We refer readers to the FY 2018
IPPS/LTCH PPS final rule (82 FR 38454 through 38456) for the data
collection and submission timeframes that we finalized for the LTCH
QRP.
We are seeking input on whether we should move the implementation
date of any new version of the LTCH CARE Data Set from the usual
release date of April to October in the future.
We are inviting public comment on this topic.
8. Proposed Changes to the LTCH QRP Reconsideration Requirements
Section 412.560(d)(1) of our regulations states that CMS will send
an LTCH written notification of a decision of noncompliance with the
measures data and standardized patient assessment data reporting
requirements for a particular fiscal year. It also states that CMS will
use the QIES ASAP system to provide notification of noncompliance to
the LTCH.
We are proposing to revise Sec. 412.560(d)(1) to expand the
methods by which we would notify an LTCH of noncompliance with the LTCH
QRP requirements for a program year. Revised Sec. 412.560(d)(1) would
state that we would notify LTCHs of noncompliance with the LTCH QRP
requirements via a letter sent through at least one of the following
notification methods: The QIES ASAP system, the United States Postal
Service, or via an email from the Medicare Administrative Contractor
(MAC). We believe this change will address the feedback from providers
requesting additional methods for notification.
We are also proposing to revise Sec. 412.560(d)(3) to clarify that
we will notify LTCHs, in writing, of our final decision regarding any
reconsideration request using the same notification process.
We are inviting public comments on these proposals.

D. Proposed Changes to the Medicare and Medicaid EHR Incentive Programs
(Now Referred to as the Medicare and Medicaid Promoting
Interoperability Programs)

1. Background
The HITECH Act (Title IV of Division B of the ARRA, together with
Title XIII of Division A of the ARRA) authorizes incentive payments
under Medicare and Medicaid for the adoption and meaningful use of
certified electronic health record technology (CEHRT). Incentive
payments under Medicare are available to eligible hospitals and CAHs
for certain payment years (as authorized under sections 1886(n) and
1814(l) of

[[Page 20516]]

the Act, respectively) if they successfully demonstrate meaningful use
of CEHRT, which includes reporting on clinical quality measures (CQMs
or eCQMs) using CEHRT. Incentive payments are available to Medicare
Advantage (MA) organizations under section 1853(m)(3) of the Act for
certain affiliated hospitals that meaningfully use CEHRT.
Sections 1886(b)(3)(B)(ix) and 1814(l)(4) of the Act also establish
downward payment adjustments under Medicare, beginning with FY 2015,
for eligible hospitals and CAHs that do not successfully demonstrate
meaningful use of CEHRT for certain associated reporting periods.
Section 1853(m)(4) of the Act establishes a negative payment adjustment
to the monthly prospective payments of a qualifying MA organization if
its affiliated eligible hospitals are not meaningful users of certified
EHR technology, beginning in 2015. Section 1903(a)(3)(F)(i) of the Act
establishes 100 percent Federal financial participation (FFP) to States
for providing incentive payments to eligible Medicaid providers
(described in section 1903(t)(2) of the Act) to adopt, implement,
upgrade and meaningfully use CEHRT.
2. Renaming the EHR Incentive Program
The Medicare and Medicaid EHR Incentive Programs has historically
been broken into three stages primarily focused on data capture and
sharing, advanced clinical processes, and improved outcomes. In this
proposed rule, we are proposing scoring and measurement policies to
move beyond the three stages of meaningful use to a new phase of EHR
measurement with an increased focus on interoperability and improving
patient access to health information. To better reflect this focus, we
are renaming the Medicare and Medicaid EHR Incentive Programs to the
Promoting Interoperability (PI) Programs, and the new name will apply
for Medicare fee-for-service, Medicare Advantage, and Medicaid. We
believe this change will help highlight the enhanced goals of the
program and better contextualize the program changes discussed in the
following sections. We also note that the former name, Medicare and
Medicaid EHR Incentive Programs, does not adequately reflect the
current status of the programs, as the incentive payments under
Medicare generally have ended (with the exception of subsection (d)
Puerto Rico hospitals as discussed in section VIII.D.10. of the
preamble of this proposed rule) and will end under Medicaid in 2021.
3. Certification Requirements Beginning in 2019
In the October 16, 2015 final rule titled ``Medicare and Medicaid
Programs; Electronic Health Record Incentive Program--Stage 3 and
Modifications to Meaningful Use in 2015 Through 2017; Final Rule'' (80
FR 62761 through 62955) (hereafter referred to as the ``2015 EHR
Incentive Programs final rule''), we adopted a final policy regarding
which Edition of CEHRT must be used by EPs, eligible hospitals, and
CAHs for the EHR Incentive Programs, which was reflected in the
definition of CEHRT under Sec. 495.4 (80 FR 62871 through 62875).
Under this policy, starting with 2018, all EPs, eligible hospitals, and
CAHs would be required to use technology certified to the 2015 Edition
to demonstrate meaningful use for an EHR reporting period in 2018 and
subsequent years (80 FR 62873 through 62875). We subsequently finalized
in the FY 2018 IPPS/LTCH PPS final rule certain changes to the policy
that would allow for CEHRT flexibility in 2018, allowing health care
providers in the Medicare and Medicaid EHR Incentive Programs to use
either the 2014 or 2015 Edition of CEHRT, or a combination of both
Editions, in 2018 (82 FR 38490 through 38493). This flexibility would
give additional time to health care providers who may need to update,
implement, and optimize the technology certified to the 2015 Edition
and was only allowed for 2018. Beginning with the EHR reporting period
in CY 2019, the 2015 Edition of CEHRT is required pursuant to the
definition of CEHRT under Sec. 495.4. We are not proposing to change
this policy, and, as discussed below, we continue to believe it is
appropriate to require the use of 2015 Edition CEHRT beginning in CY
2019. In reviewing the state of health information technology, it is
clear the 2014 Edition certification criteria are out of date and
insufficient for provider needs in the evolving health IT industry. It
would be beneficial to health IT developers and health care providers
to move to more up-to-date standards and functions that better support
interoperable exchange of health information and improve clinical
workflows.
The 2014 Edition CEHRT, which was first issued in regulations in
2012, now includes standards that are significantly out of date, which
can impose artificial limits on interoperability and the access,
exchange, and use of health information. Moving from certifying to the
2014 Edition to certifying to the 2015 Edition would also eliminate the
inconsistencies that are inherent with maintaining and implementing two
separate certification programs. In the last calendar year, the number
of new and unique 2014 Edition products have been declining, showing
that the market acknowledges the shift toward newer and more effective
technologies. The vast majority of 2014 Edition certifications are for
inherited certified status. The resulting legacy systems, while
certified to the 2014 Edition, are not the most up-to-date and detract
from health information technology's (IT's) goal of increasing
interoperability and increasing the access, exchange, and use of health
data.
Prolonging backwards compatibility of newer products to legacy
systems causes market fragmentation. Health IT stakeholders noted the
impact of system fragmentation on the cost to develop and maintain
health IT connectivity to support data exchange, develop products to
support specialty clinical care, and integrate software supporting
administrative and clinical processes. As previously stated, a large
proportion of the sector is ready to solely use the 2015 Edition;
maintaining a requirement to keep both certification editions
contributes to market fragmentation, which heightens implementation
costs for health IT developers, hospitals, and health care providers.
Developers and consumers that are required to maintain two different
certification editions, spend large amounts of money on the
recertification of older products, which diverts resources from the
development, maintenance, and implementation of more advanced
technologies, including the 2015 Edition of CEHRT.
In addition to the monetary savings of the 2015 Edition, there will
also be an impactful reduction of burden across many settings. Eligible
hospitals and CAHs will see a reduction in burden through relief from
being required to certify to a legacy system, and can use the 2015
Edition to better streamline workflows and utilize more comprehensive
functions to meet patient safety goals and improve care coordination
across the continuum. Maintaining only one edition of certification
requirements would also reduce the burden for health IT developers as
well as ONC-authorized testing laboratories and certification bodies
because they would no longer have to support two, increasingly distant
sets of requirements.
One of the major improvements in the 2015 Edition is the
application programming interface (API) functionality. The API
functionality supports health care providers and patient electronic
access to health information. These functions allow for

[[Page 20517]]

patient data to move between systems and assist patients with making
key decisions about their health care. The functions also contribute to
quality improvement and greater interoperability between systems. The
API has the ability to complement a specific provider branded patient
portal or could also potentially make one unnecessary if patients are
able to use software applications designed to interact with an API that
could support their ability to view, download, and transmit their
health information to a third party (80 FR 62842). Furthermore, the API
allows for third-party application usage with more flexibility and
smoother workflow from various systems than what is often found in many
current patient portals.
The 2015 Edition also includes certification criterion specifying a
core set of data that health care providers have noted are critical to
interoperable exchange and can be exchanged across a wide variety of
other settings and use cases, known as the Common Clinical Data Set (C-
CDS) (80 FR 62603). The US Core Data for Interoperability (USCDI)
builds off the Common Clinical Data Set definition adopted for the 2015
Edition of certified health IT and referenced in the EHR Incentive
Program, for instance as the data which must be included in a summary
care record. The USCDI aims to support the goals set forth in the 21st
Century Cures Act by specifying a common set of data classes that are
required for interoperable exchange and identifying a predictable,
transparent, and collaborative process for achieving those goals. The
USCDI is referenced by the Draft Trusted Exchange Framework,\368\ which
is intended to enable HINs and Qualified HINs to securely exchange
electronic health information in support of a range permitted purposes,
including treatment, payment, operations, individual access, public
health, and benefits determination.
---------------------------------------------------------------------------

\368\ https://www.healthit.gov/sites/default/files/draft-trusted-exchange-framework.pdf.
---------------------------------------------------------------------------

We also note that the Provide Patient Access measure's technical
requirements are updated in the 2015 Edition and support health care
providers' interest in providing patients with access to their data in
a manner that is helpful to the patient and aligns with the API
requirement in the Promoting Interoperability Program. This includes a
new function that supports patient access to their health information
through email transmission to any third party the patient chooses and
through a second encrypted method of transmission. As discussed above
the increased interoperability in this requirement provides patients
more control of their health data to inform the decisions that they
make regarding their health.
The 2015 Edition also includes a revised requirement that products
must be able to export data from one patient, a set of patients, or a
subset of patients, which is responsive to health care provider
feedback that their data is unable to carry over from a previous EHR.
The 2014 Edition did not include a requirement that the vendor allow
the health care provider to export the data themselves. In the 2015
Edition, the health care provider has the autonomy to export data
themselves without intervention by their vendor, resulting in increased
interoperability and data exchange in the 2015 Edition.
In efforts to track certification readiness for the 2015 Edition,
the Office of the National Coordinator for Health Information
Technology (ONC) considers the number of health care providers likely
to be served by the developers seeking certification under the ONC
Health IT Certification Program in real time as the testing and
certification process progresses. The ONC considers trends within the
industry when projecting for 2015 Edition readiness. This is based on
the major developers who have a major share of the market. In working
with ONC we are able to identify the percent of eligible clinicians,
eligible hospitals and CAHs that have a 2015 Edition available to them
based on vendor readiness and information. As of the beginning of the
first quarter of CY 2018, ONC confirmed that at least 66 percent of
eligible clinicians and 90 percent of eligible hospitals and CAHs have
2015 Edition available based on previous EHR Incentive Programs
attestation data. Based on the data, and as compared to the transition
from 2011 Edition to 2014 Edition, it appears that the transition from
the 2014 Edition to the 2015 Edition is on schedule for the EHR
reporting period in CY 2019.
We note that this information is current as of the beginning of CY
2018, and based on historical data, we expect readiness to continue to
improve as developers and health care providers prepare for program
participation using the 2015 Edition in CY 2019.
We continue to recognize there is a burden associated with
development and deployment of new technology, but we believe requiring
use of the most recent version of CEHRT is important in ensuring health
care providers use technology that has improved interoperability
features and up-to-date standards to collect relevant patient health
information. The 2015 Edition includes key updates to functions and
standards that support improved interoperability and clinical
effectiveness through the use of health IT.
4. Proposed Revisions to the EHR Reporting Period in 2019 and 2020
We continue to receive feedback from EPs, eligible hospitals,
hospital associations, and other clinical associations indicating that
additional time will be necessary for testing and implementation of the
new API functionality requirement for Stage 3. These organizations cite
both an inability to meet the required timeframe for implementation of
Stage 3 and the complexity of the new functionality and associated
requirements for the Patient Electronic Access to Health Information
(80 FR 62841 through 62846) and Coordination of Care Through Patient
Engagement (80 FR 62846 through 62852) objectives.
API functionality supports health care providers and patient
electronic access to health information, which is key to improving the
free flow of health information, interoperability, quality improvement,
and patient engagement. This functionality is included as part of the
2015 Edition base EHR definition (and thus must be part of CEHRT) (80
FR 62675 through 62676), and we believe that the access APIs permit may
prove valuable in many ways. For example, APIs may be enabled by a
health care provider or organization to facilitate their own use of
third party applications within their CEHRT, such as for quality
improvement. An API could also be enabled by a health care provider to
give patients access to their health information through a third-party
application with more flexibility than is often found in many current
patient portals. From the health care provider perspective, an API
could complement a specific provider branded patient portal or could
also potentially make one unnecessary if patients are able to use
software applications designed to interact with an API that could
support their ability to view, download, and transmit their health
information to a third party (80 FR 62842). We want to ensure that
health care providers have the opportunity to thoroughly test their
systems and make adjustments in order to successfully attest for the
EHR reporting periods in CYs 2019 and 2020. In addition, we believe
that health care providers may need extra time to fully implement and
test workflows with the 2015 Edition of CEHRT, which is required
beginning in CY 2019, as well as the current proposal to require use of

[[Page 20518]]

an API to incorporate patient data in the Provide Patients Electronic
Access to Their Health Information measure discussed in section
VIII.D.6.d.(1) of the preamble of this proposed rule.
We also are proposing in section VIII.D.5. of the preamble of this
proposed rule an updated scoring methodology for eligible hospitals and
CAHs that would begin in 2019, as well as two new opioid measures and
one new health information exchange measure that we believe eligible
hospitals and CAHs will want to report on as soon as those measures are
available in their CEHRT. We want to provide flexibility to health care
providers as they are becoming familiar with the new scoring
methodology and measures that we are proposing, as well as adequate
development time for EHR developers and vendors to test and incorporate
the new scoring system and measures for deployment and implementation.
Therefore, we are proposing changes to the EHR reporting periods in
2019 and 2020 and believe the changes would result in a reduction in
burden on health care providers and EHR developers and vendors. We are
proposing these changes for 2019 and 2020 as we believe it may take
more than one year for eligible hospitals and CAHs to adjust to the new
scoring methodology proposed in section VIII.D.5. of the preamble of
this proposed rule.
For the reasons discussed earlier, we are proposing the EHR
reporting periods in 2019 and 2020 for new and returning participants
attesting to CMS or their State Medicaid agency would be a minimum of
any continuous 90-day period within each of the calendar years 2019 and
2020. This would mean that EPs that attest to a State for the State's
Medicaid Promoting Interoperability Program and eligible hospitals and
CAHs attesting to CMS or the State's Medicaid Promoting
Interoperability Program would attest to meaningful use of CEHRT for an
EHR reporting period of a minimum of any continuous 90-day period from
January 1, 2019 through December 31, 2019 and from January 1, 2020
through December 31, 2020, respectively.
The applicable incentive payment year and payment adjustment years
for the EHR reporting periods in 2019 and 2020, as well as the
deadlines for attestation and other related program requirements, would
remain the same as established in prior rulemaking. We are proposing
corresponding changes to the definition of ``EHR reporting period'' and
``EHR reporting period for a payment adjustment year'' at 42 CFR 495.4.
We are inviting public comment on our proposal.
5. Proposed Scoring Methodology for Eligible Hospitals and CAHs
Attesting Under the Medicare Promoting Interoperability Program
a. Background
Section 1886(n)(3) of the Act establishes criteria for an eligible
hospital or CAH to be considered a meaningful EHR user for the Medicare
Promoting Interoperability Program. Prior to the enactment of the
Bipartisan Budget Act of 2018 (Pub. L. 115-123), section 1886(n)(3)(A)
of the Act required the Secretary to seek to improve the use of
electronic health records and health care quality over time by
requiring more stringent measures of meaningful use. This resulted in
three separate stages of meaningful use requirements, each with
increasing stringency of reporting requirements. The July 28, 2010
final rule titled, ``Medicare and Medicaid Programs; Electronic Health
Record Incentive Program'' (75 FR 44313 through 44588), hereafter
referred to as the ``Stage 1 final rule,'' established the foundation
for the Medicare and Medicaid EHR Incentive Programs by outlining the
applicable meaningful use criteria and finalizing core and menu
objectives for EPs, eligible hospitals, and CAHs, including
establishing requirements for the electronic capture of clinical data,
and providing patients with electronic copies of their health
information (75 FR 44313 through 44588). In the September 4, 2012 final
rule titled ``Medicare and Medicaid Programs; Electronic Health Record
Incentive Program--Stage 2'' (77 FR 53967 through 54162), hereafter
referred to as the ``Stage 2 final rule,'' we focused on the next goal:
The exchange of essential health data among health care providers and
patients to improve care coordination. Lastly, the 2015 EHR Incentive
Programs final rule established a single set of objectives and measures
that increased stringency by requiring patient action measures and
increasing measure thresholds, which contributed to the goal of
widespread adoption and advanced use of electronic health record
technology for Stage 3 in 2017 and subsequent years (80 FR 62762
through 62915). The provision in section 1886(n)(3)(A) of the Act
requiring more stringent measures of meaningful use over time was
subsequently removed by section 50413 of the Bipartisan Budget Act of
2018.
As we considered the future direction of EHR reporting for the
Promoting Interoperability Program, we considered how to increase the
focus of EHR reporting on interoperability and sharing data with
patients. We also considered the history of the program stages, as well
as the increased flexibility provided by the Bipartisan Budget Act of
2018. In light of these considerations, we are proposing a new scoring
methodology that reduces burden and provides greater flexibility to
hospitals while focusing on increased interoperability and patient
access.
We have received feedback from hospitals and hospital associations
that the current meaningful use requirements are not always meaningful
to them and detract from their ability to provide care to their
patients. They have further suggested, through inquiries and listening
sessions, that the requirement to meet all of the measures has been
administratively burdensome, particularly those that require patient
action. These stakeholders believe there is a critical need for
interoperability and have expressed a desire to use CEHRT to further
patient outcomes, but believe the current program structure constrains
their ability to implement more interoperable practices and deliver
quality care. An example of this feedback came from hospitals and
hospital associations regarding the View, Download or Transmit (VDT)
measure which requires at least one unique patient (or their authorized
representative) discharged from the eligible hospital or CAH to access
their health information through the use of an API, view, download or
transmit their health information to a third party or a combination of
both. These hospitals and hospital associations have indicated that,
although they can encourage their patients to access their data
electronically and through this type of platform, it is beyond their
control to require such action. They further indicated that they are
unable to require patients to perform actions that patients do not feel
accustomed to, and that certain patient populations are not comfortable
with such actions.
In addition, through our listening sessions we found that certain
rural hospitals find it more challenging to meet all of the measure
thresholds and requirements due to financial limitations. Many of these
rural hospitals expressed an interest in fully participating in the
Medicare EHR Incentive Program, but stated they are only able to meet a
subset of the objectives and measures. They stated that a new scoring
and reporting structure that would allow them to focus on their patient
population would help them successfully participate in the program.

[[Page 20519]]

Based on this feedback and the recent statutory changes, we are
proposing a new performance-based scoring methodology with fewer
measures, and moving away from the threshold-based methodology that we
currently use. We believe this change would provide a more flexible,
less burdensome structure, allowing eligible hospitals and CAHs to put
their focus back on patients. The introduction of a performance-based
scoring methodology would continue to encourage hospitals to push
themselves on measures that we continue to hear are most applicable to
how they deliver care to patients, instead of increasing thresholds on
measures that may not be as applicable to an individual hospital. Our
goal is to provide increased flexibility to eligible hospitals and CAHs
without compromising the integrity of the Medicare Promoting
Interoperability Program and enable them to focus more on patient care
and health data exchange through interoperability.
We are proposing the performance-based scoring methodology would
apply to eligible hospitals and CAHs that submit an attestation to CMS
under the Medicare Promoting Interoperability Program beginning with
the EHR reporting period in CY 2019. This would include ``Medicare-
only'' eligible hospitals and CAHs (those that are eligible for an
incentive payment under Medicare for meaningful use of CEHRT and/or
subject to the Medicare payment reduction for failing to demonstrate
meaningful use) as well as ``dual-eligible'' eligible hospitals and
CAHs (those that are eligible for an incentive payment under Medicare
for meaningful use of CEHRT and/or subject to the Medicare payment
reduction for failing to demonstrate meaningful use, and are also
eligible to earn a Medicaid incentive payment for meaningful use).
We are not proposing to apply the performance-based scoring
methodology to ``Medicaid-only'' eligible hospitals (those that are
only eligible to earn a Medicaid incentive payment for meaningful use
of CEHRT, and are not eligible for an incentive payment under Medicare
for meaningful use and/or subject to the Medicare payment reduction for
failing to demonstrate meaningful use) that submit an attestation to
their State Medicaid agency for the Medicaid Promoting Interoperability
Program. Instead, as discussed in section VIII.D.7. of the preamble of
this proposed rule, we are proposing to give States the option to adopt
the performance-based scoring methodology along with the measure
proposals discussed in section VIII.D.6. of the preamble of this
proposed rule for their Medicaid Promoting Interoperability Programs
through their State Medicaid HIT Plans.
To accomplish our goal of a performance-based program that reduces
burden while promoting interoperability, and taking into account the
feedback from our stakeholders, we outline a proposal using a
performance-based scoring methodology in the following sections of this
proposed rule. We believe the proposal promotes interoperability, helps
to maintain a focus on patients, reduces burden and provides greater
flexibility. The proposal takes an approach that weighs each measure
based on performance, and allows eligible hospitals and CAHs to
emphasize measures that are most applicable to their care delivery
methods, while putting less emphasis on those measures that may be less
applicable.
If we do not finalize a new scoring methodology, we would maintain
the current Stage 3 methodology with the same objectives, measures and
requirements, but we would include the two new opioid measures proposed
in section VIII.D.6.b. of the preamble of this proposed rule, if
finalized. The current structure of the Stage 3 objectives and measures
under Sec. 495.24(c) for eligible hospitals and CAHs attesting to CMS
requires them to report on six objectives that include 16 measures.
This structure requires the eligible hospital or CAH to report on all
measures and meet the thresholds for most of the measures or claim an
exclusion as part of demonstrating meaningful use to avoid the payment
adjustment, or to earn an incentive in the case of subsection (d)
Puerto Rico hospitals. A general summary overview of the current
objectives, measures, and reporting requirements is included in the
table below.

Existing Stage 3 Objectives, Measures and Reporting Requirements for the
Medicare EHR Incentive Program for Eligible Hospitals and CAHs
------------------------------------------------------------------------
Measure (stage 3 Reporting
Objective threshold) requirement
------------------------------------------------------------------------
Protect Patient Health Security Risk Analysis Report.
Information. (Yes/No).
Electronic Prescribing........ e-Prescribing (>25%).. Report and meet
threshold.
Patient Electronic Access to Provide Patient Access Report and meet
Health Information. (>50%). thresholds.
Patient Specific
Education (>10%).
Coordination of Care Through View, Download or Report all, but
Patient Engagement. Transmit (at least only meet the
one patient). threshold for
Secure Messaging (>5%) two.
Patient Generated
Health Data (>5%).
Health Information Exchange... Send a Summary of Care Report all, but
(>10%). only meet the
Request/Accept Summary threshold for
of Care (>10%). two.
Clinical Information
Reconciliation (>50%).
Public Health and Clinical Immunization Registry Report Yes/No to
Data Registry Reporting. Reporting. Three
Syndromic Surveillance Registries.
Reporting.
Electronic Case
Reporting.
Public Health Registry
Reporting.
Clinical Data Registry
Reporting.
Electronic Reportable
Laboratory Result
Reporting.
------------------------------------------------------------------------

b. Proposed Performance-Based Scoring Methodology
We are proposing a new scoring methodology to include a combination
of new measures, as well as the existing Stage 3 measures of the EHR
Incentive Program, broken into a smaller set of four objectives and
scored based on performance and participation. We believe this is a
significant overhaul of the existing program requirements which include
six objectives, scored on a pass/fail basis. The smaller set of
objectives would include e-Prescribing, Health Information Exchange,
Provider to Patient Exchange, and Public Health and Clinical Data
Exchange. We are

[[Page 20520]]

proposing these objectives to promote specific HHS priorities. We
include the e-Prescribing and Health Information Exchange objectives in
part to capture what we believe are core goals for the 2015 Edition in
line with section 1886(n)(3)(A) of the Act. These core goals promote
interoperability between health care providers and health IT systems to
support safer, more coordinated care. The Provider to Patient Exchange
objective promotes patient awareness and involvement in their health
care through the use of APIs, and ensures patients have access to their
medical data. Finally, the Public Health and Clinical Data Exchange
objective supports the ongoing systematic collection, analysis, and
interpretation of data that may be used in the prevention and
controlling of disease through the estimation of health status and
behavior. The integration of health IT systems into the national
network of health data tracking and promotion improves the efficiency,
timeliness, and effectiveness of public health surveillance. We believe
it is important to keep these core goals, primarily because these
objectives promote interoperability between health care providers and
health IT systems to support safer, more coordinated care while
ensuring patients have access to their medical data.
Under the proposed scoring methodology, eligible hospitals and CAHs
would be required to report certain measures from each of the four
objectives, with performance-based scoring occurring at the individual
measure-level. Each measure would be scored based on the eligible
hospital or CAH's performance for that measure, except for the Public
Health and Clinical Data Exchange objective, which requires a yes/no
attestation. Each measure would contribute to the eligible hospital or
CAH's total Promoting Interoperability (PI) score. The scores for each
of the individual measures would be added together to calculate the
total Promoting Interoperability score of up to 100 possible points for
each eligible hospital or CAH. A total score of 50 points or more would
satisfy the requirement to report on the objectives and measures of
meaningful use under Sec. 495.24, which is one of the requirements for
an eligible hospital or CAH to be considered a meaningful EHR user
under Sec. 495.4 and thus earn an incentive payment and/or avoid a
Medicare payment reduction. Eligible hospitals and CAHs scoring below
50 points would not be considered meaningful EHR users.
While this approach maintains some of the same requirements of the
EHR Incentive Program, we note that we are proposing to reduce the
overall number of required measures from 16 to 6. We also note that the
measures we are proposing to include contribute to the goal of
increased interoperability and patient access, and no longer require
the burdensome predefined thresholds of the EHR Incentive Program, and
thus allow new flexibility for eligible hospitals and CAHs in how they
are scored. We believe this proposal allows eligible hospitals and CAHs
to achieve high performance in one area where they excel, in order to
offset performance in an area where they may need additional
improvement. In this manner we believe eligible hospitals and CAHs
could still be considered meaningful EHR users while continuing to
monitor their progress on each of the measures. This approach also
helps further promote interoperability by requiring all measures and
thus all forms of interoperability across the three objectives.
We also considered an alternative approach in which scoring would
occur at the objective level, instead of the individual measure level,
and eligible hospitals or CAHs would be required to report on only one
measure from each objective to earn a score for that objective. Under
this scoring methodology, instead of six required measures, the
eligible hospital or CAH's total Promoting Interoperability score would
be based on only four measures, one measure from each objective. Each
objective would be weighted similarly to how the objectives are
weighted in our proposed methodology, and bonus points would be awarded
for reporting any additional measures beyond the required four. We are
seeking public comment on this alternative approach, and whether
additional flexibilities should be considered, such as allowing
eligible hospitals and CAHs to select which measures to report on
within an objective and how those objectives should be weighted, as
well as whether additional scoring approaches or methodologies should
be considered.
In our proposed scoring methodology, the e-Prescribing objective
would contain three measures each weighted differently to reflect their
potential availability and applicability to the hospital community. In
addition to the existing e-Prescribing measure, we are proposing to add
two new measures to the e-Prescribing objective: Query of Prescription
Drug Monitoring Program (PDMP) and Verify Opioid Treatment Agreement.
For more information about these two proposed measures, we refer
readers to section VIII.D.6.b. of the preamble of this proposed rule.
The e-Prescribing measure would be required for reporting and weighted
at 10 points because we believe it would be applicable to most eligible
hospitals and CAHs. In the event that an eligible hospital or CAH meets
the criteria and claims the exclusion for the e-Prescribing measure in
2019, the 10 points available for that measure would be redistributed
equally among the measures under the Health Information Exchange
objective:
Support Electronic Referral Loops By Sending Health
Information Measure (25 points)
Support Electronic Referral Loops By Receiving and
Incorporating Health Information (25 points)
We are seeking public comment on whether this redistribution is
appropriate for 2019, or whether the points should be distributed
differently.
The Query of Prescription Drug Monitoring Program (PDMP) and Verify
Opioid Treatment Agreement measures would be optional for EHR reporting
periods in 2019. These new measures may not be available to all
eligible hospitals and CAHs for an EHR reporting period in 2019 as they
may not have been fully developed by their health IT vendor, or not
fully implemented in time for data capture and reporting. Therefore, we
are not proposing to require these two new measures in 2019, although
eligible hospitals and CAHs may choose to report them and earn up to 5
bonus points for each measure. We are proposing to require these
measures beginning with the EHR reporting period in 2020, and we are
seeking public comment on this proposal. We note that due to varying
State requirements, not all eligible hospitals and CAHs would be able
to e-prescribe controlled substances, and thus these measures would not
be available to them. For these reasons, we are proposing an exclusion
for these two measures beginning with the EHR reporting period in 2020.
The exclusion would provide that any eligible hospital or CAH that is
unable to report the measure in accordance with applicable law would be
excluded from reporting the measure, and the 5 points assigned to that
measure would be redistributed to the e-Prescribing measure.
As the two new opioid measures become more broadly available in
CEHRT, we are proposing each of the three measures within the e-
Prescribing objective would be worth 5 points beginning in 2020. We
note that requiring these two measures would add 10 points to the
maximum total score as these measures would no longer be eligible for
optional bonus points. To

[[Page 20521]]

maintain a maximum total score of 100 points, beginning with the EHR
reporting period in 2020, we are proposing to reweight the e-
Prescribing measure from 10 points down to 5 points, and reweight the
Provide Patients Electronic Access to Their Health Information measure
from 40 points down to 35 points as illustrated in the table below. We
are proposing that if the eligible hospital or CAH qualifies for the e-
Prescribing exclusion and is excluded from reporting all three of the
measures associated with the e-Prescribing objective as described in
section VIII.D.6.b. of the preamble of this proposed rule, the 15
points for the e-Prescribing objective would be redistributed evenly
among the two measures associated with the Health Information Exchange
objective and the Provide Patients Electronic Access to their Health
Information measure by adding 5 points to each measure.
We are seeking public comment on the proposed distribution of
points beginning with the EHR reporting period in 2020.
For the Health Information Exchange objective, we are proposing to
change the name of the existing Send a Summary of Care measure to
Support Electronic Referral Loops by Sending Health Information, and
proposing a new measure which combines the functionality of the
existing Request/Accept Summary of Care and Clinical Information
Reconciliation measures into a new measure, Support Electronic Referral
Loops by Receiving and Incorporating Health Information. For more
information about the proposed measure and measure changes, we refer
readers to section VIII.D.6.c. of the preamble of this proposed rule.
Eligible hospitals and CAHs would be required to report both of these
measures, each worth 20 points toward their total Promoting
Interoperability score. These measures are weighted heavily to
emphasize the importance of sharing health information through
interoperable exchange in an effort to promote care coordination and
better patient outcomes. Similar to the two new measures in the e-
Prescribing objective, the new Support Electronic Referral Loops by
Receiving and Incorporating Health Information measure may not be
available to all eligible hospitals and CAHs as it may not have been
fully developed by their health IT vendor, or not fully implemented in
time for an EHR reporting period in 2019. For these reasons, we are
proposing an exclusion for the Support Electronic Referral Loops by
Receiving and Incorporating Health Information measure: Any eligible
hospital or CAH that is unable to implement the measure for an EHR
reporting period in 2019 would be excluded from having to report this
measure.
In the event that an eligible hospital or CAH claims an exclusion
for the Support Electronic Referral Loops by Receiving and
Incorporating Health Information measure, the 20 points would be
redistributed to the Support Electronic Referral Loops by Sending
Health Information measure, and that measure would then be worth 40
points. We are seeking public comment on whether this redistribution is
appropriate, or whether the points should be redistributed to other
measures instead.
We are proposing to weigh the one measure in the Provider to
Patient Exchange objective, Provide Patients Electronic Access to Their
Health Information, at 40 points toward the total Promoting
Interoperability score in 2019 and 35 points beginning in 2020. We are
proposing that this measure would be weighted at 35 points beginning in
2020 to account for the two new opioid measures, which would be worth 5
points each beginning in 2020 as proposed above. We believe this
objective and its associated measure get to the core of improved access
and exchange of patient data in promoting interoperability and are the
crux of the Medicare Promoting Interoperability Program. This exchange
of data between health care provider and patient is imperative in order
to continue to improve interoperability, data exchange and improved
health outcomes. We believe that it is important for patients to have
control over their own health information, and through this highly
weighted objective we are aiming to show our dedication to this effort.
The measures under the Public Health and Clinical Data Exchange
objective are reported using yes/no responses and thus cannot be scored
based on performance. We are proposing that for this objective, the
eligible hospital or CAH would be required to meet this objective in
order to receive a score and be considered a meaningful user of EHR. We
are proposing that the eligible hospital or CAH will be required to
report the Syndromic Surveillance Reporting measure and one additional
measure of the eligible hospital or CAH's choosing from the following:
Immunization Registry Reporting, Electronic Case Reporting, Public
Health Registry Reporting, Clinical Data Registry Reporting, Electronic
Reportable Laboratory Result Reporting. We are proposing an eligible
hospital or CAH would receive 10 points for the objective if they
attest a ``yes'' response for both the Syndromic Surveillance Reporting
measure and one additional measure of their choosing. If the eligible
hospital or CAH fails to report either one of the two measures required
for this objective, the eligible hospital or CAH would receive a score
of zero for the objective, and a total score of zero for the Promoting
Interoperability Program. We understand that some hospitals may not be
able to report the Syndromic Surveillance Reporting measure, or may not
be able to report some of the other measures under this objective.
Therefore, we are proposing to maintain the current exclusions for
these measures that were finalized in previous rulemaking. If an
eligible hospital or CAH claims an exclusion for one or both measures
required for this objective, we are proposing the 10 points for this
objective would be redistributed to the Provide Patients Electronic
Access to their Health Information measure under the proposed Provider
to Patient Exchange objective, making that measure worth 50 points in
2019 and 45 points beginning in 2020. Reporting more than two measures
for this objective would not earn the eligible hospital or CAH any
additional points. We refer readers to section VIII.D.6.e. of the
preamble of this proposed rule in regards to the proposals for the
current Public Health and Clinical Data Exchange objective and its
associated measures.
The Stage 3 objective, Protect Patient Health Information, and its
associated measure, Security Risk Analysis, would remain part of the
program, but would no longer be scored as part of the objectives and
measures, and would not contribute to the hospital's total score for
the objectives and measures. To earn any score in the Promoting
Interoperability Program, we are proposing eligible hospitals and CAHs
would have to attest that they completed the actions included in the
Security Risk Analysis measure at some point during the calendar year
in which the EHR reporting period occurs. We believe the Security Risk
Analysis measure involves critical tasks and note that the Health
Insurance Portability and Accountability Act (HIPAA) Security Rule
requires covered entities to conduct a risk assessment of their health
care organization. This risk assessment will help eligible hospitals
and CAHs comply with HIPAA's administrative, physical, and technical
safeguards.\369\ Therefore, we believe that

[[Page 20522]]

every eligible hospital and CAH should already be meeting the
requirements for this objective and measure as they are required by
HIPAA. We still believe this objective and its associated measure is
imperative in ensuring the safe delivery of patient health data. As a
result, we would maintain the Security Risk Analysis measure as part of
the Promoting Interoperability Program, but we would not score the
measure. We are seeking public comment on whether the Security Risk
Analysis measure should remain part of the program as an attestation
with no associated score, or whether there should be points associated
with this measure.
---------------------------------------------------------------------------

\369\ https://www.hhs.gov/hipaa/for-professionals/security/guidance/.
---------------------------------------------------------------------------

Similar to how eligible hospitals and CAHs currently submit data,
the eligible hospital or CAH would submit their numerator and
denominator data for each performance measure, and a yes/no response
for each of the two reported measures under the proposed Public Health
and Clinical Data Exchange objective. To earn a score greater than
zero, in addition to completing the activities required by the Security
Risk Analysis measure, the hospital would submit their complete
numerator and denominator or yes/no data for all required measures. The
numerator and denominator for each performance measure would then
translate to a performance rate for that measure and would be applied
to the total possible points for that measure. For example, the e-
Prescribing measure is worth 10 points. A numerator of 200 and
denominator of 250 would yield a performance rate of (200/250) = 80
percent. This 80 percent would be applied to the 10 total points
available for the e-Prescribing measure to determine the performance
score. A performance rate of 80 percent for the e-Prescribing measure
would equate to a measure score of 8 points (performance rate * total
possible measure points = points awarded toward the total PI score; 80
percent*10 = 8 points). These calculations and application to the total
Promoting Interoperability score, as well as an example of how they
would apply, are set out in the tables below.
When calculating the performance rates and measure and objective
scores, we would generally round to the nearest whole number. For
example if an eligible hospital or CAH received a score of 8.53 the
nearest whole number would be 9. Similarly, if the eligible hospital or
CAH received a score of 8.33 the nearest whole number would be 8. In
the event that the eligible hospital or CAH receives a performance rate
or measure score of less than 0.5, as long as the eligible hospital or
CAH reported on at least one patient for a given measure, a score of 1
would be awarded for that measure. We believe this is the best method
for the issues that might arise with the decimal points and is the
easiest for computations.
In order to meet statutory requirements and HHS priorities, the
eligible hospital or CAH would need to report on all of the required
measures across all objectives in order to earn any score at all.
Failure to report any required measure, or reporting a ``no'' response
on a yes/no response measure, unless an exclusion applies would result
in a score of zero. We acknowledge that, in this way, the program still
maintains a certain ``all-or-nothing'' element. However, we are
proposing to reduce the total number of required measures from 16 to 6,
which we believe reduces burden, and to introduce a performance-based
scoring methodology, which provides flexibility not provided under the
existing Stage 3 scoring methodology. We are seeking public comment on
the proposed requirement to report on all required measures, or whether
reporting on a smaller subset of optional measures would be
appropriate.
As stated earlier, an eligible hospital or CAH would need to earn a
total Promoting Interoperability score of 50 points or more in order to
satisfy the requirement to report on the objectives and measures of
meaningful use under Sec. 495.4. Our aim is that every patient has
control of and access to their health data, and we believe that the
proposed minimum Promoting Interoperability score is consistent with
the current goals of the program that focus on interoperability and
providing patients access to their health information. Our vision is
for every eligible hospital and CAH to perform at 100 percent for all
of the objectives and associated measures. However, we understand the
constraints that health care providers face in providing care to
patients and seek to provide flexibility for hospitals to create their
own score using measures that are best suited to their practice. We
also believe it is important to be realistic about what can be
achieved. This required score may be adjusted over time as eligible
hospitals and CAHs adjust to the new focus and scoring methodology of
the Medicare Promoting Interoperability Program. We believe that the
50-point minimum Promoting Interoperability score provides the
necessary benchmark to encourage progress in interoperability and also
allows us to continue to adjust this benchmark as eligible hospitals
and CAHs progress in health IT. We believe that this approach allows
eligible hospitals and CAHs to achieve high performance in one area to
offset performance in an area where a participant may need additional
improvement. We are seeking public comment on whether this minimum
score is appropriate, or whether a higher or lower minimum score would
be better suited for the first year of this new scoring methodology.
We believe our proposal would increase flexibility and help to ease
the burden on eligible hospitals and CAHs as well as provide additional
options for meeting the required objectives. The proposed changes would
allow the eligible hospital or CAH to focus on the measures that are
more appropriate for the ways in which they deliver care to patients
and types of services that they provide and improve on areas in which
an eligible hospital or CAH might need some support. We believe that
with this new proposed approach we are reducing administrative burden
and allowing health care providers to focus more on their patients. The
tables below illustrate our proposal for the new scoring methodology
and an example of application of the proposed scoring methodology.

Proposed Performance-Based Scoring Methodology for EHR Reporting Periods
in 2019
------------------------------------------------------------------------
Objectives Measures Maximum points
------------------------------------------------------------------------
e-Prescribing................. e-Prescribing......... 10 points.
Bonus: Query of 5 points bonus.
Prescription Drug
Monitoring Program
(PDMP).
Bonus: Verify Opioid 5 points bonus.
Treatment Agreement.
Health Information Exchange... Support Electronic 20 points.
Referral Loops by
Sending Health
Information.
Support Electronic 20 points.
Referral Loops by
Receiving and
Incorporating Health
Information.
Provider to Patient Exchange.. Provide Patients 40 points.
Electronic Access to
Their Health
Information.

[[Page 20523]]

Public Health and Clinical Syndromic Surveillance 10 points.
Data Exchange. Reporting (Required).
Choose one or more
additional:.
Immunization Registry
Reporting.
Electronic Case
Reporting..
Public Health Registry
Reporting..
Clinical Data Registry
Reporting..
Electronic Reportable
Laboratory Result
Reporting..
------------------------------------------------------------------------

Proposed Performance-Based Scoring Methodology Beginning With EHR
Reporting Periods in 2020
------------------------------------------------------------------------
Objectives Measures Maximum points
------------------------------------------------------------------------
e-Prescribing................. e-Prescribing......... 5 points.
Query of Prescription 5 points.
Drug Monitoring
Program (PDMP).
Verify Opioid 5 points.
Treatment Agreement.
Health Information Exchange... Support Electronic 20 points.
Referral Loops by
Sending Health
Information.
Support Electronic 20 points.
Referral Loops by
Receiving and
Incorporating Health
Information.
Provider to Patient Exchange.. Provide Patients 35 points.
Electronic Access to
Their Health
Information.
Public Health and Clinical Syndromic Surveillance 10 points.
Data Exchange. Reporting (Required).
Choose one or more
additional:.
Immunization Registry
Reporting.
Electronic Case
Reporting..
Public Health Registry
Reporting..
Clinical Data Registry
Reporting..
Electronic Reportable
Laboratory Result
Reporting..
------------------------------------------------------------------------

We are seeking public comment on whether these measures are
weighted appropriately, or whether a different weighting distribution,
such as equal distribution across all measures would be better suited
to this program and this proposed scoring methodology. We are also
seeking public comment on other scoring methodologies such as the
alternative we considered and described earlier in this section.

Proposed Scoring Methodology Example
----------------------------------------------------------------------------------------------------------------
Numerator/ Performance
Objective Measures denominator rate Score
----------------------------------------------------------------------------------------------------------------
e-Prescribing................ e-Prescribing....... 200/250........... 80% 8 points.
Query of 150/175........... 86% 5 bonus points.
Prescription Drug
Monitoring Program.
Verify Opioid N/A............... N/A 0 points.
Treatment Agreement.
Health Information Exchange.. Support Electronic 135/185........... 73% 15 points.
Referral Loops by
Sending Health
Information.
Support Electronic 145/175........... 83% 17 points.
Referral Loops by
Receiving and
Incorporating
Health Information.
Provider to Patient Exchange. Provide Patients 350/500........... 70% 28 points.
Electronic Access
to Their Health
Information.
Public Health and Clinical Syndromic Yes............... N/A 10 points.
Data Exchange. Surveillance
Reporting
(Required).
Choose one or more
additional:.
Immunization
Registry Reporting.
Electronic Case
Reporting..
Public Health
Registry Reporting..
Clinical Data
Registry Reporting..
Electronic
Reportable
Laboratory Result
Reporting..
----------------------------------------------------------------------------------
Total Score.............. .................... .................. .............. 83 points.
----------------------------------------------------------------------------------------------------------------

As discussed earlier, if we do not finalize a new scoring
methodology, we would maintain the current Stage 3 methodology with the
same objectives, measures and requirements. However, we would include
the 2 new opioid measures, if finalized. We refer readers to section
VIII.D.6.b. and c. of the preamble of this proposed rule for a
discussion of the measure proposals. The table below provides a general
summary overview of what the Stage 3 objectives, measures, and
reporting requirements would be if we do not finalize a new scoring
methodology but we do finalize the two new opioid measures.

[[Page 20524]]

Stage 3 Objectives, Measures, and Reporting Requirements if New Scoring
Methodology Is Not Finalized But Two Opioid Measures Are Finalized
------------------------------------------------------------------------
Measure (stage 3 Reporting
Objective threshold) requirement
------------------------------------------------------------------------
Protect Patient Health Security Risk Analysis Report.
Information. (Yes/No).
Electronic Prescribing........ e-Prescribing (>25%).. Report all, but
Verify Opioid only meet the
Treatment Agreement threshold for
(at least one one.
patient) *.
Query of Prescription
Drug Monitoring
Program (at least one
patient). *
Patient Electronic Access to Provide Patient Access Report and meet
Health Information. (>50%). thresholds.
Patient Specific
Education (>10%).
Coordination of Care Through View, Download or Report all, but
Patient Engagement. Transmit (at least only meet the
one patient). threshold for
Secure Messaging two.
(>5%)..
Patient Generated
Health Data (>5%)..
Health Information Exchange... Send a Summary of Care Report all, but
(>10%). only meet the
Request/Accept Summary threshold for
of Care (>10%).. two.
Clinical Information
Reconciliation
(>50%).
Public Health and Clinical Immunization Registry Report Yes/No to
Data Registry Reporting. Reporting. Three
Syndromic Surveillance Registries.
Reporting..
Case Reporting........
Public Health Registry
Reporting.
Clinical Data Registry
Reporting..
Electronic Reportable
Laboratory Result
Reporting..
------------------------------------------------------------------------
* These measures included only if finalized.

We also are seeking public comment on the feasibility of the new
scoring methodology in 2019 and whether eligible hospitals and CAHs
would be able to implement the new measures and reporting requirements
under this performance-based scoring methodology. In addition, we note
that in section VIII.D.8. of the preamble of this proposed rule, we are
seeking public comment on how the Promoting Interoperability Program
should evolve in future years regarding the future of the new scoring
methodology and related aspects of the program.
We are proposing to codify the proposed new scoring methodology in
a new paragraph (e) under Sec. 495.24. We also are proposing to revise
the introductory text of Sec. 495.24 and the heading to paragraph (c)
of this section to provide that the criteria specified in proposed new
paragraph (e) would be applicable for eligible hospitals and CAHs
attesting to CMS for 2019 and subsequent years. Further, we are
proposing to revise the introductory text of Sec. 495.24 and the
heading to paragraph (d) of this section to provide that the criteria
specified in paragraph (d) would be applicable for eligible hospitals
and CAHs attesting to a State for the Medicaid Promoting
Interoperability Program for 2019 and subsequent years.
We are inviting public comments on our proposals.
6. Proposed Measures for Eligible Hospitals and CAHs Attesting Under
the Medicare Promoting Interoperability Program
a. Measure Proposal Summary Overview
As we noted in the preceding section in our discussion of the
proposed scoring methodology for eligible hospitals and CAHs, in
proposed Sec. 495.24(e) we are proposing to make a number of changes
to the Stage 3 measures under Sec. 495.24(c) beginning in CY 2019 and
subsequent years. As indicated in the scoring methodology section
VIII.D.5. of the preamble of this proposed rule, we are proposing three
new measures (Query of PDMP, Verify Opioid Treatment Agreement, and
Support Electronic Referral Loops by Receiving and Incorporating Health
Information) beginning with the EHR reporting period in CY 2019. We are
proposing that the Query of PDMP and Verify Opioid Treatment agreement
measures would be optional for EHR reporting periods in 2019 for
eligible hospitals and CAHs and bonus points may be earned for
reporting on them. We are proposing that the Support Electronic
Referral Loops by Receiving and Incorporating Health Information would
be required beginning in 2019 with an exclusion available. We are
proposing to require the Query of PDMP and Verify Opioid Treatment
Agreement measures beginning with the EHR reporting period in 2020, and
we are seeking public comment on this proposal. Our intent is to ensure
the measures better focus on the effective use of health IT,
particularly for interoperability, and to address concerns stakeholders
have raised through public forums and in public comments related to the
perceived burden associated with the current measures in the program.
In addition, we continue to evaluate and consider broader HHS and
CMS initiatives and priorities to advance health IT when considering
and proposing new measures or changes to existing measures. CMS has
identified certain priorities which align with the broader HHS
initiatives encouraging increased use of prescription drug monitoring
programs (PDMPs) to reduce inappropriate prescriptions, improve patient
outcomes and allow for more informed prescribing practices.\370\
---------------------------------------------------------------------------

\370\ https://www.hhs.gov/opioids/about-the-epidemic/;
https://www.healthit.gov/opioids.
---------------------------------------------------------------------------

As we noted above, section 50413 of the Bipartisan Budget Act of
2018 amended section 1886(n)(3)(A) of the Act to eliminate the
provision requiring more stringent measures of meaningful use. As a
result, we can now offer additional flexibilities and burden reduction
through various proposed methods including through combining, removing
and/or adding measure options that are applicable to other care
settings.
We are proposing to remove six measures. Two of the measures we are
proposing to remove--Request/Accept Summary of Care and Clinical
Information Reconciliation--would be replaced by the Support Electronic
Referral Loops by Receiving and Incorporating Health Information
measure, which combines the functionalities and goals of the two

[[Page 20525]]

Stage 3 measures it is replacing. Four of the measures--Patient-
Specific Education; Secure Messaging; View, Download or Transmit; and
Patient Generated Health Data--would be removed because they have
proven burdensome to health care providers in ways that were unintended
and detract from health care providers' progress on current program
priorities.
While the measures would no longer need to be attested to if we
finalize the proposal to remove them, health care providers may still
continue to use the standards and functions of those measures based on
their preferences and practice needs. We believe that this burden
reduction would enable health care providers to focus on measures that
further interoperability, the exchange of health care information, and
advances of innovation in the use of CEHRT.
We also are proposing to add three new measures. For the e-
Prescribing objective, we are proposing to add two new measures: Query
of Prescription Drug Monitoring Program (PDMP) and Verify Opioid
Treatment Agreement, both of which support HHS initiatives related to
the treatment of opioid and substance use disorders by helping health
care providers avoid inappropriate prescriptions, improving
coordination of prescribing amongst health care providers and focusing
on the advanced use of CEHRT. For the Health Information Exchange
objective, we are proposing to add a new measure: Support Electronic
Referral Loops by Receiving and Incorporating Health Information, which
builds upon and replaces the existing Request/Accept Summary of Care
and Clinical Information Reconciliation measures, while furthering
interoperability and the exchange of health information.
We are also proposing to rename some of the existing Stage 3
measures and objectives. We are proposing to rename the remaining
Health Information Exchange measure, Send a Summary of Care, to Support
Electronic Referral Loops by Sending Health Information. In addition,
we are proposing to change the name of the Patient Electronic Access to
Health Information objective to Provider to Patient Exchange, and
proposing to rename the remaining measure, Provide Patient Access to
Provide Patients Electronic Access to Their Health Information. We are
proposing to eliminate the Coordination of Care Through Patient
Engagement objective and all of its associated measures as described
above. Finally, we are proposing to rename the Public Health and
Clinical Data Registry Reporting objective to the Public Health and
Clinical Data Exchange objective and are proposing to require
attestation to the Syndromic Surveillance Reporting measure and at
least one additional measure of the eligible hospital or CAH's choosing
from the following: Immunization Registry Reporting; Electronic Case
Reporting; Public Health Registry Reporting; Clinical Data Registry
Reporting; and Electronic Reportable Laboratory Result Reporting.
Lastly, in connection with the scoring methodology proposed in
section VIII.D.5. of the preamble of this proposed rule, we are
proposing to remove the exclusion criteria from all of the Stage 3
measures we are retaining, except for the measures associated with the
e-Prescribing objective, Public Health and Clinical Data Exchange
objective and the new measures, which would include exclusion criteria.
We are proposing to remove the exclusion criteria related to broadband
availability because the Fixed Broadband Deployment Data from Federal
Communications Commission (FCC) form 477 indicate no counties have less
than 4 Mbps of broadband availability.\371\ In addition, upon review of
the 2016 Modified Stage 2 attestation data for eligible hospitals and
CAHs, we found that no eligible hospital or CAH claimed an exclusion
based on broadband availability. In addition, we do not believe that an
exclusion based on the number of transitions or referrals received and
patient encounters in which the provider has never previously
encountered the patient is warranted for any of the measures associated
with Health Information Exchange objective. This exclusion applies for
the Stage 3 Request/Accept Summary of Care measure and the Clinical
Information Reconciliation measure. We reviewed the 2016 Modified Stage
2 attestation data for the Medication Reconciliation measure, which the
Clinical Information Reconciliation measure is based on and found that
all eligible hospitals and CAHs who attested successfully reported this
measure, although we note an exclusion was not available for this
measure.\372\
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\371\ https://www.fcc.gov/general/broadband-deployment-data-fcc-form-477.
\372\ https://www.cms.gov/Regulations-and-Guidance/Legislation/EHRIncentivePrograms/PUF.html.
---------------------------------------------------------------------------

In addition, we are seeking public comment on a potential new
measure Health Information Exchange Across the Care Continuum under the
Health Information Exchange objective. Under this proposed measure, an
eligible hospital or CAH would send an electronic summary of care
record, or receive and incorporate an electronic summary of care
record, for transitions of care and referrals with a provider of care
other than an eligible hospital or CAH. The measure would include
health care providers in care settings including but not limited to
long term care facilities, and post-acute care providers such as
skilled nursing facilities, home health, and behavioral health
settings.
We are proposing that all of the measure proposals in this section
VIII.D.6. of the preamble of this proposed rule would apply to eligible
hospitals and CAHs that submit an attestation to CMS under the Medicare
Promoting Interoperability Program beginning with the EHR reporting
period in CY 2019, including Medicare-only and dual-eligible eligible
hospitals and CAHs. We are not proposing to apply these measure
proposals to Medicaid-only eligible hospitals that submit an
attestation to their State Medicaid agency for the Medicaid Promoting
Interoperability program. Instead, as discussed in section VIII.D.7. of
the preamble of this proposed rule, we are proposing to give States the
option to adopt these measure proposals along with the proposed
performance-based scoring methodology discussed in section VIII.D.5. of
the preamble of this proposed rule for their Medicaid Promoting
Interoperability Program through their State Medicaid HIT Plans.
The table below provides a summary of these measures proposals.

[[Page 20526]]

Summary of Measures Proposals
------------------------------------------------------------------------
Measure status Measure
------------------------------------------------------------------------
Measures retained from Stage 3 with no e-Prescribing.
modifications *. Immunization Registry
Reporting.
Syndromic Surveillance
Reporting.
Electronic Case Reporting.
Public Health Registry
Reporting.
Clinical Data Registry
Reporting.
Electronic Reportable
Laboratory Result Reporting.
Measures retained from Stage 3 with Send a Summary of Care
modifications. (Proposed Name: Supporting
Electronic Referral Loops by
Sending Health Information).
Provide Patient Access
(Proposed Name: Provide
Patients Electronic Access to
Their Health Information).
Removed measures....................... Request/Accept Summary of Care.
Clinical Information
Reconciliation.
Patient-Specific Education.
Secure Messaging.
View, Download or Transmit.
Patient Generated Health Data.
New measures........................... Query of Prescription Drug
Monitoring Program (PDMP).
Verify Opioid Treatment
Agreement.
Support Electronic Referral
Loops by Receiving and
Incorporating Health
Information.
------------------------------------------------------------------------
* Security Risk Analysis is retained, but not included as part of the
proposed scoring methodology.

We note the proposals under the Health Information Exchange
objective require only consolidation of existing workflows and actions,
while certification criteria and standards remain the same as finalized
in the October 16, 2015 final rule titled ``2015 Edition Health
Information Technology (Health IT) Certification Criteria, 2015 Edition
Base Electronic Health Record (EHR) Definition, and ONC Health IT
Certification Program Modifications'' (80 FR 62601 through 62759),
hereafter referred to as the ``ONC 2015 Edition final rule.''
Therefore, we believe it would not take the full 18 to 24 months of
development and implementation time to transition as indicated in the
2015 EHR Incentive Programs final rule (80 FR 62875) and could
potentially be implemented for an EHR reporting period in 2019.
As we discussed in section VIII.D.5. of the preamble of this
proposed rule, we are proposing that if we do not finalize a new
scoring methodology, we would maintain the current Stage 3 methodology
with the same objectives, measures and requirements, but we would
include the two new opioid measures, if they are finalized. In
addition, if we do not finalize a new scoring methodology, the
proposals to remove objectives and measures as well as proposals to
change objective and measure names would no longer be applicable.
We are seeking public comment on these proposals.
b. Measure Proposals for the e-Prescribing Objective
In the 2015 EHR Incentive Programs final rule, since electronic
prescribing of controlled substances had further matured and was
feasible in many States, we allowed eligible hospitals and CAHs to
include controlled substances under the definition of permissible
prescriptions for the e-Prescribing objective, as long as they were
included uniformly across patients and all available schedules and in
accordance with applicable law (80 FR 62834).
We believe it is important to consider other requirements specific
to electronic prescribing of controlled substances for health care
providers to take into account and how this may interact with the
proposals under this rulemaking. CMS is committed to combatting the
opioid epidemic by making it a top priority for the agency and aligning
its efforts with the HHS opioid initiative to combat misuse and promote
programs that support treatment and recovery support services. The HHS
five-point Opioid Strategy aims to:
Improve access to prevention, treatment, and recovery
support services to prevent the health, social, and economic
consequences associated with opioid addiction and to enable individuals
to achieve long-term recovery;
Target the availability and distribution of overdose-
reversing drugs to ensure the provision of these drugs to people likely
to experience or respond to an overdose, with a particular focus on
targeting high-risk populations;
Strengthen public health data reporting and collection to
improve the timeliness and specificity of data and to inform a real-
time public health response;
Support cutting-edge research that advances our
understanding of pain and addiction, leads to the development of new
treatments, and identifies effective public health interventions to
reduce opioid-related health harms; and
Advance the practice of pain management to enable access
to high-quality, evidence-based pain care that reduces the burden of
pain for individuals, families, and society while also reducing the
inappropriate use of opioids and opioid-related harms.
CMS' strategy includes reducing the risk of opioid use disorders,
overdoses, inappropriate prescribing practices and drug diversion. We
have identified two new measures which align with the broader HHS
efforts to increase the use of PDMPs to reduce inappropriate
prescriptions, improve patient outcomes and promote more informed
prescribing practices.
We are proposing to add two new measures to the e-Prescribing
objective under Sec. 495.24(5)(iii) that are based on electronic
prescribing for controlled substances (EPCS): Query of PDMP, and Verify
Opioid Treatment Agreement. These measures build upon the meaningful
use of CEHRT as well as the security of electronic prescribing of
Schedule II controlled substances while preventing diversion. For both
measures, we are proposing to define opioids as Schedule II controlled
substances under 21 CFR 1308.12, as

[[Page 20527]]

they are recognized as having a high potential for abuse with potential
for severe psychological or physical dependence. We are also proposing
to apply the same policies for the existing e-Prescribing measure under
Sec. 495.24(e)(5)(iii) to both the Query of the PDMP and Verify Opioid
Treatment Agreement measures, including the requirement to use CEHRT as
the sole means of creating the prescription and for transmission to the
pharmacy. Eligible hospitals and CAHs have the option to include or
exclude controlled substances in the e-Prescribing measure denominator
as long as they are treated uniformly across patients and all available
schedules and in accordance with applicable law (80 FR 62834; 81 FR
77227). However, because the intent of these two new measures is to
improve prescribing practices for controlled substances, eligible
hospitals and CAHs would have to include Schedule II opioid
prescriptions in the numerator and denominator or claim the applicable
exclusion.
In the event we finalize the new scoring methodology we are
proposing in section VIII.D.5. of the preamble of this proposed rule,
that eligible hospitals and CAHs that claim the broader exclusion under
the e-Prescribing measure would automatically receive an exclusion for
all three of the measures under the e-Prescribing objective; they would
not have to also claim exclusions for the other two measures Query of
PDMP and Verify Opioid Treatment Agreement.
In the event we do not finalize the new scoring methodology we are
proposing in section VIII.D.5. of the preamble of this proposed rule,
but we do finalize the proposed measures of Query of Prescription Drug
Monitoring Program and Verify Opioid Treatment Agreement under the e-
Prescribing objective, we would continue to apply the Stage 3
requirements finalized in previous rulemaking, and we are proposing
that eligible hospitals and CAHs would be required to report all three
measures under the e-Prescribing objective, but would only be required
to meet the threshold for the e-Prescribing measure, or claim an
exclusion. In addition, in the event the new scoring methodology we are
proposing is not finalized, we would retain the existing e-Prescribing
measure threshold of 25 percent under Sec. 495.24(c)(2)(ii).
We are requesting public comments on these proposals.
(1) Proposed Measure: Query of Prescription Drug Monitoring Program
(PDMP)
A PDMP is an electronic database that tracks prescriptions of
controlled substances at the State level. PDMPs play an important role
in patient safety by assisting in the identification of patients who
have multiple prescriptions for controlled substances or may be
misusing or overusing them. Querying the PDMP is important for tracking
the prescribed controlled substances and improving prescribing
practices. The ONC, the Centers for Disease Control and Prevention
(CDC), the Department of Justice (DOJ), and the Substance Abuse and
Mental Health Services Administration (SAMHSA) have had integral roles
in the integration and expansion of PMDPs with health information
technology systems. For example, the ONC and the SAMHSA collaboratively
led the ``Enhancing Access'' project to improve health care provider
access to PDMP data utilizing health IT.\373\ Likewise, the CDC
conducted a process and outcome evaluation of the PDMP EHR Integration
and Interoperability Expansion (PEHRIIE) program funded by SAMHSA for
nine States between FY 2012 and 2016. The PEHRIIE program goals were to
integrate PDMPs into health IT and improve the comprehensiveness of
PDMPs through initiating and/or improving interstate data
exchange.\374\ In addition, the Bureau of Justice Assistance's Harold
Rogers Prescription Monitoring Program supports Prescription Drug
Monitoring Program Information Exchange (PMIX) through funding, and the
goal of PMIX is to help States implement a cost-effective solution to
facilitate interstate data sharing among PDMPs.\375\ Integration of the
PDMP with health information technology systems supports improves
access to PDMP data, minimizes changes to current workflow and overall
burden and optimizes prescribing practices. The intent of the Query of
the PDMP measure is to build upon the current PDMP initiatives from
Federal partners focusing on prescriptions generated and dispensing of
opioids.
---------------------------------------------------------------------------

\373\ https://www.healthit.gov/PDMP and https://www.healthit.gov/sites/default/files/work_group_document_integrated_paper_final_0.pdf.
\374\ https://www.cdc.gov/drugoverdose/pdf/pehriie_report-a.pdf.
\375\ https://www.bja.gov/funding/Category-5-awards.pdf.
---------------------------------------------------------------------------

Proposed Measure Description: For at least one Schedule II opioid
electronically prescribed using CEHRT during the EHR reporting period,
the eligible hospital or CAH uses data from CEHRT to conduct a query of
a Prescription Drug Monitoring Program (PDMP) for prescription drug
history is conducted, except where prohibited and in accordance with
applicable law.
CMS recognizes both the utility and value of addressing PDMP EHR
integration and further recognizes the majority of States mandate use
of State prescription monitoring programs (PMPs) requiring prescribers/
dispensers to access PMP.\376\ According to the CDC, State-level
policies that enhance PDMPs or regulate pain clinics helped several
States drive down opioid prescriptions and overdose deaths.\377\ We are
also further aware of the varying integration approaches underway
including efforts to integrate a State PDMP into a health information
exchange or electronic health record (EHR) or other efforts to enhance
a user interface of some type, such as risk assessment tools or red
flags. We note Federal evaluation resources available to inform
integration efforts \378\ and believe integration is critical for
enhancing provider workflow, access to critical PDMP data, and
improving clinical care including prescription management.
---------------------------------------------------------------------------

\376\ https://www.namsdl.org/library/14D3122C-96F5-F53E-E8F23E906B4DE09D/.
\377\ https://www.cdc.gov/drugoverdose/policy/successes.html.
\378\ https://www.cdc.gov/drugoverdose/pdf/pehriie_report-a.pdf.
---------------------------------------------------------------------------

We are proposing that the query of the PDMP for prescription drug
history must be conducted prior to the electronic transmission of the
Schedule II opioid prescription. Eligible hospitals and CAHs would have
flexibility to query the PDMP using CEHRT in any manner allowed under
their State law.
Although the query of the PDMP may currently be burdensome for some
health care providers as part of their current workflow practice, we
believe the query of a PDMP is beneficial to optimal prescribing
practices and foresee progression toward fully automated queries of the
PDMP building upon the current initiatives at the State level.
We are proposing to include in this measure all permissible
prescriptions and dispensing of Schedule II opioids regardless of the
amount prescribed during an encounter in order for eligible hospitals
and CAHs to identify multiple provider episodes (physician shopping),
prescriptions of dangerous combinations of drugs, prescribing rates and
controlled substances prescribed in high quantities. However, we are
proposing that multiple Schedule II opioid prescriptions prescribed on
the same date by the same eligible hospital or CAH would not require
multiple

[[Page 20528]]

queries of the PDMP. For example, if more than one opioid is prescribed
by the eligible hospital or CAH, only one query would have to be
performed for this measure. We have also considered that in most cases,
only one instance of querying the PDMP may be necessary or appropriate
for each hospital stay, and querying the PDMP on each day a medication
is prescribed may be burdensome for providers. We are requesting
comment on whether we should further refine the measure to limit
queries of the PDMP to once during the stay regardless of whether
multiple eligible medications are prescribed during this time.
Denominator: Number of Schedule II opioids electronically
prescribed using CEHRT by the eligible hospital or CAH during the EHR
reporting period.
Numerator: The number of Schedule II opioid prescriptions in the
denominator for which data from CEHRT is used to conduct a query of a
PDMP for prescription drug history except where prohibited and in
accordance with applicable law.
Exclusion: Any eligible hospital or CAH that does not have an
internal pharmacy that can accept electronic prescriptions for
controlled substances and is not located within 10 miles of any
pharmacy that accepts electronic prescriptions for controlled
substances at the start of their EHR reporting period.
We are proposing that the exclusion criteria would be limited to
prescriptions of controlled substances as the measure action is
specific to prescriptions of Schedule II opioids only and does not
include any other types of electronic prescriptions. In the event we
finalize the new scoring methodology we are proposing in section
VIII.D.5. of the preamble of this proposed rule, an additional
exclusion would be available beginning in 2020 for eligible hospitals
and CAHs that could not report on this measure in accordance with
applicable law.
We also understand that PDMP integration is not currently in
widespread use for CEHRT, and many eligible hospitals and CAHs may
require additional time and workflow changes at the point of care
before they can meet this measure without experiencing significant
burden. For instance, many eligible hospitals and CAHs will likely need
to manually enter data into CEHRT to document the completion of the
query of the PDMP action. In addition, some eligible hospitals and CAHs
may also need to conduct manual calculation of the measure. Even for
those eligible hospitals and CAHs that have achieved successful
integration of a PDMP with their EHR, this measure may not be machine
calculable, for instance, in cases where the eligible hospital or CAH
follows a link within the EHR to a separate PDMP system. For the
purposes of meeting this measure, we also understand that there are no
existing certification criteria for the query of a PDMP. However, we
believe that the use of structured data captured in the CEHRT, can
support querying a PDMP through the broader use of health IT. We are
seeking public comment on whether ONC should consider adopting
standards and certification criteria to support the query of a PDMP,
and if such criteria were to be adopted, on what timeline should CMS
require their use to meet this measure.
We note that the NCPDP SCRIPT 2017071 standard for e-prescribing is
now available and can help to support PDMP and EHR integration. We are
seeking public comment especially from health care providers and health
IT developers on whether they believe use of this standard can support
eligible hospitals and CAHs seeking to report on this measure, and
whether HHS should encourage use of this standard through separate
rulemaking.
We are seeking public comment on the challenges associated with
querying the PDMP with and without CEHRT integration and whether this
proposed measure should require certain standards, methods or
functionalities to minimize burden.
In including EPCS as a component of the measure we are proposing,
we acknowledge and are seeking input on perceived and real
technological barriers as part of its effective implementation
including but not limited to input on two-factor authentication and on
the effective and appropriate uses of technology, including the use of
telehealth modalities to support established patient provider
relationships subsequent to in-person visit(s) and for prescribing
purposes.
We also are requesting comment on limiting the exclusion criteria
to electronic prescription for controlled substances and whether there
are circumstances which may justify any additional exclusions for the
Query of PDMP measure and what those circumstances might be.
We note that under the new scoring methodology we are proposing in
section VIII.D.5. of the preamble of this proposed rule, measures would
not have required thresholds for reporting. Therefore, if the proposed
scoring methodology and this measure were finalized, this measure would
not have a reporting threshold. In the event we do not finalize the
proposed scoring methodology, we are proposing a threshold of at least
one prescription for this new measure. We believe a threshold of at
least one prescription is appropriate because varying State laws
related to integration of the PDMP into CEHRT can lead to differing
standards for querying.
We are also proposing that in order to meet this measure, an
eligible hospital or CAH must use the capabilities and standards as
defined for CEHRT at 45 CFR 170.315(b)(3) and 170.315(a)(10)(ii).
We are proposing to codify the Query of the PDMP measure at Sec.
495.24(e)(5)(iii)(B).
We are inviting public comment on the proposals.
(2) Proposed Measure: Verify Opioid Treatment Agreement
The intent of this measure is for eligible hospitals and CAHs to
identify whether there is an existing opioid treatment agreement when
they electronically prescribe a Schedule II opioid using CEHRT if the
total duration of the patient's Schedule II opioid prescriptions is at
least 30 cumulative days. We believe seeking to identify an opioid
treatment agreement will further efforts to coordinate care between
health care providers and foster a more informed review of patient
therapy. The intent of the treatment agreement is to clearly outline
the responsibilities of both patient and health care provider in the
treatment plan. Such a treatment plan can be integrated into care
coordination and care plan activities and documents as discussed and
agreed upon by the patient and health care provider. An opioid
treatment agreement is intended to support and to enable further
coordination and the sharing of substance use disorder (SUD) data with
consent, as may be required of the individual.
According to the American Journal of Psychiatry article
Prescription Opioid Misuse, Abuse, and Treatment in the United States:
An Update,\379\ patient provider treatment agreements are part of the
recommendations to enhance efforts to prevent opioid abuse per the
Office of the National Drug Control Policy's National Drug Control
Strategy.\380\ The article further indicates that the treatment
agreement can be

[[Page 20529]]

beneficial as it provides clear information for the agreed upon pain
management plan, preventing misconceptions.
---------------------------------------------------------------------------

\379\ Brady KT, McCauley JL, Back SE. Prescription Opioid
Misuse, Abuse, and Treatment in the United States: An Update
American Journal of Psychiatry, Volume 173, Issue 1, January 01,
2016, pp. 18-26. Available at: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4782928/.
\380\ https://obamawhitehouse.archives.gov/ondcp/policy-and-research/ndcs.
---------------------------------------------------------------------------

An article in Pain Medicine, Universal Precautions in Pain
Medicine: A Rational Approach to the Treatment of Chronic Pain also
includes treatment agreements as part of the ``Ten Steps of Universal
Precautions in Pain Medicine'' which are stated to be recommended
starting points for discussion in the treatment of chronic pain.\381\
---------------------------------------------------------------------------

\381\ Gourlay DL, Heit HA, Almahrezi A. ``Universal Precautions
in Pain Medicine: A Rational Approach to the Treatment of Chronic
Pain.'' Pain Medicine, Volume 6, Issue 2, 1 March 2005, pp. 107-112.
Available at: https://academic.oup.com/painmedicine/article/6/2/107/1819946.
---------------------------------------------------------------------------

We also understand from stakeholder feedback during listening
sessions that there are varied opinions regarding opioid treatment
agreements amongst health care providers. Some are supportive of their
use, indicating that treatment agreements are an important part of the
prescription of opioids for pain management, and help patients
understand their role and responsibilities for maintaining compliance
with terms of the treatment. Other health care providers object to
their use citing ethical concerns, and creation of division and trust
issues in the health care provider-patient relationship. Other concerns
stem from possible disconnect between the language and terminology used
in the agreement and the level of comprehension on the part of the
patient. Because of the debate among practitioners, we are requesting
comment on the challenges this proposed measure may create for health
care providers, how those challenges might be mitigated, and whether
this measure should be included as part of the Promoting
Interoperability Program. We also acknowledge challenges related to
prescribing practices and multiple State laws which may present
barriers to the uniform implementation of this proposed measure. We are
seeking public comment on the challenges and concerns associated with
opioid treatment agreements and how they could impact the feasibility
of the proposal.
Proposed Measure Description: For at least one unique patient for
whom a Schedule II opioid was electronically prescribed by the eligible
hospital or CAH using CEHRT during the EHR reporting period, if the
total duration of the patient's Schedule II opioid prescriptions is at
least 30 cumulative days within a 6-month look-back period, the
eligible hospital or CAH seeks to identify the existence of a signed
opioid treatment agreement and incorporates it into CEHRT.
We understand from listening sessions with stakeholders that
eligible hospitals and CAHs typically do not prescribe opioid
medications for more than a few days if at all. In consideration of
this low volume of opioid prescriptions, we are proposing this measure
would include all Schedule II opioids prescribed for a patient
electronically using CEHRT by the eligible hospital or CAH during the
EHR reporting period, as well as any Schedule II opioid prescriptions
identified in the patient's medication history request and response
transactions during a 6 month look-back period, where the total number
of days for which a Schedule II opioid was prescribed for the patient
is at least 30 days.
There also may be burdens specific to identifying the existence of
a treatment agreement which could require additional time and changes
to existing workflows, determining what constitutes a treatment
agreement due to a lack of a definition, standard or electronic format
and manual calculation of the measure. In addition, limitations in the
completeness of care team information may limit the ability of an
eligible hospital and CAH to identify all potential sources for
querying and obtaining information on a treatment agreement for a
specific patient. There are currently pilots in development focused on
increasing connectivity and data exchange among health care providers
to better integrate behavioral health information, for instance, pilots
taking place as part of the Federal Demonstration Program for Certified
Community Behavioral Health Clinics (CCBHCs) \382\ includes criteria on
how CCBHCs should use health IT to coordinate services and track data
on quality measures. Participants in such pilots would potentially have
the means necessary to leverage health IT connectivity to query
behavioral health data resources and health care providers within their
region to identify the existence of an opioid treatment agreement and
to seamlessly integrate patient information received into the care plan
for the patient. We are seeking public comment on other similar
pathways to facilitate the identification and exchange of treatment
agreements and opioid abuse treatment planning.
---------------------------------------------------------------------------

\382\ https://www.samhsa.gov/section-223.
---------------------------------------------------------------------------

We are proposing that the 6-month look-back period would begin on
the date on which the eligible hospital or CAH electronically transmits
its Schedule II opioid prescription using CEHRT. For example, all of
the following prescriptions would be counted for this measure: A
Schedule II opioid electronically prescribed for a patient for a
duration of five days by the eligible hospital or CAH using CEHRT
during the EHR reporting period, and four prior prescriptions for any
Schedule II opioid prescribed by the patient's physician (each for a
duration of seven days) as identified in the patient's medication
history request and response transactions during the 6-month period
preceding the date on which the eligible hospital or CAH electronically
transmits its Schedule II opioid prescription using CEHRT. In this
example, the total number of days for which a Schedule II opioid was
prescribed for the patient would equal 33 cumulative days.
We are proposing a 6-month look-back period in order to identify
more egregious cases of potential overutilization of opioids and to
cover timeframes for use outside the EHR reporting period. In addition,
we are proposing that the 6-month look-back period would utilize at a
minimum the industry standard NCDCP SCRIPT v10.6 medication history
request and response transactions codified at 45 CFR 170.205(b)(2). As
ONC has stated (80 FR 62642), adoption of the requirements for NCDCP
SCRIPT v10.6 does not preclude developers from incorporating and using
technology standards or services not required by regulation in their
health IT products.
We are not proposing to define an opioid treatment agreement as a
standardized electronic document; nor are we proposing to define the
data elements, content structure, or clinical purpose for a specific
document to be considered a ``treatment agreement.'' For this measure,
we are seeking public comment on what characteristics should be
included in an opioid treatment agreement and incorporated into CEHRT,
such as clinical data, information about the patient's care team, and
patient goals and objectives, as well as which functionalities could be
utilized to accomplish the incorporation of this information. We note
that a variety of standards available in CEHRT might support the
electronic exchange of opioid abuse related treatment data, such as use
of the Consolidated Clinical Document Architecture (CCDA) care plan
template that is currently optional in CEHRT. We are also seeking
public comment on methods or processes for incorporation of the
treatment agreement into CEHRT, including which functionalities could

[[Page 20530]]

be utilized to accomplish this. We are seeking public comment on
whether there are specific data elements that are currently
standardized that should be incorporated via reconciliation and if the
``patient health data capture'' functionality could be used to
incorporate a treatment plan that is not a structured document with
structured data elements.
Denominator: Number of unique patients for whom a Schedule II
opioid was electronically prescribed by the eligible hospital or CAH
using CEHRT during the EHR reporting period and the total duration of
Schedule II opioid prescriptions is at least 30 cumulative days as
identified in the patient's medication history request and response
transactions during a 6-month look-back period.
Numerator: The number of unique patients in the denominator for
whom the eligible hospital or CAH seeks to identify a signed opioid
treatment agreement and, if identified, incorporates the agreement in
CEHRT.
Exclusion: Any eligible hospital or CAH that does not have an
internal pharmacy that can accept electronic prescriptions for
controlled substances and is not located within 10 miles of any
pharmacy that accepts electronic prescriptions for controlled
substances at the start of their EHR reporting period.
We are proposing that the exclusion criteria would be limited to
prescriptions of controlled substances as the measure action is
specific to electronic prescriptions of Schedule II opioids only and
does not include any other types of electronic prescriptions. In the
event we finalize the new scoring methodology we are proposing in
section VIII.D.5. of the preamble of this proposed rule, an additional
exclusion would be available beginning in 2020 for eligible hospitals
and CAHs that could not report on this measure in accordance with
applicable law. We are requesting public comment on limiting the
exclusion criteria to electronic prescriptions for controlled
substances and whether there are circumstances which may require an
additional exclusion for the Verify Opioid Treatment Agreement measure
and what those circumstances might be.
We note that under the new scoring methodology we are proposing in
section VIII.D.5. of the preamble of this proposed rule, measures would
not have required thresholds for reporting. Therefore, if the proposed
scoring methodology and measure were finalized, this measure would not
have a reporting threshold. In the event we do not finalize the
proposed scoring methodology, but we finalize this proposed measure, we
are proposing a threshold of at least one unique patient for this new
measure. We believe a threshold of at least one unique patient is
appropriate to account for the varying support for the use of opioid
treatment agreements and acknowledging that not all patients who
receive at least 30 cumulative days of Schedule II opioids would have a
treatment agreement in place. We also note there are medical diagnoses
and conditions that could necessitate prescribing Schedule II opioids
for a cumulative period of more than 30 days.
We are also proposing that, in order to meet this measure, an
eligible hospital or CAH must use the capabilities and standards as
defined for CEHRT at 45 CFR 170.315(b)(3), 170.315(a)(10) and
170.205(b)(2).
As discussed above, we recognize that many providers are only
beginning to adopt EPCS at this time. While we are proposing two new
measures which combine EPCS with other actions, we are requesting
comment on whether we should explore adoption of a measure focused only
on the number of Schedule II opioids prescribed and the successful use
of EPCS for permissible prescriptions electronically prescribed. We are
seeking public comment about the feasibility of such a measure, and
whether stakeholders believe this would help to encourage broader
adoption of EPCS.
We are proposing to codify the Verify Opioid Treatment Agreement
measure at Sec. 495.24(e)(5)(iii)(C).
We are seeking public comment on the proposals for this measure.
c. Measure Proposals for the Health Information Exchange (HIE)
Objective
The Health Information Exchange measures for eligible hospitals and
CAHs hold particular importance because of the role they play within
the care continuum. In addition, these measures encourage and leverage
interoperability on a broader scale and promote health IT-based care
coordination. However, through our review of existing measures, we
determined that we could potentially improve the measures to further
reduce burden and better focus the measures on interoperability in
provider to provider exchange. Such modifications would address a
number of concerns raised by stakeholders including:
Supporting the implementation of effective health IT
supported workflows based on a specific organization's needs;
Reducing complexity and burden associated with the manual
tracking of workflows to support health IT measures; and
Emphasizing within these measures the importance of using
health IT to support closing the referral loop to improve care
coordination.
The Health Information Exchange objective includes three measures
under Sec. 495.24(e)(6)(ii), and we believe we can potentially improve
each to streamline measurement, remove redundancy, reduce complexity
and burden, and address stakeholders' concerns about the focus and
impact of the measures on the interoperable use of health IT.
As discussed in section VIII.D.6.a. of the preamble of this
proposed rule, we are proposing to remove the exclusions from all three
of the measures associated with the Health Information Exchange
objective under Sec. 495.24(c)(7)(iii) in proposed Sec. 495.24(e)(6).
However, in the event we finalize the new scoring methodology we are
proposing, eligible hospitals and CAHs would be able to claim an
exclusion under the Support Electronic Referral Loops by Receiving and
Incorporating Health Information measure as indicated in section
VIII.D.6.c.(4) of the preamble of this proposed rule.
We are proposing several changes to the current measures under the
Stage 3 Health Information Exchange objective. First, we are proposing
to change the name of Send a Summary of Care measure to Support
Electronic Referral Loops by Sending Health Information. We also are
proposing to remove the current Stage 3 Clinical Information
Reconciliation measure and combine it with the Request/Accept Summary
of Care measure to create a new measure, Support Electronic Referral
Loops by Receiving and Incorporating Health Information. This proposed
new measure would include actions from both the current Request/Accept
Summary of Care measure and Clinical Information Reconciliation measure
and focus on the exchange of the health care information while reducing
the administrative burden of reporting on two separate measures.
As discussed earlier in the proposed rule, in the event we do not
finalize the new scoring methodology we are proposing in section
VIII.D.5. of the preamble of this proposed rule, we would maintain the
current Health Information Exchange objective, associated measures and
exclusions under Sec. 495.24(c)(7) as described in section VIII.D.5.
of the preamble of this proposed rule and as outlined in the table in
that section which describes Stage 3 objectives and measures if new
scoring methodology is not finalized.

[[Page 20531]]

We are seeking public comment on these proposals.
(1) Proposed Modifications To Send a Summary of Care Measure
We are proposing to change the name of the Send a Summary of Care
measure at 42 CFR 495.24(c)(7)(ii)(A) to Support Electronic Referral
Loops by Sending Health Information at 42 CFR 495.24(e)(6)(ii)(A), to
better reflect the emphasis on completing the referral loop and
improving care coordination. We are proposing to change the measure
description only to remove the previously defined threshold from Stage
3, in alignment with our proposed implementation of a performance-based
scoring system, to require that the eligible hospital or CAH create a
summary of care record using CEHRT and electronically exchange the
summary of care record for at least one transition of care or referral.
Proposed name and measure description: Support Electronic Referral
Loops by Sending Health Information: For at least one transition of
care or referral, the eligible hospital or CAH that transitions or
refers their patient to another setting of care or provider of care:
(1) Creates a summary of care record using CEHRT; and (2)
electronically exchanges the summary of care record.
Through public comment and stakeholder correspondence, we have
become aware that, in the health care industry, there is some
misunderstanding of the scope of transitions and referrals which must
be included in the denominator of this measure. In the rulemaking for
Stages 2 and 3 (77 FR 54013 through 54021, 80 FR 62852 through 62862),
we noted the denominator for this measure includes all transitions of
care and referrals from an inpatient setting and all transitions or
referrals from an emergency department where follow up care is ordered
by an authorized provider. In the event that an eligible hospital or
CAH is the recipient of a transition of care or referral, and
subsequent to providing care the eligible hospital or CAH transitions
or refers the patient back to the referring provider of care, this
transition of care should be included in the denominator of the measure
for the eligible hospital or CAH. We expect this will help build upon
the current provider to provider communication via electronic exchange
of summary of care records created by CEHRT required under this
measure, further promote interoperability and care coordination with
additional health care providers, and prevent redundancy in creation of
a separate measure.
In the past, stakeholders have raised concerns that the summary
care records shared according to the CCDA standard included excessive
information not relevant to immediate care needs, which increased
burden on health care providers. Under the ONC Health IT Certification
Program, certified EHR technology must have the capability to exchange
all of the information in the Common Clinical Data Set (CCDS) as part
of a summary care record structured according to the CCDA standard. We
previously finalized in the Stage 2 final rule (77 FR 53991 through
53993) that health care providers must transmit all of the CCDS
information as part of this summary care record, if known, and that
health care providers must always transmit information about the
problem list, medications, and medication allergies, or validate that
this information is not known.
As finalized in the 2015 EHR Incentive Programs final rule (80 FR
62852 through 62861), our policy allows health care providers to
constrain the information in the summary care record to support
transitions of care. For instance, we encouraged health care providers
to send a list of items that he or she believes to be pertinent and
relevant to the patient's care, rather than a list of all problems,
whether active or resolved, that have ever populated the problem list.
While a current problem list must always be included, the health care
provider can use his or her judgment in deciding which items
historically present on the problem list, medical history list (if it
exists in CEHRT), or surgical history list are relevant given the
clinical circumstances.
We also wish to encourage eligible hospitals and CAHs to use the
document template available within the CCDA which contains the most
clinically relevant information that may be required by the recipient
of the transition or referral. Accordingly, we are proposing that
eligible hospitals and CAHs may use any document template within the
CCDA standard for purposes of the measures under the Health Information
Exchange objective. While eligible hospitals' and CAHs' CEHRT must be
capable of sending the full CCDA upon request, we believe this
additional flexibility will help support efforts to ensure the
information supporting a transition is relevant.
For instance, when the eligible hospital or CAH is referring to
another health care provider, the recommended document is the
``Referral Note,'' which is designed to communicate pertinent
information from a health care provider who is requesting services of
another health care provider of clinical or nonclinical services. When
the receiving health care provider sends back the information, the most
relevant CCDA document template may be the ``Consultation Note,'' which
is generated by a request from a clinician for an opinion or advice
from another clinician. However, eligible hospitals and CAHs may choose
to utilize other documents within the CCDA to support transitions, for
instance the ``Discharge Summary'' document. For more information about
the CCDA and associated templates, we refer readers to: https://www.hl7.org/documentcenter/public/standards/dstu/CDAR2_IG_CCDA_CLINNOTES_R1_DSTUR2.1_2015AUG.zip.
We note that under the new scoring methodology we are proposing in
section VIII.D.5. of the preamble of this proposed rule, measures would
not have required thresholds for reporting; therefore, if the new
scoring methodology and measure were finalized, this measure would not
have a reporting threshold. In the event we do not finalize the
proposed scoring methodology, we would maintain the current Stage 3
requirements finalized in previous rulemaking. Therefore, eligible
hospitals and CAHs would be required report on the Stage 3 Send a
Summary of Care measure under the Health Information Exchange objective
codified at Sec. 495.24(c)(7)(ii)(A).
We are inviting public comment on the measure proposals.
(2) Proposed Removal of the Request/Accept Summary of Care Measure
We are proposing to remove the Request/Accept Summary of Care
measure at Sec. 495.24(c)(7)(ii)(B) under the proposed Sec.
495.24(e)(6) based on our analysis of the existing measure and in
response to stakeholder input.
Through review of implementation practices based on stakeholder
feedback, we believe that the existing Request/Accept Summary of Care
measure is not feasible for machine calculation in the majority of
cases. The intent of the measure is to identify when health care
providers are engaging with other providers of care or care team
members to obtain up-to-date patient health information and to
subsequently incorporate relevant data into the patient record.
However, stakeholders have noted the measure specification does not
effectively further this purpose. Specifically, the existing measure
specification results in unintended consequences where health care
providers implement either:
A burdensome workflow to document the manual action to
request

[[Page 20532]]

or obtain an electronic record, for example, clicking a check box to
document each phone call or similar manual administrative task, or
A workflow which is limited to only querying internal
resources for the existence of an electronic document.
Neither of these two implementation options is desirable when the
intent of the measure is to incentivize and encourage eligible
hospitals and CAHs to implement effective workflows to identify,
receive, and incorporate patient health information from other
providers of care into the patient record.
In addition, our analysis identified that the definition of
``incorporate'' within the Request/Accept Summary of Care measure is
insufficient to ensure an interoperable result. In the 2015 EHR
Incentive Programs final rule at 80 FR 62860, we did not define
``incorporate'' as we believed it would vary based on an eligible
hospital's or CAH's workflows, patient population, and the referring
provider of care. In addition, we noted that the information could be
included as an attachment, as a link within the EHR, as imported
structured data or reconciled within the record and not exclusively
performed through use of CEHRT. Further, stakeholder feedback
highlights the fact that the requirement to incorporate data is
insufficiently clear regarding what data must be incorporated.
Our intention was that ``incorporate'' would relate to the
workflows undertaken in the process of clinical information
reconciliation further defined in the Clinical Information
Reconciliation measure (80 FR 62852 through 62862). Taken together, the
three measures under the Health Information Exchange objective were
intended to support the referral loop through sending, receiving, and
incorporating patient health data into the patient record. However,
stakeholder feedback on the measures suggests that the separation
between receiving and reconciling patient health information is not
reflective of clinical and care coordination workflows. Further,
stakeholders noted that when approached separately, the incorporate
portion of the Request/Accept Summary of Care measure is both
inconsistent with and redundant to the Clinical Information
Reconciliation measure which causes unnecessary burden and duplicative
measure calculation.
We are requesting public comments on our proposal to remove the
Request/Accept Summary of Care measure.
(3) Proposed Removal of the Clinical Information Reconciliation Measure
We are proposing to remove the Clinical Information Reconciliation
measure at Sec. 495.24(c)(7)(ii)(C) from the new measures at proposed
Sec. 495.24(e)(6) to reduce redundancy, complexity, and provider
burden.
As discussed in the prior subsection, we believe the Clinical
Information Reconciliation measure is redundant in regard to the
requirement to ``incorporate'' electronic summaries of care in light of
the requirements of the Request/Accept Summary of Care measure. In
addition, the measure is not fully health IT based as the exchange of
health care information is not required to complete the measure action
and the measure specification is not limited to only the reconciliation
of electronic information in health IT supported workflows. We stated
in the 2015 EHR Incentive Programs final rule at 80 FR 62861 that the
clinical information reconciliation process could involve both
automated and manual reconciliation to allow the receiving health care
provider to work with both electronic data received as well as the
patient to reconcile their health information. Further, stakeholder
feedback from hospitals, clinicians, and health IT developers indicates
that because the measure is not fully based on the use of health IT to
meet the measurement requirements, eligible hospitals and CAHs must
engage in burdensome tracking of manual workflows. While the overall
activity of clinical information reconciliation supports quality
patient care and should be a part of effective clinical workflows, the
process to record and track each individual action places unnecessary
burden on eligible hospitals and CAHs.
We are inviting public comment on our proposal to remove the
Clinical Information Reconciliation measure.
(4) Proposed New HIE Measure: Support Electronic Referral Loops by
Receiving and Incorporating Health Information
We are proposing to add the following new measure for inclusion in
the Health Information Exchange objective at Sec. 495.24(e)(6)(ii)(B):
Support Electronic Referral Loops by Receiving and Incorporating Health
Information. This measure would build upon and replace the existing
Request/Accept Summary of Care and Clinical Information Reconciliation
measures.
Proposed measure name and description: Support Electronic Referral
Loops by Receiving and Incorporating Health Information: For at least
one electronic summary of care record received for patient encounters
during the EHR reporting period for which an eligible hospital or CAH
was the receiving party of a transition of care or referral, or for
patient encounters during the EHR reporting period in which the
eligible hospital or CAH has never before encountered the patient, the
eligible hospital or CAH conducts clinical information reconciliation
for medication, mediation allergy, and current problem list.
We are proposing to combine two existing measures, the Request/
Accept Summary of Care measure and the Clinical Information
Reconciliation measure, in this new Support Electronic Referral Loops
by Receiving and Incorporating Health Information measure to focus on
the exchange of health care information as the current Clinical
Information Reconciliation measure is not reliant on the exchange of
health care information nor use of CEHRT to complete the measure
action. We are not proposing to change the actions associated with the
existing measures; rather, we are proposing to combine the two measures
to focus on the exchange of the health care information, reduce
administrative burden, and streamline and simplify reporting.
CMS and ONC worked together to define the following for this
measure:
Denominator: Number of electronic summary of care records received
using CEHRT for patient encounters during the EHR reporting period for
which an eligible hospital or CAH was the receiving party of a
transition of care or referral, and for patient encounters during the
EHR reporting period in which the eligible hospital or CAH has never
before encountered the patient.
Numerator: The number of electronic summary of care records in the
denominator for which clinical information reconciliation is completed
using CEHRT for the following three clinical information sets: (1)
Medication--Review of the patient's medication, including the name,
dosage, frequency, and route of each medication; (2) Medication
allergy--Review of the patient's known medication allergies; and (3)
Current Problem List--Review of the patient's current and active
diagnoses.
For the proposed measure, the denominator would increment on the
receipt of an electronic summary of care record after the eligible
hospital or CAH engages in workflows to obtain an electronic summary of
care record for a transition, referral or patient encounter in which
the health care provider has never before encountered the patient. The
numerator would increment upon

[[Page 20533]]

completion of clinical information reconciliation of the electronic
summary of care record for medications, medication allergies, and
current problems. The eligible hospital or CAH would no longer be
required to manually count each individual non-health-IT-related action
taken to engage with other providers of care and care team members to
identify and obtain the electronic summary of care record. Instead, the
proposed measure would focus on the result of these actions when an
electronic summary of care record is successfully identified, received,
and reconciled with the patient record. We believe this approach would
allow eligible hospitals and CAHs to determine and implement
appropriate workflows supporting efforts to receive the electronic
summary of care record consistent with the implementation of effective
health IT information exchange at an organizational level.
Finally, we are proposing to apply our existing policy for cases in
which the eligible hospital or CAH determines no update or modification
is necessary within the patient record based on the electronic clinical
information received, and the eligible hospital or CAH may count the
reconciliation in the numerator without completing a redundant or
duplicate update to the record. We welcome public comment on methods by
which this specific action could potentially be electronically measured
by the provider's health IT system--such as incrementing on electronic
signature or approval by an authorized provider--to mitigate the risk
of burden associated with manual tracking of the action.
We welcome public comment on these proposals. In addition, we are
seeking public comment on methods and approaches to quantify the
reduction in burden for eligible hospitals and CAHs implementing
streamlined workflows for this proposed measure. We also are seeking
public comment on the impact these proposals may have for health IT
developers in updating, testing, and implementing new measure
calculations related to these proposed changes. Specifically, we are
seeking public comment on whether ONC should require developers to
recertify their EHR technology as a result of the changes proposed, or
whether they should be able to make the changes and engage in testing
without recertification. Finally, we are seeking public comment on
whether this proposed new measure that combines the Request/Accept
Summary of Care and Clinical Information Reconciliation measures should
be adopted, or whether either or both of the existing Request/Accept
Summary of Care and Clinical Information Reconciliation measures should
be retained in lieu of this proposed new measure.
In the event we finalize the new scoring methodology we are
proposing in section VIII.D.5. of the preamble of this proposed rule,
above, an exclusion would be available for eligible hospitals and CAHs
that could not implement the Support Electronic Referral Loops by
Receiving and Incorporating Health Information measure for an EHR
reporting period in CY 2019.
We note that under the new scoring methodology we are proposing in
section VIII.D.5. of the preamble of this proposed rule, measures would
not have required thresholds for reporting. Therefore, if the proposed
scoring methodology and measure were finalized, this measure would not
have a reporting threshold. In the event we do not finalize the
proposed new scoring methodology, we would maintain the current Stage 3
requirements finalized in previous rulemaking. Therefore, eligible
hospitals and CAHs would be required report on the Stage 3 Request/
Accept Summary of Care measure and Clinical Information Reconciliation
measures under the Health Information Exchange objective codified at
Sec. 495.24(c)(7)(ii)(B) and (C).
We also are proposing that, in order to meet this measure, an
eligible hospital or CAH must use the capabilities and standards as
defined for CEHRT at 45 CFR 170.315(g)(1) and (g)(2).
d. Measure Proposals for the Provider to Patient Exchange Objective
The Provider to Patient Exchange objective for eligible hospitals
and CAHs builds upon the goal of improved access and exchange of
patient health information, patient centered communication and
coordination of care using CEHRT. We are proposing a new scoring
methodology in section VIII.D.5. of the preamble of this proposed rule,
under which (in section VIII.D.6. of the preamble of this proposed
rule) which we are proposing to rename the Patient Electronic Access to
Health Information objective to Provider to Patient Exchange, remove
the Patient Specific Education measure and rename the Provide Patient
Access measure to Provide Patients Electronic Access to Their Health
Information. In addition, we are proposing to remove the Coordination
of Care through Patient Engagement objective and all associated
measures. The existing Stage 3 Patient Electronic Access to Health
Information objective includes two measures under Sec.
495.24(c)(5)(ii) and the existing Stage 3 Coordination of Care through
Patient Engagement objective includes three measures under Sec.
495.24(c)(6)(ii).
We reviewed the existing Stage 3 requirements and determined that
the proposals for the Patient Electronic Access to Health Information
objective and Coordination of Care through Patient Engagement objective
could reduce program complexity and burden and better focus on
leveraging the most current health IT functions and standards for
patient flexibility of access and exchange of health information. We
are proposing the Provider to Patient Exchange objective would include
one measure, the existing Stage 3 Provide Patient Access measure, which
are proposing to rename to Provide Patients Electronic Access to Their
Health Information. In addition, we are proposing to revise the measure
description for the Provide Patients Electronic Access to Their Health
Information measure to change the threshold from more than 50 percent
to at least one unique patient in accordance with the proposed scoring
methodology proposed in section VIII.D.5. of the preamble of this
proposed rule. As discussed in section VIII.D.6.a. of the preamble of
this proposed rule, we are proposing to remove the exclusion for the
Provide Patients Electronic Access to Their Health Information measure.
As discussed below, if we finalize the new scoring methodology we
are proposing in section VIII.D.5. of the preamble of this proposed
rule, we are proposing to remove all of the other measures currently
associated with the Patient Electronic Access to Health Information
objective and the Coordination of Care through Patient Engagement
objective.
If we do not finalize the new scoring methodology we are proposing
in section VIII.D.5. of the preamble of this proposed rule, we would
maintain the existing Stage 3 requirements finalized in previous
rulemaking as outlined in the table in that section which describes
Stage 3 objectives and measures if new scoring methodology is not
finalized. Therefore, we would retain the existing Patient Electronic
Access to Health Information objective, associated measures and
exclusions under Sec. 495.24(c)(5) and the existing Coordination of
Care through Patient Engagement objective, associated measures and
exclusions under Sec. 495.24(c)(6).

[[Page 20534]]

(1) Proposed Modifications To Provide Patient Access Measure
We are proposing to change the name of the Provide Patient Access
measure at 42 CFR 495.24(c)(5)(ii)(A) to Provide Patients Electronic
Access to Their Health Information at proposed 42 CFR
495.24(e)(7)(ii)(A) to better reflect the emphasis on patient
engagement in their health care and patient's electronic access of
their health information through use of APIs. We are proposing to
change the measure description only to remove the previously
established threshold from Stage 3, in alignment with our proposed
implementation of a performance-based scoring methodology, to require
that the eligible hospital or CAH provide timely access for viewing,
downloading or transmitting their health information for at least one
unique patient discharged using any application of the patient's
choice.
Proposed name and measure description: Provide Patients Electronic
Access to Their Health Information: For at least one unique patient
discharged from the eligible hospital or CAH inpatient or emergency
department (POS 21 or 23):
The patient (or the patient authorized representative) is
provided timely access to view online, download, and transmit his or
her health information; and
The eligible hospital or CAH ensures the patient's health
information is available for the patient (or patient-authorized
representative) to access using any application of their choice that is
configured to meet the technical specifications of the API in the
eligible hospital or CAH's CEHRT.
We are proposing to change the measure name to emphasize electronic
access of patient health information as opposed to use of paper based
actions in accordance with the 2015 EHR Incentive Programs final rule
policy for Stage 3 to discontinue inclusion of paper based formats and
limit the focus to only health IT solutions to encourage adoption and
innovation in use of CEHRT (80 FR 62783 through 62784). In addition, we
are committed to promoting patient engagement with their health care
information and ensuring access in an electronic format upon discharge
from the eligible hospital or CAH.
We note that under the new scoring methodology we are proposing in
section VIII.D.5. of the preamble of this proposed rule, measures would
not have required thresholds for reporting. Therefore, if the new
scoring methodology and measure were finalized, this measure would not
have a reporting threshold. In the event we do not finalize the
proposed scoring methodology, we would maintain the existing Stage 3
requirements finalized in previous rulemaking. Therefore, eligible
hospitals and CAHs would be required report on the Stage 3 Provide
Patient Access measure under the Patient Electronic Access to Health
Information objective codified at Sec. 495.24(c)(5)(ii)(A).
We are inviting public comment on the measure proposal.
(2) Proposed Removal of the Patient Generated Health Data Measure
We are proposing to remove the Patient Generated Health Data (PGHD)
measure at 42 CFR 495.24(c)(6)(ii)(C) at proposed Sec. 495.24(e)(7) to
reduce complexity and focus on the goal of using advanced EHR
technology and functionalities to advance interoperability and health
information exchange.
As finalized in the 2015 EHR Incentive Programs final rule at 80 FR
62851, the measure is not fully health IT based as we did not specify
the manner in which health care providers would incorporate the data
received. Instead, we finalized that health care providers could work
with their EHR developers to establish the methods and processes that
work best for their practice and needs. We indicated that this could
include incorporation of the information using a structured format
(such as an existing field in the EHR or maintaining an isolation
between the data and the patient record such as incorporation as an
attachment, link or text reference which would not require the advanced
use of CEHRT. We note that although this measure requires use of the
2015 Edition, it does not require key updates to functions and
standards of health IT, therefore, it does not align with the current
program goals of improving interoperability, prioritizing actions
completed electronically and use of advanced CEHRT functionalities.
We are seeking public comment on our proposal to remove the Patient
Generated Health Data measure.
(3) Proposed Removal of the Patient-Specific Education Measure
We are proposing to remove the Patient-Specific Education measure
at Sec. 495.24(c)(5)(ii)(B) at proposed Sec. 495.24(e)(7) as it has
proven burdensome to eligible hospitals and CAHs in ways that were
unintended and detract from health care providers' progress on current
program priorities.
The Patient-Specific Education measure was finalized as a Stage 3
measure for eligible hospitals and CAHs in the 2015 EHR Incentive
Programs final rule with the intent to build upon the Stage 2 policy
goals of using CEHRT for provider-patient communication (80 FR 62841
through 62846).
We believe that the Patient-Specific Education measure does not
align with the current emphasis of the Medicare Promoting
Interoperability Program to increase interoperability, leverage the
most current health IT functions and standards or reduce burden for
eligible hospitals and CAHs. For example, the Patient-Specific
Education measure's primary focus is on use of CEHRT for patient
resources specific to their health care and diagnosis as well as
patient centered care. However, the education resources do not need to
be maintained within or generated by CEHRT. Therefore, even though the
CEHRT identifies the patient educational resources, the process to
generate them could take additional time and interrupt health care
provider's workflows. In addition, there could be redundancy in
providing educational materials based on resources identified by the
CEHRT as CEHRT identifies educational resources using the patient's
medication list and problem list but can also include other elements as
well. If there are no changes to a patient's health status or treatment
based on his or her health care information, there would likely be many
resources and materials that present the same type of information and
could increase burden to the health care provider in seeking additional
resources to provide.
We are inviting public comment on our proposal to remove the
Patient-Specific Education measure.
(4) Proposed Removal of the Secure Messaging Measure
We are proposing to remove the Secure Messaging measure at Sec.
495.24(c)(6)(ii)(B) at proposed Sec. 495.24(e)(7) as it has proven
burdensome to eligible hospitals and CAHs in ways that were unintended
and detract from health care providers' progress on current program
priorities.
Secure Messaging was finalized as a Stage 3 measures for eligible
hospitals and CAHs in the 2015 EHR Incentive Programs final rule with
the intent to build upon the Stage 2 policy goals of using CEHRT for
provider-patient communication (80 FR 62841 through 62849). As
mentioned above, we believe that Secure Messaging does not align with
the current emphasis of the Medicare Promoting Interoperability Program
to increase interoperability or reduce burden for eligible hospitals
and CAHs.

[[Page 20535]]

In addition, we believe there is burden associated with tracking
secure messages, including the unintended consequences of workflows
designed for the measure rather than for clinical and administrative
effectiveness. We note that Secure Messaging is not part of the EHR
Incentive Programs requirements for eligible hospitals and CAHs under
Modified Stage 2. This measure was finalized in the 2015 EHR Incentive
Programs final rule for Stage 3 (80 FR 62846 through 62852) under the
Coordination of Care Through Patient Engagement objective which allows
health care providers flexibility by requiring them to report on all
three measures but only require them to meet the thresholds of two
measures. This allows health care providers the option to choose
measure options that best fit their organizational needs and patient
population. We believe that because this measure is not currently
required, removal would not negatively impact patient engagement nor
care coordination and serve to decrease burden.
In addition, after further review, we believe that this measure may
not be practical for eligible hospitals and CAHs as the patient would
likely receive follow up care from another health care provider such as
the patient's primary care physician, a rehabilitation facility, or
home health after discharge. The patient would communicate with those
health care providers instead of the hospital for information related
to their health post-discharge.
We are inviting public comment on our proposal to remove the Secure
Messaging measure.
(5) Proposed Removal of the View, Download or Transmit Measure
We are proposing to remove the View, Download or Transmit measure
at Sec. 495.24(c)(6)(ii)(A) at proposed Sec. 495.24(e)(7) as it has
proven burdensome to eligible hospitals and CAHs in ways that were
unintended and detract from eligible hospitals and CAHs progress on
current program priorities.
We received health care provider and stakeholder feedback through
correspondence, public forums, and listening sessions indicating there
is ongoing concern with measures which require patient action for
successful attestation. We have noted that data analysis on the patient
action measures supports stakeholder concerns that barriers exist which
impact a provider's ability to meet them. Health care providers have
noted that the demographics of their patient populations which may
include low-income, location in remote, rural areas and an aging
population contribute to the barriers as the patients do not have
access to computers, internet and/or email. They have also noted that
this particular population is concerned with having their health
information online. In addition, stakeholders have indicated that
successful attestation of the measure is reliant upon the patient, and
patient education and engagement may not be enough to overcome the
barriers. In the 2015 EHR Incentive Programs final rule at 80 FR 62789,
we reduced the thresholds for both patient action measures of VDT and
Secure Messaging based on concerns from health care providers and to
increase successful attestation on this measure. After additional
review, we note that successful attestation predicated solely on a
patient's action has inadvertently created burdens to health care
providers and detracts from progress on the Promoting Interoperability
Program's measure goals of focusing on patient care, interoperability
and leveraging advanced used of health IT. Therefore, we are proposing
to remove the View, Download or Transmit measure.
We are inviting public comment on our proposal to remove the View,
Download or Transmit measure.
e. Proposed Modifications to the Public Health and Clinical Data
Registry Reporting Objective and Measures
In connection with the new scoring methodology we are proposing in
section VIII.D.5. of the preamble of this proposed rule, we are
proposing changes to the Public Health and Clinical Data Registry
Reporting objective and six associated measures under 42 CFR
495.24(c)(8)(ii)(A) through (F) in proposed 42 CFR 495.24(e)(7). We
believe that public health reporting through EHRs will extend the use
of electronic reporting solutions to additional events and care
processes, increase timeliness and efficiency of reporting and replace
manual data entry.
We are proposing to change the name of the objective to Public
Health and Clinical Data Exchange. Under the new scoring methodology
proposed in section VII.D.5. of the preamble of this proposed rule, in
aligning with our goal to increase flexibility, improve value, and
focus on burden reduction, we are proposing that eligible hospitals and
CAHs would be required to attest to the Syndromic Surveillance
Reporting measure and at least one additional measure from the
following options: Immunization Registry Reporting; Clinical Data
Registry Reporting; Electronic Case Reporting; Public Health Registry
Reporting; and Electronic Reportable Laboratory Result Reporting.
We are proposing to require the Syndromic Surveillance Reporting
measure under the Public Health and Clinical Data Exchange objective
because the CDC indicates the primary source of data for syndromic
surveillance comes from EHRs in emergency care settings. Typically, EHR
data transmitted from health care facilities to public health agencies
for syndromic surveillance are not filtered or categorized. As a
result, public health agencies can use the same data that support
delivery of care for an all-hazards surveillance approach.
The EHR Incentive Program has enabled the growth of syndromic
surveillance across the country and in a number of States, such as
Illinois and Wisconsin, nearly all of the hospitals with emergency
departments are participating. More complete coverage allows public
health agencies to monitor trends in emergency department visits with
more precision, detect smaller increases in morbidity, identify
emerging health threats in smaller geographic areas, and collaborate
with healthcare and other State agencies to respond quickly to emerging
health threats.
In addition, syndromic surveillance reporting via CEHRT leverages
the wealth and depth of clinical information that has not been captured
before to study emerging health conditions like the rising opioid
overdose epidemic. The data will also provide a unique opportunity to
examine rare conditions and new procedures. We are seeking public
comment on the proposal to require reporting on this measure.
We stated in the 2015 EHR Incentive Programs final rule at 80 FR
62771 that one of the program goals was to increase interoperability
through public health registry exchange of data. We continue to believe
that public health reporting is valuable in terms of health information
exchange between health care providers and public health and clinical
data registries. For example, when immunization information is directly
exchanged between EHRs and registries, patient information may be
accessed by all of a patient's health care providers for improved
continuity of care and reduced provider burden, as well as supporting
population health monitoring. While we believe that it is important to
leverage health IT through advanced use of CEHRT, for public health and
clinical data registries reporting, we also want to reduce burden.
Through stakeholder feedback, we understand that some of the existing
active engagement requirements are

[[Page 20536]]

complicated and confusing, and contributed to unintended burden due to
issues related to readiness or onboarding for electronic exchange with
registries. Therefore, under the new scoring methodology proposed in
section VII.D.5. of the preamble of this proposed rule, we are
proposing to require attestation to only two measures under the Public
Health and Clinical Data Exchange objective instead of three, which is
currently required under Stage 3.
In addition, we intend to propose in future rulemaking to remove
the Public Health and Clinical Data Exchange objective and measures no
later than CY 2022, and are seeking public comment on whether hospitals
will continue to share such data with public health entities once the
Public Health and Clinical Data Exchange objective and measures are
removed, as well as other policy levers outside of the Promoting
Interoperability Program that could be adopted for continued reporting
to public health and clinical data registries, if necessary. As noted
above, while we believe that these registries provide the necessary
monitoring of public health nationally and contribute to the overall
health of the nation, we are also focusing on reducing burden and
identifying other appropriate venues in which reporting to public
health and clinical data registries could be reported. We are seeking
public comment on the role that each of the public health and clinical
data registries should have in the future of the Promoting
Interoperability Programs and whether the submission of this data
should still be required when the incentive payments for meaningful use
of CEHRT will end in 2021.
Lastly, we are seeking public comment on whether the Promoting
Interoperability Programs are the best means for promoting the sharing
of clinical data with public health entities.
In the event we do not finalize the new scoring methodology we are
proposing in section VIII.D.5. of the preamble of this proposed rule,
we would maintain the existing Stage 3 requirements finalized in
previous rulemaking and outlined in the table in that section which
describes Stage 3 objectives and measures if new scoring methodology is
not finalized. Therefore, we would retain the existing Public Health
and Clinical Data Registry Reporting objective and associated measures
and exclusions under Sec. 495.24(c)(8).
f. Request for Comment--Potential New Measures for HIE Objective:
Health Information Exchange Across the Care Continuum
We are working to introduce additional flexibility to allow
providers a wider range of options in selecting measures that are most
appropriate to their setting, patient population, and clinical practice
improvement goals. For this reason, we are seeking public comment on a
potential concept for two additional measure options for the Health
Information Exchange objective for eligible hospitals and CAHs.
The Stage 3 program requirements for health information exchange
primarily focused on the exchange between and among eligible hospitals,
CAHs and eligible professionals. While these use cases represent a
significant portion of the health care industry, the care continuum is
much broader and includes a wide range of health care providers and
settings of care that have adopted and implemented health IT systems to
support patient care and electronic information exchange. Specifically,
health care providers in long-term care and post-acute care settings,
skilled nursing facilities, and behavioral health settings have made
significant advancements in the adoption and use of health IT. Many
current Promoting Interoperability Program participants are now engaged
in bi-directional exchange of patient health information with these
health care providers and settings of care and many more are seeking to
incorporate these workflows as part of efforts to improve care team
coordination or to support alternative payment models.
For these reasons, we are seeking public comment on two potential
new measures for inclusion in the program to enable eligible hospitals
and CAHs to exchange health information through health IT supported
care coordination across a wide range of settings.
New Measure Description for Support Electronic Referral Loops by
Sending Health Information Across the Care Continuum: For at least one
transition of care or referral to a provider of care other than an
eligible hospital or CAH, the eligible hospital or CAH creates a
summary of care record using CEHRT; and electronically exchanges the
summary of care record.
New Measure Denominator: Number of transitions of care and
referrals during the EHR reporting period for which the eligible
hospital or CAH inpatient or emergency department (POS 21 or 23) was
the transitioning or referring provider to a provider of care other
than an eligible hospital or CAH.
New Measure Numerator: The number of transitions of care and
referrals in the denominator where a summary of care record was created
and exchanged electronically using CEHRT.
New Measure Description for Support Electronic Referral Loops By
Receiving and Incorporating Health Information Across the Care
Continuum: For at least one electronic summary of care record received
by an eligible hospital or CAH from a transition of care or referral
from a provider of care other than an eligible hospital or CAH, the
eligible hospital or CAH conducts clinical information reconciliation
for medications, mediation allergies, and problem list.
New Measure Denominator: The number of electronic summary of care
records received for a patient encounter during the EHR reporting
period for which an eligible hospital or CAH was the recipient of a
transition of care or referral from a provider of care other than an
eligible hospital or CAH.
New Measure Numerator: The number of electronic summary of care
records in the denominator for which clinical information
reconciliation was completed using CEHRT for the following three
clinical information sets: (1) Medication--Review of the patient's
medication, including the name, dosage, frequency, and route of each
medication; (2) Medication allergy--Review of the patient's known
medication allergies; and (3) Current Problem List--Review of the
patient's current and active diagnoses.
We are seeking public comment on whether these two measures should
be combined into one measure so that an eligible hospital or CAH that
is engaged in exchanging health information across the care continuum
may include any such exchange in a single measure. We are seeking
public comment on whether the denominators should be combined to a
single measure including both transitions of care from a hospital and
transitions of care to a hospital. We also are seeking public comment
on whether the numerators should be combined to a single measure
including both the sending and receiving of electronic patient health
information. We are seeking public comment on whether the potential new
measures should be considered for inclusion in a future program year or
whether stakeholders believe there is sufficient readiness and interest
in these measures to adopt them as early as 2019. For the purposes of
focusing the denominator, we are seeking public comment regarding
whether the potential new measures should be limited to transitions of
care and referrals specific to long-term and post-acute care, skilled
nursing care,

[[Page 20537]]

and behavioral health care settings. We also are seeking public comment
on whether additional settings of care should be considered for
inclusion in the denominators and if a provider should be allowed to
limit the denominators to a specific type of care setting based on
their organizational needs, clinical improvement goals, or
participation in an alternative payment model. Finally, we are seeking
public comment on the impact the potential new measures may have for
health IT developers to develop, test, and implement a new measure
calculation for a future program year.
7. Proposed Application of Proposed Scoring Methodology and Measures
Under the Medicaid Promoting Interoperability Program
As indicated in sections VIII.D.5. and VIII.D.6. of the preamble of
this proposed rule, we are not proposing to require States to adopt the
new scoring methodology and measures that we are proposing. Instead, we
are proposing to give States the option to adopt the new scoring
methodology we are proposing in section VIII.D.5. of the preamble of
this proposed rule together with the measures proposals included in
section VIII.D.6. of the preamble of this proposed rule for their
Medicaid Promoting Interoperability Programs. Any State that wishes to
exercise this option must submit a change to its State Medicaid HIT
Plan (SMHP) for CMS' approval, as specified in Sec. 495.332. If a
State chooses not to submit such a change, or if the change is not
approved, the objectives, measures, and scoring would remain the same
as currently specified under Sec. 495.24. We believe that States are
unlikely to choose this option due to concerns with burden, time
constraints and costs associated with implementing updates to
technology and reporting systems, as very few eligible hospitals will
be eligible to receive an incentive payment under the Medicaid
Promoting Interoperability Program in 2019 and subsequent years.
However, our proposal to extend this option to States would allow them
flexibility to benefit from the improvements to meaningful use scoring
outlined in this proposed rule, if they so choose. Similarly, we also
request public comment on whether we should modify the objectives and
measures for eligible professionals (EPs) in the Medicaid Promoting
Interoperability Program in order to encourage greater interoperability
for Medicaid EPs. We are interested in policy options that should be
considered, including the benefits of greater alignment with the Merit-
Based Incentive Payment System requirements for Eligible Clinicians. We
also are inviting comments on the burdens and hurdles that such policy
changes might create for EPs and States.
In connection with these proposals regarding the scoring
methodology and measures, we are proposing to require under Sec.
495.40(b)(2)(vii) ``dual-eligible'' eligible hospitals and CAHs (those
that are eligible for an incentive payment under Medicare for
meaningful use of CEHRT and/or subject to the Medicare payment
reduction for failing to demonstrate meaningful use, and are also
eligible to earn a Medicaid incentive payment for meaningful use) to
demonstrate meaningful use for the Promoting Interoperability Program
to CMS, and not to their respective State Medicaid agency, beginning
with the EHR reporting period in CY 2019. This includes all attestation
requirements, including the objectives and measures of meaningful use,
in addition to reporting clinical quality measures. In the past, we
have generally adopted a common definition of meaningful use under
Medicare and Medicaid (for example, 77 FR 44324 through 44326). If we
adopt the proposals made in this rule, there would not be a common
definition of meaningful use, unless a State chooses to exercise the
option described above and receives approval from CMS. In light of
these changes, we believe it would be more efficient and
straightforward in terms of program administration and operations if
all dual-eligible eligible hospitals and CAHs demonstrate meaningful
use to CMS. If a dual-eligible eligible hospital or CAH instead
demonstrates meaningful use to its State Medicaid agency, it would only
qualify for an incentive payment under Medicaid (assuming it meets all
eligibility and other program requirements), and it would not qualify
for an incentive payment under Medicare and/or avoid the Medicare
payment reduction. The proposals in this rule would not change the
deeming policy under the definition of meaningful EHR user under Sec.
495.4, under which an eligible hospital or CAH that successfully
demonstrates meaningful use to CMS would be deemed a meaningful EHR
user for purposes of the Medicaid incentive payment.
We also are proposing to amend the requirements for State reporting
to CMS under the Medicaid Promoting Interoperability Program under
Sec. 495.316(g), so that States would not be required to report, for
program years after 2018, provider-level attestation data for each
eligible hospital that attests to the State to demonstrate meaningful
use.
We are seeking public comments on these proposals.
8. Promoting Interoperability Program Future Direction
In future years of the Promoting Interoperability Program, we will
continue to consider changes which support a variety of HHS goals,
including: Reducing administrative burden, supporting alignment with
the Quality Payment Program, advancing interoperability and the
exchange of health information, and promoting innovative uses of health
IT. We believe a focus on interoperability and simplification will
reduce health care provider burden while allowing flexibility to pursue
innovative applications that improve care delivery. One strategy we are
exploring is creating a set of priority health IT activities that would
serve as alternatives to the traditional EHR Incentive Program
measures.
For example, we are seeking public comment on whether participation
in the Trusted Exchange Framework and Common Agreement (TEFCA) should
be considered a health IT activity that could count for credit within
the Health Information Exchange objective in lieu of reporting on
measures for this objective. The 21st Century Cures Act (Pub. L. 114-
255), enacted in 2016, requires HHS to take steps to enable the
electronic sharing of health information ensuring interoperability for
health care providers and settings across the care continuum. Congress
directed ONC to ``develop or support a trusted exchange framework,
including a common agreement among health information networks
nationally.'' In January 2018, ONC released a draft version of the
Trusted Exchange Framework.\383\ ONC will revise the draft TEF based on
public comment and ultimately release a final version of the Trusted
Exchange Framework that will subsequently be available for adoption by
HINs and their participants seeking to participate in nationwide health
information exchange. By participating in, or serving as, a health
information network, health IT developers and other stakeholders can
ensure that health care providers have the ability to seamlessly share
and receive a core set of data from other network participants in
accordance with a set of permitted purposes and

[[Page 20538]]

applicable privacy and security requirements.
---------------------------------------------------------------------------

\383\ The draft version of the Trusted Exchange Framework may be
accessed at: https://beta.healthit.gov/topic/interoperability/trusted-exchange-framework-and-common-agreement.
---------------------------------------------------------------------------

To qualify for this activity, an eligible hospital or CAH would
demonstrate that they are using CEHRT from a developer who participates
in or serves as a health information network which has adopted the
TEFCA. Eligible hospitals and CAHs could also be required to
demonstrate that they are active participants in a health information
network and routinely sharing health information to support care
transitions. They could also be required to demonstrate that their
CEHRT enables the use of an open API to exchange information with the
network.
We also are considering a health IT activity in which eligible
hospitals and CAHs could obtain credit if they maintain an open API
which allows patients to access their health information through a
preferred third party. This could be the open API maintained to comply
with the terms of the TEFCA or a standalone offering as long as the API
offers ongoing persistent access to outside parties. Under this
approach, an eligible hospital or CAH that attests to making such an
open API available for the purposes of ensuring patients have access to
their health information would receive full credit for the Provide
Patient Access measure under this objective.
Finally, we are considering developing a health IT activity which
would allow eligible hospitals and CAHs to obtain credit under the
Public Health and Clinical Data Exchange objective for piloting
emerging technology standards. A priority outcome for the draft Trusted
Exchange Framework is enabling bulk data queries which health care
providers and other stakeholders can utilize to conduct effective
population health management across their entire attributed population.
However, technical infrastructure to support this use case on a
widespread basis is still in development.
HHS could develop a health IT activity under which an eligible
hospital or CAH would participate in a pilot, and eventually implement
in production, use of an API based on the emerging update to the FHIR
standard which would allow population level data access through an API
in lieu of reporting on measures under the Public Health and Clinical
Data Exchange objective.
We welcome stakeholder comments on the concept of adopting health
IT activities, and specifically on the health IT activities described
above. We also welcome recommendations for other health IT activities
through which eligible hospitals and CAHs could earn credit in lieu of
reporting on specific measures, and which add value for patients and
health care providers, are relevant to patient care and clinical
workflows, support alignment with existing objectives, promote
flexibility, are feasible for implementation, are innovative in the use
of health IT and promote interoperability.
Finally, we specifically are seeking public comments on the
following questions:
What health IT activities should CMS consider recognizing
in lieu of reporting on objectives that would most effectively advance
priorities for nationwide interoperability and spur innovation? What
principles should CMS employ to identify health IT activities?
Do stakeholders believe that introducing health IT
activities in lieu of reporting on measures would decrease burden
associated with the Promoting Interoperability Programs?
If additional measures were added to the program, what
measures would be beneficial to add to promote our goals of care
coordination and interoperability?
How can the Promoting Interoperability Program for
eligible hospitals and CAHs further align with the Quality Payment
Program (for example, requirements for eligible clinicians under MIPS
and Advanced APMs) to reduce burden for health care providers,
especially hospital-based MIPS eligible clinicians?
What other steps can HHS take to further reduce the
administrative burden associated with the Promoting Interoperability
Program?
9. Clinical Quality Measurement for Eligible Hospitals and Critical
Access Hospitals (CAHs) Participating in the Medicare and Medicaid
Promoting Interoperability Programs
a. Background and Current CQMs
Under sections 1814(l)(3)(A), 1886(n)(3)(A), and
1903(t)(6)(C)(i)(II) of the Act and the definition of ``meaningful EHR
user'' under 42 CFR 495.4, eligible hospitals and CAHs must report on
clinical quality measures (referred to as CQMs or eCQMs) selected by
CMS using CEHRT, as part of being a meaningful EHR user under the
Medicare and Medicaid Promoting Interoperability Programs.
The table below lists the 16 CQMs available for eligible hospitals
and CAHs to report under the Medicare and Medicaid PI Programs
beginning in CY 2017 (81 FR 57255).

CQMs for Eligible Hospitals and CAHs Beginning With CY 2017
----------------------------------------------------------------------------------------------------------------
Short name Measure name NQF No.
----------------------------------------------------------------------------------------------------------------
AMI-8a................................... Primary PCI Received Within 90 Minutes of Hospital 0163
Arrival.
ED-3..................................... Median Time from ED Arrival to ED Departure for 0496
Discharged ED Patients.
CAC-3.................................... Home Management Plan of Care Document Given to +
Patient/Caregiver.
ED-1..................................... Median Time from ED Arrival to ED Departure for 0495
Admitted ED Patients.
ED-2..................................... Admit Decision Time to ED Departure Time for Admitted 0497
Patients.
EHDI-1a.................................. Hearing Screening Prior to Hospital Discharge........ 1354
PC-01.................................... Elective Delivery (Collected in aggregate, submitted 0469
via web-based tool or electronic clinical quality
measure).
PC-05.................................... Exclusive Breast Milk Feeding*....................... 0480
STK-02................................... Discharged on Antithrombotic Therapy................. 0435
STK-03................................... Anticoagulation Therapy for Atrial Fibrillation/ 0436
Flutter.
STK-05................................... Antithrombotic Therapy by the End of Hospital Day Two 0438
STK-06................................... Discharged on Statin Medication...................... 0439
STK-08................................... Stroke Education..................................... +
STK-10................................... Assessed for Rehabilitation.......................... 0441
VTE-1.................................... Venous Thromboembolism Prophylaxis................... 0371
VTE-2.................................... Intensive Care Unit Venous Thromboembolism 0372
Prophylaxis.
----------------------------------------------------------------------------------------------------------------
+ NQF endorsement has been removed.

[[Page 20539]]

* Measure name has been shortened. We refer readers to annually updated measure specifications on the CMS eCQI
Resource Center web page for further information at: https://www.healthit.gov/newsroom/ecqi-resource-center.

b. Proposed CQMs for Reporting Periods Beginning With CY 2020
As we have stated previously in rulemaking (82 FR 38479), we plan
to continue to align the CQM reporting requirements for the PI Programs
with the Hospital IQR Program. In order to move the program forward in
the least burdensome manner possible, while maintaining a set of the
most meaningful quality measures and continuing to incentivize
improvement in the quality of care provided to patients, we believe it
is appropriate to propose to remove certain eCQMs at this time to
develop an even more streamlined set of the most meaningful eCQMs for
hospitals. To align with the Hospital IQR Program, we are proposing to
reduce the number of eCQMs in the Medicare and Medicaid Promoting
Interoperability Programs eCQM measure set from which eligible
hospitals and CAHs report, by proposing to remove eight eCQMs (from the
16 eCQMs currently in the measure set) beginning with the reporting
period in CY 2020. The eight eCQMs we are proposing to remove are:
Primary PCI Received Within 90 Minutes of Hospital Arrival
(NQF #0163) (AMI-8a);
Home Management Plan of Care Document Given to Patient/
Caregiver (CAC-3);
Median Time from ED Arrival to ED Departure for Admitted
ED Patients (NQF #0495) (ED-1);
Hearing Screening Prior to Hospital Discharge (NQF #1354)
(EHDI-1a);
Elective Delivery (NQF #0469) (PC-01);
Stroke Education (STK-08) (adopted at 78 FR 50807;
Assessed for Rehabilitation (NQF #0441) (STK-10); and
Median Time from ED Arrival to ED Departure for Discharged
ED Patients (NQF 0496) (ED-3).
We note that the first seven eCQMs on this list are currently
included in the Hospital IQR Program, and in section VIII.A.5.(b)(9),
we are proposing to remove them from the Hospital IQR Program beginning
in CY 2020. For more information on the first seven eCQMs selected for
removal, we refer readers to section VIII.A.5.(b)(9) of the preamble of
this proposed rule.
We believe that a coordinated reduction in the overall number of
eCQMs in both the Hospital IQR Program and Medicare and Medicaid EHR
Promoting Interoperability will reduce certification burden on
hospitals, improve the quality of reported data by enabling eligible
hospitals and CAHs to focus on a smaller, more specific subset of CQMs
while still allowing eligible hospitals and CAHs some flexibility to
select which eCQMs to report that best reflect their patient
populations and support internal quality improvement efforts. With
respect to the Median Time from ED Arrival to ED Departure for
Discharged ED Patients measure (NQF 0496) (ED-3), this is an outpatient
measure and is not included as an eCQM in the Hospital IQR Program. We
are proposing to remove it so the eCQMs would align completely between
the two programs in order to reduce burden and enable eligible
hospitals and CAHs to easily report electronically through the Hospital
IQR Program submission mechanism.
As we stated in section VIII.A.5.(b)(9) with regard to the Hospital
IQR Program proposal for the CY 2020 reporting period and subsequent
years, we also considered proposing to remove these eCQMs one year
earlier, beginning with the CY 2019 reporting period/FY 2021 payment
determination. In establishing our eCQM policies, we must balance the
needs of eligible hospitals and CAHs with variable preferences and
capabilities. Overall, across the range of capabilities and resources
for eCQM reporting, stakeholders have expressed that they want more
time to prepare for eCQM changes.
We recognize that some hospitals and health IT vendors may prefer
earlier removal in order to forgo maintenance on those eCQMs proposed
for removal. In preparation for this proposed rule, we weighed the
relative burdens associated with removing these measures beginning with
the CY 2019 reporting period or beginning with the CY 2020 reporting
period. In the event we finalize our proposal to remove these eCQMs, we
intend to align the timing of the removal for the Medicare and Medicaid
Promoting Interoperability Programs with the Hospital IQR Program.
We are inviting public comment on our proposal, including the
specific measures proposed for removal and the timing of removal from
the Medicare and Medicaid Promoting Interoperability Programs.
d. Proposed CQM Reporting Periods and Criteria for the Medicare and
Medicaid Promoting Interoperability Programs in CY 2019
For CY 2019, we are proposing the same CQM reporting periods and
criteria as established in the FY 2018 IPPS/LTCH PPS final rule (82 FR
38479 through 38483) for the Medicare and Medicaid EHR Incentive
Programs in CY 2018, which would be as follows:
For CY 2019, for eligible hospitals and CAHs that report CQMs
electronically, we are proposing the reporting period for the Medicare
and Medicaid Promoting Interoperability Programs would be one, self-
selected calendar quarter of CY 2019 data, and the submission period
for the Medicare Promoting Interoperability Program would be the 2
months following the close of the calendar year, ending February 29,
2020. For eligible hospitals and CAHs that report CQMs by attestation
under the Medicare Promoting Interoperability Program as a result of
electronic reporting not being feasible, and for eligible hospitals and
CAHs that report CQMs by attestation under their State's Medicaid
Promoting Interoperability Program, we previously established a CQM
reporting period of the full CY 2019 (consisting of 4 quarterly data
reporting periods) (80 FR 62893). We also established an exception to
this full-year reporting period for eligible hospitals and CAHs
demonstrating meaningful use for the first time under their State's
Medicaid EHR Incentive Program. Under this exception, the CQM reporting
period is any continuous 90-day period within CY 2019 (80 FR 62893). We
are proposing that the submission period for eligible hospitals and
CAHs reporting CQMs by attestation under the Medicare EHR Incentive
Program would be the 2 months following the close of the CY 2019 CQM
reporting period, ending February 29, 2020. In regard to the Medicaid
EHR Incentive Program, we provide States with the flexibility to
determine the method of reporting CQMs (attestation or electronic
reporting) and the submission periods for reporting CQMs, subject to
prior approval by CMS.
For the CY 2019 reporting period, we are proposing that the
reporting criteria under the Medicare and Medicaid Promoting
Interoperability Program for eligible hospitals and CAHs reporting CQMs
electronically would be as follows: For eligible hospitals and CAHs
participating only in the Promoting

[[Page 20540]]

Interoperability Program, or participating in both the Promoting
Interoperability Program and the Hospital IQR Program, report on at
least 4 self-selected CQMs from the set of 16 available CQMs listed in
the table above.
We are proposing the following reporting criteria for eligible
hospitals and CAHs that report CQMs by attestation under the Medicare
Promoting Interoperability Program as a result of electronic reporting
not being feasible, and for eligible hospitals and CAHs that report
CQMs by attestation under their State's Medicaid Promoting
Interoperability Program, for the reporting period in CY 2019--report
on all 16 available CQMs listed in the table in section VIII.D.9.a. of
the preamble of this proposed rule, above.
We are requesting public comments on these proposals.
e. CQM Reporting Form and Method for the Medicare Promoting
Interoperability Program in CY 2019
As we stated in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49759
through 49760), for the reporting periods in 2016 and future years, we
are requiring QRDA-I for CQM electronic submissions for the Medicare
EHR Incentive (now Promoting Interoperability) Program. As noted in the
FY 2016 IPPS/LTCH PPS final rule (80 FR 49760), States would continue
to have the option, subject to our prior approval, to allow or require
QRDA-III for CQM reporting.
The form and method of electronic submission are further explained
in sub-regulatory guidance and the certification process. For example,
the following documents are updated annually to reflect the most recent
CQM electronic specifications: The CMS Implementation Guide for QRDA;
program specific performance calculation guidance; and CQM electronic
specifications and guidance documents. These documents are located on
the eCQI Resource Center web page at: https://ecqi.healthit.gov/. For
further information on CQM reporting, we refer readers to the EHR
Incentive Program (now Promoting Interoperability Program) website
where guides and tip sheets are located at: https://www.cms.gov/ehrincentiveprograms. For the reporting period in CY 2019 reporting
period, we are proposing the following for CQM submission under the
Medicare Promoting Interoperability Program:
Eligible hospitals and CAHs participating in the Medicare
Promoting Interoperability Program (single program participation)--
electronically report CQMs through QualityNet Portal.
Eligible hospital and CAH options for electronic reporting
for multiple programs (that is, Promoting Interoperability Program and
Hospital IQR Program participation)--electronically report through
QualityNet Portal.
As noted in the 2015 EHR Incentive Programs final rule (80 FR
62894), starting in 2018, eligible hospitals and CAHs participating in
the Medicare EHR Incentive Program must electronically report CQMs
where feasible; and attestation to CQMs will no longer be an option
except in certain circumstances where electronic reporting is not
feasible. For the Medicaid Promoting Interoperability Program, States
continue to be responsible for determining whether and how electronic
reporting of CQMs would occur, or if they wish to allow reporting
through attestation. Any changes that States make to their CQM
reporting methods must be submitted through the State Medicaid Health
IT Plan (SMHP) process for CMS review and approval prior to being
implemented.
For CY 2019, we are proposing to continue our policy regarding the
electronic submission of CQMs, which requires the use of the most
recent version of the CQM electronic specification for each CQM to
which the EHR is certified. For the CY 2019 electronic reporting of
CQMs, this means eligible hospitals and CAHs are required to use the
Spring 2017 version of the CQM electronic specifications and any
applicable addenda available on the eCQI Resource Center web page at:
https://ecqi.healthit.gov/. In addition, we are proposing that eligible
hospitals or CAHs must have their EHR technology certified to all 16
available CQMs listed in the table above. As discussed in section
VIII.D.3. of the preamble of this proposed rule, eligible hospitals and
CAHs are required to use 2015 Edition CEHRT for the Medicare and
Medicaid Promoting Interoperability Programs in CY 2019. We reiterate
that an EHR certified for CQMs under the 2015 Edition certification
criteria does not have to be recertified each time it is updated to a
more recent version of the CQMs (82 FR 38485).
We are requesting public comments on these proposals.
f. Request for Comment
Stakeholders continue to identify areas for improvement in the
implementation of eCQMs under a variety of CMS programs, including the
Hospital IQR Program and the Medicare and Medicaid EHR Incentive (now
Promoting Interoperability) Programs. While effective utilization of
eCQMs promises greater efficiency and more timely access to data to
support quality improvement activities, various types of burden
associated with these measurement approaches detracts from these
benefits. Moreover, some providers may have low awareness of the
resources and tools available to help address issues that arise in
utilizing eCQMs.
Program design and operations associated with measurement aspects
of these programs can be a significant source of burden for providers.
Uncertainty around rapidly shifting timelines and requirements can pose
significant financial and operational planning challenges for
organizations, while lack of alignment across programs results in
further complexity. In addition, the implementation of eCQMs within the
EHR is a significant source of burden. Health IT products vary widely
in the eCQMs they offer, and incorporating new measure specifications
into a product, along with validation and testing of the updates, can
be challenging and time-consuming. Lack of transparency from developers
around data sources within the EHR, mapping, measure calculations, and
reporting schemas, can hinder providers' ability to implement eCQMs and
ensure the accuracy of results. Moreover, challenges in extracting data
from the EHR and integrating with other applications can serve as a
source of burden for providers seeking to bring together different
technology solutions and work with other third party services to
complete reporting and quality improvement activities.
Stakeholders have expressed support for increasing the availability
of new eCQMs, developing eCQMs that focus on patient outcomes and
higher impact measurement areas, and exploring how eCQMs can reduce the
burden associated with chart-abstracted measures. However, they have
also identified barriers which may contribute to a lack of adequate
development of eCQMs and limit their potential, including long
development timelines, lack of guidelines/prioritization of and
participation in eCQM development, limited field testing, and program
policies that limit innovation by focusing on ``least common
denominator'' approaches.
We are seeking stakeholder feedback on ways that we could address
these and other challenges related to eCQM use. Specifically, we are
inviting comment on the following:

[[Page 20541]]

What aspects of the use of eCQMs are most burdensome to
hospitals and health IT vendors?
What program and policy changes, such as improved
regulatory alignment, would have the greatest impact on addressing eCQM
burden?
What are the most significant barriers to the availability
and use of new eCQMs today?
What specifically would stakeholders like to see us do to
reduce burden and maximize the benefits of eCQMs?
How could we encourage hospitals and health IT vendors to
engage in improvements to existing eCQMs?
How could we encourage hospitals and health IT vendors to
engage in testing new eCQMs?
Would hospitals and health IT vendors be interested in or
willing to participate in pilots or models of alternative approaches to
quality measurement that would explore less burdensome ways of
approaching quality measurement, such as sharing data with third
parties that use machine learning and natural language processing to
classify quality of care or other approaches?
What ways could we incentivize or reward innovative uses
of health IT that could reduce burden for hospitals?
What additional resources or tools would hospitals and
health IT vendors like to have publicly available to support testing,
implementation, and reporting of eCQMs?
10. Participation in the Medicare Promoting Interoperability Program
for Subsection (d) Puerto Rico Hospitals
a. Background
In the Stage 1 final rule (77 FR 44448), we noted that subsection
(d) Puerto Rico hospitals as defined in section 1886(d)(9)(A) of the
Act were not ``eligible hospitals'' as defined in section 1886(n)(6)(B)
of the Act, and therefore were not eligible for the incentive payments
for the meaningful use of CEHRT under section 1886(n) of the Act.
Section 602(a) of the Consolidated Appropriations Act, 2016 (Pub. L.
114-113) subsequently amended section 1886(n)(6)(B) of the Act to
include subsection (d) Puerto Rico hospitals in the definition of
``eligible hospital,'' which made subsection (d) Puerto Rico hospitals
eligible for the incentive payments under section 1886(n) of the Act
for hospitals that are meaningful EHR users and subject to the payment
reductions under section 1886(b)(3)(B)(ix) of the Act for hospitals
that are not meaningful EHR users. In order to take into account delays
in implementation, section 602(d) of the Consolidated Appropriations
Act, 2016 adjusted the existing timelines for the incentive payments by
five years and payment reductions by 7 years for subsection (d) Puerto
Rico hospitals, as further discussed in the sections below.
As authorized under section 602(c) of the Consolidated
Appropriations Act, 2016, we have previously elected to implement the
amendments made by section 602 as applied to subsection (d) Puerto Rico
hospitals through program instruction. In doing so we have sought to
align the policies for subsection (d) Puerto Rico hospitals with our
existing policies for eligible hospitals under the Medicare Promoting
Interoperability Program to the greatest extent possible, while taking
into account the unique circumstances applicable to hospitals on Puerto
Rico. In the following sections of the proposed rule, we are proposing
to codify the program instructions we have issued to subsection (d)
Puerto Rico hospitals and to amend our regulations under Parts 412 and
495 such that the provisions that apply to eligible hospitals would
include subsection (d) Puerto Rico hospitals unless otherwise
indicated.
We are requesting public comments on the proposals made in the
following sections.
b. Definitions
(1) Eligible Hospital: Subsection (d) Puerto Rico Hospitals
We are proposing to define a ``Puerto Rico eligible hospital''
under Sec. 495.100 as a subsection (d) Puerto Rico hospital as defined
in section 1886(d)(9)(A) of the Act.
We are proposing to amend the definition of ``eligible hospital''
under Sec. 495.100 to include Puerto Rico eligible hospitals unless
otherwise indicated.
We are proposing to amend the general provisions under Sec.
412.200 as related to prospective payment rates for inpatient operating
costs for subsection (d) Puerto Rico hospitals.
(2) EHR Reporting Period: Subsection (d) Puerto Rico Hospitals
Section 602(d) of the Consolidated Appropriations Act, 2016
provides that for subsection (d) Puerto Rico hospitals, FY 2016 is the
first payment year under section 1886(n)(2)(G)(i) of the Act for which
an incentive payment could be made to a hospital that is a meaningful
EHR user. The definition of ``EHR reporting period'' under Sec. 495.4
specifies for eligible hospitals for the FY 2016 payment year an EHR
reporting period of any continuous 90-day period in CY 2016, which is
consistent with the program instructions we issued to subsection (d)
Puerto Rico hospitals, so we do not believe any amendment is necessary.
We are proposing to amend the definition of ``EHR reporting period''
under Sec. 495.4 to specify for Puerto Rico eligible hospitals for the
FY 2017 payment year an EHR reporting period of a minimum of any
continuous 14-day period in CY 2017, which is consistent with the
program instructions we issued to subsection (d) Puerto Rico hospitals.
We allowed for a 14-day EHR reporting period in CY 2017 to acknowledge
and account for the devastation to Puerto Rico caused by Hurricane
Maria. We have not issued program instructions to subsection (d) Puerto
Rico hospitals concerning the EHR reporting periods for the payment
years after FY 2017. For the FY 2018, 2019, and 2020 payment years, we
are proposing an EHR reporting period of a minimum of any continuous
90-day period in CYs 2018, 2019, and 2020 respectively for Puerto Rico
eligible hospitals, and we are proposing corresponding amendments to
the definition of ``EHR reporting period'' under Sec. 495.4.
(3) EHR Reporting Period for a Payment Adjustment Year for Eligible
Hospitals: Subsection (d) Puerto Rico Hospitals
Section 602(d) of the Consolidated Appropriations Act, 2016
provides that the payment reductions under section 1886(b)(3)(B)(ix) of
the Act would apply beginning with FY 2022 for subsection (d) Puerto
Rico hospitals that are not meaningful EHR users for the applicable EHR
reporting period for the payment adjustment year. Because Puerto Rico
eligible hospitals would be considered eligible hospitals, the EHR
reporting periods for payment adjustment years and related policies,
including deadlines and requests for significant hardship exceptions,
that we establish for eligible hospitals would also apply to Puerto
Rico eligible hospitals beginning with the FY 2022 payment adjustment
year.
(4) Payment Year for Subsection (d) Puerto Rico Hospitals
Section 602(d) of the Consolidated Appropriations Act, 2016
provides that for subsection (d) Puerto Rico hospitals, FY 2016 is the
first payment year under section 1886(n)(2)(G)(i) of the Act for which
an incentive payment could be made to a hospital that is a meaningful
EHR user. We are proposing to amend the definition of ``payment year''
under Sec. 495.4 to specify for Puerto Rico eligible hospitals,
payment year means a Federal FY beginning with 2016.

[[Page 20542]]

(5) Payment Adjustment Year for Subsection (d) Puerto Rico Hospitals
Section 602(d) of the Consolidated Appropriations Act, 2016
provides that the payment reductions under section 1886(b)(3)(B)(ix) of
the Act will apply beginning with FY 2022 for subsection (d) Puerto
Rico hospitals that are not meaningful EHR users for the applicable EHR
reporting period for the payment adjustment year. We are proposing to
amend the definition of ``payment adjustment year'' under Sec. 495.4
to specify for Puerto Rico eligible hospitals, payment adjustment year
means a Federal fiscal year beginning with 2022.
c. Duration and Timing of Incentive Payments for Subsection (d) Puerto
Rico Hospitals--Transition Periods and Transition Factors
Section 602(d) of the Consolidated Appropriations Act, 2016
provides for a phase down under section 1886(n)(2)(E)(ii) of the Act
for subsection (d) Puerto Rico hospitals whose first payment year is
after 2018. We are proposing to amend Sec. 495.104(b) to specify the
following years for which Puerto Rico eligible hospitals may receive
incentive payments under section 1886(n) of the Act:
Puerto Rico eligible hospitals whose first payment year is
FY 2016 may receive such payments for FYs 2016 through 2019.
Puerto Rico eligible hospitals whose first payment year is
FY 2017 may receive such payments for FYs 2017 through 2020.
Puerto Rico eligible hospitals whose first payment year is
FY 2018 may receive such payments for FYs 2018 through 2021.
Puerto Rico eligible hospitals whose first payment year is
FY 2019 may receive such payments for FY 2019 through 2021.
Puerto Rico eligible hospitals whose first payment year is
FY 2020 may receive such payments for FY 2020 through 2021.
We are proposing to amend Sec. 495.104(c)(5) to specify the
following transition factors under section 1886(n)(2)(E)(i) of the Act
for Puerto Rico eligible hospitals:

Proposed Transition Factors for Subsection (d) Puerto Rico Hospitals
----------------------------------------------------------------------------------------------------------------
First Payment Year (FY)
-------------------------------------------------------------------------------
2016 2017 2018 2019 2020
----------------------------------------------------------------------------------------------------------------
2016............................ 1.00
2017............................ 0.75 1.00
2018............................ 0.50 0.75 1.00
2019............................ 0.25 0.50 0.75 0.75
2020............................ .............. 0.25 0.50 0.50 0.50
2021............................ .............. .............. 0.25 0.25 0.25
----------------------------------------------------------------------------------------------------------------

d. Market Basket Adjustment for Subsection (d) Puerto Rico Hospitals
Section 602(d) of the Consolidated Appropriations Act, 2016
provides that the payment reductions under section 1886(b)(3)(B)(ix) of
the Act would apply beginning with FY 2022 for subsection (d) Puerto
Rico hospitals. We are proposing for a subsection (d) Puerto Rico
hospital that is not a meaningful EHR user for the EHR reporting period
for the FY, three-quarters of the applicable percentage increase
otherwise applicable for such FY shall be reduced by 33 1/3 percent for
FY 2022, 66 2/3 percent for FY 2023, and 100 percent for FY 2024 and
each subsequent FY. We are proposing to amend Sec. 412.64(d)(3) to
reflect these proposed reductions.
11. Proposed Modifications to the Medicare Advantage Promoting
Interoperability Program
a. Participation in the Medicare Advantage Promoting Interoperability
Program for Subsection (d) Puerto Rico Hospitals
Section 1853(m) of the Act provides for incentive payments to
qualifying Medicare Advantage (MA) organizations for certain affiliated
eligible hospitals (as defined in section 1886(n)(6)(B)) that
meaningfully use certified EHR technology, and for application of
downward payment adjustments to qualifying MA organizations for their
affiliated hospitals that are not meaningful users of certified EHR
technology, beginning in FY 2015. As noted in section D.8 of this
proposed rule, section 602(a) of the Consolidated Appropriations Act,
2016 amended section 1886(n)(6)(B) of the Act to include subsection (d)
Puerto Rico hospitals in the definition of ``eligible hospital.'' We
note that the definition of ``qualifying MA-affiliated hospital'' in
Sec. 495.200 means an eligible hospital under section 1866(n)(6) that
meets certain other criteria. Therefore, the amendment to section
1866(n)(6) by the Consolidated Appropriations Act to include subsection
(d) Puerto Rico hospitals renders such hospitals potentially eligible
as qualifying MA-affiliated hospitals for purposes of the Medicare
Advantage EHR/PI incentives and payment adjustments. We are proposing
certain changes to our regulations under 42 CFR part 495 so that the
incentive payment and payment adjustment provisions that apply to MA-
affiliated eligible hospitals are applicable to MA-affiliated eligible
hospitals in Puerto Rico.
b. Definitions
(1) Payment Year for MA-Affiliated Eligible Hospitals in Puerto Rico
Section 602(d) of the Consolidated Appropriations Act, 2016
provides that for subsection (d) Puerto Rico hospitals, FY 2016 is the
first payment year for which an EHR incentive payment could be made to
an eligible hospital that is a meaningful EHR user. We are proposing to
amend the definition of ``payment year'' under Sec. 495.200 to specify
that, with respect to MA-affiliated eligible hospitals in Puerto Rico,
payment year means a Federal FY beginning with 2016.
(2) MA Payment Adjustment Year for MA-Affiliated Eligible Hospitals in
Puerto Rico
Section 602(d) of the Consolidated Appropriations Act, 2016
provides for payment reductions to subsection (d) Puerto Rico hospitals
that are not meaningful EHR users for the applicable EHR reporting
period for the payment adjustment year, beginning with FY 2022. We are
proposing to amend the definition of ``MA payment adjustment year''
under Sec. 495.200 to specify that, for qualifying MA organizations
that first receive an MA EHR incentive payment for at least 1 payment
year for

[[Page 20543]]

an MA-affiliated eligible hospital in Puerto Rico, payment adjustment
year means a calendar year starting with 2022.
We are soliciting feedback on whether we should amend the
definition of ``MA payment adjustment year'' to specify that the
duration of the reporting period for MA-affiliated eligible hospitals
for purposes of determining whether a qualifying MA organization is
subject to a payment adjustment should be other than the full federal
fiscal year ending in the MA payment adjustment year. We also are
requesting comments on an alternative approach under which we would use
the same reporting period that is used for the Medicare Promoting
Interoperability Program.
c. Payment Adjustments Effective for 2015 and Subsequent MA Payment
Years With Respect to MA-Affiliated Eligible Hospitals
Under Sec. 495.211, beginning for MA payment adjustment year 2015,
payment adjustments set are made to prospective payments (issued under
section 1853(a)(1)(A) of the Act) of qualifying MA organizations that
previously received incentive payments under the MA EHR Incentive (now
Promoting Interoperability) Program, if all or a portion of the MA-
affiliated eligible hospitals that would meet the definition of
qualifying MA-affiliated eligible hospitals (but for their
demonstration of meaningful use) are not meaningful EHR users. Section
495.211(e) sets forth the formula for calculating payment adjustments
for 2015 and subsequent years with respect to MA-affiliated eligible
hospitals. We are proposing to amend paragraph (e) by adding a new
subparagraph (4), which specifies that, prior to payment adjustment
year 2022, subsection (d) Puerto Rico hospitals are neither qualifying
nor potentially qualifying MA-affiliated eligible hospitals for
purposes of applying the payment adjustments under Sec. 495.211.
We are soliciting comment on whether further regulatory amendments
are necessary or appropriate so that the EHR incentive payment and
payment adjustment provisions that apply to MA-affiliated eligible
hospitals are applicable to MA-affiliated eligible hospitals in Puerto
Rico in a manner that is consistent with the Consolidated
Appropriations Act, 2016.
12. Proposed Modifications to the Medicaid Promoting Interoperability
Program
The policies proposed in this section would apply only in the
Medicaid EHR Incentive (now Promoting Interoperability) Program.
a. Proposed Requirements Regarding Prior Approval of Requests for
Proposals (RFPs) and Contracts in Support of the Medicaid Promoting
Interoperability Program
Section 1903(a)(3)(F)(ii) of the Act establishes an enhanced
federal matching rate of 90 percent for State expenditures related to
the administration of Medicaid Promoting Interoperability Program
payments. On July 28, 2010, in the Stage 1 final rule (75 FR 44313,
44507), we established prior approval requirements for State funding,
planning documents, proposed budgets, project schedules, and certain
implementation activities that a State may wish to pursue in support of
the Medicaid Promoting Interoperability Program, as a condition of
receipt of the 90 percent FFP available to States under section
1903(a)(3)(F)(ii) of the Act. To minimize the burden on States, we
designed the prior approval conditions and prior approval process to
mirror what was at the time used in support of acquiring automated data
processing (ADP) equipment and services in conjunction with development
and operation of States' Medicaid Management Information Systems
(MMIS), which are the States' automated mechanized claims processing
and information retrieval systems approved by CMS. Specifically, at
Sec. 495.324(b)(2) we established that, as a condition of receiving 90
percent FFP for administration of their Medicaid Promoting
Interoperability programs, States must receive prior approval for
requests for proposals and contracts used to complete activities under
42 CFR part 495 subpart D, unless specifically exempted by HHS, before
release of the request for proposal or execution of the contract. This
was consistent with the requirement then in place for MMIS at 45 CFR
95.611(a)(2). At section 495.324(b)(3) we established that unless
specifically exempted by HHS, States must receive prior approval for
contract amendments involving contract cost increases exceeding
$100,000 or contract time extensions of more than 60 days, prior to
execution of the contract amendment. This was consistent with the
requirement then in place at 45 CFR 95.611(b)(2)(iv).
Subsequently, in the final rule titled ``State Systems Advance
Planning Document (APD) Process'' (75 FR 66319, October 28, 2010), HHS
amended 45 CFR 95.611(b)(2)(iii) to establish a $500,000 threshold for
prior HHS approval of acquisition solicitation documents and contracts
for ADP equipment or services for which States would seek enhanced
federal matching funds (75 FR 66331). In the same rule, HHS also
established at 45 CFR 95.611(b)(2)(iv) a $500,000 prior approval
threshold for contract amendments for which States would seek enhanced
Federal match (75 FR 66324). In the final rule titled ``Medicaid
Program; Mechanized Claims Processing and Information Retrieval Systems
(90/10)'' (80 FR 75817, 75836 through 75837, December 4, 2015), 45 CFR
95.611(a)(2) was amended to establish a $500,000 threshold for prior
approval of acquisitions related to ADP equipment and services matched
at the enhanced rate for MMIS authorized under 42 CFR part 433, subpart
C. There was previously no threshold dollar amount for prior approvals
related to such acquisitions in 45 CFR 95.611(a)(2).
We are now proposing to amend 42 CFR 495.324(b)(2) and
495.324(b)(3) to align with current prior approval policy for MMIS and
ADP systems at 45 CFR 95.611(a)(2)(ii), and (b)(2)(iii) and (iv), and
to minimize burden on States. Specifically, we are proposing that the
prior approval dollar threshold in Sec. 495.324(b)(3) would be
increased to $500,000, and that a prior approval threshold of $500,000
would be added to Sec. 495.324(b)(2). We also are proposing minor
amendments to the language of 495.324(b)(2) and (3) to better align it
with the language of 45 CFR 95.611(b)(2)(iii) and (iv). In addition, in
light of these proposed changes, we are proposing a conforming
amendment to amend the threshold in Sec. 495.324(d) for prior approval
of justifications for sole source acquisitions to be the same $500,000
threshold. That threshold is currently aligned with the $100,000
threshold in current Sec. 495.324(b)(3). We believe that amending
Sec. 495.324(d) to preserve alignment with Sec. 495.324(b)(3) would
reduce burden on States and maintain the consistency of our prior
approval requirements. This proposal would not affect the other
requirements that States must comply with when making acquisitions in
support of the Medicaid Promoting Interoperability Program under the
Federal provisions contained in 42 CFR part 495, subpart D, and
specifically 42 CFR 495.348, regardless of conditions for prior
approval.
We believe that this proposal would reduce burden on States by
raising the prior approval thresholds and generally aligning them with
the thresholds for prior approval of MMIS and ADP acquisitions costs.
We are inviting public comments on this proposal.

[[Page 20544]]

b. Funding Availability to States To Conclude the Medicaid Promoting
Interoperability Program
Under section 1903(a)(3)(F) and (t) of the Act, State Medicaid
programs may receive FFP in expenditures for incentive payments to
certain Medicaid providers to adopt, implement, upgrade, and
meaningfully use CEHRT. In addition, FFP is available to States for
reasonable administrative expenses related to administration of those
incentive payments as long as the State meets certain conditions.
Specifically, section 1903(a)(3)(F)(i) of the Act establishes 100
percent FFP to States for incentive payments to eligible Medicaid
providers (described in section 1903(t)(1) and (2) of the Act) to
adopt, implement, upgrade, and meaningfully use CEHRT. Section
1903(a)(3)(F)(ii) of the Act establishes 90 percent FFP to States for
administrative expenses related to administration of the incentive
payments.
In Sec. 495.320 and Sec. 495.322, we provide the general rule
that States may receive: (1) 100 Percent FFP in State expenditures for
EHR incentive payments; and (2) 90 percent FFP in State expenditures
for administrative activities in support of implementing incentive
payments to Medicaid eligible providers. Section 495.316 establishes
State monitoring and reporting requirements regarding activities
required to receive an incentive payment. Subject to Sec. 495.332, the
State is responsible for tracking and verifying the activities
necessary for a Medicaid EP or eligible hospital to receive an
incentive payment for each payment year, as described in Sec. 495.314.
To date, we have not established a date beyond which 90 percent FFP
is no longer available to States for their expenditures related to
administering the Medicaid Promoting Interoperability Program. In the
Stage 1 final rule (75 FR 44319), we established that, in accordance
with sections 1903(t)(4)(A)(iii) and (5)(D) of the Act, in no case may
any Medicaid EP or eligible hospital receive an incentive payment after
2021 (42 CFR 495.310(a)(2)(v) and 495.310(f)).
Because December 31, 2021 is the last date that States could make
Medicaid Promoting Interoperability incentive payments to Medicaid EPs
and eligible hospitals (other than pursuant to a successful appeal
related to 2021 or a prior year), we believe it is reasonable for
States to conclude most administrative activities related to the
Medicaid Promoting Interoperability Program, including submitting final
required reports to CMS, by September 30, 2022. Therefore, we are
proposing to amend Sec. 495.322 to provide that the 90 percent FFP for
Medicaid Promoting Interoperability Program administration would no
longer be available for most State expenditures incurred after
September 30, 2022.
We are proposing a later sunset date for the availability of 90
percent enhanced match for State administrative costs related to
Medicaid Promoting Interoperability Program audit and appeals
activities, as well as costs related to administering incentive payment
disbursements and recoupments that might result from those activities.
We acknowledge that States have a responsibility to conduct audits of
the payments made to Medicaid providers participating in the Medicaid
Promoting Interoperability Program, in accordance with Sec. 495.368,
in order to combat fraud and abuse, and that States also must provide a
process for EHR incentive payment appeals in accordance with Sec.
495.370. We expect that these activities will require administration
for some time after, but at most a year, beyond September 30, 2022.
Because provider incentive payments could be disbursed up until
December 31, 2021, we anticipate that States would need additional time
to review provider risk factors, select samples, and conduct audits.
Once post-payment audits are completed, States would also need time to
work with any providers who choose to appeal their audit findings.
Collectively, the post-payment audit process and/or appeals process
could take several months, and in some cases might take more than one
year. Therefore, we are proposing that the 90 percent FFP would
continue to be available for State administrative expenditures related
to Medicaid Promoting Interoperability Program audit and appeals
activities until September 30, 2023. States would not be able to claim
any Medicaid Promoting Interoperability Program administrative match
for expenditures incurred after September 30, 2023.
States should be aware that under this proposal, they would need to
incur the expenditures for which they would claim the 90 percent FFP
for Medicaid Promoting Interoperability Program administrative
activities no later than the sunset dates of September 30, 2022 or
September 30, 2023, as applicable. This means that for States to claim
the 90 percent FFP for goods and services related to Medicaid Promoting
Interoperability Program administrative activities, States would have
to ensure that the goods and services are provided no later than close
of business September 30, 2022 or close of business September 30, 2023,
as applicable. Thus, for example, if an amount that is related to
administration of a Medicaid Promoting Interoperability Program audit
or appeal has been obligated by September 30, 2023, but the good or
service has not yet been furnished by that date, then the expenditure
could not be claimed at the enhanced 90 percent FFP.
We are inviting public comments on this proposal, especially on
whether the timelines proposed provide States with a reasonable amount
of time to wind down their Medicaid Promoting Interoperability Program.

IX. Proposed Revisions of the Supporting Documentation Required for
Submission of an Acceptable Medicare Cost Report

A. Background

Sections 1815(a) and 1833(e) of the Act provide that no Medicare
payments will be made to a provider unless it has furnished the
information, as may be requested by the Secretary, to determine the
amount of payments due the provider under the Medicare program. In
general, providers submit this information through annual cost reports
\384\ that cover a 12-month period of time. Under the regulations at 42
CFR 413.20(b) and 413.24(f), providers are required to submit cost
reports annually, with the reporting period based on the provider's
accounting year. For cost years beginning on or after October 1, 1989,
section 1886(f)(1) of the Act and Sec. 413.24(f)(4) of the regulations
require hospitals to submit cost reports in a standardized electronic
format, and the same requirement was later imposed for other types of
providers.
---------------------------------------------------------------------------

\384\ There are currently nine Medicare cost reports: The
Hospital and Health Care Complex Cost Report, Form CMS-2552, OMB No.
0938-0050; the Skilled Nursing Facility and Skilled Nursing Facility
Health Care Complex Cost Report, Form CMS-2540, OMB No. 0938-0463;
the Home Health Agency Cost Report, Form CMS-1728, OMB No. 0938-
0022; the Outpatient Rehabilitation Provider Cost Report, Form CMS-
2088, OMB No. 0938-0037; the Independent Rural Health Clinic and
Freestanding Federally Qualified Health Center Cost Report (prior to
October 1, 2014), Form CMS-222, OMB No. 0938-0107; the Federally
Qualified Health Center Cost Report (beginning on or after October
1, 2014), Form CMS-224, OMB No. 0938-1298; the Organ Procurement
Organizations and Histocompatibility Laboratory, Form CMS-216, OMB
No. 0938-0102; the Independent Renal Dialysis Facility Cost Report,
Form CMS-265, OMB No. 0938-0236; and the Hospice Cost and Data
Report, Form CMS-1984, OMB No. 0938-0758.
---------------------------------------------------------------------------

All providers participating in the Medicare program are required
under Sec. 413.20(a) to maintain sufficient financial records and
statistical data for proper determination of costs payable under the
program. Moreover, providers

[[Page 20545]]

must use standardized definitions and follow accounting, statistical,
and reporting practices that are widely accepted in the hospital and
related fields. Upon receipt of a provider's cost report, the Medicare
Administrative Contractor (herein referred to as ``contractor'')
reviews the cost report to determine its acceptability in accordance
with Sec. 413.24(f)(5). Each cost report submission by a provider to
its contractor, including an amended cost report, is considered to be a
separate cost report submission under Sec. 413.24(f)(5). Each cost
report submission requires the supporting documentation specified in
Sec. 413.24(f)(5)(i). A cost report submitted without the required
supporting documentation is rejected under Sec. 413.24(f)(5)(i). Under
Sec. 413.24(f)(5)(iii), when the cost report is rejected, it is deemed
an unacceptable submission and treated as if it had never been filed.
Several provisions in the regulations requiring supporting
documentation for the Medicare cost report to be acceptable need to be
updated to reflect current practices, to improve the accuracy of these
reports, and to facilitate more efficient contractor review of cost
reports. The regulations at Sec. 413.24(f)(5)(i) provides that a
provider's cost report is rejected if the provider does not complete
and submit the Provider Cost Reimbursement Questionnaire (a
questionnaire independent of the cost report, OMB No. 0938-0301, also
known as Form CMS-339). The Form CMS-339 requires the provider to
submit supporting documents, as applicable, for items such as Medicare
bad debt, approved educational activities, and cost allocation from a
home office or chain organization.
Beginning in 2011, as cost report forms were updated for various
provider types, the Form CMS-339 was incorporated as a worksheet in the
Medicare cost report (the worksheet title and placement within the cost
report vary by provider type), and is no longer submitted as a separate
supporting document. The Form CMS-339 has been incorporated into all
Medicare cost reports except for the Organ Procurement Organization
(OPO) and Histocompatibility Laboratory cost report, Form CMS-216. In
section IX.B. of the preamble of this proposed rule, we are proposing
to incorporate the Form CMS-339 into the OPO and Histocompatibility
cost report, Form CMS-216.
The cost report worksheet that incorporated the Form CMS-339
continues to require the provider to submit supporting documents for
Medicare bad debt, approved educational activities, and certain cost
allocation information from a home office or chain organization, as
applicable. However, our regulations at Sec. 413.24(f)(5)(i) do not
reflect that the Provider Cost Reimbursement Questionnaire, Form CMS-
339, has been incorporated into the Medicare cost report as a worksheet
because the regulations require the Form CMS-339 to be submitted as a
supporting document to the cost report.
Section 413.24(f)(5)(i) also provides that a cost report is
rejected for a teaching hospital if a copy of the Intern and Resident
Information System (IRIS) diskette is not included as supporting
documentation. However, diskettes are no longer used by providers to
furnish this data to contractors.
Section 413.20 of the regulations requires providers to maintain
sufficient financial records and statistical data for the proper
determination of costs payable under the program as well as an adequate
ongoing system for furnishing records needed to provide accurate cost
data and other information capable of verification by qualified
auditors. In accordance with Sec. 413.20(d), the provider must furnish
such information to the contractor as may be necessary to assure proper
payment. Information from the provider relating to Medicaid days used
in the calculation of DSH payments, charity care charges, uninsured
discounts, and home office cost allocations are necessary to assure
proper payment. While our regulations require that these supporting
documents be maintained by the provider and furnished to the contractor
to assure proper payment, Sec. 413.24(f)(5) does not require
submission of supporting documentation for Medicaid days used in the
calculation of DSH payments, charity care charges, uninsured discounts,
or home office cost allocations reported on a provider's cost report
for the provider to have an acceptable cost report submission. These
supporting documents are often subsequently requested by the
contractor, and must be submitted by the provider in order to assure
proper payment, which can delay payments and prolong audits.
Our specific proposals for revising our regulations are discussed
below.

B. Proposed Revisions to Regulations

1. Provider Cost Reimbursement Questionnaire
Section 413.24(f)(5)(i) of the regulations provides that a
provider's Medicare cost report is rejected for lack of supporting
documentation if it does not include the Provider Cost Reimbursement
Questionnaire (also known as Form CMS-339). As discussed in section
IX.A. of the preamble of this proposed rule, beginning in 2011, as cost
report forms were updated, the Provider Cost Reimbursement
Questionnaire, Form CMS-339, was incorporated into all Medicare cost
reports as a worksheet, except the OPO and Histocompatibility
Laboratory cost report, Form CMS-216. In this proposed rule, we are
proposing to incorporate the Provider Cost Reimbursement Questionnaire,
Form CMS-339, into the OPO and Histocompatibility Laboratory cost
report, Form CMS-216. The incorporation of the Form CMS-339 into the
Form CMS-216 will complete our incorporation of the Form CMS-339 into
all Medicare cost reports.
In addition, in this proposed rule, we are proposing to revise
Sec. 413.24(f)(5)(i) by removing the reference to the Provider Cost
Reimbursement Questionnaire so that Sec. 413.24(f)(5)(i) no longer
states that a cost report will be rejected for lack of supporting
documentation if it does not include a Provider Cost Reimbursement
Questionnaire (Form CMS-339). Furthermore, we are proposing to add
language to the first sentence of Sec. 413.24(f)(5)(i) to clarify that
a provider must submit all necessary supporting documents for its cost
report. We believe this proposal is consistent with the recordkeeping
requirements in Sec. Sec. 413.20 and 413.24.
2. Intern and Resident Information System (IRIS) Data
Section 413.24(f)(5)(i) also provides that a Medicare cost report
for a teaching hospital is rejected for lack of supporting
documentation if the cost report does not include a copy of the Intern
and Resident Information System (IRIS) diskette.
Section 1886(h) of the Act, as added by section 9202 of the
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), Public
Law 99-272, establishes a methodology for determining payments to
hospitals for the GME programs (which is currently implemented in the
regulations at 42 CFR 413.75 through 413.83). To account for the higher
indirect patient care costs of teaching hospitals relative to
nonteaching hospitals, section 1886(d)(5)(B) of the Act provides for a
payment adjustment known as the IME adjustment under the IPPS for
hospitals that have residents in an approved GME program. The
regulation regarding the calculation of this additional payment is
located at 42 CFR 412.105. (We refer

[[Page 20546]]

readers to section IV.E. of the preamble of this proposed rule for
additional background on direct GME and IME payments.)
In accordance with Sec. 413.78(b) for direct GME and Sec.
412.105(f)(1)(iii)(A) for IME, no individual may be counted as more
than one full-time equivalent (FTE). A hospital cannot claim the time
spent by residents training at another hospital; if a resident spends
time in more than one hospital or in a nonprovider setting, the
resident counts as a partial FTE based on the proportion of time worked
at the hospital to the total time worked. A part-time resident counts
as a partial FTE based on the proportion of allowable time worked
compared to the total time necessary to fill a full-time internship or
residency slot.
In 1990, we established the IRIS, under the authority of sections
1886(d)(5)(B) and 1886(h) of the Act, in order to facilitate proper
counting of FTE residents by hospitals that rotate their FTE residents
from one hospital or nonprovider setting to another. Teaching hospitals
use the IRIS to collect and report information on residents training in
approved residency programs. Section 413.24(f)(5)(i) requires teaching
hospitals to submit the IRIS data along with their Medicare cost
reports in order to have an acceptable cost report submission. The IRIS
can be downloaded from CMS' website at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Computer-Data-and-Systems/IRIS/?redirect=/iris. We are currently in the process of producing
a new Extensible Markup Language (XML)-based IRIS file format that
captures FTE resident count data consistent with the manner in which
FTEs are reported on the Medicare cost report.
After receiving the IRIS data along with each teaching hospital's
cost report, the contractors upload the data to a national database
housed at CMS, which can be used to identify ``duplicates,'' that is,
FTE residents being claimed by more than one hospital for the same
rotation. Identifying duplicates allows the contractors to approach the
hospitals that simultaneously claimed the same FTE, and correct the
duplicate reporting on the respective hospitals' cost reports for
direct GME and IME payment purposes.
Historically, we would collect the IRIS data from hospitals on a
diskette, as referenced in Sec. 413.24(f)(5)(i). Because diskettes are
no longer used by providers to furnish these data to contractors, in
this proposed rule, we are proposing to remove the reference in the
regulations to a diskette and instead reference ``Intern and Resident
Information System data.'' Specifically, we are proposing to amend
Sec. 413.24(f)(5)(i) by adding a new paragraph (A) to include this
proposed revised language.
In addition, to enhance the contractors' ability to review
duplicates and to ensure residents are not being double-counted, we
believe it is necessary and appropriate to require that the total
unweighted and weighted FTE counts on the IRIS for direct GME and IME
respectively, for all applicable allopathic, osteopathic, dental, and
podiatric residents that a hospital may train, must equal the same
total unweighted and weighted FTE counts for direct GME and IME
reported on Worksheet E-4 and Worksheet E, Part A. The need to verify
and maintain the integrity of the IRIS data has been the subject of
reviews by the Office of the Inspector General (OIG) over the years. An
August 2014 OIG report cited the need for CMS to develop procedures to
ensure that no resident is counted as more than one FTE in the
calculation of Medicare GME payments (OIG Report No. A-02-13-01014,
August 2014). More recently, a July 2017 OIG report recommended that
procedures be developed to ensure that no resident is counted as more
than one FTE in the calculation of Medicare GME payments (OIG Report
No. A-02-15-01027, July 2017).
Therefore, effective for cost reports filed on or after October 1,
2018, we are proposing to add the requirement that IRIS data contain
the same total counts of direct GME FTE residents (unweighted and
weighted) and of IME FTE residents as the total counts of direct GME
and IME FTE residents reported in the cost report. Specifically, we are
proposing to specify in a new paragraph (A) of Sec. 413.24(f)(5)(i)
that, effective for cost reports filed on or after October 1, 2018, the
IRIS data must contain the same total counts of direct GME FTE
residents (unweighted and weighted) and of IME FTE residents as the
total counts of direct GME FTE and IME FTE residents reported in the
hospital's cost report, or the cost report will be rejected for lack of
supporting documentation.
3. Medicare Bad Debt Reimbursement
Under section 1861(v)(1) of the Act and the regulations at Sec.
413.89, Medicare may reimburse a portion of the uncollectible
deductible and coinsurance amounts to those entities eligible to
receive reimbursement for Medicare bad debt. The Medicare Provider
Reimbursement Manual (PRM-1, CMS Pub. 15-1), Chapter 3, provides
guidance to providers that claim Medicare bad debt reimbursement.
Section 413.24(f)(5)(i) provides that an acceptable cost report
submission requires the provider to submit a Provider Cost
Reimbursement Questionnaire, Form CMS-339. The Form CMS-339, which has
been incorporated into all Medicare cost reports (except the OPO and
Histocompatibility Laboratory cost report, Form CMS-216, which we are
now proposing to incorporate into the cost report, as discussed in
section IX.B.1. of the preamble of this proposed rule), requires the
provider to submit supporting documentation with the cost report to
substantiate its claims for Medicare bad debt reimbursement. For
example, the hospital cost report, which incorporated the Form CMS-339,
instructs hospitals to submit a ``completed Exhibit 2 or internal
schedules duplicating the documentation requested on Exhibit 2 to
support the bad debts claimed'' (Section 4004.2 of CMS Pub. 15-2). This
``completed Exhibit 2 or internal schedules duplicating the
documentation requested on Exhibit 2 to support the bad debts claimed''
is also known as the Medicare bad debt listing and requires information
such as the patient's name, dates of service, the beneficiary's
Medicaid status, if applicable, the date that collection effort ceased,
and the deductible and coinsurance amounts.
Because the Provider Cost Reimbursement Questionnaire is
incorporated into the cost report as a worksheet, the bad debt listing
continues to be required for an acceptable cost report under Sec.
413.24(f)(5). In this proposed rule, we are proposing to require that
the Medicare bad debt listing correspond to the bad debt amount claimed
in the provider's cost report, in order for the provider to have an
acceptable cost report submission under Sec. 413.24(f)(5). This is
also consistent with a provider's recordkeeping and cost reporting
requirements of Sec. Sec. 413.20 and 413.24, and will facilitate the
contractor's review and verification of the cost report. Specifically,
we are proposing to amend Sec. 413.24(f)(5)(i) by adding a new
paragraph (B) to specify that, effective for cost reporting periods
beginning on or after October 1, 2018, for providers claiming Medicare
bad debt reimbursement, a cost report would be rejected for lack of
supporting documentation if it does not include a detailed bad debt
listing that

[[Page 20547]]

corresponds to the bad debt amounts claimed in the provider's cost
report.
4. Disproportionate Share Hospital (DSH) Payment Adjustment
The DSH payment adjustment provision under section 1886(d)(5)(F) of
the Act was enacted by section 9105 of COBRA and became effective for
discharges occurring on or after May 1, 1986. Under section
1886(d)(5)(F) of the Act, the primary method by which a hospital
qualifies for a Medicare DSH payment is based on the hospital's
disproportionate patient percentage, which is determined using a
statutory formula. This statutory formula incorporates the hospital's
number of patient days for patients who are eligible for Medicaid, but
were not entitled to benefits under Medicare Part A (``Medicaid
eligible days''), which hospitals are required to submit on their cost
reports.
Currently, in order for a DSH eligible hospital to have an
acceptable cost report submission, there is no requirement for the
hospital to also submit a listing of its Medicaid eligible days that
corresponds to the Medicaid eligible days claimed in the hospital's
cost report, as a supporting document. DSH eligible hospitals have
always been required to collect and maintain this data for completion
of the cost report, and to submit it when requested. However, we are
proposing that in order to have an acceptable cost report submission,
DSH eligible hospitals must submit this supporting data with their cost
reports. To ensure accurate DSH payments, additional information
regarding Medicaid eligible days is required in order to validate the
number of Medicaid eligible days the hospital reports in its cost
report. Currently, when this information regarding Medicaid eligible
days is not submitted by the DSH eligible hospitals with the cost
report, contractors must request it. An audit may reveal an
overstatement of a hospital's Medicaid eligible days. However, an audit
of these data may not take place for more than a year after the cost
report has been submitted, and tentative program reimbursement payments
are often issued to a provider upon the submission of the cost report.
Because the existing burden estimate for a DSH eligible hospital's cost
report already reflects the requirement that these hospitals collect,
maintain, and submit this data when requested, there is not additional
burden.
Requiring a provider to submit, as a supporting document with its
cost report, a listing of the provider's Medicaid eligible days that
corresponds to the Medicaid eligible days claimed in the DSH eligible
hospital's cost report would provide contractors with the DSH eligible
hospital's source document listing the Medicaid eligible days claimed
on its cost report and would be consistent with the recordkeeping and
cost reporting requirements of Sec. Sec. 413.20 and 413.24, which
require a provider to substantiate its costs. A requirement to submit
this supporting documentation also would facilitate the contractor's
review and verification of the cost report without the need to request
additional data from the provider. This proposal would not affect a
hospital's ability to submit an amended cost report, within 12 months
after the hospital's cost report is due, that reflects updated
information on Medicaid eligible patient days after the hospital
receives updated Medicaid eligibility information from the State (CY
2016 OPPS/ASC final rule with comment period (80 FR 70560)).
Therefore, in this proposed rule, we are proposing that, effective
for cost reporting periods beginning on or after October 1, 2018, in
order for a hospital eligible for a Medicare DSH payment adjustment to
have an acceptable cost report submission in accordance with Sec.
413.24(f)(5), the provider must submit a detailed listing of its
Medicaid eligible days that corresponds to the Medicaid eligible days
claimed in the provider's cost report, as a supporting document with
the provider's cost report. In addition, we are proposing that if the
provider submits an amended cost report that changes its Medicaid
eligible days, an amended listing or an addendum to the original
listing of the provider's Medicaid eligible days that corresponds to
the Medicaid eligible days claimed in the provider's amended cost
report would also need to be submitted as a supporting document with
the amended cost report.
Consistent with this proposal, we are proposing to amend Sec.
413.24(f)(5)(i) by adding a new paragraph (C) to specify that,
effective for cost reporting periods beginning on or after October 1,
2018, for hospitals claiming a DSH payment adjustment, a cost report
will be rejected for lack of supporting documentation if it does not
include a detailed listing of the hospital's Medicaid eligible days
that corresponds to the Medicaid eligible days claimed in the
hospital's cost report. If the hospital submits an amended cost report
that changes its Medicaid eligible days, an amended listing or an
addendum to the original listing of the hospital's Medicaid eligible
days that corresponds to the Medicaid eligible days claimed in the
hospital's amended cost report would be required.
5. Charity Care and Uninsured Discounts
Section 3133 of the Affordable Care Act amended the Medicare DSH
payment adjustment provision at section 1886(d)(5)(F) of the Act, and
established section 1886(r) of the Act which provides for an additional
payment that reflects a hospital's uncompensated care (which includes
charity care and discounts given to uninsured patients who qualify
under the hospital's charity care policy or financial assistance
policy). In accordance with the FY 2018 IPPS/LTCH PPS final rule (82 FR
38201 through 38208), starting in FY 2018, Worksheet S-10 of the cost
report is used as a data source for calculating uncompensated care
payments.
Currently there is no requirement for a DSH eligible hospital to
submit supporting documentation with its cost report, to substantiate
its charity care or discounts given to uninsured patients who qualify
under the hospital's charity care policy or financial assistance
policy, in order for its cost report submission to be acceptable in
accordance with Sec. 413.24(f)(5). Uncompensated care data reported on
a hospital's cost report did not have an impact on the determination of
uncompensated care payments before FY 2018 when the agency first began
using Worksheet S-10 data to calculate uncompensated care payments.
However, because the Worksheet S-10 data are now utilized to make
uncompensated care payments to DSH-eligible hospitals, documentation to
substantiate charity care or discounts given to uninsured patients who
qualify under the hospital's charity care or financial assistance
policy is needed to complete the cost report and to ensure there is no
duplication when hospitals report Medicare bad debt, charity care, and
uninsured discounts. All hospitals, including DSH eligible hospitals,
have always been required to collect and maintain this data for
completion of the cost report, and submit it when requested. However,
we are now proposing that in order to have an acceptable cost report
submission, DSH eligible hospitals must submit this supporting data
with their cost reports. To ensure accurate uncompensated care
payments, additional supporting information regarding charity care and
uninsured discounts is required in order to validate the amounts
reported in the cost report. Currently, when the documentation to
support the charity care charges and uninsured discounts is not
submitted by DSH eligible hospitals with the cost report, contractors
must

[[Page 20548]]

request it. Because the existing burden estimate for a DSH eligible
hospital's cost report already reflects the requirement that these
hospitals collect, maintain, and submit this data when requested, there
is no additional burden.
We believe that requiring a DSH eligible hospital to submit, with
its cost report, a detailed listing of its charity care and uninsured
discounts that corresponds to the amount claimed in the hospital's cost
report would be consistent with the recordkeeping and cost reporting
requirements of Sec. Sec. 413.20 and 413.24, which require a provider
to substantiate its costs. This supporting documentation also would
facilitate the contractor's review and verification of the cost report
without the need to request additional data from the provider.
Therefore, in this proposed rule, we are proposing that, effective
for cost reporting periods beginning on or after October 1, 2018, in
order for hospitals reporting charity care and/or uninsured discounts
to have an acceptable cost report submission under Sec. 413.24(f)(5),
the provider must submit a detailed listing of charity care and/or
uninsured discounts that contains information such as the patient name,
dates of service, insurer (if applicable), and the amount of charity
care and/or uninsured discount given that corresponds to the amount
claimed in the hospital's cost report as a supporting document with the
hospital's cost report.
Consistent with this proposal, we are proposing to amend Sec.
413.24(f)(5)(i) by adding a new paragraph (D) to specify that,
effective for cost reporting periods beginning on or after October 1,
2018, for hospitals reporting charity care and/or uninsured discounts,
a cost report will be rejected for lack of supporting documentation if
it does not include a detailed listing of charity care and/or uninsured
discounts that corresponds to the amounts claimed in the provider's
cost report.
6. Home Office Allocations
A chain organization consists of a group of two or more health care
facilities which are owned, leased, or through any other device,
controlled by one organization (Provider Reimbursement Manual 1 (PRM-
1), CMS Pub. 15-1, Chapter 21, Section 2150). Chain organizations
include, but are not limited to, chains operated by proprietary
organizations and chains operated by various religious, charitable, and
governmental organizations. A chain organization may also include
business organizations which are engaged in other activities not
directly related to health care.
When a provider claims costs on its cost report that are allocated
from a home office (also known as a chain home office or chain
organization), the Home Office Cost Statement constitutes the
documentary support required of the provider to be reimbursed for home
office costs in the provider's cost report as set forth in Section
2153, Chapter 21, of the PRM-1. Section 2153 states that each
contractor servicing a provider in a chain must be furnished with a
detailed Home Office Cost Statement as a basis for reimbursing the
provider for cost allocations from a home office or chain organization.
However, many cost reports that have home office costs allocated to
them are submitted without a Home Office Cost Statement as a supporting
document. In addition, there are home offices or chain organizations
that are not completing a Home Office Cost Statement to support the
costs they are allocating to the provider cost reports. Lack of this
documentation should result in a disallowance of costs. It is our
understanding that some providers paid under a PPS mistakenly believe
that a Home Office Cost Statement is no longer required. However, the
home office costs reported in the provider's cost report may have an
impact on future ratesetting and payment refinement activities. We
believe that requiring a home office or chain organization to complete
a Home Office Cost Statement and a provider to submit, with its cost
report, a copy of the Home Office Cost Statement completed by the home
office or chain organization that corresponds to the amounts allocated
from the home office or chain organization to the provider's cost
report, is consistent with Section 2153 of the PRM-1 and would be
consistent with a provider's recordkeeping and cost reporting
requirements of Sec. Sec. 413.20 and 413.24, which require a provider
to substantiate its costs.
Therefore, in this proposed rule, we are proposing that, effective
for cost reporting periods beginning on or after October 1, 2018, in
order for a provider claiming costs on its cost report that are
allocated from a home office or chain organization to have an
acceptable cost report submission under Sec. 413.24(f)(5), a Home
Office Cost Statement completed by the home office or chain
organization that corresponds to the amounts allocated from the home
office or chain organization to the provider's cost report must be
submitted as a supporting document with the provider's cost report.
This proposal would facilitate the contractor's review and verification
of the cost report without needing to request additional data from the
provider. With our proposal, we anticipate more providers will submit
the Home Office Cost Statement to support the amounts reported in their
cost reports, in order to have an acceptable cost report submission.
Because the existing burden estimate for a provider's cost report
already reflects the requirement that providers collect, maintain, and
submit this data, there is no additional burden.
Consistent with this proposal, we are proposing to amend Sec.
413.24(f)(5)(i) by adding a new paragraph (E) to specify that,
effective for cost reporting periods beginning on or after October 1,
2018, for providers claiming costs on their cost report that are
allocated from a home office or chain organization, a cost report will
be rejected for lack of supporting documentation if it does not include
a Home Office Cost Statement completed by the home office or chain
organization that corresponds to the amounts allocated from the home
office or chain organization to the provider's cost report.
We are seeking public comment on all of our proposals.

X. Requirements for Hospitals To Make Public a List of Their Standard
Charges via the Internet

In the FY 2015 IPPS/LTCH proposed rule and final rule (79 FR 28169
and 79 FR 50146, respectively), we discussed the implementation of
section 2718(e) of the Public Health Service Act, which aims to improve
the transparency of hospital charges. We noted that section 2718(e) of
the Public Health Service Act, which was enacted as part of the
Affordable Care Act, requires that each hospital operating within the
United States, for each year, establish (and update) and make public
(in accordance with guidelines developed by the Secretary) a list of
the hospital's standard charges for items and services provided by the
hospital, including for diagnosis-related groups established under
section 1886(d)(4) of the Social Security Act. We reminded hospitals of
their obligation to comply with the provisions of section 2718(e) of
the Public Health Service Act and provided guidelines for its
implementation. We stated that hospitals are required to either make
public a list of their standard charges (whether that be the
chargemaster itself or in another form of their choice) or their
policies for allowing the public to view a list of those charges in
response to an inquiry.
We encouraged hospitals to undertake efforts to engage in consumer
friendly communication of their charges to help patients understand
what their potential

[[Page 20549]]

financial liability might be for services they obtain at the hospital,
and to enable patients to compare charges for similar services across
hospitals. We also stated that we expect that hospitals will update the
information at least annually, or more often as appropriate, to reflect
current charges. We further noted that we are confident that hospital
compliance with this statutory transparency requirement will greatly
improve the public accessibility of charge information. Finally, we
stated that we would continue to review and post relevant charge data
in a consumer-friendly way, as we previously have done by posting
hospital and physician charge information on the CMS website.
We are concerned that challenges continue to exist for patients due
to insufficient price transparency. Such challenges include patients
being surprised by out-of-network bills for physicians, such as
anesthesiologists and radiologists, who provide services at in-network
hospitals, and patients being surprised by facility fees and physician
fees for emergency room visits. We also are concerned that chargemaster
data are not helpful to patients for determining what they are likely
to pay for a particular service or hospital stay. In order to promote
greater price transparency for patients, we are considering ways to
improve the accessibility and usability of the charge information that
hospitals are required to disclose under section 2718(e) of the Public
Health Service Act.
As one step to further improve the public accessibility of charge
information, effective January 1, 2019, we are updating our guidelines
to require hospitals to make available a list of their current standard
charges via the internet in a machine readable format and to update
this information at least annually, or more often as appropriate. This
could be in the form of the chargemaster itself or another form of the
hospital's choice, as long as the information is in machine readable
format.
We also are considering other potential actions that would be
appropriate, either under the authority of section 2718(e) of the
Public Health Service Act or under other authority, to further our
objective of having hospitals undertake efforts to engage in consumer-
friendly communication of their charges to help patients understand
what their potential financial liability might be for services they
obtain at the hospital, and to enable patients to compare charges for
similar services across hospitals. Therefore, we are seeking public
comment on the following:
Should ``standard charges'' be defined to mean: average or
median rates for the items on the chargemaster; average or median rates
for groups of services commonly billed together (such as for an MS-
DRG), as determined by the hospital based on its billing patterns; or
the average discount off the chargemaster amount across all payers,
either for each item on the chargemaster or for groups of services
commonly billed together? Should ``standard charges'' be defined and
reported for both some measure of the average contracted rate and the
chargemaster? Or is the best measure of a hospital's standard charges
its chargemaster?
What types of information would be most beneficial to
patients, how can hospitals best enable patients to use charge and cost
information in their decision-making, and how can CMS and providers
help third parties create patient-friendly interfaces with these data?
Should health care providers be required to inform
patients how much their out-of- pocket costs for a service will be
before those patients are furnished that service? What changes would be
needed to support greater transparency around patient obligations for
their out-of-pocket costs? What can be done to better inform patients
of these obligations? Should health care providers play any role in
helping to inform patients of what their out-of- pocket obligations
will be?
Should we require health care providers to provide
patients with information on what Medicare pays for a particular
service performed by a health care provider? If CMS were to finalize a
requirement that this information be made available to beneficiaries by
health care providers, what changes would need to be made by health
care providers? What corresponding regulatory changes would be
necessary?
CMS is considering making information regarding noncompliance with
section 2718(e) of the Public Health Service Act public and intends to
consider this as well as additional enforcement mechanisms in future
rulemaking. Therefore, we are seeking comment on the following:
What is the most appropriate mechanism for CMS to enforce
price transparency requirements? Should CMS require hospitals to attest
to meeting requirements in the provider agreement or elsewhere? How
should CMS assess hospital compliance? Should CMS publicize complaints
regarding access to price information or review hospital compliance and
post results? What is the most effective way for CMS to publicize
information regarding hospitals that fail to comply? Should CMS impose
civil money penalties on hospitals that fail to make standard charges
publically available as required by section 2718(e) of the Public
Health Service Act? Should CMS use a framework similar to the Federal
civil penalties under 45 CFR 158.601, et seq. that apply to issuers
that fail to report information and pay rebates related to medical loss
ratios, as required by sections 2718(a) and (b) of the Public Health
Service Act, or would a different framework be more appropriate?
In addition, we are seeking public comment on improving our
understanding of out-of-pocket costs for patients with Medigap
coverage, especially with respect to the following particular
questions:
How does Medigap coverage affect patients' understanding
of their out-of-pocket costs before they receive care? What challenges
do providers face in providing information about out-of-pocket costs to
patients with Medigap? What changes would be needed to support
providers sharing out-of-pocket cost information with patients that
reflects the patient's Medigap coverage? Who is best situated to
provide patients with Medigap coverage clear information on their out-
of-pocket costs prior to receipt of care? What State-specific
requirements or programs help educate Medigap patients about their out-
of-pocket costs prior to receipt of care?
We also note that, in the interest of public accessibility, we
continue to post charge data for services furnished to Medicare
beneficiaries covered under Medicare fee-for-service by diagnosis-
related group for each IPPS hospital on our website. These charge data
are based on the MEDPAR short-stay inpatient data and augmented with
the provider-of-service data and hospital referral regions data to
include provider characteristics and hospital referral region. For each
hospital-DRG record, the charge data include total discharges for
Medicare beneficiaries, average covered charges, average total
payments, and average Medicare payments. Data are currently available
for FYs 2011 through 2015 for the more than 3,000 IPPS hospitals within
the 50 United States and District of Columbia. These data are available
at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Medicare-Provider-Charge-Data/Inpatient.html.

[[Page 20550]]

XI. Proposed Revisions Regarding Physician Certification and
Recertification of Claims

Our Medicare regulations at 42 CFR 424.11, which implement sections
1814(a)(2) and 1835(a)(2) of the Act, specify the requirements for
physician statements that certify and periodically recertify as to the
medical necessity of certain types of covered services provided to
Medicare beneficiaries. The regulation provision under Sec. 424.11(c)
specifies that when supporting information for the required physician
statement is available elsewhere in the records (for example, in the
physician's progress notes), the information need not be repeated in
the statement itself. The last sentence of Sec. 424.11(c) further
provides that it will suffice for the statement to indicate where the
information is to be found.
As part of our ongoing initiative to identify Medicare regulations
that are unnecessary, obsolete, or excessively burdensome on health
care providers and suppliers--and thereby free up resources that could
be used to improve or enhance patient care--we have been made aware
that the provisions of Sec. 424.11(c) which state that it will suffice
for the statement to indicate where the information is to be found may
be resulting in unnecessary denials of Medicare claims. As currently
worded, this last sentence of Sec. 424.11(c) can result in a claim
being denied merely because the physician statement technically fails
to identify a specific location in the file for the supporting
information, even when that information nevertheless may be readily
apparent to the reviewer. We believe that continuing to require the
location to be specified in this situation is unnecessary.
Certifications and recertifications continue to be based on the
criteria for the service being certified, and the medical record must
contain adequate documentation of the relevant criteria for which the
physician is providing certification or recertification, even if the
precise location of the information within the medical record is not
included. Moreover, the need for the precise location is becoming
increasingly obsolete with the growing utilization of electronic health
records (EHRs)--which, by their nature, are readily searchable.
Accordingly, in this proposed rule, we are proposing to delete the last
sentence of Sec. 424.11(c). In addition, we are proposing to relocate
the second sentence of Sec. 424.11(c) (indicating that supporting
information contained elsewhere in the provider's records need not be
repeated in the certification or recertification statement itself) to
the end of the immediately preceding paragraph (b), which describes
similar kinds of flexibility that are currently afforded in terms of
completing the required statement.
We are inviting public comments on our proposals.

XII. Request for Information on Promoting Interoperability and
Electronic Healthcare Information Exchange Through Possible Revisions
to the CMS Patient Health and Safety Requirements for Hospitals and
Other Medicare- and Medicaid-Participating Providers and Suppliers

Currently, Medicare- and Medicaid-participating providers and
suppliers are at varying stages of adoption of health information
technology (health IT). Many hospitals have adopted electronic health
records (EHRs), and CMS has provided incentive payments to eligible
hospitals, critical access hospitals (CAHs), and eligible professionals
who have demonstrated meaningful use of certified EHR technology
(CEHRT) under the Medicare EHR Incentive Program. As of 2015, 96
percent of Medicare- and Medicaid-participating non-Federal acute care
hospitals had adopted certified EHRs with the capability to
electronically export a summary of clinical care.\385\ While both
adoption of EHRs and electronic exchange of information have grown
substantially among hospitals, significant obstacles to exchanging
electronic health information across the continuum of care persist.
Routine electronic transfer of information post-discharge has not been
achieved by providers and suppliers in many localities and regions
throughout the Nation.
---------------------------------------------------------------------------

\385\ These statistics can be accessed at:
https://dashboard.healthit.gov/quickstats/pages/FIG-Hospital-EHR-Adoption.php.
---------------------------------------------------------------------------

CMS is firmly committed to the use of certified health IT and
interoperable EHR systems for electronic healthcare information
exchange to effectively help hospitals and other Medicare- and
Medicaid-participating providers and suppliers improve internal care
delivery practices, support the exchange of important information
across care team members during transitions of care, and enable
reporting of electronically specified clinical quality measures
(eCQMs). The Office of the National Coordinator for Health Information
Technology (ONC) acts as the principal Federal entity charged with
coordination of nationwide efforts to implement and use health
information technology and the electronic exchange of health
information on behalf of the Department of Health and Human Services.
In 2015, ONC finalized the 2015 Edition health IT certification
criteria (2015 Edition), the most recent criteria for health IT to be
certified to under the ONC Health IT Certification Program. The 2015
Edition facilitates greater interoperability for several clinical
health information purposes and enables health information exchange
through new and enhanced certification criteria, standards, and
implementation specifications. CMS requires eligible hospitals and CAHs
in the Medicare and Medicaid EHR Incentive Programs and eligible
clinicians in the Quality Payment Program (QPP) to use EHR technology
certified to the 2015 Edition beginning in CY 2019.
In addition, several important initiatives will be implemented over
the next several years to provide hospitals and other participating
providers and suppliers with access to robust infrastructure that will
enable routine electronic exchange of health information. Section 4003
of the 21st Century Cures Act (Pub. L. 114-255), enacted in 2016, and
amending section 3000 of the Public Health Service Act (42 U.S.C.
300jj), requires HHS to take steps to advance the electronic exchange
of health information and interoperability for participating providers
and suppliers in various settings across the care continuum.
Specifically, Congress directed that ONC ``. . . for the purpose of
ensuring full network-to-network exchange of health information,
convene public-private and public-public partnerships to build
consensus and develop or support a trusted exchange framework,
including a common agreement among health information networks
nationally.'' In January 2018, ONC released a draft version of its
proposal for the Trusted Exchange Framework and Common Agreement,\386\
which outlines principles and minimum terms and conditions for trusted
exchange to enable interoperability across disparate health information
networks (HINs). The Trusted Exchange Framework (TEF) is focused on
achieving the following four important outcomes in the long-term:
---------------------------------------------------------------------------

\386\ The draft version of the trusted Exchange Framework may be
accessed at: https://beta.healthit.gov/topic/interoperability/trusted-exchange-framework-and-common-agreement.
---------------------------------------------------------------------------

Professional care providers, who deliver care across the
continuum, can access health information about their patients,
regardless of where the patient received care.

[[Page 20551]]

Patients can find all of their health information from
across the care continuum, even if they do not remember the name of the
professional care provider they saw.
Professional care providers and health systems, as well as
public and private health care organizations and public and private
payer organizations accountable for managing benefits and the health of
populations, can receive necessary and appropriate information on
groups of individuals without having to access one record at a time,
allowing them to analyze population health trends, outcomes, and costs;
identify at-risk populations; and track progress on quality improvement
initiatives.
The health IT community has open and accessible
application programming interfaces (APIs) to encourage entrepreneurial,
user-focused innovation that will make health information more
accessible and improve EHR usability.
ONC will revise the draft TEF based on public comment and
ultimately release a final version of the TEF that will subsequently be
available for adoption by HINs and their participants seeking to
participate in nationwide health information exchange. The goal for
stakeholders that participate in, or serve as, a HIN is to ensure that
participants will have the ability to seamlessly share and receive a
core set of data from other network participants in accordance with a
set of permitted purposes and applicable privacy and security
requirements. Broad adoption of this framework and its associated
exchange standards is intended to both achieve the outcomes described
above while creating an environment more conducive to innovation.
In light of the widespread adoption of EHRs along with the
increasing availability of health information exchange infrastructure
predominantly among hospitals, we are interested in hearing from
stakeholders on how we could use the CMS health and safety standards
that are required for providers and suppliers participating in the
Medicare and Medicaid programs (that is, the Conditions of
Participation (CoPs), Conditions for Coverage (CfCs), and Requirements
for Participation (RfPs) for Long Term Care Facilities) to further
advance electronic exchange of information that supports safe,
effective transitions of care between hospitals and community
providers. Specifically, CMS might consider revisions to the current
CMS CoPs for hospitals such as: Requiring that hospitals transferring
medically necessary information to another facility upon a patient
transfer or discharge do so electronically; requiring that hospitals
electronically send required discharge information to a community
provider via electronic means if possible and if a community provider
can be identified; and requiring that hospitals make certain
information available to patients or a specified third-party
application (for example, required discharge instructions) via
electronic means if requested.
On November 3, 2015, we published a proposed rule (80 FR 68126) to
implement the provisions of the IMPACT Act and to revise the discharge
planning CoP requirements that hospitals (including short-term acute
care hospitals, long-term care hospitals (LTCHs), inpatient
rehabilitation hospitals (IRFs), inpatient psychiatric hospitals
(IPFs), children's hospitals, and cancer hospitals), critical access
hospitals (CAHs), and home health agencies (HHAs) must meet in order to
participate in the Medicare and Medicaid programs. This proposed rule
has not been finalized yet. However, several of the proposed
requirements directly address the issue of communication between
providers and between providers and patients, as well as the issue of
interoperability:
Hospitals and CAHs would be required to transfer certain
necessary medical information and a copy of the discharge instructions
and discharge summary to the patient's practitioner, if the
practitioner is known and has been clearly identified;
Hospitals and CAHs would be required to send certain
necessary medical information to the receiving facility/post-acute care
providers, at the time of discharge; and
Hospitals, CAHs and HHAs, would need to comply with the
IMPACT Act requirements that would require hospitals, CAHs, and certain
post-acute care providers to use data on quality measures and data on
resource use measures to assist patients during the discharge planning
process, while taking into account the patient's goals of care and
treatment preferences.
We published another proposed rule (81 FR 39448), on June 16, 2016,
that updated a number of CoP requirements that hospitals and CAHs must
meet in order to participate in the Medicare and Medicaid programs.
This proposed rule has not been finalized yet. One of the proposed
hospital CoP revisions in that rule directly addresses the issues of
communication between providers and patients, patient access to their
medical records, and interoperability. We proposed that patients have
the right to access their medical records, upon an oral or written
request, in the form and format requested by such patients, if it is
readily producible in such form and format (including in an electronic
form or format when such medical records are maintained
electronically); or, if not, in a readable hard copy form or such other
form and format as agreed to by the facility and the individual,
including current medical records, within a reasonable timeframe. The
hospital must not frustrate the legitimate efforts of individuals to
gain access to their own medical records and must actively seek to meet
these requests as quickly as its record keeping system permits.
We also published a final rule (81 FR 68688), on October 4, 2016,
that revised the requirements that LTC facilities must meet to
participate in the Medicare and Medicaid programs, where we made a
number of revisions based on the importance of effective communication
between providers during transitions of care, such as transfers and
discharges of residents to other facilities or providers, or to home.
Among these revisions was a requirement that the transferring LTC
facility must provide all necessary information to the resident's
receiving provider, whether it is an acute care hospital, a LTC
hospital, a psychiatric facility, another LTC facility, a hospice, a
health agency, or another community-based provider or practitioner. We
specified that necessary information must include the following:
Contact information of the practitioner responsible for
the care of the resident;
Resident representative information including contact
information;
Advance directive information;
Special instructions or precautions for ongoing care;
The resident's comprehensive care plan goals; and
All other necessary information, including a copy of the
resident's discharge or transfer summary and any other documentation to
ensure a safe and effective transition of care.
We note that the discharge summary mentioned above must include
reconciliation of the resident's medications, as well as a
recapitulation of the resident's stay, a final summary of the
resident's status, and the post-discharge plan of care. In the preamble
to the rule, we encouraged LTC facilities to electronically exchange
this information if possible and to identify opportunities to
streamline the collection and exchange of resident information by using
information that the facility is already capturing electronically.
Additionally, we specifically invite stakeholder feedback on the
following

[[Page 20552]]

questions regarding possible new or revised CoPs/CfCs/RfPs for
interoperability and electronic exchange of health information:
If CMS were to propose a new CoP/CfC/RfP standard to
require electronic exchange of medically necessary information, would
this help to reduce information blocking as defined in section 4004 of
the 21st Century Cures Act?
Should CMS propose new CoPs/CfCs/RfPs for hospitals and
other participating providers and suppliers to ensure a patient's or
resident's (or his or her caregiver's or representative's) right and
ability to electronically access his or her health information without
undue burden? Would existing portals or other electronic means
currently in use by many hospitals satisfy such a requirement regarding
patient/resident access as well as interoperability?
Are new or revised CMS CoPs/CfCs/RfPs for interoperability
and electronic exchange of health information necessary to ensure
patients/residents and their treating providers routinely receive
relevant electronic health information from hospitals on a timely basis
or will this be achieved in the next few years through existing
Medicare and Medicaid policies, HIPAA, and implementation of relevant
policies in the 21st Century Cures Act?
What would be a reasonable implementation timeframe for
compliance with new or revised CMS CoPs/CfCs/RfPs for interoperability
and electronic exchange of health information if CMS were to propose
and finalize such requirements? Should these requirements have delayed
implementation dates for specific participating providers and
suppliers, or types of participating providers and suppliers (for
example, participating providers and suppliers that are not eligible
for the Medicare and Medicaid EHR Incentive Programs)?
Do stakeholders believe that new or revised CMS CoPs/CfCs/
RfPs for interoperability and electronic exchange of health information
would help improve routine electronic transfer of health information as
well as overall patient/resident care and safety?
Under new or revised CoPs/CfCs/RfPs, should non-electronic
forms of sharing medically necessary information (for example, printed
copies of patient/resident discharge/transfer summaries shared directly
with the patient/resident or with the receiving provider or supplier,
either directly transferred with the patient/resident or by mail or fax
to the receiving provider or supplier) be permitted to continue if the
receiving provider, supplier, or patient/resident cannot receive the
information electronically?
Are there any other operational or legal considerations
(for example, HIPAA), obstacles, or barriers that hospitals and other
providers and suppliers would face in implementing changes to meet new
or revised interoperability and health information exchange
requirements under new or revised CMS CoPs/CfCs/RfPs if they are
proposed and finalized in the future?
What types of exceptions, if any, to meeting new or
revised interoperability and health information exchange requirements,
should be allowed under new or revised CMS CoPs/CfCs/RfPs if they are
proposed and finalized in the future? Should exceptions under the QPP
including CEHRT hardship or small practices be extended to new
requirements? Would extending such exceptions impact the effectiveness
of these requirements?
We would also like to directly address the issue of communication
between hospitals (as well as the other providers and suppliers across
the continuum of patient care) and their patients and caregivers.
MyHealthEData is a government-wide initiative aimed at breaking down
barriers that contribute to preventing patients from being able to
access and control their medical records. Privacy and security of
patient data will be at the center of all CMS efforts in this area. CMS
must protect the confidentiality of patient data, and CMS is completely
aligned with the Department of Veterans Affairs (VA), the National
Institutes of Health (NIH), ONC, and the rest of the Federal
Government, on this objective.
While some Medicare beneficiaries have had, for quite some time,
the ability to download their Medicare claims information, in pdf or
Excel formats, through the CMS Blue Button platform, the information
was provided without any context or other information that would help
beneficiaries understand what the data was really telling them. For
beneficiaries, their claims information is useless if it is either too
hard to obtain or, as was the case with the information provided
through previous versions of Blue Button, hard to understand. In an
effort to fully contribute to the Federal Government's MyHealthEData
initiative, CMS developed and launched the new Blue Button 2.0, which
represents a major step toward giving patients meaningful control of
their health information in an easy-to-access and understandable way.
Blue Button 2.0 is a developer-friendly, standards-based API that
enables Medicare beneficiaries to connect their claims data to secure
applications, services, and research programs they trust. The
possibilities for better care through Blue Button 2.0 data are
exciting, and might include enabling the creation of health dashboards
for Medicare beneficiaries to view their health information in a single
portal, or allowing beneficiaries to share complete medication lists
with their doctors to prevent dangerous drug interactions.
To fully understand all of these health IT interoperability issues,
initiatives, and innovations through the lens of its regulatory
authority, CMS invites members of the public to submit their ideas on
how best to accomplish the goal of fully interoperable health IT and
EHR systems for Medicare- and Medicaid-participating providers and
suppliers, as well as how best to further contribute to and advance the
MyHealthEData initiative for patients. We are particularly interested
in identifying fundamental barriers to interoperability and health
information exchange, including those specific barriers that prevent
patients from being able to access and control their medical records.
We also welcome the public's ideas and innovative thoughts on
addressing these barriers and ultimately removing or reducing them in
an effective way, specifically through revisions to the current CMS
CoPs, CfCs, and RfPs for hospitals and other participating providers
and suppliers. We have received stakeholder input through recent CMS
Listening Sessions on the need to address health IT adoption and
interoperability among providers that were not eligible for the
Medicare and Medicaid EHR Incentives program, including long-term and
post-acute care providers, behavioral health providers, clinical
laboratories and social service providers, and we would also welcome
specific input on how to encourage adoption of certified health IT and
interoperability among these types of providers and suppliers as well.
We note that this is a Request for Information only. Respondents
are encouraged to provide complete but concise and organized responses,
including any relevant data and specific examples. However, respondents
are not required to address every issue or respond to every question
discussed in this Request for Information to have their responses
considered. In accordance with the implementing regulations of the
Paperwork Reduction Act at 5 CFR 1320.3(h)(4), all responses will be
considered, provided they contain information CMS can use to identify
and contact the commenter, if needed.
This Request for Information is issued solely for information and
planning

[[Page 20553]]

purposes; it does not constitute a Request for Proposal (RFP),
applications, proposal abstracts, or quotations. This Request for
Information does not commit the U.S. Government to contract for any
supplies or services or make a grant award. Further, CMS is not seeking
proposals through this Request for Information and will not accept
unsolicited proposals. Responders are advised that the U.S. Government
will not pay for any information or administrative costs incurred in
response to this Request for Information; all costs associated with
responding to this Request for Information will be solely at the
interested party's expense.
We note that not responding to this Request for Information does
not preclude participation in any future procurement, if conducted. It
is the responsibility of the potential responders to monitor this
Request for Information announcement for additional information
pertaining to this request. In addition, we note that CMS will not
respond to questions about the policy issues raised in this Request for
Information. CMS will not respond to comment submissions in response to
this Request for Information in the FY 2019 IPPS/LTCH PPS final rule.
Rather, CMS will actively consider all input as we develop future
regulatory proposals or future subregulatory policy guidance. CMS may
or may not choose to contact individual responders. Such communications
would be for the sole purpose of clarifying statements in the
responders' written responses. Contractor support personnel may be used
to review responses to this Request for Information. Responses to this
notice are not offers and cannot be accepted by the Government to form
a binding contract or issue a grant. Information obtained as a result
of this Request for Information may be used by the Government for
program planning on a nonattribution basis. Respondents should not
include any information that might be considered proprietary or
confidential.
This Request for Information should not be construed as a
commitment or authorization to incur cost for which reimbursement would
be required or sought. All submissions become U.S. Government property
and will not be returned. CMS may publically post the public comments
received, or a summary of those public comments.

XIII. MedPAC Recommendations

Under section 1886(e)(4)(B) of the Act, the Secretary must consider
MedPAC's recommendations regarding hospital inpatient payments. Under
section 1886(e)(5) of the Act, the Secretary must publish in the annual
proposed and final IPPS rules the Secretary's recommendations regarding
MedPAC's recommendations. We have reviewed MedPAC's March 2018 ``Report
to the Congress: Medicare Payment Policy'' and have given the
recommendations in the report consideration in conjunction with the
proposed policies set forth in this proposed rule. MedPAC
recommendations for the IPPS for FY 2019 are addressed in Appendix B to
this proposed rule.
For further information relating specifically to the MedPAC reports
or to obtain a copy of the reports, contact MedPAC at (202) 653-7226,
or visit MedPAC's website at: https://www.medpac.gov.

XIV. Other Required Information

A. Publicly Available Files

IPPS-related data are available on the internet for public use. The
data can be found on the CMS website at: https://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/.
Following is a listing of the IPPS-related data files that are
available.
Commenters interested in discussing any data files used in
construction of this proposed rule should contact Michael Treitel at
(410) 786-4552.
1. CMS Wage Data Public Use File
This file contains the hospital hours and salaries from Worksheet
S-3, Parts II and III from FY 2015 Medicare cost reports used to create
the proposed FY 2019 IPPS wage index. Multiple versions of this file
are created each year. For a discussion of the release of different
versions of this file, we refer readers to section III.L. of the
preamble of this proposed rule.

------------------------------------------------------------------------
Processing year Wage data year PPS fiscal year
------------------------------------------------------------------------
2018 2015 2019
2017 2014 2018
2016 2013 2017
2015 2012 2016
2014 2011 2015
2013 2010 2014
2012 2009 2013
2011 2008 2012
2010 2007 2011
2009 2006 2010
2008 2005 2009
2007 2004 2008
------------------------------------------------------------------------

Media: Internet at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files.html.
Periods Available: FY 2007 through FY 2019 IPPS Update.
2. CMS Occupational Mix Data Public Use File
This file contains the CY 2016 occupational mix survey data to be
used to compute the occupational mix adjusted wage indexes. Multiple
versions of this file are created each year. For a discussion of the
release of different versions of this file, we refer readers to section
III.L. of the preamble of this proposed rule.
Media: Internet at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files.html.
Period Available: FY 2019 IPPS Update.
3. Provider Occupational Mix Adjustment Factors for Each Occupational
Category Public Use File
This file contains each hospital's occupational mix adjustment
factors by occupational category. Two versions of these files are
created each year to support the rulemaking.
Media: Internet at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files.html.
Period Available: FY 2019 IPPS Update.
4. Other Wage Index Files
CMS releases other wage index analysis files after each proposed
and final rule.
Media: Internet at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files.html.
Periods Available: FY 2005 through FY 2019 IPPS Update.
5. FY 2019 IPPS SSA/FIPS CBSA State and County Crosswalk
This file contains a crosswalk of State and county codes used by
the Social Security Administration (SSA) and the Federal Information
Processing Standards (FIPS), county name, and a list of Core-Based
Statistical Areas (CBSAs).
Media: Internet at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Acute-Inpatient-Files-for-Download.html.
Period Available: FY 2019 IPPS Update.
6. HCRIS Cost Report Data
The data included in this file contain cost reports with fiscal
years ending on

[[Page 20554]]

or after September 30, 1996. These data files contain the highest level
of cost report status.
Media: Internet at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Downloadable-Public-Use-Files/Cost-Reports/Cost-Reports-by-Fiscal-Year.html.
(We note that data are no longer offered on a CD. All of the data
collected are now available free for download from the cited website.)
7. Provider-Specific File
This file is a component of the PRICER program used in the MAC's
system to compute DRG/MS-DRG payments for individual bills. The file
contains records for all prospective payment system eligible hospitals,
including hospitals in waiver States, and data elements used in the
prospective payment system recalibration processes and related
activities. Beginning with December 1988, the individual records were
enlarged to include pass-through per diems and other elements.
Media: Internet at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ProspMedicareFeeSvcPmtGen/psf_text.html.
Period Available: Quarterly Update.
8. CMS Medicare Case-Mix Index File
This file contains the Medicare case-mix index by provider number
as published in each year's update of the Medicare hospital inpatient
prospective payment system. The case-mix index is a measure of the
costliness of cases treated by a hospital relative to the cost of the
national average of all Medicare hospital cases, using DRG/MS-DRG
weights as a measure of relative costliness of cases. Two versions of
this file are created each year to support the rulemaking.
Media: Internet at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Acute-Inpatient-Files-for-Download.html.
Periods Available: FY 1985 through FY 2019.
9. MS-DRG Relative Weights (Also Table 5--MS-DRGs)
This file contains a listing of MS-DRGs, MS-DRG narrative
descriptions, relative weights, and geometric and arithmetic mean
lengths of stay for each fiscal year. Two versions of this file are
created each year to support the rulemaking.
Media: Internet at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Acute-Inpatient-Files-for-Download.html.
Periods Available: FY 2005 through FY 2019 IPPS Update
10. IPPS Payment Impact File
This file contains data used to estimate payments under Medicare's
hospital inpatient prospective payment systems for operating and
capital-related costs. The data are taken from various sources,
including the Provider-Specific File, HCRIS Cost Report Data, MedPAR
Limited Data Sets, and prior impact files. The data set is abstracted
from an internal file used for the impact analysis of the changes to
the prospective payment systems published in the Federal Register. Two
versions of this file are created each year to support the rulemaking.
Media: Internet at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Historical-Impact-Files-for-FY-1994-through-Present.html.
Periods Available: FY 1994 through FY 2019 IPPS Update.
11. AOR/BOR Tables
This file contains data used to develop the MS-DRG relative
weights. It contains mean, maximum, minimum, standard deviation, and
coefficient of variation statistics by MS-DRG for length of stay and
standardized charges. The BOR tables are ``Before Outliers Removed''
and the AOR is ``After Outliers Removed.'' (Outliers refer to
statistical outliers, not payment outliers.)
Two versions of this file are created each year to support the
rulemaking.
Media: Internet at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Acute-Inpatient-Files-for-Download.html.
Periods Available: FY 2005 through FY 2019 IPPS Update.
12. Prospective Payment System (PPS) Standardizing File
This file contains information that standardizes the charges used
to calculate relative weights to determine payments under the hospital
inpatient operating and capital prospective payment systems. Variables
include wage index, cost-of-living adjustment (COLA), case-mix index,
indirect medical education (IME) adjustment, disproportionate share,
and the Core-Based Statistical Area (CBSA). The file supports the
rulemaking.
Media: Internet at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Acute-Inpatient-Files-for-Download.html.
Period Available: FY 2019 IPPS Update.
13. Hospital Readmissions Reduction Program Supplemental File
This file contains information on the calculation of the Hospital
Readmissions Reduction Program (HRRP) payment adjustment. Variables
include the proxy excess readmission ratios for acute myocardial
infarction (AMI), pneumonia (PN) and heart failure (HF), coronary
obstruction pulmonary disease (COPD), total hip arthroplasty (THA)/
total knee arthroplasty (TKA), and coronary artery bypass grafting
(CABG) and the proxy readmissions payment adjustment for each provider
included in the program. In addition, the file contains information on
the number of cases for each of the applicable conditions excluded in
the calculation of the readmission payment adjustment factors. It also
contains MS-DRG relative weight information to estimate the payment
adjustment factors. The file supports the rulemaking.
Media: Internet at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Acute-Inpatient-Files-for-Download.html.
Period Available: FY 2019 IPPS Update.
14. Medicare Disproportionate Share Hospital (DSH) Supplemental File
This file contains information on the calculation of the
uncompensated care payments for FY 2019. Variables include the data
used to determine a hospital's share of uncompensated care payments,
total uncompensated care payments and estimated per claim uncompensated
care payment amounts. The file supports the rulemaking.
Media: Internet at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Acute-Inpatient-Files-for-Download.html.
Period Available: FY 2019 IPPS Update.

B. Collection of Information Requirements

1. Statutory Requirement for Solicitation of Comments
Under the Paperwork Reduction Act of 1995, we are required to
provide 60-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and

[[Page 20555]]

approval. In order to fairly evaluate whether an information collection
should be approved by OMB, section 3506(c)(2)(A) of the Paperwork
Reduction Act of 1995 requires that we solicit comment on the following
issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
In this proposed rule, we are soliciting public comment on each of
these issues for the following sections of this document that contain
information collection requirements (ICRs).
2. ICRs for Application for GME Resident Slots
The information collection requirements associated with the
preservation of resident cap positions from close hospitals, addressed
in section IV.L.2. of the preamble of this proposed rule, are not
subject to the Paperwork Reduction Act, as stated in section 5506 of
the Affordable Care Act.
3. ICRs for the Hospital Inpatient Quality Reporting (IQR) Program
a. Background
The Hospital IQR Program (formerly referred to as the Reporting
Hospital Quality Data for Annual Payment (RHQDAPU) Program) was
originally established to implement section 501(b) of the MMA, Public
Law 108-173. The collection of information associated with the original
starter set of quality measures was previously approved under OMB
control number 0938-0918. All of the information collection
requirements previously approved under OMB control number 0938-0918
have been combined with the information collection request currently
approved under OMB control number 0938-1022. OMB has currently approved
3,637,282 hours of burden and approximately $133 million under OMB
control number 0938-1022, accounting for information collection burden
experienced by 3,300 IPPS hospitals and 1,100 non-IPPS hospitals for
the FY 2020 payment determination.\387\ We no longer use OMB control
number 0938-0918. Below, we describe the burden changes with regards to
collection of information under OMB control number 0938-1022 for IPPS
hospitals due to the proposals in this proposed rule.
---------------------------------------------------------------------------

\387\ The information collection burden associated with
submitting data for the HCP and HAI measures (CDI, CAUTI, CLABSI,
MRSA Bacteremia, and Colon and Abdominal Hysterectomy SSI) via the
CDC's NHSN system is captured under a separate OMB control number,
0920-0666. The information collection burden associated with
submitting data for the HCAHPS Survey measure is captured under OMB
control number 0938-0981.
---------------------------------------------------------------------------

In section VIII.A. of the preamble of this proposed rule, we
discuss the following proposals that we expect to affect our collection
of information burden estimates: (1) eCQM reporting and submission
requirements for the CY 2019 reporting period/FY 2021 payment
determination; (2) removal of eight chart-abstracted measures beginning
with the CY 2019 reporting period/FY 2021 payment determination; and
(3) removal of one chart-abstracted measure beginning with the CY 2020
reporting period/FY 2022 payment determination. Details on these
proposals, as well as the expected burden changes, are discussed below.
This proposed rule also includes proposals with respect to claims-
based measures to: (1) Remove 17 claims-based measures beginning with
the CY 2018 reporting period/FY 2020 payment determination; (2) remove
two claims-based measures beginning with the CY 2019 reporting period/
FY 2021 payment determination; (3) remove one claims-based measure
beginning with CY 2020 reporting period/FY 2022 payment determination;
(4) remove one claims-based measure beginning with the CY 2021
reporting period/FY 2023 payment determination; (5) remove two
structural measures beginning with the CY 2018 reporting period/FY 2020
payment determination; and (6) remove seven eCQMs beginning with CY
2020 reporting period/FY 2022 payment determination. As discussed
further below, we do not expect these proposals to affect our
information collection burden estimates.
b. Information Collection Burden Estimate for the Proposed Removal of
Chart-Abstracted Measures
(1) Information Collection Burden Estimate for the Proposed Removal of
Eight Chart-Abstracted Measures Beginning With the CY 2019 Reporting
Period/FY 2021 Payment Determination
In sections VIII.A.5.b(2)(b) and VIII.A.5.b.(8)(b) of the preamble
of this proposed rule, we are proposing to remove eight chart-
abstracted measures (five National Healthcare Safety Network (NHSN))
hospital-acquired infection (HAI) measures and three clinical process
of care measures) beginning with the CY 2019 reporting period/FY 2021
payment determination:
National Healthcare Safety Network Facility-Wide Inpatient
Hospital-Onset Clostridium difficile Infection (CDI) Outcome Measure
(NQF #1717);
National Healthcare Safety Network Catheter-Associated
Urinary Tract Infection (CAUTI) Outcome Measure (NQF #0138);
National Healthcare Safety Network Central Line-Associated
Bloodstream Infection (CLABSI) Outcome Measure (NQF #0139);
National Healthcare Safety Network Facility-Wide Inpatient
Hospital-Onset Methicillin-Resistant Staphylococcus aureus (MRSA)
Bacteremia Outcome Measure (NQF #1716);
American College of Surgeons--Centers for Disease Control
and Prevention Harmonized Procedure-Specific Surgical Site Infection
(SSI) Outcome Measure (Colon and Abdominal Hysterectomy SSI) (NQF
#0753);
Median Time from ED Arrival to ED Departure for Admitted
ED Patients (ED-1) (NQF #0495);
Influenza Immunization (IMM-2) (NQF #1659); and
Incidence of Potentially Preventable Venous
Thromboembolism (VTE-6).
Because the burden associated with submitting data for the NHSN HAI
measures (CDI, CAUTI, CLABSI, MRSA Bacteremia, and Colon and Abdominal
Hysterectomy SSI) is captured under separate OMB control number 0920-
0666, we do not provide an independent estimate of the information
collection burden associated with these measures for the Hospital IQR
Program. Because the NHSN HAI measures will be retained in the HAC
Reduction Program, we do not anticipate a reduction in data collection
and reporting burden associated with the CDC NHSN's OMB control number
0920-0666. We note, however, that we anticipate a reduction in burden
associated with the Hospital IQR Program validation activities we
conduct for these NHSN HAI measures, as discussed further below.
We anticipate a reduction in information collection burden for all
IPPS hospitals of 741,074 hours, or 225 hours per hospital, as a result
of our proposals to remove the ED-1 and IMM-2 chart-abstracted measures
beginning with the CY 2019 reporting period/FY 2021 payment
determination. This estimate was calculated by considering the
previously approved information collection burden estimate for
reporting the combined global population set (ED-1, ED-2, and IMM-2) of
1,599,074 hours, minus the estimated information collection reporting
burden for only the ED-2

[[Page 20556]]

measure \388\ ([15 minutes per record x 260 records per hospital per
quarter x 4 quarters]/60 minutes per hour x 3,300 IPPS hospital =
858,000 hours). Through these calculations (1,599,074 hours - 858,000
hours), we estimate a reduction of 741,074 hours, or 225 hours per
hospital per year (741,074 hours/3,300 hospitals) across all IPPS
hospitals for the CY 2019 reporting period/FY 2021 payment
determination if our proposals to remove the ED-1 and IMM-2 measures
from the Hospital IQR Program are finalized as proposed.
---------------------------------------------------------------------------

\388\ Estimated 15 minutes per case for reporting ED-2 measure
based on average Clinical Data Abstraction Center abstraction times
for 3Q 2016, 4Q 2016, and 1Q 2017 discharge data.
---------------------------------------------------------------------------

We also anticipate our proposal to remove the VTE-6 measure would
result in an information collection burden reduction of 304,997 hours
for all IPPS hospitals, or 92 hours per hospital, for the CY 2019
reporting period/FY 2021 payment determination. We have previously
estimated a reporting burden of 92 hours (7 minutes per record x 198
records per hospital per quarter x 4 quarters/60 minutes) per hospital
per year, or 304,997 hours (92 hours per hospital x 3,300 hospitals)
across all hospitals associated with abstracting and reporting VTE-6.
Therefore, we estimate an information collection burden decrease of
304,997 hours for the CY 2019 reporting period/FY 2021 payment
determination if our proposal to remove this measure from the Hospital
IQR Program is finalized as proposed.
In summary, if our proposals in section VIII.A.5.b.(8) of the
preamble of this proposed rule to remove IMM-2, ED-1, and VTE-6 are
finalized as proposed, we estimate an information collection burden
reduction of 1,046,071 hours (-741,074 hours for ED-1 and IMM-2 removal
+ -304,997 hours for VTE-6 removal) and approximately $38.3 million
(1,046,071 hours x $36.58 per hour \389\) across all 3,300 IPPS
hospitals participating in the Hospital IQR Program for the CY 2019
reporting period/FY 2021 payment determination.
---------------------------------------------------------------------------

\389\ In the FY 2017 IPPS/LTCH PPS final rule (82 FR 38501), we
finalized an hourly wage estimate of $18.29 per hour, plus 100
percent overhead and fringe benefits, for the Hospital IQR Program.
Accordingly, we calculate cost burden to hospitals using a wage plus
benefits estimate of $36.58 per hour.
---------------------------------------------------------------------------

(2) Information Collection Burden Estimate for the Proposed Removal of
One Chart-Abstracted Measure Beginning With the CY 2020 Reporting
Period/FY 2022 Payment Determination
In section VIII.A.5.b.(8)(b) of the preamble of this proposed rule,
we are proposing to remove the ED-2 measure (NQF #0497) beginning with
the CY 2020 reporting period/FY 2022 payment determination. We
anticipate removing this chart-abstracted measure would reduce the
reporting burden for all IPPS hospitals by a total of 858,000 hours, or
260 hours per hospital. As discussed above, we estimate reporting the
ED-2 measure takes approximately 260 hours (15 minutes per record x 260
records per hospital per quarter x 4 quarters/60 minutes = 260 hours)
per hospital per year, or 858,000 hours (260 hours x 3,300 hospitals)
across all IPPS hospitals. We, therefore, estimate an 858,000 hour
information collection burden decrease for the CY 2020 reporting
period/FY 2022 payment determination as a result of our proposal to
remove this measure from the Hospital IQR Program.
In summary, if our proposal in section VIII.A.5.b.(8)(b) of the
preamble of this proposed rule to remove ED-2 is finalized as proposed,
we estimate an information collection burden reduction of 858,000 hours
and approximately $31.4 million (858,000 hours x $36.58 per hour \390\)
across all 3,300 IPPS hospitals participating in the Hospital IQR
Program for the CY 2020 reporting period/FY 2022 payment determination.
---------------------------------------------------------------------------

\390\ In the FY 2017 IPPS/LTCH PPS final rule (82 FR 38501), we
finalized an hourly wage estimate of $18.29 per hour, plus 100
percent overhead and fringe benefits, for the Hospital IQR Program.
Accordingly, we calculate cost burden to hospitals using a wage plus
benefits estimate of $36.58 per hour.
---------------------------------------------------------------------------

(3) Information Collection Impacts on Data Validation Resulting From
Chart-Abstracted Measure Removal
While we are not proposing any changes to our validation
requirements related to chart-abstracted measures, if our proposals in
section VIII.A.5.b.(2)(b) and section VIII.A.5.b.(8) of the preamble of
this proposed rule to remove five NHSN HAIs and four clinical process
of care measures are finalized as proposed, we believe that hospitals
would experience an overall reduction in information collection burden
associated with chart-abstracted measure validation beginning with the
FY 2022 payment determination.
As noted in the FY 2016 IPPS/LTCH IPPS final rule (80 FR 49762 and
49763), we reimburse hospitals directly for expenses associated with
submission of charts for clinical process of care measure data
validation (we reimburse hospitals at 12 cents per photocopied page;
for hospitals providing charts digitally via a re-writable disc, such
as encrypted CD-ROMs, DVDs, or flash drives, we reimburse hospitals at
a rate of 40 cents per disc); we do not believe any additional
information collection burden is associated with submitting this
information via Web portal or PDF (79 FR 50346). Therefore, because we
directly reimburse, we do not anticipate any net change in burden
associated with the cost of submission of validation charts as a result
of our proposals to remove four clinical process of care measures.
Hospitals would no longer be required to submit, or be reimbursed for
submitting, these data to CMS.
Because we are proposing to remove all of the NHSN HAI measures
from the Hospital IQR Program and because hospitals selected for
validation currently are required to submit validation templates for
the NHSN HAI measures, we anticipate a reduction in information
collection burden under the Hospital IQR Program associated with the
NHSN HAI data validation effort. We note that the burden associated
with data collection for the NHSN HAI measures (CDI, CAUTI, CLABSI,
MRSA Bacteremia, and Colon and Abdominal Hysterectomy SSI) is accounted
for under the CDC NHSN OMB control number 0920-0666. Because the NHSN
HAI measures will be retained in the HAC Reduction Program, we do not
anticipate a change in data collection and reporting burden associated
with this OMB control number due to our proposals. The data validation
activities, however, are conducted by CMS. Since the measures were
adopted into the Hospital IQR Program, CMS has validated the data for
purposes of the Program. Therefore, this burden has been captured under
the Hospital IQR Program's OMB control number 0938-1022. We have
previously estimated a reporting burden of 80 hours (1,200 minutes per
record x 1 record per hospital per quarter x 4 quarters/60 minutes) per
hospital selected for chart-abstracted measure validation per year to
submit the CLABSI and CAUTI templates, and 64 hours (960 minutes per
record x 1 record per hospital per quarter x 4 quarters/60 minutes) per
hospital selected for chart-abstracted measure validation per year to
submit the MRSA and CDI templates. We, therefore, estimate a total
validation burden decrease of 43,200 hours ([-80 hours per hospital to
submit CLABSI and CAUTI templates + -64 hours per hospital to submit
MRSA and CDI templates] x 300 hospitals selected for validation) and
approximately $1.6 million (43,200 hours x $36.58 per hour \391\) for
the FY 2022 payment

[[Page 20557]]

determination because of the removal of these measures from the
Hospital IQR Program and the secondary effects on validation. We note
that we are proposing that the HAC Reduction Program will begin
validation of these NHSN HAI measures as discussed in section IV.J. of
the preamble of this proposed rule.
---------------------------------------------------------------------------

\391\ In the FY 2017 IPPS/LTCH PPS final rule (82 FR 38501), we
finalized an hourly wage estimate of $18.29 per hour, plus 100
percent overhead and fringe benefits, for the Hospital IQR Program.
Accordingly, we calculate cost burden to hospitals using a wage plus
benefits estimate of $36.58 per hour.
---------------------------------------------------------------------------

c. Information Collection Burden Estimate for Proposed Removal of Two
Structural Measures
In sections VIII.A.5.a. and b.(1) of the preamble of this proposed
rule, we are proposing to remove two structural measures (Hospital
Survey on Patient Safety Culture and Safe Surgery Checklist Use)
beginning with the CY 2018 reporting period/FY 2020 payment
determination. We anticipate removing these measures will result in a
minimal information collection burden reduction for hospitals.
Specifically, we do anticipate a very slight reduction in information
collection burden associated with the proposed removal of the Safe
Surgery Checklist measure because completion of this measure takes
hospitals approximately two minutes each year (77 FR 53666). Similarly,
we anticipate a very slight reduction in information collection burden
associated with the proposed removal of the Patient Safety Checklist
measure (80 FR 49762 through 49873). Consistent with previous years (80
FR 49762), we estimate a collection of information burden of 15 minutes
per hospital to report all four previously finalized structural
measures and to complete other forms (such as the Extraordinary
Circumstances Extension/Exemption Request Form). Therefore, our
information collection burden estimate of 15 minutes per hospital
remains unchanged because we believe the reduction in information
collection burden associated with removing these two structural
measures is sufficiently minimal that it will not substantially impact
this estimate, and we want to retain a conservative estimate of the
information collection burden associated with the use of our forms.
d. Burden Estimate for Proposed Removal of Claims-Based Measures
In section VIII.A.5.b.(2)(a), (3), (4), (6), and (7) of the
preamble of this proposed rule, we are proposing to remove the
following 17 claims-based measures beginning with the CY 2018 reporting
period/FY 2020 payment determination:
Patient Safety and Adverse Events Composite Measure (PSI
90) (NQF #0531);
Hospital 30-Day All-Cause Risk-Standardized Readmission
Rate Following Acute Myocardial Infarction (AMI) Hospitalization (NQF
#0505) (READM-30-AMI);
Hospital 30-Day, All-Cause, Risk-Standardized Readmission
Rate Following Chronic Obstructive Pulmonary Disease (COPD)
Hospitalization (NQF #1891) (READM-30-COPD);
Hospital 30-Day, All-Cause, Unplanned, Risk-Standardized
Readmission Rate Following Coronary Artery Bypass Graft (CABG) Surgery
(NQF #2515) (READM-30-CABG);
Hospital 30-Day, All-Cause, Risk-Standardized Readmission
Rate Following Heart Failure Hospitalization (NQF #0330) (READM-30-HF);
Hospital 30-Day, All-Cause, Risk-Standardized Readmission
Rate Following Pneumonia Hospitalization (NQF #0506) (READM-30-PN);
30-day Risk-Standardized Readmission Rate Following Stroke
Hospitalization (READ-30-STK;
Hospital-Level 30-Day, All-Cause Risk-Standardized
Readmission Rate Following Elective Primary Total Hip Arthroplasty and/
or Total Knee Arthroplasty (NQF #1551) (READM-30-THA/TKA);
Hospital 30-day, All-Cause, Risk-Standardized Mortality
Rate Following Acute Myocardial Infarction (AMI) Hospitalization for
Patients 18 and Older (NQF #0230) (MORT-30-AMI);
Hospital 30-Day, All-Cause, Risk-Standardized Mortality
Rate Following Heart Failure Hospitalization (NQF #0229) (MORT-30-HF);
Medicare Spending Per Beneficiary (MSPB)--Hospital (NQF
#2158);
Cellulitis Clinical Episode-Based Payment Measure
(Cellulitis Payment);
Gastrointestinal Hemorrhage Clinical Episode-Based Payment
Measure (GI Payment);
Kidney/Urinary Tract Infection Clinical Episode-Based
Payment Measure (Kidney/UTI Payment);
Aortic Aneurysm Procedure Clinical Episode-Based Payment
Measure (AA Payment);
Cholecystectomy and Common Duct Exploration Clinical
Episode-Based Payment Measure (Chole and CDE Payment); and
Spinal Fusion Clinical Episode-Based Payment Measure
(SFusion Payment).
In addition, we are proposing to remove two claims-based measures
beginning with the CY 2019 reporting period/FY 2021 payment
determination: (1) Hospital 30-Day, All-Cause, Risk-Standardized
Mortality Rate Following Chronic Obstructive Pulmonary Disease (COPD)
Hospitalization (NQF #1893); and (2) Hospital 30-Day, All-Cause, Risk-
Standardized Mortality Rate Following Pneumonia Hospitalization (NQF
#0468). We also are proposing to remove one claims-based measure,
Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following
Coronary Artery Bypass Graft (CABG) Surgery measure (NQF #2558),
beginning with the CY 2020 reporting period/FY 2022 payment
determination, and one claims-based measure, Hospital-Level Risk-
Standardized Complication Rate (RSCR) Following Elective Primary Total
Hip Arthroplasty and/or Total Knee Arthroplasty, beginning with the CY
2021 reporting period/FY 2023 payment determination.
Because these claims-based measures are calculated using only data
already reported to the Medicare program for payment purposes, we do
not anticipate that removing these measures will affect information
collection burden on hospitals. However, we refer readers to section
VIII.A.5.b.(2)(a), (3), (4), (6) and (7) of the preamble of this
proposed rule for a discussion of the reduction in costs associated
with these measures unrelated to the information collection burden.
e. Information Collection Burden Estimate for Proposed Removal of eCQMs
In section VIII.A.5.b.(9) of the preamble of this proposed rule, we
are proposing to remove the following seven eCQMs from the eCQM measure
set beginning with the CY 2020 reporting period/FY 2022 payment
determination:
Primary PCI Received within 90 Minutes of Hospital Arrival
(AMI-8a);
Home Management and Plan of Care Document Given to
Patient/Caregiver (CAC-3);
Median Time from ED Arrival to ED Departure for Admitted
ED Patients (ED-1) (NQF #0495); \392\
---------------------------------------------------------------------------

\392\ Median Time from ED Arrival to ED Departure for Admitted
ED Patients (ED-1) is proposed for removal in both chart-abstracted
and eCQM forms.
---------------------------------------------------------------------------

Hearing Screening Prior to Hospital Discharge (EHDI-1a)
(NQF# 1354);
Elective Delivery (PC-01) (NQF #0469);
Stroke Education (STK-08); and
Assessed for Rehabilitation (STK-10) (NQF #0441).
Because these eCQMs being proposed for removal were among a set of
15 eCQMs available for reporting, we believe that reducing the number
of

[[Page 20558]]

eCQMs from which hospitals choose would enable hospitals to focus on
and maintain a smaller subset of measures (8 instead of 15), but this
would not have an effect on the burden of submitting information to
CMS. Hospitals will still be required to submit 4 eCQMs of their choice
from the eCQM measure set. While the information collection burden
would not change, we refer readers to section VIII.A.4.b. of the
preamble of this proposed rule where we acknowledge that costs are
multi-faceted and include not only the burden associated with
reporting, but also the costs associated with implementing and
maintaining Program requirements.
f. Information Collection Burden Estimates for the Proposed Updates to
the eCQM Reporting Requirements
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38355 through
38361), we finalized eCQM reporting requirements, such that hospitals
submit one, self-selected calendar quarter of data for 4 eCQMs in the
Hospital IQR Program measure set for the CY 2018 reporting period/FY
2020 payment determination. In section VIII.A.10.d.(2) of the preamble
of this proposed rule, we are proposing to require that hospitals
continue to submit one, self-selected calendar quarter of data for 4
eCQMs in the Hospital IQR Program measure set for the CY 2019 reporting
period/FY 2021 payment determination. Therefore, we believe the burden
estimate of 40 minutes per hospital per year (10 minutes per record x 4
eCQMs x 1 quarter) associated with eCQM reporting requirements
finalized for the CY 2018 reporting period/FY 2020 payment
determination will also apply to the CY 2019 reporting period/FY 2021
payment determination.
g. Information Collection Burden Estimate for the Proposed
Modifications to EHR Certification Requirements
In section VIII.A.10.d.(3) of the preamble of this proposed rule,
we are proposing to update the EHR certification requirements by
requiring the use of EHR technology certified to the 2015 Edition
beginning with the CY 2019 reporting period/FY 2021 payment
determination, to align with the Medicare and Medicaid Promoting
Interoperability Programs (previously known as the Medicare and
Medicaid EHR Incentive Programs) for eligible hospitals and CAHs. We do
not expect this proposal to affect our information collection burden
estimates because this proposal does not require hospitals to submit
new data to CMS. With respect to any costs unrelated to data
submission, we refer readers to Appendix I.K. of the preamble of this
proposed rule.
h. Summary of Information Collection Burden Estimates for the Hospital
IQR Program
In summary, under OMB control number 0938-1022, we estimate: (1) A
total information collection burden reduction of 1,046,138 hours (-
1,046,071 hours due to the proposed removal of ED-1, IMM-2, and VTE-6
measures for the CY 2019 reporting period/FY 2021 payment determination
and -67 hours for no longer collecting data for the voluntary Hybrid
HWR measure \393\) and a total cost reduction related to information
collection of approximately $38.3 million (-1,046,138 hours x $36.58
per hour \394\) for the CY 2019 reporting period/FY 2021 payment
determination; and (2) a total information collection burden reduction
of 901,200 hours (-858,000 hours due to the proposed removal of ED-2--
43,200 hours due to no longer needing to validate NHSN HAI measures
under the Hospital IQR Program) and a total information collection cost
reduction of approximately $33 million (-901,200 hours x $36.58 per
hour \395\) for the CY 2020 reporting period/FY 2022 payment
determination. These are the total information collection burden
reduction estimates for which we are requesting OMB approval under OMB
number 0938-1022.
---------------------------------------------------------------------------

\393\ In the FY 2017 IPPS/LTCH PPS final rule (82 FR 38350
through 38355), we finalized our proposal to collect data on a
voluntary basis for the Hybrid HWR measure for the CY 2018 reporting
period/FY 2020 payment determination. We estimated that
approximately 100 hospitals would voluntarily report data for this
measure, resulting in a total burden of 67 hours across all
hospitals for the CY 2018 reporting period/FY 2020 payment
determination (82 FR 38504). Because we only finalized voluntary
collection of data for one year, voluntary collection of this data
would no longer occur, beginning with the CY 2019 reporting period/
FY 2021 payment determination and subsequent years, resulting in a
reduction in burden of 67 hours across all hospitals.
\394\ In the FY 2017 IPPS/LTCH PPS final rule (82 FR 38501), we
finalized an hourly wage estimate of $18.29 per hour, plus 100
percent overhead and fringe benefits, for the Hospital IQR Program.
Accordingly, we calculate cost burden to hospitals using a wage plus
benefits estimate of $36.58 per hour.
\395\ In the FY 2017 IPPS/LTCH PPS final rule (82 FR 38501), we
finalized an hourly wage estimate of $18.29 per hour, plus 100
percent overhead and fringe benefits, for the Hospital IQR Program.
Accordingly, we calculate cost burden to hospitals using a wage plus
benefits estimate of $36.58 per hour.

Hospital IQR Program CY 2019 Reporting Period/FY 2021 Payment Determination Information Collection Burden Estimates
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual recordkeeping and reporting requirements under OMB control No. 0938-1022 for CY 2019
reporting period/FY 2021 payment Determination
-----------------------------------------------------------------------------------------------
Newly Previously
Average proposed finalized
Activity Estimated Number Number of number Annual annual annual Net
time per reporting IPPS records burden burden burden difference
record quarters hospitals per (hours) (hours) (hours) in annual
(minutes) per year reporting hospital per across across burden
per hospital IPPS IPPS hours
quarter hospitals hospitals
--------------------------------------------------------------------------------------------------------------------------------------------------------
Reporting on Emergency department throughput (ED-1)/ 13 4 3,300 260 225 858,000 1,599,074 -741,074
Immunizations (IMM-2)..................................
Venous thromboembolism (VTE)............................ 7 4 3,300 198 92 0 304,997 -304,997
Voluntary HWR Reporting \396\........................... 10 4 100 1 0.67 0 67 -67
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Change in Information Collection Burden Hours: -1,046,138.
Total Cost Estimate: Updated Hourly Wage ($36.58) x Change in Burden Hours (-1,046,138) = -$38,267,728.
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 20559]]

Hospital IQR Program CY 2020 Reporting Period/FY 2022 Payment Determination Information Collection Burden Estimates
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual recordkeeping and reporting requirements under OMB control No. 0938-1022 for CY 2020
reporting period/FY 2022 payment determination
-----------------------------------------------------------------------------------------------
Newly Previously
Average proposed finalized
Activity Estimated Number Number of number Annual annual annual Net
time per reporting IPPS records burden burden burden difference
record quarters hospitals per (hours) (hours) (hours) in annual
(minutes) per year reporting hospital per across across burden
per hospital IPPS IPPS hours
quarter hospitals hospitals
--------------------------------------------------------------------------------------------------------------------------------------------------------
Reporting on Emergency department throughput (ED-2 only) 15 4 3,300 260 260 0 858,000 -858,000
HAI Validation Templates (CLABSI, CAUTI)................ 1,200 4 300 1 80 0 24,000 -24,000
HAI Validation Templates (MRSA, CDI).................... 960 4 300 1 64 0 19,200 -19,200
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Change in Information Collection Burden Hours:-901,200
Total Cost Estimate: Updated Hourly Wage ($36.58) x Change in Burden Hours (-901,200) = $32,965,896
--------------------------------------------------------------------------------------------------------------------------------------------------------

4. ICRs for PPS-Exempt Cancer Hospital Quality Reporting (PCHQR)
Program
a. Background
As discussed in sections VIII.B. of the preamble of this proposed
rule, section 1866(k)(1) of the Act requires, for purposes of FY 2014
and each subsequent fiscal year, that a hospital described in section
1886(d)(1)(B)(v) of the Act (a PPS-exempt cancer hospital, or a PCH)
submit data in accordance with section 1866(k)(2) of the Act with
respect to such fiscal year. There is no financial impact to PCH
Medicare payment if a PCH does not participate. Below we discuss only
changes in burden that would result from the proposals in this proposed
rule.
---------------------------------------------------------------------------

\396\ In the FY 2017 IPPS/LTCH PPS final rule (82 FR 38350
through 38355), we finalized our proposal to collect data on a
voluntary basis for the Hybrid HWR measure for the CY 2018 reporting
period/FY 2020 payment determination. We estimated that
approximately 100 hospitals would voluntarily report data for this
measure, resulting in a total burden of 67 hours across all
hospitals for the CY 2018 reporting period/FY 2020 payment
determination (82 FR 38504). Because we only finalized voluntary
collection of data for one year, voluntary collection of this data
would no longer occur beginning with the CY 2019 reporting period/FY
2021 payment determination and subsequent years resulting in a
reduction in burden of 67 hours across all hospitals.
---------------------------------------------------------------------------

b. Proposed Revision of Time Estimate for Structural and Web-Based Tool
Measures for the FY 2021 Program Year and Subsequent Years
In this proposed rule, we are proposing a revision to our burden
calculation methodology. With all the parameters considered when PCHs
submit data on PCHQR Program measures (training of appropriate staff
members on National Healthcare Safety Network (NHSN) reporting and the
CMS Web Measures Tool for the reporting of the clinical process/
oncology care measures; the time required for collection and
aggregation of data; and the time required for reporting of the data by
the PCH's representative), we strive to achieve continuity in how we
calculate and analyze burden data. In prior years, we have based our
burden estimates on the notion that all 11 PCHs would report on all
measures for all cases (78 FR 50958). These assumptions were made in
order to be as comprehensive as possible given a lack of PCH-specific
data available at the time. However, we believe it is more appropriate
to use estimates developed using data available in other quality
reporting programs wherever possible, because we believe these
estimates will provide a more accurate estimate of burden associated
with data collection and reporting. Our proposal to update the estimate
the time required to collect and report data for structural measures
and measures that use a web-based tool is discussed below.
We initially adopted five clinical process/cancer specific
treatment measures that utilized a web-based tool for the FY 2016
program year in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50841
through 50844). In that rule, we did not specify burden estimates based
on the measure type, but instead provided estimates ``for submitting
all quality measure data'' (78 FR 50958). Since then, we have been able
to better understand and differentiate the various levels of effort
associated with data abstraction and submission for specific types of
measures. Moreover, in understanding that certain measure types prove
more burdensome than others (that is, chart-abstracted measures), we
believe it is necessary to provide burden estimates that better reflect
with the type of measure being discussed.
Using historical data from its validation contractor, the Hospital
IQR Program has previously estimated that it takes 15 minutes per
hospital to report on four structural measures (80 FR 49762). We
believe this estimate is appropriate for the PCHQR Program because data
submission for measures that utilize a web-based tool is similar to the
data submission for a structural measure, in that both types of
measures use the same reporting mechanism, the QualityNet Secure
Portal. In addition, we wish to account for the time associated with
data collection and aggregation for individual measures when
considering burden, and believe 15 minutes per measure is an
appropriately conservative estimate for the measures submitted via a
web-based tool in the PCHQR Program. Therefore, we are proposing to
apply this burden estimate to four measures that utilize a web-based
tool: (1) Oncology: Radiation Dose Limits to Normal Tissues (PCH-14/NQF
#0382); (2) Oncology: Medical and Radiation--Pain Intensity Quantified
(PCH-16/NQF #0384); (3) Prostate Cancer: Adjuvant Hormonal Therapy for
High Risk Patients (PCH-17/NQF #0390); and (4) Prostate Cancer:
Avoidance of Overuse of Bone Scan for Staging Low-Risk Patients (PCH-
18/NQF #0389).
We are inviting public comment on our proposal to utilize a burden
estimate of 15 minutes per measure, per PCH, with respect to the burden
estimates we discuss below for the FY 2021 program year and subsequent
years.

[[Page 20560]]

c. Estimated Burden of PCHQR Program Proposals for the FY 2021 Program
Year
In section VIII.B.3. of the preamble of this proposed rule, we are
proposing to remove six measures beginning with the FY 2021 program
year--four web-based, structural measures: (1) Oncology: Radiation Dose
Limits to Normal Tissues (PCH-14/NQF #0382); (2) Oncology: Medical and
Radiation--Pain Intensity Quantified (PCH-16/NQF #0384); (3) Prostate
Cancer: Adjuvant Hormonal Therapy for High Risk Patients (PCH-17/NQF
#0390); (4) Prostate Cancer: Avoidance of Overuse of Bone Scan for
Staging Low-Risk Patients (PCH-18/NQF #0389), and two chart-abstracted,
NHSN measures: (5) NHSN Catheter-Associated Urinary Tract Infection
(CAUTI) Outcome Measure (PCH-5/NQF #0138) and (6) NHSN Central Line-
Associated Bloodstream Infection (CLABSI) Outcome Measure (PCH-4/NQF
#0139). In addition, in section VIII.B.4.b. of the preamble of this
proposed rule, we are proposing to adopt one claims-based measure, 30-
Day Unplanned Readmissions for Cancer Patients (NQF #3188), beginning
with the FY 2021 program year. If these proposals are finalized, the
PCHQR Program measure set would consist of 13 measures for the FY 2021
program year.
We anticipate our proposal to remove four web-based, structural
measures will reduce the burden associated with quality reporting on
PCHs. If our proposal to apply the burden estimate of 15 minutes per
measure to the four web-based, structural measures is finalized as
proposed, we estimate a reduction of 1 hour (or 60 minutes) per PCH (15
minutes per measure x 4 measures = 60 minutes), and a total annual
reduction of approximately 11 hours for all 11 PCHs (60 minutes x 11
PCHs/60 minutes per hour), due to the proposed removal of these four
measures.
We anticipate that the proposed removal of the two NHSN measures:
(1) Catheter-Associated Urinary Tract Infection (CAUTI) Outcome Measure
(PCH-5/NQF #0138) and (2) Central Line-Associated Bloodstream Infection
(CLABSI) Outcome Measure (PCH-4/NQF #0139) will result in a burden
decrease. Historically, we have accounted for the burden associated
with collecting and reporting data for the Catheter-Associated Urinary
Tract Infections (CAUTI) and Central Line-Associated Bloodstream
Infection (CLABSI) National Healthcare Safety Network measures as
though they were standalone chart-abstracted measures.\397\
Specifically, in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53667), we
originally estimated the burden for reporting three chart-abstracted
cancer measures and two NHSN CDC measures (CLABSI and CAUTI) at
approximately 6,293.5 hours annually for each PCH, or 69,228.5 burden
hours annually for all 11 PCHs. Using this estimate, we estimated 1,259
burden hours per measure (6,294 hours/5 measures = 1,258.8 hours per
measure). As such, if our proposal to remove the CAUTI and CLABSI
measures is finalized as proposed, we estimate an annual burden
reduction of 2,518 hours per PCH (1,259 hours x 2 measures = 2,518
hours) and an annual burden reduction of 27,698 hours across all eleven
PCHs (2,518 hours per PCH x 11 PCHs = 27,698 hours).
---------------------------------------------------------------------------

\397\ We note that the Centers for Disease Control and
Prevention (CDC), the owner of the NHSN system, maintains its own
OMB control number, 0920-0666, that estimates the burden associated
with reporting data for the measures retained in the PCHQR program,
that utilize the NHSN system. We have not independently accounted
for the burden associated with adopting subsequent measures
utilizing the NHSN system (that is, Colon and Abdominal Hysterectomy
SSI; CDI; MRSA Bacteremia; and Influenza Vaccination Coverage Among
Healthcare Personnel (HCP) measures) because the burden associated
with reporting these measures is captured under the aforementioned
OMB control number.
---------------------------------------------------------------------------

We do not anticipate any increase in burden on PCHs related to our
proposal to adopt the claims-based 30-Day Unplanned Readmissions for
Cancer Patients measure (NQF #3188) beginning with the FY 2021 program
year. Because this measure is claims-based and therefore does not
require facilities to submit any additional data, we do not believe
there is any increase in burden associated with this proposal.
In summary, if our proposals to remove six measures and to modify
our burden estimation methodology for measures that utilize a web-based
submission tool are finalized as proposed, we estimate a total
reduction of 27,709 hours of burden per year for all 11 PCHs (-27,698
hours for the removal of the CAUTI & CLABSI measures-11 hours for the
removal of the four web-based, structural measures = 27,709 total
hours) beginning with the FY 2021 program year. Coupled with our
estimated salary costs, we estimate that these proposed changes would
result in a reduction in annual labor costs of $1,013,595 (27,709 hours
x $36.58 hourly labor cost \398\) across the 11 PCHs beginning with the
FY 2021 PCHQR Program. The burden associated with these reporting
requirements is currently approved under OMB control number 0938-1175.
The information collection will be revised and submitted to OMB.
---------------------------------------------------------------------------

\398\ In the FY 2017 IPPS/LTCH PPS final rule (82 FR 38504
through 38505), we finalized an hourly wage estimate of $18.29 per
hour, plus 100 percent overhead and fringe benefits, for the
Hospital IQR Program. Accordingly, we calculate cost burden to
hospitals using a wage plus benefits estimate of $36.58 per hour.
---------------------------------------------------------------------------

5. ICRs for the Hospital Value-Based Purchasing (VBP) Program
In section IV.I. of the preamble of this proposed rule, we discuss
proposed requirements for the Hospital VBP Program. Specifically, in
this proposed rule, with respect to quality measures, we are proposing
to remove four claims-based measures effective with the effective date
of the FY 2019 IPPS/LTCH PPS final rule. Because these claims-based
measures are calculated using only data already reported to the
Medicare program for payment purposes, we do not anticipate removing
these measures will increase or decrease the reporting burden on
hospitals. However, we believe removal of these measures from the
Hospital VBP Program will reduce other costs associated with the
program, such as: (1) Costs for health care providers and clinicians to
track the confidential feedback preview reports and publicly reported
information on the measures in more than one program; (2) costs for CMS
to analyze, and publicly report the measure data in multiple programs;
and (3) confusion for beneficiaries to see public reporting on the same
measures in different programs.
In addition, in this proposed rule, we are proposing to remove six
chart-abstracted measures beginning with the FY 2021 program year.
Because these chart-abstracted measures used data required for and
collected under the Hospital IQR Program (OMB control number 0938-
1022), there was no additional data collection burden associated these
measures under the Hospital VBP Program. Therefore, we do not
anticipate removing these measures will increase or decrease the
reporting burden on hospitals. However, we believe removal of these
measures from the Hospital VBP Program will reduce other costs
associated with the program, such as: (1) Costs for health care
providers and clinicians to track the confidential feedback preview
reports and publicly reported information on the measures in more than
one program; (2) costs for CMS to analyze, and publicly report the
measures' data in multiple programs; and (3) confusion for
beneficiaries to see public reporting on the same measures in different
programs. We note that we are proposing to remove seven claims-based
measures from the Hospital IQR

[[Page 20561]]

Program, which have been finalized previously for, and will remain in,
the Hospital VBP Program. However, we do not believe retaining these
claims-based measures in the Hospital VBP Program will create any
additional burden for hospitals because the measure data will continue
to be collected using Medicare FFS claims hospitals are already
submitting to the Medicare program for payment purposes.
6. ICRs for the Long-Term Care Hospital Quality Reporting Program (LTCH
QRP)
As discussed in section VIII.C.5. of the preamble of this proposed
rule, we are proposing to remove two measures from the LTCH QRP
beginning with the FY 2020 LTCH QRP and to remove one measure from the
LTCH QRP beginning with the FY 2021 LTCH QRP.
In section VIII.C.5.a. and b. of the preamble of this proposed
rule, we are proposing to remove two CDC NHSN measures: National
Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-Onset
Methicillin-Resistant Staphylococcus aureus (MRSA) Bacteremia Outcome
Measure (NQF #1716) and National Healthcare Safety Network (NHSN)
Ventilator-Associated Event (VAE) Outcome Measure--beginning with the
FY 2020 LTCH QRP. LTCHs would no longer be required to submit data on
these measures beginning with October 1, 2018 admissions and
discharges. As a result, the burden and cost specifically for LTCHs for
complying with the requirements of the LTCH QRP would be reduced. While
the overall burden estimates are accounted for under OMB control number
(0920-0666), to specifically account for burden reductions, the CDC
provided more detailed estimates for LTCH reporting on the data for the
measures we are proposing to remove.
Based on estimates provided by the CDC, which is based on the
frequency of actual reporting on such data, we estimate that the
removal of the National Healthcare Safety Network (NHSN) Facility-wide
Inpatient Hospital-onset Methicillin-resistant Staphylococcus aureus
(MRSA) Bacteremia Outcome Measure (NQF #1716) would result in a 3-hour
(15 minutes per MRSA submission x 12 estimated submissions per LTCH per
year) reduction in clinical staff time annually to report data, which
equates to a decrease of 1,260 hours (3 hours burden per LTCH per year
x 420 total LTCHs) in burden for all LTCHs. Given 10 minutes of
registered nurse time at $69.40 per hour, and 5 minutes of medical
records or health information technician time at $39.86 per hour, for
the submission of MRSA data to the NHSN per LTCH per year, we estimate
that the total cost of complying with the requirements of the LTCH QRP
would be reduced by $178.66 per LTCH annually, or $75,037.20 for all
LTCHs annually.
Applying the same approach on burden reduction estimations, we
estimate that the removal of the National Healthcare Safety Network
(NHSN) Ventilator-Associated Event (VAE) Outcome Measure from the LTCH
QRP would result in a 4.4 hour (22 minutes per VAE submission x 12
estimated submissions per LTCH per year) reduction in clinical staff
time to report data, which equates to a decrease of 1,848 hours (4.4
hours burden per LTCH per year x 420 total LTCHs) in burden for all
LTCHs. Given the registered nurse hourly rate of $69.40 per hour, and
medical records or health information technician rate of $39.86 per
hour for the submission of VAE data to the NHSN per LTCH per year, we
estimate that the total cost of complying with the LTCH QRP would be
reduced by $293.54 per LTCH annually, or $123,288.48 for all LTCHs
annually.
In addition, in section VIII.C.5.c. of the preamble of this
proposed rule, we are proposing to remove the measure, Percent of
Residents or Patients Who Were Assessed and Appropriately Given the
Seasonal Influenza Vaccine (Short Stay) (NQF #0680), beginning with the
FY 2021 LTCH QRP. LTCHs would no longer be required to submit data on
this measure beginning with October 1, 2018 admissions and discharges.
As a result, the estimated burden and cost for LTCHs for complying with
requirements of the LTCH QRP would be reduced. Specifically, we believe
that there would be a 1.8 minute reduction in clinical staff time to
report data per patient stay. We estimate 136,476 discharges from 420
LTCHs annually. This equates to a decrease of 4,094 hours in burden for
all LTCHs (0.03 hours per assessment x 136,476 discharges). Given 1.8
minutes of registered nurse time at $69.40 per hour completing an
average of 325 sets of LTCH CARE Data Set assessments per LTCH per
year, we estimate that the total cost would be reduced by $676.53 per
LTCH annually, or $284,143.03 for all LTCHs annually. This decrease in
burden will be accounted for in the information collection under OMB
control number 0938-1163.
Overall, the cost associated with the proposed changes to the LTCH
QRP is estimated at a reduction of $1,148.73 per LTCH annually or
$482,468.71 for all LTCHs.
7. ICRs Relating to the Hospital-Acquired Condition (HAC) Reduction
Program
In section IV.J. of the preamble of this proposed rule, we discuss
proposed requirements for the HAC Reduction Program. In this proposed
rule, we are not proposing to adopt any new measures into the HAC
Reduction Program. However, the Hospital IQR Program is proposing to
remove the claims-based Patient Safety and Adverse Events Composite
(PSI 90) and five NHSN HAI measures (CDI, CAUTI, CLABSI, MRSA, and
SSI). These measures had been previously adopted for, and will remain
in, the HAC Reduction Program.
We do not believe that retaining the claims-based PSI 90 measure in
the HAC Reduction Program will create any additional burden for
hospitals because it will continue to be collected using Medicare FFS
claims hospitals are already submitting to the Medicare program for
payment purposes.
We note the burden associated with collecting and submitting data
for the HAI measures (CDI, CAUTI, CLABSI, MRSA, and Colon and Abdominal
Hysterectomy SSI) via the NHSN system is captured under a separate OMB
control number, 0920-0666, and therefore will not impact our burden
estimates.
We anticipate the proposed discontinuation of the HAI measure
validation process under the Hospital IQR Program will result in a net
burden decrease to the Hospital IQR Program, but will result in an off-
setting net burden increase to the HAC Reduction Program because
hospitals selected for validation will continue to be required to
submit validation templates for the HAI measures. Therefore, if our
proposals in section VIII.A.5.b.(2)(b) of the preamble of this proposed
rule to remove the HAI chart-abstracted measures from the Hospital IQR
Program are adopted, data validation for the measures will transfer to
the HAC Reduction Program, and this is will result in a net neutral
transfer of 43,200 hours and approximately $1.6 million with no overall
net increase in burden.
Under the Hospital IQR Program, we have previously estimated a
reporting burden of 80 hours (1,200 minutes per record x 1 record per
hospital per quarter x 4 quarters/60 minutes) per hospital selected for
validation per year to submit the CLABSI and CAUTI templates, and 64
hours (960 minutes per record x 1 record per hospital per quarter x 4
quarters/60 minutes) per hospital selected for validation per year to
submit the MRSA and CDI templates.

[[Page 20562]]

We therefore estimate a total burden shift of 43,200 hours ([80 hours
per hospital to submit CLABSI and CAUTI templates + 64 hours per
hospital to submit MRSA and CDI templates] x 300 hospitals selected for
validation) and approximately $1.6 million (43,200 hours x $36.58 per
hour \399\) as a result of our proposals to discontinue HAI validation
under the Hospital IQR Program and begin a validation process under the
HAC Reduction Program.
---------------------------------------------------------------------------

\399\ In the FY 2017 IPPS/LTCH PPS final rule (82 FR 38501), we
finalized an hourly wage estimate of $18.29 per hour, plus 100
percent overhead and fringe benefits, for the Hospital IQR Program.
Accordingly, we calculate cost burden to hospitals using a wage plus
benefits estimate of $36.58 per hour.
---------------------------------------------------------------------------

8. ICRs Relating to the Hospital Readmissions Reduction Program
In section IV.H. of the preamble of this proposed rule, we discuss
proposed requirements for the Hospital Readmissions Reduction Program.
In this proposed rule, we are not proposing to adopt any new measures
into the Hospital Readmissions Reduction Program. However, we are
proposing to remove six claims-based measures from the Hospital IQR
Program, which have been finalized previously for, and will remain in,
the Hospital Readmissions Reduction Program. We do not believe that
these claims-based measures remaining in the Hospital Readmissions
Reduction Program will create any additional burden for hospitals
because they will continue to be collected using Medicare FFS claims
hospitals are already submitting to the Medicare program for payment
purposes.
9. ICRs for the Promoting Interoperability Programs
a. Background and Proposed Update to Hourly Wage Rate
In section VIII.D. of the preamble of this proposed rule, we are
proposing a new performance-based scoring methodology and changes to
the Stage 3 objectives and measures for eligible hospitals and CAHs
that attest to CMS for the Medicare Promoting Interoperability Program.
We are also proposing: To change the EHR reporting period in CYs 2019
and 2020; to establish the CQM reporting period and criteria for CY
2019, proposing the removal of eight CQMs beginning in CY 2020; and to
codify the policies for subsection (d) Puerto Rico hospitals to
participate in the Medicare Promoting Interoperability Program for
eligible hospitals, including policies previously implemented through
program instruction. We are retaining the requirement for the 2015
Edition of CEHRT to be used beginning in CY 2019.
In prior rules (81 FR 57260), we have estimated that the electronic
reporting of CQM data could be accomplished by staff with a mean hourly
wage of $16.42 per hour.\400\ Because this wage rate is based on Bureau
of Labor Statistics (BLS) data dating to 2012, we are proposing to
update the wage rate to the most recent data available from the BLS,
which is the 2016 wage rate of $19.93.\401\ We are calculating the cost
of overhead, including fringe benefits, at 100 percent of the mean
hourly wage. This is an estimated adjustment, since both fringe
benefits and overhead costs vary significantly from employer-to-
employer and the methods of estimating such costs vary widely from
study-to-study. Nonetheless, we believe that doubling the hourly wage
rate ($19.44 x 2 = $39.86) to estimate total cost is a reasonably
accurate estimation method and allows for a conservative estimate of
hourly costs. We refer readers to the Hospital IQR Program discussion
in section XIV.B.3. of the preamble of this proposed rule, above, for
more information regarding the information collection burden related to
reporting of CQMs.
---------------------------------------------------------------------------

\400\ Occupational Outlook Handbook. Available at: https://www.bls.gov/oes/2012/may/oes292071.htm.
\401\ Occupational Outlook Handbook. Available at: https://www.bls.gov/oes/current/oes292071.htm.
---------------------------------------------------------------------------

b. Burden Estimates
In sections VIII.D.5. and 6. of the preamble of this proposed rule,
we are proposing a new scoring methodology for eligible hospitals and
CAHs that attest to CMS for the Promoting Interoperability Program, and
the addition of two new opioid measures that would be optional in 2019.
This scoring approach would require eligible hospitals and CAHs to
report by attestation on only six measures. We consider this scoring
methodology to be based more on performance and not solely on whether
an eligible hospital or CAH meets the thresholds for measures. We
estimate that the new scoring methodology would reduce the necessary
response time by .25 hours. This is a reduction to the previous burden
estimate provided in the 2015 EHR Incentive Programs final rule (80 FR
62928). We are updating the burden estimate to take into account the
reduced burden associated with the proposed new requirements for
eligible hospitals and CAHs for Stage 3 of meaningful use. We believe
the burden would be different for eligible hospitals that attest to a
State for purposes of receiving a Medicaid incentive payment because
the existing Stage 3 requirements would continue to apply to them. We
note that under section 101(b)(1) of the Medicare Access and CHIP
Reauthorization Act of 2015 (Pub. L. 114-10), the Medicare EHR
Incentive Program was sunset for EPs in 2018, and now many of these EPs
are subject to the requirements of the Quality Payment Program (QPP).
Currently the burden is estimated at $388,408,189 annually. We estimate
the burden for all participants in the Medicare and Medicaid Promoting
Interoperability Programs represents a total cost of $61,113,527.80,
which is a reduction of $327,294,661 annually. We also note that the
currently approved burden in hours are 4,230,155 and as a result of
this proposal we believe it will be reduced to 623,562.19 hours. This
burden reduction would occur as a result of the reduced numbers of EPs
and the new scoring methodology for eligible hospitals and CAHs
proposed in this proposed rule. The burden estimate includes subsection
(d) Puerto Rico hospitals. Below is the burden table where we take into
account these changes and the burden that would ensue as a result of
the changes. Please note that the information collection request (OMB
Control number 0938-1278) is being revised and will be submitted to
OMB.

Burden and Cost Estimates Associated With Information Collection
--------------------------------------------------------------------------------------------------------------------------------------------------------
Burden per Hourly labor
Reg section Number of Number of response Total annual cost of Total cost ($)
respondents responses (hours) burden (hours) reporting ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sec. 495.24(d)--Objectives/Measures (Medicaid EPs).. 80,000 80,000 7.43 594,400 100 $59,440,000

[[Page 20563]]

Sec. 495.24(d)--Objectives/Measures Medicaid 133 133 7.43 988.19 67.25 66,455.78
(eligible hospitals/CAHs)............................
Sec. 495.24(e)--Objectives/Measures Medicare 3300 3300 7.18 23,694 67.25 1,593,421.50
(eligible hospitals/CAHs)............................
Sec. 495.316--Quarterly Reporting (Medicaid)........ 56 224 20 4,480 3.047 13,650.56
-------------------------------------------------------------------------------------------------
Totals............................................ 83,489 83,489 .............. 623,562.19 .............. $61,113,527.80
--------------------------------------------------------------------------------------------------------------------------------------------------------

There are 3,300 eligible hospitals and CAHs that attest to CMS
(Medicare-only and dual-eligible) under the Medicare Promoting
Interoperability Program. Therefore, the total estimated annual cost
burden for all eligible hospitals and CAHs in the Medicare Promoting
Interoperability Program to attest to meaningful use would be
$,1,593,421.5 (3,300 eligible hospitals and CAHs x 7 hours 18 minutes x
$67.25).\402\
---------------------------------------------------------------------------

\402\ https://www.bls.gov/oes/current/oes231011.htm.
---------------------------------------------------------------------------

We are proposing that the new scoring methodology and changes to
the Stage 3 objectives and measures for eligible hospitals and CAHs
that attest to CMS would be optional for States to implement through
changes to their State Medicaid HIT Plans approved by CMS for eligible
hospitals participating in their Medicaid Promoting Interoperability
Program. If States choose not to align, eligible hospitals in those
States would continue to attest to the objectives and measures as
currently specified under Sec. 495.24(d). Extending this option to
States would allow them flexibility to benefit from the improvements to
meaningful use scoring outlined in this proposed rule, if they so
choose. If States choose to take this option, we anticipate the same
burden reduction for Medicaid eligible hospitals as discussed above,
but a significant burden increase for States that would have to
overhaul their systems to collect data. If States do not take the
option, they would face no burden increase or decrease.
In section VIII.D.7. of the preamble of this proposed rule, we are
proposing the EHR reporting periods in CYs 2019 and 2020 for new and
returning participants attesting to CMS or their State Medicaid agency
would be a minimum of any continuous 90-day period within each of the
CYs 2019 and 2020. This would mean that EPs that attest to a State for
the State's Medicaid Promoting Interoperability Program and eligible
hospitals and CAHs attesting to CMS or the State's Medicaid Promoting
Interoperability Program would attest to meaningful use of CEHRT for an
EHR reporting period of a minimum of any continuous 90-day period from
January 1, 2019 through December 31, 2019 and from January 1, 2020
through December 31, 2020, respectively. The applicable incentive
payment year and payment adjustment years for the EHR reporting periods
in 2019 and 2020, as well as the deadlines for attestation and other
related program requirements, would remain the same as established in
prior rulemaking. We are proposing corresponding changes to the
definition of ``EHR reporting period'' and ``EHR reporting period for a
payment adjustment year'' at 42 CFR 495.4. We do not expect these
proposals to affect our burden estimates because we have never required
a different EHR reporting period.
In section VIII.D.9. of the preamble of this proposed rule we are
proposing that the reporting period for Medicare and Medicaid eligible
hospitals and CAHs that report CQMs electronically would be one, self-
selected calendar quarter of CY 2019 data. We are proposing that
eligible hospitals and CAHs participating in only the EHR Program, or
participating in both the Promoting Interoperability Programs and the
Hospital IQR Program, report on at least 4 self-selected CQMs. We are
also proposing to remove eight CQMs beginning in 2020. We believe to
report on the 4 self-selected CQMs electronically would cost ($39.86 x
40 min) 1,594.4 per hospital times 3,300 hospitals results in a total
burden of $5,261,520 for all eligible hospitals and CAHs.
In section VIII.D.10. of the preamble of this proposed rule, we are
proposing to incorporate into our regulations program guidance
regarding subsection (d) Puerto Rico hospitals. Because we are not
proposing any new requirements, we do not believe that these proposals
will affect burden.
In section VIII.D.12.a. of the preamble of this proposed rule, we
are proposing to amend 45 CFR 495.324(b)(2) and 495.324(b)(3) to align
with current prior approval policy for MMIS and ADP systems at 45 CFR
95.611(a)(2)(ii), and (b)(2)(iii) and (iv), and to minimize burden on
States. Specifically, we are proposing that the prior approval dollar
threshold in Sec. 495.324(b)(3) would be increased to $500,000, and
that a prior approval threshold of $500,000 would be added to Sec.
495.324(b)(2). In addition, in light of these proposed changes, we are
proposing a conforming amendment to amend the threshold in Sec.
495.324(d) for prior approval of justifications for sole source
acquisitions to be the same $500,000 threshold. That threshold is
currently aligned with the $100,000 threshold in current Sec.
495.324(b)(3). Amending Sec. 495.324(d) to preserve alignment with
Sec. 495.324(b)(3) would reduce burden on States and maintain the
consistency of our prior approval requirements. We believe that this
proposal would reduce burden on States by raising the prior approval
thresholds and generally aligning them with the thresholds for prior
approval of MMIS and ADP acquisitions costs.
In section VIII.D.12.b. of the preamble of this proposed rule, we
are proposing that the 90 percent FFP for Medicaid Promoting
Interoperability Program administration would no longer be available
for most State expenditures incurred after September 30, 2022. We are
proposing a later sunset date, September 30, 2023, for the availability
of 90 percent enhanced match for State administrative costs related to
Medicaid Promoting Interoperability Program audit and appeals
activities, as well as costs related to administering incentive payment
disbursements and recoupments that might result from those activities.
States would not be able to claim any Medicaid Promoting
Interoperability Program administrative match for expenditures incurred
after September 30, 2023. We do not believe that these proposals would
impose any

[[Page 20564]]

additional burdens on States, because they only affect the timing of
State expenditures.
We are requesting public comments on these information collection
and recordkeeping requirements.
10. ICRs for Proposed Revisions to the Supporting Documentation
Requirements for Medicare Cost Reports
In section IX.B.1. of the preamble of this proposed rule, we are
proposing to incorporate the Provider Cost Reimbursement Questionnaire,
Form CMS-339 (OMB No. 0938-0301) into the Organ Procurement
Organization (OPO) and Histocompatibility Laboratory cost report, Form
CMS-216 (OMB No. 0938-0102), which would complete our incorporation of
the Form CMS-339 into all Medicare cost reports. We also are proposing
to update Sec. 413.24(f)(5)(i) to reflect that an acceptable cost
report would no longer require the provider to separately submit a
Provider Cost Reimbursement Questionnaire, Form CMS-339, by removing
the reference to the questionnaire.
There are 58 OPOs and 47 histocompatibility laboratories. This
proposal would not require additional data collection from OPOs or
histocompatibility laboratories. This proposal would benefit OPOs and
histocompatibility laboratories because they would no longer be
required to complete and submit the Form CMS-339 as a separate form
independent of the Medicare cost report in order to have an acceptable
cost report submission under Sec. 413.24(f)(5)(i).
Currently, all OPOs and histocompatibility laboratories are
required to complete Form CMS-339. The proposal to incorporate the
Provider Cost Reimbursement Questionnaire, Form CMS-339, into the OPO
and Histocompatibility Laboratory cost report would eliminate the
requirement to complete the Form CMS-339. The estimated annual burden
associated with Form CMS-339 is 3 hours per respondent. The time
required by an OPO or a histocompatibility laboratory to complete the
Form CMS-339 would be reduced if it is incorporated into the cost
report. The incorporation of the Form CMS-339 into the cost report as a
cost report worksheet would decrease burden upon OPOs and
histocompatibility laboratories. These entities would no longer be
required to review multiple pages of questions not applicable to them.
This proposal would result in an overall burden reduction to the 58
OPOs and 47 histocompatibility laboratories of a total of 289 hours.
Instead, these entities would be required to respond to 5
questions, which we estimate would take 15 minutes per entity. The
total estimated burden across all respondents would be 26 hours ((105
respondents) x (0.25 hours/response)). By eliminating the requirement
to complete the inapplicable parts of the Form CMS-339, each OPO or
histocompatibility laboratory would experience a net burden decrease of
2.75 hours.
Based on the most recent Bureau of Labor Statistics (BLS) 2016
Occupational Outlook Handbook, the mean hourly wage for Category 43-
3031 (bookkeeping, accounting, and auditing clerk) is $19.34. We added
100 percent of the mean hourly wage to account for fringe benefits and
overhead, which calculates to a total hourly wage of $38.68 ($19.34 +
$19.34). The overall decrease in costs to the 58 OPOs and 47
histocompatibility laboratories is $11,178.52 ($38.68 x 289 hours).
In section IX.B.6. of the preamble of this proposed rule, we are
proposing that, effective for cost reporting periods beginning on or
after October 1, 2018, in order for a provider claiming costs on its
cost report that are allocated from a home office or chain organization
to have an acceptable cost report submission under Sec. 413.24(f)(5),
a Home Office Cost Statement completed by the home office or chain
organization that corresponds to the amounts allocated from the home
office or chain organization to the provider's cost report must be
submitted as a supporting document with the provider's cost report.
With our proposal, we anticipate that more providers claiming costs on
their cost reports that are allocated from a home office or chain
organization will submit a Home Office Cost Statement with their cost
reports in order to have an acceptable cost report submission. Based on
the most recent available FY 2016 data in CMS' System for Tracking
Audit and Reimbursement, there were approximately 94 providers that
claimed costs on their cost reports that were allocated from
approximately 13 home offices or chain organizations, but did not
submit a Home Office Cost Statement with their cost reports to
substantiate these allocated costs.
Because the existing burden estimate for a provider's cost report
already reflects the requirement that providers collect, maintain, and
submit this data, there is no additional burden placed upon providers
as a result of our proposal to require them to submit these supporting
documents along with their cost report in order to have an acceptable
cost report submission. To account for the anticipated increase in home
office cost statement submissions, we will adjust the number of
respondents in the Home Office Cost Statement (OMB Control number 0938-
0202) information collection request that is currently being developed
for reinstatement.

C. Response to Comments

Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this proposed
rule, and, when we proceed with a subsequent document(s), we will
respond to those comments in the preamble to that document.

List of Subjects

42 CFR Part 412

Administrative practice and procedure, Health facilities, Medicare,
Puerto Rico, Reporting and recordkeeping requirements.

42 CFR Part 413

Health facilities, Kidney diseases, Medicare, Puerto Rico,
Reporting and recordkeeping requirements.

42 CFR Part 424

Emergency medical services, Health facilities, Health professions,
Medicare, Reporting and recordkeeping requirements.

42 CFR Part 495

Administrative practice and procedure, Electronic health records,
Health facilities, Health professions, Health maintenance organizations
(HMO), Medicaid, Medicare, Penalties, Privacy, Reporting and
recordkeeping requirements.

For the reasons set forth in the preamble of this proposed rule,
the Centers for Medicare and Medicaid Services is proposing to amend 42
CFR chapter IV as set forth below:

PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL
SERVICES

0
1. The authority citation for part 412 is revised to read as follows:

Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh); secs. 123 and 124 of subtitle A of Title I
of Pub. L. 106-113 (113 Stat. 1501A-332); sec. 307 of Subtitle A of
Title III of Pub. L. 106-554; sec. 114 of 110-173; sec. 4302 of Pub.
L. 111-5; secs. 3106 and 10312 of Pub. L. 111-148; sec. 1206 of Pub.
L. 113-67; sec. 112 of Pub. L. 113-93; sec. 231 of Pub. L.

[[Page 20565]]

114-113; secs. 15004, 15006, 15007, 15008, 15009, and 15010 of Pub.
L. 114-255; and sec. 51005 of Division E of Title X of Pub. L. 115-
123.

0
2. Section 412.3 is amended by revising paragraph (a) to read as
follows:

Sec. 412.3 Admissions.

(a) For purposes of payment under Medicare Part A, an individual is
considered an inpatient of a hospital, including a critical access
hospital, if formally admitted as an inpatient pursuant to an order for
inpatient admission by a physician or other qualified practitioner in
accordance with this section and Sec. Sec. 482.24(c), 482.12(c), and
485.638(a)(4)(iii) of this chapter for a critical access hospital. In
addition, inpatient rehabilitation facilities also must adhere to the
admission requirements specified in Sec. 412.622.
* * * * *
0
3. Section 412.4 is amended by adding paragraph (c)(4) to read as
follows:

Sec. 412.4 Discharges and transfers.

* * * * *
(c) * * *
(4) For discharges occurring on or after October 1, 2018, to
hospice care by a hospice program.
* * * * *
0
4. Section 412.22 is amended by adding paragraph (h)(2)(iii)(A)(4) to
read as follows:

Sec. 412.22 Excluded hospitals and hospital units: General rules.

* * * * *
(h) * * *
(2) * * *
(iii) * * *
(A) * * *
(4) On or after October 1, 2018, a satellite facility that is part
of a hospital excluded from the prospective payment systems specified
in Sec. 412.1(a)(1) that provides inpatient services in a building
also used by another hospital that is excluded from the prospective
payment systems specified in Sec. 412.1(a)(1), or in one or more
entire buildings located on the same campus as buildings used by
another hospital that is excluded from the prospective payment systems
specified in Sec. 412.1(a)(1), is not required to meet the criteria
specified in paragraphs (h)(2)(iii)(A)(1) through (3) of this section
in order to be excluded from the inpatient prospective payment system.
A satellite facility that is part of a hospital excluded from the
prospective payment systems specified in Sec. 412.1(a)(1) which is
located in a building also used by another hospital that is not
excluded from the prospective payment systems specified in Sec.
412.1(a)(1), or in one or more entire buildings located on the same
campus as buildings used by another hospital that is not excluded from
the prospective payment systems specified in Sec. 412.1(a)(1), is
required to meet the criteria specified in paragraphs (h)(2)(iii)(A)(1)
through (3) of this section in order to be excluded from the
prospective payment systems specified in Sec. 412.1(a)(1).
* * * * *
0
5. Section 412.25 is amended by--
0
a. Revising paragraphs (a)(1)(ii), (d), and (e)(2)(iii)(A); and
0
b. Adding paragraph (e)(2)(iv).
The revisions and addition read as follows:

Sec. 412.25 Excluded hospital units: Common requirements.

(a) * * *
(1) * * *
(ii) Prior to October 1, 2019, is not excluded in its entirety from
the prospective payment systems; and
* * * * *
(d) Number of excluded units. Each hospital may have only one unit
of each type (psychiatric or rehabilitation) excluded from the
prospective payment systems specified in Sec. 412.1(a)(1). A hospital
excluded from the prospective payment systems as specified in Sec.
412.1(a)(1) may not have an excluded unit (psychiatric or
rehabilitation) that is excluded on the same basis as the hospital.
(e) * * *
(2) * * *
(iii) * * *
(A) Except as provided in paragraph (e)(2)(iv) of this section, it
is not under the control of the governing body or chief executive
officer of the hospital in which it is located, and it furnishes
inpatient care through the use of medical personnel who are not under
the control of the medical staff or chief medical officer of the
hospital in which it is located.
* * * * *
(iv) Effective for cost reporting periods beginning on or after
October 1, 2019, the requirements of paragraph (e)(2)(iii)(A) of this
section do not apply to a satellite facility of a unit that is part of
a hospital excluded from the prospective payment systems specified in
Sec. 412.1(a)(1) that does not furnish services in a building also
used by another hospital that is not excluded from the prospective
payment systems specified in Sec. 412.1(a)(1), or in one or more
entire buildings located on the same campus as buildings used by
another hospital that is not excluded from the prospective payment
systems specified in Sec. 412.1(a)(1).
* * * * *
0
6. Section 412.64 is amended by revising paragraphs (d)(1)(vii) and
(d)(3) to read as follows:

Sec. Sec. 412.64 Federal rates for inpatient operating costs for
Federal fiscal year 2005 and subsequent fiscal years.

* * * * *
(d) * * *
(1) * * *
(vii) For fiscal years 2017, 2018, and 2019, the percentage
increase in the market basket index (as defined in Sec. 413.40(a)(3)
of this chapter) for prospective payment hospitals, subject to the
provisions of paragraphs (d)(2) and (3) of this section, less a
multifactor productivity adjustment (as determined by CMS) and less
0.75 percentage point.
* * * * *
(3)(i) Beginning fiscal year 2015, in the case of a ``subsection
(d) hospital,'' as defined under section 1886(d)(1)(B) of the Act, that
is not a meaningful electronic health record (EHR) user as defined in
part 495 of this chapter for the applicable EHR reporting period and
does not receive an exception, three-fourths of the percentage increase
in the market basket index (as defined in Sec. 413.40(a)(3) of this
chapter) for prospective payment hospitals is reduced--
(A) For fiscal year 2015, by 33 1/3 percent;
(B) For fiscal year 2016, by 66 2/3 percent; and
(C) For fiscal year 2017 and subsequent fiscal years, by 100
percent.
(ii) Beginning fiscal year 2022, in the case of a ``subsection (d)
Puerto Rico hospital,'' as defined under section 1886(d)(9)(A) of the
Act, that is not a meaningful EHR user as defined in part 495 of this
chapter for the applicable EHR reporting period and does not receive an
exception, three-fourths of the percentage increase in the market
basket index (as defined in Sec. 413.40(a)(3) of this chapter) for
prospective payment hospitals is reduced--
(A) For fiscal year 2022, by 33 1/3 percent;
(B) For fiscal year 2023, by 66 2/3 percent; and
(C) For fiscal year 2024 and subsequent fiscal years, by 100
percent.
* * * * *
0
7. Section 412.90 is amended by revising paragraph (j) to read as
follows:

Sec. 412.90 General rules.

* * * * *
(j) Medicare-dependent, small rural hospitals. For cost reporting
periods

[[Page 20566]]

beginning on or after April 1, 1990, and before October 1, 1994, and
for discharges occurring on or after October 1, 1997 and before October
1, 2022, CMS adjusts the prospective payment rates for inpatient
operating costs determined under subparts D and E of this part if a
hospital is classified as a Medicare-dependent, small rural hospital.
* * * * *

Sec. 412.92 [Amended]

0
8. Section 412.92 is amended--
0
a. In paragraph (a)(1)(ii) by removing the term ``intermediary'' and
adding the term ``MAC'' is its place;
0
b. By adding paragraph (a)(4);
0
c. In paragraph (b)(1)(i) by removing the term ``fiscal intermediary''
and adding the term ``MAC'' in its place;
0
d. In paragraphs (b)(1)(iii)(B) and ((b)(1)(iv) by removing the term
``intermediary'' and adding the term ``MAC'' in its place;
0
e. In paragraph (b)(1)(v) by removing the term ``intermediary's'' and
adding the term ``MAC's'' in its place, and removing the term
``intermediary'' and adding the term ``MAC'' in its place;
0
f. By revising paragraphs (b)(2)(i) and (ii) introductory text and
(b)(2)(ii)(B);
0
g. By adding paragraph (b)(2)(ii)(C);
0
h. By revising paragraph (b)(2)(iv);
0
i. In paragraphs (b)(3)(i), (ii) and (iii) by removing the term
``fiscal intermediary'' and adding the term ``MAC'' in its place;
0
j. In paragraph (b)(3)(iv) by removing the phrase ``fiscal intermediary
or'';
0
k. In paragraph (d)(2) introductory text, (e)(1) and (e)(3)
introductory text by removing the term ``intermediary'' wherever it
appears and adding the term ``MAC'' in its place;
0
l. In paragraph (e)(2) introductory text by removing the term
``intermediary's'' and adding the term ``MAC's'' in its place;
0
m. In paragraph (e)(2)(i) by removing the term ``intermediary'' and
adding the term ``MAC'' in its place; and
0
n. In paragraphs (e)(3)(i) introductory text, and (e)(3)(ii) and (iii)
by removing the term ``intermediary'' and adding the term ``MAC'' in
its place.
The revisions and addition read as follows:

Sec. 412.92 Special treatment: sole community hospitals.

(a) * * *
(4) For a hospital with a main campus and one or more remote
locations under a single provider agreement where services are provided
and billed under the inpatient hospital prospective payment system and
that meets the provider-based criteria at Sec. 413.65 of this chapter
as a main campus and a remote location of a hospital, combined data
from the main campus and its remote location(s) are required to
demonstrate that the criteria specified in paragraphs (a)(1)(i) and
(ii) of this section are met. For the mileage and rural location
criteria in paragraph (a) of this section and the mileage,
accessibility, and travel time criteria specified in paragraphs (a)(1)
through (3) of this section, the hospital must demonstrate that the
main campus and its remote location(s) each independently satisfy those
requirements.
(b) * * *
(2) * * *
(i) For applications received on or before September 30, 2018, sole
community hospital status is effective 30 days after the date of CMS'
written notification of approval, except as provided in paragraph
(b)(2)(v) of this section. For applications received on or after
October 1, 2018, sole community hospital status is effective as of the
date CMS receives the complete application, except as provided in
paragraph (b)(2)(v) of this section.
(ii) When a court order or a determination by the Provider
Reimbursement Review Board (PRRB) reverses a CMS denial of sole
community hospital status and no further appeal is made, the sole
community hospital status is effective as follows:
* * * * *
(B) If the hospital's application for sole community hospital
status was received on or after October 1, 1983 and on or before
September 30, 2018, the effective date is 30 days after the date of
CMS' original written notification of denial.
(C) If the hospital's application for sole community hospital
status was received on or after October 1, 2018, the effective date is
the date CMS receives the complete application.
* * * * *
(iv) For applications received on or before September 30, 2018, a
hospital classified as a sole community hospital receives a payment
adjustment, as described in paragraph (d) of this section, effective
with discharges occurring on or after 30 days after the date of CMS'
approval of the classification. For applications received on or after
October 1, 2018, a hospital classified as a sole community hospital
receives a payment adjustment, as described in paragraph (d) of this
section, effective with discharges occurring on or after the date CMS
receives the complete application.
* * * * *
0
9. Section 412.96 is amended by redesignating paragraph (d) as
paragraph (e) and adding a new paragraph (d) to read as follows:

Sec. 412.96 Special treatment: Referral centers.

* * * * *
(d) Criteria for hospitals that have remote location(s). For a
hospital with a main campus and one or more remote locations under a
single provider agreement where services are provided and billed under
the inpatient hospital prospective payment system and that meets the
provider-based criteria at Sec. 413.65 of this chapter as a main
campus and a remote location of a hospital, combined data from the main
campus and its remote location(s) are required to demonstrate that the
criteria specified in paragraphs (b)(1) and (2) and (c)(1) through (5)
of this section are met. For the rural location criteria specified in
paragraphs (b)(1) and (c) of this section and the mileage criteria
specified in paragraphs (b)(2)(ii) and (c)(4) of this section, the
hospital must demonstrate that the main campus and its remote locations
each independently satisfy those requirements.
* * * * *
0
10. Section 412.101 is amended by--
0
a. Revising paragraph (b)(2);
0
b. Revising paragraphs (c)(1) and (2) introductory text;
0
c. Adding paragraph (c)(3); and
0
d. Revising paragraph (d).
The revisions and addition read as follows:

Sec. 412.101 Special treatment: Inpatient hospital payment
adjustment for low-volume hospitals.

* * * * *
(b) * * *
(2) In order to qualify for this adjustment, a hospital must meet
the following criteria, subject to the provisions of paragraph (e) of
this section:
(i) For FY 2005 through FY 2010 and FY 2023 and subsequent fiscal
years, a hospital must have fewer than 200 total discharges, which
includes Medicare and non-Medicare discharges, during the fiscal year,
based on the hospital's most recently submitted cost report, and be
located more than 25 road miles (as defined in paragraph (a) of this
section) from the nearest ``subsection (d)'' (section 1886(d) of the
Act) hospital.
(ii) For FY 2011 through FY 2018, a hospital must have fewer than
1,600 Medicare discharges, as defined in paragraph (a) of this section,
during the

[[Page 20567]]

fiscal year, based on the hospital's Medicare discharges from the most
recently available MedPAR data as determined by CMS, and be located
more than 15 road miles, as defined in paragraph (a) of this section,
from the nearest ``subsection (d)'' (section 1886(d) of the Act)
hospital.
(iii) For FY 2019 through FY 2022, a hospital must have fewer than
3,800 total discharges, which includes Medicare and non-Medicare
discharges, during the fiscal year, based on the hospital's most
recently submitted cost report, and be located more than 15 road miles
(as defined in paragraph (a) of this section) from the nearest
``subsection (d)'' (section 1886(d) of the Act) hospital.
* * * * *
(c) * * *
(1) For FY 2005 through FY 2010 and FY 2023 and subsequent fiscal
years, the adjustment is an additional 25 percent for each Medicare
discharge.
(2) For FY 2011 through FY 2018, the adjustment is as follows:
* * * * *
(3) For FY 2019 through FY 2022, the adjustment is as follows:
(i) For low-volume hospitals with 500 or fewer total discharges,
which includes Medicare and non-Medicare discharges, during the fiscal
year, based on the hospital's most recently submitted cost report, the
adjustment is an additional 25 percent for each Medicare discharge.
(ii) For low-volume hospitals with more than 500 and fewer than
3,800 total discharges, which includes Medicare and non-Medicare
discharges, during the fiscal year, based on the hospital's most
recently submitted cost report, the adjustment for each Medicare
discharge is an additional percent calculated using the formula [(95/
330)--(number of total discharges/13,200)]. ``Total discharges'' is
determined as described in paragraph (b)(2)(iii) of this section.
(d) Eligibility of new hospitals for the adjustment. For FYs 2005
through 2010 and FY 2019 and subsequent fiscal years, a new hospital
will be eligible for a low-volume adjustment under this section once it
has submitted a cost report for a cost reporting period that indicates
that it meets discharge requirements during the applicable fiscal year
and has provided its Medicare administrative contractor with sufficient
evidence that it meets the distance requirement, as specified in
paragraph (b)(2) of this section.
* * * * *
0
11. Section 412.103 is amended by adding paragraph (a)(7) and revising
paragraph (b)(6) to read as follows:

Sec. 412.103 Special treatment: Hospitals located in urban areas and
that apply for reclassification as rural.

(a) * * *
(7) For a hospital with a main campus and one or more remote
locations under a single provider agreement where services are provided
and billed under the inpatient hospital prospective payment system and
that meets the provider-based criteria at Sec. 413.65 of this chapter
as a main campus and a remote location of a hospital, the hospital is
required to demonstrate that the main campus and its remote location(s)
each independently satisfy the location conditions specified in
paragraphs (a)(1), (2), and (6) of this section.
(b) * * *
(6) Lock-in date for the wage index calculation and budget
neutrality. In order for a hospital to be treated as rural in the wage
index and budget neutrality calculations under Sec. 412.64(e)(1)(ii),
(2), and (4) and (h) for the payment rates for the next Federal fiscal
year, the hospital's application must be approved by the CMS Regional
Office in accordance with the requirements of this section no later
than 60 days after the public display date at the Office of the Federal
Register of the inpatient prospective payment system proposed rule for
the next Federal fiscal year.
* * * * *

Sec. 412.105 [Amended]

0
12. Section 412.105 is amended in paragraph (f)(1)(vii) by removing the
reference ``Sec. Sec. 413.79(e)(1) through (e)(4)'' and adding in its
place the reference ``Sec. 413.79(e)''.
0
13. Section 412.106 is amended by adding paragraph (g)(1)(iii)(C)(5) to
read as follows:

Sec. 412.106 Special treatment: Hospitals that serve a
disproportionate share of low-income patients.

* * * * *
(g) * * *
(1) * * *
(iii) * * *
(C) * * *
(5) For fiscal year 2019, CMS will base its estimates of the amount
of hospital uncompensated care on utilization data for Medicaid and
Medicare SSI patients, as determined by CMS in accordance with
paragraphs (b)(2)(i) and (4) of this section, using data on Medicaid
utilization from 2013 cost reports from the most recent HCRIS database
extract and the most recent available year of data on Medicare SSI
utilization (or, for Puerto Rico hospitals, a proxy for Medicare SSI
utilization data), and for hospitals other than Puerto Rico hospitals,
IHS or Tribal hospitals, and all-inclusive rate providers, data on
uncompensated care costs, defined as charity care costs plus non-
Medicare bad debt costs from 2014 and 2015 cost reports from the most
recent HCRIS database extract.
* * * * *

Sec. 412.108 [Amended]

0
14. Section 412.108 is amended--
0
a. By revising paragraph (a)(1);
0
b. By adding paragraph (a)(3);
0
c. By revising paragraph (b)(4) introductory text;
0
d. In paragraphs (b)(1) and (3), and (b)(4)(i), (ii), and (iii),
(b)(5), (6), (7), (8), and (9), and (d)(1), (d)(2)(i), (d)(3)
introductory text, and (d)(3)(i), (ii), and (iii) by removing the terms
``fiscal intermediary'' and ``intermediary'' wherever they appear and
adding the term ``MAC'' in their place;
0
e. In paragraph (b)(8) and (9) and (d)(2) introductory text by removing
the terms ``fiscal intermediary's'' and ``intermediary's'' and adding
the term ``MAC's'' in their place; and
0
f. By revising paragraph (c)(2)(iii) introductory text.
The revisions and additions read as follows:

Sec. 412.108 Special treatment: Medicare-dependent, small rural
hospitals.

(a) * * *
(1) General considerations. For cost reporting periods beginning on
or after April 1, 1990, and ending before October 1, 1994, or for
discharges occurring on or after October 1, 1997, and before October 1,
2022, a hospital is classified as a Medicare-dependent, small rural
hospital if it meets all of the following conditions:
(i) It is located in a rural area (as defined in subpart D of this
part) or it is located in a State with no rural area and satisfies any
of the criteria under Sec. 412.103(a)(1) or (3) or under Sec.
412.103(a)(2) as of January 1, 2018.
(ii) The hospital has 100 or fewer beds as defined in Sec.
412.105(b) during the cost reporting period.
(iii) The hospital is not also classified as a sole community
hospital under Sec. 412.92.
(iv) At least 60 percent of the hospital's inpatient days or
discharges were attributable to individuals entitled to Medicare Part A
benefits during the hospital's cost reporting period or periods as
follows, subject to the provisions of paragraph (a)(1)(v) of this
section:

[[Page 20568]]

(A) The hospital's cost reporting period ending on or after
September 30, 1987 and before September 30, 1988.
(B) If the hospital does not have a cost reporting period that
meets the criterion set forth in paragraph (a)(1)(iv)(A) of this
section, the hospital's cost reporting period beginning on or after
October 1, 1986, and before October 1, 1987.
(C) At least two of the last three most recent audited cost
reporting periods for which the Secretary has a settled cost report.
(v) If the cost reporting period determined under paragraph
(a)(1)(iv) of this section is for less than 12 months, the hospital's
most recent 12-month or longer cost reporting period before the short
period is used.
* * * * *
(3) Criteria for hospitals that have remote location(s). For a
hospital with a main campus and one or more remote locations under a
single provider agreement where services are provided and billed under
the inpatient hospital prospective payment system and that meets the
provider-based criteria at Sec. 413.65 as a main campus and a remote
location of a hospital, combined data from the main campus and its
remote location(s) are required to demonstrate that the criteria in
paragraphs (a)(1) and (2) of this section are met. For the location
requirement specified in paragraph (a)(1)(i) of this section, the
hospital must demonstrate that the main campus and its remote locations
each independently satisfy this requirement.
(b) * * *
(4) For applications received on or before September 30, 2018, a
determination of MDH status made by the MAC is effective 30 days after
the date the MAC provides written notification to the hospital. For
applications received on or after October 1, 2018, a determination of
MDH status made by the MAC is effective as of the date CMS receives the
complete application. An approved MDH status determination remains in
effect unless there is a change in the circumstances under which the
status was approved.
* * * * *
(c) * * *
(2) * * *
(iii) For discharges occurring during cost reporting periods (or
portions thereof) beginning on or after October 1, 2006, and before
October 1, 2022, 75 percent of the amount that the Federal rate
determined under paragraph (c)(1) of this section is exceeded by the
highest of the following:
* * * * *
0
15. Section 412.152 is amended by adding, in alphabetical order,
definitions of ``Applicable period for dual-eligibility'', ``Dual-
eligible'', and ``Proportion of dual-eligibles'' to read as follows:

Sec. 412.152 Definitions for the Hospital Readmissions Reduction
Program.

* * * * *
Applicable period for dual-eligibility is the 3-year data period
corresponding to the applicable period as established by the Secretary
for the Hospital Readmissions Reduction Program.
* * * * *
Dual-eligible is a patient beneficiary who has been identified as
having full benefit status in both the Medicare and Medicaid programs
in the State Medicare Modernization Act (MMA) files for the month the
beneficiary was discharged from the hospital.
* * * * *
Proportion of dual-eligibles is the number of dual-eligible
patients among all Medicare Fee-for-Service and Medicare Advantage
stays during the applicable period.
* * * * *
0
16. Section 412.164 is amended by revising paragraph (a) to read as
follows:

Sec. 412.164 Measure selection under the Hospital Value-Based
Purchasing (VBP) Program.

(a) CMS will select measures, other than measures of readmissions,
for purposes of the Hospital VBP Program. The measures will be selected
from the measures specified under section 1886(b)(3)(B)(viii) of the
Act (the Hospital Inpatient Quality Reporting Program).
* * * * *
0
17. Section 412.200 is revised to read as follows:

Sec. 412.200 General provisions.

Beginning with discharges occurring on or after October 1, 1987,
hospitals located in Puerto Rico are subject to the rules governing the
prospective payment system for inpatient operating costs. Except as
provided in this subpart, the provisions of subparts A, B, C, F, G, and
H of this part apply to hospitals located in Puerto Rico. Except for
Sec. 412.60, which deals with DRG classification and weighting
factors, or as otherwise specified, the provisions of subparts D and E,
which describe the methodology used to determine prospective payment
rates for inpatient operating costs for hospitals, do not apply to
hospitals located in Puerto Rico. Instead, the methodology for
determining prospective payment rates for inpatient operating costs for
these hospitals is set forth in Sec. Sec. 412.204 through 412.212.
0
18. Section 412.230 is amended by revising paragraph (d)(5) to read as
follows:

Sec. 412.230 Criteria for an individual hospital seeking
redesignation to another rural area or an urban area.

* * * * *
(d) * * *
(5) Single hospital MSA exception. The requirements of paragraph
(d)(1)(iii) of this section do not apply if a hospital is the single
hospital in its MSA with published 3-year average hourly wage data
included in the current fiscal year inpatient prospective payment
system final rule.
0
19. Section 412.500 is amended by adding paragraphs (a)(9) and (10) to
read as follows:

Sec. 412.500 Basis and scope of subpart.

(a) * * *
(9) Section 51005(a) of Public Law 115-123 which extended the
blended payment rate for the site neutral payment rate cases to apply
to discharges occurring in cost reporting periods beginning in FYs 2018
and 2019.
(10) Section 51005(b) of Public Law which reduces the IPPS
comparable amount for the site neutral payment rate cases by 4.6
percent for FYs 2018 through 2026.
* * * * *
0
20. Section 412.522 is amended by--
0
a. Adding paragraph (c)(1)(iii);
0
b. Removing paragraph (c)(2)(v); and
0
c. Revising paragraph (c)(3) introductory text.
The addition and revision read as follows:

Sec. 412.522 Application of site neutral payment rate.

* * * * *
(c) * * *
(1) * * *
(iii) For discharges occurring in fiscal years 2018 through 2026,
the amount in paragraph (c)(1)(i) of this section is reduced by 4.6
percent.
* * * * *
(3) Transition. For discharges occurring in cost reporting periods
beginning on or after October 1, 2015 and on or before September 30,
2019, payment for discharges under paragraph (c)(1) of this section are
made using a blended payment rate, which is determined as--
* * * * *
0
21. Section 412.523 is amended by adding paragraphs (c)(3)(xv) and
(d)(6) to read as follows:

Sec. 412.523 Methodology for calculating the Federal prospective
payment rates.

* * * * *

[[Page 20569]]

(c) * * *
(3) * * *
(xv) For long-term care hospital prospective payment system fiscal
year beginning October 1, 2018, and ending September 30, 2019. The LTCH
PPS standard Federal payment rate for the long-term care hospital
prospective payment system beginning October 1, 2018, and ending
September 30, 2019, is the standard Federal payment rate for the
previous long-term care hospital prospective payment system fiscal year
updated by 1.15 percent and further adjusted, as appropriate, as
described in paragraph (d) of this section.
* * * * *
(d) * * *
(6) Adjustment for the elimination of the limitation on long-term
care hospital admissions from referring hospitals. The standard Federal
payment rate determined in paragraph (c)(3) of this section for
discharges occurring on or after October 1, 2018 is permanently
adjusted by a one-time factor so that estimated aggregate payments to
LTCH PPS standard Federal rate cases in FY 2019 are projected to equal
estimated aggregate payments that would have been paid for such cases
without regard to the elimination of the limitation on long-term care
hospital admissions from referring hospitals.
* * * * *

Sec. 412.525 [Amended]

0
22. Section 412.525 is amended by removing paragraph (d)(6).

Sec. 412.538 [Removed and reserved]

0
23. Section 412.538 is removed and reserved.
0
24. Section 412.560 is amended by--
0
a. Adding paragraph (b)(3); and
0
b. Revising paragraphs (d)(1) and (3).
The addition and revisions read as follows:

Sec. 412.560 Requirements under the Long-Term Care Hospital Quality
Reporting Program (LTCH QRP).

* * * * *
(b) * * *
(3) CMS may remove a quality measure from the LTCH QRP based on one
or more of the following factors:
(i) Measure performance among long-term care hospitals is so high
and unvarying that meaningful distinctions in improvements in
performance can no longer be made.
(ii) Performance or improvement on a measure does not result in
better patient outcomes.
(iii) A measure does not align with current clinical guidelines or
practice.
(iv) A more broadly applicable measure (across settings,
populations, or conditions) for the particular topic is available.
(v) A measure that is more proximal in time to desired patient
outcomes for the particular topic is available.
(vi) A measure that is more strongly associated with desired
patient outcomes for the particular topic is available.
(vii) Collection or public reporting of a measure leads to
negative, unintended consequences other than patient harm.
(viii) The costs associated with a measure outweigh the benefit of
its continued use in the program.
* * * * *
(d) * * *
(1) Written letter of noncompliance decision. Long-term care
hospitals that do not meet the requirement in paragraph (b) of this
section for a program year will receive a notification of noncompliance
sent through at least one of the following methods: Quality Improvement
and Evaluation System (QIES) Assessment Submission and Processing
(ASAP) system, the United States Postal Service, or via an email from
the MAC.
* * * * *
(3) CMS decision on reconsideration request. CMS will notify long-
term care hospitals, in writing, of its final decision regarding any
reconsideration request through at least one of the following methods:
The QIES ASAP system, the United States Postal Service, or via an email
from the MAC.
* * * * *

PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR
END-STAGE RENAL DISEASE SERVICES; PROSPECTIVELY DETERMINED PAYMENT
RATES FOR SKILLED NURSING FACILITIES; PAYMENT FOR ACUTE KIDNEY
INJURY DIALYSIS

0
25. The authority citation for part 413 continues to read as follows:

Authority: Secs. 1102, 1812(d), 1814(b), 1815, 1833(a), (i),
and (n), 1861(v), 1871, 1881, 1883 and 1886 of the Social Security
Act (42 U.S.C. 1302, 1395d(d), 1395f(b), 1395g, 1395l(a), (i), and
(n), 1395x(v), 1395hh, 1395rr, 1395tt, and 1395ww); and sec. 124 of
Public Law 106-113, 113 Stat. 1501A-332; sec. 3201 of Public Law
112-96, 126 Stat. 156; sec. 632 of Public Law 112-240, 126 Stat.
2354; sec. 217 of Public Law 113-93, 129 Stat. 1040; and sec. 204 of
Public Law 113-295, 128 Stat. 4010; and sec. 808 of Public Law 114-
27, 129 Stat. 362.

0
26. Section 413.24 is amended by revising paragraph (f)(5)(i) to read
as follows:

Sec. 413.24 Adequate cost data and cost finding.

* * * * *
(f) * * *
(5) * * *
(i) All providers--The provider must accurately complete and submit
the required cost reporting forms, including all necessary signatures
and supporting documents. A cost report is rejected for lack of
supporting documentation if it does not include the following:
(A) Teaching hospitals--For teaching hospitals, the Intern and
Resident Information System (IRIS) data. Effective for cost reports
filed on or after October 1, 2018, the IRIS data must contain the same
total counts of direct GME FTE residents (unweighted and weighted) and
IME FTE residents as the total counts of direct GME FTE and IME FTE
residents reported in the provider's cost report.
(B) Bad debt--Effective for cost reporting periods beginning on or
after October 1, 2018, for providers claiming Medicare bad debt
reimbursement, a detailed bad debt listing that corresponds to the
amount of bad debt claimed in the provider's cost report.
(C) DSH eligible hospitals--Effective for cost reporting periods
beginning on or after October 1, 2018, for hospitals claiming a
disproportionate share hospital payment adjustment, a detailed listing
of the hospital's Medicaid eligible days that corresponds to the
Medicaid eligible days claimed in the hospital's cost report. If the
hospital submits an amended cost report that changes its Medicaid
eligible days, the hospital must submit an amended listing or an
addendum to the original listing of the hospital's Medicaid eligible
days that corresponds to the Medicaid eligible days claimed in the
hospital's amended cost report.
(D) Charity care and uninsured discounts--Effective for cost
reporting periods beginning on or after October 1, 2018, for DSH
eligible hospitals reporting charity care and/or uninsured discounts, a
detailed listing of charity care and/or uninsured discounts that
corresponds to the amounts claimed in the DSH eligible hospital's cost
report.
(E) Home office cost allocation--Effective for cost reporting
periods beginning on or after October 1, 2018, for providers claiming
costs on their cost report that are allocated from a home office or
chain organization, a home office cost statement completed by the home
office or chain organization that corresponds to the amounts allocated
from the home office or chain organization to the provider's cost
report.
* * * * *

[[Page 20570]]

0
27. Section 413.79 is amended by revising paragraph (e)(1)(iv) to read
as follows:

Sec. 413.79 Direct GME Payments: Determination of the weighted
number of FTE residents.

* * * * *
(e) * * *
(1) * * *
(iv)(A) Effective for Medicare GME affiliation agreements entered
into on or after October 1, 2005, an urban hospital that qualifies for
an adjustment to its FTE cap under paragraph (e)(1) of this section is
permitted to be part of a Medicare GME affiliated group for purposes of
establishing an aggregate FTE cap only if the adjustment that results
from the affiliation is an increase to the urban hospital's FTE cap.
(B) Effective for Medicare GME affiliation agreements entered into
on or after July 1, 2019, an urban hospital that qualifies for an
adjustment to its FTE cap under paragraph (e)(1) of this section is
permitted to be part of a Medicare GME affiliated group for purposes of
establishing an aggregate FTE cap and receive an adjustment that is a
decrease to the urban hospital's FTE cap only if the decrease results
from a Medicare GME affiliated group consisting solely of two or more
urban hospitals that qualify to receive adjustments to their FTE caps
under paragraph (e)(1) of this section.
* * * * *

PART 424--CONDITIONS FOR MEDICARE PAYMENT

0
28. The authority citation for part 424 continues to read as follows:

Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).

0
29. Section 424.11 is amended by revising paragraphs (b) and (c) to
read as follows:

Sec. 424.11 General procedures.

* * * * *
(b) Obtaining the certification and recertification statements. No
specific procedures or forms are required for certification and
recertification statements. The provider may adopt any method that
permits verification. The certification and recertification statements
may be entered on forms, notes, or records that the appropriate
individual signs, or on a special separate form. Except as provided in
paragraph (d) of this section for delayed certifications, there must be
a separate signed statement for each certification or recertification.
If supporting information for the signed statement is contained in
other provider records (such as physicians' progress notes), it need
not be repeated in the statement itself.
(c) Required information. The succeeding sections of this subpart
set forth specific information required for different types of
services.
* * * * *

PART 495--STANDARDS FOR THE ELECTRONIC HEALTH RECORD TECHNOLOGY
INCENTIVE PROGRAM

0
30. The authority citation for part 495 continues to read as follows:

Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).

0
31. Section 495.4 is amended--
0
a. In the definition of ``EHR reporting period'' by revising paragraph
(1)(iii), adding paragraph (1)(iv), revising paragraphs (2)(ii)(C) and
(D) and (2)(iii), and adding paragraph (2)(iv);
0
b. In the definition of ``EHR reporting period for a payment adjustment
year'' by revising paragraph (2)(iii) and adding paragraph (2)(iv),
revising paragraph (3)(iii), and adding paragraph (3)(iv); and
0
c. By revising the definitions of ``Payment adjustment year'' and
``Payment year''.
The revisions and additions read as follows:

Sec. 495.4 Definitions.

* * * * *
EHR reporting period. * * *
(1) * * *
(iii) For the CY 2019 payment year under the Medicaid Promoting
Interoperability Program:
(A) For the EP first demonstrating he or she is a meaningful EHR
user, any continuous 90-day period within CY 2019.
(B) For the EP who has successfully demonstrated he or she is a
meaningful EHR user in any prior year, any continuous 90-day period
within CY 2019.
(iv) For the CY 2020 payment year under the Medicaid Promoting
Interoperability Program:
(A) For the EP first demonstrating he or she is a meaningful EHR
user, any continuous 90-day period within CY 2020.
(B) For the EP who has successfully demonstrated he or she is a
meaningful EHR user in any prior year, any continuous 90-day period
within CY 2020.
(2) * * *
(ii) * * *
(C) For the FY 2017 payment year as follows:
(1) Under the Medicaid EHR Incentive Program:
(i) For the eligible hospital or CAH first demonstrating it is a
meaningful EHR user, any continuous 90-day period within CY 2017.
(ii) For the eligible hospital or CAH that has successfully
demonstrated it is a meaningful EHR user in any prior year, any
continuous 90-day period within CY 2017.
(iii) For the eligible hospital or CAH demonstrating the Stage 3
objectives and measures at Sec. 495.24, any continuous 90-day period
within CY 2017.
(2) Under the Medicare EHR Incentive Program, for a Puerto Rico
eligible hospital, any continuous 14-day period within CY 2017.
(D) For the FY 2018 payment year as follows:
(1) Under the Medicaid Promoting Interoperability Program:
(i) For the eligible hospital or CAH first demonstrating it is a
meaningful EHR user, any continuous 90-day period within CY 2018.
(ii) For the eligible hospital or CAH that has successfully
demonstrated it is a meaningful EHR user in any prior year, any
continuous 90-day period within CY 2018.
(2) Under the Medicare Promoting Interoperability Program, for a
Puerto Rico eligible hospital, any continuous 90-day period within CY
2018.
(iii) For the FY 2019 payment year as follows:
(A) Under the Medicaid Promoting Interoperability Program:
(1) For the eligible hospital or CAH first demonstrating it is a
meaningful EHR user, any continuous 90-day period within CY 2019.
(2) For the eligible hospital or CAH that has successfully
demonstrated it is a meaningful EHR user in any prior year, any
continuous 90-day period within CY 2019.
(B) Under the Medicare Promoting Interoperability Program, for a
Puerto Rico eligible hospital, any continuous 90-day period within CY
2019.
(iv) For the FY 2020 payment year as follows:
(A) Under the Medicaid Promoting Interoperability Program:
(1) For the eligible hospital or CAH first demonstrating it is a
meaningful EHR user, any continuous 90-day period within CY 2020.
(2) For the eligible hospital or CAH that has successfully
demonstrated it is a meaningful EHR user in any prior year, any
continuous 90-day period within CY 2020.
(B) Under the Medicare Promoting Interoperability Program, for a
Puerto

[[Page 20571]]

Rico eligible hospital, any continuous 90-day period within CY 2020.
* * * * *
EHR reporting period for a payment adjustment year. * * *
(2) * * *
(iii) The following are applicable for 2019:
(A) If an eligible hospital has not successfully demonstrated it is
a meaningful EHR user in a prior year, the EHR reporting period is any
continuous 90-day period within CY 2019 and applies for the FY 2020 and
2021 payment adjustment years. For the FY 2020 payment adjustment year,
the EHR reporting period must end before and the eligible hospital must
successfully register for and attest to meaningful use no later than
October 1, 2019.
(B) If in a prior year an eligible hospital has successfully
demonstrated it is a meaningful EHR user, the EHR reporting period is
any continuous 90-day period within CY 2019 and applies for the FY 2021
payment adjustment year.
(iv) The following are applicable for 2020:
(A) If an eligible hospital has not successfully demonstrated it is
a meaningful EHR user in a prior year, the EHR reporting period is any
continuous 90-day period within CY 2020 and applies for the FY 2021 and
2022 payment adjustment years. For the FY 2021 payment adjustment year,
the EHR reporting period must end before and the eligible hospital must
successfully register for and attest to meaningful use no later than
October 1, 2020.
(B) If in a prior year an eligible hospital has successfully
demonstrated it is a meaningful EHR user, the EHR reporting period is
any continuous 90- day period within CY 2020 and applies for the FY
2022 payment adjustment year.
(3) * * *
(iii) The following are applicable for 2019:
(A) If a CAH has not successfully demonstrated it is a meaningful
EHR user in a prior year, the EHR reporting period is any continuous
90-day period within CY 2019 and applies for the FY 2019 payment
adjustment year.
(B) If in a prior year a CAH has successfully demonstrated it is a
meaningful EHR user, the EHR reporting period is any continuous 90-day
period within CY 2019 and applies for the FY 2019 payment adjustment
year.
(iv) The following are applicable for 2020:
(A) If a CAH has not successfully demonstrated it is a meaningful
EHR user in a prior year, the EHR reporting period is any continuous
90-day period within CY 2020 and applies for the FY 2020 payment
adjustment year.
(B) If in a prior year a CAH has successfully demonstrated it is a
meaningful EHR user, the EHR reporting period is any continuous 90-day
period within CY 2020 and applies for the FY 2020 payment adjustment
year.
* * * * *
Payment adjustment year means the following:
(1) For an EP, a calendar year beginning with CY 2015.
(2) For a CAH or an eligible hospital, a Federal fiscal year
beginning with FY 2015.
(3) For a Puerto Rico eligible hospital, a Federal fiscal year
beginning with FY 2022.
Payment year means the following:
(1) For an EP, a calendar year beginning with CY 2011.
(2) For a CAH or an eligible hospital, a Federal fiscal year
beginning with FY 2011.
(3) For a Puerto Rico eligible hospital, a Federal fiscal year
beginning with FY 2016.
* * * * *
0
32. Section 495.24 is amended by revising the introductory text,
paragraphs (c) and (d) headings and adding paragraph (e) to read as
follows:

Sec. 495.24 Stage 3 meaningful use objectives and measures for EPs,
eligible hospitals and CAHs for 2019 and subsequent years.

The criteria specified in paragraphs (c) and (d) of this section
are optional for 2017 and 2018 for EPs, eligible hospitals, and CAHs
that have successfully demonstrated meaningful use in a prior year. The
criteria specified in paragraph (d) of this section are applicable for
all EPs for 2019 and subsequent years, and for eligible hospitals and
CAHs attesting to a State for the Medicaid Promoting Interoperability
Program for 2019 and subsequent years. The criteria specified in
paragraph (e) of this section are applicable for eligible hospitals and
CAHs attesting to CMS for 2019 and subsequent years.
* * * * *
(c) Stage 3 objectives and measures for eligible hospitals and CAHs
attesting to CMS--
* * * * *
(d) Stage 3 objectives and measures for all EPs for 2019 and
subsequent years, and for eligible hospitals and CAHs attesting to a
State for the Medicaid Promoting Interoperability Program for 2019 and
subsequent years--
* * * * *
(e) Stage 3 objectives and measures for eligible hospitals and CAHs
attesting to CMS for 2019 and subsequent years--(1) General rule.
Except as specified in paragraph (e)(2) of this section, eligible
hospitals and CAHs must meet all objectives and associated measures of
the Stage 3 criteria specified in this paragraph (e) and earn a total
score of at least 50 points to meet the definition of a meaningful EHR
user.
(2) Exclusion for nonapplicable measures. (i) An eligible hospital
or CAH may exclude a particular measure that includes an option for
exclusion contained in this paragraph (e) if the eligible hospital or
CAH meets the following requirements:
(A) Meets the criteria in the applicable measure that would permit
the exclusion.
(B) Attests to the exclusion.
(ii) Distribution of points for nonapplicable measures. For
eligible hospitals or CAHs that claim such exclusion, the points
assigned to the excluded measure will be distributed to other measures
as outlined in this paragraph (e).
(3) Objectives and associated measures in this paragraph (e) that
rely on measures that count unique patients or actions. (i) If a
measure (or associated objective) in this paragraph (e) references
paragraph (e)(3) of this section, the measure may be calculated by
reviewing only the actions for patients whose records are maintained
using CEHRT. A patient's record is maintained using CEHRT if sufficient
data were entered in the CEHRT to allow the record to be saved, and not
rejected due to incomplete data.
(ii) If the objective and associated measure does not reference
this paragraph (e)(3), the measure must be calculated by reviewing all
patient records, not just those maintained using CEHRT.
(4) Protect patient health information--(i) Objective. Protect
electronic protected health information (ePHI) created or maintained by
the CEHRT through the implementation of appropriate technical,
administrative, and physical safeguards.
(ii) Measure scoring. Eligible hospitals and CAHs are required to
report on the security risk analysis measure in paragraph (e)(4)(iii)
of this section, but no points are available for this measure.
(iii) Security risk analysis measure. Conduct or review a security
risk analysis in accordance with the requirements under 45 CFR
164.308(a)(1), including addressing the security (including encryption)
of data created or maintained by CEHRT in accordance with requirements
under 45

[[Page 20572]]

CFR 164.312(a)(2)(iv) and 45 CFR 164.306(d)(3), implement security
updates as necessary, and correct identified security deficiencies as
part of the provider's risk management process.
(5) Electronic prescribing--(i) Objective. Generate and transmit
permissible discharge prescriptions electronically (eRx).
(ii) Measures scoring. (A) In 2019, eligible hospitals and CAHs
must meet the e-Prescribing measure in paragraph (e)(5)(iii)(A) of this
section and have the option to report on the query of PDMP measure and
verify opioid treatment agreement measure in paragraphs (e)(5)(iii)(B)
and (C) of this section. The electronic prescribing objective in
paragraph (e)(5)(i) of this section is worth up to 20 points.
(B) In 2020 and subsequent years, eligible hospitals and CAHs must
meet each of the measures in paragraphs (e)(5)(iii)(A), (B) and (C) of
this section. The electronic prescribing objective in paragraph
(e)(5)(i) of this section is worth up to 15 points.
(iii) Measures. (A) e-Prescribing measure. Subject to paragraph
(e)(3) of this section, at least one hospital discharge medication
order for permissible prescriptions (for new and changed prescriptions)
is queried for a drug formulary and transmitted electronically using
CEHRT. This performance-based measure is worth up to 10 points in 2019
and up to 5 points in 2020 and subsequent years.
(B) Query of prescription drug monitoring program (PDMP) measure.
Subject to paragraph (e)(3) of this section, for at least one Schedule
II opioid electronically prescribed using CEHRT during the EHR
reporting period, the eligible hospital or CAH uses data from CEHRT to
conduct a query of a Prescription Drug Monitoring Program (PDMP) for
prescription drug history, except where prohibited and in accordance
with applicable law. This performance-based measure is worth up to 5
bonus points in 2019 and up to 5 points in 2020 and subsequent years.
(C) Verify opioid treatment agreement measure. Subject to paragraph
(e)(4) of this section, f or at least one unique patient for whom a
Schedule II opioid was electronically prescribed by the eligible
hospital or CAH using CEHRT during the EHR reporting period, if the
total duration of the patient's Schedule II opioid prescriptions is at
least 30 cumulative days within a 6-month look-back period, the
eligible hospital or CAH seeks to identify the existence of a signed
opioid treatment agreement and incorporates it into the patient's
electronic health record using CEHRT. This performance-based measure is
worth up to 5 bonus points in 2019 and up to 5 points in 2020 and
subsequent years.
(iv) Exclusion for an EHR reporting period in CY 2019 in accordance
with paragraph (e)(2) of this section. An exclusion claimed under
paragraph (e)(5)(vi)(A) of this section will redistribute 10 points
equally among the measures associated with the health information
exchange objective under paragraph (e)(6) of this section.
(v) Exclusions beginning with an EHR reporting period in CY 2020 in
accordance with paragraph (e)(2) of this section. An exclusion claimed
under paragraph (e)(5)(vi)(A) of this section will redistribute 15
points equally among the measures associated with the health
information exchange objective under paragraph (e)(6) of this section
and the provide patients electronic access to their health information
measure under paragraph (e)(7)(ii) of this section. An exclusion
claimed under paragraph (e)(5)(vi)(B) or (C) of this section will
redistribute 5 points for each excluded measure to the e-Prescribing
measure under paragraph (e)(5)(iii)(A) of this section.
(vi) Exclusions in accordance with paragraph (e)(2) of this
section. (A) Any eligible hospital or CAH that does not have an
internal pharmacy that can accept electronic prescriptions and there
are no pharmacies that accept electronic prescriptions within 10 miles
at the start of the eligible hospital or CAH's EHR reporting period may
be excluded from the measure specified in paragraph (e)(5)(iii)(A) of
this section for an EHR reporting period in CY 2019 and may be excluded
from the measures specified in paragraphs (e)(5)(iii)(A) through (C) of
this section beginning with an EHR reporting period in CY 2020.
(B) Any eligible hospital or CAH that does not have an internal
pharmacy that can accept electronic prescriptions for controlled
substances and is not located within 10 miles of any pharmacy that
accepts electronic prescriptions for controlled substances at the start
of their EHR reporting period may be excluded from the measures
specified in paragraphs (e)(5)(iii)(B) and (C) of this section
beginning with an EHR reporting period in CY 2020.
(C) Any eligible hospital or CAH that is unable to report the
measure in accordance with applicable law may be excluded from the
measures specified in paragraphs (e)(5)(iii)(B) and (C) of this section
beginning with an EHR reporting period in CY 2020.
(6) Health information exchange--(i) Objective. The eligible
hospital or CAH provides a summary of care record when transitioning or
referring their patient to another setting of care, receives or
retrieves a summary of care record upon the receipt of a transition or
referral or upon the first patient encounter with a new patient, and
incorporates summary of care information from other providers into
their EHR using the functions of CEHRT.
(ii) Measures. Eligible hospitals and CAHs must meet both of the
following measures (each worth up to 20 points), and could receive up
to 40 points for this objective.
(A) Support electronic referral loops by sending health information
measure: Subject to paragraph (e)(3) of this section, for at least one
transition of care or referral, the eligible hospital or CAH that
transitions or refers its patient to another setting of care or
provider of care--
(1) Creates a summary of care record using CEHRT; and
(2) Electronically exchanges the summary of care record.
(B) Support electronic referral loops by receiving and
incorporating health information measure: Subject to paragraph (e)(3)
of this section, for at least one electronic summary of care record
received for patient encounters during the EHR reporting period for
which an eligible hospital or CAH was the receiving party of a
transition of care or referral, or for patient encounters during the
EHR reporting period in which the eligible hospital or CAH has never
before encountered the patient, the eligible hospital or CAH conducts
clinical information reconciliation for medication, mediation allergy,
and current problem list.
(iii) Exclusions in accordance with paragraph (e)(2) of this
section. Claiming the exclusion will redistribute 20 points to the
support electronic referral loops by sending health information measure
under paragraph (e)(6)(ii)(A). Any eligible hospital or CAH that is
unable to implement the measure for an EHR reporting period in 2019 may
be excluded from the measure specified in paragraph (e)(6)(ii)(B) of
this section.
(7) Provider to Patient Exchange--(i) Objective. The eligible
hospital or CAH provides patients (or patient-authorized
representative) with timely electronic access to their health
information.
(ii) Provide patients electronic access to their health information
measure. Eligible hospitals and CAHs must meet the following measure,
and could receive up to 40 points for this objective in 2019 and up to
35 points for this objective in 2020 and subsequent years.

[[Page 20573]]

For at least one unique patient discharged from the eligible hospital
or CAH inpatient or emergency department (POS 21 or 23)--
(A) The patient (or patient-authorized representative) is provided
timely access to view online, download, and transmit his or her health
information; and
(B) The eligible hospital or CAH ensures the patient's health
information is available for the patient (or patient-authorized
representative) to access using any application of their choice that is
configured to meet the technical specifications of the API in the
eligible hospital or CAH's CEHRT. This performance-based measure is
worth up to 40 points in 2019 and up to 35 points in 2020 and
subsequent years.
(8) Public health and clinical data exchange--(i) Objective. The
eligible hospital or CAH is in active engagement with a public health
agency (PHA) or clinical data registry (CDR) to submit electronic
public health data in a meaningful way using CEHRT, except where
prohibited, and in accordance with applicable law and practice.
(ii) Measures. In order to meet the objective under paragraph
(e)(8)(i) of this section, an eligible hospital or CAH must meet the
syndromic surveillance reporting measure in paragraph (e)(8)(ii)(A) of
this section and one additional measure from paragraphs (e)(8)(ii)(B)
through (F) of this section. Eligible hospitals and CAHs could receive
a total of 10 points for this objective.
(A) Syndromic surveillance reporting measure. The eligible hospital
or CAH is in active engagement with a public health agency to submit
syndromic surveillance data from an urgent care setting.
(B) Immunization registry reporting measure. The eligible hospital
or CAH is in active engagement with a public health agency to submit
immunization data and receive immunization forecasts and histories from
the public health immunization registry/immunization information system
(IIS).
(C) Electronic case reporting measure. The eligible hospital or CAH
is in active engagement with a public health agency to submit case
reporting of reportable conditions.
(D) Public health registry reporting measure. The eligible hospital
or CAH is in active engagement with a public health agency to submit
data to public health registries.
(E) Clinical data registry reporting measure. The eligible hospital
or CAH is in active engagement to submit data to a clinical data
registry.
(F) Electronic reportable laboratory result reporting measure. The
eligible hospital or CAH is in active engagement with a public health
agency to submit electronic reportable laboratory results.
(iii) Exclusions in accordance with paragraph (e)(2) of this
section. An exclusion claimed under paragraphs (e)(8)(iii)(A) through
(F) of this section will redistribute 10 points to the provide patients
electronic access to their health information measure under paragraph
(e)(7)(ii) of this section.
(A) Any eligible hospital or CAH meeting one or more of the
following criteria may be excluded from the syndromic surveillance
reporting measure specified in paragraph (e)(8)(ii)(A) of this section
if the eligible hospital or CAH--
(1) Does not have an emergency or urgent care department.
(2) Operates in a jurisdiction for which no public health agency is
capable of receiving electronic syndromic surveillance data in the
specific standards required to meet the CEHRT definition at the start
of the EHR reporting period.
(3) Operates in a jurisdiction where no public health agency has
declared readiness to receive syndromic surveillance data from eligible
hospitals or CAHs as of 6 months prior to the start of the EHR
reporting period.
(B) Any eligible hospital or CAH meeting one or more of the
following criteria may be excluded from to the immunization registry
reporting measure specified in paragraph (e)(8)(ii)(B) of this section
if the eligible hospital or CAH--
(1) Does not administer any immunizations to any of the populations
for which data is collected by its jurisdiction's immunization registry
or immunization information system during the EHR reporting period.
(2) Operates in a jurisdiction for which no immunization registry
or immunization information system is capable of accepting the specific
standards required to meet the CEHRT definition at the start of the EHR
reporting period.
(3) Operates in a jurisdiction where no immunization registry or
immunization information system has declared readiness to receive
immunization data as of 6 months prior to the start of the EHR
reporting period.
(C) Any eligible hospital or CAH meeting one or more of the
following criteria may be excluded from the electronic case reporting
measure specified in paragraph (e)(8)(ii)(C) of this section if the
eligible hospital or CAH--
(1) Does not treat or diagnose any reportable diseases for which
data is collected by their jurisdiction's reportable disease system
during the EHR reporting period.
(2) Operates in a jurisdiction for which no public health agency is
capable of receiving electronic case reporting data in the specific
standards required to meet the CEHRT definition at the start of their
EHR reporting period.
(3) Operates in a jurisdiction where no public health agency has
declared readiness to receive electronic case reporting data as of 6
months prior to the start of the EHR reporting period.
(D) Any eligible hospital or CAH meeting at least one of the
following criteria may be excluded from the public health registry
reporting measure specified in paragraph (e)(8)(ii)(D) of this section
if the eligible hospital or CAH--
(1) Does not diagnose or directly treat any disease or condition
associated with a public health registry in its jurisdiction during the
EHR reporting period.
(2) Operates in a jurisdiction for which no public health agency is
capable of accepting electronic registry transactions in the specific
standards required to meet the CEHRT definition at the start of the EHR
reporting period.
(3) Operates in a jurisdiction where no public health registry for
which the eligible hospital or CAH is eligible has declared readiness
to receive electronic registry transactions as of 6 months prior to the
start of the EHR reporting period.
(E) Any eligible hospital or CAH meeting at least one of the
following criteria may be excluded from the clinical data registry
reporting measure specified in paragraph (e)(8)(ii)(E) of this section
if the eligible hospital or CAH--
(1) Does not diagnose or directly treat any disease or condition
associated with a clinical data registry in their jurisdiction during
the EHR reporting period.
(2) Operates in a jurisdiction for which no clinical data registry
is capable of accepting electronic registry transactions in the
specific standards required to meet the CEHRT definition at the start
of the EHR reporting period.
(3) Operates in a jurisdiction where no clinical data registry for
which the eligible hospital or CAH is eligible has declared readiness
to receive electronic registry transactions as of 6 months prior to the
start of the EHR reporting period.
(F) Any eligible hospital or CAH meeting one or more of the
following

[[Page 20574]]

criteria may be excluded from the electronic reportable laboratory
result reporting measure specified in paragraph (e)(8)(ii)(F) of this
section if the eligible hospital or CAH--
(1) Does not perform or order laboratory tests that are reportable
in its jurisdiction during the EHR reporting period.
(2) Operates in a jurisdiction for which no public health agency
that is capable of accepting the specific ELR standards required to
meet the CEHRT definition at the start of the EHR reporting period.
(3) Operates in a jurisdiction where no public health agency has
declared readiness to receive electronic reportable laboratory results
from an eligible hospital or CAH as of 6 months prior to the start of
the EHR reporting period.
0
33. Section 495.40 is amended by adding paragraph (b)(2)(vii) to read
as follows:

Sec. 495.40 Demonstration of meaningful use criteria.

* * * * *
(b) * * *
(2) * * *
(vii) Exception for dual-eligible eligible hospitals and CAHs
beginning in CY 2019. (A) Beginning with the EHR reporting period in CY
2019, dual-eligible eligible hospitals and CAHs (those that are
eligible for an incentive payment under Medicare for meaningful use of
CEHRT and/or subject to the Medicare payment reduction for failing to
demonstrate meaningful use, and are also eligible to earn a Medicaid
incentive payment for meaningful use) must satisfy the requirements
under paragraph (b)(2) of this section by attestation and reporting
information to CMS, not to their respective state Medicaid agency.
(B) Dual-eligible eligible hospitals and CAHs that demonstrate
meaningful use to their state Medicaid agency may only qualify for an
incentive payment under Medicaid and will not qualify for an incentive
payment under Medicare and/or avoid the Medicare payment reduction.
* * * * *
0
34. Section 495.100 is amended by revising the definition of ``Eligible
hospital'' and adding a definition of ``Puerto Rico eligible hospital''
in alphabetical order to read as follows:

Sec. 495.100 Definitions.

* * * * *
Eligible hospital means a hospital subject to the prospective
payment system specified in Sec. 412.1(a)(1) of this chapter,
excluding those hospitals specified in Sec. 412.23 of this chapter,
excluding those hospital units specified in Sec. 412.25 of this
chapter, and including Puerto Rico eligible hospitals unless otherwise
indicated.
* * * * *
Puerto Rico eligible hospital means a subsection (d) Puerto Rico
hospital as defined in section 1886(d)(9)(A) of the Social Security
Act.
* * * * *
0
35. Section 495.104 is amended by adding paragraphs (b)(6) through (10)
and (c)(5)(vi) through (x) to read as follows:

Sec. 495.104 Incentive payments to eligible hospitals.

* * * * *
(b) * * *
(6) Puerto Rico eligible hospitals whose first payment year is FY
2016 may receive such payments for FYs 2016 through 2019.
(7) Puerto Rico eligible hospitals whose first payment year is FY
2017 may receive such payments for FYs 2017 through 2020.
(8) Puerto Rico eligible hospitals whose first payment year is FY
2018 may receive such payments for FYs 2018 through 2021.
(9) Puerto Rico eligible hospitals whose first payment year is FY
2019 may receive such payments for FYs 2019 through 2021.
(10) Puerto Rico eligible hospitals whose first payment year is FY
2020 may receive such payments for FYs 2020 through 2021.
(c) * * *
(5) * * *
(vi) For Puerto Rico eligible hospitals whose first payment year is
FY 2016--
(A) 1 for FY 2016;
(B) 3/4 for FY 2017;
(C) 1/2 for FY 2018; and
(D) 1/4 for FY 2019.
(vii) For Puerto Rico eligible hospitals whose first payment year
is FY 2017--
(A) 1 for FY 2017;
(B) 3/4 for FY 2018;
(C) 1/2 for FY 2019; and
(D) 1/4 for FY 2020;
(viii) For Puerto Rico eligible hospitals whose first payment year
is FY 2018--
(A) 1 for FY 2018;
(B) 3/4 for FY 2018;
(C) 1/2 for FY 2019; and
(D) 1/4 for FY 2020.
(ix) For Puerto Rico eligible hospitals whose first payment year is
FY 2019--
(A) 3/4 for FY 2019;
(B) 1/2 for FY 2020; and
(C) 1/4 for FY 2021.
(x) For Puerto Rico eligible hospitals whose first payment year is
FY 2020--
(A) 1/2 for FY 2020; and
(B) 1/4 for FY 2021.
* * * * *
0
36. Section 495.200 is amended by revising the definitions of ``MA
payment adjustment year'' and ``Payment year'' to read as follows:

Sec. 495.200 Definitions.

* * * * *
MA payment adjustment year means--
(1) Except as provided in paragraph (2) of this definition, for
qualifying MA organizations that receive an MA EHR incentive payment
for at least 1 payment year, calendar years beginning with CY 2015.
(2) For qualifying MA organizations that receive an MA EHR
incentive payment for a qualifying MA-affiliated eligible hospital in
Puerto Rico for at least 1 payment year, and that have not previously
received an MA EHR incentive payment for a qualifying MA-affiliated
eligible hospital not in Puerto Rico, calendar years beginning with CY
2022.
(3) For MA-affiliated eligible hospitals, the applicable EHR
reporting period for purposes of determining whether the MA
organization is subject to a payment adjustment is the Federal fiscal
year ending in the MA payment adjustment year.
(4) For MA EPs, the applicable EHR reporting period for purposes of
determining whether the MA organization is subject to a payment
adjustment is the calendar year concurrent with the payment adjustment
year.
* * * * *
Payment year means--
(1) For a qualifying MA EP, a calendar year beginning with CY 2011
and ending with CY 2016; and
(2) For an eligible hospital, a Federal fiscal year beginning with
FY 2011 and ending with FY 2016; and
(3) For an eligible hospital in Puerto Rico, a Federal fiscal year
beginning with FY 2016 and ending with FY 2021.
* * * * *
0
37. Section 495.211 is amended by adding paragraph (e)(4) to read as
follows:

Sec. 495.211 Payment adjustments effective for 2015 and subsequent
MA payment years with respect to MA EPs and MA-affiliated eligible
hospitals.

* * * * *
(e) * * *
(4) For MA payment adjustment years prior to 2022, subsection (d)
Puerto Rico hospitals are neither potentially qualifying MA-affiliated
eligible hospitals nor qualifying MA-affiliated eligible hospitals for
purposes of

[[Page 20575]]

applying the payment adjustments under paragraph (e) of this section.
0
38. Section 495.316 is amended by revising paragraph (g)(2) to read as
follows:

Sec. 495.316 State monitoring and reporting regarding activities
required to receive an incentive payment.

* * * * *
(g) * * *
(2) Subject to paragraph (h)(2) of this section, provider-level
attestation data for each eligible hospital that attests to
demonstrating meaningful use for each payment year beginning with 2013
and ending after 2018.
* * * * *
0
39. Section 495.322 is revised to read as follows:

Sec. 495.322 FFP for reasonable administrative expenses.

(a) Subject to prior approval conditions at Sec. 495.324, FFP is
available at 90 percent in State expenditures for administrative
activities in support of implementing incentive payments to Medicaid
eligible providers.
(b) FFP available under paragraph (a) of this section is available
only for expenditures incurred on or before September 30, 2022, except
for expenditures related to audit and appeal activities required under
this subpart, which must be incurred on or before September 30, 2023.
0
40. Section 495.324 is amended by revising paragraphs (b)(2) and (3)
and (d) to read as follows:

Sec. 495.324 Prior approval conditions.

* * * * *
(b) * * *
(2) For the acquisition solicitation documents and any contract
that a State may utilize to complete activities under this subpart,
unless specifically exempted by the Department of Health and Human
Services, prior to release of the acquisition solicitation documents or
prior to execution of the contract, when the contract is anticipated to
or will exceed $500,000.
(3) For contract amendments, unless specifically exempted by the
Department of Health and Human Services, prior to execution of the
contract amendment, involving contract cost increases exceeding
$500,000 or contract time extensions of more than 60 days.
* * * * *
(d) A State must obtain prior written approval from HHS of its
justification for a sole source acquisition, when it plans to acquire
noncompetitively from a nongovernmental source HIT equipment or
services, with proposed FFP under this subpart if the total State and
Federal acquisition cost is more than $500,000.

Dated: March 29, 2018.
Seema Verma,
Administrator, Centers for Medicare and Medicaid Services.
Dated: April 2, 2018.
Alex M. Azar II,
Secretary, Department of Health and Human Services.

Note: The following Addendum and Appendixes will not appear in
the Code of Federal Regulations.

Addendum--Proposed Schedule of Standardized Amounts, Update Factors,
Rate-of-Increase Percentages Effective With Cost Reporting Periods
Beginning on or After October 1, 2018, and Payment Rates for LTCHs
Effective for Discharges Occurring on or After October 1, 2018

I. Summary and Background

In this Addendum, we are setting forth a description of the
methods and data we used to determine the proposed prospective
payment rates for Medicare hospital inpatient operating costs and
Medicare hospital inpatient capital-related costs for FY 2019 for
acute care hospitals. We also are setting forth the rate-of-increase
percentage for updating the target amounts for certain hospitals
excluded from the IPPS for FY 2019. We note that, because certain
hospitals excluded from the IPPS are paid on a reasonable cost basis
subject to a rate-of-increase ceiling (and not by the IPPS), these
hospitals are not affected by the proposed figures for the
standardized amounts, offsets, and budget neutrality factors.
Therefore, in this proposed rule, we are setting forth the rate-of-
increase percentage for updating the target amounts for certain
hospitals excluded from the IPPS that will be effective for cost
reporting periods beginning on or after October 1, 2018.
In addition, we are setting forth a description of the methods
and data we used to determine the proposed LTCH PPS standard Federal
payment rate that would be applicable to Medicare LTCHs for FY 2019.
In general, except for SCHs and MDHs, for FY 2019, each
hospital's payment per discharge under the IPPS is based on 100
percent of the Federal national rate, also known as the national
adjusted standardized amount. This amount reflects the national
average hospital cost per case from a base year, updated for
inflation. Section 205 of the Medicare Access and CHIP
Reauthorization Act of 2015 (MACRA) (Pub. L. 114-10, enacted on
April 16, 2015) extended the MDH program (which, under previous law,
was to be in effect for discharges on or before March 31, 2015 only)
for discharges occurring on or after April 1, 2015, through FY 2017
(that is, for discharges occurring on or before September 30, 2017).
Section 50205 of the Bipartisan Budget Act of 2018, enacted February
9, 2018, extended the MDH program for discharges on or after October
1, 2017 through September 30, 2022.
SCHs are paid based on whichever of the following rates yields
the greatest aggregate payment: The Federal national rate
(including, as discussed in section IV.G. of the preamble of this
proposed rule, uncompensated care payments under section 1886(r)(2)
of the Act); the updated hospital-specific rate based on FY 1982
costs per discharge; the updated hospital-specific rate based on FY
1987 costs per discharge; the updated hospital-specific rate based
on FY 1996 costs per discharge; or the updated hospital-specific
rate based on FY 2006 costs per discharge.
Under section 1886(d)(5)(G) of the Act, MDHs historically were
paid based on the Federal national rate or, if higher, the Federal
national rate plus 50 percent of the difference between the Federal
national rate and the updated hospital-specific rate based on FY
1982 or FY 1987 costs per discharge, whichever was higher. However,
section 5003(a)(1) of Public Law 109-171 extended and modified the
MDH special payment provision that was previously set to expire on
October 1, 2006, to include discharges occurring on or after October
1, 2006, but before October 1, 2011. Under section 5003(b) of Public
Law 109-171, if the change results in an increase to an MDH's target
amount, we must rebase an MDH's hospital specific rates based on its
FY 2002 cost report. Section 5003(c) of Public Law 109-171 further
required that MDHs be paid based on the Federal national rate or, if
higher, the Federal national rate plus 75 percent of the difference
between the Federal national rate and the updated hospital specific
rate. Further, based on the provisions of section 5003(d) of Public
Law 109-171, MDHs are no longer subject to the 12-percent cap on
their DSH payment adjustment factor.
As discussed in section IV.B. of the preamble of this proposed
rule, in accordance with section 1886(d)(9)(E) of the Act as amended
by section 601 of the Consolidated Appropriations Act, 2016 (Pub. L.
114-113), for FY 2019, subsection (d) Puerto Rico hospitals will
continue to be paid based on 100 percent of the national
standardized amount. Because Puerto Rico hospitals are paid 100
percent of the national standardized amount and are subject to the
same national standardized amount as subsection (d) hospitals that
receive the full update, our discussion below does not include
references to the Puerto Rico standardized amount or the Puerto
Rico-specific wage index.
As discussed in section II. of this Addendum, we are proposing
to make changes in the determination of the prospective payment
rates for Medicare inpatient operating costs for acute care
hospitals for FY 2019. In section III. of this Addendum, we discuss
our proposed policy changes for determining the prospective payment
rates for Medicare inpatient capital-related costs for FY 2019. In
section IV. of this Addendum, we are setting forth the rate-of-
increase percentage for determining the rate-of-increase limits for
certain hospitals excluded from the IPPS for FY 2019. In section V.
of this Addendum, we discuss

[[Page 20576]]

proposed policy changes for determining the LTCH PPS standard
Federal rate for LTCHs paid under the LTCH PPS for FY 2019. The
tables to which we refer in the preamble of this proposed rule are
listed in section VI. of this Addendum and are available via the
internet on the CMS website.

II. Proposed Changes to Prospective Payment Rates for Hospital
Inpatient Operating Costs for Acute Care Hospitals for FY 2019

The basic methodology for determining prospective payment rates
for hospital inpatient operating costs for acute care hospitals for
FY 2005 and subsequent fiscal years is set forth under Sec. 412.64.
The basic methodology for determining the prospective payment rates
for hospital inpatient operating costs for hospitals located in
Puerto Rico for FY 2005 and subsequent fiscal years is set forth
under Sec. Sec. 412.211 and 412.212. Below we discuss the factors
we are proposing to use for determining the proposed prospective
payment rates for FY 2019.
In summary, the proposed standardized amounts set forth in
Tables 1A, 1B, and 1C that are listed and published in section VI.
of this Addendum (and available via the internet on the CMS website)
reflect--
Equalization of the standardized amounts for urban and
other areas at the level computed for large urban hospitals during
FY 2004 and onward, as provided for under section
1886(d)(3)(A)(iv)(II) of the Act.
The labor-related share that is applied to the
standardized amounts to give the hospital the highest payment, as
provided for under sections 1886(d)(3)(E) and 1886(d)(9)(C)(iv) of
the Act. For FY 2019, depending on whether a hospital submits
quality data under the rules established in accordance with section
1886(b)(3)(B)(viii) of the Act (hereafter referred to as a hospital
that submits quality data) and is a meaningful EHR user under
section 1886(b)(3)(B)(ix) of the Act (hereafter referred to as a
hospital that is a meaningful EHR user), there are four possible
applicable percentage increases that can be applied to the national
standardized amount. We refer readers to section IV.B. of the
preamble of this proposed rule for a complete discussion on the
proposed FY 2019 inpatient hospital update. Below is a table with
these four options:

----------------------------------------------------------------------------------------------------------------
Hospital Hospital Hospital did Hospital did
submitted submitted NOT submit NOT submit
quality data quality data quality data quality data
FY 2019 and is a and is NOT a and is a and is NOT a
meaningful EHR meaningful EHR meaningful EHR meaningful EHR
user user user user
----------------------------------------------------------------------------------------------------------------
Proposed Market Basket 2.8 2.8 2.8 2.8
Rate[dash]of[dash]Increase.....................
Proposed Adjustment for Failure to Submit 0.0 0.0 -0.7 -0.7
Quality Data under Section 1886(b)(3)(B)(viii)
of the Act.....................................
Proposed Adjustment for Failure to be a 0.0 -2.1 0.0 -2.1
Meaningful EHR User under Section
1886(b)(3)(B)(ix) of the Act...................
Proposed MFP Adjustment under Section -0.8 -0.8 -0.8 -0.8
1886(b)(3)(B)(xi) of the Act...................
Statutory Adjustment under Section -0.75 -0.75 -0.75 -0.75
1886(b)(3)(B)(xii) of the Act..................
Proposed Applicable Percentage Increase Applied 1.25 -0.85 0.55 -1.55
to Standardized Amount.........................
----------------------------------------------------------------------------------------------------------------

We note that section 1886(b)(3)(B)(viii) of the Act, which
specifies the adjustment to the applicable percentage increase for
``subsection (d)'' hospitals that do not submit quality data under
the rules established by the Secretary, is not applicable to
hospitals located in Puerto Rico.
In addition, section 602 of Public Law 114-113 amended section
1886(n)(6)(B) of the Act to specify that Puerto Rico hospitals are
eligible for incentive payments for the meaningful use of certified
EHR technology, effective beginning FY 2016, and also to apply the
adjustments to the applicable percentage increase under section
1886(b)(3)(B)(ix) of the Act to Puerto Rico hospitals that are not
meaningful EHR users, effective FY 2022. Accordingly, because the
provisions of section 1886(b)(3)(B)(ix) of the Act are not
applicable to hospitals located in Puerto Rico until FY 2022, the
adjustments under this provision are not applicable for FY 2019.
An adjustment to the standardized amount to ensure
budget neutrality for DRG recalibration and reclassification, as
provided for under section 1886(d)(4)(C)(iii) of the Act.
An adjustment to ensure the wage index and labor-
related share changes (depending on the fiscal year) are budget
neutral, as provided for under section 1886(d)(3)(E)(i) of the Act
(as discussed in the FY 2006 IPPS final rule (70 FR 47395) and the
FY 2010 IPPS final rule (74 FR 44005). We note that section
1886(d)(3)(E)(i) of the Act requires that when we compute such
budget neutrality, we assume that the provisions of section
1886(d)(3)(E)(ii) of the Act (requiring a 62-percent labor-related
share in certain circumstances) had not been enacted.
An adjustment to ensure the effects of geographic
reclassification are budget neutral, as provided for under section
1886(d)(8)(D) of the Act, by removing the FY 2017 budget neutrality
factor and applying a revised factor.
A positive adjustment of 0.5 percent in FYs 2019
through 2023 as required under section 414 of the MACRA.
An adjustment to ensure the effects of the Rural
Community Hospital Demonstration program required under section 410A
of Public Law 108-173, as amended by sections 3123 and 10313 of
Public Law 111-148, which extended the demonstration program for an
additional 5 years, as amended by section 15003 of Public Law 114-
255 which amended section 410A of Public Law 108-173 to provide for
a 10-year extension of the demonstration program (in place of the 5-
year extension required by the Affordable Care Act) beginning on the
date immediately following the last day of the initial 5-year period
under section 410A(a)(5) of Public Law 108-173, are budget neutral
as required under section 410A(c)(2) of Public Law 108-173.
An adjustment to remove the FY 2018 outlier offset and
apply an offset for FY 2019, as provided for in section
1886(d)(3)(B) of the Act.
For FY 2019, consistent with current law, we are proposing to
apply the rural floor budget neutrality adjustment to hospital wage
indexes. Also, consistent with section 3141 of the Affordable Care
Act, instead of applying a State-level rural floor budget neutrality
adjustment to the wage index, we are proposing to apply a uniform,
national budget neutrality adjustment to the FY 2019 wage index for
the rural floor. We note that, in section III.H.2.b. of the preamble
to this proposed rule, we are proposing not to extend the imputed
floor policy (both the original methodology and alternative
methodology) for FY 2019. Therefore, for FY 2019, in this proposed
rule, we are proposing to not include the imputed floor (calculated
under the original methodology and alternative methodology) in
calculating the uniform, national rural floor budget neutrality
adjustment, which is reflected in the proposed FY 2019 wage index.

A. Calculation of the Proposed Adjusted Standardized Amount

1. Standardization of Base-Year Costs or Target Amounts

In general, the national standardized amount is based on per
discharge averages of adjusted hospital costs from a base period
(section 1886(d)(2)(A) of the Act), updated and otherwise adjusted
in accordance with the provisions of section 1886(d) of the Act. The
September 1, 1983 interim final rule (48 FR 39763) contained a
detailed explanation of how base-year cost data (from cost reporting
periods ending during FY 1981) were established for urban and rural
hospitals in the initial development of standardized amounts for the
IPPS.
Sections 1886(d)(2)(B) and 1886(d)(2)(C) of the Act require us
to update base-year per discharge costs for FY 1984 and then
standardize the cost data in order to remove the effects of certain
sources of cost variations among hospitals. These effects include
case-mix, differences in area wage levels, cost-of-living
adjustments for Alaska

[[Page 20577]]

and Hawaii, IME costs, and costs to hospitals serving a
disproportionate share of low-income patients.
For FY 2019, we are proposing to continue to use the national
labor-related and nonlabor-related shares (which are based on the
2014-based hospital market basket) that were used in FY 2018.
Specifically, under section 1886(d)(3)(E) of the Act, the Secretary
estimates, from time to time, the proportion of payments that are
labor-related and adjusts the proportion (as estimated by the
Secretary from time to time) of hospitals' costs which are
attributable to wages and wage-related costs of the DRG prospective
payment rates. We refer to the proportion of hospitals' costs that
are attributable to wages and wage-related costs as the ``labor-
related share.'' For FY 2019, as discussed in section III. of the
preamble of this proposed rule, we are proposing to continue to use
a labor-related share of 68.3 percent for the national standardized
amounts for all IPPS hospitals (including hospitals in Puerto Rico)
that have a wage index value that is greater than 1.0000. Consistent
with section 1886(d)(3)(E) of the Act, we are proposing to apply the
wage index to a labor-related share of 62 percent of the national
standardized amount for all IPPS hospitals (including hospitals in
Puerto Rico) whose wage index values are less than or equal to
1.0000.
The proposed standardized amounts for operating costs appear in
Tables 1A, 1B, and 1C that are listed and published in section VI.
of the Addendum to this proposed rule and are available via the
internet on the CMS website.

2. Computing the National Average Standardized Amount

Section 1886(d)(3)(A)(iv)(II) of the Act requires that,
beginning with FY 2004 and thereafter, an equal standardized amount
be computed for all hospitals at the level computed for large urban
hospitals during FY 2003, updated by the applicable percentage
update. Accordingly, we are proposing to calculate the FY 2019
national average standardized amount irrespective of whether a
hospital is located in an urban or rural location.

3. Updating the National Average Standardized Amount

Section 1886(b)(3)(B) of the Act specifies the applicable
percentage increase used to update the standardized amount for
payment for inpatient hospital operating costs. We note that, in
compliance with section 404 of the MMA, in this proposed rule, we
are proposing to use the 2014-based IPPS operating and capital
market baskets for FY 2019. As discussed in section IV.B. of the
preamble of this proposed rule, in accordance with section
1886(b)(3)(B) of the Act, as amended by section 3401(a) of the
Affordable Care Act, we are proposing to reduce the FY 2019
applicable percentage increase (which is based on IGI's fourth
quarter 2017 forecast of the 2014-based IPPS market basket) by the
MFP adjustment (the 10-year moving average of MFP for the period
ending FY 2019) of 0.8 percentage point, which is also calculated
based on IGI's fourth quarter 2017 forecast.
In addition, in accordance with section 1886(b)(3)(B)(i) of the
Act, as amended by sections 3401(a) and 10319(a) of the Affordable
Care Act, we are proposing to further update the standardized amount
for FY 2019 by the estimated market basket percentage increase less
0.75 percentage point for hospitals in all areas. Sections
1886(b)(3)(B)(xi) and (xii) of the Act, as added and amended by
sections 3401(a) and 10319(a) of the Affordable Care Act, further
state that these adjustments may result in the applicable percentage
increase being less than zero. The percentage increase in the market
basket reflects the average change in the price of goods and
services required as inputs to provide hospital inpatient services.
Based on IGI's 2017 fourth quarter forecast of the hospital
market basket increase (as discussed in Appendix B of this proposed
rule), the forecast of the hospital market basket increase for FY
2019 for this proposed rule is 2.8 percent. As discussed earlier,
for FY 2019, depending on whether a hospital submits quality data
under the rules established in accordance with section
1886(b)(3)(B)(viii) of the Act and is a meaningful EHR user under
section 1886(b)(3)(B)(ix) of the Act, there are four possible
applicable percentage increases that can be applied to the
standardized amount. We refer readers to section IV.B. of the
preamble of this proposed rule for a complete discussion on the FY
2019 inpatient hospital update to the standardized amount. We also
refer readers to the table above for the four possible applicable
percentage increases that would be applied to update the national
standardized amount. The proposed standardized amounts shown in
Tables 1A through 1C that are published in section VI. of this
Addendum and that are available via the internet on the CMS website
reflect these differential amounts.
Although the update factors for FY 2019 are set by law, we are
required by section 1886(e)(4) of the Act to recommend, taking into
account MedPAC's recommendations, appropriate update factors for FY
2019 for both IPPS hospitals and hospitals and hospital units
excluded from the IPPS. Section 1886(e)(5)(A) of the Act requires
that we publish our recommendations in the Federal Register for
public comment. Our recommendation on the update factors is set
forth in Appendix B of this proposed rule.

4. Methodology for Calculation of the Average Standardized Amount

The methodology we used to calculate the proposed FY 2019
standardized amount is as follows:
To ensure we are only including hospitals paid under
the IPPS in the calculation of the standardized amount, we apply the
following inclusion and exclusion criteria: Include hospitals whose
last four digits fall between 0001 and 0879 (section 2779A1 of
Chapter 2 of the State Operations Manual on the CMS website at:
https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/som107c02.pdf); exclude CAHs at the time of this proposed
rule; exclude hospitals in Maryland (because these hospitals are
paid under an all payer model under section 1115A of the Act); and
remove PPS-excluded cancer hospitals that have a ``V'' in the fifth
position of their provider number or a ``E'' or ``F'' in the sixth
position.
As in the past, we are proposing to adjust the FY 2019
standardized amount to remove the effects of the FY 2018 geographic
reclassifications and outlier payments before applying the FY 2019
updates. We then apply budget neutrality offsets for outliers and
geographic reclassifications to the standardized amount based on
proposed FY 2019 payment policies.
We do not remove the prior year's budget neutrality
adjustments for reclassification and recalibration of the DRG
relative weights and for updated wage data because, in accordance
with sections 1886(d)(4)(C)(iii) and 1886(d)(3)(E) of the Act,
estimated aggregate payments after updates in the DRG relative
weights and wage index should equal estimated aggregate payments
prior to the changes. If we removed the prior year's adjustment, we
would not satisfy these conditions.
Budget neutrality is determined by comparing aggregate IPPS
payments before and after making changes that are required to be
budget neutral (for example, changes to MS-DRG classifications,
recalibration of the MS-DRG relative weights, updates to the wage
index, and different geographic reclassifications). We include
outlier payments in the simulations because they may be affected by
changes in these parameters.
Consistent with our methodology established in the FY
2011 IPPS/LTCH PPS final rule (75 FR 50422 through 50433), because
IME Medicare Advantage payments are made to IPPS hospitals under
section 1886(d) of the Act, we believe these payments must be part
of these budget neutrality calculations. However, we note that it is
not necessary to include Medicare Advantage IME payments in the
outlier threshold calculation or the outlier offset to the
standardized amount because the statute requires that outlier
payments be not less than 5 percent nor more than 6 percent of total
``operating DRG payments,'' which does not include IME and DSH
payments. We refer readers to the FY 2011 IPPS/LTCH PPS final rule
for a complete discussion on our methodology of identifying and
adding the total Medicare Advantage IME payment amount to the budget
neutrality adjustments.
Consistent with the methodology in the FY 2012 IPPS/
LTCH PPS final rule, in order to ensure that we capture only fee-
for-service claims, we are only including claims with a ``Claim
Type'' of 60 (which is a field on the MedPAR file that indicates a
claim is an FFS claim).
Consistent with our methodology established in the FY
2017 IPPS/LTCH PPS final rule (81 FR 57277), in order to further
ensure that we capture only FFS claims, we are excluding claims with
a ``GHOPAID'' indicator of 1 (which is a field on the MedPAR file
that indicates a claim is not an FFS claim and is paid by a Group
Health Organization).
Consistent with our methodology established in the FY
2011 IPPS/LTCH PPS final rule (75 FR 50422 through 50423), we
examine the MedPAR file and remove pharmacy charges for anti-
hemophilic blood

[[Page 20578]]

factor (which are paid separately under the IPPS) with an indicator
of ``3'' for blood clotting with a revenue code of ``0636'' from the
covered charge field for the budget neutrality adjustments. We also
remove organ acquisition charges from the covered charge field for
the budget neutrality adjustments because organ acquisition is a
pass-through payment not paid under the IPPS.
For FY 2019, the Bundled Payments for Care Improvement
(BPCI) Initiative will have ended and a new model, the BPCI Advanced
model will have begun. The BPCI Advanced model, tested under the
authority of section 3021 of the Affordable Care Act (codified at
section 1115A of the Act), is comprised of a single payment and risk
track, which bundles payments for multiple services beneficiaries
receive during a Clinical Episode. Acute care hospitals may
participate in the BPCI Advanced model in one of two capacities: As
a model Participant or as a downstream Episode Initiator. Regardless
of the capacity in which they participate in the BPCI Advanced
model, participating acute care hospitals will continue to receive
IPPS payments under section 1886(d) of the Act. Acute care hospitals
that are Participants also assume financial and quality performance
accountability for Clinical Episodes in the form of a reconciliation
payment. For additional information on the BPCI Advanced model, we
refer readers to the BPCI Advanced web page on the CMS Center for
Medicare and Medicaid Innovation's website at: https://innovation.cms.gov/initiatives/bpci-advanced/.
In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53341 through
53343), for FY 2013 and subsequent fiscal years, we finalized a
methodology to treat hospitals that participate in the BPCI
Initiative the same as prior fiscal years for the IPPS payment
modeling and ratesetting process (which includes recalibration of
the MS-DRG relative weights, ratesetting, calculation of the budget
neutrality factors, and the impact analysis) without regard to a
hospital's participation within these bundled payment models (that
is, as if they are not participating in those models under the BPCI
initiative). For FY 2019, consistent with how we have treated
hospitals that participated in the BPCI Initiative, we are proposing
to include all applicable data from subsection (d) hospitals
participating in the BPCI Advanced model in our IPPS payment
modeling and ratesetting calculations. We believe it is appropriate
to include all applicable data from the subsection (d) hospitals
participating in the BPCI Advanced model in our IPPS payment
modeling and ratesetting calculations because these hospitals are
still receiving IPPS payments under section 1886(d) of the Act.
Consistent with our methodology established in the FY
2013 IPPS/LTCH PPS final rule (77 FR 53687 through 53688), we
believe that it is appropriate to include adjustments for the
Hospital Readmissions Reduction Program and the Hospital VBP Program
(established under the Affordable Care Act) within our budget
neutrality calculations.
Both the hospital readmissions payment adjustment (reduction)
and the hospital VBP payment adjustment (redistribution) are applied
on a claim-by-claim basis by adjusting, as applicable, the base-
operating DRG payment amount for individual subsection (d)
hospitals, which affects the overall sum of aggregate payments on
each side of the comparison within the budget neutrality
calculations.
In order to properly determine aggregate payments on each side
of the comparison, consistent with the approach we have taken in
prior years, for FY 2019 and subsequent years, we are proposing to
continue to apply a proxy hospital readmissions payment adjustment
and a proxy hospital VBP payment adjustment on each side of the
comparison, consistent with the methodology that we adopted in the
FY 2013 IPPS/LTCH PPS final rule (77 FR 53687 through 53688). That
is, we are proposing to apply a proposed proxy readmissions payment
adjustment factor and a proposed proxy hospital VBP payment
adjustment factor on both sides of our comparison of aggregate
payments when determining all budget neutrality factors described in
section II.A.4. of this Addendum.
For the purpose of calculating the proposed proxy FY 2019
readmissions payment adjustment factors, for both this proposed rule
and the final rule, as discussed in section IV.H. of the preamble of
this proposed rule, we are proposing to use the proportion of
dually-eligible Medicare beneficiaries, excess readmission ratios,
and aggregate payments for excess readmissions from the prior fiscal
year's applicable period because, at this time and at the time of
the development of the final rule, hospitals will not yet have had
the opportunity to review and correct the data (program calculations
based on the proposed FY 2019 applicable period of July 1, 2014 to
June 30, 2017) before the data are made public under our policy
regarding the reporting of hospital-specific readmission rates,
consistent with section 1886(q)(6) of the Act. (For additional
information on our general policy for the reporting of hospital-
specific readmission rates, consistent with section 1886(q)(6) of
the Act, we refer readers to the FY 2013 IPPS/LTCH PPS final rule
(77 FR 53399 through 53400) and section IV.H. of the preamble of
this proposed rule.)
In addition, for FY 2019, for the purpose of modeling aggregate
payments when determining all budget neutrality factors, we are
proposing to use proxy hospital VBP payment adjustment factors for
FY 2019 that are based on data from a historical period because
hospitals have not yet had an opportunity to review and submit
corrections for their data from the FY 2019 performance period. (For
additional information on our policy regarding the review and
correction of hospital-specific measure rates under the Hospital VBP
Program, consistent with section 1886(o)(10)(A)(ii) of the Act, we
refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53578
through 53581), the CY 2012 OPPS/ASC final rule with comment period
(76 FR 74544 through 74547), and the Hospital Inpatient VBP final
rule (76 FR 26534 through 26536).)
The Affordable Care Act also established section
1886(r) of the Act, which modifies the methodology for computing the
Medicare DSH payment adjustment beginning in FY 2014. Beginning in
FY 2014, IPPS hospitals receiving Medicare DSH payment adjustments
receive an empirically justified Medicare DSH payment equal to 25
percent of the amount that would previously have been received under
the statutory formula set forth under section 1886(d)(5)(F) of the
Act governing the Medicare DSH payment adjustment. In accordance
with section 1886(r)(2) of the Act, the remaining amount, equal to
an estimate of 75 percent of what otherwise would have been paid as
Medicare DSH payments, reduced to reflect changes in the percentage
of individuals who are uninsured and an additional statutory
adjustment, will be available to make additional payments to
Medicare DSH hospitals based on their share of the total amount of
uncompensated care reported by Medicare DSH hospitals for a given
time period. In order to properly determine aggregate payments on
each side of the comparison for budget neutrality, prior to FY 2014,
we included estimated Medicare DSH payments on both sides of our
comparison of aggregate payments when determining all budget
neutrality factors described in section II.A.4. of this Addendum.
To do this for FY 2019 (as we did for the last 5 fiscal years),
we are proposing to include estimated empirically justified Medicare
DSH payments that will be paid in accordance with section 1886(r)(1)
of the Act and estimates of the additional uncompensated care
payments made to hospitals receiving Medicare DSH payment
adjustments as described by section 1886(r)(2) of the Act. That is,
we are proposing to consider estimated empirically justified
Medicare DSH payments at 25 percent of what would otherwise have
been paid, and also the estimated additional uncompensated care
payments for hospitals receiving Medicare DSH payment adjustments on
both sides of our comparison of aggregate payments when determining
all budget neutrality factors described in section II.A.4. of this
Addendum.
When calculating total payments for budget neutrality,
to determine total payments for SCHs, we model total hospital-
specific rate payments and total Federal rate payments and then
include whichever one of the total payments is greater. As discussed
in section IV.F. of the preamble to this proposed rule and below, we
are proposing to continue to use the FY 2014 finalized methodology
under which we take into consideration uncompensated care payments
in the comparison of payments under the Federal rate and the
hospital-specific rate for SCHs. Therefore, we are proposing to
include estimated uncompensated care payments in this comparison.
Similarly, for MDHs, as discussed in section IV.F. of the
preamble of this proposed rule, when computing payments under the
Federal national rate plus 75 percent of the difference between the
payments under the Federal national rate and the payments under the
updated hospital-specific rate, we are proposing to continue to take
into consideration uncompensated care payments in the computation of
payments under the

[[Page 20579]]

Federal rate and the hospital-specific rate for MDHs.
We are proposing to include an adjustment to the
standardized amount for those hospitals that are not meaningful EHR
users in our modeling of aggregate payments for budget neutrality
for FY 2019. Similar to FY 2018, we are including this adjustment
based on data on the prior year's performance. Payments for
hospitals will be estimated based on the proposed applicable
standardized amount in Tables 1A and 1B for discharges occurring in
FY 2019.
In our determination of all proposed budget neutrality
factors described in section II.A.4. of this Addendum, we use
transfer-adjusted discharges. Specifically, we calculated the
transfer-adjusted discharges using the statutory expansion of the
postacute care transfer policy to include discharges to hospice care
by a hospice program as discussed in section IV.A.2.b. of the
preamble of this proposed rule.

a. Proposed Recalibration of MS-DRG Relative Weights

Section 1886(d)(4)(C)(iii) of the Act specifies that, beginning
in FY 1991, the annual DRG reclassification and recalibration of the
relative weights must be made in a manner that ensures that
aggregate payments to hospitals are not affected. As discussed in
section II.G. of the preamble of this proposed rule, we normalized
the recalibrated MS-DRG relative weights by an adjustment factor so
that the average case relative weight after recalibration is equal
to the average case relative weight prior to recalibration. However,
equating the average case relative weight after recalibration to the
average case relative weight before recalibration does not
necessarily achieve budget neutrality with respect to aggregate
payments to hospitals because payments to hospitals are affected by
factors other than average case relative weight. Therefore, as we
have done in past years, we are proposing to make a budget
neutrality adjustment to ensure that the requirement of section
1886(d)(4)(C)(iii) of the Act is met.
For FY 2019, to comply with the requirement that MS-DRG
reclassification and recalibration of the relative weights be budget
neutral for the standardized amount and the hospital-specific rates,
we used FY 2017 discharge data to simulate payments and compared the
following:
Aggregate payments using the FY 2018 labor-related
share percentages, the FY 2018 relative weights, and the FY 2018
pre-reclassified wage data, and applied the proposed FY 2019
hospital readmissions payment adjustments and estimated FY 2019
hospital VBP payment adjustments; and
Aggregate payments using the FY 2018 labor-related
share percentages, the proposed FY 2019 relative weights, and the FY
2018 pre-reclassified wage data, and applied the proposed FY 2019
hospital readmissions payment adjustments and estimated FY 2019
hospital VBP payment adjustments applied above.
Based on this comparison, we computed a proposed budget
neutrality adjustment factor equal to 0.997896 and applied this
factor to the standardized amount. As discussed in section IV. of
this Addendum, we also are proposing to apply the MS-DRG
reclassification and recalibration budget neutrality factor of
0.997896 to the hospital-specific rates that are effective for cost
reporting periods beginning on or after October 1, 2018.

b. Updated Wage Index--Budget Neutrality Adjustment

Section 1886(d)(3)(E)(i) of the Act requires us to update the
hospital wage index on an annual basis beginning October 1, 1993.
This provision also requires us to make any updates or adjustments
to the wage index in a manner that ensures that aggregate payments
to hospitals are not affected by the change in the wage index.
Section 1886(d)(3)(E)(i) of the Act requires that we implement the
wage index adjustment in a budget neutral manner. However, section
1886(d)(3)(E)(ii) of the Act sets the labor-related share at 62
percent for hospitals with a wage index less than or equal to
1.0000, and section 1886(d)(3)(E)(i) of the Act provides that the
Secretary shall calculate the budget neutrality adjustment for the
adjustments or updates made under that provision as if section
1886(d)(3)(E)(ii) of the Act had not been enacted. In other words,
this section of the statute requires that we implement the updates
to the wage index in a budget neutral manner, but that our budget
neutrality adjustment should not take into account the requirement
that we set the labor-related share for hospitals with wage indexes
less than or equal to 1.0000 at the more advantageous level of 62
percent. Therefore, for purposes of this budget neutrality
adjustment, section 1886(d)(3)(E)(i) of the Act prohibits us from
taking into account the fact that hospitals with a wage index less
than or equal to 1.0000 are paid using a labor-related share of 62
percent. Consistent with current policy, for FY 2019, we are
proposing to adjust 100 percent of the wage index factor for
occupational mix. We describe the occupational mix adjustment in
section III.E. of the preamble of this proposed rule.
To compute a proposed budget neutrality adjustment factor for
wage index and labor-related share percentage changes, we used FY
2017 discharge data to simulate payments and compared the following:
Aggregate payments using the proposed FY 2019 relative
weights and the FY 2018 pre-reclassified wage indexes, applied the
FY 2018 labor-related share of 68.3 percent to all hospitals
(regardless of whether the hospital's wage index was above or below
1.0000), and applied the proposed FY 2019 hospital readmissions
payment adjustment and the estimated FY 2019 hospital VBP payment
adjustment; and
Aggregate payments using the proposed FY 2019 relative
weights and the proposed FY 2019 pre-reclassified wage indexes,
applied the proposed labor-related share for FY 2019 of 68.3 percent
to all hospitals (regardless of whether the hospital's wage index
was above or below 1.0000), and applied the same proposed FY 2019
hospital readmissions payment adjustments and estimated FY 2019
hospital VBP payment adjustments applied above.
In addition, we applied the proposed MS-DRG reclassification and
recalibration budget neutrality adjustment factor (derived in the
first step) to the proposed payment rates that were used to simulate
payments for this comparison of aggregate payments from FY 2018 to
FY 2019. By applying this methodology, we determined a proposed
budget neutrality adjustment factor of 1.001182 for proposed changes
to the wage index.

c. Reclassified Hospitals--Proposed Budget Neutrality Adjustment

Section 1886(d)(8)(B) of the Act provides that certain rural
hospitals are deemed urban. In addition, section 1886(d)(10) of the
Act provides for the reclassification of hospitals based on
determinations by the MGCRB. Under section 1886(d)(10) of the Act, a
hospital may be reclassified for purposes of the wage index.
Under section 1886(d)(8)(D) of the Act, the Secretary is
required to adjust the standardized amount to ensure that aggregate
payments under the IPPS after implementation of the provisions of
sections 1886(d)(8)(B) and (C) and 1886(d)(10) of the Act are equal
to the aggregate prospective payments that would have been made
absent these provisions. We note that the wage index adjustments
provided for under section 1886(d)(13) of the Act are not budget
neutral. Section 1886(d)(13)(H) of the Act provides that any
increase in a wage index under section 1886(d)(13) shall not be
taken into account in applying any budget neutrality adjustment with
respect to such index under section 1886(d)(8)(D) of the Act. To
calculate the proposed budget neutrality adjustment factor for FY
2019, we used FY 2017 discharge data to simulate payments and
compared the following:
Aggregate payments using the proposed FY 2019 labor-
related share percentages, the proposed FY 2019 relative weights,
and the proposed FY 2019 wage data prior to any reclassifications
under sections 1886(d)(8)(B) and (C) and 1886(d)(10) of the Act, and
applied the proposed FY 2019 hospital readmissions payment
adjustments and the estimated FY 2019 hospital VBP payment
adjustments; and
Aggregate payments using the proposed FY 2019 labor-
related share percentages, the proposed FY 2019 relative weights,
and the proposed FY 2019 wage data after such reclassifications, and
applied the same proposed FY 2019 hospital readmissions payment
adjustments and the estimated FY 2019 hospital VBP payment
adjustments applied above.
We note that the reclassifications applied under the second
simulation and comparison are those listed in Table 2 associated
with this proposed rule, which is available via the internet on the
CMS website. This table reflects reclassification crosswalks
proposed for FY 2019, and apply the proposed policies explained in
section III. of the preamble of this proposed rule. Based on these
simulations, we calculated a proposed budget neutrality adjustment
factor of 0.987084 to ensure that the effects of these provisions
are budget neutral, consistent with the statute.
The proposed FY 2019 budget neutrality adjustment factor was
applied to the proposed standardized amount after removing the
effects of the FY 2018 budget

[[Page 20580]]

neutrality adjustment factor. We note that the proposed FY 2019
budget neutrality adjustment reflects FY 2019 wage index
reclassifications approved by the MGCRB or the Administrator at the
time of development of this proposed rule.

d. Rural Floor Budget Neutrality Adjustment

Under Sec. 412.64(e)(4), we make an adjustment to the wage
index to ensure that aggregate payments after implementation of the
rural floor under section 4410 of the BBA (Pub. L. 105-33) is equal
to the aggregate prospective payments that would have been made in
the absence of this provision. Consistent with section 3141 of the
Affordable Care Act and as discussed in section III.G. of the
preamble of this proposed rule and codified at Sec.
412.64(e)(4)(ii), the budget neutrality adjustment for the rural
floor is a national adjustment to the wage index.
As noted above and as discussed in section III.G.2. of the
preamble of this proposed rule, the imputed floor is set to expire
effective October 1, 2018, and we are not proposing to extend the
imputed floor policy.
Similar to our calculation in the FY 2015 IPPS/LTCH PPS final
rule (79 FR 50369 through 50370), for FY 2019, we are proposing to
calculate a national rural Puerto Rico wage index. Because there are
no rural Puerto Rico hospitals with established wage data, our
calculation of the proposed FY 2019 rural Puerto Rico wage index is
based on the policy adopted in the FY 2008 IPPS final rule with
comment period (72 FR 47323). That is, we use the unweighted average
of the wage indexes from all CBSAs (urban areas) that are contiguous
(share a border with) to the rural counties to compute the rural
floor (72 FR 47323; 76 FR 51594). Under the OMB labor market area
delineations, except for Arecibo, Puerto Rico (CBSA 11640), all
other Puerto Rico urban areas are contiguous to a rural area.
Therefore, based on our existing policy, the proposed FY 2019 rural
Puerto Rico wage index is calculated based on the average of the
proposed FY 2019 wage indexes for the following urban areas:
Aguadilla-Isabela, PR (CBSA 10380); Guayama, PR (CBSA 25020);
Mayaguez, PR (CBSA 32420); Ponce, PR (CBSA 38660); San German, PR
(CBSA 41900); and San Juan-Carolina-Caguas, PR (CBSA 41980).
To calculate the proposed national rural floor budget neutrality
adjustment factor, we used FY 2017 discharge data to simulate
payments and the proposed post-reclassified national wage indexes
and compared the following:
National simulated payments without the proposed
national rural floor; and
National simulated payments with the proposed national
rural floor.
Based on this comparison, we determined a proposed national
rural floor budget neutrality adjustment factor of 0.994733. The
national adjustment was applied to the national wage indexes to
produce a proposed national rural floor budget neutral wage index.

e. Proposed Rural Community Hospital Demonstration Program Adjustment

In section IV.L. of the preamble of this proposed rule, we
discuss the Rural Community Hospital Demonstration program, which
was originally authorized for a 5-year period by section 410A of the
Medicare Prescription Drug, Improvement, and Modernization Act of
2003 (MMA) (Pub. L. 108-173), and extended for another 5-year period
by sections 3123 and 10313 of the Affordable Care Act (Pub. L. 111-
148). Subsequently, section 15003 of the 21st Century Cures Act
(Pub. L. 114-255), enacted December 13, 2016, amended section 410A
of Public Law 108-173 to require a 10-year extension period (in
place of the 5-year extension required by the Affordable Care Act,
as further discussed below). We make an adjustment to the
standardized amount to ensure the effects of the Rural Community
Hospital Demonstration program are budget neutral as required under
section 410A(c)(2) of Public Law 108-173. We refer the reader to
section IV.L. of the preamble of this proposed rule for complete
details regarding the Rural Community Hospital Demonstration.
With regard to budget neutrality, as mentioned earlier, we make
an adjustment to the standardized amount to ensure the effects of
the Rural Community Hospital Demonstration are budget neutral, as
required under section 410A(c)(2) of Public Law 108-173. For FY
2019, the total amount that we are proposing to apply to make an
adjustment to the standardized amounts to ensure the effects of the
Rural Community Hospital Demonstration program are budget neutral is
$73,191,887. Accordingly, using the most recent data available to
account for the estimated costs of the demonstration program, for FY
2019, we computed a proposed factor of 0.999325 for the Rural
Community Hospital Demonstration budget neutrality adjustment that
will be applied to the IPPS standard Federal payment rate. We refer
readers to section IV.L. of the preamble of this proposed rule on
complete details regarding the calculation of the amount we are
applying to make an adjustment to the standardized amount.
We note, as discussed in section IV.L. of the preamble of this
proposed rule, if updated or additional data become available prior
to issuance of the FY 2019 IPPS/LTCH PPS final rule, we would use
those data to the extent appropriate to determine the budget
neutrality offset amount for FY 2019. We refer readers to section
IV.L. of the preamble of this proposed rule on complete details
regarding the availability of additional data prior to the FY 2019
IPPS/LTCH PPS final rule.

f. Proposed Adjustment for FY 2019 Required Under Section 414 of Public
Law 114-10 (MACRA)

As stated in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56785),
once the recoupment required under section 631 of the ATRA was
complete, we had anticipated making a single positive adjustment in
FY 2018 to offset the reductions required to recoup the $11 billion
under section 631 of the ATRA. However, section 414 of the MACRA
(which was enacted on April 16, 2015) replaced the single positive
adjustment we intended to make in FY 2018 with a 0.5 percent
positive adjustment for each of FYs 2018 through 2023. (As noted in
the FY 2018 IPPS/LTCH PPS proposed and final rules, section 15005 of
the 21st Century Cures Act (Pub. L. 114-255), which was enacted
December 13, 2016, reduced the adjustment for FY 2018 from 0.5
percentage points to 0.4588 percentage points.) Therefore, for FY
2019, we are proposing to implement the required +0.5 percent
adjustment to the standardized amount. This is a permanent
adjustment to the payment rates.

g. Proposed Outlier Payments

Section 1886(d)(5)(A) of the Act provides for payments in
addition to the basic prospective payments for ``outlier'' cases
involving extraordinarily high costs. To qualify for outlier
payments, a case must have costs greater than the sum of the
prospective payment rate for the MS-DRG, any IME and DSH payments,
uncompensated care payments, any new technology add-on payments, and
the ``outlier threshold'' or ``fixed-loss'' amount (a dollar amount
by which the costs of a case must exceed payments in order to
qualify for an outlier payment). We refer to the sum of the
prospective payment rate for the MS-DRG, any IME and DSH payments,
uncompensated care payments, any new technology add-on payments, and
the outlier threshold as the outlier ``fixed-loss cost threshold.''
To determine whether the costs of a case exceed the fixed-loss cost
threshold, a hospital's CCR is applied to the total covered charges
for the case to convert the charges to estimated costs. Payments for
eligible cases are then made based on a marginal cost factor, which
is a percentage of the estimated costs above the fixed-loss cost
threshold. The marginal cost factor for FY 2019 is 80 percent, or 90
percent for burn MS-DRGs 927, 928, 929, 933, 934 and 935. We have
used a marginal cost factor of 90 percent since FY 1989 (54 FR 36479
through 36480) for designated burn DRGs as well as a marginal cost
factor of 80 percent for all other DRGs since FY 1995 (59 FR 45367).
In accordance with section 1886(d)(5)(A)(iv) of the Act, outlier
payments for any year are projected to be not less than 5 percent
nor more than 6 percent of total operating DRG payments (which does
not include IME and DSH payments) plus outlier payments. When
setting the outlier threshold, we compute the 5.1 percent target by
dividing the total operating outlier payments by the total operating
DRG payments plus outlier payments. We do not include any other
payments such as IME and DSH within the outlier target amount.
Therefore, it is not necessary to include Medicare Advantage IME
payments in the outlier threshold calculation. Section 1886(d)(3)(B)
of the Act requires the Secretary to reduce the average standardized
amount by a factor to account for the estimated proportion of total
DRG payments made to outlier cases. More information on outlier
payments may be found on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/outlier.htm.

(1) Proposed FY 2019 Outlier Fixed-Loss Cost Threshold

In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50977 through
50983), in response to

[[Page 20581]]

public comments on the FY 2013 IPPS/LTCH PPS proposed rule, we made
changes to our methodology for projecting the outlier fixed-loss
cost threshold for FY 2014. We refer readers to the FY 2014 IPPS/
LTCH PPS final rule for a detailed discussion of the changes.
As we have done in the past, to calculate the proposed FY 2019
outlier threshold, we simulated payments by applying proposed FY
2019 payment rates and policies using cases from the FY 2017 MedPAR
file. As noted in section II.C. of this Addendum, we specify the
formula used for actual claim payment which is also used by CMS to
project the outlier threshold for the upcoming fiscal year. The
difference is the source of some of the variables in the formula.
For example, operating and capital CCRs for actual claim payment are
from the PSF while CMS uses an adjusted CCR (as described below) to
project the threshold for the upcoming fiscal year. In addition,
charges for a claim payment are from the bill while charges to
project the threshold are from the MedPAR data with an inflation
factor applied to the charges (as described earlier).
In order to determine the proposed FY 2019 outlier threshold, we
inflated the charges on the MedPAR claims by 2 years, from FY 2017
to FY 2019. As discussed in the FY 2015 IPPS/LTCH PPS final rule, we
believe a methodology that is based on 1-year of charge data will
provide a more stable measure to project the average charge per case
because our prior methodology used a 6-month measure, which
inherently uses fewer claims than a 1-year measure and makes it more
susceptible to fluctuations in the average charge per case as a
result of any significant charge increases or decreases by
hospitals. As finalized in the FY 2017 IPPS/LTCH PPS final rule (81
FR 57282), we are using the following methodology to calculate the
charge inflation factor for FY 2019:
To produce the most stable measure of charge inflation,
we applied the following inclusion and exclusion criteria of
hospitals claims in our measure of charge inflation: Include
hospitals whose last four digits fall between 0001 and 0899 (section
2779A1 of Chapter 2 of the State Operations Manual on the CMS
website at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/som107c02.pdf); include CAHs that were IPPS
hospitals for the time period of the MedPAR data being used to
calculate the charge inflation factor; include hospitals in
Maryland; and remove PPS-excluded cancer hospitals who have a ``V''
in the fifth position of their provider number or a ``E'' or ``F''
in the sixth position.
We excluded Medicare Advantage IME claims for the
reasons described in section I.A.4. of this Addendum. We refer
readers to the FY 2011 IPPS/LTCH PPS final rule for a complete
discussion on our methodology of identifying and adding the total
Medicare Advantage IME payment amount to the budget neutrality
adjustments.
In order to ensure that we capture only FFS claims, we
included claims with a ``Claim Type'' of 60 (which is a field on the
MedPAR file that indicates a claim is an FFS claim).
In order to further ensure that we capture only FFS
claims, we excluded claims with a ``GHOPAID'' indicator of 1 (which
is a field on the MedPAR file that indicates a claim is not an FFS
claim and is paid by a Group Health Organization).
We examined the MedPAR file and removed pharmacy
charges for anti-hemophilic blood factor (which are paid separately
under the IPPS) with an indicator of ``3'' for blood clotting with a
revenue code of ``0636'' from the covered charge field. We also
removed organ acquisition charges from the covered charge field
because organ acquisition is a pass-through payment not paid under
the IPPS.
In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49779 through
49780), we stated that commenters were concerned that they were
unable to replicate the calculation of the charge inflation factor
that CMS used in the proposed rule. In response to those comments,
we stated that we continue to believe that it is optimal to use the
most recent period of charge data available to measure charge
inflation. In response to those comments, similar to FY 2016, FY
2017, and FY 2018, for FY 2019, we grouped claims data by quarter in
the table below in order that the public would be able to replicate
the claims summary for the claims with discharge dates through
September 30, 2017, that are available under the current limited
data set (LDS) structure. In order to provide even more information
in response to the commenters' request, similar to FY 2016, FY 2017,
and FY 2018, for FY 2019, we are making available on the CMS website
at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/ (click on the links on the left titled
``FY 2019 IPPS Proposed Rule Home Page'' and then click the link
``FY 2019 Proposed Rule Data Files'') more detailed summary tables
by provider with the monthly charges that were used to compute the
charge inflation factor. We continue to work with our systems teams
and privacy office to explore expanding the information available in
the current LDS, perhaps through the provision of a supplemental
data file for future rulemaking.

--------------------------------------------------------------------------------------------------------------------------------------------------------
Covered charges Covered charges
(January 1, 2016, Cases (January 1, (January 1, 2017, Cases (January 1,
Quarter through December 31, 2016, through through December 31, 2017, through
2016) December 31, 2016) 2017) December 31, 2017)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1............................................................... $140,753,065,878 2,506,525 $149,358,509,178 2,551,065
2............................................................... 135,409,469,345 2,414,710 140,445,911,726 2,397,110
3............................................................... 132,239,610,957 2,356,131 135,004,161,478 2,293,958
4............................................................... 138,440,787,173 2,412,708 108,175,925,297 1,821,225
---------------------------------------------------------------------------------------
Total....................................................... 546,842,933,353 9,690,074 532,984,507,679 9,063,358
--------------------------------------------------------------------------------------------------------------------------------------------------------

Under this methodology, to compute the 1-year average annualized
rate-of-change in charges per case for FY 2019, we compared the
average covered charge per case of $56,433 ($546,842,933,353/
9,690,074) from the second quarter of FY 2016 through the first
quarter of FY 2017 (January 1, 2016, through December 31, 2016) to
the average covered charge per case of $58,806.52 ($532,984,507,679/
9,063,358) from the second quarter of FY 2017 through the first
quarter of FY 2018 (January 1, 2017, through December 31, 2017).
This rate-of-change was 4.2 percent (1.04205) or 9.5 percent
(1.085868) over 2 years. The billed charges are obtained from the
claim from the MedPAR file and inflated by the inflation factor
specified above.
As we have done in the past, in this proposed rule, we are
proposing to establish the proposed FY 2019 outlier threshold using
hospital CCRs from the December 2017 update to the Provider-Specific
File (PSF)--the most recent available data at the time of the
development of this proposed rule. We are proposing to apply the
following edits to providers' CCRs in the PSF. We believe these
edits are appropriate in order to accurately model the outlier
threshold. We first search for Indian Health Service providers and
those providers assigned the statewide average CCR from the current
fiscal year. We then replace these CCRs with the statewide average
CCR for the upcoming fiscal year. We also assign the statewide
average CCR (for the upcoming fiscal year) to those providers that
have no value in the CCR field in the PSF or whose CCRs exceed the
ceilings described later in this section (3.0 standard deviations
from the mean of the log distribution of CCRs for all hospitals). We
do not apply the adjustment factors described below to hospitals
assigned the statewide average CCR.
For FY 2019, we also are proposing to continue to apply an
adjustment factor to the CCRs to account for cost and charge
inflation (as explained below). We are proposing that, if more
recent data became available, we would use that data to calculate
the final FY 2019 outlier threshold.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50979), we
adopted a new methodology to adjust the CCRs. Specifically, we
finalized a policy to compare the national average case-weighted
operating and capital CCR from the most recent update of the PSF to
the national average case-weighted operating and capital CCR from
the same period of the prior year.

[[Page 20582]]

Therefore, as we have done since FY 2014, we are proposing to
adjust the CCRs from the December 2017 update of the PSF by
comparing the percentage change in the national average case-
weighted operating CCR and capital CCR from the December 2016 update
of the PSF to the national average case-weighted operating CCR and
capital CCR from the December 2017 update of the PSF. We note that
we used total transfer-adjusted cases from FY 2017 to determine the
national average case-weighted CCRs for both sides of the
comparison. As stated in the FY 2014 IPPS/LTCH PPS final rule (78 FR
50979), we believe that it is appropriate to use the same case count
on both sides of the comparison because this will produce the true
percentage change in the average case-weighted operating and capital
CCR from one year to the next without any effect from a change in
case count on different sides of the comparison.
Using the proposed methodology above, for the proposed rule, we
calculated a proposed December 2016 operating national average case-
weighted CCR of 0.266065 and a proposed December 2017 operating
national average case-weighted CCR of 0.262830. We then calculated
the percentage change between the two national operating case-
weighted CCRs by subtracting the December 2016 operating national
average case-weighted CCR from the December 2017 operating national
average case-weighted CCR and then dividing the result by the
December 2016 national operating average case-weighted CCR. This
resulted in a proposed national operating CCR adjustment factor of
0.987842.
We used the same methodology proposed above to adjust the
capital CCRs. Specifically, we calculated a December 2016 capital
national average case-weighted CCR of 0.023104 and a December 2017
capital national average case-weighted CCR of 0.022076. We then
calculated the percentage change between the two national capital
case-weighted CCRs by subtracting the December 2016 capital national
average case-weighted CCR from the December 2017 capital national
average case-weighted CCR and then dividing the result by the
December 2016 capital national average case-weighted CCR. This
resulted in a proposed national capital CCR adjustment factor of
0.955517.
As discussed in section III.B.3. of the preamble of the FY 2011
IPPS/LTCH PPS final rule (75 FR 50160 and 50161) and in section
III.G.3. of the preamble of this proposed rule, in accordance with
section 10324(a) of the Affordable Care Act, we created a wage index
floor of 1.0000 for all hospitals located in States determined to be
frontier States. We note that the frontier State floor adjustments
were applied after rural floor budget neutrality adjustments were
applied for all labor market areas, in order to ensure that no
hospital in a frontier State would receive a wage index less than
1.0000 due to the proposed rural floor adjustment. In accordance
with section 10324(a) of the Affordable Care Act, the frontier State
adjustment will not be subject to budget neutrality, and will only
be extended to hospitals geographically located within a frontier
State. However, for purposes of estimating the proposed outlier
threshold for FY 2019, it was necessary to adjust the proposed wage
index of those eligible hospitals in a frontier State when
calculating the proposed outlier threshold that results in outlier
payments being 5.1 percent of total payments for FY 2019. If we did
not take the above into account, our estimate of total FY 2019
payments would be too low, and, as a result, our proposed outlier
threshold would be too high, such that estimated outlier payments
would be less than our projected 5.1 percent of total payments.
As we did in establishing the FY 2009 outlier threshold (73 FR
57891), in our projection of FY 2019 outlier payments, we are
proposing not to make any adjustments for the possibility that
hospitals' CCRs and outlier payments may be reconciled upon cost
report settlement. We continue to believe that, due to the policy
implemented in the June 9, 2003 Outlier Final Rule (68 FR 34494),
CCRs will no longer fluctuate significantly and, therefore, few
hospitals will actually have these ratios reconciled upon cost
report settlement. In addition, it is difficult to predict the
specific hospitals that will have CCRs and outlier payments
reconciled in any given year. We note that we have instructed MACs
to identify for CMS any instances where: (1) A hospital's actual CCR
for the cost reporting period fluctuates plus or minus 10 percentage
points compared to the interim CCR used to calculate outlier
payments when a bill is processed; and (2) the total outlier
payments for the hospital exceeded $500,000.00 for that period. Our
simulations assume that CCRs accurately measure hospital costs based
on information available to us at the time we set the outlier
threshold. For these reasons, we are proposing not to make any
assumptions regarding the effects of reconciliation on the outlier
threshold calculation.
As described in sections IV.H. and IV.I., respectively, of the
preamble of this proposed rule, sections 1886(q) and 1886(o) of the
Act establish the Hospital Readmissions Reduction Program and the
Hospital VBP Program, respectively. We do not believe that it is
appropriate to include the proposed hospital VBP payment adjustments
and the estimated hospital readmissions payment adjustments in the
proposed outlier threshold calculation or the proposed outlier
offset to the standardized amount. Specifically, consistent with our
definition of the base operating DRG payment amount for the Hospital
Readmissions Reduction Program under Sec. 412.152 and the Hospital
VBP Program under Sec. 412.160, outlier payments under section
1886(d)(5)(A) of the Act are not affected by these payment
adjustments. Therefore, outlier payments would continue to be
calculated based on the unadjusted base DRG payment amount (as
opposed to using the base-operating DRG payment amount adjusted by
the hospital readmissions payment adjustment and the hospital VBP
payment adjustment). Consequently, we are proposing to exclude the
proposed hospital VBP payment adjustments and the estimated hospital
readmissions payment adjustments from the calculation of the
proposed outlier fixed-loss cost threshold.
We note that, to the extent section 1886(r) of the Act modifies
the DSH payment methodology under section 1886(d)(5)(F) of the Act,
the uncompensated care payment under section 1886(r)(2) of the Act,
like the empirically justified Medicare DSH payment under section
1886(r)(1) of the Act, may be considered an amount payable under
section 1886(d)(5)(F) of the Act such that it would be reasonable to
include the payment in the outlier determination under section
1886(d)(5)(A) of the Act. As we have done since the implementation
of uncompensated care payments in FY 2014, for FY 2019, we also are
proposing to allocate an estimated per-discharge uncompensated care
payment amount to all cases for the hospitals eligible to receive
the uncompensated care payment amount in the calculation of the
outlier fixed-loss cost threshold methodology. We continue to
believe that allocating an eligible hospital's estimated
uncompensated care payment to all cases equally in the calculation
of the outlier fixed-loss cost threshold would best approximate the
amount we would pay in uncompensated care payments during the year
because, when we make claim payments to a hospital eligible for such
payments, we would be making estimated per-discharge uncompensated
care payments to all cases equally. Furthermore, we continue to
believe that using the estimated per-claim uncompensated care
payment amount to determine outlier estimates provides
predictability as to the amount of uncompensated care payments
included in the calculation of outlier payments. Therefore,
consistent with the methodology used since FY 2014 to calculate the
outlier fixed-loss cost threshold, for FY 2019, we are proposing to
include estimated FY 2019 uncompensated care payments in the
computation of the proposed outlier fixed-loss cost threshold.
Specifically, we are proposing to use the estimated per-discharge
uncompensated care payments to hospitals eligible for the
uncompensated care payment for all cases in the calculation of the
proposed outlier fixed-loss cost threshold methodology.
Using this methodology, we used the formula described in section
I.C.1 of this Addendum to simulate and calculate the Federal payment
rate and outlier payments for all claims. We used a threshold of
$27,545 and calculated total operating Federal payments of
$92,908,351,672 and total outlier payments of $4,738,377,622. We
then divided total outlier payments by total operating Federal
payments plus total outlier payments and determined that this
threshold met the 5.1 percent target. As a result, we are proposing
an outlier fixed-loss cost threshold for FY 2019 equal to the
prospective payment rate for the MS-DRG, plus any IME, empirically
justified Medicare DSH payments, estimated uncompensated care
payment, and any add-on payments for new technology, plus $27,545.

(2) Other Proposed Changes Concerning Outliers

As stated in the FY 1994 IPPS final rule (58 FR 46348), we
establish an outlier threshold that is applicable to both hospital
inpatient operating costs and hospital inpatient

[[Page 20583]]

capital-related costs. When we modeled the combined operating and
capital outlier payments, we found that using a common threshold
resulted in a lower percentage of outlier payments for capital-
related costs than for operating costs. We project that the
thresholds for FY 2019 will result in outlier payments that will
equal 5.1 percent of operating DRG payments and 5.06 percent of
capital payments based on the Federal rate.
In accordance with section 1886(d)(3)(B) of the Act, we are
proposing to reduce the FY 2019 standardized amount by the same
percentage to account for the projected proportion of payments paid
as outliers.
The proposed outlier adjustment factors that would be applied to
the standardized amount based on the proposed FY 2019 outlier
threshold are as follows:

------------------------------------------------------------------------
Operating
standardized Capital
amounts federal rate
------------------------------------------------------------------------
National................................ 0.948999 0.949367
------------------------------------------------------------------------

We are proposing to apply the outlier adjustment factors to the
proposed FY 2019 payment rates after removing the effects of the FY
2018 outlier adjustment factors on the standardized amount.
To determine whether a case qualifies for outlier payments, we
currently apply hospital-specific CCRs to the total covered charges
for the case. Estimated operating and capital costs for the case are
calculated separately by applying separate operating and capital
CCRs. These costs are then combined and compared with the outlier
fixed-loss cost threshold.
Under our current policy at Sec. 412.84, we calculate operating
and capital CCR ceilings and assign a statewide average CCR for
hospitals whose CCRs exceed 3.0 standard deviations from the mean of
the log distribution of CCRs for all hospitals. Based on this
calculation, for hospitals for which the MAC computes operating CCRs
greater than 1.167 or capital CCRs greater than 0.154, or hospitals
for which the MAC is unable to calculate a CCR (as described under
Sec. 412.84(i)(3) of our regulations), statewide average CCRs are
used to determine whether a hospital qualifies for outlier payments.
Table 8A listed in section VI. of this Addendum (and available only
via the internet on the CMS website) contains the proposed statewide
average operating CCRs for urban hospitals and for rural hospitals
for which the MAC is unable to compute a hospital-specific CCR
within the above range. These statewide average ratios would be
effective for discharges occurring on or after October 1, 2018 and
would replace the statewide average ratios from the prior fiscal
year. Table 8B listed in section VI. of this Addendum (and available
via the internet on the CMS website) contains the comparable
proposed statewide average capital CCRs. As previously stated, the
proposed CCRs in Tables 8A and 8B would be used during FY 2019 when
hospital-specific CCRs based on the latest settled cost report
either are not available or are outside the range noted above. Table
8C listed in section VI. of this Addendum (and available via the
internet on the CMS website) contains the proposed statewide average
total CCRs used under the LTCH PPS as discussed in section V. of
this Addendum.
We finally note that we published a manual update (Change
Request 3966) to our outlier policy on October 12, 2005, which
updated Chapter 3, Section 20.1.2 of the Medicare Claims Processing
Manual. The manual update covered an array of topics, including
CCRs, reconciliation, and the time value of money. We encourage
hospitals that are assigned the statewide average operating and/or
capital CCRs to work with their MAC on a possible alternative
operating and/or capital CCR as explained in Change Request 3966.
Use of an alternative CCR developed by the hospital in conjunction
with the MAC can avoid possible overpayments or underpayments at
cost report settlement, thereby ensuring better accuracy when making
outlier payments and negating the need for outlier reconciliation.
We also note that a hospital may request an alternative operating or
capital CCR at any time as long as the guidelines of Change Request
3966 are followed. In addition, as mentioned above, we published an
additional manual update (Change Request 7192) to our outlier policy
on December 3, 2010, which also updated Chapter 3, Section 20.1.2 of
the Medicare Claims Processing Manual. The manual update outlines
the outlier reconciliation process for hospitals and Medicare
contractors. To download and view the manual instructions on outlier
reconciliation, we refer readers to the CMS website: https://www.cms.hhs.gov/manuals/downloads/clm104c03.pdf.

(3) Alternative Considered for a Potential Change to the CCRs Used for
Outliers, New Technology Add-On Payments, and Payments to IPPS-Excluded
Cancer Hospitals for Chimeric Antigen Receptor (CAR) T-Cell Therapy

As discussed in section II.F.2.d. of the preamble of this
proposed rule, we have received many inquiries from the public
regarding payment of CAR T-cell therapy. For FY 2019, one suggestion
from the public was to allow hospitals to utilize a CCR specific to
the ICD-10-PCS procedure codes used to report the performance of
procedures involving the use of CAR T-cell therapy drugs, for
example a CCR of 1.0, when determining whether an individual case
qualifies for FY 2019 outlier payments and to determine the cost of
an individual case for FY 2019 for purposes of a new technology add-
on payment, if approved. As previously discussed, procedures
involving the use of CAR T-cell therapy drugs are currently
identified with ICD-10-PCS procedure codes XW033C3 (Introduction of
engineered autologous chimeric antigen receptor t-cell immunotherapy
into peripheral vein, percutaneous approach, new technology group 3)
and XW043C3 (Introduction of engineered autologous chimeric antigen
receptor t-cell immunotherapy into central vein, percutaneous
approach, new technology group 3), which both became effective
October 1, 2017.
Two CAR T-cell therapy drugs received FDA approval in 2017.
KYMRIAH^TM (manufactured by Novartis Pharmaceuticals
Corporation) was approved for the use in the treatment of patients
up to 25 years of age with B-cell precursor acute lymphoblastic
leukemia (ALL) that is refractory or in second or later relapse.
YESCARTA^TM (manufactured by Kite Pharma, Inc.) was
approved for the use in the treatment of adult patients with certain
types of large B-cell lymphoma and who have not responded to or who
have relapsed after at least two other kinds of treatment.
As discussed in greater detail in section II.H.5.a. of the
preamble of this proposed rule, the manufacturer of
KYMRIAH^TM and the manufacturer of YESCARTA^TM
submitted separate applications for new technology add-on payments
for FY 2019. We believe that, in the context of these pending new
technology add-on payment applications, there may also be merit in
the suggestion from the public to allow hospitals to utilize a CCR
specific to procedures involving the ICD-10-PCS procedures codes
describing CAR T-cell therapy drugs for FY 2019 as part of the
determination of the cost of a case for purposes of calculating
outlier payments for individual FY 2019 cases, new technology add-on
payments, if approved, for individual FY 2019 cases, and payments to
IPPS-excluded cancer hospitals beginning in FY 2019. For example, a
CCR of 1.0 could be used for charges associated with ICD-10-PCS
procedure codes XW033C3 and XW043C3, as many public inquirers
believed hospitals would be unlikely to set charges different from
costs for the use of KYMRIAH^TM and YESCARTA^TM.
Such a change would result in a higher outlier payment, higher new
technology add-on payment, or the determination of higher costs for
IPPS-excluded cancer hospital cases. For example, if a hospital
charged $400,000 for the procedure described by ICD-10-PCS procedure
code XW033C3, the application of a hypothetical CCR of 0.25 results
in a cost of $100,000 (= $400,000 * 0.25) while the application of a
hypothetical CCR of 1.00 results in a cost of $400,000 (= $400,000 *
1.0).
We are inviting public comments on this alternative approach for
FY 2019.
We also are inviting comments on how this payment alternative
would affect access to care, as well as how it affects incentives to
encourage lower drug prices, which is a high priority for this
Administration. In addition, we are considering alternative
approaches and authorities to encourage value-based care and lower
drug prices. We solicit comments on how the payment methodology
alternatives may intersect and affect future participation in any
such alternative approaches.

(4) FY 2017 Outlier Payments

Our current estimate, using available FY 2017 claims data, is
that actual outlier payments for FY 2017 were approximately 5.53
percent of actual total MS-DRG payments. Therefore, the data
indicate that, for FY 2017, the percentage of actual outlier
payments relative to actual total payments is higher than we
projected for FY 2017. Consistent with the policy and statutory
interpretation we have maintained since the inception of the IPPS,
we do not make retroactive adjustments to outlier payments

[[Page 20584]]

to ensure that total outlier payments for FY 2017 are equal to 5.1
percent of total MS-DRG payments. As explained in the FY 2003
Outlier Final Rule (68 FR 34502), if we were to make retroactive
adjustments to all outlier payments to ensure total payments are 5.1
percent of MS-DRG payments (by retroactively adjusting outlier
payments), we would be removing the important aspect of the
prospective nature of the IPPS. Because such an across-the-board
adjustment would either lead to more or less outlier payments for
all hospitals, hospitals would no longer be able to reliably
approximate their payment for a patient while the patient is still
hospitalized. We believe it would be neither necessary nor
appropriate to make such an aggregate retroactive adjustment.
Furthermore, we believe it is consistent with the statutory language
at section 1886(d)(5)(A)(iv) of the Act not to make retroactive
adjustments to outlier payments. This section states that outlier
payments be equal to or greater than 5 percent and less than or
equal to 6 percent of projected or estimated (not actual) MS-DRG
payments. We believe that an important goal of a PPS is
predictability. Therefore, we believe that the fixed-loss outlier
threshold should be projected based on the best available historical
data and should not be adjusted retroactively. A retroactive change
to the fixed-loss outlier threshold would affect all hospitals
subject to the IPPS, thereby undercutting the predictability of the
system as a whole.
We note that, because the MedPAR claims data for the entire FY
2018 will not be available until after September 30, 2018, we are
unable to provide an estimate of actual outlier payments for FY 2018
based on FY 2018 claims data in this proposed rule. We will provide
an estimate of actual FY 2018 outlier payments in the FY 2020 IPPS/
LTCH PPS proposed rule.

5. Proposed FY 2019 Standardized Amount

The adjusted standardized amount is divided into labor-related
and nonlabor-related portions. Tables 1A and 1B listed and published
in section VI. of this Addendum (and available via the internet on
the CMS website) contain the national standardized amounts that we
are proposing to apply to all hospitals, except hospitals located in
Puerto Rico, for FY 2019. The proposed standardized amount for
hospitals in Puerto Rico is shown in Table 1C listed and published
in section VI. of this Addendum (and available via the internet on
the CMS website). The proposed amounts shown in Tables 1A and 1B
differ only in that the labor-related share applied to the
standardized amounts in Table 1A is 68.3 percent, and the labor-
related share applied to the standardized amounts in Table 1B is 62
percent. In accordance with sections 1886(d)(3)(E) and
1886(d)(9)(C)(iv) of the Act, we are proposing to apply a labor-
related share of 62 percent, unless application of that percentage
would result in lower payments to a hospital than would otherwise be
made. In effect, the statutory provision means that we will apply a
labor-related share of 62 percent for all hospitals whose wage
indexes are less than or equal to 1.0000.
In addition, Tables 1A and 1B include the proposed standardized
amounts reflecting the proposed applicable percentage increases for
FY 2019.
The proposed labor-related and nonlabor-related portions of the
national average standardized amounts for Puerto Rico hospitals for
FY 2019 are set forth in Table 1C listed and published in section
VI. of this Addendum (and available via the internet on the CMS
website). Similar to above, section 1886(d)(9)(C)(iv) of the Act, as
amended by section 403(b) of Public Law 108-173, provides that the
labor-related share for hospitals located in Puerto Rico be 62
percent, unless the application of that percentage would result in
lower payments to the hospital.
The following table illustrates the changes from the FY 2018
national standardized amount to the proposed FY 2019 national
standardized amount. The second through fifth columns display the
changes from the FY 2018 standardized amounts for each applicable
proposed FY 2019 standardized amount. The first row of the table
shows the updated (through FY 2018) average standardized amount
after restoring the FY 2018 offsets for outlier payments and the
geographic reclassification budget neutrality. The MS-DRG
reclassification and recalibration and wage index budget neutrality
adjustment factors are cumulative. Therefore, those FY 2018
adjustment factors are not removed from this table.

Changes From FY 2018 Standardized Amounts to the Proposed FY 2019 Standardized Amounts
----------------------------------------------------------------------------------------------------------------
Hospital submitted Hospital did NOT Hospital did NOT
Hospital submitted quality data and submit quality submit quality
quality data and is NOT a data and is a data and is NOT a
is a meaningful meaningful EHR meaningful EHR meaningful EHR
EHR user user user user
----------------------------------------------------------------------------------------------------------------
FY 2018 Base Rate after
removing:
1. FY 2018 Geographic If Wage Index is If Wage Index is If Wage Index is If Wage Index is
Reclassification Budget Greater Than Greater Than Greater Than Greater Than
Neutrality (0.987985). 1.0000: 1.0000: 1.0000: 1.0000:
2. FY 2018 Operating Outlier Labor (68.3%): Labor (68.3%): Labor (68.3%): Labor (68.3%):
Offset (0.948998). $4,059.36 $4,059.36 $4,059.36 $4,059.36
Nonlabor (30.4%): Nonlabor (30.4%): Nonlabor (30.4%): Nonlabor (30.4%):
$1,884.07. $1,884.07. $1,884.07. $1,884.07
If Wage Index is If Wage Index is If Wage Index is If Wage Index is
less Than or less Than or less Than or less Than or
Equal to 1.0000: Equal to 1.0000: Equal to 1.0000: Equal to 1.0000:
Labor (62%): Labor (62%): Labor (62%): Labor (62%):
$3,684.92. $3,684.92. $3,684.92. $3,684.92
Nonlabor (38%): Nonlabor (38%): Nonlabor (38%): Nonlabor (38%):
$2,258.50. $2,258.50. $2,258.50. $2,258.50
Proposed FY 2019 Update Factor.. 1.0125............ 0.9915............ 1.0055............ 0.9845
Proposed FY 2019 MS-DRG 0.997896.......... 0.997896.......... 0.997896.......... 0.997896
Recalibration Budget Neutrality
Factor.
Proposed FY 2019 Wage Index 1.001182.......... 1.001182.......... 1.001182.......... 1.001182
Budget Neutrality Factor.
Proposed FY 2019 0.987084.......... 0.987084.......... 0.987084.......... 0.987084
Reclassification Budget
Neutrality Factor.
Proposed FY 2019 Operating 0.948999.......... 0.948999.......... 0.948999.......... 0.948999
Outlier Factor.
Proposed FY 2019 Rural 0.999325.......... 0.999325.......... 0.999325.......... 0.999325
Demonstration Budget Neutrality
Factor.
Adjustment for FY 2019 Required 1.005............. 1.005............. 1.005............. 1.005
under Section 414 of Public Law
114-10 (MACRA).
Proposed National Standardized Labor: $3,863.17 Labor: $3,783.04 Labor: $3,836.46 Labor: $3,756.34
Amount for FY 2019 if Wage Nonlabor: Nonlabor: Nonlabor: Nonlabor:
Index is Greater Than 1.0000; $1,793.01. $1,755.82. $1,780.61. $1,743.43
Labor/Non-Labor Share
Percentage (68.3/31.7).
Proposed National Standardized Labor: $3,506.83 Labor: $3,434.09 Labor: $3,482.58 Labor: $3,409.86
Amount for FY 2019 if Wage Nonlabor: Nonlabor: Nonlabor: Nonlabor:
Index is Less Than or Equal to $2,149.35. $2,104.77. $2,134.49. $2,089.91
1.0000; Labor/Non-Labor Share
Percentage (62/0;38).
----------------------------------------------------------------------------------------------------------------

[[Page 20585]]

B. Proposed Adjustments for Area Wage Levels and Cost-of-Living

Tables 1A through 1C, as published in section VI. of this
Addendum (and available via the internet on the CMS website),
contain the proposed labor-related and nonlabor-related shares that
we are proposing to use to calculate the prospective payment rates
for hospitals located in the 50 States, the District of Columbia,
and Puerto Rico for FY 2019. This section addresses two types of
adjustments to the standardized amounts that are made in determining
the proposed prospective payment rates as described in this
Addendum.

1. Proposed Adjustment for Area Wage Levels

Sections 1886(d)(3)(E) and 1886(d)(9)(C)(iv) of the Act require
that we make an adjustment to the labor-related portion of the
national prospective payment rate to account for area differences in
hospital wage levels. This adjustment is made by multiplying the
labor-related portion of the adjusted standardized amounts by the
appropriate wage index for the area in which the hospital is
located. For FY 2019, as discussed in section IV.B.3. of the
preamble of this proposed rule, we are proposing to apply a labor-
related share of 68.3 percent for the national standardized amounts
for all IPPS hospitals (including hospitals in Puerto Rico) that
have a wage index value that is greater than 1.0000. Consistent with
section 1886(d)(3)(E) of the Act, we are proposing to apply the wage
index to a labor-related share of 62 percent of the national
standardized amount for all IPPS hospitals (including hospitals in
Puerto Rico) whose wage index values are less than or equal to
1.0000. In section III. of the preamble of this proposed rule, we
discuss the data and methodology for the proposed FY 2019 wage
index.

2. Proposed Adjustment for Cost-of-Living in Alaska and Hawaii

Section 1886(d)(5)(H) of the Act provides discretionary
authority to the Secretary to make adjustments as the Secretary
deems appropriate to take into account the unique circumstances of
hospitals located in Alaska and Hawaii. Higher labor-related costs
for these two States are taken into account in the adjustment for
area wages described above. To account for higher nonlabor-related
costs for these two States, we multiply the nonlabor-related portion
of the standardized amount for hospitals in Alaska and Hawaii by an
adjustment factor.
In the FY 2013 IPPS/LTCH PPS final rule, we established a
methodology to update the COLA factors for Alaska and Hawaii that
were published by the U.S. Office of Personnel Management (OPM)
every 4 years (at the same time as the update to the labor-related
share of the IPPS market basket), beginning in FY 2014. We refer
readers to the FY 2013 IPPS/LTCH PPS proposed and final rules for
additional background and a detailed description of this methodology
(77 FR 28145 through 28146 and 77 FR 53700 through 53701,
respectively).
For FY 2018, in the FY 2018 IPPS/LTCH PPS final rule (82 FR
38530 through 38531), we updated the COLA factors published by OPM
for 2009 (as these are the last COLA factors OPM published prior to
transitioning from COLAs to locality pay) using the methodology that
we finalized in the FY 2013 IPPS/LTCH PPS final rule.
Based on the policy finalized in the FY 2013 IPPS/LTCH PPS final
rule, we are proposing to continue to use the same COLA factors in
FY 2019 that were used in FY 2018 to adjust the nonlabor-related
portion of the standardized amount for hospitals located in Alaska
and Hawaii. Below is a table listing the proposed COLA factors for
FY 2019.

Proposed FY2019 Cost-of-Living Adjustment Factors: Alaska and Hawaii
Hospitals
------------------------------------------------------------------------
Cost of living
Area adjustment
factor
------------------------------------------------------------------------
Alaska:
City of Anchorage and 80-kilometer (50-mile) radius 1.25
by road............................................
City of Fairbanks and 80-kilometer (50-mile) radius 1.25
by road............................................
City of Juneau and 80-kilometer (50-mile) radius by 1.25
road...............................................
Rest of Alaska...................................... 1.25

City and County of Honolulu......................... 1.25
County of Hawaii.................................... 1.21
County of Kauai..................................... 1.25
County of Maui and County of Kalawao................ 1.25
------------------------------------------------------------------------

Based on the policy finalized in the FY 2013 IPPS/LTCH PPS final
rule, the next update to the COLA factors for Alaska and Hawaii
would occur at the same time as the update to the labor-related
share of the IPPS market basket (no later than FY 2022).

C. Calculation of the Proposed Prospective Payment Rates

General Formula for Calculation of the Prospective Payment Rates for FY
2019

In general, the operating prospective payment rate for all
hospitals (including hospitals in Puerto Rico) paid under the IPPS,
except SCHs and MDHs, for FY 2019 equals the Federal rate (which
includes uncompensated care payments).
Section 205 of the Medicare Access and CHIP Reauthorization Act
of 2015 (MACRA) (Pub. L. 114-10, enacted on April 16, 2015) extended
the MDH program (which, under previous law, was to be in effect for
discharges on or before March 31, 2015 only) for discharges
occurring on or after April 1, 2015, through FY 2017 (that is, for
discharges occurring on or before September 30, 2017). Section 50205
of the Bipartisan Budget Act of 2018 (Pub. L. 115-123), enacted
February 9, 2018, extended the MDH program for discharges on or
after October 1, 2017 through September 30, 2022.
SCHs are paid based on whichever of the following rates yields
the greatest aggregate payment: The Federal national rate (which, as
discussed in section V.G. of the preamble of this proposed rule,
includes uncompensated care payments); the updated hospital-specific
rate based on FY 1982 costs per discharge; the updated hospital-
specific rate based on FY 1987 costs per discharge; the updated
hospital-specific rate based on FY 1996 costs per discharge; or the
updated hospital-specific rate based on FY 2006 costs per discharge
to determine the rate that yields the greatest aggregate payment.
The prospective payment rate for SCHs for FY 2019 equals the
higher of the applicable Federal rate, or the hospital-specific rate
as described below. The prospective payment rate for MDHs for FY
2019 equals the higher of the Federal rate, or the Federal rate plus
75 percent of the difference between the Federal rate and the
hospital-specific rate as described below. For MDHs, the updated
hospital-specific rate is based on FY 1982, FY 1987, or FY 2002
costs per discharge, whichever yields the greatest aggregate
payment.

1. Operating and Capital Federal Payment Rate and Outlier Payment
Calculation

Note: The formula below is used for actual claim payment and is
also used by CMS to project the outlier threshold for the upcoming
fiscal year. The difference is the source of some of the variables
in the formula. For example, operating and capital CCRs for actual
claim payment are from the PSF while CMS uses an adjusted CCR (as
described above) to project the threshold for the upcoming fiscal
year. In addition, charges for a claim payment are from the bill
while charges to project the threshold are from the MedPAR data with
an inflation factor applied to the charges (as described earlier).
Step 1--Determine the MS-DRG and MS-DRG relative weight for each
claim based on

[[Page 20586]]

the ICD-10-CM procedure and diagnosis codes on the claim.
Step 2--Select the applicable average standardized amount
depending on whether the hospital submitted qualifying quality data
and is a meaningful EHR user, as described above.
Step 3--Compute the operating and capital Federal payment rate:

--Federal Payment Rate for Operating Costs = MS-DRG Relative Weight
x [(Labor-Related Applicable Standardized Amount x Applicable CBSA
Wage Index) + (Nonlabor-Related Applicable Standardized Amount x
Cost-of-Living Adjustment)] x (1 + IME + (DSH * 0.25))
--Federal Payment for Capital Costs = MS-DRG Relative Weight x
Federal Capital Rate x Geographic Adjustment Fact x (l + IME + DSH)

Step 4--Determine operating and capital costs:

--Operating Costs = (Billed Charges x Operating CCR)
--Capital Costs = (Billed Charges x Capital CCR).

Step 5--Compute operating and capital outlier threshold (CMS
applies a geographic adjustment to the operating and capital outlier
threshold to account for local cost variation):

--Operating CCR to Total CCR = (Operating CCR)/(Operating CCR +
Capital CCR)
--Operating Outlier Threshold = [Fixed Loss Threshold x ((Labor-
Related Portion x CBSA Wage Index) + Nonlabor-Related portion)] x
Operating CCR to Total CCR + Federal Payment with IME, DSH +
Uncompensated Care Payment + New Technology Add-On Payment Amount
--Capital CCR to Total CCR = (Capital CCR)/(Operating CCR + Capital
CCR)
--Capital Outlier Threshold = (Fixed Loss Threshold x Geographic
Adjustment Factor x Capital CCR to Total CCR) + Federal Payment with
IME and DSH

Step 6--Compute operating and capital outlier payments:

--Marginal Cost Factor = 0.80 or 0.90 (depending on the MS-DRG)
--Operating Outlier Payment = (Operating Costs-Operating Outlier
Threshold) x Marginal Cost Factor
--Capital Outlier Payment = (Capital Costs- Capital Outlier
Threshold) x Marginal Cost Factor

The payment rate may then be further adjusted for hospitals that
qualify for a low-volume payment adjustment under section
1886(d)(12) of the Act and 42 CFR 412.101(b). The base-operating DRG
payment amount may be further adjusted by the hospital readmissions
payment adjustment and the hospital VBP payment adjustment as
described under sections 1886(q) and 1886(o) of the Act,
respectively. Payments also may be reduced by the 1-percent
adjustment under the HAC Reduction Program as described in section
1886(p) of the Act. We also make new technology add-on payments in
accordance with section 1886(d)(5)(K) and (L) of the Act. Finally,
we add the uncompensated care payment to the total claim payment
amount. As noted in the formula above, we take uncompensated care
payments and new technology add-on payments into consideration when
calculating outlier payments.

2. Hospital-Specific Rate (Applicable Only to SCHs and MDHs)

a. Calculation of Hospital-Specific Rate

Section 1886(b)(3)(C) of the Act provides that SCHs are paid
based on whichever of the following rates yields the greatest
aggregate payment: The Federal rate; the updated hospital-specific
rate based on FY 1982 costs per discharge; the updated hospital-
specific rate based on FY 1987 costs per discharge; the updated
hospital-specific rate based on FY 1996 costs per discharge; or the
updated hospital-specific rate based on FY 2006 costs per discharge
to determine the rate that yields the greatest aggregate payment.
As noted above, as discussed in section IV.G. of the preamble of
this FY 2019 IPPS/LTCH PPS proposed rule, section 205 of the
Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (Pub.
L. 114-10, enacted on April 16, 2015) extended the MDH program
(which, under previous law, was to be in effect for discharges on or
before March 31, 2015 only) for discharges occurring on or after
April 1, 2015, through FY 2017 (that is, for discharges occurring on
or before September 30, 2017). Section 50205 of the Bipartisan
Budget Act of 2018, enacted February 9, 2018, extended the MDH
program for discharges on or after October 1, 2017 through September
30, 2022. For MDHs, the updated hospital-specific rate is based on
FY 1982, FY 1987, or FY 2002 costs per discharge, whichever yields
the greatest aggregate payment.
For a more detailed discussion of the calculation of the
hospital-specific rates, we refer readers to the FY 1984 IPPS
interim final rule (48 FR 39772); the April 20, 1990 final rule with
comment period (55 FR 15150); the FY 1991 IPPS final rule (55 FR
35994); and the FY 2001 IPPS final rule (65 FR 47082).

b. Updating the FY 1982, FY 1987, FY 1996, FY 2002 and FY 2006
Hospital-Specific Rate for FY 2019

Section 1886(b)(3)(B)(iv) of the Act provides that the
applicable percentage increase applicable to the hospital-specific
rates for SCHs and MDHs equals the applicable percentage increase
set forth in section 1886(b)(3)(B)(i) of the Act (that is, the same
update factor as for all other hospitals subject to the IPPS).
Because the Act sets the update factor for SCHs and MDHs equal to
the update factor for all other IPPS hospitals, the update to the
hospital-specific rates for SCHs and MDHs is subject to the
amendments to section 1886(b)(3)(B) of the Act made by sections
3401(a) and 10319(a) of the Affordable Care Act. Accordingly, the
proposed applicable percentage increases to the hospital-specific
rates applicable to SCHs and MDHs are the following:

----------------------------------------------------------------------------------------------------------------
Hospital Hospital Hospital did Hospital did
submitted submitted NOT submit NOT submit
quality data quality data quality data quality data
FY 2019 and is a and is NOT a and is a and is NOT a
meaningful EHR Meaningful EHR meaningful EHR Meaningful EHR
user user user user
----------------------------------------------------------------------------------------------------------------
Proposed Market Basket Rate-of-Increase......... 2.8 2.8 2.8 2.8
Proposed Adjustment for Failure to Submit 0.0 0.0 -0.7 -0.7
Quality Data under Section 1886(b)(3)(B)(viii)
of the Act.....................................
Proposed Adjustment for Failure to be a 0.0 -2.1 0.0 -2.1
Meaningful EHR User under Section
1886(b)(3)(B)(ix) of the Act...................
Proposed MFP Adjustment under Section -0.8 -0.8 -0.8 -0.8
1886(b)(3)(B)(xi) of the Act...................
Statutory Adjustment under Section -0.75 -0.75 -0.75 -0.75
1886(b)(3)(B)(xii) of the Act..................
Proposed Applicable Percentage Increase Applied 1.25 -0.85 0.55 -1.55
to Standardized Amount.........................
----------------------------------------------------------------------------------------------------------------

For a complete discussion of the applicable percentage increase
applied to the hospital-specific rates for SCHs and MDHs, we refer
readers to section IV.B. of the preamble of this proposed rule.
In addition, because SCHs and MDHs use the same MS-DRGs as other
hospitals when they are paid based in whole or in part on the
hospital-specific rate, the hospital-specific rate is adjusted by a
budget neutrality factor to ensure that changes to the MS-DRG
classifications and the recalibration of the MS-DRG relative weights
are made in a manner so that aggregate IPPS payments are unaffected.
Therefore, the proposed hospital-specific rate for an SCH or an MDH
is adjusted by the proposed MS-DRG reclassification and
recalibration budget neutrality factor of 0.997896, as discussed in
section III. of this Addendum. The resulting rate is used in
determining the payment rate that an SCH or MDH would receive for
its discharges beginning on or after October 1, 2018. We note that,
in this proposed rule, for FY 2019, we are not making a
documentation and coding adjustment to the hospital-specific rate.
We refer readers to section II.D.

[[Page 20587]]

of the preamble of this proposed rule for a complete discussion
regarding our proposed policies and previously finalized policies
(including our historical adjustments to the payment rates) relating
to the effect of changes in documentation and coding that do not
reflect real changes in case-mix.

III. Proposed Changes to Payment Rates for Acute Care Hospital
Inpatient Capital-Related Costs for FY 2019

The PPS for acute care hospital inpatient capital-related costs
was implemented for cost reporting periods beginning on or after
October 1, 1991. The basic methodology for determining Federal
capital prospective rates is set forth in the regulations at 42 CFR
412.308 through 412.352. Below we discuss the factors that we used
to determine the proposed capital Federal rate for FY 2019, which
would be effective for discharges occurring on or after October 1,
2018.
All hospitals (except ``new'' hospitals under Sec.
412.304(c)(2)) are paid based on the capital Federal rate. We
annually update the capital standard Federal rate, as provided in
Sec. 412.308(c)(1), to account for capital input price increases
and other factors. The regulations at Sec. 412.308(c)(2) also
provide that the capital Federal rate be adjusted annually by a
factor equal to the estimated proportion of outlier payments under
the capital Federal rate to total capital payments under the capital
Federal rate. In addition, Sec. 412.308(c)(3) requires that the
capital Federal rate be reduced by an adjustment factor equal to the
estimated proportion of payments for exceptions under Sec. 412.348.
(We note that, as discussed in the FY 2013 IPPS/LTCH PPS final rule
(77 FR 53705), there is generally no longer a need for an exceptions
payment adjustment factor.) However, in limited circumstances, an
additional payment exception for extraordinary circumstances is
provided for under Sec. 412.348(f) for qualifying hospitals.
Therefore, in accordance with Sec. 412.308(c)(3), an exceptions
payment adjustment factor may need to be applied if such payments
are made. Section 412.308(c)(4)(ii) requires that the capital
standard Federal rate be adjusted so that the effects of the annual
DRG reclassification and the recalibration of DRG weights and
changes in the geographic adjustment factor (GAF) are budget
neutral.
Section 412.374 provides for payments to hospitals located in
Puerto Rico under the IPPS for acute care hospital inpatient
capital-related costs, which currently specifies capital IPPS
payments to hospitals located in Puerto Rico are based on 100
percent of the Federal rate.

A. Determination of the Federal Hospital Inpatient Capital-Related
Prospective Payment Rate Update for FY 2019

In the discussion that follows, we explain the factors that we
used to determine the proposed capital Federal rate for FY 2019. In
particular, we explain why the proposed FY 2019 capital Federal rate
would increase approximately 1.28 percent, compared to the FY 2018
capital Federal rate. As discussed in the impact analysis in
Appendix A to this proposed rule, we estimate that capital payments
per discharge will increase approximately 1.7 percent during that
same period. Because capital payments constitute approximately 10
percent of hospital payments, a 1-percent change in the capital
Federal rate yields only approximately a 0.1 percent change in
actual payments to hospitals.

1. Projected Capital Standard Federal Rate Update

a. Description of the Update Framework

Under Sec. 412.308(c)(1), the capital standard Federal rate is
updated on the basis of an analytical framework that takes into
account changes in a capital input price index (CIPI) and several
other policy adjustment factors. Specifically, we adjust the
projected CIPI rate of change as appropriate each year for case-mix
index-related changes, for intensity, and for errors in previous
CIPI forecasts. The proposed update factor for FY 2019 under that
framework is 1.2 percent based on a projected 1.2 percent increase
in the 2014-based CIPI, a proposed 0.0 percentage point adjustment
for intensity, a proposed 0.0 percentage point adjustment for case-
mix, a proposed 0.0 percentage point adjustment for the DRG
reclassification and recalibration, and a forecast error correction
of 0.0 percentage point. As discussed in section III.C. of this
Addendum, we continue to believe that the CIPI is the most
appropriate input price index for capital costs to measure capital
price changes in a given year. We also explain the basis for the FY
2019 CIPI projection in that same section of this Addendum. Below we
describe the policy adjustments that we are proposing to apply in
the update framework for FY 2019.
The case-mix index is the measure of the average DRG weight for
cases paid under the IPPS. Because the DRG weight determines the
prospective payment for each case, any percentage increase in the
case-mix index corresponds to an equal percentage increase in
hospital payments.
The case-mix index can change for any of several reasons:
The average resource use of Medicare patient changes
(``real'' case-mix change);
Changes in hospital documentation and coding of patient
records result in higher-weighted DRG assignments (``coding
effects''); and
The annual DRG reclassification and recalibration
changes may not be budget neutral (``reclassification effect'').
We define real case-mix change as actual changes in the mix (and
resource requirements) of Medicare patients as opposed to changes in
documentation and coding behavior that result in assignment of cases
to higher-weighted DRGs, but do not reflect higher resource
requirements. The capital update framework includes the same case-
mix index adjustment used in the former operating IPPS update
framework (as discussed in the May 18, 2004 IPPS proposed rule for
FY 2005 (69 FR 28816)). (We no longer use an update framework to
make a recommendation for updating the operating IPPS standardized
amounts as discussed in section II. of Appendix B to the FY 2006
IPPS final rule (70 FR 47707).)
For FY 2019, we are projecting a 0.5 percent total increase in
the case-mix index. We estimated that the real case-mix increase
would equal 0.5 percent for FY 2019. The net adjustment for change
in case-mix is the difference between the projected real increase in
case-mix and the projected total increase in case-mix. Therefore,
the proposed net adjustment for case-mix change in FY 2019 is 0.0
percentage point.
The capital update framework also contains an adjustment for the
effects of DRG reclassification and recalibration. This adjustment
is intended to remove the effect on total payments of prior year's
changes to the DRG classifications and relative weights, in order to
retain budget neutrality for all case-mix index-related changes
other than those due to patient severity of illness. Due to the lag
time in the availability of data, there is a 2-year lag in data used
to determine the adjustment for the effects of DRG reclassification
and recalibration. For example, we have data available to evaluate
the effects of the FY 2017 DRG reclassification and recalibration as
part of our proposed update for FY 2019. We assume, for purposes of
this adjustment, that the estimate of FY 2017 DRG reclassification
and recalibration resulted in no change in the case-mix when
compared with the case-mix index that would have resulted if we had
not made the reclassification and recalibration changes to the DRGs.
Therefore, we are proposing to make a 0.0 percentage point
adjustment for reclassification and recalibration in the update
framework for FY 2019.
The capital update framework also contains an adjustment for
forecast error. The input price index forecast is based on
historical trends and relationships ascertainable at the time the
update factor is established for the upcoming year. In any given
year, there may be unanticipated price fluctuations that may result
in differences between the actual increase in prices and the
forecast used in calculating the update factors. In setting a
prospective payment rate under the framework, we make an adjustment
for forecast error only if our estimate of the change in the capital
input price index for any year is off by 0.25 percentage point or
more. There is a 2-year lag between the forecast and the
availability of data to develop a measurement of the forecast error.
Historically, when a forecast error of the CIPI is greater than 0.25
percentage point in absolute terms, it is reflected in the update
recommended under this framework. A forecast error of 0.0 percentage
point was calculated for the FY 2017 update, for which there are
historical data. That is, current historical data indicate that the
forecasted FY 2017 CIPI (1.2 percent) used in calculating the FY
2017 update factor was 0.0 percentage point higher than actual
realized price increases (1.2 percent). As this does not exceed the
0.25 percentage point threshold, we are not proposing to make an
adjustment for forecast error in the update for FY 2019.
Under the capital IPPS update framework, we also make an
adjustment for changes in intensity. Historically, we calculated
this adjustment using the same methodology and data that were used
in the past under the framework for operating IPPS. The intensity

[[Page 20588]]

factor for the operating update framework reflected how hospital
services are utilized to produce the final product, that is, the
discharge. This component accounts for changes in the use of
quality-enhancing services, for changes within DRG severity, and for
expected modification of practice patterns to remove noncost-
effective services. Our intensity measure is based on a 5-year
average.
We calculate case-mix constant intensity as the change in total
cost per discharge, adjusted for price level changes (the CPI for
hospital and related services) and changes in real case-mix. Without
reliable estimates of the proportions of the overall annual
intensity changes that are due, respectively, to ineffective
practice patterns and the combination of quality-enhancing new
technologies and complexity within the DRG system, we assume that
one-half of the annual change is due to each of these factors. The
capital update framework thus provides an add-on to the input price
index rate of increase of one-half of the estimated annual increase
in intensity, to allow for increases within DRG severity and the
adoption of quality-enhancing technology.
In this proposed rule, we are proposing to continue to use a
Medicare-specific intensity measure that is based on a 5-year
adjusted average of cost per discharge for FY 2019 (we refer readers
to the FY 2011 IPPS/LTCH PPS final rule (75 FR 50436) for a full
description of our Medicare-specific intensity measure).
Specifically, for FY 2019, we are proposing to use an intensity
measure that is based on an average of cost per discharge data from
the 5-year period beginning with FY 2012 and extending through FY
2016. Based on these data, we estimated that case-mix constant
intensity declined during FYs 2012 through 2016. In the past, when
we found intensity to be declining, we believed a zero (rather than
a negative) intensity adjustment was appropriate. Consistent with
this approach, because we estimate that intensity will decline
during that 5-year period, we believe it is appropriate to continue
to apply a zero intensity adjustment for FY 2019. Therefore, we are
proposing to make a 0.0 percentage point adjustment for intensity in
the update for FY 2019.
Above, we described the basis of the components we used to
develop the proposed 1.2 percent capital update factor under the
capital update framework for FY 2019 as shown in the following
table.

Proposed CMS FY 2019 Update Factor to the Capital Federal Rate
------------------------------------------------------------------------

------------------------------------------------------------------------
Capital Input Price Index *.................................. 1.2
Intensity.................................................... 0.0
------------------------------------------------------------------------
Case-Mix Adjustment Factors
------------------------------------------------------------------------
Real Across DRG Change....................................... 0.5
Projected Case-Mix Change.................................... 0.5
----------
Subtotal................................................... 1.2
Effect of FY 2017 Reclassification and Recalibration......... 0.0
Forecast Error Correction.................................... 0.0
----------
Proposed Total Update...................................... 1.2
------------------------------------------------------------------------
* The capital input price index represents the 2014-based CIPI.

b. Comparison of CMS and MedPAC Update Recommendation

In its March 2018 Report to Congress, MedPAC did not make a
specific update recommendation for capital IPPS payments for FY
2019. (We refer readers to MedPAC's Report to the Congress: Medicare
Payment Policy, March 2018, Chapter 3, available on the website at:
https://www.medpac.gov.)

2. Proposed Outlier Payment Adjustment Factor

Section 412.312(c) establishes a unified outlier payment
methodology for inpatient operating and inpatient capital-related
costs. A single set of thresholds is used to identify outlier cases
for both inpatient operating and inpatient capital-related payments.
Section 412.308(c)(2) provides that the standard Federal rate for
inpatient capital-related costs be reduced by an adjustment factor
equal to the estimated proportion of capital-related outlier
payments to total inpatient capital-related PPS payments. The
outlier thresholds are set so that operating outlier payments are
projected to be 5.1 percent of total operating IPPS DRG payments.
For FY 2018, we estimated that outlier payments for capital
would equal 5.17 percent of inpatient capital-related payments based
on the capital Federal rate in FY 2018. Based on the thresholds as
set forth in section II.A. of this Addendum, we estimate that
outlier payments for capital-related costs would equal 5.06 percent
for inpatient capital-related payments based on the proposed capital
Federal rate in FY 2019. Therefore, we are proposing to apply an
outlier adjustment factor of 0.9494 in determining the capital
Federal rate for FY 2019. Thus, we estimate that the percentage of
capital outlier payments to proposed total capital Federal rate
payments for FY 2019 would be lower than the percentage for FY 2018.
The outlier reduction factors are not built permanently into the
capital rates; that is, they are not applied cumulatively in
determining the capital Federal rate. The proposed FY 2019 outlier
adjustment of 0.9494 is a 0.12 percent change from the FY 2018
outlier adjustment of 0.9483. Therefore, the proposed net change in
the outlier adjustment to the capital Federal rate for FY 2019 is
1.0012(0.9494/0.9483) so that the proposed outlier adjustment would
increase the FY 2019 capital Federal rate by 0.12 percent compared
to the FY 2018 outlier adjustment.

3. Proposed Budget Neutrality Adjustment Factor for Changes in DRG
Classifications and Weights and the GAF

Section 412.308(c)(4)(ii) requires that the capital Federal rate
be adjusted so that aggregate payments for the fiscal year based on
the capital Federal rate after any changes resulting from the annual
DRG reclassification and recalibration and changes in the GAF are
projected to equal aggregate payments that would have been made on
the basis of the capital Federal rate without such changes. The
budget neutrality factor for DRG reclassifications and recalibration
nationally is applied in determining the capital IPPS Federal rate,
and is applicable for all hospitals, including those hospitals
located in Puerto Rico.
To determine the proposed factors for FY 2019, we compared
estimated aggregate capital Federal rate payments based on the FY
2018 MS-DRG classifications and relative weights and the FY 2018 GAF
to estimated aggregate capital Federal rate payments based on the FY
2018 MS-DRG classifications and relative weights and the proposed FY
2019 GAFs. To achieve budget neutrality for the changes in the GAFs,
based on calculations using updated data, we are proposing to apply
an incremental budget neutrality adjustment factor of 1.000094 for
FY 2019 to the previous cumulative FY 2018 adjustment factor.
We then compared estimated aggregate capital Federal rate
payments based on the FY 2018 MS-DRG relative weights and the
proposed FY 2019 GAFs to estimate aggregate capital Federal rate
payments based on the cumulative effects of the proposed FY 2019 MS-
DRG classifications and relative weights and the proposed FY 2019
GAFs. The proposed incremental adjustment factor for DRG
classifications and changes in relative weights is 0.9996. The
proposed incremental adjustment factors for MS-DRG classifications
and proposed changes in relative weights and for proposed changes in
the GAFs through FY 2019 is 0.9997. We note that all the values are
calculated with unrounded numbers.
The GAF/DRG budget neutrality adjustment factors are built
permanently into the capital rates; that is, they are applied
cumulatively in determining the capital Federal rate. This follows
the requirement under Sec. 412.308(c)(4)(ii) that estimated
aggregate payments each year be no more or less than they would have
been in the absence of the annual DRG reclassification and
recalibration and changes in the GAFs.
The methodology used to determine the recalibration and
geographic adjustment factor (GAF/DRG) budget neutrality adjustment
is similar to the methodology used in establishing budget neutrality
adjustments under the IPPS for operating costs. One difference is
that, under the operating IPPS, the budget neutrality adjustments
for the effect of geographic reclassifications are determined
separately from the effects of other changes in the hospital wage
index and the MS-DRG relative weights. Under the capital IPPS, there
is a single GAF/DRG budget neutrality adjustment factor for changes
in the GAF (including geographic reclassification) and the MS-DRG
relative weights. In addition, there is no adjustment for the
effects that geographic reclassification has on the other payment
parameters, such as the payments for DSH or IME.
The proposed incremental adjustment factor of 0.9997 (the
product of the proposed incremental national GAF budget neutrality

[[Page 20589]]

adjustment factor of 1.00009 and the proposed incremental DRG budget
neutrality adjustment factor of 0.9996) accounts for the MS-DRG
reclassifications and recalibration and for changes in the GAFs. It
also incorporates the effects on the GAFs of FY 2019 geographic
reclassification decisions made by the MGCRB compared to FY 2018
decisions. However, it does not account for changes in payments due
to changes in the DSH and IME adjustment factors.

4. Proposed Capital Federal Rate for FY 2019

For FY 2018, we established a capital Federal rate of $453.95
(82 FR 46144 through 46145). We are proposing to establish an update
of 1.2 percent in determining the FY 2019 capital Federal rate for
all hospitals. As a result of this proposed update and the proposed
budget neutrality factors discussed earlier, we are proposing to
establish a national capital Federal rate of $459.78 for FY 2019.
The proposed national capital Federal rate for FY 2019 was
calculated as follows:
The proposed FY 2019 update factor is 1.012; that is,
the proposed update is 1.2 percent.
The proposed FY 2019 budget neutrality adjustment
factor that is applied to the capital Federal rate for changes in
the MS-DRG classifications and relative weights and changes in the
GAFs is 0.9997.
The proposed FY 2019 outlier adjustment factor is
0.9494.
We are providing the following chart that shows how each of the
proposed factors and adjustments for FY 2019 affects the computation
of the proposed FY 2019 national capital Federal rate in comparison
to the FY 2018 national capital Federal rate as presented in the FY
2018 IPPS/LTCH PPS Correction Notice (82 FR 46144 through 46145).
The proposed FY 2019 update factor has the effect of increasing the
capital Federal rate by 1.2 percent compared to the FY 2018 capital
Federal rate. The proposed GAF/DRG budget neutrality adjustment
factor has the effect of decreasing the capital Federal rate by 0.03
percent. The proposed FY 2019 outlier adjustment factor has the
effect of increasing the capital Federal rate by 0.12 percent
compared to the FY 2018 capital Federal rate. The combined effect of
all the proposed changes would increase the national capital Federal
rate by approximately 1.28 percent compared to the FY 2018 national
capital Federal rate.

Comparison of Factors and Adjustments: Fy 2018 Capital Federal Rate and Proposed FY 2019 Capital Federal Rate
----------------------------------------------------------------------------------------------------------------
Proposed FY Proposed Proposed
FY 2018 2019 change percent change
----------------------------------------------------------------------------------------------------------------
Update Factor \1\............................... 1.0130 1.012 1.012 1.20
GAF/DRG Adjustment Factor \1\................... 0.9987 0.9997 .09997 -0.03
Outlier Adjustment Factor \2\................... 0.9483 0.9494 1.0012 0.12
Capital Federal Rate............................ $453.95 $459.78 1.0128 \3\ 1.28
----------------------------------------------------------------------------------------------------------------
\1\ The update factor and the GAF/DRG budget neutrality adjustment factors are built permanently into the
capital Federal rates. Thus, for example, the incremental change from FY 2018 to FY 2019 resulting from the
application of the proposed 0.9997 GAF/DRG budget neutrality adjustment factor for FY 2019 is a net change of
0.9997 (or -0.03 percent).
\2\ The outlier reduction factor is not built permanently into the capital Federal rate; that is, the factor is
not applied cumulatively in determining the capital Federal rate. Thus, for example, the net change resulting
from the application of the proposed FY 2019 outlier adjustment factor is 0.9494/0.9483 or 1.0012 (or 0.12
percent).
\3\ Percent change may not sum due to rounding.

B. Calculation of the Inpatient Capital-Related Prospective
Payments for FY 2019

For purposes of calculating payments for each discharge during
FY 2019, the capital Federal rate is adjusted as follows: (Standard
Federal Rate) x (DRG weight) x (GAF) x (COLA for hospitals located
in Alaska and Hawaii) x (1 + DSH Adjustment Factor + IME Adjustment
Factor, if applicable). The result is the adjusted capital Federal
rate. Hospitals also may receive outlier payments for those cases
that qualify under the thresholds established for each fiscal year.
Section 412.312(c) provides for a single set of thresholds to
identify outlier cases for both inpatient operating and inpatient
capital-related payments. The proposed outlier thresholds for FY
2019 are in section II.A. of this Addendum. For FY 2019, a case
would qualify as a cost outlier if the cost for the case plus the
(operating) IME and DSH payments (including both the empirically
justified Medicare DSH payment and the estimated uncompensated care
payment, as discussed in section II.A.4.g.(1) of this Addendum) is
greater than the prospective payment rate for the MS-DRG plus the
proposed fixed-loss amount of $27,545.
Currently, as provided under Sec. 412.304(c)(2), we pay a new
hospital 85 percent of its reasonable costs during the first 2 years
of operation unless it elects to receive payment based on 100
percent of the capital Federal rate. Effective with the third year
of operation, we pay the hospital based on 100 percent of the
capital Federal rate (that is, the same methodology used to pay all
other hospitals subject to the capital PPS).

C. Capital Input Price Index

1. Background

Like the operating input price index, the capital input price
index (CIPI) is a fixed-weight price index that measures the price
changes associated with capital costs during a given year. The CIPI
differs from the operating input price index in one important
aspect--the CIPI reflects the vintage nature of capital, which is
the acquisition and use of capital over time. Capital expenses in
any given year are determined by the stock of capital in that year
(that is, capital that remains on hand from all current and prior
capital acquisitions). An index measuring capital price changes
needs to reflect this vintage nature of capital. Therefore, the CIPI
was developed to capture the vintage nature of capital by using a
weighted-average of past capital purchase prices up to and including
the current year.
We periodically update the base year for the operating and
capital input price indexes to reflect the changing composition of
inputs for operating and capital expenses. For this FY 2019 IPPS/
LTCH PPS proposed rule, we are using the rebased and revised IPPS
operating and capital market baskets that reflect a 2014 base year.
For a complete discussion of this rebasing, we refer readers to
section IV. of the preamble of the FY 2018 IPPS/LTCH PPS final rule.

2. Forecast of the CIPI for FY 2019

Based on IGI's fourth quarter 2017 forecast, for this proposed
rule, we are forecasting the 2014-based CIPI to increase 1.2 percent
in FY 2019. This reflects a projected 1.6 percent increase in
vintage-weighted depreciation prices (building and fixed equipment,
and movable equipment), and a projected 3.0 percent increase in
other capital expense prices in FY 2019, partially offset by a
projected 1.3 percent decline in vintage-weighted interest expense
prices in FY 2019. The weighted average of these three factors
produces the forecasted 1.2 percent increase for the 2014-based CIPI
in FY 2019.

IV. Proposed Changes to Payment Rates for Excluded Hospitals: Rate-of-
Increase Percentages for FY 2019

Payments for services furnished in children's hospitals, 11
cancer hospitals, and hospitals located outside the 50 States, the
District of Columbia and Puerto Rico (that is, short-term acute care
hospitals located in the U.S. Virgin Islands, Guam, the Northern
Mariana Islands, and American Samoa) that are excluded from the IPPS
are made on the basis of reasonable costs based on the hospital's
own historical cost experience, subject to a rate-of-increase
ceiling. A per discharge limit (the target amount, as defined in
Sec. 413.40(a) of the regulations) is set for each hospital, based
on the hospital's own cost experience in its base year, and updated
annually by a rate-of-increase percentage specified in Sec.
413.40(c)(3). In addition, as

[[Page 20590]]

specified in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38536),
effective for cost reporting periods beginning during FY 2018, the
annual update to the target amount for extended neoplastic disease
care hospitals (hospitals described in Sec. 412.22(i) of the
regulations) also is the rate-of-increase percentage specified in
Sec. 413.40(c)(3). (We note that, in accordance with Sec.
403.752(a), religious nonmedical health care institutions (RNHCIs)
are also subject to the rate-of-increase limits established under
Sec. 413.40 of the regulations.)
The proposed FY 2019 rate-of-increase percentage for updating
the target amounts for the 11 cancer hospitals, children's
hospitals, the short-term acute care hospitals located in the U.S.
Virgin Islands, Guam, the Northern Mariana Islands, and American
Samoa, RNHCIs, and extended neoplastic disease care hospitals is the
estimated percentage increase in the IPPS operating market basket
for FY 2019, in accordance with applicable regulations at Sec.
413.40. Based on IGI's 2017 fourth quarter forecast, we estimated
that the 2014-based IPPS operating market basket update for FY 2019
is 2.8 percent (that is, the estimate of the market basket rate-of-
increase). However, we are proposing that if more recent data become
available for the final rule, we would use them to calculate the
IPPS operating market basket update for FY 2019. Therefore, for
children's hospitals, the 11 cancer hospitals, hospitals located
outside the 50 States, the District of Columbia, and Puerto Rico
(that is, short-term acute care hospitals located in the U.S. Virgin
Islands, Guam, the Northern Mariana Islands, and American Samoa),
extended neoplastic disease care hospitals, and RNHCIs, the FY 2019
rate-of-increase percentage that would be applied to the FY 2018
target amounts, in order to determine the proposed FY 2019 target
amounts is 2.8 percent.
The IRF PPS, the IPF PPS, and the LTCH PPS are updated annually.
We refer readers to section VII. of the preamble of this proposed
rule and section V. of the Addendum to this proposed rule for the
proposed update changes to the Federal payment rates for LTCHs under
the LTCH PPS for FY 2019. The annual updates for the IRF PPS and the
IPF PPS are issued by the agency in separate Federal Register
documents.

V. Proposed Changes to the Payment Rates for the LTCH PPS for FY 2019

A. Proposed LTCH PPS Standard Federal Payment Rate for FY 2019

1. Overview

In section VII. of the preamble of this proposed rule, we
discuss our proposed annual updates to the payment rates, factors,
and specific policies under the LTCH PPS for FY 2019.
Under Sec. 412.523(c)(3) of the regulations, for LTCH PPS FYs
2012 through 2017, we updated the standard Federal payment rate by
the most recent estimate of the LTCH PPS market basket at that time,
including additional statutory adjustments required by sections
1886(m)(3)(A)(i) (citing sections 1886(b)(3)(B)(xi)(II),
1886(m)(3)(A)(ii), and 1886(m)(4) of the Act as set forth in the
regulations at Sec. 412.523(c)(3)(viii) through (c)(3)(xiii)). (For
a summary of the payment rate development prior to FY 2012, we refer
readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38310 through
38312).) Sections 1886(m)(3)(A) and 1886(m)(3)(C) of the Act specify
that, for rate year 2010 and each subsequent rate year, except FY
2018, any annual update to the standard Federal payment rate shall
be reduced:
For rate year 2010 through 2019, by the ``other
adjustment'' specified in section 1886(m)(3)(A)(ii) and (m)(4) of
the Act; and
For rate year 2012 and each subsequent year, by the
productivity adjustment described in section 1886(b)(3)(B)(xi)(II)
of the Act (which we refer to as ``the multifactor productivity
(MFP) adjustment'') as discussed in section VII.D.2. of the preamble
of this proposed rule.
This section of the Act further provides that the application of
section 1886(m)(3) of the Act may result in the annual update being
less than zero for a rate year, and may result in payment rates for
a rate year being less than such payment rates for the preceding
rate year. (As noted in section VII.D.2.a. of the preamble of this
proposed rule, the annual update to the LTCH PPS occurs on October 1
and we have adopted the term ``fiscal year'' (FY) rather than ``rate
year'' (RY) under the LTCH PPS beginning October 1, 2010. Therefore,
for purposes of clarity, when discussing the annual update for the
LTCH PPS, including the provisions of the Affordable Care Act, we
use the term ``fiscal year'' rather than ``rate year'' for 2011 and
subsequent years.)
For LTCHs that fail to submit the required quality reporting
data in accordance with the LTCH QRP, the annual update is reduced
by 2.0 percentage points as required by section 1886(m)(5) of the
Act.

2. Development of the Proposed FY 2019 LTCH PPS Standard Federal
Payment Rate

Consistent with our historical practice, for FY 2019, we are
proposing to apply the annual update to the LTCH PPS standard
Federal payment rate from the previous year. Furthermore, in
determining the proposed LTCH PPS standard Federal payment rate for
FY 2019, we also are proposing to make certain regulatory
adjustments, consistent with past practices. Specifically, in
determining the proposed FY 2019 LTCH PPS standard Federal payment
rate, we are proposing to apply a budget neutrality adjustment
factor for the changes related to the area wage adjustment (that is,
changes to the wage data and labor-related share) in accordance with
Sec. 412.523(d)(4) and a proposed budget neutrality adjustment
factor for the proposed elimination of the 25-percent threshold
policy (discussed in VII.D. of the preamble of this proposed rule).
In this FY 2019 IPPS/LTCH PPS proposed rule, we are proposing an
annual update to the LTCH PPS standard Federal payment rate of 1.15
percent. Accordingly, under proposed Sec. 412.523(c)(3)(xv), we are
proposing to apply a factor of 1.0115 to the FY 2018 LTCH PPS
standard Federal payment rate of $41,415.11 to determine the
proposed FY 2019 LTCH PPS standard Federal payment rate. Also, under
proposed Sec. 412.523(c)(3)(xv), applied in conjunction with the
provisions of Sec. 412.523(c)(4), we are proposing an annual update
to the LTCH PPS standard Federal payment rate of -0.85 percent (that
is, a proposed update factor of 0.9915) for FY 2019 for LTCHs that
fail to submit the required quality reporting data for FY 2019 as
required under the LTCH QRP. Consistent with Sec. 412.523(d)(4), we
also are proposing to apply an area wage level budget neutrality
factor to the proposed FY 2019 LTCH PPS standard Federal payment
rate of 0.999713 based on the best available data at this time, to
ensure that any proposed changes to the area wage level adjustment
(that is, the proposed annual update of the wage index values and
labor-related share) would not result in any change (increase or
decrease) in estimated aggregate LTCH PPS standard Federal rate
payments. Finally, we are proposing to apply a one-time, permanent
budget neutrality adjustment of 0.990535 for our proposed
elimination of the 25-percent threshold policy (discussed in VII.E.
of the preamble of this proposed rule). Accordingly, we are
proposing an LTCH PPS standard Federal payment rate of $41,482.98
(calculated as $41,415.11 x 1.0115 x 0.999713 x 0.990535) for FY
2019 (calculations performed on rounded numbers). For LTCHs that
fail to submit quality reporting data for FY 2019, in accordance
with the requirements of the LTCH QRP under section 1866(m)(5) of
the Act, we are proposing an LTCH PPS standard Federal payment rate
of $40,662.75 (calculated as $41,415.11 x 0.9915 x 0.999713 x
0.990535) (calculations performed on rounded numbers) for FY 2019.

B. Proposed Adjustment for Area Wage Levels Under the LTCH PPS for
FY 2019

1. Background

Under the authority of section 123 of the BBRA, as amended by
section 307(b) of the BIPA, we established an adjustment to the LTCH
PPS standard Federal payment rate to account for differences in LTCH
area wage levels under Sec. 412.525(c). The labor-related share of
the LTCH PPS standard Federal payment rate is adjusted to account
for geographic differences in area wage levels by applying the
applicable LTCH PPS wage index. The applicable LTCH PPS wage index
is computed using wage data from inpatient acute care hospitals
without regard to reclassification under section 1886(d)(8) or
section 1886(d)(10) of the Act.

2. Proposed Geographic Classifications (Labor Market Areas) for the
LTCH PPS Standard Federal Payment Rate

In adjusting for the differences in area wage levels under the
LTCH PPS, the labor-related portion of an LTCH's Federal prospective
payment is adjusted by using an appropriate area wage index based on
the geographic classification (labor market area) in which the LTCH
is located. Specifically, the application of the LTCH PPS area wage
level adjustment under existing Sec. 412.525(c) is made based on
the location of the LTCH--either in an ``urban area,'' or a ``rural
area,'' as defined in Sec. 412.503. Under Sec. 412.503, an ``urban
area'' is defined as a Metropolitan Statistical Area (MSA) (which
includes a Metropolitan division, where applicable), as

[[Page 20591]]

defined by the Executive OMB and a ``rural area'' is defined as any
area outside of an urban area. (Information on OMB's MSA
delineations based on the 2010 standards can be found at: https://obamawhitehouse.archives.gov/sites/default/files/omb/assets/fedreg_2010/06282010_metro_standards-Complete.pdf.)
The CBSA-based geographic classifications (labor market area
definitions) currently used under the LTCH PPS, effective for
discharges occurring on or after October 1, 2014, are based on the
OMB labor market area delineations based on the 2010 Decennial
Census data. The current statistical areas (which were implemented
beginning with FY 2015) are based on revised OMB delineations issued
on February 28, 2013, in OMB Bulletin No. 13-01. We adopted these
labor market area delineations because they are based on the best
available data that reflect the local economies and area wage levels
of the hospitals that are currently located in these geographic
areas. We also believe that these OMB delineations will ensure that
the LTCH PPS area wage level adjustment most appropriately accounts
for and reflects the relative hospital wage levels in the geographic
area of the hospital as compared to the national average hospital
wage level. We noted that this policy was consistent with the IPPS
policy adopted in FY 2015 under Sec. 412.64(b)(1)(ii)(D) of the
regulations (79 FR 49951 through 49963). (For additional information
on the CBSA-based labor market area (geographic classification)
delineations currently used under the LTCH PPS and the history of
the labor market area definitions used under the LTCH PPS, we refer
readers to the FY 2015 IPPS/LTCH PPS final rule (79 FR 50180 through
50185).)
In general, it is our historical practice to update the CBSA-
based labor market area delineations annually based on the most
recent updates issued by OMB. Generally, OMB issues major revisions
to statistical areas every 10 years, based on the results of the
decennial census. However, OMB occasionally issues minor updates and
revisions to statistical areas in the years between the decennial
censuses. On July 15, 2015, OMB issued OMB Bulletin No. 15-01, which
provided updates to and superseded OMB Bulletin No. 13-01 that was
issued on February 28, 2013. The attachment to OMB Bulletin No. 15-
01 provided detailed information on the update to statistical areas
since February 28, 2013. We adopted the updates contained in OMB
Bulletin No. 15-01, as discussed in the FY 2017 IPPS/LTCH PPS final
rule (81 FR 56913 through 56914). On August 15, 2017, OMB issued OMB
Bulletin No. 17-01 that updated and superseded Bulletin No. 15-01.
As discussed in section III.A.2. of the preamble of this proposed
rule, OMB Bulletin No. 17-01 and its attachments provide detailed
information on the update to statistical areas since the July 15,
2015 release of Bulletin No. 15-01 and are based on the application
of the 2010 Standards for Delineating Metropolitan and Micropolitan
Statistical Areas to Census Bureau population estimates for July 1,
2014, and July 1, 2015. A copy of this bulletin may be obtained on
the website at: https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/bulletins/2017/b-17-01.pdf.
OMB Bulletin No. 17-01 made the following change that is
relevant to the LTCH PPS CBSA-based labor market area (geographic
classification) delineations:
Twin Falls, ID, with principal city Twin Falls, ID and
consisting of counties Jerome County, ID and Twin Falls County, ID,
which was a Micropolitan (geographically rural) area, now qualifies
as an urban area under new CBSA 46300 entitled Twin Falls, ID.
This change affects all providers located in CBSA 46300, but our
database shows no LTCHs located in CBSA 46300.
We believe that this revision to the CBSA-based labor market
area delineations will ensure that the LTCH PPS area wage level
adjustment most appropriately accounts for and reflects the relative
hospital wage levels in the geographic area of the hospital as
compared to the national average hospital wage level based on the
best available data that reflect the local economies and area wage
levels of the hospitals that are currently located in these
geographic areas (81 FR 57298). Therefore, we are proposing to adopt
this revision under the LTCH PPS, effective October 1, 2018.
Accordingly, the proposed FY 2019 LTCH PPS wage index values in
Tables 12A and 12B listed in section VI. of the Addendum to this
proposed rule (which are available via the internet on the CMS
website) reflect the revision to the CBSA-based labor market area
delineations described above. We note that, as discussed in section
III.A.2. of the preamble of this proposed rule, the revision to the
CBSA-based delineations also is being proposed under the IPPS.

3. Proposed Labor-Related Share for the LTCH PPS Standard Federal
Payment Rate

Under the payment adjustment for the differences in area wage
levels under Sec. 412.525(c), the labor-related share of an LTCH's
standard Federal payment rate payment is adjusted by the applicable
wage index for the labor market area in which the LTCH is located.
The LTCH PPS labor-related share currently represents the sum of the
labor-related portion of operating costs and a labor-related portion
of capital costs using the applicable LTCH PPS market basket.
Additional background information on the historical development of
the labor-related share under the LTCH PPS can be found in the RY
2007 LTCH PPS final rule (71 FR 27810 through 27817 and 27829
through 27830) and the FY 2012 IPPS/LTCH PPS final rule (76 FR 51766
through 51769 and 51808).
For FY 2013, we rebased and revised the market basket used under
the LTCH PPS by adopting a 2009-based LTCH-specific market basket.
In addition, beginning in FY 2013, we determined the labor-related
share annually as the sum of the relative importance of each labor-
related cost category of the 2009-based LTCH-specific market basket
for the respective fiscal year based on the best available data.
(For more details, we refer readers to the FY 2013 IPPS/LTCH PPS
final rule (77 FR 53477 through 53479).) As noted previously, we
rebased and revised the 2009-based LTCH-specific market basket to
reflect a 2013 base year. In conjunction with that policy, as
discussed in section VII.D. of the preamble of this FY 2019 IPPS/
LTCH PPS proposed rule, we are proposing to establish that the LTCH
PPS labor-related share for FY 2019 is the sum of the FY 2019
relative importance of each labor-related cost category in the 2013-
based LTCH market basket using the most recent available data.
Specifically, we are proposing to establish that the labor-
related share for FY 2019 includes the sum of the labor-related
portion of operating costs from the 2013-based LTCH market basket
(that is, the sum of the FY 2019 relative importance share of Wages
and Salaries; Employee Benefits; Professional Fees: Labor-Related;
Administrative and Facilities Support Services; Installation,
Maintenance, and Repair Services; All Other: Labor-related Services)
and a portion of the Capital-Related cost weight from the 2013-based
LTCH PPS market basket. Based on IGI's fourth quarter 2017 forecast
of the 2013-based LTCH market basket, we are proposing to establish
a labor-related share under the LTCH PPS for FY 2019 of 66.2
percent. This labor-related share is determined using the same
methodology as employed in calculating all previous LTCH PPS labor-
related shares. Consistent with our historical practice, we also are
proposing that if more recent data become available, we would use
that data, if appropriate, to determine the final FY 2019 labor-
related share in the final rule. (We note that a labor-related share
of 66.2 percent is the same as the labor-related share for FY 2018.
Although the relative importance of some components of the market
basket have changed, the proposed labor-related share remains at
66.2 percent when aggregating these components and rounding to one
decimal.)
The proposed labor-related share for FY 2019 is the sum of the
FY 2019 relative importance of each labor-related cost category, and
would reflect the different rates of price change for these cost
categories between the base year (2013) and FY 2019. The sum of the
relative importance for FY 2019 for operating costs (Wages and
Salaries; Employee Benefits; Professional Fees: Labor-Related;
Administrative and Facilities Support Services; Installation,
Maintenance, and Repair Services; All Other: Labor-Related Services)
is 62.0 percent. The portion of capital-related costs that is
influenced by the local labor market is estimated to be 46 percent
(the same percentage applied to the 2009-based LTCH-specific market
basket). Because the relative importance for capital-related costs
under our policies is 9.1 percent of the 2013-based LTCH market
basket in FY 2019, we are proposing to take 46 percent of 9.1
percent to determine the labor-related share of capital-related
costs for FY 2019 (0.46 x 9.1). The result is 4.2 percent, which we
added to 62.0 percent for the operating cost amount to determine the
total proposed labor-related share for FY 2019. Therefore, we are
proposing that the labor-related share under the LTCH PPS for FY
2019 is 66.2 percent.

4. Proposed Wage Index for FY 2019 for the LTCH PPS Standard Federal
Payment Rate

Historically, we have established LTCH PPS area wage index
values calculated from acute care IPPS hospital wage data without
taking into account geographic reclassification under sections
1886(d)(8) and 1886(d)(10) of the Act (67 FR 56019). The

[[Page 20592]]

area wage level adjustment established under the LTCH PPS is based
on an LTCH's actual location without regard to the ``urban'' or
``rural'' designation of any related or affiliated provider.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38538 through
38539), we calculated the FY 2018 LTCH PPS area wage index values
using the same data used for the FY 2018 acute care hospital IPPS
(that is, data from cost reporting periods beginning during FY
2014), without taking into account geographic reclassification under
sections 1886(d)(8) and 1886(d)(10) of the Act, as these were the
most recent complete data available at that time. In that same final
rule, we indicated that we computed the FY 2018 LTCH PPS area wage
index values, consistent with the urban and rural geographic
classifications (labor market areas) that were in place at that time
and consistent with the pre-reclassified IPPS wage index policy
(that is, our historical policy of not taking into account IPPS
geographic reclassifications in determining payments under the LTCH
PPS). As with the IPPS wage index, wage data for multicampus
hospitals with campuses located in different labor market areas
(CBSAs) are apportioned to each CBSA where the campus (or campuses)
are located. We also continued to use our existing policy for
determining area wage index values for areas where there are no IPPS
wage data.
Consistent with our historical methodology, as discussed in this
FY 2019 IPPS/LTCH PPS proposed rule, to determine the applicable
area wage index values for the FY 2019 LTCH PPS standard Federal
payment rate, under the broad authority of section 123 of the BBRA,
as amended by section 307(b) of the BIPA, we are proposing to use
wage data collected from cost reports submitted by IPPS hospitals
for cost reporting periods beginning during FY 2015, without taking
into account geographic reclassification under sections 1886(d)(8)
and 1886(d)(10) of the Act because these data are the most recent
complete data available. We also note that these are the same data
we are using to compute the FY 2019 acute care hospital inpatient
wage index, as discussed in section III. of the preamble of this
proposed rule. We are proposing to compute the proposed FY 2019 LTCH
PPS standard Federal payment rate area wage index values consistent
with the ``urban'' and ``rural'' geographic classifications (that
is, labor market area delineations, including the proposed updates,
as previously discussed in section V.B. of this Addendum) and our
historical policy of not taking into account IPPS geographic
reclassifications under sections 1886(d)(8) and 1886(d)(10) of the
Act in determining payments under the LTCH PPS. We also are
proposing to continue to apportion wage data for multicampus
hospitals with campuses located in different labor market areas to
each CBSA where the campus or campuses are located, consistent with
the IPPS policy. Lastly, consistent with our existing methodology
for determining the LTCH PPS wage index values, for FY 2019, we are
proposing to continue to use our existing policy for determining
area wage index values for areas where there are no IPPS wage data.
Under our existing methodology, the LTCH PPS wage index value for
urban CBSAs with no IPPS wage data would be determined by using an
average of all of the urban areas within the State, and the LTCH PPS
wage index value for rural areas with no IPPS wage data would be
determined by using the unweighted average of the wage indices from
all of the CBSAs that are contiguous to the rural counties of the
State.
Based on the FY 2015 IPPS wage data that we are proposing to use
to determine the proposed FY 2019 LTCH PPS standard Federal payment
rate area wage index values in this proposed rule, there are no IPPS
wage data for the urban area of Hinesville, GA (CBSA 25980).
Consistent with the methodology discussed above, we calculated the
proposed FY 2019 wage index value for CBSA 25980 as the average of
the wage index values for all of the other urban areas within the
State of Georgia (that is, CBSAs 10500, 12020, 12060, 12260, 15260,
16860, 17980, 19140, 23580, 31420, 40660, 42340, 46660 and 47580),
as shown in Table 12A, which is listed in section VI. of the
Addendum to this proposed rule and available via the internet on the
CMS website). We note that, as IPPS wage data are dynamic, it is
possible that urban areas without IPPS wage data will vary in the
future.
Based on the FY 2015 IPPS wage data that we are proposing to use
to determine the proposed FY 2019 LTCH PPS standard Federal payment
rate area wage index values in this proposed rule, there are no
rural areas without IPPS hospital wage data. Therefore, it is not
necessary to use our established methodology to calculate a proposed
LTCH PPS standard Federal payment rate wage index value for proposed
rural areas with no IPPS wage data for FY 2019. We note that, as
IPPS wage data are dynamic, it is possible that the number of rural
areas without IPPS wage data will vary in the future. The proposed
FY 2019 LTCH PPS standard Federal payment rate wage index values
that would be applicable for LTCH PPS standard Federal payment rate
discharges occurring on or after October 1, 2018, through September
30, 2019, are presented in Table 12A (for urban areas) and Table 12B
(for rural areas), which are listed in section VI. of the Addendum
to this proposed rule and available via the internet on the CMS
website.

5. Proposed Budget Neutrality Adjustment for Changes to the LTCH PPS
Standard Federal Payment Rate Area Wage Level Adjustment

Historically, the LTCH PPS wage index and labor-related share
are updated annually based on the latest available data. Under Sec.
412.525(c)(2), any changes to the area wage index values or labor-
related share are to be made in a budget neutral manner such that
estimated aggregate LTCH PPS payments are unaffected; that is, will
be neither greater than nor less than estimated aggregate LTCH PPS
payments without such changes to the area wage level adjustment.
Under this policy, we determine an area wage-level adjustment budget
neutrality factor that will be applied to the standard Federal
payment rate to ensure that any changes to the area wage level
adjustments are budget neutral such that any changes to the area
wage index values or labor-related share would not result in any
change (increase or decrease) in estimated aggregate LTCH PPS
payments. Accordingly, under Sec. 412.523(d)(4), we apply an area
wage level adjustment budget neutrality factor in determining the
standard Federal payment rate, and we also established a methodology
for calculating an area wage level adjustment budget neutrality
factor. (For additional information on the establishment of our
budget neutrality policy for changes to the area wage level
adjustment, we refer readers to the FY 2012 IPPS/LTCH PPS final rule
(76 FR 51771 through 51773 and 51809).) In this proposed rule, for
FY 2019 LTCH PPS standard Federal payment rate cases, in accordance
with Sec. 412.523(d)(4), we are proposing to apply an area wage
level adjustment budget neutrality factor to adjust the LTCH PPS
standard Federal payment rate to account for the estimated effect of
the proposed adjustments or updates to the area wage level
adjustment under Sec. 412.525(c)(1) on estimated aggregate LTCH PPS
payments using a methodology that is consistent with the methodology
we established in the FY 2012 IPPS/LTCH PPS final rule (76 FR
51773). Specifically, we are proposing to determine an area wage
level adjustment budget neutrality factor that would be applied to
the LTCH PPS standard Federal payment rate under Sec. 412.523(d)(4)
for FY 2019 using the following methodology:
Step 1--We simulated estimated aggregate LTCH PPS standard
Federal payment rate payments using the FY 2018 wage index values
and the FY 2018 labor-related share of 66.2 percent (as established
in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38314 and 38315)).
Step 2--We simulated estimated aggregate LTCH PPS standard
Federal payment rate payments using the proposed FY 2019 wage index
values (as shown in Tables 12A and 12B listed in the Addendum to
this proposed rule and available via the internet on the CMS
website) and the proposed FY 2019 labor-related share of 66.2
percent (based on the latest available data as previously discussed
in this Addendum).
Step 3--We calculated the ratio of these estimated total LTCH
PPS standard Federal payment rate payments by dividing the estimated
total LTCH PPS standard Federal payment rate payments using the FY
2018 area wage level adjustments (calculated in Step 1) by the
estimated total LTCH PPS standard Federal payment rate payments
using the proposed FY 2019 area wage level adjustments (calculated
in Step 2) to determine the proposed area wage level adjustment
budget neutrality factor for FY 2019 LTCH PPS standard Federal
payment rate payments.
Step 4--We then applied the proposed FY 2019 area wage level
adjustment budget neutrality factor from Step 3 to determine the
proposed FY 2019 LTCH PPS standard Federal payment rate after the
application of the proposed FY 2019 annual update (discussed
previously in section V.A. of this Addendum).
We note that, with the exception of cases subject to the
transitional blend payment rate

[[Page 20593]]

provisions and certain temporary exemptions for certain spinal cord
specialty hospitals and certain severe wound cases, under the dual
rate LTCH PPS payment structure, only LTCH PPS cases that meet the
statutory criteria to be excluded from the site neutral payment rate
(that is, LTCH PPS standard Federal payment rate cases) are paid
based on the LTCH PPS standard Federal payment rate. Because the
area wage level adjustment under Sec. 412.525(c) is an adjustment
to the LTCH PPS standard Federal payment rate, we only used data
from claims that would have qualified for payment at the LTCH PPS
standard Federal payment rate if such rate had been in effect at the
time of discharge to calculate the FY 2019 LTCH PPS standard Federal
payment rate area wage level adjustment budget neutrality factor
described above.
For this proposed rule, using the steps in the methodology
previously described, we determined a proposed FY 2019 LTCH PPS
standard Federal payment rate area wage level adjustment budget
neutrality factor of 0.999713. Accordingly, in section V.A. of the
Addendum to this proposed rule, to determine the proposed FY 2019
LTCH PPS standard Federal payment rate, we are proposing to apply an
area wage level adjustment budget neutrality factor of 0.999713, in
accordance with Sec. 412.523(d)(4). The proposed FY 2019 LTCH PPS
standard Federal payment rate shown in Table 1E of the Addendum to
this proposed rule reflects this adjustment factor.

C. Proposed LTCH PPS Cost-of-Living Adjustment (COLA) for LTCHs
Located in Alaska and Hawaii

Under Sec. 412.525(b), a cost-of-living adjustment (COLA) is
provided for LTCHs located in Alaska and Hawaii to account for the
higher costs incurred in those States. Specifically, we apply a COLA
to payments to LTCHs located in Alaska and Hawaii by multiplying the
nonlabor-related portion of the standard Federal payment rate by the
applicable COLA factors established annually by CMS. Higher labor-
related costs for LTCHs located in Alaska and Hawaii are taken into
account in the adjustment for area wage levels previously described.
The methodology used to determine the COLA factors for Alaska and
Hawaii is based on a comparison of the growth in the Consumer Price
Indexes (CPIs) for Anchorage, Alaska, and Honolulu, Hawaii, relative
to the growth in the CPI for the average U.S. city as published by
the Bureau of Labor Statistics (BLS). It also includes a 25-percent
cap on the CPI-updated COLA factors. Under our current policy, we
update the COLA factors using the methodology described above every
4 years (at the same time as the update to the labor-related share
of the IPPS market basket), and we last updated the COLA factors for
Alaska and Hawaii published by OPM for 2009 in FY 2018 (82 FR 38539
through 38540).
We continue to believe that determining updated COLA factors
using this methodology would appropriately adjust the nonlabor-
related portion of the LTCH PPS standard Federal payment rate for
LTCHs located in Alaska and Hawaii. Therefore, in this proposed rule
for FY 2019, under the broad authority conferred upon the Secretary
by section 123 of the BBRA, as amended by section 307(b) of the
BIPA, to determine appropriate payment adjustments under the LTCH
PPS, we are proposing to continue to use the COLA factors based on
the 2009 OPM COLA factors updated through 2016 by the comparison of
the growth in the CPIs for Anchorage, Alaska, and Honolulu, Hawaii,
relative to the growth in the CPI for the average U.S. city as
established in the FY 2018 IPPS/LTCH PPS final rule. (For additional
details on our current methodology for updating the COLA factors for
Alaska and Hawaii and for a discussion on the FY 2018 COLA factors,
we refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR
38539 through 38540).) Consistent with our historical practice, we
are proposing to establish that the COLA factors shown in the
following table will be used to adjust the nonlabor-related portion
of the LTCH PPS standard Federal payment rate for LTCHs located in
Alaska and Hawaii under Sec. 412.525(b).

Proposed Cost-of-Living Adjustment Factors for Alaska and Hawaii Under
the LTCH PPS for FY 2019
------------------------------------------------------------------------
FY 2018 and
Area proposed FY
2019
------------------------------------------------------------------------
Alaska:
City of Anchorage and 80-kilometer (50-mile) radius by 1.25
road.................................................
City of Fairbanks and 80-kilometer (50-mile) radius by 1.25
road.................................................
City of Juneau and 80-kilometer (50-mile) radius by 1.25
road.................................................
Rest of Alaska........................................ 1.25
City and County of Honolulu........................... 1.25
County of Hawaii...................................... 1.21
County of Kauai....................................... 1.25
County of Maui and County of Kalawao.................. 1.25
------------------------------------------------------------------------

D. Proposed Adjustment for LTCH PPS High Cost Outlier (HCO) Cases

1. HCO Background

From the beginning of the LTCH PPS, we have included an
adjustment to account for cases in which there are extraordinarily
high costs relative to the costs of most discharges. Under this
policy, additional payments are made based on the degree to which
the estimated cost of a case (which is calculated by multiplying the
Medicare allowable covered charge by the hospital's overall hospital
CCR) exceeds a fixed-loss amount. This policy results in greater
payment accuracy under the LTCH PPS and the Medicare program, and
the LTCH sharing the financial risk for the treatment of
extraordinarily high-cost cases.
We retained the basic tenets of our HCO policy in FY 2016 when
we implemented the dual rate LTCH PPS payment structure under
section 1206 of Public Law 113-67. LTCH discharges that meet the
criteria for exclusion from the site neutral payment rate (that is,
LTCH PPS standard Federal payment rate cases) are paid at the LTCH
PPS standard Federal payment rate, which includes, as applicable,
HCO payments under Sec. 412.523(e). LTCH discharges that do not
meet the criteria for exclusion are paid at the site neutral payment
rate, which includes, as applicable, HCO payments under Sec.
412.522(c)(2)(i). In the FY 2016 IPPS/LTCH PPS final rule, we
established separate fixed-loss amounts and targets for the two
different LTCH PPS payment rates. Under this bifurcated policy, the
historic 8-percent HCO target was retained for LTCH PPS standard
Federal payment rate cases, with the fixed-loss amount calculated
using only data from LTCH cases that would have been paid at the
LTCH PPS standard Federal payment rate if that rate had been in
effect at the time of those discharges. For site neutral payment
rate cases, we adopted the operating IPPS HCO target (currently 5.1
percent) and set the fixed-loss amount for site neutral payment rate
cases at the value of the IPPS fixed-loss amount. Under the HCO
policy for both payment rates, an LTCH receives 80 percent of the
difference between the estimated cost of the case and the applicable
HCO threshold, which is the sum of the LTCH PPS payment for the case
and the applicable fixed-loss amount for such case.
In order to maintain budget neutrality, consistent with the
budget neutrality requirement for HCO payments to LTCH PPS standard
Federal rate payment cases, we also adopted a budget neutrality
requirement for HCO payments to site neutral payment rate cases by
applying a budget neutrality factor to the LTCH PPS payment for
those site neutral payment rate cases. (We refer readers to Sec.
412.522(c)(2)(i) of the regulations for further details.) We note
that, during the 2-year transitional period, the site neutral
payment rate HCO budget neutrality factor did not apply to the LTCH
PPS standard Federal payment rate portion of the blended payment
rate at Sec. 412.522(c)(3) payable to site neutral payment rate
cases. (For additional details on the HCO policy adopted for site
neutral payment rate cases under the dual rate LTCH PPS payment
structure, including the budget neutrality adjustment for HCO
payments to site neutral payment rate cases, we refer readers to the
FY 2016 IPPS/LTCH PPS final rule (80 FR 49617 through 49623).)

2. Determining LTCH CCRs Under the LTCH PPS

a. Background

As noted above, CCRs are used to determine payments for HCO
adjustments for both payment rates under the LTCH PPS and also are
used to determine payments for site neutral payment rate cases. As
noted earlier, in determining HCO and the site neutral payment rate
payments (regardless of whether the case is also an HCO), we
generally calculate the estimated cost of the case by multiplying
the LTCH's overall CCR by the Medicare allowable charges for the
case. An overall CCR is used because the LTCH PPS uses a single
prospective payment per discharge that covers both inpatient

[[Page 20594]]

operating and capital-related costs. The LTCH's overall CCR is
generally computed based on the sum of LTCH operating and capital
costs (as described in Section 150.24, Chapter 3, of the Medicare
Claims Processing Manual (Pub. 100-4)) as compared to total Medicare
charges (that is, the sum of its operating and capital inpatient
routine and ancillary charges), with those values determined from
either the most recently settled cost report or the most recent
tentatively settled cost report, whichever is from the latest cost
reporting period. However, in certain instances, we use an
alternative CCR, such as the statewide average CCR, a CCR that is
specified by CMS, or one that is requested by the hospital. (We
refer readers to Sec. 412.525(a)(4)(iv) of the regulations for
further details regarding HCO adjustments for either LTCH PPS
payment rate and Sec. 412.522(c)(1)(ii) for the site neutral
payment rate.)
The LTCH's calculated CCR is then compared to the LTCH total CCR
ceiling. Under our established policy, an LTCH with a calculated CCR
in excess of the applicable maximum CCR threshold (that is, the LTCH
total CCR ceiling, which is calculated as 3 standard deviations from
the national geometric average CCR) is generally assigned the
applicable statewide CCR. This policy is premised on a belief that
calculated CCRs above the LTCH total CCR ceiling are most likely due
to faulty data reporting or entry, and CCRs based on erroneous data
should not be used to identify and make payments for outlier cases.

b. LTCH Total CCR Ceiling

Consistent with our historical practice, we are proposing to use
the most recent data to determine the LTCH total CCR ceiling for FY
2019 in this proposed rule. Specifically, in this proposed rule,
using our established methodology for determining the LTCH total CCR
ceiling based on IPPS total CCR data from the December 2017 update
of the Provider Specific File (PSF), which is the most recent data
available, we are proposing to establish an LTCH total CCR ceiling
of 1.28 under the LTCH PPS for FY 2019 in accordance with Sec.
412.525(a)(4)(iv)(C)(2) for HCO cases under either payment rate and
Sec. 412.522(c)(1)(ii) for the site neutral payment rate. (For
additional information on our methodology for determining the LTCH
total CCR ceiling, we refer readers to the FY 2007 IPPS final rule
(71 FR 48118 through 48119).)

c. LTCH Statewide Average CCRs

Our general methodology for determining the statewide average
CCRs used under the LTCH PPS is similar to our established
methodology for determining the LTCH total CCR ceiling because it is
based on ``total'' IPPS CCR data. (For additional information on our
methodology for determining statewide average CCRs under the LTCH
PPS, we refer readers to the FY 2007 IPPS final rule (71 FR 48119
through 48120).) Under the LTCH PPS HCO policy for cases paid under
either payment rate at Sec. 412.525(a)(4)(iv)(C)(2), the current
SSO policy at Sec. 412.529(f)(4)(iii)(B), and the site neutral
payment rate at Sec. 412.522(c)(1)(ii), the MAC may use a statewide
average CCR, which is established annually by CMS, if it is unable
to determine an accurate CCR for an LTCH in one of the following
circumstances: (1) New LTCHs that have not yet submitted their first
Medicare cost report (a new LTCH is defined as an entity that has
not accepted assignment of an existing hospital's provider agreement
in accordance with Sec. 489.18); (2) LTCHs whose calculated CCR is
in excess of the LTCH total CCR ceiling; and (3) other LTCHs for
whom data with which to calculate a CCR are not available (for
example, missing or faulty data). (Other sources of data that the
MAC may consider in determining an LTCH's CCR include data from a
different cost reporting period for the LTCH, data from the cost
reporting period preceding the period in which the hospital began to
be paid as an LTCH (that is, the period of at least 6 months that it
was paid as a short-term, acute care hospital), or data from other
comparable LTCHs, such as LTCHs in the same chain or in the same
region.)
Consistent with our historical practice of using the best
available data, in this proposed rule, using our established
methodology for determining the LTCH statewide average CCRs, based
on the most recent complete IPPS ``total CCR'' data from the
December 2017 update of the PSF, we are proposing to establish LTCH
PPS statewide average total CCRs for urban and rural hospitals that
will be effective for discharges occurring on or after October 1,
2018, through September 30, 2019, in Table 8C listed in section VI.
of the Addendum to this proposed rule (and available via the
internet on the CMS website). Consistent with our historical
practice, we also are proposing that if more recent data become
available, we would use that data to determine the LTCH PPS
statewide average total CCRs for FY 2019 in the final rule.
Under the current LTCH PPS labor market areas, all areas in
Delaware, the District of Columbia, New Jersey, and Rhode Island are
classified as urban. Therefore, there are no rural statewide average
total CCRs listed for those jurisdictions in Table 8C. This policy
is consistent with the policy that we established when we revised
our methodology for determining the applicable LTCH statewide
average CCRs in the FY 2007 IPPS final rule (71 FR 48119 through
48121) and is the same as the policy applied under the IPPS. In
addition, although Connecticut has areas that are designated as
rural, in our calculation of the LTCH statewide average CCRs, there
was no data available from short-term, acute care IPPS hospitals to
compute a rural statewide average CCR or there were no short-term,
acute care IPPS hospitals or LTCHs located in that area as of
December 2017. Therefore, consistent with our existing methodology,
we are proposing to use the national average total CCR for rural
IPPS hospitals for rural Connecticut in Table 8C. While
Massachusetts also has rural areas, the statewide average CCR for
rural areas in Massachusetts is based on one provider whose CCR is
an atypical 1.215. Because this is much higher than the statewide
urban average and furthermore implies costs exceeded charges, as
with Connecticut, we are proposing to use the national average total
CCR for rural hospitals for hospitals located in rural
Massachusetts. Furthermore, consistent with our existing
methodology, in determining the urban and rural statewide average
total CCRs for Maryland LTCHs paid under the LTCH PPS, we are
proposing to continue to use, as a proxy, the national average total
CCR for urban IPPS hospitals and the national average total CCR for
rural IPPS hospitals, respectively. We are using this proxy because
we believe that the CCR data in the PSF for Maryland hospitals may
not be entirely accurate (as discussed in greater detail in the FY
2007 IPPS final rule (71 FR 48120)).

d. Reconciliation of HCO Payments

Under the HCO policy for cases paid under either payment rate at
Sec. 412.525(a)(4)(iv)(D), the payments for HCO cases are subject
to reconciliation. Specifically, any such payments are reconciled at
settlement based on the CCR that was calculated based on the cost
report coinciding with the discharge. For additional information on
the reconciliation policy, we refer readers to Sections 150.26
through 150.28 of the Medicare Claims Processing Manual (Pub. 100-
4), as added by Change Request 7192 (Transmittal 2111; December 3,
2010), and the RY 2009 LTCH PPS final rule (73 FR 26820 through
26821).

3. High-Cost Outlier Payments for LTCH PPS Standard Federal Payment
Rate Cases

a. Proposed Changes to High-Cost Outlier Payments for LTCH PPS Standard
Federal Payment Rate Cases

Under the regulations at Sec. 412.525(a)(2)(ii) and as required
by section 1886(m)(7) of the Act, the fixed-loss amount for HCO
payments is set each year so that the estimated aggregate HCO
payments for LTCH PPS standard Federal payment rate cases are
99.6875 percent of 8 percent (that is, 7.975 percent) of estimated
aggregate LTCH PPS payments for LTCH PPS standard Federal payment
rate cases. (For more details on the requirements for high-cost
outlier payments in FY 2018 and subsequent years under section
1886(m)(7) of the Act and additional information regarding high-cost
outlier payments prior to FY 2018, we refer readers to the FY 2018
IPPS/LTCH PPS final rule (82 FR 38542 through 38544).)

b. Establishment of the Proposed Fixed-Loss Amount for LTCH PPS
Standard Federal Payment Rate Cases for FY 2019

When we implemented the LTCH PPS, we established a fixed-loss
amount so that total estimated outlier payments are projected to
equal 8 percent of total estimated payments under the LTCH PPS (67
FR 56022 through 56026). When we implemented the dual rate LTCH PPS
payment structure beginning in FY 2016, we established that, in
general, the historical LTCH PPS HCO policy would continue to apply
to LTCH PPS standard Federal payment rate cases. That is, the fixed-
loss amount and target for LTCH PPS standard Federal payment rate
cases would be determined using the LTCH PPS HCO policy adopted when
the LTCH PPS was first implemented, but we limited the data used
under that policy to LTCH cases that would have been LTCH PPS
standard Federal payment rate cases if the statutory changes

[[Page 20595]]

had been in effect at the time of those discharges.
To determine the applicable fixed-loss amount for LTCH PPS
standard Federal payment rate cases, we estimate outlier payments
and total LTCH PPS payments for each LTCH PPS standard Federal
payment rate case (or for each case that would have been a LTCH PPS
standard Federal payment rate case if the statutory changes had been
in effect at the time of the discharge) using claims data from the
MedPAR files. In accordance with Sec. 412.525(a)(2)(ii), the
applicable fixed-loss amount for LTCH PPS standard Federal payment
rate cases results in estimated total outlier payments being
projected to be equal to 7.975 percent of projected total LTCH PPS
payments for LTCH PPS standard Federal payment rate cases. We use
MedPAR claims data and CCRs based on data from the most recent PSF
(or from the applicable statewide average CCR if an LTCH's CCR data
are faulty or unavailable) to establish an applicable fixed-loss
threshold amount for LTCH PPS standard Federal payment rate cases.
In this FY 2019 IPPS/LTCH PPS proposed rule, we are proposing to
continue to use our current methodology to calculate an applicable
fixed-loss amount for LTCH PPS standard Federal payment rate cases
for FY 2019 using the best available data that would maintain
estimated HCO payments at the projected 7.975 percent of total
estimated LTCH PPS payments for LTCH PPS standard Federal payment
rate cases (based on the proposed payment rates and policies for
these cases presented in this proposed rule). Specifically, based on
the most recent complete LTCH data available at this time (that is,
LTCH claims data from the December 2017 update of the FY 2017 MedPAR
file and CCRs from the December 2017 update of the PSF), we are
proposing to determine a proposed fixed-loss amount for LTCH PPS
standard Federal payment rate cases for FY 2019 of $30,639 that
would result in estimated outlier payments projected to be equal to
7.975 percent of estimated FY 2019 payments for such cases. Under
this proposal, we would continue to make an additional HCO payment
for the cost of an LTCH PPS standard Federal payment rate case that
exceeds the HCO threshold amount that is equal to 80 percent of the
difference between the estimated cost of the case and the outlier
threshold (the sum of the proposed adjusted LTCH PPS standard
Federal payment rate payment and the proposed fixed-loss amount for
LTCH PPS standard Federal payment rate cases of $30,639).
We note that the proposed fixed-loss amount for HCO cases paid
under the LTCH PPS standard Federal payment rate in FY 2019 of
$30,639 is higher than the FY 2018 fixed-loss amount of $27,381 for
LTCH PPS standard Federal payment rate cases. However, based on the
most recent available data at the time of the development of this FY
2019 IPPS/LTCH PPS proposed rule, we found that the current FY 2018
HCO threshold of $27,381 results in estimated HCO payments for LTCH
PPS standard Federal payment rate cases of approximately 7.988
percent of the estimated total LTCH PPS payments in FY 2018, which
exceeds the 7.975 percent target by 0.01 percentage points. We
continue to believe, as discussed in detail in the FY 2018 IPPS/LTCH
PPS final rule (82 FR 38542 through 38543), this increase is largely
attributable to the rate-of-change (that is, increase) in the
Medicare allowable charges on the claims data in addition to updates
to CCRs from the December 2016 update of the PSF to the March 2017
update of the PSF. Consistent with our historical practice of using
the best data available, we are proposing that, when determining the
fixed-loss amount for LTCH PPS standard Federal payment rate cases
for FY 2019 in the final rule, we would use the most recent
available LTCH claims data and CCR data at the time.

3. Proposed High-Cost Outlier Payments for Site Neutral Payment Rate
Cases

Under Sec. 412.525(a), site neutral payment rate cases receive
an additional HCO payment for costs that exceed the HCO threshold
that is equal to 80 percent of the difference between the estimated
cost of the case and the applicable HCO threshold (80 FR 49618
through 49629). In the following discussion, we note that the
statutory transitional payment method for cases that are paid the
site neutral payment rate for LTCH discharges occurring in cost
reporting periods beginning during FY 2016 through FY 2019 uses a
blended payment rate, which is determined as 50 percent of the site
neutral payment rate amount for the discharge and 50 percent of the
LTCH PPS standard Federal payment rate amount for the discharge
(Sec. 412.522(c)(3)). As such, for FY 2019 discharges paid under
the transitional payment method, the discussion below pertains only
to the site neutral payment rate portion of the blended payment rate
under Sec. 412.522(c)(3)(i).
When we implemented the application of the site neutral payment
rate in FY 2016, in examining the appropriate fixed-loss amount for
site neutral payment rate cases issue, we considered how LTCH
discharges based on historical claims data would have been
classified under the dual rate LTCH PPS payment structure and the
CMS' Office of the Actuary projections regarding how LTCHs will
likely respond to our implementation of policies resulting from the
statutory payment changes. We again relied on these considerations
and actuarial projections in FY 2017 and FY 2018 because the
historical claims data available in each of these years were not all
subject to the LTCH PPS dual rate payment system. Similarly, for FY
2019, we continue to rely on these considerations and actuarial
projections because, due to the transitional blended payment policy
for site neutral payment rate cases, FY 2017 claims for these cases
were not subject to the full effect of the site neutral payment
rate.
For FYs 2016 through 2018, at that time our actuaries projected
that the proportion of cases that would qualify as LTCH PPS standard
Federal payment rate cases versus site neutral payment rate cases
under the statutory provisions would remain consistent with what is
reflected in the historical LTCH PPS claims data. Although our
actuaries did not project an immediate change in the proportions
found in the historical data, they did project cost and resource
changes to account for the lower payment rates. Our actuaries also
projected that the costs and resource use for cases paid at the site
neutral payment rate would likely be lower, on average, than the
costs and resource use for cases paid at the LTCH PPS standard
Federal payment rate and would likely mirror the costs and resource
use for IPPS cases assigned to the same MS-DRG, regardless of
whether the proportion of site neutral payment rate cases in the
future remains similar to what is found based on the historical
data. As discussed in the FY 2016 IPPS/LTCH PPS final rule (80 FR
49619), this actuarial assumption is based on our expectation that
site neutral payment rate cases would generally be paid based on an
IPPS comparable per diem amount under the statutory LTCH PPS payment
changes that began in FY 2016, which, in the majority of cases, is
much lower than the payment that would have been paid if these
statutory changes were not enacted. In light of these projections
and expectations, we discussed that we believed that the use of a
single fixed-loss amount and HCO target for all LTCH PPS cases would
be problematic. In addition, we discussed that we did not believe
that it would be appropriate for comparable LTCH PPS site neutral
payment rate cases to receive dramatically different HCO payments
from those cases that would be paid under the IPPS (80 FR 49617
through 49619 and 81 FR 57305 through 57307). For those reasons, we
stated that we believed that the most appropriate fixed-loss amount
for site neutral payment rate cases for FYs 2016 through 2018 would
be equal to the IPPS fixed-loss amount for that particular fiscal
year. Therefore, we established the fixed-loss amount for site
neutral payment rate cases as the corresponding IPPS fixed-loss
amounts for FYs 2016 through 2018. In particular, in FY 2018, we
established the fixed-loss amount for site neutral payment rate
cases as the FY 2018 IPPS fixed-loss amount of $26,537 (82 FR
46145).
As noted earlier, because not all claims in the data used for
this proposed rule were subject to the site neutral payment rate, we
continue to rely on the same considerations and actuarial
projections used in FYs 2016 through 2018 when developing a proposed
fixed-loss amount for site neutral payment rate cases for FY 2019.
Because our actuaries continue to project that site neutral payment
rate cases in FY 2019 will continue to mirror an IPPS case paid
under the same MS-DRG, we continue to believe that it would be
inappropriate for comparable LTCH PPS site neutral payment rate
cases to receive dramatically different HCO payments from those
cases that would be paid under the IPPS. More specifically, as with
FYs 2016 through 2018, our actuaries project that the costs and
resource use for FY 2019 cases paid at the site neutral payment rate
would likely be lower, on average, than the costs and resource use
for cases paid at the LTCH PPS standard Federal payment rate and
will likely mirror the costs and resource use for IPPS cases
assigned to the same MS-DRG, regardless of whether the proportion of
site neutral payment rate cases in the future remains similar to
what is found based on the

[[Page 20596]]

historical data. (Based on the most recent FY 2017 LTCH claims data,
approximately 64 percent of LTCH cases would have been paid the LTCH
PPS standard Federal payment rate and approximately 36 percent of
LTCH cases would have been paid the site neutral payment rate for
discharges occurring in FY 2017.)
For these reasons, we continue to believe that the most
appropriate proposed fixed-loss amount for site neutral payment rate
cases for FY 2019 is the proposed IPPS fixed-loss amount for FY
2019. Therefore, consistent with past practice, in this FY 2019
IPPS/LTCH PPS proposed rule, for FY 2019, we are proposing that the
applicable HCO threshold for site neutral payment rate cases is the
sum of the site neutral payment rate for the case and the proposed
IPPS fixed-loss amount. That is, we are proposing a fixed-loss
amount for site neutral payment rate cases of $27,545, which is the
same proposed FY 2019 IPPS fixed-loss amount discussed in section
II.A.4.g.(1) of the Addendum to this proposed rule. We continue to
believe that this policy would reduce differences between HCO
payments for similar cases under the IPPS and site neutral payment
rate cases under the LTCH PPS and promote fairness between the two
systems. Accordingly, for FY 2019, we are proposing to calculate a
HCO payment for site neutral payment rate cases with costs that
exceed the HCO threshold amount that is equal to 80 percent of the
difference between the estimated cost of the case and the outlier
threshold (the sum of the proposed site neutral payment rate payment
and the proposed fixed-loss amount for site neutral payment rate
cases of $27,545).
In establishing a HCO policy for site neutral payment rate
cases, we established a budget neutrality adjustment under Sec.
412.522(c)(2)(i). We established this requirement because we
believed, and continue to believe, that the HCO policy for site
neutral payment rate cases should be budget neutral, just as the HCO
policy for LTCH PPS standard Federal payment rate cases is budget
neutral, meaning that estimated site neutral payment rate HCO
payments should not result in any change in estimated aggregate LTCH
PPS payments.
To ensure that estimated HCO payments payable to site neutral
payment rate cases in FY 2019 would not result in any increase in
estimated aggregate FY 2019 LTCH PPS payments, under the budget
neutrality requirement at Sec. 412.522(c)(2)(i), it is necessary to
reduce site neutral payment rate payments (or the portion of the
blended payment rate payment for FY 2018 discharges occurring in
LTCH cost reporting periods beginning before October 1, 2017) by 5.1
percent to account for the estimated additional HCO payments payable
to those cases in FY 2019. In order to achieve this, for FY 2019, in
general, we are proposing to continue to use the policy adopted for
FY 2018.
As discussed earlier, consistent with the IPPS HCO payment
threshold, we estimate our proposed fixed-loss threshold of $27,545
results in HCO payments for site neutral payment rate cases to equal
5.1 percent of the site neutral payment rate payments that are based
on the IPPS comparable per diem amount. As such, to ensure estimated
HCO payments payable for site neutral payment rate cases in FY 2019
would not result in any increase in estimated aggregate FY 2019 LTCH
PPS payments, under the budget neutrality requirement at Sec.
412.522(c)(2)(i), it is necessary to reduce the site neutral payment
rate amount paid under Sec. 412.522(c)(1)(i) by 5.1 percent to
account for the estimated additional HCO payments payable for site
neutral payment rate cases in FY 2019. In order to achieve this, for
FY 2019, we are proposing to apply a budget neutrality factor of
0.949 (that is, the decimal equivalent of a 5.1 percent reduction,
determined as 1.0-5.1/100 = 0.949) to the site neutral payment rate
for those site neutral payment rate cases paid under Sec.
412.522(c)(1)(i). We note that, consistent with the policy adopted
for FY 2018, this proposed HCO budget neutrality adjustment would
not be applied to the HCO portion of the site neutral payment rate
amount (81 FR 57309).

E. Proposed Update to the IPPS Comparable/Equivalent Amounts To
Reflect the Statutory Changes to the IPPS DSH Payment Adjustment
Methodology

In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50766), we
established a policy to reflect the changes to the Medicare IPPS DSH
payment adjustment methodology made by section 3133 of the
Affordable Care Act in the calculation of the ``IPPS comparable
amount'' under the SSO policy at Sec. 412.529 and the ``IPPS
equivalent amount'' under the 25-percent threshold payment
adjustment policy at Sec. 412.534 and Sec. 412.536. Historically,
the determination of both the ``IPPS comparable amount'' and the
``IPPS equivalent amount'' includes an amount for inpatient
operating costs ``for the costs of serving a disproportionate share
of low-income patients.'' Under the statutory changes to the
Medicare DSH payment adjustment methodology that began in FY 2014,
in general, eligible IPPS hospitals receive an empirically justified
Medicare DSH payment equal to 25 percent of the amount they
otherwise would have received under the statutory formula for
Medicare DSH payments prior to the amendments made by the Affordable
Care Act. The remaining amount, equal to an estimate of 75 percent
of the amount that otherwise would have been paid as Medicare DSH
payments, reduced to reflect changes in the percentage of
individuals who are uninsured, is made available to make additional
payments to each hospital that qualifies for Medicare DSH payments
and that has uncompensated care. The additional uncompensated care
payments are based on the hospital's amount of uncompensated care
for a given time period relative to the total amount of
uncompensated care for that same time period reported by all IPPS
hospitals that receive Medicare DSH payments.
To reflect the statutory changes to the Medicare DSH payment
adjustment methodology in the calculation of the ``IPPS comparable
amount'' and the ``IPPS equivalent amount'' under the LTCH PPS, we
stated that we will include a reduced Medicare DSH payment amount
that reflects the projected percentage of the payment amount
calculated based on the statutory Medicare DSH payment formula prior
to the amendments made by the Affordable Care Act that will be paid
to eligible IPPS hospitals as empirically justified Medicare DSH
payments and uncompensated care payments in that year (that is, a
percentage of the operating Medicare DSH payment amount that has
historically been reflected in the LTCH PPS payments that is based
on IPPS rates). We also stated that the projected percentage will be
updated annually, consistent with the annual determination of the
amount of uncompensated care payments that will be made to eligible
IPPS hospitals. We believe that this approach results in appropriate
payments under the LTCH PPS and is consistent with our intention
that the ``IPPS comparable amount'' and the ``IPPS equivalent
amount'' under the LTCH PPS closely resemble what an IPPS payment
would have been for the same episode of care, while recognizing that
some features of the IPPS cannot be translated directly into the
LTCH PPS (79 FR 50766 through 50767).
For FY 2019, as discussed in greater detail in section IV.F.3.
of the preamble of this proposed rule, based on the most recent data
available, our estimate of 75 percent of the amount that would
otherwise have been paid as Medicare DSH payments (under the
methodology outlined in section 1886(r)(2) of the Act) is adjusted
to 67.51 percent of that amount to reflect the change in the
percentage of individuals who are uninsured. The resulting amount is
then used to determine the amount available to make uncompensated
care payments to eligible IPPS hospitals in FY 2018. In other words,
the amount of the Medicare DSH payments that would have been made
prior to the amendments made by the Affordable Care Act will be
adjusted to 50.63 percent (the product of 75 percent and 67.51
percent) and the resulting amount will be used to calculate the
uncompensated care payments to eligible hospitals. As a result, for
FY 2019, we project that the reduction in the amount of Medicare DSH
payments pursuant to section 1886(r)(1) of the Act, along with the
payments for uncompensated care under section 1886(r)(2) of the Act,
will result in overall Medicare DSH payments of 75.63 percent of the
amount of Medicare DSH payments that would otherwise have been made
in the absence of the amendments made by the Affordable Care Act
(that is, 25 percent + 50.63 percent = 75.63 percent).
In this FY 2019 IPPS/LTCH PPS proposed rule, for FY 2019, we are
proposing to establish that the calculation of the ``IPPS comparable
amount'' under Sec. 412.529 would include an applicable operating
Medicare DSH payment amount that is equal to 75.63 percent of the
operating Medicare DSH payment amount that would have been paid
based on the statutory Medicare DSH payment formula absent the
amendments made by the Affordable Care Act. Furthermore, consistent
with our historical practice, we are proposing that if more recent
data became available, if appropriate, we will use that data to
determine this factor in the final rule.

[[Page 20597]]

F. Computing the Proposed Adjusted LTCH PPS Federal Prospective
Payments for FY 2019

Section 412.525 sets forth the adjustments to the LTCH PPS
standard Federal payment rate. Under the dual rate LTCH PPS payment
structure, only LTCH PPS cases that meet the statutory criteria to
be excluded from the site neutral payment rate are paid based on the
LTCH PPS standard Federal payment rate. Under Sec. 412.525(c), the
LTCH PPS standard Federal payment rate is adjusted to account for
differences in area wages by multiplying the proposed labor-related
share of the LTCH PPS standard Federal payment rate for a case by
the applicable LTCH PPS wage index (the proposed FY 2019 values are
shown in Tables 12A through 12B listed in section VI. of the
Addendum to this proposed rule and are available via the internet on
the CMS website). The LTCH PPS standard Federal payment rate is also
adjusted to account for the higher costs of LTCHs located in Alaska
and Hawaii by the applicable COLA factors (the proposed FY 2019
factors are shown in the chart in section V.C. of this Addendum) in
accordance with Sec. 412.525(b). In this proposed rule, we are
proposing to establish an LTCH PPS standard Federal payment rate for
FY 2019 of $41,482.98, as discussed in section V.A. of the Addendum
to this proposed rule. We illustrate the methodology to adjust the
proposed LTCH PPS standard Federal payment rate for FY 2019 in the
following example:
Example:
During FY 2019, a Medicare discharge that meets the criteria to
be excluded from the site neutral payment rate, that is, an LTCH PPS
standard Federal payment rate case, is from an LTCH that is located
in Chicago, Illinois (CBSA 16974). The proposed FY 2019 LTCH PPS
wage index value for CBSA 16974 is 1.0511 (obtained from Table 12A
listed in section VI. of the Addendum to this proposed rule and
available via the internet on the CMS website). The Medicare patient
case is classified into MS-LTC-DRG 189 (Pulmonary Edema &
Respiratory Failure), which has a proposed relative weight for FY
2019 of 0.9595 (obtained from Table 11 listed in section VI. of the
Addendum to this proposed rule and available via the internet on the
CMS website). The LTCH submitted quality reporting data for FY 2019
in accordance with the LTCH QRP under section 1886(m)(5) of the Act.
To calculate the LTCH's total adjusted Federal prospective
payment for this Medicare patient case in FY 2019, we computed the
wage-adjusted proposed Federal prospective payment amount by
multiplying the unadjusted proposed FY 2019 LTCH PPS standard
Federal payment rate ($41,482.98) by the proposed labor-related
share (66.2 percent) and the wage index value (1.0511). This wage-
adjusted amount was then added to the proposed nonlabor-related
portion of the unadjusted proposed LTCH PPS standard Federal payment
rate (33.8 percent; adjusted for cost of living, if applicable) to
determine the adjusted proposed LTCH PPS standard Federal payment
rate, which is then multiplied by the proposed MS-LTC-DRG relative
weight (0.9595) to calculate the total adjusted proposed LTCH PPS
standard Federal prospective payment for FY 2019 ($41,149.38). The
table below illustrates the components of the calculations in this
example.

------------------------------------------------------------------------

------------------------------------------------------------------------
Proposed Unadjusted LTCH PPS Standard Federal $41,482.98
Prospective Payment Rate...............................
Proposed Labor-Related Share............................ x 0.662
Proposed Labor-Related Portion of the LTCH PPS Standard = $27,461.73
Federal Payment Rate...................................
Proposed Wage Index (CBSA 16974)........................ x 1.0511
Proposed Wage-Adjusted Labor Share of LTCH PPS Standard = $28,865.02
Federal Payment Rate...................................
Proposed Nonlabor-Related Portion of the LTCH PPS + $14,021.25
Standard Federal Payment Rate ($41,482.98 x 0.338).....
Proposed Adjusted LTCH PPS Standard Federal Payment = $42,886.27
Amount.................................................
Proposed MS-LTC-DRG 189 Relative Weight................. x 0.9595
Proposed Total Adjusted LTCH PPS Standard Federal = $41,149.38
Prospective Payment....................................
------------------------------------------------------------------------

VI. Tables Referenced in This Proposed Rule Generally Available Only
Through the Internet on the CMS Website

This section lists the tables referred to throughout the
preamble of this proposed rule and in this Addendum. In the past, a
majority of these tables were published in the Federal Register as
part of the annual proposed and final rules. However, similar to FYs
2012 through 2018, for the FY 2019 rulemaking cycle, the IPPS and
LTCH PPS tables will not be published in the Federal Register in the
annual IPPS/LTCH PPS proposed and final rules and will be available
only through the internet. Specifically, all IPPS tables listed
below, with the exception of IPPS Tables 1A, 1B, 1C, and 1D, and
LTCH PPS Table 1E will generally only be available through the
internet. IPPS Tables 1A, 1B, 1C, and 1D, and LTCH PPS Table 1E are
displayed at the end of this section and will continue to be
published in the Federal Register as part of the annual proposed and
final rules.
As discussed in the FY 2016 IPPS/LTCH PPS final rule (80 FR
49807), we streamlined and consolidated the wage index tables for FY
2016 and subsequent fiscal years.
As discussed in section III.J. of the preamble to this proposed
rule, we are adding a new Table 4, ``List of Counties Eligible for
the Out-Migration Adjustment under Section 1886(d)(13) of the Act--
FY 2019,'' associated with this proposed rule. This table consists
of the following: A list of counties that would be eligible for the
out-migration adjustment for FY 2019 identified by FIPS county code,
the proposed FY 2019 out-migration adjustment, and the number of
years the adjustment would be in effect. We believe this new table
would make this information more transparent and provide the public
with easier access to this information. We intend to make the
information available annually via Table 4 in the IPPS/LTCH PPS
proposed and final rules, and are including it among the tables
associated with this FY 2019 IPPS/LTCH PPS proposed rule that are
available via the internet on the CMS website.
As discussed in sections II.F.13., II.F.15.b. and d., II.F.16.,
and II.F.18. of the preamble of this proposed rule, we developed the
following ICD-10-CM and ICD-10-PCS code tables for FY 2019: Table
6A.--New Diagnosis Codes; Table 6B.--New Procedure Codes; Table
6C.--Invalid Diagnosis Codes; Table 6D.--Invalid Procedure Codes;
Table 6E.--Revised Diagnosis Code Titles; Table 6F.--Revised
Procedure Code Titles; Table 6G.1.--Proposed Secondary Diagnosis
Order Additions to the CC Exclusion List; Table 6G.2.--Proposed
Principal Diagnosis Order Additions to the CC Exclusion List; Table
6H.1.--Proposed Secondary Diagnosis Order Deletions to the CC
Exclusion List; Table 6H.2.--Proposed Principal Diagnosis Order
Deletions to the CC Exclusion List; Table 6I.1.--Proposed Additions
to the MCC List; Table 6I.2.--Proposed Deletions to the MCC List;
Table 6J.1.--Proposed Additions to the CC List; Table 6J.2.--
Proposed Deletions to the CC List; and Table 6P.-- ICD-10-CM and
ICD-10-PCS Codes for Proposed MS-DRG Changes. Table 6P contains
multiple tables, 6P.1 through 6P.1k, that include the ICD-10-CM and
ICD-10-PCS code lists relating to specific proposed MS-DRG changes.
In addition, under the HAC Reduction Program established by section
3008 of the Affordable Care Act, a hospital's total payment may be
reduced by 1 percent if it is in the lowest HAC performance
quartile. However, as discussed in section IV.K. of the preamble of
this proposed rule, we are not providing the hospital-level data as
a table associated with this proposed rule. The hospital-level data
for the FY 2019 HAC Reduction Program will be made publicly
available once it has undergone the review and corrections process.
As discussed in section II.H.1. of the preamble of this proposed
rule, Table 10 that we have released in prior fiscal years contained
the thresholds that we use to evaluate applications for new medical
service and technology add-on payments for the fiscal year that
follows the fiscal year that is otherwise the subject of the
rulemaking. In an effort to clarify for the public that the listed
thresholds will be used for new technology add-on payment
applications for the next fiscal year (in this case, for FY 2020)
rather than the fiscal year that is otherwise the subject of the
rulemaking (in this case, for FY 2019), we are proposing to provide
the thresholds previously included in Table 10 as one of our
publicly available data files

[[Page 20598]]

posted via the internet on the CMS website for the rulemaking for
the upcoming fiscal year at: https://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/, which
is the same URL where the impact data files associated with the
rulemaking for the applicable fiscal year are posted. We refer
readers to section II.H.1. of the preamble of this proposed rule
regarding our proposal to include the thresholds previously included
in Table 10 as one of our public data files.
As discussed in section VII.B of the preamble of this proposed
rule, in previous fiscal years, Table 13A.--Composition of Low-
Volume Quintiles for MS-LTC-DRGs (which was listed in section VI. of
the Addendum to the proposed and final rules and available via the
internet on the CMS website) listed the composition of the low-
volume quintiles for MS-LTC-DRGs for the respective year, and Table
13B.--No Volume MS-LTC-DRG Crosswalk (also listed in section VI. of
the Addendum to the proposed and final rules and available via the
internet on the CMS website) listed the no-volume MS-LTC-DRGs and
the MS-LTC-DRGs to which each was cross-walked (that is, the cross-
walked MS-LTC-DRGs). The information contained in Tables 13A and 13B
is used in the development of Table 11.--MS-LTC-DRGs, Relative
Weights, Geometric Average Length of Stay, and Short-Stay Outlier
(SSO) Threshold for LTCH PPS Discharges, which contains the proposed
MS-LTC-DRGs and their respective proposed relative weights,
geometric mean length of stay, and five-sixths of the geometric mean
length of stay (used to identify SSO cases) for the respective
fiscal year (and also is listed in section VI. of the Addendum to
this proposed rule and available via the internet on the CMS
website). Because the information contained in Tables 13A and 13B
does not contain proposed payment rates or factors for the
applicable payment year, we are proposing to generally provide the
data previously published in Tables 13A and 13B for each annual
proposed rule and final rule as one of our supplemental data files
via the internet on the CMS website for the respective rule and
fiscal year (that is, FY 2019 and subsequent fiscal years) at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/LongTermCareHospitalPPS/ (that is, the same URL address
where the impact data files associated with the rule are posted). To
streamline the information made available to the public that is used
in the annual development of Table 11, we believe that this proposed
change in the presentation of the information contained in Tables
13A and 13B will make it easier for the public to navigate and find
the relevant data and information used for the development of
proposed payment rates or factors for the applicable payment year,
while continuing to furnish the same information contained in the
tables provided in previous fiscal years.
In addition, Table 18 associated with this proposed rule
contains the proposed Factor 3 for purposes of determining the FY
2019 uncompensated care payment for all hospitals and identifies
whether or not a hospital is projected to receive Medicare DSH
payments and, therefore, eligible to receive the additional payment
for uncompensated care for FY 2019. A hospital's Factor 3 determines
the proportion of the aggregate amount available for uncompensated
care payments that a Medicare DSH eligible hospital will receive
under section 3133 of the Affordable Care Act.
Readers who experience any problems accessing any of the tables
that are posted on the CMS websites identified below should contact
Michael Treitel at (410) 786-4552.
The following IPPS tables for this FY 2019 proposed rule are
generally only available through the internet on the CMS website at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/. Click on the link on the left side of
the screen titled, ``FY 2019 IPPS Proposed Rule Home Page'' or
``Acute Inpatient--Files for Download.''

Table 2.--Proposed Case-Mix Index and Wage Index Table by CCN--FY
2019
Table 3.--Proposed Wage Index Table by CBSA--FY 2019
Table 4.--Proposed List of Counties Eligible for the Out-Migration
Adjustment under Section 1886(d)(13) of the Act--FY 2019
Table 5.--Proposed List of Medicare Severity Diagnosis-Related
Groups (MS-DRGs), Relative Weighting Factors, and Geometric and
Arithmetic Mean Length of Stay--FY 2019
Table 6A.--New Diagnosis Codes--FY 2019
Table 6B.--New Procedure Codes--FY 2019
Table 6C.--Invalid Diagnosis Codes--FY 2019
Table 6D.--Invalid Procedure Codes--FY 2019
Table 6E.--Revised Diagnosis Code Titles--FY 2019
Table 6F.--Revised Procedure Code Titles--FY 2019
Table 6G.1.--Proposed Secondary Diagnosis Order Additions to the CC
Exclusions List--FY 2019
Table 6G.2.--Proposed Principal Diagnosis Order Additions to the CC
Exclusions List--FY 2019
Table 6H.1.--Proposed Secondary Diagnosis Order Deletions to the CC
Exclusions List--FY 2019
Table 6H.2.--Proposed Principal Diagnosis Order Deletions to the CC
Exclusions List--FY 2019
Table 6I.1.--Proposed Additions to the MCC List--FY 2019
Table 6I.2.--Proposed Deletions to the MCC List--FY 2019
Table 6J.1.--Proposed Additions to the CC List--FY 2019
Table 6J.2.--Proposed Deletions to the CC List--FY 2019
Table 6P.--ICD-10-CM and ICD-10-PCS Codes for Proposed MS-DRG
Changes--FY 2019
Table 7A.--Proposed Medicare Prospective Payment System Selected
Percentile Lengths of Stay: FY 2017 MedPAR Update--September 2017
GROUPER V35.0 MS-DRGs
Table 7B.--Proposed Medicare Prospective Payment System Selected
Percentile Lengths of Stay: FY 2017 MedPAR Update-- September 2017
GROUPER V36.0 MS-DRGs
Table 8A.--Proposed FY 2019 Statewide Average Operating Cost-to-
Charge Ratios (CCRs) for Acute Care Hospitals (Urban and Rural)
Table 8B.--Proposed FY 2019 Statewide Average Capital Cost-to-Charge
Ratios (CCRs) for Acute Care Hospitals
Table 15.--Proposed Proxy FY 2019 Readmissions Adjustment Factors
Table 16.--Proposed Proxy Hospital Value-Based Purchasing (VBP)
Program Adjustment Factors for FY 2019
Table 18.--Proposed FY 2019 Medicare DSH Uncompensated Care Payment
Factor 3

The following LTCH PPS tables for this FY 2019 proposed rule are
available only through the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/LongTermCareHospitalPPS/ under the list item for
Regulation Number CMS-1694-P:

Table 8C.--Proposed FY 2019 Statewide Average Total Cost-to-Charge
Ratios (CCRs) for LTCHs (Urban and Rural)
Table 11.--Proposed MS-LTC-DRGs, Relative Weights, Geometric Average
Length of Stay, and Short-Stay Outlier (SSO) Threshold for LTCH PPS
Discharges Occurring from October 1, 2018 through September 30, 2019
Table 12A.--Proposed LTCH PPS Wage Index for Urban Areas for
Discharges Occurring from October 1, 2018 through September 30, 2019
Table 12B.--Proposed LTCH PPS Wage Index for Rural Areas for
Discharges Occurring from October 1, 2018 through September 30, 2019

[[Page 20599]]

Table 1A--Proposed National Adjusted Operating Standardized Amounts, Labor/Nonlabor
[(68.3 percent labor share/31.7 percent nonlabor share if wage index is greater than 1)--FY 2019]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hospital submitted quality data and is Hospital submitted quality data and Hospital did NOT submit quality data Hospital did NOT submit quality data
a meaningful EHR user (Update = 1.25 is NOT a meaningful EHR user (update and is a meaningful EHR user (update and is NOT a meaningful EHR user
Percent) = -0.85 percent) = 0.550 percent) (update = -1.55 percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Labor Nonlabor Labor Nonlabor Labor Nonlabor Labor Nonlabor
--------------------------------------------------------------------------------------------------------------------------------------------------------
$3,863.17 $1,793.01 $3,783.04 $1,755.82 $3,836.46 $1,780.61 $3,756.34 $1,743.43
--------------------------------------------------------------------------------------------------------------------------------------------------------

Table 1B--Proposed National Adjusted Operating Standardized Amounts, Labor/Nonlabor
[(62 percent labor share/38 percent nonlabor share if wage index is less than or equal to 1)--FY 2019]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hospital submitted quality data and is Hospital submitted quality data and Hospital did NOT submit quality data Hospital did NOT submit quality data
a meaningful EHR User (update = 1.25 is NOT a meaningful EHR user (update and is a meaningful EHR user (update and is NOT a meaningful EHR user
percent) = -0.85 percent) = 0.550 percent) (update = -1.55 percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Labor Nonlabor Labor Nonlabor Labor Nonlabor Labor Nonlabor
--------------------------------------------------------------------------------------------------------------------------------------------------------
$3,506.83 $2,149.35 $3,434.09 $2,104.77 $3,482.58 $2,134.49 $3,409.86 $2,089.91
--------------------------------------------------------------------------------------------------------------------------------------------------------

Table 1C--Proposed Adjusted Operating Standardized Amounts for Hospitals in Puerto Rico, Labor/Nonlabor
[(National: 62 percent labor share/38 percent nonlabor share because wage index is less than or equal to 1)--FY
2019]
----------------------------------------------------------------------------------------------------------------
Rates if wage index is greater than 1 Rates if wage index is less
---------------------------------------------- than or equal to 1
Standardized amount -------------------------------
Labor Nonlabor Labor Nonlabor
----------------------------------------------------------------------------------------------------------------
National 1........................ Not Applicable....... Not Applicable....... $3,506.83 $2,149.35
----------------------------------------------------------------------------------------------------------------
1 For FY 2019, there are no CBSAs in Puerto Rico with a national wage index greater than 1.

Table 1D--Proposed Capital Standard Federal Payment Rate
[FY 2019]
------------------------------------------------------------------------
Rate
------------------------------------------------------------------------
National................................................ $459.78
------------------------------------------------------------------------

Table 1E--Proposed LTCH PPS Standard Federal Payment Rate
[FY 2019]
------------------------------------------------------------------------
Full update (1.15 Reduced update * (-
percent) 0.85 percent)
------------------------------------------------------------------------
Standard Federal Rate........... $41,482.98 $40,662.75
------------------------------------------------------------------------
* For LTCHs that fail to submit quality reporting data for FY 2019 in
accordance with the LTCH Quality Reporting Program (LTCH QRP), the
annual update is reduced by 2.0 percentage points as required by
section 1886(m)(5) of the Act.

Appendix A: Economic Analyses

I. Regulatory Impact Analysis

A. Statement of Need

This proposed rule is necessary in order to make payment and
policy changes under the Medicare IPPS for Medicare acute care
hospital inpatient services for operating and capital-related costs
as well as for certain hospitals and hospital units excluded from
the IPPS. This proposed rule also is necessary to make payment and
policy changes for Medicare hospitals under the LTCH PPS.

B. Overall Impact

We have examined the impacts of this proposed rule as required
by Executive Order 12866 on Regulatory Planning and Review
(September 30, 1993), Executive Order 13563 on Improving Regulation
and Regulatory Review (January 18, 2011), the Regulatory Flexibility
Act (RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) of
the Social Security Act, section 202 of the Unfunded Mandates Reform
Act of 1995 (March 22, 1995; Pub. L. 104-4), Executive Order 13132
on Federalism (August 4, 1999), the Congressional Review Act (5
U.S.C. 804(2), and Executive Order 13771 on Reducing Regulation and
Controlling Regulatory Costs (January 30, 2017).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that
maximize net benefits (including potential economic, environmental,
public health and safety effects, distributive impacts, and equity).
Section 3(f) of Executive Order 12866 defines a ``significant
regulatory action'' as an action that is likely to result in a rule:
(1) (Having an annual effect on the economy of $100 million or more
in any 1 year, or adversely and materially affecting a sector of the

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economy, productivity, competition, jobs, the environment, public
health or safety, or state, local or tribal governments or
communities (also referred to as ``economically significant''); (2)
creating a serious inconsistency or otherwise interfering with an
action taken or planned by another agency; (3) materially altering
the budgetary impacts of entitlement grants, user fees, or loan
programs or the rights and obligations of recipients thereof; or (4)
raising novel legal or policy issues arising out of legal mandates,
the President's priorities, or the principles set forth in the
Executive Order.
We have determined that this proposed rule is a major rule as
defined in 5 U.S.C. 804(2). We estimate that the proposed changes
for FY 2019 acute care hospital operating and capital payments would
redistribute amounts in excess of $100 million to acute care
hospitals. The applicable percentage increase to the IPPS rates
required by the statute, in conjunction with other proposed payment
changes in this proposed rule, would result in an estimated $4.1
billion increase in FY 2019 payments, primarily driven by a combined
$4.0 billion increase in FY 2019 operating payments and
uncompensated care payments, and a combined $0.1 billion increase in
FY 2019 capital payments and low-volume hospital payments. These
proposed changes are relative to payments made in FY 2018. The
impact analysis of the proposed capital payments can be found in
section I.I. of this Appendix. In addition, as described in section
I.J. of this Appendix, LTCHs are expected to experience a decrease
in payments by $5 million in FY 2019 relative to FY 2018.
Our operating impact estimate includes the proposed 0.5 percent
adjustment required under section 414 of the MACRA applied to the
IPPS standardized amount, as discussed in section II.D. of the
preamble of this proposed rule. In addition, our operating payment
impact estimate includes the proposed 1.25 percent hospital update
to the standardized amount (which includes the estimated 2.8 percent
market basket update less 0.8 percentage point for the proposed
multifactor productivity adjustment and less 0.75 percentage point
required under the Affordable Care Act). The estimates of proposed
IPPS operating payments to acute care hospitals do not reflect any
changes in hospital admissions or real case-mix intensity, which
would also affect overall payment changes.
The analysis in this Appendix, in conjunction with the remainder
of this document, demonstrates that this proposed rule is consistent
with the regulatory philosophy and principles identified in
Executive Orders 12866 and 13563, the RFA, and section 1102(b) of
the Act. This proposed rule would affect payments to a substantial
number of small rural hospitals, as well as other classes of
hospitals, and the effects on some hospitals may be significant.
Finally, in accordance with the provisions of Executive Order 12866,
the Executive Office of Management and Budget has reviewed this
proposed rule.

C. Objectives of the IPPS and the LTCH PPS

The primary objective of the IPPS and the LTCH PPS is to create
incentives for hospitals to operate efficiently and minimize
unnecessary costs, while at the same time ensuring that payments are
sufficient to adequately compensate hospitals for their legitimate
costs in delivering necessary care to Medicare beneficiaries. In
addition, we share national goals of preserving the Medicare
Hospital Insurance Trust Fund.
We believe that the changes in this proposed rule would further
each of these goals while maintaining the financial viability of the
hospital industry and ensuring access to high quality health care
for Medicare beneficiaries. We expect that these proposed changes
will ensure that the outcomes of the prospective payment systems are
reasonable and equitable, while avoiding or minimizing unintended
adverse consequences.
Because this proposed rule contains a range of policies, we
refer readers to the section of the proposed rule where each policy
is discussed. These sections include the rational for our decisions,
including the need for the proposed policy.

D. Limitations of Our Analysis

The following quantitative analysis presents the projected
effects of our proposed policy changes, as well as statutory changes
effective for FY 2019, on various hospital groups. We estimate the
effects of individual proposed policy changes by estimating payments
per case, while holding all other payment policies constant. We use
the best data available, but, generally, we do not attempt to make
adjustments for future changes in such variables as admissions,
lengths of stay, or case-mix. In addition, we discuss limitations of
our analysis for specific proposed policies in the discussion of
those proposed policies as needed.

E. Hospitals Included in and Excluded From the IPPS

The prospective payment systems for hospital inpatient operating
and capital-related costs of acute care hospitals encompass most
general short-term, acute care hospitals that participate in the
Medicare program. There were 29 Indian Health Service hospitals in
our database, which we excluded from the analysis due to the special
characteristics of the prospective payment methodology for these
hospitals. Among other short-term, acute care hospitals, hospitals
in Maryland are paid in accordance with the Maryland All-Payer
Model, and hospitals located outside the 50 States, the District of
Columbia, and Puerto Rico (that is, 5 short-term acute care
hospitals located in the U.S. Virgin Islands, Guam, the Northern
Mariana Islands, and American Samoa) receive payment for inpatient
hospital services they furnish on the basis of reasonable costs,
subject to a rate-of-increase ceiling.
As of March 2018, there were 3,257 IPPS acute care hospitals
included in our analysis. This represents approximately 54 percent
of all Medicare-participating hospitals. The majority of this impact
analysis focuses on this set of hospitals. There also are
approximately 1,395 CAHs. These small, limited service hospitals are
paid on the basis of reasonable costs, rather than under the IPPS.
IPPS-excluded hospitals and units, which are paid under separate
payment systems, include IPFs, IRFs, LTCHs, RNHCIs, children's
hospitals, 11 cancer hospitals, extended neoplastic disease care
hospitals, and 5 short-term acute care hospitals located in the
Virgin Islands, Guam, the Northern Mariana Islands, and American
Samoa. Changes in the prospective payment systems for IPFs and IRFs
are made through separate rulemaking. Payment impacts of proposed
changes to the prospective payment systems for these IPPS-excluded
hospitals and units are not included in this proposed rule. The
impact of the proposed update and policy changes to the LTCH PPS for
FY 2019 is discussed in section I.J. of this Appendix.

F. Effects on Hospitals and Hospital Units Excluded From the IPPS

As of March 2018, there were 98 children's hospitals, 11 cancer
hospitals, 5 short-term acute care hospitals located in the Virgin
Islands, Guam, the Northern Mariana Islands and American Samoa, 1
extended neoplastic disease care hospital, and 18 RNHCIs being paid
on a reasonable cost basis subject to the rate-of-increase ceiling
under Sec. 413.40. (In accordance with Sec. 403.752(a) of the
regulation, RNHCIs are paid under Sec. 413.40.) Among the remaining
providers, 280 rehabilitation hospitals and 844 rehabilitation
units, and approximately 409 LTCHs, are paid the Federal prospective
per discharge rate under the IRF PPS and the LTCH PPS, respectively,
and 538 psychiatric hospitals and 1,098 psychiatric units are paid
the Federal per diem amount under the IPF PPS. As stated previously,
IRFs and IPFs are not affected by the rate updates discussed in this
proposed rule. The impacts of the proposed changes on LTCHs are
discussed in section I.J. of this Appendix.
For children's hospitals, the 11 cancer hospitals, the 5 short-
term acute care hospitals located in the Virgin Islands, Guam, the
Northern Mariana Islands, and American Samoa, extended neoplastic
disease care hospitals, and RNHCIs, the update of the rate-of-
increase limit (or target amount) would be the estimated FY 2019
percentage increase in the 2014-based IPPS operating market basket,
consistent with section 1886(b)(3)(B)(ii) of the Act, and Sec. Sec.
403.752(a) and 413.40 of the regulations. Consistent with current
law, based on IGI's 2017 fourth quarter forecast of the 2014-based
IPPS market basket increase, we are estimating the FY 2019 update to
be 2.8 percent (that is, the estimate of the market basket rate-of-
increase). We are proposing that if more recent data become
available for the final rule, we would use them to calculate the
IPPS operating market basket update for FY 2019. However, the
Affordable Care Act requires an adjustment for multifactor
productivity (currently proposed at 0.8 percentage point for FY
2019) and a 0.75 percentage point reduction to the market basket
update, resulting in a proposed 1.25 percent applicable percentage
increase for IPPS hospitals that submit quality data and are
meaningful EHR users, as discussed in

[[Page 20601]]

section IV.B. of the preamble of this proposed rule. Children's
hospitals, the 11 cancer hospitals, the 5 short-term acute care
hospitals located in the Virgin Islands, Guam, the Northern Mariana
Islands, and American Samoa, extended neoplastic disease care
hospitals, and RNHCIs that continue to be paid based on reasonable
costs subject to rate-of-increase limits under Sec. 413.40 of the
regulations are not subject to the reductions in the applicable
percentage increase required under the Affordable Care Act.
Therefore, for those hospitals paid under Sec. 413.40 of the
regulations, the proposed update is the percentage increase in the
2014-based IPPS operating market basket for FY 2019, estimated at
2.8 percent, without the reductions described previously under the
Affordable Care Act.
The impact of the proposed update in the rate-of-increase limit
on those excluded hospitals depends on the cumulative cost increases
experienced by each excluded hospital since its applicable base
period. For excluded hospitals that have maintained their cost
increases at a level below the rate-of-increase limits since their
base period, the major effect is on the level of incentive payments
these excluded hospitals receive. Conversely, for excluded hospitals
with cost increases above the cumulative update in their rate-of-
increase limits, the major effect is the amount of excess costs that
would not be paid.
We note that, under Sec. 413.40(d)(3), an excluded hospital
that continues to be paid under the TEFRA system and whose costs
exceed 110 percent of its rate-of-increase limit receives its rate-
of-increase limit plus the lesser of: (1) 50 percent of its
reasonable costs in excess of 110 percent of the limit; or (2) 10
percent of its limit. In addition, under the various provisions set
forth in Sec. 413.40, hospitals can obtain payment adjustments for
justifiable increases in operating costs that exceed the limit.

G. Quantitative Effects of the Proposed Policy Changes Under the
IPPS for Operating Costs

1. Basis and Methodology of Estimates

In this proposed rule, we are announcing proposed policy changes
and payment rate updates for the IPPS for FY 2019 for operating
costs of acute care hospitals. The proposed FY 2019 updates to the
capital payments to acute care hospitals are discussed in section
I.I. of this Appendix.
Based on the overall percentage change in payments per case
estimated using our payment simulation model, we estimate that
proposed total FY 2019 operating payments would increase by 2.1
percent, compared to FY 2018. In addition to the applicable
percentage increase, this amount reflects the proposed 0.5 percent
permanent adjustment to the standardized amount required under
section 414 of the MACRA. The impacts do not reflect changes in the
number of hospital admissions or real case-mix intensity, which
would also affect overall payment changes.
We have prepared separate impact analyses of the proposed
changes to each system. This section deals with the proposed changes
to the operating inpatient prospective payment system for acute care
hospitals. Our payment simulation model relies on the most recent
available data to enable us to estimate the impacts on payments per
case of certain proposed changes in this proposed rule. However,
there are other proposed changes for which we do not have data
available that would allow us to estimate the payment impacts using
this model. For those proposed changes, we have attempted to predict
the payment impacts based upon our experience and other more limited
data.
The data used in developing the quantitative analyses of
proposed changes in payments per case presented in this section are
taken from the FY 2017 MedPAR file and the most current Provider-
Specific File (PSF) that is used for payment purposes. Although the
analyses of the proposed changes to the operating PPS do not
incorporate cost data, data from the most recently available
hospital cost reports were used to categorize hospitals. Our
analysis has several qualifications. First, in this analysis, we do
not make adjustments for future changes in such variables as
admissions, lengths of stay, or underlying growth in real case-mix.
Second, due to the interdependent nature of the IPPS payment
components, it is very difficult to precisely quantify the impact
associated with each proposed change. Third, we use various data
sources to categorize hospitals in the tables. In some cases,
particularly the number of beds, there is a fair degree of variation
in the data from the different sources. We have attempted to
construct these variables with the best available source overall.
However, for individual hospitals, some miscategorizations are
possible.
Using cases from the FY 2017 MedPAR file, we simulate payments
under the operating IPPS given various combinations of payment
parameters. As described previously, Indian Health Service hospitals
and hospitals in Maryland were excluded from the simulations. The
impact of proposed payments under the capital IPPS, and the impact
of proposed payments for costs other than inpatient operating costs,
are not analyzed in this section. Estimated payment impacts of the
capital IPPS for FY 2019 are discussed in section I.I. of this
Appendix.
We discuss the following proposed changes:
The effects of the proposed application of the
adjustment required under section 414 of the MACRA and the
applicable percentage increase (including the proposed market basket
update, the proposed multifactor productivity adjustment, and the
applicable percentage reduction in accordance with the Affordable
Care Act) to the standardized amount and hospital-specific rates.
The effects of the proposed changes to the relative
weights and MS-DRG GROUPER.
The effects of the proposed changes in hospitals' wage
index values reflecting updated wage data from hospitals' cost
reporting periods beginning during FY 2015, compared to the FY 2014
wage data, to calculate the proposed FY 2019 wage index.
The effects of the geographic reclassifications by the
MGCRB (as of publication of this proposed rule) that would be
effective for FY 2019.
The effects of the proposed rural floor with the
application of the national budget neutrality factor to the wage
index, and the proposed expiration of the imputed floor.
The effects of the proposed frontier State wage index
adjustment under the statutory provision that requires hospitals
located in States that qualify as frontier States to not have a wage
index less than 1.0. This provision is not budget neutral.
The effects of the proposed implementation of section
1886(d)(13) of the Act, as added by section 505 of Public Law 108-
173, which provides for an increase in a hospital's wage index if a
threshold percentage of residents of the county where the hospital
is located commute to work at hospitals in counties with higher wage
indexes for FY 2019. This provision is not budget neutral.
The total estimated change in proposed payments based
on the proposed FY 2019 policies relative to payments based on FY
2018 policies that include the proposed applicable percentage
increase of 1.25 percent (or proposed 2.8 percent market basket
update with a proposed reduction of 0.8 percentage point for the
multifactor productivity adjustment, and a 0.75 percentage point
reduction, as required under the Affordable Care Act).
To illustrate the impact of the proposed FY 2019 changes, our
analysis begins with a FY 2018 baseline simulation model using: The
FY 2018 applicable percentage increase of 1.35 percent, the 0.4588
percent adjustment to the Federal standardized amount, and the
adjustment factor of (1/1.006) to both the national standardized
amount and the hospitals specific rate; the FY 2018 MS-DRG GROUPER
(Version 35); the FY 2018 CBSA designations for hospitals based on
the OMB definitions from the 2010 Census; the FY 2018 wage index;
and no MGCRB reclassifications. Outlier payments are set at 5.1
percent of total operating MS-DRG and outlier payments for modeling
purposes. Section 1886(b)(3)(B)(viii) of the Act, as added by
section 5001(a) of Pub. L. 109-171, as amended by section
4102(b)(1)(A) of the ARRA (Public Law 111-5) and by section
3401(a)(2) of the Affordable Care Act (Pub. L. 111-148), provides
that, for FY 2007 and each subsequent year through FY 2014, the
update factor will include a reduction of 2.0 percentage points for
any subsection (d) hospital that does not submit data on measures in
a form and manner, and at a time specified by the Secretary.
Beginning in FY 2015, the reduction is one-quarter of such
applicable percentage increase determined without regard to section
1886(b)(3)(B)(ix), (xi), or (xii) of the Act, or one-quarter of the
market basket update. Therefore, for FY 2019, we are proposing that
hospitals that do not submit quality information under rules
established by the Secretary and that are meaningful EHR users under
section 1886(b)(3)(B)(ix) of the Act would receive an applicable
percentage increase of 0.55 percent. At the time this impact was
prepared, 54 hospitals are estimated to not receive the full market
basket rate-of-increase for FY 2019 because they failed the quality
data submission process or did not choose to participate, but are
meaningful EHR users. For purposes of the simulations shown later in
this section, we modeled the proposed

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payment changes for FY 2019 using a reduced update for these
hospitals.
For FY 2019, in accordance with section 1886(b)(3)(B)(ix) of the
Act, a hospital that has been identified as not a meaningful EHR
user will be subject to a reduction of three-quarters of such
applicable percentage increase determined without regard to section
1886(b)(3)(B)(ix), (xi), or (xii) of the Act. Therefore, for FY
2019, we are proposing that hospitals that are identified as not
meaningful EHR users and do submit quality information under section
1886(b)(3)(B)(viii) of the Act would receive an applicable
percentage increase of -0.85 percent. At the time this impact
analysis was prepared, 148 hospitals are estimated to not receive
the full market basket rate-of-increase for FY 2019 because they are
identified as not meaningful EHR users that do submit quality
information under section 1886(b)(3)(B)(viii) of the Act. For
purposes of the simulations shown in this section, we modeled the
proposed payment changes for FY 2019 using a reduced update for
these hospitals.
Hospitals that are identified as not meaningful EHR users under
section 1886(b)(3)(B)(ix) of the Act and also do not submit quality
data under section 1886(b)(3)(B)(viii) of the Act would receive a
proposed applicable percentage increase of -1.55 percent, which
reflects a one-quarter reduction of the market basket update for
failure to submit quality data and a three-quarter reduction of the
market basket update for being identified as not a meaningful EHR
user. At the time this impact was prepared, 43 hospitals are
estimated to not receive the full market basket rate-of-increase for
FY 2019 because they are identified as not meaningful EHR users that
do not submit quality data under section 1886(b)(3)(B)(viii) of the
Act.
Each proposed policy change, statutory or otherwise, is then
added incrementally to this baseline, finally arriving at an FY 2019
model incorporating all of the proposed changes. This simulation
allows us to isolate the effects of each proposed change.
Our comparison illustrates the proposed percent change in
payments per case from FY 2018 to FY 2019. Two factors not discussed
separately have significant impacts here. The first factor is the
proposed update to the standardized amount. In accordance with
section 1886(b)(3)(B)(i) of the Act, we are proposing to update the
standardized amounts for FY 2019 using a proposed applicable
percentage increase of 1.25 percent. This includes our forecasted
IPPS operating hospital market basket increase of 2.8 percent with a
proposed 0.8 percentage point reduction for the multifactor
productivity adjustment and a 0.75 percentage point reduction, as
required, under the Affordable Care Act. Hospitals that fail to
comply with the quality data submission requirements and are
meaningful EHR users would receive a proposed update of 0.55
percent. This proposed update includes a reduction of one-quarter of
the market basket update for failure to submit these data. Hospitals
that do comply with the quality data submission requirements but are
not meaningful EHR users would receive a proposed update of -0.85
percent, which includes a reduction of three-quarters of the market
basket update. Furthermore, hospitals that do not comply with the
quality data submission requirements and also are not meaningful EHR
users would receive an proposed update of -1.55 percent. Under
section 1886(b)(3)(B)(iv) of the Act, the proposed update to the
hospital-specific amounts for SCHs and MDHs is also equal to the
applicable percentage increase, or 1.25 percent, if the hospital
submits quality data and is a meaningful EHR user.
A second significant factor that affects the proposed changes in
hospitals' payments per case from FY 2018 to FY 2019 is the change
in hospitals' geographic reclassification status from one year to
the next. That is, payments may be reduced for hospitals
reclassified in FY 2018 that would no longer be reclassified in FY
2019. Conversely, payments may increase for hospitals not
reclassified in FY 2018 that were reclassified in FY 2019.

2. Analysis of Table I

Table I displays the results of our analysis of the proposed
changes for FY 2019. The table categorizes hospitals by various
geographic and special payment consideration groups to illustrate
the varying impacts on different types of hospitals. The top row of
the table shows the proposed overall impact on the 3,257 acute care
hospitals included in the analysis.
The next four rows of Table I contain hospitals categorized
according to their geographic location: All urban, which is further
divided into large urban and other urban; and rural. There are 2,480
hospitals located in urban areas included in our analysis. Among
these, there are 1,310 hospitals located in large urban areas
(populations over 1 million), and 1,170 hospitals in other urban
areas (populations of 1 million or fewer). In addition, there are
777 hospitals in rural areas. The next two groupings are by bed-size
categories, shown separately for urban and rural hospitals. The last
groupings by geographic location are by census divisions, also shown
separately for urban and rural hospitals.
The second part of Table I shows hospital groups based on
hospitals' FY 2019 payment classifications, including any
reclassifications under section 1886(d)(10) of the Act. For example,
the rows labeled urban, large urban, other urban, and rural show
that the numbers of hospitals paid based on these categorizations
after consideration of geographic reclassifications (including
reclassifications under sections 1886(d)(8)(B) and 1886(d)(8)(E) of
the Act that have implications for capital payments) are 2,281,
1,325, 956, and 976, respectively.
The next three groupings examine the impacts of the proposed
changes on hospitals grouped by whether or not they have GME
residency programs (teaching hospitals that receive an IME
adjustment) or receive Medicare DSH payments, or some combination of
these two adjustments. There are 2,162 nonteaching hospitals in our
analysis, 846 teaching hospitals with fewer than 100 residents, and
249 teaching hospitals with 100 or more residents.
In the DSH categories, hospitals are grouped according to their
DSH payment status, and whether they are considered urban or rural
for DSH purposes. The next category groups together hospitals
considered urban or rural, in terms of whether they receive the IME
adjustment, the DSH adjustment, both, or neither.
The next three rows examine the impacts of the proposed changes
on rural hospitals by special payment groups (SCHs, MDHs and RRCs).
There were 328 RRCs, 311 SCHs, 135 MDHs, 133 hospitals that are both
SCHs and RRCs, and 14 hospitals that are both MDHs and RRCs.
The next series of groupings are based on the type of ownership
and the hospital's Medicare utilization expressed as a percent of
total patient days. These data were taken from the FY 2015 or FY
2014 Medicare cost reports.
The next two groupings concern the geographic reclassification
status of hospitals. The first grouping displays all urban hospitals
that were reclassified by the MGCRB for FY 2019. The second grouping
shows the MGCRB rural reclassifications.
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a. Effects of the Proposed Hospital Update and Other Proposed
Adjustments (Column 1)

As discussed in section IV.B. of the preamble of this proposed
rule, this column includes the proposed hospital update, including
the proposed 2.8 percent market basket update, the reduction of
proposed 0.8 percentage point for the multifactor productivity
adjustment, and the 0.75 percentage point reduction, in accordance
with the Affordable Care Act. In addition, as discussed in section
II.D. of the preamble of this proposed rule, this column includes
the FY 2018 +0.5 percent adjustment required under section 414 of
the MACRA. As a result, we are proposing to make a 1.75 percent
update to the national standardized amount. This column also
includes the proposed update to the hospital-specific rates which
includes the proposed 2.8 percent market basket update, the proposed
reduction of 0.8 percentage point for the multifactor productivity
adjustment, and the 0.75 percentage point reduction in accordance
with the Affordable Care Act. As a result, we are proposing to make
a 1.25 percent update to the hospital-specific rates.
Overall, hospitals would experience a 1.7 percent increase in
payments primarily due to the combined effects of the proposed
hospital update to the national standardized amount and the proposed
hospital update to the hospital-specific rate. Hospitals that are
paid under the hospital-specific rate would experience a 1.25
percent increase in payments; therefore, hospital categories
containing hospitals paid under the hospital specific rate would
experience a lower than average increase in payments.

b. Effects of the Proposed Changes to the MS-DRG Reclassifications and
Relative Cost-Based Weights With Recalibration Budget Neutrality
(Column 2)

Column 2 shows the effects of the proposed changes to the MS-
DRGs and relative weights with the application of the proposed
recalibration budget neutrality factor to the standardized amounts.
Section 1886(d)(4)(C)(i) of the Act requires us annually to make
appropriate classification changes in order to reflect changes in
treatment patterns, technology, and any other factors that may
change the relative use of hospital resources. Consistent with
section 1886(d)(4)(C)(iii) of the Act, we calculated a proposed
recalibration budget neutrality factor to account for the changes in
MS-DRGs and relative weights to ensure that the overall payment
impact is budget neutral.
As discussed in section II.E. of the preamble of this proposed
rule, the proposed FY 2019 MS-DRG relative weights would be 100
percent cost-based and 100 percent MS-DRGs. For FY 2019, the MS-DRGs
are calculated using the FY 2017 MedPAR data grouped to the Version
36 (FY 2019) MS-DRGs. The methodology to calculate the proposed
relative weights and the reclassification changes to the GROUPER are
described in more detail in section II.G. of the preamble of this
proposed rule.
The ``All Hospitals'' line in Column 2 indicates that proposed
changes due to the MS-DRGs and relative weights would result in a
0.0 percent change in payments with the application of the proposed
recalibration budget neutrality factor of 0.997896 to the
standardized amount. Hospital categories that generally treat more
medical cases than surgical cases would experience a decrease in
their payments under the relative weights. For example, rural
hospitals would experience a 0.3 percent decrease in payments in
part because rural hospitals tend to treat fewer surgical cases than
medical cases. Conversely, teaching hospitals with more than 100
residents would experience an increase in payments of 0.1 percent as
those hospitals treat more surgical cases than medical cases.

c. Effects of the Proposed Wage Index Changes (Column 3)

Column 3 shows the impact of updated wage data using FY 2015
cost report data, with the application of the proposed wage budget
neutrality factor. The wage index is calculated and assigned to
hospitals on the basis of the labor market area in which the
hospital is located. Under section 1886(d)(3)(E) of the Act,
beginning with FY 2005, we delineate hospital labor market areas
based on the Core Based Statistical Areas (CBSAs) established by
OMB. The current statistical standards used in FY 2019 are based on
OMB standards published on February 28, 2013 (75 FR 37246 and
37252), and 2010 Decennial Census data (OMB Bulletin No. 13-01), as
updated in OMB Bulletin Nos. 15-01 and 17-01. (We refer readers to
the FY 2015 IPPS/LTCH PPS final rule (79 FR 49951 through 49963) for
a full discussion on our adoption of the OMB labor market area
delineations, based on the 2010 Decennial Census data, effective
beginning with the FY 2015 IPPS wage index, to section III.A.2. of
the preamble of the FY 2017 IPPS/LTCH PPS final rule (81 FR 56913)
for a discussion of our adoption of the CBSA updates in OMB Bulletin
No. 15-01, which were effective beginning with the FY 2017 wage
index, and to section III.A.2. of this proposed rule for a
discussion of our proposed adoption of the CBSA update in OMB
Bulletin No. 17-01 for the FY 2019 wage index.)
Section 1886(d)(3)(E) of the Act requires that, beginning
October 1, 1993, we annually update the wage data used to calculate
the wage index. In accordance with this requirement, the proposed
wage index for acute care hospitals for FY 2019 is based on data
submitted for hospital cost reporting periods, beginning on or after
October 1, 2014 and before October 1, 2015. The estimated impact of
the updated wage data using the FY 2015 cost report data and the OMB
labor market area delineations on hospital payments is isolated in
Column 3 by holding the other proposed payment parameters constant
in this simulation. That is, Column 3 shows the proposed percentage
change in payments when going from a model using the FY 2018 wage
index, based on FY 2014 wage data, the labor-related share of 68.3
percent, under the OMB delineations and having a 100-percent
occupational mix adjustment applied, to a model using the proposed
FY 2019 pre-reclassification wage index based on FY 2015 wage data
with the labor-related share of 68.3 percent, under the OMB
delineations, also having a 100-percent occupational mix adjustment
applied, while holding other payment parameters, such as use of the
Version 36 MS-DRG GROUPER constant. The proposed FY 2019
occupational mix adjustment is based on the CY 2016 occupational mix
survey.
In addition, the column shows the impact of the application of
the proposed wage budget neutrality to the national standardized
amount. In FY 2010, we began calculating separate wage budget
neutrality and recalibration budget neutrality factors, in
accordance with section 1886(d)(3)(E) of the Act, which specifies
that budget neutrality to account for wage index changes or updates
made under that subparagraph must be made without regard to the 62
percent labor-related share guaranteed under section
1886(d)(3)(E)(ii) of the Act. Therefore, for FY 2019, we are
proposing to calculate the wage budget neutrality factor to ensure
that payments under updated wage data and the labor-related share of
68.3 percent are budget neutral, without regard to the lower labor-
related share of 62 percent applied to hospitals with a wage index
less than or equal to 1.0. In other words, the wage budget
neutrality is calculated under the assumption that all hospitals
receive the higher labor-related share of the standardized amount.
The proposed FY 2019 wage budget neutrality factor is 1.001182, and
the overall proposed payment change is 0 percent.
Column 3 shows the impacts of updating the wage data using FY
2015 cost reports. Overall, the proposed new wage data and the
labor-related share, combined with the proposed wage budget
neutrality adjustment, would lead to no change for all hospitals, as
shown in Column 3.
In looking at the wage data itself, the national average hourly
wage would increase 1.02 percent compared to FY 2018. Therefore, the
only manner in which to maintain or exceed the previous year's wage
index was to match or exceed the proposed 1.02 percent increase in
the national average hourly wage. Of the 3,226 hospitals with wage
data for both FYs 2018 and 2019, 1,445 or 44.8 percent would
experience an average hourly wage increase of 1.02 percent or more.
The following chart compares the shifts in wage index values for
hospitals due to proposed changes in the average hourly wage data
for FY 2019 relative to FY 2018. Among urban hospitals, 10 would
experience a decrease of 10 percent or more, and 6 urban hospitals
would experience an increase of 10 percent or more. One hundred
urban hospitals would experience an increase or decrease of at least
5 percent or more but less than 10 percent. Among rural hospitals, 5
would experience an increase of increase of 10 percent or more, and
2 would experience a decrease of 10 percent or more. Nine rural
hospitals would experience an increase or decrease of at least 5
percent or more but less than 10 percent. However, 748 rural
hospitals would experience increases or decreases of less than 5
percent, while 2,346 urban hospitals would experience increases or
decreases of less than 5 percent. No urban hospitals and no rural
hospitals would experience no change to their wage index. These
figures reflect proposed changes in the

[[Page 20610]]

``pre-reclassified, occupational mix-adjusted wage index,'' that is,
the wage index before the application of geographic
reclassification, the rural floor, the out-migration adjustment, and
other wage index exceptions and adjustments. (We refer readers to
sections III.G. through III.L. of the preamble of this proposed rule
for a complete discussion of the exceptions and adjustments to the
proposed wage index.) We note that the ``post-reclassified wage
index'' or ``payment wage index,'' which is the wage index that
includes all such exceptions and adjustments (as reflected in Tables
2 and 3 associated with this proposed rule, which are available via
the internet on the CMS website) is used to adjust the labor-related
share of a hospital's standardized amount, either 68.3 percent or 62
percent, depending upon whether a hospital's wage index is greater
than 1.0 or less than or equal to 1.0. Therefore, the proposed pre-
reclassified wage index figures in the following chart may
illustrate a somewhat larger or smaller change than would occur in a
hospital's payment wage index and total payment.
The following chart shows the projected impact of proposed
changes in the area wage index values for urban and rural hospitals.

------------------------------------------------------------------------
Number of hospitals
Proposed FY 2019 percentage change in -------------------------------
area wage index values Urban Rural
------------------------------------------------------------------------
Increase 10 percent or more............. 6 5
Increase greater than or equal to 5 55 3
percent and less than 10 percent.......
Increase or decrease less than 5 percent 2,346 748
Decrease greater than or equal to 5 45 6
percent and less than 10 percent.......
Decrease 10 percent or more............. 10 2
Unchanged............................... 0 0
------------------------------------------------------------------------

d. Effects of MGCRB Reclassifications (Column 4)

Our impact analysis to this point has assumed acute care
hospitals are paid on the basis of their actual geographic location
(with the exception of ongoing policies that provide that certain
hospitals receive payments on bases other than where they are
geographically located). The proposed changes in Column 4 reflect
the per case payment impact of moving from this baseline to a
simulation incorporating the MGCRB decisions for FY 2019.
By spring of each year, the MGCRB makes reclassification
determinations that will be effective for the next fiscal year,
which begins on October 1. The MGCRB may approve a hospital's
reclassification request for the purpose of using another area's
wage index value. Hospitals may appeal denials of MGCRB decisions to
the CMS Administrator. Further, hospitals have 45 days from the date
the IPPS proposed rule is issued in the Federal Register to decide
whether to withdraw or terminate an approved geographic
reclassification for the following year (we refer readers to the
discussion of our clarification of this policy in section III.I.2.
of the preamble to this proposed rule).
The overall effect of geographic reclassification is required by
section 1886(d)(8)(D) of the Act to be budget neutral. Therefore,
for purposes of this impact analysis, we are proposing to apply an
adjustment of 0.987084 to ensure that the effects of the
reclassifications under sections 1886(d)(8)(B) and (C) and
1886(d)(10) of the Act are budget neutral (section II.A. of the
Addendum to this proposed rule). Geographic reclassification
generally benefits hospitals in rural areas. We estimate that the
geographic reclassification would increase payments to rural
hospitals by an average of 1.4 percent. By region, all the rural
hospital categories would experience increases in payments due to
MGCRB reclassifications.
Table 2 listed in section VI. of the Addendum to this proposed
rule and available via the internet on the CMS website reflects the
reclassifications for FY 2019.

e. Effects of the Proposed Rural Floor, Including Application of
National Budget Neutrality (Column 5)

As discussed in section III.B. of the preamble of the FY 2009
IPPS final rule, the FY 2010 IPPS/RY 2010 LTCH PPS final rule, the
FYs 2011 through 2018 IPPS/LTCH PPS final rules, and this FY 2019
proposed rule, section 4410 of Public Law 105-33 established the
rural floor by requiring that the wage index for a hospital in any
urban area cannot be less than the wage index received by rural
hospitals in the same State. We would apply a uniform budget
neutrality adjustment to the wage index. As discussed in section
III.G. of the preamble of this proposed rule, we are not proposing
to extend the imputed floor policy. Therefore, column 6 shows the
effects of the proposed rural floor only.
The Affordable Care Act requires that we apply one rural floor
budget neutrality factor to the wage index nationally. We have
calculated a proposed FY 2019 rural floor budget neutrality factor
to be applied to the wage index of 0.994733, which would reduce wage
indexes by 0.53 percent.
Column 5 shows the projected impact of the rural floor with the
national rural floor budget neutrality factor applied to the wage
index based on the OMB labor market area delineations. The column
compares the proposed post-reclassification FY 2019 wage index of
providers before the proposed rural floor adjustment and the post-
reclassification FY 2019 wage index of providers with the rural
floor adjustment based on the OMB labor market area delineations.
Only urban hospitals can benefit from the rural floors. Because the
provision is budget neutral, all other hospitals (that is, all rural
hospitals and those urban hospitals to which the adjustment is not
made) would experience a decrease in payments due to the budget
neutrality adjustment that is applied nationally to their wage
index.
We estimate that 255 hospitals would receive the rural floor in
FY 2019. All IPPS hospitals in our model would have their wage index
reduced by the proposed rural floor budget neutrality adjustment of
0.994733. We project that, in aggregate, rural hospitals would
experience a -0.2 percent decrease in payments as a result of the
application of the proposed rural floor budget neutrality because
the rural hospitals do not benefit from the rural floor, but have
their wage indexes downwardly adjusted to ensure that the
application of the rural floor is budget neutral overall. We project
hospitals located in urban areas would experience no change in
payments because proposed increases in payments by hospitals
benefitting from the rural floor offset decreases in payments by
nonrural floor urban hospitals whose wage index is downwardly
adjusted by the rural floor budget neutrality factor. Urban
hospitals in the New England region would experience a 2.2 percent
increase in payments primarily due to the application of the rural
floor in Massachusetts. Thirty-five urban providers in Massachusetts
are expected to receive the rural floor wage index value, including
the proposed rural floor budget neutrality adjustment, increasing
payments overall to Massachusetts by an estimated $49 million. We
estimate that Massachusetts hospitals would receive approximately a
1.4 percent increase in IPPS payments due to the application of the
proposed rural floor in FY 2019.
Urban Puerto Rico hospitals are expected to experience a 0
percent increase in payments as a result of the application of the
proposed rural floor.
In response to a public comment addressed in the FY 2012 IPPS/
LTCH PPS final rule (76 FR 51593), we are providing the payment
impact of the rural floor with budget neutrality at the State level.
Column 1 of the following table displays the number of IPPS
hospitals located in each State. Column 2 displays the number of
hospitals in each State that would receive the rural floor wage
index for FY 2019. Column 3 displays the percentage of total
payments each State would receive or contribute to fund the rural
floor with national budget neutrality. The column compares the
proposed post-reclassification FY 2019 wage index of providers
before the rural floor adjustment and the proposed post-
reclassification FY 2019 wage index of providers with the rural
floor adjustment. Column 4 displays the estimated payment amount
that each State

[[Page 20611]]

would gain or lose due to the application of the rural floor with
national budget neutrality.

Proposed FY 2019 IPPS Estimated Payments Due to Proposed Rural Floor With National Budget Neutrality
----------------------------------------------------------------------------------------------------------------
Proposed
percent change
Number of in payments
Number of hospitals that due to Difference (in
hospitals would receive application of $ millions)
the rural rural floor
floor with budget
neutrality
(1) (2) (3) (4)
----------------------------------------------------------------------------------------------------------------
Alabama......................................... 84 2 -0.3 -$4
Alaska.......................................... 6 1 -0.2 0
Arizona......................................... 56 4 -0.2 -3
Arkansas........................................ 45 0 -0.3 -3
California...................................... 297 63 0.4 48
Colorado........................................ 46 9 0.6 8
Connecticut..................................... 30 17 5.5 90
Delaware........................................ 6 1 -0.3 -1
Washington, DC.................................. 7 0 -0.3 -2
Florida......................................... 168 8 -0.2 -17
Georgia......................................... 101 0 -0.3 -7
Hawaii.......................................... 12 0 -0.2 -1
Idaho........................................... 14 0 -0.2 -1
Illinois........................................ 125 2 -0.3 -12
Indiana......................................... 85 0 -0.3 -7
Iowa............................................ 34 0 -0.3 -3
Kansas.......................................... 51 0 -0.2 -2
Kentucky........................................ 64 0 -0.2 -4
Louisiana....................................... 90 0 -0.3 -4
Maine........................................... 17 0 -0.3 -1
Massachusetts................................... 56 35 1.4 49
Michigan........................................ 94 0 -0.3 -12
Minnesota....................................... 49 0 -0.2 -5
Mississippi..................................... 59 0 -0.3 -3
Missouri........................................ 72 0 -0.2 -6
Montana......................................... 13 2 -0.2 -1
Nebraska........................................ 23 0 -0.2 -2
Nevada.......................................... 22 3 0.4 4
New Hampshire................................... 13 4 0.7 4
New Jersey...................................... 64 10 -0.4 -13
New Mexico...................................... 25 2 -0.2 -1
New York........................................ 149 18 -0.2 -16
North Carolina.................................. 84 0 -0.2 -9
North Dakota.................................... 6 5 1.2 4
Ohio............................................ 129 7 -0.2 -9
Oklahoma........................................ 79 1 -0.3 -4
Oregon.......................................... 34 1 -0.2 -2
Pennsylvania.................................... 150 3 -0.3 -14
Puerto Rico..................................... 51 11 0.2 0
Rhode Island.................................... 11 10 -0.3 -1
South Carolina.................................. 54 6 0 -1
South Dakota.................................... 17 0 -0.2 -1
Tennessee....................................... 90 6 -0.3 -6
Texas........................................... 311 14 -0.2 -12
Utah............................................ 31 0 -0.2 -1
Vermont......................................... 6 0 -0.2 0
Virginia........................................ 74 1 -0.2 -5
Washington...................................... 48 4 -0.3 -6
West Virginia................................... 29 2 -0.1 -1
Wisconsin....................................... 66 1 -0.3 -5
Wyoming......................................... 10 2 0.4 1
----------------------------------------------------------------------------------------------------------------

f. Effects of the Application of Proposed the Frontier State Wage Index
and Proposed Out-Migration Adjustment (Column 6)

This column shows the combined effects of the application of
section 10324(a) of the Affordable Care Act, which requires that we
establish a minimum post-reclassified wage-index of 1.00 for all
hospitals located in ``frontier States,'' and the effects of section
1886(d)(13) of the Act, as added by section 505 of Public Law 108-
173, which provides for an increase in the wage index for hospitals
located in certain counties that have a relatively high percentage
of hospital employees who reside in the county, but work in a
different area with a higher wage index. These two wage index
provisions are

[[Page 20612]]

not budget neutral and would increase payments overall by 0.1
percent compared to the provisions not being in effect.
The term ``frontier States'' is defined in the statute as States
in which at least 50 percent of counties have a population density
less than 6 persons per square mile. Based on these criteria, 5
States (Montana, Nevada, North Dakota, South Dakota, and Wyoming)
are considered frontier States and 50 hospitals located in those
States would receive a frontier wage index of 1.0000. Overall, this
provision is not budget neutral and is estimated to increase IPPS
operating payments by approximately $61 million. Rural and urban
hospitals located in the West North Central region would experience
an increase in payments by 0.2 and 0.6 percent, respectively,
because many of the hospitals located in this region are frontier
State hospitals.
In addition, section 1886(d)(13) of the Act, as added by section
505 of Public Law 108-173, provides for an increase in the wage
index for hospitals located in certain counties that have a
relatively high percentage of hospital employees who reside in the
county, but work in a different area with a higher wage index.
Hospitals located in counties that qualify for the payment
adjustment would receive an increase in the wage index that is equal
to a weighted average of the difference between the wage index of
the resident county, post-reclassification and the higher wage index
work area(s), weighted by the overall percentage of workers who are
employed in an area with a higher wage index. There are an estimated
220 providers that would receive the out-migration wage adjustment
in FY 2019. Rural hospitals generally would qualify for the
adjustment, resulting in a 0.1 percent increase in payments. This
provision appears to benefit section 401 hospitals and RRCs in that
they would each experience a 0.1 and 0.2 percent increase in
payments, respectively. (We note that there has been an increase in
the number of RRCs as a result of the decision by the Court of
Appeals for the Third Circuit in Geisinger Community Medical Center
vs. Secretary, United States Department of Health and Human
Services, 794 F.3d 383 (3d Cir. 2015) and subsequent regulatory
changes (81 FR 23428).) This out-migration wage adjustment also is
not budget neutral, and we estimate the impact of these providers
receiving the proposed out-migration increase would be approximately
$36 million.

g. Effects of All Proposed FY 2019 Changes (Column 7)

Column 7 shows our estimate of the proposed changes in payments
per discharge from FY 2018 and FY 2019, resulting from all proposed
changes reflected in this proposed rule for FY 2019. It includes
combined effects of the year-to-year change of the previous columns
in the table.
The proposed average increase in payments under the IPPS for all
hospitals is approximately 2.1 percent for FY 2019 relative to FY
2018 and for this row is primarily driven by the proposed changes
reflected in Column 1. Column 7 includes the proposed annual
hospital update of 1.25 percent to the national standardized amount.
This proposed annual hospital update includes the proposed 2.8
percent market basket update, the proposed 0.8 percentage point
reduction for the multifactor productivity adjustment, and the 0.75
percentage point reduction under section 3401 of the Affordable Care
Act. As discussed in section II.D. of the preamble of this proposed
rule, this column also includes the +0.5 percent adjustment required
under section 414 of the MACRA. Hospitals paid under the hospital-
specific rate would receive a 1.25 percent hospital update. As
described in Column 1, the proposed annual hospital update with the
proposed +0.5 percent adjustment for hospitals paid under the
national standardized amount, combined with the proposed annual
hospital update for hospitals paid under the hospital-specific
rates, would result in a 2.1 percent increase in payments in FY 2019
relative to FY 2018. There are also interactive effects among the
various factors comprising the payment system that we are not able
to isolate, which contribute to our estimate of the proposed changes
in payments per discharge from FY 2018 and FY 2019 in Column 7.
Overall payments to hospitals paid under the IPPS due to the
proposed applicable percentage increase and changes to policies
related to MS-DRGs, geographic adjustments, and outliers are
estimated to increase by 2.1 percent for FY 2019. Hospitals in urban
areas would experience a 2.1 percent increase in payments per
discharge in FY 2019 compared to FY 2018. Hospital payments per
discharge in rural areas are estimated to increase by 1.1 percent in
FY 2019.

3. Impact Analysis of Table II

Table II presents the projected impact of the proposed changes
for FY 2019 for urban and rural hospitals and for the different
categories of hospitals shown in Table I. It compares the estimated
average payments per discharge for FY 2018 with the estimated
proposed average payments per discharge for FY 2019, as calculated
under our models. Therefore, this table presents, in terms of the
average dollar amounts paid per discharge, the combined effects of
the proposed changes presented in Table I. The estimated percentage
changes shown in the last column of Table II equal the estimated
percentage changes in average payments per discharge from Column 7
of Table I.

Table II--Impact Analysis of Proposed Changes for FY 2019 Acute Care Hospital Operating Prospective Payment System
[Payments per discharge]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated proposed
Estimated average FY average FY 2019 Proposed FY 2019
Number of hospitals 2018 payment per payment per changes
discharge discharge
(1) (2) (3) (4)
--------------------------------------------------------------------------------------------------------------------------------------------------------
All Hospitals................................................... 3,257 12,167 12,418 2.1
By Geographic Location.......................................... 0 0 0 0
Urban hospitals............................................. 2,480 12,514 12,782 2.1
Large urban areas........................................... 1,310 13,078 13,356 2.1
Other urban areas........................................... 1,170 11,958 12,215 2.1
Rural hospitals............................................. 777 9,115 9,215 1.1
Bed Size (Urban)................................................ 0 0 0 0
0-99 beds................................................... 638 9,985 10,129 1.4
100-199 beds................................................ 763 10,422 10,598 1.7
200-299 beds................................................ 438 11,356 11,598 2.1
300-499 beds................................................ 427 12,635 12,902 2.1
500 or more beds............................................ 214 15,498 15,887 2.5
Bed Size (Rural)................................................ 0 0 0 0
0-49 beds................................................... 299 7,793 7,853 0.8
50-99 beds.................................................. 279 8,630 8,717 1
100-149 beds................................................ 116 9,057 9,149 1
150-199 beds................................................ 44 9,611 9,712 1
200 or more beds............................................ 39 10,713 10,876 1.5

[[Page 20613]]

Urban by Region................................................. 0 0 0 0
New England................................................. 113 13,465 13,843 2.8
Middle Atlantic............................................. 310 14,104 14,369 1.9
South Atlantic.............................................. 401 11,125 11,338 1.9
East North Central.......................................... 385 11,828 12,055 1.9
East South Central.......................................... 147 10,527 10,759 2.2
West North Central.......................................... 158 12,238 12,487 2
West South Central.......................................... 378 11,327 11,569 2.1
Mountain.................................................... 163 12,940 13,090 1.2
Pacific..................................................... 374 15,865 16,354 3.1
Puerto Rico................................................. 51 9,113 9,161 0.5
Rural by Region................................................. 0 0 0 0
New England................................................. 20 12,473 12,564 0.7
Middle Atlantic............................................. 53 9,046 9,155 1.2
South Atlantic.............................................. 122 8,448 8,545 1.1
East North Central.......................................... 114 9,332 9,428 1
East South Central.......................................... 150 8,111 8,242 1.6
West North Central.......................................... 94 9,900 9,969 0.7
West South Central.......................................... 147 7,786 7,876 1.2
Mountain.................................................... 54 10,907 10,993 0.8
Pacific..................................................... 23 12,555 12,669 0.9
By Payment Classification....................................... 0 0 0 0
Urban hospitals............................................. 2,281 12,348 12,600 2
Large urban areas........................................... 1,325 13,065 13,343 2.1
Other urban areas........................................... 956 11,375 11,591 1.9
Rural areas................................................. 976 11,541 11,786 2.1
Teaching Status................................................. 0 0 0 0
Nonteaching................................................. 2,162 10,041 10,215 1.7
Fewer than 100 residents.................................... 846 11,630 11,856 1.9
100 or more residents....................................... 249 17,766 18,227 2.6
Urban DSH....................................................... 0 0 0 0
Non-DSH..................................................... 520 10,534 10,698 1.6
100 or more beds............................................ 1,483 12,717 12,983 2.1
Less than 100 beds.......................................... 365 9,273 9,429 1.7
Rural DSH....................................................... 0 0 0 0
SCH......................................................... 258 9,830 9,899 0.7
RRC......................................................... 367 12,346 12,653 2.5
100 or more beds............................................ 27 11,231 11,409 1.6
Less than 100 beds.......................................... 127 7,161 7,298 1.9
Urban teaching and DSH.......................................... 0 0 0 0
Both teaching and DSH....................................... 818 13,863 14,165 2.2
Teaching and no DSH......................................... 88 11,427 11,633 1.8
No teaching and DSH......................................... 1,030 10,372 10,565 1.9
No teaching and no DSH...................................... 345 9,983 10,138 1.6
Special Hospital Types.......................................... 0 0 0 0
RRC......................................................... 328 12,447 12,798 2.8
SCH......................................................... 311 10,970 11,064 0.9
MDH......................................................... 135 7,604 7,672 0.9
SCH and RRC................................................. 133 11,324 11,449 1.1
MDH and RRC................................................. 14 9,606 9,708 1.1
Type of Ownership............................................... 0 0 0 0
Voluntary................................................... 1,901 12,315 12,574 2.1
Proprietary................................................. 854 10,643 10,821 1.7
Government.................................................. 501 13,411 13,710 2.2
Medicare Utilization as a Percent of Inpatient Days............. 0 0 0 0
0-25........................................................ 546 15,419 15,705 1.9
25-50....................................................... 2,121 12,023 12,287 2.2
50-65....................................................... 477 9,798 9,922 1.3
Over 65..................................................... 73 7,321 7,465 2
Invalid/Missing Data........................................ 39 9,508 9,867 3.8
FY 2019 Reclassifications by the Medicare Geographic 0 0 0 0
Classification Review Board....................................

[[Page 20614]]

All Reclassified Hospitals.................................. 911 12,230 12,514 2.3
Non-Reclassified Hospitals.................................. 2,346 12,137 12,371 1.9
Urban Hospitals Reclassified................................ 633 12,818 13,134 2.5
Urban Nonreclassified Hospitals............................. 1,795 12,382 12,632 2
Rural Hospitals Reclassified Full Year...................... 278 9,469 9,596 1.3
Rural Nonreclassified Hospitals Full Year................... 452 8,662 8,723 0.7
All Section 401 Reclassified Hospitals:..................... 246 13,340 13,694 2.7
Other Reclassified Hospitals (Section 1886(d)(8)(B))........ 47 8,579 8,665 1
--------------------------------------------------------------------------------------------------------------------------------------------------------

H. Effects of Other Proposed Policy Changes

In addition to those proposed policy changes discussed
previously that we are able to model using our IPPS payment
simulation model, we are proposing to make various other changes in
this proposed rule. Generally, we have limited or no specific data
available with which to estimate the impacts of these proposed
changes. Our estimates of the likely impacts associated with these
other proposed changes are discussed in this section.

1. Effects of Proposed Policy Relating to New Medical Service and
Technology Add-On Payments

In section II.H. of the preamble to this proposed rule, we
discuss 15 technologies for which we received applications for add-
on payments for new medical services and technologies for FY 2019,
as well as the status of the new technologies that were approved to
receive new technology add-on payments in FY 2018. As explained in
the preamble to this proposed rule, add-on payments for new medical
services and technologies under section 1886(d)(5)(K) of the Act are
not required to be budget neutral. As discussed in section II.H.6.
of the preamble of this proposed rule, we have not yet determined
whether any of the 15 technologies for which we received
applications for consideration for new technology add-on payments
for FY 2019 will meet the specified criteria. Consequently, it is
premature to estimate the potential payment impact of these 15
technologies for any potential new technology add-on payments for FY
2019. We note that if any of the 15 technologies are found to be
eligible for new technology add-on payments for FY 2019, in the FY
2019 IPPS/LTCH PPS final rule, we would discuss the estimated
payment impact for FY 2019.
In section II.H.5. of the preamble of this proposed rule, we are
proposing to discontinue new technology add-on payments for
Idarucizumab, GORE[reg] EXCLUDER[reg] Iliac Branch Endoprosthesis
(IBE), Edwards/Perceval Sutureless Valves, and
Vistogard^TM (Uridine Triacetate) for FY 2019 because
these technologies will have been on the U.S. market for 3 years. We
also are proposing to continue to make new technology add-on
payments for Defitelio[reg] (Defibrotide), Ustekinumab
(Stelara[reg]) and Bezlotoxumab (Zinplava^TM) in FY 2019
because these technologies would still be considered new. We note
that new technology add-on payments for each case are limited to the
lesser of (1) 50 percent of the costs of the new technology or (2)
50 percent of the amount by which the costs of the case exceed the
standard MS-DRG payment for the case. Because it is difficult to
predict the actual new technology add-on payment for each case, our
estimates below are based on the increase in new technology add-on
payments for FY 2019 as if every claim that would qualify for a new
technology add-on payment would receive the maximum add-on payment.
The following are estimates for FY 2019 for the three technologies
for which we are proposing to continue to make new technology add-on
payments in FY 2019:
Based on the applicant's estimate from FY 2017, we
currently estimate that new technology add-on payments for
Defitelio[reg] would increase overall FY 2019 payments by $5,161,200
(maximum add-on payment of $75,900 * 68 patients).
Based on the applicant's estimate from FY 2018, we
currently estimate that new technology add-on payments for
Ustekinumab (Stelara[reg]) would increase overall FY 2019 payments
by $400,800 (maximum add-on payment of $2,400 * 167 patients).
Based on the applicant's estimate for FY 2018, we
currently estimate that new technology add-on payments for
Bezlotoxumab (Zinplava^TM) would increase overall FY 2019
payments by $2,857,600 (maximum add-on payment of $1,900 * 1,504
patients).

2. Effects of Proposed Changes to MS-DRGs Subject to the Postacute Care
Transfer Policy and the MS-DRG Special Payment Policy

In section IV.A. of the preamble of this proposed rule, we
discuss our proposed changes to the list of MS-DRGs subject to the
postacute care transfer policy and the MS-DRG special payment
policy. As reflected in Table 5 listed in section VI. of the
Addendum to this proposed rule (which is available via the internet
on the CMS website), using criteria set forth in regulations at 42
CFR 412.4, we evaluated MS-DRG charge, discharge, and transfer data
to determine which proposed new or revised MS-DRGs would qualify for
the postacute care transfer and MS-DRG special payment policies. As
a result of our proposals to revise the MS-DRG classifications for
FY 2019, which are discussed in section II.F. of the preamble of
this proposed rule, we are proposing additions to the list of MS-
DRGs subject to the MS-DRG special payment policy. Column 4 of Table
I in this Appendix A shows the effects of the proposed changes to
the MS-DRGs and the proposed relative payment weights and the
application of the proposed recalibration budget neutrality factor
to the standardized amounts. Section 1886(d)(4)(C)(i) of the Act
requires us annually to make appropriate DRG classification changes
in order to reflect changes in treatment patterns, technology, and
any other factors that may change the relative use of hospital
resources. The analysis and methods for determining the changes due
to the MS-DRGs and relative payment weights account for and include
changes as a result of the proposed changes to the MS-DRGs subject
to the MS-DRG postacute care transfer and MS-DRG special payment
policies. We refer readers to section I.G. of this Appendix A for a
detailed discussion of payment impacts due to the proposed MS-DRG
reclassification policies for FY 2019.
In section IV.A.2.b. of the preamble of this proposed rule, we
discuss our proposed conforming changes to the regulations at Sec.
412.4(c) to reflect the amendments to section 1886(d)(5)(J) of the
Act made by section 53109 of the Bipartisan Budget Act of 2018.
Section 53109 of the Bipartisan Budget Act of 2018 amended section
1886(d)(5)(J) of the Act to include discharges to hospice services
provided by a hospice program as a ``qualified discharge'' under the
postacute

[[Page 20615]]

care transfer policy, effective for discharges occurring on or after
October 1, 2018. To implement this change, we are proposing that
discharges using Patient Discharge Status code of 50 (Discharged/
Transferred to Hospice--Routine or Continuous Home Care) or 51
(Discharged/Transferred to Hospice, General Inpatient Care or
Inpatient Respite) would be subject to the postacute care transfer
policy, effective for discharges occurring on or after October 1,
2018. Our actuaries estimate that this change in the postacute care
transfer policy would generate an annual savings of approximately
$240 million in Medicare payments in FY 2019, and up to $540 million
annually by FY 2028.

3. Effects of Proposed Changes to Low-Volume Hospital Payment
Adjustment Policy

In section IV.D. of the preamble of this proposed rule, we
discuss the proposed changes to the low-volume hospital payment
policy for FY 2019 to implement the provisions of section 50204 of
the Bipartisan Budget Act of 2018. Specifically, for FY 2019,
qualifying hospitals must have less than 3,800 combined Medicare and
non-Medicare discharges (instead of 1,600 Medicare discharges) and
must be located more than 15 road miles from another subsection (d)
hospital. Section 50204 of the Bipartisan Budget Act of 2018 also
modified the methodology for calculating the payment adjustment for
low-volume hospitals for FYs 2019 through 2022. To implement these
requirements, we are proposing that the low-volume hospital payment
adjustment would be determined as follows:
For low-volume hospitals with 500 or fewer total
discharges during the fiscal year, an additional 25 percent for each
Medicare discharge.
For low-volume hospitals with total discharges during
the fiscal year of more than 500 and fewer than 3,800, an additional
percent calculated using the formula [(95/330) x (number of total
discharges/13,200)] for each Medicare discharge.
Based upon the best available data at this time, we estimate the
changes to the low-volume hospital payment adjustment policy that we
are proposing to implement in accordance with section 50204 of the
Bipartisan Budget Act of 2018 would increase Medicare payments by
$72 million in FY 2019 as compared to FY 2018. More specifically, in
FY 2019, we estimate that 622 providers would receive approximately
$417 million compared to our estimate of 606 providers receiving
approximately $345 million in FY 2018. These payment estimates were
determined by identifying providers that, based on the best
available data, are expected to qualify under the criteria that will
apply in FY 2019 (that is, are located at least 15 miles from the
nearest subsection (d) hospital and have less than 3,800 total
discharges), and were determined from the same data used in
developing the quantitative analyses of proposed changes in payments
per case discussed previously in section I.G. of this Appendix A.

4. Effects of the Proposed Changes to Medicare DSH and Uncompensated
Care Payments for FY 2019

As discussed in section IV.F. of the preamble of this proposed
rule, under section 3133 of the Affordable Care Act, hospitals that
are eligible to receive Medicare DSH payments will receive 25
percent of the amount they previously would have received under the
statutory formula for Medicare DSH payments under section
1886(d)(5)(F) of the Act. The remainder, equal to an estimate of 75
percent of what formerly would have been paid as Medicare DSH
payments (Factor 1), reduced to reflect changes in the percentage of
uninsured individuals and additional statutory adjustments (Factor
2), is available to make additional payments to each hospital that
qualifies for Medicare DSH payments and that has uncompensated care.
Each hospital eligible for Medicare DSH payments will receive an
additional payment based on its estimated share of the total amount
of uncompensated care for all hospitals eligible for Medicare DSH
payments. The uncompensated care payment methodology has
redistributive effects based on the proportion of a hospital's
amount of uncompensated care relative to the aggregate amount of
uncompensated care of all hospitals eligible for Medicare DSH
payments (Factor 3). The change to Medicare DSH payments under
section 3133 of the Affordable Care Act is not budget neutral.
In this proposed rule, we are proposing to establish the amount
to be distributed as uncompensated care payments to DSH eligible
hospitals, which for FY 2019 is $8,250,415,972.16. This figure
represents 75 percent of the amount that otherwise would have been
paid for Medicare DSH payment adjustments adjusted by a proposed
Factor 2 of 67.51 percent. For FY 2018, the amount available to be
distributed for uncompensated care was $6,766,695,163.56, or 75
percent of the amount that otherwise would have been paid for
Medicare DSH payment adjustments adjusted by a Factor 2 of 58.01
percent. To calculate proposed Factor 3 for FY 2019, we used an
average of data computed using Medicaid days from hospitals' 2013
cost reports from the HCRIS database as updated through February 15,
2018, uncompensated care costs from hospitals' 2014 and 2015 cost
reports from the same extract of HCRIS, and SSI days from the FY
2016 SSI ratios. For each eligible hospital, with the exception of
Puerto Rico hospitals, all-inclusive rate providers, and Indian
Health Service and Tribal hospitals, we calculated a proposed Factor
3 using information from cost reports for FYs 2013, 2014, and 2015.
To calculate Factor 3 for Puerto Rico hospitals, all-inclusive rate
providers, and Indian Health Service and Tribal hospitals, we used
data regarding low-income insured days for FY 2013. For a complete
discussion of the proposed methodology for calculating Factor 3, we
refer readers to section IV.F.4. of the preamble of this proposed
rule.
To estimate the impact of the combined effect of proposed
changes in Factors 1 and 2, as well as the proposed changes to the
data used in determining Factor 3, on the calculation of Medicare
uncompensated care payments (UCP), we compared total UCP estimated
in the FY 2018 IPPS/LTCH PPS final rule to total UCP estimated in
this FY 2019 IPPS/LTCH PPS proposed rule. For FY 2018, for each
hospital, we calculated 75 percent of the estimated amount that
would have been paid as Medicare DSH payments in the absence of
section 3133 of the Affordable Care Act, adjusted by a Factor 2 of
58.01 percent and multiplied by a Factor 3 calculated, as described
in the FY 2018 IPPS/LTCH PPS final rule. For FY 2019, we calculate
75 percent of the estimated amount that would be paid as Medicare
DSH payments absent section 3133 of the Affordable Care Act,
adjusted by a Factor 2 of 67.51 percent and multiplied by a Factor 3
calculated using the methodology described previously.
Our analysis included 2,485 hospitals that are projected to be
eligible for DSH in FY 2019. It did not include hospitals that
terminated their participation from the Medicare program as of
January 1, 2018, Maryland hospitals, new hospitals, MDHs, and SCHs
that are expected to be paid based on their hospital-specific rates.
Hospitals participating in the Rural Community Hospital
Demonstration Program were inadvertently included in the current
impact analysis, but will be excluded in the final rule, as
participating hospitals are not eligible to receive empirically
justified Medicare DSH payments and uncompensated care payments.
Roughly $6.6 million in total uncompensated care payments was
estimated for 13 of the 30 participating hospitals. However, in the
final rule, uncompensated care payments will be distributed only to
eligible hospitals projected to receive Medicare DSH payments. In
addition, low-income insured days and uncompensated care costs from
merged or acquired hospitals were combined into the surviving
hospital's CMS certification number (CCN), and the nonsurviving CCN
was excluded from the analysis. The estimated impact of the proposed
changes in Factors 1, 2, and 3 on uncompensated care payments across
all hospitals projected to be eligible for DSH payments in FY 2019,
by hospital characteristic, is presented in the following table.

[[Page 20616]]

Modeled Uncompensated Care Payments for Estimated FY 2019 DSHs by Hospital Type: Model UCP $ (in Millions) From
FY 2018 to FY 2019
----------------------------------------------------------------------------------------------------------------
FY 2018 final FY 2019
rule CN proposed rule Dollar
Number of estimated UCP estimated UCP difference: FY Percent change
estimated DSHs $ (in $ (in 2019- FY 2018 **
millions) millions) (in millions)
(1) (2) (3) (4) (5)
----------------------------------------------------------------------------------------------------------------
Total........................... 2,485 $6,767 $8,250 $1,484 21.93
By Geographic Location:
Urban Hospitals............. 1,962 6,422 7,793 1,371 21.35
Large Urban Areas........... 1,050 3,847 4,624 777 20.20
Other Urban Areas........... 912 2,575 3,169 594 23.06
Rural Hospitals............. 522 345 457 112 32.50
Bed Size (Urban):
0 to 99 Beds................ 351 177 246 68 38.53
100 to 249 Beds............. 860 1,519 1,862 343 22.59
250+ Beds................... 751 4,726 5,685 959 20.30
Bed Size (Rural):
0 to 99 Beds................ 388 164 232 67 41.01
100 to 249 Beds............. 121 146 185 39 26.77
250+ Beds................... 13 34 40 6 16.21
Urban by Region:
New England................. 92 259 289 30 11.65
Middle Atlantic............. 247 1,004 1,057 53 5.30
South Atlantic.............. 316 1,343 1,829 486 36.17
East North Central.......... 325 864 1,019 155 17.96
East South Central.......... 134 389 464 75 19.36
West North Central.......... 104 312 379 67 21.46
West South Central.......... 257 981 1,396 415 42.28
Mountain.................... 125 313 365 52 16.58
Pacific..................... 320 874 894 20 2.29
Puerto Rico................. 42 82 99 17 21.23
Rural by Region:
New England................. 12 14 18 4 30.09
Middle Atlantic............. 26 19 20 1 3.55
South Atlantic.............. 90 79 109 30 38.63
East North Central.......... 72 40 55 15 37.19
East South Central.......... 135 93 101 8 8.80
West North Central.......... 39 16 32 16 99.17
West South Central.......... 112 66 91 25 38.01
Mountain.................... 29 14 24 10 73.48
Pacific..................... 7 4 6 3 67.46
By Payment Classification:
Urban Hospitals............. 1,879 5,917 7,245 1,328 22.44
Large Urban Areas........... 1,062 3,855 4,634 780 20.23
Other Urban Areas........... 817 2,062 2,610 548 26.59
Rural Hospitals............. 605 850 1,005 155 18.25
Teaching Status:
Nonteaching................. 1,545 2,020 2,522 503 24.90
Fewer than 100 residents.... 695 2,246 2,695 448 19.96
100 or more residents....... 244 2,501 3,033 532 21.27
Type of Ownership:
Voluntary................... 1,468 4,137 4,813 676 16.35
Proprietary................. 566 1,015 1,258 243 23.98
Government.................. 450 1,615 2,179 564 34.93
Medicare Utilization Percent:
0 to 25..................... 470 2,255 2,663 408 18.07
25 to 50.................... 1,691 4,290 5,299 1,009 23.53
50 to 65.................... 281 215 279 63 29.42
Greater than 65............. 39 7 9 3 40.26
----------------------------------------------------------------------------------------------------------------
Source: Dobson DaVanzo analysis of 2013-2015 Hospital Cost Reports.
* Dollar UCP calculated by [0.75 * estimated section 1886(d)(5)(F) payments * Factor 2 * Factor 3]. When summed
across all hospitals projected to receive DSH payments, uncompensated care payments are estimated to be $6,767
million in FY 2018 and $8,250 million in FY 2018.
** Percentage change is determined as the difference between Medicare UCP payments modeled for the FY 2019 IPPS/
LTCH PPS proposed rule (column 3) and Medicare UCP payments modeled for the FY 2018 IPPS/LTCH PPS final rule
correction notice (column 2) divided by Medicare UCP payments modeled for the FY 2018 final rule correction
notice (column 2) times 100 percent.
*** Hospitals with Missing or Unknown Medicare Utilization are not shown in table.

Changes in projected FY 2019 uncompensated care payments from
payments in FY 2018 are driven by increases in Factor 1 and Factor
2, as well as by an increase in the number of hospitals eligible to
receive DSH in FY 2019 relative to FY 2018. Factor 1 has increased
from $11.665 billion to $12.221 billion, and the percent change in
the percent of individuals who are

[[Page 20617]]

uninsured (Factor 2) has increased from 58.01 percent to 67.51
percent. Based on the proposed increases in these two factors, the
proposed impact analysis found that, across all projected DSH
eligible hospitals, FY 2019 uncompensated care payments are
estimated at approximately $8.250 billion, or an increase of
approximately 21.9 percent from FY 2018 uncompensated care payments
(approximately $6.767 billion). While these proposed changes would
result in a net increase in the amount available to be distributed
in uncompensated care payments, the projected payment increases vary
by hospital type. This redistribution of uncompensated care payments
is caused by changes in Factor 3.
As seen in the above table, percent increases smaller than 21.93
percent indicate that hospitals within the specified category are
projected to experience a smaller increase in uncompensated care
payments, on average, compared to the universe of projected FY 2019
DSH hospitals. Conversely, percent increases that are greater than
21.93 percent indicate a hospital type is projected to have a larger
increase than the overall average. The variation in the distribution
of payments by hospital characteristic is largely dependent on a
given hospital's number of Medicaid days and SSI days, as well as
its uncompensated care costs as reported in the Worksheet S-10, used
in the Factor 3 computation.
Many rural hospitals are projected to experience a larger
increase in uncompensated care payments than their urban
counterparts. Overall, rural hospitals are projected to receive a
32.50 percent increase in uncompensated care payments, while urban
hospitals are projected to receive a 21.35 percent increase in
uncompensated care payments.
By bed size, smaller hospitals are projected to receive larger
increases in uncompensated care payments than larger hospitals, in
both rural and urban settings. Rural hospitals with 0-99 beds are
projected to receive a 41.01 percent payment increase, and rural
hospitals with 100-249 beds are projected to see a 26.77 percent
increase. Larger rural hospitals with 250+ beds are projected to
experience a 16.21 percent payment increase, which is smaller than
the overall average. This trend is consistent with urban hospitals,
in which the smallest urban hospitals (0-99 beds) are projected to
receive an increase in uncompensated care payments of 38.53 percent.
Urban hospitals with 100-250 beds are projected to receive an
increase of 22.59 percent, which is consistent with the overall
average, while larger urban hospitals with and 250+ beds are
projected to receive a 20.30 percent increase in uncompensated care
payments, which is somewhat smaller than the overall average but
larger than the increase projected for their rural counterparts.
By region, rural hospitals in the West North Central region are
expected to receive a large increase in uncompensated care payments,
as are rural hospitals in the Mountain, Pacific, South Atlantic,
West South Central, East North Central, and New England regions.
Rural hospitals in the Middle Atlantic and East South Central
regions are projected to receive smaller than average payment
increases. Regionally, urban hospitals are projected to receive a
wide range of payment changes. Small increases in uncompensated care
payments are projected in the Pacific and Middle Atlantic regions.
Smaller than average increases in payments are also projected in the
New England, Mountain, East North Central, and East South Central
regions. Hospitals in the South Atlantic and West South Central
regions are projected to receive a larger than average increase in
uncompensated payments, while the projected increase in the West
North Central region and in Puerto Rico is generally consistent with
the overall average increase of 21.93 percent.
Nonteaching hospitals are projected to receive a larger than
average payment increase of 24.90 percent. Teaching hospitals with
fewer than 100 residents are projected to receive payment increases
of 19.96 percent, which is slightly below average, while those
teaching hospitals with 100+ residents have a projected payment
increase of 21.27 percent, consistent with the overall average.
Government and proprietary hospitals are projected to receive larger
than average increases (34.93 percent and 23.98 percent,
respectively), while voluntary hospitals are expected to receive
increases lower than the overall average at 16.35 percent. Hospitals
with 0 to 25 percent Medicare utilization are projected to receive
increases in uncompensated care payments slightly below the overall
average, while all other hospitals are projected to receive larger
increases.

5. Effects of Proposed Reduction Under the Hospital Readmissions
Reduction Program for FY 2019

In section IV.H. of the preamble of this proposed rule, we
discuss proposed requirements for the Hospital Readmissions
Reduction Program. This program requires a reduction to a hospital's
base operating DRG payment to account for excess readmissions of
selected applicable conditions. The table and analysis below
illustrate the estimated financial impact of the Hospital
Readmissions Reduction Program payment adjustment methodology, as
outlined in this FY 2019 IPPS/LTCH PPS proposed rule. In this table,
we are presenting the estimated impact of the FY 2019 Hospital
Readmissions Reduction Program on hospitals by hospital
characteristic.
The table presents results of hospitals stratified into
quintiles based on the proportion of dual-eligible stays among
Medicare fee-for-service (FFS) and managed care stays between July
1, 2013 and June 30, 2016 (that is, the FY 2018 Hospital
Readmissions Reduction Program performance period). Hospitals'
performance on the excess readmission ratios (ERRs) are assessed
relative to their peer group median and a neutrality modifier is
applied in the payment adjustment factor calculation to maintain
budget neutrality. To analyze the results by hospital
characteristic, we used the FY 2018 Inpatient Prospective Payment
System (IPPS) Final Rule Impact File.
This table includes 3,064 non-Maryland hospitals eligible to
receive a penalty during the performance period. Hospitals are
eligible to receive a penalty if they have 25 or more eligible
discharges for at least one measure between July 1, 2013 and June
30, 2016. The second column in the table indicates the total number
of penalty eligible non-Maryland hospitals (that is, have an
estimated payment adjustment factor less than 1) with available data
for each characteristic.
The third column in the table indicates the percentage of
penalized hospitals among those eligible to receive a penalty for
each characteristic. For example, with regards to teaching status,
81.90 percent of eligible hospitals characterized as non-teaching
hospitals would be penalized. Among teaching hospitals, 90.05
percent of eligible hospitals with fewer than 100 residents and
96.37 percent of eligible hospitals with 100 or more residents would
be penalized.
The fourth column in the table estimates the financial impact on
hospitals by hospital characteristics. The table shows the share of
payment adjustments as a percentage of all base operating DRG
payments for each characteristic. This is calculated as the sum of
penalties for all hospitals with that characteristic over the sum of
all base operating DRG payments for those hospitals between October
1, 2015 and September 30, 2016 (FY 2016). For example, the penalty
as a share of payments for urban hospitals is 0.69 percent. This
means that total penalties for all urban hospitals are 0.69 percent
of total payments for urban hospitals. Measuring the financial
impact on hospitals as a proportion of total base operating DRG
payments allows us to account for differences in the amount of base
operating DRG payments for hospitals within the characteristic when
comparing the financial impact of the program on different groups of
hospitals.

[[Page 20618]]

Estimated Percentage of Hospitals Penalized and Penalty as Share of Payment for FY 2019 Hospital Readmissions
Reduction Program
[By hospital characteristic]
----------------------------------------------------------------------------------------------------------------
Percentage of Penalty as a
Number of Number of hospitals share of
Hospital characteristic eligible penalized penalized \c\ payments \d\
hospitals \a\ hospitals \b\ (%) (%)
----------------------------------------------------------------------------------------------------------------
All Hospitals................................... 3,064 2,610 85.18 0.70
By Geographic Location (n=3,064): \e\
Urban hospitals............................. 2,291 1,991 86.91 0.69
1-99 beds............................... 530 375 70.75 0.80
100-199 beds............................ 711 645 90.72 0.81
200-299 beds............................ 419 387 92.36 0.77
300-399 beds............................ 273 255 93.41 0.69
400-499 beds............................ 145 137 94.48 0.55
500 or more beds........................ 213 192 90.14 0.62
Rural hospitals............................. 773 619 80.08 0.71
1-49 beds............................... 292 208 71.23 0.61
50-99 beds.............................. 283 231 81.63 0.67
100-149 beds............................ 115 104 90.43 0.76
150-199 beds............................ 44 40 90.91 0.59
200 or more beds........................ 39 36 92.31 0.86
By Teaching Status \f\ (n=3,064):
Non-teaching................................ 2,022 1,656 81.90 0.80
Fewer than 100 Residents.................... 794 715 90.05 0.70
100 or more Residents....................... 248 239 96.37 0.53
By Ownership Type (n=3,064):
Government.................................. 481 397 82.54 0.58
Proprietary................................. 768 616 80.21 0.96
Voluntary................................... 1,815 1,597 87.99 0.66
By Safety-net Status \g\ (n=3,064):
Safety-net hospitals........................ 619 541 87.40 0.57
Non-safety-net hospitals.................... 2,445 2,069 84.62 0.73
By DSH Patient Percentage \h\ (n=3,064):
0-24........................................ 1,246 1,021 81.94 0.78
25-49....................................... 1,452 1,269 87.40 0.66
50-64....................................... 200 182 91.00 0.64
65 and over................................. 166 138 83.13 0.59
By Medicare Cost Report (MCR) Percent: \i\
(n=3,061):
0-24........................................ 433 368 84.99 0.46
25-49....................................... 2,100 1,819 86.62 0.71
50-64....................................... 468 381 81.41 0.89
65 and over................................. 60 41 68.33 1.25
By Region (n=3,064):
New England................................. 129 114 88.37 0.82
Middle Atlantic............................. 352 327 92.90 0.85
South Atlantic.............................. 511 469 91.78 0.84
East North Central.......................... 480 417 86.88 0.65
East South Central.......................... 288 258 89.58 0.87
West North Central.......................... 247 196 79.35 0.46
West South Central.......................... 476 373 78.36 0.63
Mountain.................................... 218 163 74.77 0.56
Pacific..................................... 363 293 80.72 0.42
----------------------------------------------------------------------------------------------------------------
Source: Results based on July 1, 2013 through June 30, 2016 discharges among subsection (d) and Maryland
hospitals only. Although data from all subsection (d) and Maryland hospitals are used in calculations of each
hospital's ERR, this table does not include results for Maryland hospitals since Maryland hospitals are not
eligible for a penalty under the program. Hospitals are stratified into five peer groups based on the
proportion of FFS and managed care dual-eligible stays for the 3-year FY 2018 performance period. Hospital
characteristics are from the FY 2018 Hospital Inpatient Prospective Payment System (IPPS) Final Rule Impact
File.
\a\ This column is the number of applicable hospitals within the characteristic that are eligible for a penalty
(that is, they have 25 or more eligible discharges for at least one measure).
\b\ This column is the number of applicable hospitals that are penalized (i.e., they have 25 or more eligible
discharges for at least one measure and an estimated payment adjustment factor less than 1) within the
characteristic.
\c\ This column is the percentage of applicable hospitals that are penalized among hospitals that are eligible
to receive a penalty.
\d\ The penalty as a share of payments is calculated as the sum of all penalties for the group of hospitals with
that characteristic divided by total base operating DRG payments for all hospitals with that characteristic.
MedPAR data from October 1, 2015 through September 30, 2016 (FY 2016), are used to calculate the total base
operating DRG payments, which are used to estimate total penalties.
\e\ The total number of hospitals with hospital characteristics data may not add up to the total number of
hospitals because not all hospitals have data for all characteristics. All hospitals had information for:
Geographic location, bed size, teaching status, ownership type, safety-net status, DSH patient percentage, and
region (n=3,064). Not all hospitals had data for MCR percent (n=3,061).
\f\ A hospital is considered a teaching hospital if it has an IME adjustment factor for Operation PPS (TCHOP)
greater than zero.
\g\ A hospital is considered a safety-net hospital if they are in the top DSH quintile.
\h\ DSH [Disproportionate Share Hospital] patient percentage is the sum of the percentage of Medicare inpatient
days attributable to patients eligible for both Medicare Part A and Supplemental Security Income (SSI), and
the percentage of total inpatient days attributable to patients eligible for Medicaid but not Medicare Part A.
\i\ MCR [Medicare Cost Report] percent is the percentage of total inpatient stays from Medicare patients.

[[Page 20619]]

6. Effects of Proposed Changes Under the FY 2019 Hospital Value-Based
Purchasing (VBP) Program

a. Effects of Proposed Changes for FY 2019

In section IV.I. of the preamble of this proposed rule, we
discuss the Hospital VBP Program under which the Secretary makes
value-based incentive payments to hospitals based on their
performance on measures during the performance period with respect
to a fiscal year. These incentive payments will be funded for FY
2019 through a reduction to the FY 2019 base operating DRG payment
amount for the discharge for the hospital for such fiscal year, as
required by section 1886(o)(7)(B) of the Act. The applicable
percentage for FY 2019 and subsequent years is 2 percent. The total
amount available for value-based incentive payments must be equal to
the total amount of reduced payments for all hospitals for the
fiscal year, as estimated by the Secretary.
In section IV.I.1.b. of the preamble of this proposed rule, we
estimate the available pool of funds for value-based incentive
payments in the FY 2019 program year, which, in accordance with
section 1886(o)(7)(C)(v) of the Act, will be 2.00 percent of base
operating DRG payments, or a total of approximately $1.9 billion.
This estimated available pool for FY 2019 is based on the historical
pool of hospitals that were eligible to participate in the FY 2018
program year and the payment information from the December 2017
update to the FY 2017 MedPAR file.
The proposed estimated impacts of the FY 2019 program year by
hospital characteristic, found in the table below, are based on
historical TPSs. We used the FY 2018 program year's TPSs to
calculate the proxy adjustment factors used for this impact
analysis. These are the most recently available scores that
hospitals were given an opportunity to review and correct. The proxy
adjustment factors use estimated annual base operating DRG payment
amounts derived from the December 2017 update to the FY 2017 MedPAR
file. The proxy adjustment factors can be found in Table 16
associated with this proposed rule (available via the internet on
the CMS website).
The impact analysis shows that, for the FY 2019 program year,
the number of hospitals that would receive an increase in their base
operating DRG payment amount is higher than the number of hospitals
that would receive a decrease. On average, urban hospitals in the
West North Central region and rural hospitals in Mountain region
would have the highest positive percent change in base operating
DRG. Urban Middle Atlantic, urban South Atlantic, and urban East
South Central regions would experience an average decrease in base
operating DRG. All other regions, both urban and rural, would have
an average increase in base operating DRG.
As DSH percent increases, the average percent change in base
operating DRG would decrease. With respect to hospitals' Medicare
utilization as a percent of inpatient days (MCR), as the MCR percent
increases, the percent change in base operating DRG would tend to
increase. On average, teaching hospitals would have a decrease in
base operating DRG, while non-teaching hospitals would have an
increase in base operating DRG.

Impact Analysis of Base Operating DRG Payment Amounts Resulting From the
FY 2019 Hospital VBP Program
------------------------------------------------------------------------
Average net
Number of percentage
hospitals payment
adjustment
------------------------------------------------------------------------
By Geographic Location:
All Hospitals....................... 2,808 0.163
Large Urban..................... 1,146 0.067
Other Urban..................... 994 0.070
Rural Area...................... 668 0.465
Urban hospitals............. 2,140 0.068
0-99 beds............... 375 0.475
100-199 beds............ 708 0.120
200-299 beds............ 429 -0.037
300-499 beds............ 416 -0.185
500 or more beds........ 212 -0.117
Rural hospitals............. 668 0.465
0-49 beds............... 201 0.675
50-99 beds.............. 272 0.526
100-149 beds............ 114 0.306
150-199 beds............ 43 0.048
200 or more beds........ 38 -0.125
By Region:
Urban By Region..................... 2,140 0.068
New England..................... 107 0.191
Middle Atlantic................. 288 -0.101
South Atlantic.................. 376 -0.024
East North Central.............. 348 0.178
East South Central.............. 131 -0.101
West North Central.............. 137 0.315
West South Central.............. 265 0.011
Mountain........................ 144 0.027
Pacific......................... 344 0.189
Rural By Region..................... 668 0.465
New England..................... 20 0.739
Middle Atlantic................. 51 0.397
South Atlantic.................. 108 0.489
East North Central.............. 108 0.489
East South Central.............. 123 0.214
West North Central.............. 82 0.628
West South Central.............. 109 0.349
Mountain........................ 46 0.785
Pacific......................... 21 0.562
By MCR Percent:
0-25................................ 434 0.122

[[Page 20620]]

25-50............................... 1,958 0.152
50-65............................... 389 0.250
Over 65............................. 27 0.350
Missing............................. .............. ..............
By DSH Percent:
0-25................................ 1,082 0.254
25-50............................... 1,381 0.126
50-65............................... 196 0.005
Over 65............................. 149 0.046
By Teaching Status:
Non-Teaching........................ 1,763 0.278
Teaching............................ 1,045 -0.032
------------------------------------------------------------------------

Actual FY 2019 program year's TPSs will not be reviewed and
corrected by hospitals until after the FY 2019 IPPS/LTCH PPS final
rule has been published. Therefore, the same historical universe of
eligible hospitals and corresponding TPSs from the FY 2018 program
year will be used for the updated impact analysis in that final
rule.

b. Effects of Proposed Domain Weighting and Alternative Considered
Beginning With the FY 2021 Program Year

In section IV.I.4.b. of the preamble of this proposed rule, we
discuss our proposed changes to the Hospital VBP Program domain
weighting beginning with the FY 2021 program year. We note that we
are not proposing to make any changes to the domain weighting for
the FY 2019 or FY 2020 program years. The estimated impacts of the
proposed domain weighting and alternative considered for three
domains beginning with the FY 2021 program year, by hospital
characteristic found in the table below, are based on historical
TPSs. This analysis uses the same data set as the proposed estimated
impacts for the FY 2019 program year above, and is intended to
expand upon the analysis of the proposed domain weighting and
alternative considered discussed in section IV.I.4.b. of the
preamble of this proposed rule.
This impact analysis shows that under the proposed domain
weighting to increase the Clinical Outcomes domain (proposed domain
name; previously referred to as the Clinical Care domain) from 25
percent to 50 percent of each hospital's TPS, we estimate that on
average, urban hospitals in the East South Central region and rural
hospitals in New England region would have the highest positive
percent change in base operating DRG. We estimate that four of the
urban regions would have a decrease in base operating DRG, on
average. We estimate that rural hospitals in East South Central and
West South Central would have a decrease in base operating DRG, on
average, while rural hospitals in the other regions would have an
increase. We estimate that hospitals with a DSH percent 0-25 would
have a positive percent change in base operating DRG, while
hospitals with higher DSH percentages would have negative percent
change in base operating DRG, on average. We estimate that hospitals
with MCR percent over 65 would have a positive percent change in
base operating DRG, while hospitals with lower MCR percentages would
have negative percent change in base operating DRG, on average. We
estimate that both teaching and non-teaching hospitals would have a
negative percent change in base operating DRG.
Under the alternative domain weighting we considered of equally
weighting each of the three domains to constitute one-third of each
hospital's TPS, we estimate that rural hospitals in New England
region would have the highest positive percent change in base
operating DRG, with all rural hospitals estimated to have a positive
percent change in base operating DRG. We estimate that on average
urban hospitals in four regions would have a positive percent change
in base operating DRG, while urban hospitals in five of the regions
would have a negative percent change in base operating DRG. We
estimate that hospitals with a DSH percent of 0-25 and 25-50 would
have a positive percent change in base operating DRG, while
hospitals with higher DSH percentages would have negative percent
change in base operating DRG, on average. We estimate that hospitals
with MCR percent 0-25 would have a negative percent change in base
operating DRG, while hospitals with higher MCR percentages would
have positive percent change in base operating DRG, on average. We
estimate that teaching hospitals would have a negative percent
change in base operating DRG, on average, while nonteaching
hospitals would have a positive percent change in base operating
DRG.

Impact Analysis of Base Operating DRG Payment Amounts Resulting From Proposed and Alternative Domain Weighting
Considered for Three Domains Beginning With the FY 2021 Hospital VBP Program
----------------------------------------------------------------------------------------------------------------
Average Average
percentage percentage
payment payment
Number of adjustment adjustment
hospitals (proposed (alternative
domain domain
weighting) weighting)
----------------------------------------------------------------------------------------------------------------
By Geographic Location:
All Hospitals............................................... 2,701 -0.071 0.059
Large Urban............................................. 1,087 -0.019 -0.015
Other Urban............................................. 963 -0.152 -0.032
Rural Area.............................................. 651 -0.040 -0.318
Urban hospitals............................................. 2,050 -0.081 -0.023
0-99 beds............................................... 341 0.051 0.379
100-199 beds............................................ 682 -0.106 -0.040
200-299 beds............................................ 407 -0.118 -0.120
300-499 beds............................................ 409 -0.186 -0.233

[[Page 20621]]

500 or more beds........................................ 211 0.058 -0.026
Rural hospitals............................................. 651 -0.040 -0.318
0-49 beds............................................... 188 0.044 0.573
50-99 beds.............................................. 268 0.024 0.379
100-149 beds............................................ 114 -0.155 0.105
150-199 beds............................................ 43 -0.298 -0.148
200 or more beds........................................ 38 -0.262 -0.203
By Region:
Urban By Region............................................. 2,050 -0.081 -0.023
New England............................................. 105 0.203 0.172
Middle Atlantic......................................... 284 -0.166 -0.191
South Atlantic.......................................... 373 -0.178 -0.119
East North Central...................................... 342 0.061 0.109
East South Central...................................... 127 0.384 -0.248
West North Central...................................... 133 0.127 0.344
West South Central...................................... 248 -0.189 -0.148
Mountain................................................ 137 -0.147 -0.074
Pacific................................................. 301 0.013 0.093
Rural By Region............................................. 651 -0.040 0.318
New England............................................. 19 0.317 0.661
Middle Atlantic......................................... 51 0.066 0.314
South Atlantic.......................................... 106 0.039 0.379
East North Central...................................... 108 0.011 0.398
East South Central...................................... 122 -0.283 0.031
West North Central...................................... 82 0.088 0.557
West South Central...................................... 102 -0.219 0.077
Mountain................................................ 40 0.185 0.658
Pacific................................................. 21 0.079 0.563
By MCR Percent:
0-25........................................................ 350 -0.189 -0.119
25-50....................................................... 1,937 -0.063 0.058
50-65....................................................... 387 -0.029 0.188
Over 65..................................................... 27 0.238 0.579
Missing..................................................... .............. .............. ..............
By DSH Percent:
0-25........................................................ 1,031 0.021 0.182
25-50....................................................... 1,359 -0.127 0.012
50-65....................................................... 185 -0.184 -0.156
Over 65..................................................... 126 -0.058 -0.119
By Teaching Status:
Non-Teaching................................................ 1,702 -0.056 0.151
Teaching.................................................... 999 -0.097 -0.098
----------------------------------------------------------------------------------------------------------------

7. Effects of Proposed Changes to the HAC Reduction Program for FY 2019

In section IV.J. of the preamble of this proposed rule, we
discuss proposed requirements for the HAC Reduction Program. In this
proposed rule, we are not proposing to adopt any new measures into
the HAC Reduction Program. However, the Hospital IQR Program is
proposing to remove the claims-based Patient Safety and Adverse
Events Composite (PSI-90) and five NHSN HAI measures. These measures
had been previously adopted for, and will remain in, the HAC
Reduction Program. We are proposing to begin validation of these HAI
measures under the HAC Reduction Program beginning in FY 2020.
We note the burden associated with collecting and submitting
data via the NHSN system is captured under a separate OMB control
number, 0920-0666, and therefore will not impact our burden
estimates. We anticipate the proposed removal of the NHSN HAI
measures from the Hospital IQR Program will result in a net burden
decrease to the Hospital IQR Program, but will result in an off-
setting net burden increase to the HAC Reduction Program because
hospitals selected for validation will continue to be required to
submit validation templates for the HAI measures. Therefore, if the
proposals found in section VIII.A.5.b.(1) and IV.J.4.e. of the
preamble of this proposed rule to remove HAI chart-abstracted
measures from the Hospital IQR Program and adopt validation process
for the HAC Reduction Program are finalized, then we anticipate a
shift in burden associated with this data validation effort to the
HAC Reduction Program beginning in FY 2020. We discuss the
associated burden hours in section XV.B.7. of this proposed rule,
and note the burden associated with these requirements is captured
in an information collection request currently available for review
and comment, OMB control number 0938--NEW.
The table below presents the estimated proportion of hospitals
in the FY 2019 worst-performing quartile of the Total HAC Scores by
hospital characteristic. These FY 2019 HAC Reduction Program results
were calculated using the Winsorized z-score methodology finalized
in the 2017 IPPS/LTCH PPS final rule (80 FR 57022 through 57025).
Each hospital's Total HAC Score was calculated as the weighted
average of the hospital's Domain 1 score (15 percent) and

[[Page 20622]]

Domain 2 score (85 percent). Non-Maryland hospitals with a Total HAC
Score above the 75th percentile Total HAC Score were identified as
being in the worst-performing quartile.
We used the modified Recalibrated Patient Safety Indicator (PSI)
90 Composite measure results based on Medicare fee-for-service (FFS)
discharges from October 1, 2015 through June 30, 2017 and ICD-10
recalibrated version 8.0 of the CMS PSI software to estimate the
impact of the FY 2019 HAC Reduction Program. For the CDC Central
Line-Associated Bloodstream Infection (CLABSI), Catheter-Associated
Urinary Tract Infection (CAUTI), Colon and Abdominal Hysterectomy
Surgical Site Infection (SSI), Methicillin-resistant Staphylococcus
aureus (MRSA) bacteremia, and Clostridium difficile Infection (CDI)
measure results, we used standardized infection ratios (SIRs)
calculated with hospital surveillance data reported to the National
Healthcare Safety Network (NHSN) for infections occurring between
January 1, 2015 through December 31, 2016.\403\
---------------------------------------------------------------------------

\403\ Updated FY 2019 data for the CDC NHSN measures (1/1/2016
through 12/31/2017) was not available at the time of publishing this
proposed rule.
---------------------------------------------------------------------------

To analyze the results by hospital characteristic, we used the
FY 2018 Final Rule Impact File. This table includes 3,216 non-
Maryland hospitals with an FY 2019 Total HAC Score. Of these, 3,201
hospitals had information for geographic location and bed size,
Disproportionate Share Hospital (DSH) percent, teaching status,
ownership status, and safety-net status; \404\ 3,188 had information
for Medicare Cost Report (MCR) percent; and 3,214 had information
for their geographic region. Maryland hospitals and hospitals
without a Total HAC Score are not included in the table below.
---------------------------------------------------------------------------

\404\ A hospital is considered a Safety-net hospital if it is in
the top quintile for DSH percent.
---------------------------------------------------------------------------

The second column in the table indicates the total number of
non-Maryland hospitals with available data for each characteristic
that have a Total HAC Score for the FY 2019 HAC Reduction Program.
For example, with regard to teaching status, 2,131 hospitals are
characterized as non-teaching hospitals, 822 are characterized as
teaching hospitals with fewer than 100 residents, and 248 are
characterized as teaching hospitals with at least 100 residents.
This only represents a total of 3,201 hospitals because the other 15
hospitals have missing data for teaching status. The third column in
the table indicates the number of hospitals for each characteristic
that would be in the worst-performing quartile of Total HAC Scores.
These hospitals would receive a payment reduction under the FY 2019
HAC Reduction Program. For example, with regard to teaching status,
475 out of 2,131 hospitals characterized as non-teaching hospitals
would be subject to a payment reduction. Among teaching hospitals,
199 out of 822 hospitals with fewer than 100 residents and 116 out
of 248 hospitals with 100 or more residents would be subject to a
payment reduction.
The fourth column in the table indicates the proportion of
hospitals for each characteristic that would be in the worst-
performing quartile of Total HAC Scores and would receive a payment
reduction under the FY 2019 HAC Reduction Program. For example, 22.3
percent of the 2,131 hospitals characterized as non-teaching
hospitals, 24.2 percent of the 822 teaching hospitals with fewer
than 100 residents, and 46.8 percent of the 248 hospitals with 100
or more residents would be subject to a payment reduction.

Estimated Proportion of Hospitals in the Worst-Performing Quartile (>75th Percentile) of the Total HAC Scores
for the FY 2019 HAC Reduction Program
[By hospital characteristic]
----------------------------------------------------------------------------------------------------------------
Number of Percent of
hospitals in hospitals in
Hospital characteristic Number of the worst- the worst-
hospitals performing performing
quartile \a\ quartile \b\
----------------------------------------------------------------------------------------------------------------
Total \c\....................................................... 3,216 804 25.0
By Geographic Location (n=3,201): \d\
Urban hospitals............................................. 2,415 630 26.1
1-99 beds............................................... 624 125 20.0
100-199 beds............................................ 724 190 26.2
200-299 beds............................................ 432 116 26.9
300-399 beds............................................ 275 77 28.0
400-499 beds............................................ 147 48 32.7
500 or more beds........................................ 213 74 34.7
Rural hospitals............................................. 786 160 20.4
1-49 beds............................................... 304 56 18.4
50-99 beds.............................................. 283 68 24.0
100-149 beds............................................ 116 21 18.1
150-199 beds............................................ 44 8 18.2
200 or more beds........................................ 39 7 17.9
By Safety-Net Status \e\ (n=3,201):
Non-safety net.............................................. 2,557 570 22.3
Safety-net.................................................. 644 220 34.2
By DSH Percent \f\ (n=3,201):
0-24........................................................ 1,340 285 21.3
25-49....................................................... 1,472 358 24.3
50-64....................................................... 210 76 36.2
65 and over................................................. 179 71 39.7
By Teaching Status \g\ (n=3,201):
Non-teaching................................................ 2,131 475 22.3
Fewer than 100 residents.................................... 822 199 24.2
100 or more residents....................................... 248 116 46.8
By Ownership (n=3,201):
Voluntary................................................... 1,866 474 25.4
Proprietary................................................. 838 166 19.8
Government.................................................. 497 150 30.2
By MCR Percent \h\ (n=3,188):
0-24........................................................ 515 148 28.7
25-49....................................................... 2,128 513 24.1
50-64....................................................... 471 109 23.1

[[Page 20623]]

65 and over................................................. 74 15 20.3
By Region (n=3,214): \i\
New England................................................. 133 36 27.1
Mid-Atlantic................................................ 364 119 32.7
South Atlantic.............................................. 524 140 26.7
East North Central.......................................... 497 101 20.3
East South Central.......................................... 299 75 25.1
West North Central.......................................... 256 50 19.5
West South Central.......................................... 516 98 19.0
Mountain.................................................... 227 61 26.9
Pacific..................................................... 398 122 30.7
----------------------------------------------------------------------------------------------------------------
Source: FY 2019 HAC Reduction Program Proposed Rule Results are based on Recalibrated PSI 90 Composite data from
October 2015 through June 2017 and CDC CLABSI, CAUTI, SSI, CDI, and MRSA results from January 2015 through
December 2016. Hospital Characteristics are based on the FY 2018 Hospital Inpatient Prospective Payment System
(IPPS) Final Rule Impact File.
\a\ This column is the number of non-Maryland hospitals with a Total HAC Score within the corresponding
characteristic that are estimated to be in the worst-performing quartile.
\b\ This column is the percent of non-Maryland hospitals within each characteristic that are estimated to be in
the worst-performing quartile. The percentages are calculated by dividing the number of non-Maryland hospitals
with a Total HAC Score in the worst-performing quartile by the total number of non-Maryland hospitals with a
Total HAC Score within that characteristic.
\c\ The number of non-Maryland hospitals with a FY 2019 Total HAC Score (N=3,216). Note that not all hospitals
have data for all hospital characteristics.
\d\ The number of hospitals that had information for geographic location with bed size, Safety-net status,
Disproportionate Share Hospital (DSH) percent, teaching status, and ownership status (n=3,201).
\e\ A hospital is considered a Safety-net hospital if it is in the top quintile for DSH percent.
\f\ The DSH patient percentage is equal to the sum of (1) the percentage of Medicare inpatient days attributable
to patients eligible for both Medicare Part A and Supplemental Security Income and (2) the percentage of total
inpatient days attributable to patients eligible for Medicaid but not Medicare Part A.
\g\ A hospital is considered a teaching hospital if it has an IME adjustment factor for Operation PPS (TCHOP)
greater than zero.
\h\ Not all hospitals had data for MCR percent (n=3,188).
\i\ Not all hospitals had data for Region (n=3,214).

8. Effects of Proposed Changes Relating to Medicare GME Agreements for
New Urban Teaching Hospitals

In section IV.K.2. of the preamble of this proposed rule, we
discuss our proposal to provide new urban teaching hospitals with
greater flexibility under the regulation governing Medicare GME
affiliation agreements. Currently, if a new urban teaching hospital
participates in a Medicare GME affiliation agreement, it can only
receive an increase in its cap(s) as part of that agreement. That
is, if a hospital with IME or direct GME FTE resident caps
established under Sec. 412.105(f)(1)(iv) or Sec. 413.79(c)(2), or
both, based on training occurring in 1996, is part of the Medicare
GME affiliated group, Sec. 413.79(e)(1)(iv) provides that the new
urban teaching hospital(s) would only be permitted to receive in
increase in its cap(s). We are proposing to revise the regulation to
specify that, effective for Medicare GME affiliation agreements
entered into on or after July 1, 2019, a new urban teaching hospital
(that is, a hospital that qualifies for an adjustment under Sec.
412.105(f)(1)(vii) or Sec. 413.79(e)(1), or both) may participate
in a Medicare GME affiliated group composed solely of new urban
teaching hospitals and be eligible to receive a decrease to its FTE
caps as a result of participation in that affiliated group. Rather
than create new FTE cap slots to cross train residents, Medicare GME
affiliation agreements use existing cap slots to allow residents to
rotate to various hospitals. Because Medicare GME affiliation
agreements use existing FTE cap slots, we do not anticipate any
significant cost impact associated with this proposal.

9. Effects of Proposed Implementation of the Rural Community Hospital
Demonstration Program in FY 2019

In section IV.L. of the preamble of this proposed rule for FY
2019, we discussed our implementation and budget neutrality
methodology for section 410A of Public Law 108-173, as amended by
sections 3123 and 10313 of Public Law 111-148, and more recently, by
section 15003 of Public Law 114-255, which requires the Secretary to
conduct a demonstration that would modify payments for inpatient
services for up to 30 rural hospitals.
Section 15003 of Public Law 114-255 requires the Secretary to
conduct the Rural Community Hospital Demonstration for a 10-year
extension period (in place of the 5-year extension period required
by the Affordable Care Act), beginning on the date immediately
following the last day of the initial 5-year period under section
410A(a)(5) of Public Law 108-173. In the preamble to this proposed
rule, we described the terms of participation for the extension
period authorized by Public Law 114-255. In the FY 2018 IPPS/LTCH
PPS final rule, we finalized our policy with regard to the effective
date for the application of the reasonable cost-based payment
methodology under the demonstration for those among the hospitals
that had previously participated and were choosing to participate in
the second 5-year extension period. According to our finalized
policy, each of these previously participating hospitals began the
second 5 years of the 10-year extension period on the date
immediately after the date the period of performance under the 5-
year extension period ended. However, by the time of the FY 2018
IPPS/LTCH PPS final rule, we had not been able to verify which among
the previously participating hospitals would be continuing
participation, and thus were not able to estimate the costs of the
demonstration for that year's final rule. We stated in the final
rule that we would instead include the estimated costs of the
demonstration for all participating hospitals for FY 2018, along
with those for FY 2019, in the budget neutrality offset amount for
the FY 2019 proposed and final rules.
Seventeen of the 21 hospitals that completed their periods of
participation under the extension period authorized by the
Affordable Care Act have elected to continue in the second 5-year
extension period, while 13 additional hospitals have been selected
to participate. Each of these newly participating hospitals will
begin its 5-year period of participation effective the start of the
first cost reporting period on or after October 1, 2017. Thus, 30
hospitals are participating in the demonstration during FY 2018.

[[Page 20624]]

In the FY 2018 IPPS/LTCH PPS final rule, we finalized the budget
neutrality methodology in accordance with our policies for
implementing the demonstration, adopting the general methodology
used in previous years, whereby we estimated the additional payments
made by the program for each of the participating hospitals as a
result of the demonstration. In order to achieve budget neutrality,
we adjusted the national IPPS rates by an amount sufficient to
account for the added costs of this demonstration. In other words,
we have applied budget neutrality across the payment system as a
whole rather than across the participants of this demonstration. The
language of the statutory budget neutrality requirement permits the
agency to implement the budget neutrality provision in this manner.
The statutory language requires that aggregate payments made by the
Secretary do not exceed the amount which the Secretary would have
paid if the demonstration was not implemented, but does not identify
the range across which aggregate payments must be held equal.
Because we were unable to confirm the hospitals that would be
participating in the second extension period in time for including
the estimates of the cost of the demonstration in FY 2018 in the FY
2018 final rule, we indicated that we will include this estimate in
the FY 2019 IPPS/LTCH proposed and final rules. For this proposed
rule, the resulting amounts applicable to FYs 2018 and 2019,
respectively, are $33,254,247 and $78,409,842, which we are
proposing to include in the budget neutrality offset adjustment for
FY 2019. These estimated amounts are based on the specific
assumptions regarding the data sources used, that is, recently
available ``as submitted'' cost reports and historical and proposed
update factors for cost, payment, and volume. If updated data become
available prior to the FY 2019 IPPS/LTCH PPS final rule, we will use
them to the extent appropriate to estimate the costs of the
demonstration program. In addition, we will determine the costs of
the demonstration for the previously participating hospitals for the
period from when their period of performance ended for the first 5-
year extension period and the start of the cost report year in FY
2018 when finalized cost reports for this period are available. We
will include these costs for the demonstration in future rulemaking.
In previous years, we have incorporated a second component into
the budget neutrality offset amounts identified in the final IPPS
rules. As finalized cost reports became available, we determined the
amount by which the actual costs of the demonstration for an
earlier, given year differed from the estimated costs for the
demonstration set forth in the final IPPS rule for the corresponding
fiscal year, and we incorporated that amount into the budget
neutrality offset amount for the upcoming fiscal year. We have
calculated this difference for FYs 2005 through 2010 between the
actual costs of the demonstration as determined from finalized cost
reports once available, and estimated costs of the demonstration as
identified in the applicable IPPS final rules for these years.
With the extension of the demonstration for another 5-year
period, as authorized by section 15003 of Public Law 114-255, we
will continue this general procedure. Currently, finalized cost
reports are now available for the 16 hospitals that completed a cost
reporting period beginning in FY 2011 according to the demonstration
cost-based payment methodology, as well as for the 23 hospitals that
completed such a cost reporting period beginning in FY 2012. The
actual costs of the demonstration for FY 2011 as determined from the
finalized cost reports fell short of the estimated amount that was
finalized in the FY 2011 IPPS/LTCH PPS final rule for FY 2011 by
$29,971,829; the actual costs of the demonstration for FY 2012 fell
short of the amount that was finalized in the FY 2012 final rule by
$8,500,373.
We note that, for this proposed rule, the amounts identified for
the actual costs of the demonstration for each of FYs 2011 and 2012
(determined from current finalized cost reports) are less than the
amounts that were identified in the final rule for each these fiscal
years. Therefore, in keeping with previous policy finalized in
similar situations when the costs of the demonstration fell short of
the amount estimated in the corresponding year's final rule, we will
be including this component as a negative adjustment to the budget
neutrality offset amount for the current fiscal year.
Therefore, for FY 2019, the total amount that we are proposing
to apply to the national IPPS rates is $73,191,887. If updated data
become available prior to the FY 2019 IPPS/LTCH PPS final rule, we
would use them to the extent appropriate to determine the budget
neutrality offset amount for FY 2019. Furthermore, if the needed
cost reports are available in time for the FY 2019 IPPS/LTCH PPS
final rule, we will also identify the difference between the total
cost of the demonstration based on finalized FY 2013 cost reports
and the estimate of the costs of the demonstration for that year,
and incorporate that amount into the budget neutrality offset amount
for FY 2019. In addition, when finalized cost reports for FYs 2014
through 2016 are available, we will include the difference between
the actual costs as reflected on these cost reports and the amounts
included in the budget neutrality offset amounts for these fiscal
years in a future final rule.

10. Effect of Proposed Revision of the Hospital Inpatient Admission
Order Documentation Requirements

In section IV.M. of the preamble of this proposed rule, we
discuss our proposal to revise the admission order documentation
requirements. Specifically, we are proposing to revise the inpatient
admission order policy to no longer require the presence of a
written inpatient admission order in the medical record as a
specific condition of Medicare Part A payment. Our actuaries
estimate that any increase in Medicare payments due to the proposed
change would be negligible, given the anticipated low volume of
claims that would be payable under this proposed policy that would
not have been paid under the current policy.

11. Effect of Proposed Policy Changes Relating to Satellite Facilities
and Excluded Units

In section VI.B. of the preamble of this proposed rule, we
discuss our proposal to revise the regulations applicable to
satellite facilities so that the separateness and control
requirements would only apply to IPPS-excluded satellite facilities
that are co-located with IPPS hospitals beginning in FY 2019. This
proposed policy change is premised on the belief that the policy
concerns that underlie our existing satellite facility regulations
(that is, inappropriate patient shifting and hospitals acting as
illegal de facto units) are sufficiently moderated in situations
where IPPS-excluded hospitals are co-located with each other but not
IPPS hospitals, in large part due to the payment system changes that
have occurred over the intervening years for IPPS-excluded
hospitals, the requirements in the hospital conditions of
participation (CoPs) (which are still present regardless of these
proposed changes), and because such changes would be consistent with
the revisions to our HwH policy that were finalized in the FY 2018
IPPS/LTCH PPS final rule, which was estimated to have a de minimus
effect on Medicare payments due to the administrative nature of the
changes. We also are proposing to revise our regulations to allow
IPPS-excluded hospitals to operate as IPPS-excluded units, as
discussed in section VI.C. of the preamble to this proposed rule,
effective with cost reporting periods beginning on or after October
1, 2019. We believe that this proposal is also consistent with the
revisions to our HwH policy that were finalized in the FY 2018 IPPS/
LTCH PPS final rule and the proposed changes to the satellite
regulation discussed previously. We do not expect any significant
payment impact as a result of either of these proposed policies
because these policies are primarily administrative in nature and
are not expected to result in additional Medicare expenditures that
would have been made, regardless of our changes, because IPPS
hospital co-location is already allowed under existing regulations.

12. Effects of Continued Implementation of the Frontier Community
Health Integration Project (FCHIP) Demonstration

In section VI.D.2. of the preamble of this proposed rule, we
discuss the implementation of the FCHIP demonstration, which allows
eligible entities to develop and test new models for the delivery of
health care services in eligible counties in order to improve access
to and better integrate the delivery of acute care, extended care,
and other health care services to Medicare beneficiaries in no more
than four States. Budget neutrality estimates for the demonstration
will be based on the demonstration period of August 1, 2016 through
July 31, 2019. The demonstration includes three intervention prongs,
under which specific waivers of Medicare payment rules will allow
for enhanced payment: Telehealth, skilled nursing facility/nursing
facility services, and ambulance services. These waivers are being
implemented with the goal of increasing access to care with no net
increase in costs. (We initially addressed

[[Page 20625]]

this demonstration in the FY 2017 IPPS/LTCH PPS final rule (81 FR
57064 through 57065).)
We specified the payment enhancements for the demonstration and
selected CAHs for participation with the goal of maintaining the
budget neutrality of the demonstration on its own terms (that is,
the demonstration will produce savings from reduced transfers and
admissions to other health care providers, thus offsetting any
increase in payments resulting from the demonstration). However,
because of the small size of this demonstration program and
uncertainty associated with projected Medicare utilization and
costs, in the FY 2017 IPPS/LTCH PPS final rule we adopted a
contingency plan (81 FR 57064 through 57065) to ensure that the
budget neutrality requirement in section 123 of Public Law 110-275
is met. Accordingly, if analysis of claims data for the Medicare
beneficiaries receiving services at each of the participating CAHs,
as well as of other data sources, including cost reports, shows that
increases in Medicare payments under the demonstration during the 3-
year period are not sufficiently offset by reductions elsewhere, we
will recoup the additional expenditures attributable to the
demonstration through a reduction in payments to all CAHs
nationwide. The demonstration is projected to impact payments to
participating CAHs under both Medicare Part A and Part B. Thus, in
the event that we determine that aggregate payments under the
demonstration exceed the payments that would otherwise have been
made, CMS will recoup payments through reductions of Medicare
payments to all CAHs under both Medicare Part A and Part B. Because
of the small scale of the demonstration, it would not be feasible to
implement budget neutrality by reducing payments only to the
participating CAHs. Therefore, we will make the reduction to
payments to all CAHs, not just those participating in the
demonstration, because the FCHIP demonstration is specifically
designed to test innovations that affect delivery of services by
this provider category. As we explained in the FY 2017 IPPS/LTCH PPS
final rule (81 FR 57065), we believe that the language of the
statutory budget neutrality requirement at section 123(g)(1)(B) of
the Act permits the agency to implement the budget neutrality
provision in this manner. The statutory language merely refers to
ensuring that aggregate payments made by the Secretary do not exceed
the amount which the Secretary estimates would have been paid if the
demonstration project was not implemented, and does not identify the
range across which aggregate payments must be held equal.
Given the 3-year period of performance of the FCHIP
demonstration and the time needed to conduct the budget neutrality
analysis, in the event the demonstration is found not to have been
budget neutral, we plan to recoup any excess costs over a period of
three cost report periods, beginning in CY 2020. Therefore, this
policy has no impact for any national payment system for FY 2019.

13. Effects of Proposed Revisions of the Supporting Documentation
Required for Submission of an Acceptable Medicare Cost Report

In section IX.B.1. of the preamble of this proposed rule, we are
proposing to incorporate the Provider Cost Reimbursement
Questionnaire, Form CMS-339 (OMB No. 0938-0301), into the Organ
Procurement Organization (OPO) and Histocompatibility Laboratory
cost report, Form CMS-216 (OMB No. 0938-0102), which would complete
our incorporation of the Form CMS-339 into all Medicare cost
reports. We also are proposing to update Sec. 413.24(f)(5)(i) to
reflect that an acceptable cost report will no longer require the
provider to separately submit a Provider Cost Reimbursement
Questionnaire, Form CMS-339, by removing the reference to the
questionnaire. There are 58 OPOs and 47 histocompatibility
laboratories. This proposal would not require additional data
collection from OPOs or histocompatibility laboratories. This
proposal would benefit OPOs and histocompatibility laboratories
because they would no longer be required to complete and submit the
Form CMS-339 as a separate form independent of the Medicare cost
report in order to have an acceptable cost report submission under
Sec. 413.24(f)(5)(i). As discussed in detail in section IX.B.10. of
the preamble of this proposed rule, this proposal would decrease
overall costs to the 58 OPOs and 47 histocompatibility laboratories
by $11,178.52.
In section IX.B.2. of the preamble of this proposed rule, we
also are proposing that, effective for cost reports filed on or
after October 1, 2018, a cost report is rejected for teaching
hospitals for lack of supporting documentation if it does not
include the IRIS data that contains the same total counts of direct
GME FTE residents (unweighted and weighted) and of IME FTE residents
as the total counts of direct GME FTE and IME FTE residents reported
in the teaching hospital's cost report. This proposal would continue
to require all teaching hospitals to submit the IRIS data under
Sec. 413.24(f)(5) to have an acceptable cost report submission.
However, this proposal would require that this data must correspond
to the same total counts of direct GME FTE residents (unweighted and
weighted) and of IME FTE residents as the total counts of direct GME
FTE and IME FTE residents reported in the teaching hospital's cost
report. Providers are required under Sec. Sec. 413.20 and 413.24 to
maintain data that substantiates their costs. IRIS is the source
document for reporting FTEs in all teaching hospitals' cost reports.
To enhance the contractors' ability to review duplicates and to
ensure residents are not being double-counted, we believe it is
necessary and appropriate to require that the total unweighted and
weighted FTE counts on the IRIS for direct GME and IME respectively,
for all applicable allopathic, osteopathic, dental, and podiatric
residents that a hospital may train, must equal the same total
unweighted and weighted FTE counts for direct GME and IME reported
on Worksheet E-4 and Worksheet E, Part A. Because all teaching
hospitals are already required to submit the IRIS data under Sec.
413.24(f)(5) to have an acceptable cost report submission, there are
no additional burdens or expenses placed upon teaching hospitals as
a result of our proposal to require that the supporting documents
submitted (the IRIS data) correspond to the amounts reported in the
cost report in order to have an acceptable cost report submission.
In section IX.B.3. of the preamble of this proposed rule, we are
proposing that, effective for cost reporting periods beginning on or
after October 1, 2018, for providers claiming Medicare bad debt
reimbursement, a cost report is rejected for lack of supporting
documentation if it does not include a Medicare bad debt listing
that corresponds to the bad debt amounts claimed in the provider's
Medicare cost report. This proposal would not require providers
claiming Medicare bad debt reimbursement to collect additional data.
Providers are required under Sec. Sec. 413.20 and 413.24 to
maintain data that substantiates their costs. The cost report
worksheet that incorporated Form CMS-339 continues to require
providers who claim Medicare bad debt reimbursement to submit a bad
debt listing with the cost report in order to have an acceptable
cost report submission. Because of the existing requirement, there
are no additional burdens or expenses placed upon providers to
ensure that the supporting documentation, the bad debt listing,
corresponds to the amounts reported in the cost report in order to
have an acceptable cost report submission.
In section IX.B.4. of the preamble of this proposed rule, we are
proposing that, effective for cost reporting periods beginning on or
after October 1, 2018, for hospitals claiming a disproportionate
share hospital payment adjustment, a cost report is rejected for
lack of supporting documentation if it does not include a detailed
listing of the hospital's Medicaid eligible days that corresponds to
the Medicaid eligible days claimed in the hospital's cost report.
Providers are required under Sec. Sec. 413.20 and 413.24 to
maintain data that substantiates their costs. The provider must
furnish such information to the contractor as may be necessary to
assure proper payment by the program. Currently, when the supporting
documentation regarding Medicaid eligible days is not submitted by
DSH eligible hospitals with their cost report, contractors must
request it. Tentative program reimbursement payments are often
issued to providers upon the submission of the cost report, and a
subsequent submission of supporting documentation may reveal an
overstatement of a hospital's Medicaid eligible days with a
resulting overpayment to the provider.
Requiring a provider to submit, as a supporting document with
its cost report, a listing of the provider's Medicaid eligible days
that corresponds to the Medicaid eligible days claimed in the DSH
eligible hospital's cost report would be consistent with the
recordkeeping and cost reporting requirements of Sec. Sec. 413.20
and 413.24, which require providers to maintain data that
substantiates their costs. This proposal to require providers to
submit the supporting documentation with the cost report would also
facilitate accurate provider payment and

[[Page 20626]]

the contractor's review and verification of the cost report.
This proposal would not require hospitals claiming a DSH payment
adjustment to collect additional data. Hospitals claiming a DSH
payment adjustment are already collecting the data in order to
report the hospital's Medicaid eligible days in the hospital's cost
report. Because the existing burden estimate for a DSH eligible
hospital's cost report already reflects the requirement that these
hospitals collect, maintain, and submit this data when requested,
there is no additional burden placed upon hospitals as a result of
our proposal to require them to submit these supporting documents
along with their cost report, and to ensure the supporting
documentation corresponds to the amounts reported in the cost report
in order to have an acceptable cost report submission.
In section IX.B.5. of the preamble of this proposed rule, we are
proposing that, effective for cost reporting periods beginning on or
after October 1, 2018, for DSH eligible hospitals reporting charity
care and/or uninsured discounts, a cost report is rejected for lack
of supporting documentation if it does not include a detailed
listing of charity care and/or uninsured discounts that corresponds
to the amounts claimed in the provider's cost report. Providers are
required under Sec. Sec. 413.20 and 413.24 to maintain data that
substantiates their costs. The provider must furnish such
information to the contractor as may be necessary to assure proper
payment by the program. Contractors regularly request that hospitals
claiming charity care and/or uninsured discounts submit
documentation to support their charity care and/or uninsured
discounts reported in their cost report. This proposal to require
providers to submit this supporting documentation with the cost
report would facilitate accurate payment to the provider and the
contractor's review and verification of the cost report.
This proposal would not require DSH eligible hospitals reporting
charity care and/or uninsured discounts to collect additional data
but would require them to submit the supporting documentation with
the cost report rather than at a later time. Because the existing
burden estimate for a DSH eligible hospital's cost report already
reflects the requirement that these hospitals collect, maintain, and
submit this data when requested, there is no additional burden
placed upon DSH eligible hospitals as a result of our proposal to
require them to submit these supporting documents along with their
cost report and to ensure the supporting documentation corresponds
to the amounts reported in the cost report in order to have an
acceptable cost report submission.
In section IX.B.6. of the preamble of this proposed rule, we are
proposing that, effective for cost reporting periods beginning on or
after October 1, 2018, for a provider reporting costs on its cost
report that are allocated from a home office or chain organization,
a cost report is rejected for lack of supporting documentation if it
does not include a copy of the Home Office Cost Statement completed
by the home office or chain organization that corresponds to the
amounts allocated from the home office or chain organization to the
provider's cost report. This proposal would not require providers
reporting costs on their cost report that are allocated from a home
office or chain organization to collect additional data. Instead,
this proposal would codify our longstanding policy requiring costs
allocated from a home office or chain organization to a provider be
substantiated on the provider's cost report. Providers are required
under Sec. Sec. 413.20 and 413.24 to maintain data that
substantiates their costs. With our proposal, we anticipate more
providers will submit the Home Office Cost Statement to support the
amounts reported in their cost reports, in order to have an
acceptable cost report submission. Because the existing burden
estimate for a provider's cost report already reflects the
requirement that providers collect, maintain, and submit this data,
there is no additional burden placed upon providers as a result of
our proposal to require them to submit these supporting documents
along with their cost report, in order to have an acceptable cost
report submission.

14. Effect of Proposed Revisions Regarding Physician Certification and
Recertification of Claims

In section XI. of the preamble of this proposed rule, we discuss
our proposal to remove from the regulations the requirement that a
physician statement of certification or recertification must itself
indicate where that supporting information is to be found in the
medical record. While moving this provision would have no
substantive impact, we have examined the impact of eliminating the
provision pertaining to where the supporting information is to be
found and believe that substantial time and money would be saved by
physicians when completing both certification and recertification
statements. On average, we estimate that it requires approximately 9
minutes for the precise location of the various elements to be
identified and recorded in the statements. This time currently is
expended not only with the completion of an initial certification
statement but each time a recertification statement is completed.
While the proposed elimination of this provision would benefit
physicians in terms of reducing the amount of time expended in
completing certification and recertification statements, it would
also benefit physicians whose claims have been denied either because
the physician failed to include this information in the
certification and/or recertification statement or failed to
accurately account for the information in the statements. In fact,
these claims are routinely denied even in situations where the
location of the information within a paper medical record is readily
apparent to the reviewer. Given the improved capabilities of
searchable electronic health records, these types of denials are
increasingly unnecessary. We also expect a positive impact for
beneficiaries because beneficiaries would no longer receive notices
that these claims were denied, which inevitably caused confusion
given the nature of these denials. Moreover, the denial of claims
due to the failure to include the location of information within a
paper medical record results in appeals. As an example, these
denials are significant for skilled nursing facility (SNF) claims.
In the SNF setting, a required element of the certification and
recertification statement is the required estimated length of need
(ELON) element. The table below shows in Row 1 the SNF improper
payment rates for claims in error (certification statement does not
indicate where in the medical record the required information of
ELON is to be found; however the medical record contains the missing
information); and in Row 2, the error rate if these claims are no
longer considered to be erroneous (due to removal of the provision
in the regulations). The data shown in the table are from the 2017
CERT reporting period and includes claims from July 1, 2015 through
June 30, 2016.

--------------------------------------------------------------------------------------------------------------------------------------------------------
Improper 95 percent
Provider type Label Projected dollars Projected payment rate confidence
in error dollars paid (%) interval
--------------------------------------------------------------------------------------------------------------------------------------------------------
SNF............................................ ELON Claims in Error.............. $3,259,219,132 $34,949,922,572 9.3 7.6-11.0
SNF............................................ ELON Claims Not in Error.......... 2,776,135,742 34,949,922,572 7.9 6.3-9.5
--------------------------------------------------------------------------------------------------------------------------------------------------------

Overall, there is a 1.4 percentage point reduction in the
improper payment rate in the SNF setting alone. The impact on the
SNF setting is significant. Yet, if this 1.4 percentage point is
considered uniformly across all provider settings, the magnitude of
this provision and its impact on the Medicare Trust funds is
extensive. Moreover, by eliminating these denials and subsequent
appeals, MACS would have more time to dedicate to other more
pertinent appeal issues.

I. Effects of Proposed Changes in the Capital IPPS

1. General Considerations

For the impact analysis presented below, we used data from the
December 2017 update of the FY 2017 MedPAR file and the December
2017 update of the Provider-Specific File (PSF) that is used for
payment purposes. Although the analyses of the proposed changes to
the capital prospective payment system do not incorporate cost data,
we used the December 2017 update of the most recently available
hospital cost report data (FYs 2015 and 2016) to categorize

[[Page 20627]]

hospitals. Our analysis has several qualifications. We use the best
data available and make assumptions about case-mix and beneficiary
enrollment as described later in this section.
Due to the interdependent nature of the IPPS, it is very
difficult to precisely quantify the impact associated with each
change. In addition, we draw upon various sources for the data used
to categorize hospitals in the tables. In some cases (for instance,
the number of beds), there is a fair degree of variation in the data
from different sources. We have attempted to construct these
variables with the best available sources overall. However, it is
possible that some individual hospitals are placed in the wrong
category.
Using cases from the December 2017 update of the FY 2017 MedPAR
file, we simulated payments under the capital IPPS for FY 2018 and
proposed payments for FY 2019 for a comparison of total payments per
case. Any short-term, acute care hospitals not paid under the
general IPPS (for example, hospitals in Maryland) are excluded from
the simulations.
The methodology for determining a capital IPPS payment is set
forth at Sec. 412.312. The basic methodology for calculating the
proposed capital IPPS payments in FY 2019 is as follows:

(Standard Federal Rate) x (DRG weight) x (GAF) x (COLA for hospitals
located in Alaska and Hawaii) x (1 + DSH Adjustment Factor + IME
adjustment factor, if applicable).

In addition to the other adjustments, hospitals may receive
outlier payments for those cases that qualify under the threshold
established for each fiscal year. We modeled payments for each
hospital by multiplying the capital Federal rate by the GAF and the
hospital's case-mix. We then added estimated payments for indirect
medical education, disproportionate share, and outliers, if
applicable. For purposes of this impact analysis, the model includes
the following assumptions:
We estimate that the Medicare case-mix index would
increase by 0.5 percent in both FYs 2018 and 2019.
We estimate that Medicare discharges would be
approximately 11.0 million in FY 2018 and 11.1 million in FY 2019.
The capital Federal rate was updated beginning in FY
1996 by an analytical framework that considers changes in the prices
associated with capital-related costs and adjustments to account for
forecast error, changes in the case-mix index, allowable changes in
intensity, and other factors. As discussed in section III.A.1.a. of
the Addendum to this proposed rule, the proposed update is 1.2
percent for FY 2019.
In addition to the proposed FY 2019 update factor, the
proposed FY 2019 capital Federal rate was calculated based on a
proposed GAF/DRG budget neutrality adjustment factor of 0.9997 and a
proposed outlier adjustment factor of 0.9494.

2. Results

We used the actuarial model previously described in section I.I.
of Appendix A of this proposed rule to estimate the potential impact
of our proposed changes for FY 2019 on total capital payments per
case, using a universe of 3,257 hospitals. As previously described,
the individual hospital payment parameters are taken from the best
available data, including the December 2017 update of the FY 2017
MedPAR file, the December 2017 update to the PSF, and the most
recent cost report data from the December 2017 update of HCRIS. In
Table III, we present a comparison of estimated total payments per
case for FY 2018 and estimated proposed total payments per case for
FY 2019 based on the proposed FY 2019 payment policies. Column 2
shows estimates of payments per case under our model for FY 2018.
Column 3 shows estimates of proposed payments per case under our
model for FY 2019. Column 4 shows the total percentage change in
payments from FY 2018 to FY 2019. The change represented in Column 4
includes the proposed 1.2 percent update to the capital Federal rate
and other proposed changes in the adjustments to the capital Federal
rate. The comparisons are provided by: (1) Geographic location; (2)
region; and (3) payment classification.
The simulation results show that, on average, capital payments
per case in FY 2019 are expected to increase as compared to capital
payments per case in FY 2018. This expected increase overall is
largely due to the proposed 1.2 percent update to the capital
Federal rate for FY 2019. Hospitals within both rural and urban
regions may experience an increase or a decrease in capital payments
per case due to proposed changes in the GAFs. These regional effects
of the proposed changes to the GAFs on capital payments are
consistent with the projected changes in payments due to proposed
changes in the wage index (and policies affecting the wage index) as
shown in Table I in section I.G. of this Appendix A.
The net impact of these proposed changes is an estimated 1.7
percent change in capital payments per case from FY 2018 to FY 2019
for all hospitals (as shown in Table III).
The geographic comparison shows that, on average, hospitals in
urban classifications would experience an increase in capital IPPS
payments per case in FY 2019 as compared to FY 2018, while those
hospitals in rural classifications would experience a decrease in
capital IPPS payments. Capital IPPS payments per case would increase
by an estimated 2.9 percent for hospitals in large urban areas and
by 1.0 for hospitals in other urban areas, while payments to
hospitals in rural areas would decrease by 1.4 percent, from FY 2018
to FY 2019.
The comparisons by region show that the estimated increases in
capital payments per case from FY 2018 to FY 2019 in urban areas
would range from a 0.3 percent increase for the Mountain urban
region to a 3.7 percent increase for the Pacific urban region. For
rural regions, the Mountain rural region is projected to experience
the largest increase in capital IPPS payments per case of 0.9
percent, while the East South Central rural region is projected to
experience a decrease in capital IPPS payments per case of 2.9
percent.
Hospitals of all types of ownership (that is, voluntary
hospitals, government hospitals, and proprietary hospitals) are
expected to experience an increase in capital payments per case from
FY 2018 to FY 2019. The proposed increase in capital payments for
voluntary hospitals is estimated to be 1.5 percent. Government
hospitals and proprietary hospitals are expected to experience an
increase in capital IPPS payments of 2.9 and 1.8 percent,
respectively.
Section 1886(d)(10) of the Act established the MGCRB. Hospitals
may apply for reclassification for purposes of the wage index for FY
2019. Reclassification for wage index purposes also affects the GAFs
because that factor is constructed from the hospital wage index. To
present the effects of the hospitals being reclassified as of the
publication of this proposed rule for FY 2019, we show the average
capital payments per case for reclassified hospitals for FY 2019.
Urban reclassified hospitals are expected to experience an increase
in capital payments of 0.7 percent; urban nonreclassified hospitals
are expected to experience an increase in capital payments of 2.7
percent. The estimated percentage decrease for rural reclassified
hospitals is 2.3 percent, and for rural nonreclassified hospitals,
the estimated percentage decrease in capital payments is 0.1
percent.

Table III--Comparison of Total Payments per Case
[FY 2018 payments compared to proposed FY 2019 payments]
----------------------------------------------------------------------------------------------------------------
Proposed
Number of Average FY average FY
hospitals 2018 payments/ 2019 payments/ Change
case case
----------------------------------------------------------------------------------------------------------------
By Geographic Location:
All hospitals............................... 3,257 948 964 1.7
Large urban areas (populations over 1 1,310 1,021 1,051 2.9
million)...................................
Other urban areas (populations of 1 million 1,170 938 947 1.0
of fewer)..................................

[[Page 20628]]

Urban hospitals............................. 2,480 979 999 2.0
0-99 beds............................... 638 795 818 2.9
100-199 beds............................ 763 843 860 2.0
200-299 beds............................ 438 903 918 1.7
300-499 beds............................ 427 989 1,008 1.9
500 or more beds........................ 214 1,175 1,200 2.1
Rural hospitals............................. 777 669 660 -1.4
0-49 beds............................... 299 548 559 2.0
50-99 beds.............................. 279 605 616 1.8
100-149 beds............................ 116 680 655 -3.7
150-199 beds............................ 44 731 705 -3.5
200 or more beds........................ 39 815 786 -3.6
By Region:
Urban by Region............................. 2,480 979 999 2.0
New England............................. 113 1,070 1,093 2.1
Middle Atlantic......................... 310 1,074 1,091 1.6
South Atlantic.......................... 401 871 886 1.7
East North Central...................... 385 942 953 1.1
East South Central...................... 147 825 843 2.1
West North Central...................... 158 963 980 1.8
West South Central...................... 378 887 912 2.8
Mountain................................ 163 1,021 1,024 0.3
Pacific................................. 374 1,244 1,291 3.7
Puerto Rico............................. 51 448 452 1.0
Rural by Region............................. 777 669 660 -1.4
New England............................. 20 927 919 -0.9
Middle Atlantic......................... 53 643 637 -0.9
South Atlantic.......................... 122 622 609 -2.1
East North Central...................... 114 679 672 -1.0
East South Central...................... 150 623 605 -2.9
West North Central...................... 94 710 704 -0.9
West South Central...................... 147 594 588 -1.0
Mountain................................ 54 741 748 0.9
Pacific................................. 23 865 858 -0.8
By Payment Classification:
All hospitals............................... 3,257 948 964 1.7
Large urban areas (populations over 1 1,325 1,020 1,050 2.9
million)...................................
Other urban areas (populations of 1 million 956 903 924 2.3
of fewer)..................................
Rural areas................................. 976 869 852 -1.9
Teaching Status:
Non-teaching................................ 2,162 804 816 1.5
Fewer than 100 Residents.................... 846 916 930 1.5
100 or more Residents....................... 249 1,316 1,346 2.4
Urban DSH:
Non-DSH................................. 520 870 888 2.1
100 or more beds........................ 1,483 993 1,020 2.7
Less than 100 beds...................... 365 724 748 3.4
Rural DSH:
Sole Community (SCH/EACH)............... 258 663 660 -0.5
Referral Center (RRC/EACH).............. 367 941 919 -2.4
Other Rural:
100 or more beds.................... 27 892 855 -4.2
Less than 100 beds.................. 127 537 550 2.5
Urban teaching and DSH:
Both teaching and DSH................... 818 1,064 1,095 2.9
Teaching and no DSH..................... 88 917 933 1.7
No teaching and DSH..................... 1,030 842 861 2.3
No teaching and no DSH.................. 345 852 874 2.6
Rural Hospital Types:
RRC/EACH.................................... 328 975 964 -1.1
SCH/EACH.................................... 311 750 752 0.2
SCH, RRC and EACH........................... 133 807 792 -1.9
Hospitals Reclassified by the Medicare
Geographic Classification Review Board:
FY2018 Reclassifications:...................
All Urban Reclassified.................. 633 999 1,006 0.7
All Urban Non-Reclassified.............. 1,795 972 998 2.7

[[Page 20629]]

All Rural Reclassified.................. 278 708 692 -2.3
All Rural Non-Reclassified.............. 452 612 611 -0.1
All Section 401 Reclassified Hospitals.. 246 1,018 996 -2.1
Other Reclassified Hospitals (Section 47 654 660 0.9
1886(d)(8)(B)).........................
Type of Ownership:
Voluntary............................... 1,901 963 978 1.5
Proprietary............................. 854 856 872 1.8
Government.............................. 501 985 1,013 2.9
Medicare Utilization as a Percent of
Inpatient Days:
0-25.................................... 546 1,105 1,128 2.0
25-50................................... 2,121 948 965 1.8
50-65................................... 477 781 786 0.6
Over 65................................. 73 547 558 2.2
Invalid/Missing Data.................... 39 1,108 1,311 18.4
----------------------------------------------------------------------------------------------------------------

J. Effects of Proposed Payment Rate Changes and Proposed Policy
Changes Under the LTCH PPS

1. Introduction and General Considerations

In section VII. of the preamble of this proposed rule and
section V. of the Addendum to this proposed rule, we set forth the
proposed annual update to the payment rates for the LTCH PPS for FY
2019. In the preamble of this proposed rule, we specify the
statutory authority for the provisions that are presented, identify
the proposed policies, and present rationales for our decisions as
well as alternatives that were considered. In this section of
Appendix A to this proposed rule, we discuss the impact of the
proposed changes to the payment rate, factors, and other payment
rate policies related to the LTCH PPS that are presented in the
preamble of this proposed rule in terms of their estimated fiscal
impact on the Medicare budget and on LTCHs.
There are 409 LTCHs included in this impact analysis. We note
that, although there are currently approximately 417 LTCHs, for
purposes of this impact analysis, we excluded the data of all-
inclusive rate providers consistent with the development of the
proposed FY 2019 MS-LTC-DRG relative weights (discussed in section
VII.B.3.c. of the preamble of this proposed rule. Moreover, in the
claims data used for this proposed rule, 1 of these 409 LTCHs only
have claims for site neutral payment rate cases and are thus not
included in our impact analysis for LTCH PPS standard Federal
payment rate cases.) In the impact analysis, we used the proposed
payment rate, factors, and policies presented in this proposed rule,
the proposed 1.0115 percent annual update to the LTCH PPS standard
Federal payment rate, the proposed update to the MS-LTC-DRG
classifications and relative weights, the proposed update to the
wage index values and labor-related share, the proposed elimination
of the 25-pecent threshold policy and corresponding proposed one-
time permanent budget neutrality adjustment (discussed in VII.E. of
the preamble of this proposed rule), and the best available claims
and CCR data to estimate the proposed change in payments for FY
2019.
Under the dual rate LTCH PPS payment structure, payment for LTCH
discharges that meet the criteria for exclusion from the site
neutral payment rate (that is, LTCH PPS standard Federal payment
rate cases) is based on the LTCH PPS standard Federal payment rate.
Consistent with the statute, the site neutral payment rate is the
lower of the IPPS comparable per diem amount as determined under
Sec. 412.529(d)(4), including any applicable outlier payments as
specified in Sec. 412.525(a); or 100 percent of the estimated cost
of the case as determined under existing Sec. 412.529(d)(2). In
addition, there are two separate HCO targets--one for LTCH PPS
standard Federal payment rate cases and one for site neutral payment
rate cases. The statute also establishes a transitional payment
method for cases that are paid the site neutral payment rate for
LTCH discharges occurring in cost reporting periods beginning during
FY 2016 through FY 2019. The transitional payment amount for site
neutral payment rate cases is a blended payment rate, which is
calculated as 50 percent of the applicable site neutral payment rate
amount for the discharge as determined under Sec. 412.522(c)(1) and
50 percent of the applicable LTCH PPS standard Federal payment rate
for the discharge determined under Sec. 412.523.
Based on the best available data for the 409 LTCHs in our
database that were considered in the analyses used for this proposed
rule, we estimate that overall LTCH PPS payments in FY 2019 would
decrease by approximately 0.1 percent (or approximately $5 million)
based on the proposed rates and factors presented in section VII. of
the preamble and section V. of the Addendum to this proposed rule.
Based on the FY 2017 LTCH cases that were used for the analyses
in this proposed rule, approximately 36 percent of those cases were
classified as site neutral payment rate cases (that is, 36 percent
of LTCH cases did not meet the patient-level criteria for exclusion
from the site neutral payment rate). Our Office of the Actuary
estimates that the percent of LTCH PPS cases that will be paid at
the site neutral payment rate in FY 2018 will not change
significantly from the most recent historical data. Taking into
account the transitional blended payment rate and other changes that
will apply to the site neutral payment rate cases in FY 2019, we
estimate that aggregate LTCH PPS payments for these site neutral
payment rate cases will decrease by approximately 1.1 percent (or
approximately $11 million).
Approximately 64 percent of LTCH cases are expected to meet the
patient-level criteria for exclusion from the site neutral payment
rate in FY 2019, and would be paid based on the LTCH PPS standard
Federal payment rate for the full year. We estimate that total LTCH
PPS payments for these LTCH PPS standard Federal payment rate cases
in FY 2019 would increase approximately 0.2 percent (or
approximately $6 million). This estimated increase in LTCH PPS
payments for LTCH PPS standard Federal payment rate cases in FY 2019
is primarily due to the proposed 1.15 percent annual update to the
LTCH PPS standard Federal payment rate for FY 2019 (discussed in
section V.A. of the Addendum to this proposed rule) and the proposed
-0.9 percent one-time permanent budget neutrality adjustment under
our proposal to eliminate the 25-percent threshold policy.
Based on the 409 LTCHs that were represented in the FY 2017 LTCH
cases that were used for the analyses in this proposed rule
presented in this Appendix, we estimate that aggregate FY 2019 LTCH
PPS payments would be approximately $4.510 billion, as compared to
estimated aggregate FY 2018 LTCH PPS payments of approximately
$4.515 billion, resulting in an estimated overall decrease in LTCH
PPS payments of approximately $5 million. We note that the estimated
$5 million decrease in LTCH PPS payments in FY 2019 does not reflect
changes in LTCH admissions or case-mix intensity, which would also
affect the overall payment effects of the proposed policies in this
proposed rule.
The LTCH PPS standard Federal payment rate for FY 2018 is
$41,415.11. For FY 2019, we are proposing to establish an LTCH PPS

[[Page 20630]]

standard Federal payment rate of $41,482.98 which reflects the
proposed 1.15 percent annual update to the LTCH PPS standard Federal
payment rate, the proposed area wage budget neutrality factor of
0.999713 to ensure that the changes in the wage indexes and labor-
related share do not influence aggregate payments, and the proposed
one-time permanent budget neutrality adjustment of 0.990535 to
ensure that our proposed elimination of the 25-percent threshold
policy (discussed in VII.E. of the preamble of this proposed rule)
do not influence aggregate LTCH PPS payments. For LTCHs that fail to
submit data for the LTCH QRP, in accordance with section
1886(m)(5)(C) of the Act, we are proposing to establish an LTCH PPS
standard Federal payment rate of $40,662.75. This proposed LTCH PPS
standard Federal payment rate reflects the proposed updates and
factors previously described as well as the required 2.0 percentage
point reduction to the annual update for failure to submit data
under the LTCH QRP. We note that the factors previously described to
determine the proposed FY 2019 LTCH PPS standard Federal payment
rate are applied to the FY 2018 LTCH PPS standard Federal rate set
forth under Sec. 412.523(c)(3)(xiv) (that is, $41,415.11).
Table IV shows the estimated impact for LTCH PPS standard
Federal payment rate cases. The estimated change attributable solely
to the proposed annual update of 1.15 percent to the LTCH PPS
standard Federal payment rate is projected to result in an increase
of 1.1 percent in payments per discharge for LTCH PPS standard
Federal payment rate cases from FY 2018 to FY 2019, on average, for
all LTCHs (Column 6). In addition to the proposed annual update to
the LTCH PPS standard Federal payment rate for FY 2019, the
estimated increase of 1.1 percent shown in Column 6 of Table IV also
includes estimated payments for SSO cases that would be paid using
methodologies that are not affected by the annual update to the LTCH
PPS standard Federal payment rate, as well as the reduction that is
applied to the annual update of LTCHs that do not submit the
required LTCH QRP data. Therefore, for all hospital categories, the
projected increase in payments based on the proposed LTCH PPS
standard Federal payment rate to LTCH PPS standard Federal payment
rate cases is somewhat less than the 1.15 percent annual update for
FY 2019.
For FY 2019, we are proposing to update the wage index values
based on the most recent available data, and we are proposing to
continue to use labor market areas based on the OMB CBSA
delineations (as discussed in section V.B. of the Addendum to this
proposed rule). In addition, we are proposing to maintain the labor-
related share at 66.2 percent under the LTCH PPS for FY 2019, based
on the most recent available data on the relative importance of the
labor-related share of operating and capital costs of the 2013-based
LTCH market basket. We also are proposing to apply a proposed area
wage level budget neutrality factor of 0.999713 to ensure that the
changes to the wage data and labor-related share do not result in
any change in estimated aggregate LTCH PPS payments to LTCH PPS
standard Federal payment rate cases.
As we discuss in VII.E. of the preamble of this proposed rule,
we are proposing to eliminate the 25-percent threshold policy in a
budget neutral manner. Therefore, for FY 2019, we are proposing to
apply a one-time permanent budget neutrality factor of 0.990535 to
ensure the proposed elimination of the 25-percent threshold policy
does not result in any change in estimated aggregate LTCH PPS
payments.
We currently estimate total HCO payments for LTCH PPS standard
Federal payment rate cases would decrease from FY 2018 to FY 2019.
Based on the FY 2017 LTCH cases that were used for the analyses in
this proposed rule, we estimate that the FY 2018 HCO threshold of
$27,381 (as established in the FY 2018 IPPS/LTCH PPS final rule)
would result in estimated HCO payments for LTCH PPS standard Federal
payment rate cases in FY 2018 that are above the 7.975 percent
target. Specifically, we currently estimate that HCO payments for
LTCH PPS standard Federal payment rate cases would be approximately
7.988 percent of the estimated total LTCH PPS standard Federal
payment rate payments in FY 2018. Combined with our estimate that FY
2019 HCO payments for LTCH PPS standard Federal payment rate cases
would be 7.975 percent of estimated total LTCH PPS standard Federal
payment rate payments in FY 2019, this would result in a negligible
estimated decrease in HCO payments of less than 0.1 percent between
FY 2018 and FY 2019. We note that, consistent with past practice, in
calculating these estimated HCO payments, we increased estimated
costs by our actuaries' projected market basket percentage increase
factor.
Table IV shows the estimated impact of the proposed payment rate
and proposed policy changes on LTCH PPS payments for LTCH PPS
standard Federal payment rate cases for FY 2019 by comparing
estimated FY 2018 LTCH PPS payments to estimated FY 2019 LTCH PPS
payments. (As noted earlier, our analysis does not reflect changes
in LTCH admissions or case-mix intensity.) We note that these
impacts do not include LTCH PPS site neutral payment rate cases for
the reasons discussed in section I.J.4. of this Appendix. As we
discuss in detail throughout this proposed rule, based on the most
recent available data, we believe that the provisions of this
proposed rule relating to the LTCH PPS, which are projected to
result in an overall decrease in estimated aggregate LTCH PPS
payments, and the resulting LTCH PPS payment amounts would result in
appropriate Medicare payments that are consistent with the statute.

2. Impact on Rural Hospitals

For purposes of section 1102(b) of the Act, we define a small
rural hospital as a hospital that is located outside of an urban
area and has fewer than 100 beds. As shown in Table IV, we are
projecting no change in estimated payments for LTCH PPS standard
Federal payment rate cases for LTCHs located in a rural area. This
estimated impact is based on the FY 2017 data for the 21 rural LTCHs
(out of 409 LTCHs) that were used for the impact analyses shown in
Table IV.

3. Anticipated Effects of Proposed LTCH PPS Payment Rate Changes and
Policy Changes

a. Budgetary Impact

Section 123(a)(1) of the BBRA requires that the PPS developed
for LTCHs ``maintain budget neutrality.'' We believe that the
statute's mandate for budget neutrality applies only to the first
year of the implementation of the LTCH PPS (that is, FY 2003).
Therefore, in calculating the FY 2003 standard Federal payment rate
under Sec. 412.523(d)(2), we set total estimated payments for FY
2003 under the LTCH PPS so that estimated aggregate payments under
the LTCH PPS were estimated to equal the amount that would have been
paid if the LTCH PPS had not been implemented.
Section 1886(m)(6)(A) of the Act establishes a dual rate LTCH
PPS payment structure with two distinct payment rates for LTCH
discharges beginning in FY 2016. Under this statutory change, LTCH
discharges that meet the patient-level criteria for exclusion from
the site neutral payment rate (that is, LTCH PPS standard Federal
payment rate cases) are paid based on the LTCH PPS standard Federal
payment rate. LTCH discharges paid at the site neutral payment rate
are generally paid the lower of the IPPS comparable per diem amount,
including any applicable HCO payments, or 100 percent of the
estimated cost of the case. The statute also establishes a
transitional payment method for cases that are paid at the site
neutral payment rate for LTCH discharges occurring in cost reporting
periods beginning during FY 2016 through FY 2019, under which the
site neutral payment rate cases are paid based on a blended payment
rate calculated as 50 percent of the applicable site neutral payment
rate amount for the discharge and 50 percent of the applicable LTCH
PPS standard Federal payment rate for the discharge.
As discussed in section I.J. of this Appendix, we project a
decrease in aggregate LTCH PPS payments in FY 2019 of approximately
$5 million. This estimated decrease in payments reflects the
projected increase in payments to LTCH PPS standard Federal payment
rate cases of approximately $6 million and the projected decrease in
payments to site neutral payment rate cases of approximately $11
million under the dual rate LTCH PPS payment rate structure required
by the statute beginning in FY 2016.
As discussed in section V.D. of the Addendum to this proposed
rule, our actuaries project cost and resource changes for site
neutral payment rate cases due to the site neutral payment rates
required under the statute. Specifically, our actuaries project that
the costs and resource use for cases paid at the site neutral
payment rate will likely be lower, on average, than the costs and
resource use for cases paid at the LTCH PPS standard Federal payment
rate, and will likely mirror the costs and resource use for IPPS
cases assigned to the same MS-DRG. While we are able to incorporate
this projection at an aggregate level into our payment modeling,
because the historical claims data that we are using in this
proposed rule to project estimated FY 2019

[[Page 20631]]

LTCH PPS payments (that is, FY 2017 LTCH claims data) do not reflect
this actuarial projection, we are unable to model the impact of the
proposed change in LTCH PPS payments for site neutral payment rate
cases at the same level of detail with which we are able to model
the impacts of the proposed changes to LTCH PPS payments for LTCH
PPS standard Federal payment rate cases. Therefore, Table IV only
reflects proposed changes in LTCH PPS payments for LTCH PPS standard
Federal payment rate cases and, unless otherwise noted, the
remaining discussion in section I.J.4. of this Appendix refers only
to the impact on proposed LTCH PPS payments for LTCH PPS standard
Federal payment rate cases. In the following section, we present our
provider impact analysis for the proposed changes that affect LTCH
PPS payments for LTCH PPS standard Federal payment rate cases.

b. Impact on Providers

The basic methodology for determining a per discharge payment
for LTCH PPS standard Federal payment rate cases is currently set
forth under Sec. Sec. 412.515 through 412.538. In addition to
adjusting the LTCH PPS standard Federal payment rate by the MS-LTC-
DRG relative weight, we make adjustments to account for area wage
levels and SSOs. LTCHs located in Alaska and Hawaii also have their
payments adjusted by a COLA. Under our application of the dual rate
LTCH PPS payment structure, the LTCH PPS standard Federal payment
rate is generally only used to determine payments for LTCH PPS
standard Federal payment rate cases (that is, those LTCH PPS cases
that meet the statutory criteria to be excluded from the site
neutral payment rate). LTCH discharges that do not meet the patient-
level criteria for exclusion are paid the site neutral payment rate,
which we are calculating as the lower of the IPPS comparable per
diem amount as determined under Sec. 412.529(d)(4), including any
applicable outlier payments, or 100 percent of the estimated cost of
the case as determined under existing Sec. 412.529(d)(2). In
addition, when certain thresholds are met, LTCHs also receive HCO
payments for both LTCH PPS standard Federal payment rate cases and
site neutral payment rate cases that are paid at the IPPS comparable
per diem amount.
To understand the impact of the proposed changes to the LTCH PPS
payments for LTCH PPS standard Federal payment rate cases presented
in this proposed rule on different categories of LTCHs for FY 2019,
it is necessary to estimate payments per discharge for FY 2018 using
the rates, factors, and the policies established in the FY 2018
IPPS/LTCH PPS final rule and estimate payments per discharge for FY
2019 using the proposed rates, factors, and the policies in this FY
2019 IPPS/LTCH PPS proposed rule (as discussed in section VII. of
the preamble of this proposed rule and section V. of the Addendum to
this proposed rule). As discussed elsewhere in this proposed rule,
these estimates are based on the best available LTCH claims data and
other factors, such as the application of inflation factors to
estimate costs for HCO cases in each year. The resulting analyses
can then be used to compare how our policies applicable to LTCH PPS
standard Federal payment rate cases affect different groups of
LTCHs.
For the following analysis, we group hospitals based on
characteristics provided in the OSCAR data, cost report data in
HCRIS, and PSF data. Hospital groups included the following:
Location: Large urban/other urban/rural.
Participation date.
Ownership control.
Census region.
Bed size.

c. Calculation of Proposed LTCH PPS Payments for LTCH PPS Standard
Federal Payment Rate Cases

For purposes of this impact analysis, to estimate the per
discharge payment effects of our proposed policies on proposed
payments for LTCH PPS standard Federal payment rate cases, we
simulated FY 2018 and proposed FY 2019 payments on a case-by-case
basis using historical LTCH claims from the FY 2017 MedPAR files
that met or would have met the criteria to be paid at the LTCH PPS
standard Federal payment rate if the statutory patient-level
criteria had been in effect at the time of discharge for all cases
in the FY 2017 MedPAR files. For modeling FY 2018 LTCH PPS payments,
we used the FY 2018 standard Federal payment rate of $41,415.11 (or
$ 40,595.02 for LTCHs that failed to submit quality data as required
under the requirements of the LTCH QRP).
Similarly, for modeling payments based on the proposed FY 2019
LTCH PPS standard Federal payment rate, we used the proposed FY 2019
standard Federal payment rate of $41,482.98 (or $40,662.75 for LTCHs
that failed to submit quality data as required under the
requirements of the LTCH QRP). In each case, we applied the
applicable adjustments for area wage levels and the COLA for LTCHs
located in Alaska and Hawaii. Specifically, for modeling FY 2018
LTCH PPS payments, we used the current FY 2018 labor-related share
(66.2 percent), the wage index values established in the Tables 12A
and 12B listed in the Addendum to the FY 2018 IPPS/LTCH PPS final
rule (which are available via the internet on the CMS website), the
FY 2018 HCO fixed-loss amount for LTCH PPS standard Federal payment
rate cases of $27,381 (as discussed in section V.D. of the Addendum
to that final rule), and the FY 2018 COLA factors (shown in the
table in section V.C. of the Addendum to that final rule) to adjust
the FY 2018 nonlabor-related share (33.8 percent) for LTCHs located
in Alaska and Hawaii.
Similarly, for modeling proposed FY 2019 LTCH PPS payments, we
used the proposed FY 2019 LTCH PPS labor-related share (66.2
percent), the proposed FY 2019 wage index values from Tables 12A and
12B listed in section VI. of the Addendum to this proposed rule
(which are available via the internet on the CMS website), the
proposed FY 2019 fixed-loss amount for LTCH PPS standard Federal
payment rate cases of $30,639 (as discussed in section V.D.3. of the
Addendum to this proposed rule), and the proposed FY 2019 COLA
factors (shown in the table in section V.C. of the Addendum to this
proposed rule) to adjust the FY 2019 nonlabor-related share (33.8
percent) for LTCHs located in Alaska and Hawaii.
The impacts that follow reflect the estimated ``losses'' or
``gains'' among the various classifications of LTCHs from FY 2018 to
FY 2019 based on the proposed payment rates and proposed policy
changes applicable to LTCH PPS standard Federal payment rate cases
presented in this proposed rule. Table IV illustrates the estimated
aggregate impact of the proposed change in LTCH PPS payments for
LTCH PPS standard Federal payment rate cases among various
classifications of LTCHs. (As discussed previously, these impacts do
not include LTCH PPS site neutral payment rate cases.)
The first column, LTCH Classification, identifies the
type of LTCH.
The second column lists the number of LTCHs of each
classification type.
The third column identifies the number of LTCH cases
expected to meet the LTCH PPS standard Federal payment rate
criteria.
The fourth column shows the estimated FY 2018 payment
per discharge for LTCH cases expected to meet the LTCH PPS standard
Federal payment rate criteria (as described previously).
The fifth column shows the estimated FY 2019 payment
per discharge for LTCH cases expected to meet the LTCH PPS standard
Federal payment rate criteria (as described previously).
The sixth column shows the percentage change in
estimated payments per discharge for LTCH cases expected to meet the
LTCH PPS standard Federal payment rate criteria from FY 2018 to FY
2019 due to the proposed annual update to the standard Federal rate
(as discussed in section V.A.2. of the Addendum to this proposed
rule).
The seventh column shows the percentage change in
estimated payments per discharge for LTCH PPS standard Federal
payment rate cases from FY 2018 to FY 2019 for proposed changes to
the area wage level adjustment (that is, the wage indexes and the
labor-related share), including the application of the proposed area
wage level budget neutrality factor (as discussed in section V.B. of
the Addendum to this proposed rule).
The eighth column shows the percentage change in
estimated payments per discharge for LTCH PPS standard Federal
payment rate cases from FY 2018 (Column 4) to FY 2019 (Column 5) for
all proposed changes.

[[Page 20632]]

Table IV--Impact of Proposed Payment Rate and Proposed Policy Changes to LTCH PPS Payments for LTCH PPS Standard Federal Payment Rate Cases for FY 2019
[Estimated FY 2018 payments compared to estimated FY 2019 payments]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed Proposed
percent change percent change
Average due to change due to Proposed
Number of LTCH Average FY proposed FY to the proposed percent change
Number of PPS standard 2018 LTCH PPS 2019 LTCH PPS proposed changes to due to all
LTCH classification LTCHS payment rate payment per payment per annual update area wage proposed
cases standard standard to the adjustment standard
payment rate payment rate standard with wage payment rate
\1\ federal rate budget changes \4\
\2\ neutrality \3\
(1) (2) (3) (4) (5) (6) (7) (8)
--------------------------------------------------------------------------------------------------------------------------------------------------------
All Providers........................... 409 74,978 $47,125 $47,205 1.1 0.0 0.2
By Location:
Rural............................... 21 2,494 39,412 39,405 1.1 -0.2 0.0
Urban............................... 388 72,484 47,390 47,473 1.1 0.0 0.2
Large........................... 196 40,272 50,584 50,738 1.1 0.0 0.3
Other........................... 192 32,212 43,398 43,392 1.1 0.0 0.0
By Participation Date:
Before Oct. 1983.................... 11 1,910 43,040 42,764 1.1 -0.5 -0.6
Oct. 1983-Sept. 1993................ 42 9,584 52,189 52,476 1.1 0.2 0.5
Oct. 1993-Sept. 2002................ 169 31,176 45,745 45,783 1.1 0.0 0.1
After October 2002.................. 187 32,308 47,195 47,276 1.1 0.0 0.2
By Ownership Type:
Voluntary........................... 77 10,529 49,341 49,513 1.1 0.2 0.3
Proprietary......................... 319 62,700 46,608 46,670 1.1 0.0 0.1
Government.......................... 13 1,749 52,316 52,503 1.1 0.0 0.4
By Region:
New England......................... 12 2,684 43,020 42,791 1.1 -0.3 -0.5
Middle Atlantic..................... 24 5,929 50,944 51,276 1.1 0.1 0.7
South Atlantic...................... 66 13,670 48,296 48,379 1.1 -0.2 0.2
East North Central.................. 68 11,782 46,537 46,446 1.1 -0.4 -0.2
East South Central.................. 36 6,335 45,480 45,581 1.1 -0.1 0.2
West North Central.................. 28 4,390 45,904 45,807 1.1 -0.2 -0.2
West South Central.................. 120 18,278 41,768 41,750 1.1 0.1 0.0
Mountain............................ 29 4,048 48,082 48,022 1.1 -0.3 -0.1
Pacific............................. 26 7,862 58,460 59,090 1.2 0.8 1.1
By Bed Size:
Beds: 0-24.......................... 43 5,094 47,085 47,049 1.1 -0.2 -0.1
Beds: 25-49......................... 187 26,483 44,734 44,782 1.1 0.0 0.1
Beds: 50-74......................... 105 19,580 48,176 48,274 1.1 0.0 0.2
Beds: 75-124........................ 42 10,938 50,444 50,649 1.1 0.1 0.4
Beds: 125-199....................... 23 7,944 47,519 47,442 1.1 -0.3 -0.2
Beds: 200+.......................... 9 4,939 47,834 48,112 1.1 0.5 0.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Estimated FY 2019 LTCH PPS payments for LTCH PPS standard Federal payment rate criteria based on the proposed payment rate and factor changes
applicable to such cases presented in the preamble of and the Addendum to this proposed rule.
\2\ Percent change in estimated payments per discharge for LTCH PPS standard Federal payment rate cases from FY 2018 to FY 2019 for the proposed annual
update to the LTCH PPS standard Federal payment rate.
\3\ Proposed percent change in estimated payments per discharge for LTCH PPS standard Federal payment rate cases from FY 2018 to FY 2019 for proposed
changes to the area wage level adjustment under Sec. 412.525(c) (as discussed in section V.B. of the Addendum to this proposed rule).
\4\ Proposed percent change in estimated payments per discharge for LTCH PPS standard Federal payment rate cases from FY 2018 (shown in Column 4) to FY
2019 (shown in Column 5), including all of the proposed changes to the rates and factors applicable to such cases presented in the preamble and the
Addendum to this proposed rule. We note that this column, which shows the proposed percent change in estimated payments per discharge for all proposed
changes, does not equal the sum of the proposed percent changes in estimated payments per discharge for the proposed annual update to the LTCH PPS
standard Federal payment rate (Column 6) and the proposed changes to the area wage level adjustment with budget neutrality (Column 7) due to the
effect of estimated changes in estimated payments to aggregate HCO payments for LTCH PPS standard Federal payment rate cases (as discussed in this
impact analysis), as well as other interactive effects that cannot be isolated.

d. Results

Based on the FY 2017 LTCH cases (from 409 LTCHs) that were used
for the analyses in this proposed rule, we have prepared the
following summary of the impact (as shown in Table IV) of the
proposed LTCH PPS payment rate and proposed policy changes for LTCH
PPS standard Federal payment rate cases presented in this proposed
rule. The impact analysis in Table IV shows that estimated payments
per discharge for LTCH PPS standard Federal payment rate cases are
projected to increase 0.2 percent, on average, for all LTCHs from FY
2018 to FY 2019 as a result of the proposed payment rate and
proposed policy changes applicable to LTCH PPS standard Federal
payment rate cases presented in this proposed rule. This estimated
0.2 percent increase in LTCH PPS payments per discharge was
determined by comparing estimated FY 2019 LTCH PPS payments (using
the proposed payment rates and factors discussed in this proposed
rule) to estimated FY 2018 LTCH PPS payments for LTCH discharges
which will be LTCH PPS standard Federal payment rate cases if the
dual rate LTCH PPS payment structure was or had been in effect at
the time of the discharge (as described in section I.J.4. of this
Appendix).
As stated previously, we are proposing to update the LTCH PPS
standard Federal payment rate for FY 2019 by 1.15 percent. For LTCHs
that fail to submit quality data under the requirements of the LTCH
QRP, as required by section 1886(m)(5)(C) of the Act, a 2.0
percentage point reduction is applied to the annual update to the
LTCH PPS standard Federal payment rate. Consistent with Sec.
412.523(d)(4), we also are proposing to apply an area wage level
budget neutrality factor to the proposed FY 2019 LTCH PPS standard
Federal payment rate of 0.999713, based on the best available data
at this time, to ensure that any proposed changes to the area wage
level adjustment (that is, the proposed annual update of the wage
index values and labor-related share) would not result in any change
(increase or decrease) in estimated aggregate LTCH PPS standard
Federal payment rate payments. Finally, we are proposing to make a
budget neutrality adjustment of 0.990535 for our proposed
elimination of the 25-percent threshold

[[Page 20633]]

policy (discussed in VII.E. of the preamble of this proposed rule).
As we also explained earlier in this section, for most categories of
LTCHs (as shown in Table IV, Column 6), the estimated payment
increase due to the proposed 1.15 percent annual update to the LTCH
PPS standard Federal payment rate is projected to result in
approximately a 1.1 percent increase in estimated payments per
discharge for LTCH PPS standard Federal payment rate cases for all
LTCHs from FY 2018 to FY 2019. This is because our estimate of the
proposed changes in payments due to the proposed update to the LTCH
PPS standard Federal payment rate also reflects estimated payments
for SSO cases that are paid using a methodology that is not entirely
affected by the update to the LTCH PPS standard Federal payment
rate. Consequently, for certain hospital categories, we estimate
that payments to LTCH PPS standard Federal payment rate cases may
increase by less than 1.1 percent due to the proposed annual update
to the LTCH PPS standard Federal payment rate for FY 2019.

(1) Location

Based on the most recent available data, the vast majority of
LTCHs are located in urban areas. Only approximately 5 percent of
the LTCHs are identified as being located in a rural area, and
approximately 3 percent of all LTCH PPS standard Federal payment
rate cases are expected to be treated in these rural hospitals. The
impact analysis presented in Table IV shows that the proposed
overall average percent increase in estimated payments per discharge
for LTCH PPS standard Federal payment rate cases from FY 2018 to FY
2019 for all hospitals is 0.2 percent. However, for rural LTCHs,
estimated payments for LTCH PPS standard Federal payment rate cases
are expected to remain constant. This is primarily driven by a
projected decrease resulting from changes to the proposed changes to
the area wage index adjustment. For urban LTCHs, we estimate an
increase of 0.2 percent from FY 2018 to FY 2019. Among the urban
LTCHs, large urban LTCHs are projected to experience an increase of
0.3 percent in estimated payments per discharge for LTCH PPS
standard Federal payment rate cases from FY 2018 to FY 2019, and
such payments for the remaining urban LTCHs are projected to remain
constant from FY 2018 to FY 2019, as shown in Table IV.

(2) Participation Date

LTCHs are grouped by participation date into four categories:
(1) Before October 1983; (2) between October 1983 and September
1993; (3) between October 1993 and September 2002; and (4) October
2002 and after. Based on the most recent available data, the
categories of LTCHs with the largest expected percentage of LTCH PPS
standard Federal payment rate cases (approximately 43 percent) are
in LTCHs that began participating in the Medicare program after
October 2002, and they are projected to experience a 0.2 percent
increase in estimated payments per discharge for LTCH PPS standard
Federal payment rate cases from FY 2018 to FY 2019, as shown in
Table IV.
Approximately 3 percent of LTCHs began participating in the
Medicare program before October 1983, and these LTCHs are projected
to experience an average percent decrease of 0.6 percent in
estimated payments per discharge for LTCH PPS standard Federal
payment rate cases from FY 2018 to FY 2019. Approximately 10 percent
of LTCHs began participating in the Medicare program between October
1983 and September 1993, and these LTCHs are projected to experience
an increase of 0.5 percent in estimated payments for LTCH PPS
standard Federal payment rate cases from FY 2018 to FY 2019. LTCHs
that began participating in the Medicare program between October
1993 and October 1, 2002, which treat approximately 41 percent of
all LTCH PPS standard Federal payment rate cases, are projected to
experience a 0.1 percent increase in estimated payments from FY 2018
to FY 2019.

(3) Ownership Control

LTCHs are grouped into four categories based on ownership
control type: Voluntary, proprietary, government and unknown. Based
on the most recent available data, approximately 19 percent of LTCHs
are identified as voluntary (Table IV). The majority (approximately
78 percent) of LTCHs are identified as proprietary, while government
owned and operated LTCHs represent approximately 3 percent of LTCHs.
Based on ownership type, voluntary LTCHs are expected to experience
a 0.3 percent increase in payments to LTCH PPS standard Federal
payment rate cases, while proprietary LTCHs are expected to
experience an average increase of 0.1 percent in payments to LTCH
PPS standard Federal payment rate cases. Government owned and
operated LTCHs, meanwhile, are expected to experience a 0.4 percent
increase in payments to LTCH PPS standard Federal payment rate cases
from FY 2018 to FY 2019.

(4) Census Region

Estimated payments per discharge for LTCH PPS standard Federal
payment rate cases for FY 2019 are projected to increase across 4 of
the 9 census regions. LTCHs located in the East and West North
Central regions and the Mountain region are projected to experience
a slight decrease of 0.1 and 0.2 percent, respectively, while LTCHs
located New England are expected to experience a 0.5 decrease in
payments. All other regions are projected to experience constant or
increased payments per discharge for FY 2019 in comparison to FY
2018. Of the 9 census regions, we project that the increase in
estimated payments per discharge to LTCH PPS standard Federal
payment rate cases will have the largest positive impact on LTCHs in
the Pacific region (1.1 percent) and the Middle Atlantic region (0.7
percent) as shown in Table IV. These regional variations are largely
due to proposed updates in the wage index.

(5) Bed Size

LTCHs are grouped into six categories based on bed size: 0-24
beds; 25-49 beds; 50-74 beds; 75-124 beds; 125-199 beds; and greater
than 200 beds. We project that LTCHs with 0-24 beds would experience
a decrease in payments for LTCH PPS standard Federal payment rate
cases of 0.1 percent, while LTCHs with 125-199 beds are expected to
experience a decrease of 0.2 percent. We expect the remaining
categories to experience an increase in payments of 0.1 and 0.2
percent for LTCHs with 25-49 and 50-74 beds, respectively, a 0.4
percent increase in payments for LTCHs with 75-124 beds, and a 0.6
increase for LTCHs with 200 or more beds.

4. Effect on the Medicare Program

As stated previously, we project that the provisions of this
proposed rule would result in an increase in estimated aggregate
LTCH PPS payments to LTCH PPS standard Federal payment rate cases in
FY 2019 relative to FY 2018 of approximately 6 million (or
approximately 0.2 percent) for the 409 LTCHs in our database.
Although, as stated previously, the hospital-level impacts do not
include LTCH PPS site neutral payment rate cases, we estimate that
the provisions of this proposed rule would result in a decrease in
estimated aggregate LTCH PPS payments to site neutral payment rate
cases in FY 2019 relative to FY 2018 of approximately $11 million
(or approximately 1.1 percent) for the 409 LTCHs in our database.
Therefore, we project that the provisions of this proposed rule
would result in a decrease in estimated aggregate LTCH PPS payments
to all LTCH cases in FY 2019 relative to FY 2018 of approximately $5
million (or approximately 0.1 percent) for the 409 LTCHs in our
database.

5. Effect on Medicare Beneficiaries

Under the LTCH PPS, hospitals receive payment based on the
average resources consumed by patients for each diagnosis. We do not
expect any changes in the quality of care or access to services for
Medicare beneficiaries as a result of this proposed rule, but we
continue to expect that paying prospectively for LTCH services will
enhance the efficiency of the Medicare program. As discussed above,
we do not expect the continued implementation of the site neutral
payment system to have a negative impact access to or quality of
care, as demonstrated in areas where there is little or no LTCH
presence, general short-term acute care hospitals are effectively
providing treatment for the same types of patients that are treated
in LTCHs.

K. Effects of Proposed Requirements for the Hospital Inpatient
Quality Reporting (IQR) Program

1. Background

In section VIII.A. of the preamble of this proposed rule, we
discuss our current and proposed requirements for hospitals to
report quality data under the Hospital IQR Program in order to
receive the full annual percentage increase for the FY 2021 payment
determination.
In this proposed rule, we are proposing to: (1) Extend eCQM
reporting requirements to the CY 2019 reporting period/FY 2021
payment determination; (2) require the 2015 Edition of CEHRT for
eCQMs beginning with the CY 2019 reporting period/FY 2021 payment
determination; (3) remove 17 claims-based measures beginning with
the CY 2018 reporting period/FY 2020 payment determination; (4)
remove two structural

[[Page 20634]]

measures beginning with the CY 2018 reporting period/FY 2020 payment
determination; (5) remove two claims-based measures beginning with
the CY 2019 reporting period/FY 2021 payment determination; (6)
remove eight chart-abstracted measures beginning with the CY 2019
reporting period/FY 2021 payment determination; (7) remove one
claims-based measure beginning with the CY 2020 reporting period/FY
2022 payment determination; (8) remove one chart-abstracted measure
beginning with the CY 2020 reporting period/FY 2022 payment
determination; (9) remove seven eCQMs beginning with CY 2020
reporting period/FY 2022 payment determination; (10) remove one
claims-based measure beginning with the CY 2021 reporting period/FY
2023 payment determination; and (11) adopt a new measure removal
factor.
We do not believe our proposal to adopt a new measure removal
factor will directly affect burden. However, as further explained in
section XIV.B.3. of the preamble of this proposed rule, we believe
that there will be an overall decrease in the estimated information
collection burden for hospitals due to the other proposed policies.
We refer readers to section XIV.B.3. of the preamble of this
proposed rule for a summary of our information collection burden
estimate calculations. The effects of these proposals are discussed
in more detail below.

2. Impact of Proposed Extension of eCQM Reporting Requirements

In the FY 2018 IPPS/LTCH PPS final rule, we finalized policies
to require hospitals to submit one, self-selected calendar quarter
of data for four eCQMs in the Hospital IQR Program measure set for
the CY 2018 reporting period/FY 2020 payment determination (82 FR
38355 through 38361). In section VIII.A.11.d.(2) of the preamble of
this proposed rule, we are proposing to extend those reporting
requirements for the CY 2019 reporting period/FY 2021 payment
determination, such that hospitals would be required to submit one,
self-selected calendar quarter of data for four eCQMs in the
Hospital IQR Program measure set. Therefore, we believe our burden
estimate of 40 minutes per hospital per year (10 minutes per record
x 4 eCQMs x 1 quarter) associated with eCQM reporting requirements
finalized for the CY 2018 reporting period/FY 2020 payment
determination will also apply to the CY 2019 reporting period/FY
2021 payment determination.

3. Impact of Proposed Requirement To Certify EHR to the 2015 Edition

In section VIII.A.11.d.(3) of the preamble of this proposed
rule, we discuss our proposal to require use of EHR technology
certified to the 2015 Edition beginning with the CY 2019 reporting
period/FY 2021 payment determination, which aligns with previously
established requirements in the Medicare and Medicaid Promoting
Interoperability Programs (previously known as the Medicare and
Medicaid EHR Incentive Programs). As described in section XIV.B.3.g.
of the preamble of this proposed rule, we expect this proposal to
have no impact on information collection burden for the Hospital IQR
Program because this proposal does not require hospitals to submit
new data to CMS.
With respect to any costs unrelated to data submission, although
this proposal would require some investment in systems updates, the
Medicare and Medicaid Promoting Interoperability Programs
(previously known as the Medicare and Medicaid EHR Incentive
Programs) previously finalized a requirement that hospitals use the
2015 Edition of CEHRT beginning with the CY 2019 reporting period/FY
2021 payment determination (80 FR 62761 through 62955). Because all
hospitals participating in the Hospital IQR Program are subsection
(d) hospitals that also participate in the Medicare and Medicaid
Promoting Interoperability Programs (previously known as the
Medicare and Medicaid EHR Incentive Programs), we do not anticipate
any additional costs as a result of this proposal.

4. Impact of Proposed Removal of Chart-Abstracted Measures

In sections VIII.A.5.b.(2)(b) and VIII.A.5.b.(8) of the preamble
of this proposed rule, beginning with the CY 2019 reporting period/
FY 2021 payment determination, we are proposing to remove eight
chart-abstracted measures--five National Health and Safety Network
(NHSN) hospital-acquired infection (HAI) measures (CDI (NQF #1717),
CAUTI (NQF #0138), CLABSI (NQF #0139), MRSA Bacteremia (NQF #1716),
Colon and Abdominal Hysterectomy SSI (NQF #0753)) and three clinical
process of care measures (ED-1 (NQF #0495), IMM-2 (NQF #1659), VTE-6
\405\). In section VIII.A.5.b.(8)(b) of the preamble of this
proposed rule, beginning with the CY 2020 reporting period/FY 2022
payment determination, we also are proposing to remove one chart-
abstracted clinical process of care measure (ED-2).
---------------------------------------------------------------------------

\405\ NQF endorsement has been removed.
---------------------------------------------------------------------------

As described in detail in section XIV.B.3. of the preamble of
this proposed rule, we expect our proposals to remove the clinical
process of care chart-abstracted measures would reduce the
information collection burden by 1,046,071 hours and approximately
$38.3 million for the CY 2019 reporting period/FY 2021 payment
determination, and an additional 901,200 hours and approximately $33
million for the CY 2020 reporting period/FY 2022 payment
determination for the Hospital IQR Program. We note that the burden
of data collection for the NHSN HAI measures (CDI, CAUTI, CLABSI,
MRSA Bacteremia, and Colon and Abdominal Hysterectomy SSI) is
accounted for under the Centers for Disease Control and Prevention
(CDC) National Health and Safety Network (NHSN) OMB control number
0920-0666. Because burden associated with submitting data for the
NHSN HAI measures is captured under a separate OMB control number,
we do not provide an independent estimate of the information
collection burden associated with these measures for the Hospital
IQR Program.
The data validation activities, however, are conducted by CMS.
Since the measures were adopted into the Hospital IQR Program, CMS
has validated the data for purposes of the Program. Therefore, this
burden has been captured under the Hospital IQR Program's OMB
control number 0938-1022. While we did not propose any changes
directly to the validation process related to chart-abstracted
measures, if our proposals to remove five NHSN HAI and four clinical
process of care chart-abstracted measures (in section
VIII.A.5.b.(2)(b) and section VIII.A.5.b.(8) of the preamble of this
proposed rule) are finalized as proposed, we believe that hospitals
will experience an overall reduction in burden associated with
validation of chart-abstracted measures beginning with the FY 2022
payment determination because hospitals selected for validation are
currently required to submit validation templates for the NHSN HAI
measures for the Hospital IQR Program. In addition, if our proposals
to remove the NHSN HAI measures are finalized, the information
collection burden associated with submission of these validation
templates would be eliminated from the Hospital IQR Program. As
described in detail in section XIV.B.3. of the preamble of this
proposed rule, we estimate a total decrease of 43,200 hours and
approximately $1.6 million as a result of discontinuing submission
of NHSN HAI validation templates under the Hospital IQR Program as
described in section IV.K.4.e. of the preamble of this proposed
rule. The proposed removal of NHSN HAI measures from the Hospital
IQR Program, the subsequent cessation of validation processes for
the NHSN HAI measures, the retention of these measures in the HAC
Reduction Program, and the proposed implementation of a validation
process for these measures under the HAC Reduction Program,
represent no net change in information collection burden for the
NHSN HAI measures across CMS hospital quality programs. Therefore,
we do not anticipate any change under the CDC NHSN's OMB control
number 0920-0666 due to our proposals.
Furthermore, we anticipate that the costs to hospitals
participating in the Hospital IQR Program, beyond that associated
with information collection, will be reduced because hospitals would
no longer need to review multiple feedback reports for the NHSN HAI
measures from three different hospital quality programs (the
Hospital IQR, Hospital VBP, and HAC Reduction Programs) that use
three different reporting periods, which result in interpreting
slightly different measure rates for the same measures (under the
Hospital IQR Program, a rolling four quarters of data are used to
update the Hospital Compare website; under the Hospital VBP Program,
1-year periods are used for each of the baseline period and the
performance period; and under the HAC Reduction Program, a 2-year
performance period is used).

5. Impact of Proposed Removal of Two Structural Measures

In section VIII.A.5.a. and VII.A.5.b.(1) of the preamble of this
proposed rule, we are proposing to remove two structural measures,
Hospital Survey on Patient Safety Culture and Safe Surgery
Checklist, beginning with the CY 2018 reporting period/FY 2020
payment determination. We believe these

[[Page 20635]]

proposals will result in a minimal information collection burden
reduction, which is addressed in section XIV.B.3. of the preamble of
this proposed rule. In addition, we refer readers to VIII.A.4.b. of
the preamble of this proposed rule, where we acknowledge that costs
are multi-faceted and include not only the burden associated with
reporting, but also the costs associated with implementing and
maintaining Program requirements. We believe it may be unnecessarily
costly and/or of limited benefit to retain or maintain a measure
which our analyses show no longer meaningfully supports program
objectives (for example, informing beneficiary choice or payment
scoring). As discussed in sections VIII.A.5.a. and VIII.A.5.b.(1) of
the preamble of this proposed rule, we believe these measure are of
limited utility for internal hospital quality improvement efforts
because they do not provide individual patient level data or any
information on patient outcomes. In addition, our analyses show that
use of patient safety culture surveys and safe surgery checklists is
widely in practice among hospitals. Therefore, we do not believe
that these measures support the program objectives of facilitating
internal hospital quality improvement efforts or informing
beneficiary choice.

6. Impact of the Proposed Removal of Claims-Based Measures

In sections VIII.A.5.b.(2)(a), (3), (4), (6), and (7) of the
preamble of this proposed rule, we are proposing to remove 17
claims-based measures PSI-90 (NQF #0531), READM-30-AMI (NQF #0505),
READM-30-CABG (NQF #2515), READM-30-COPD (NQF #1891), READM-30-HF
(NQF #0330), READM-30-PN (NQF #0506), READM-30-THA/TKA (NQF #1551),
READM-30-STK, MORT-30-AMI (NQF #0230), MORT-30-HF (NQF #0229), MSPB
(NQF #2158), Cellulitis Payment, GI Payment, Kidney/UTI Payment, AA
Payment, Chole and CDE Payment, and SFusion Payment) beginning with
the CY 2018 reporting period/CY 2020 payment determination. In
addition, in section VIII.A.5.b.(4) of the preamble of this proposed
rule, we are proposing to remove two claims-based measures (MORT-30-
COPD (NQF #1893) and MORT-30-PN (NQF #0468)) beginning with the CY
2019 reporting period/FY 2021 payment determination. Furthermore, in
sections VIII.A.5.b.(4) and VIII.A.5.b.(5), respectively, of the
preamble of this proposed rule, we are proposing to remove one-
claims based measure (MORT-30-CABG (NQF #2558)) beginning with the
CY 2020 reporting period/FY 2022 payment determination and one
claims-based measure (Hip/Knee Complications (NQF #1550)) beginning
with the CY 2021 reporting period/FY 2023 payment determination.
These claims-based measures are calculated using only data
already reported to the Medicare program for payment purposes,
therefore, we do not believe removing these measures will impact the
information collection burden on hospitals. Nonetheless, we
anticipate that hospitals will experience a general cost reduction
associated with these proposals stemming from no longer having to
review and track various program requirements or measure information
in multiple confidential feedback and preview reports from multiple
programs that reflect multiple measure rates due to varying scoring
methodologies and reporting periods.

7. Impact of the Proposed Removal of eCQMs

In section VIII.A.5.b.(9) of the preamble of this proposed rule,
we are proposing to remove seven eCQMs from the Hospital IQR Program
eCQM measure set beginning with the CY 2020 reporting period/FY 2022
payment determination. As described in section XIV.B.3. of this
proposed rule, we do not anticipate that removal of these seven
eCQMs will affect the information collection burden for hospitals.
However, as discussed in section VIII.A.4.b. of the preamble of this
proposed rule, we believe costs are multifaceted and include not
only the burden associated with reporting, but also the costs
associated with implementing and maintaining Program requirements,
such as maintaining measure specifications in hospitals' EHR systems
for all of the eCQMs available for use in the Hospital IQR Program.
We further discuss costs unrelated to information collection
associated with eCQM removal in section VIII.A.5.b.(9) of the
preamble of this proposed rule.

8. Summary of Effects

In summary, we estimate: (1) A total information collection
burden reduction of 1,046,138 hours (-1,046,071 hours due to the
proposed removal of ED-1 (NQF #0495), IMM-2 (NQF #1659), and VTE-6
\406\ measures for the CY 2019 reporting period/FY 2021 payment
determination and -67 hours for no longer collecting data for the
voluntary Hybrid HWR measure \407\) and a total cost reduction
related to information collection of approximately $38.3 million (-
1,046,138 hours x $36.58 per hour \408\) for the CY 2019 reporting
period/FY 2021 payment determination; and (2) a total information
collection burden reduction of 901,200 hours (-858,000 hours due to
the proposed removal of ED-2 -43,200 hours due to the proposed
discontinuation of the NHSN HAI measure validation process under the
Hospital IQR Program) and a total cost reduction related to
information collection of approximately $33 million (-901,200 hours
x $36.58 per hour \409\) for the CY 2020 reporting period/FY 2022
payment determination. As stated earlier, we also anticipate
additional cost reductions unrelated to the information collection
burden associated with our proposals, including, for example, no
longer having to review and track measure information in multiple
feedback reports from multiple programs and maintaining measure
specifications in hospitals' EHR systems for all eCQMs available for
use in the program.
---------------------------------------------------------------------------

\406\ NQF Endorsement has been removed.
\407\ In the FY 2017 IPPS/LTCH PPS final rule (82 FR 38350
through 38355), we finalized our proposal to collect data on a
voluntary basis for the Hybrid HWR measure for the CY 2018 reporting
period/FY 2020 payment determination. We estimated that
approximately 100 hospitals would voluntarily report data for this
measure, resulting in a total burden of 67 hours across all
hospitals for the CY 2018 reporting period/FY 2020 payment
determination (82 FR 38504). Because we only finalized voluntary
collection of data for one year, voluntary collection of this data
would no longer occur beginning with the CY 2019 reporting period/FY
2021 payment determination and subsequent years resulting in a
reduction in burden of 67 hours across all hospitals.
\408\ In the FY 2017 IPPS/LTCH PPS final rule (82 FR 38501), we
finalized an hourly wage estimate of $18.29 per hour, plus 100
percent overhead and fringe benefits, for the Hospital IQR Program.
Accordingly, we calculate cost burden to hospitals using a wage plus
benefits estimate of $36.58 per hour.
\409\ Ibid.
---------------------------------------------------------------------------

Historically, 100 hospitals, on average, that participate in the
Hospital IQR Program do not receive the full annual percentage
increase in any fiscal year due to the failure to meet all
requirements of this Program. We anticipate that the number of
hospitals not receiving the full annual percentage increase will be
approximately the same as in past years or slightly decrease. We
believe that reducing the number of chart-abstracted measures used
in the Hospital IQR Program would, at least in part, help increase
hospitals' chances to meet all Program requirements and receive
their full annual percentage increase.
We refer readers to section XIV.B.3. of the preamble of this
proposed rule (information collection requirements) for a detailed
discussion of the burden of the requirements for submitting data to
the Hospital IQR Program.

L. Effects of Proposed Requirements for the PPS-Exempt Cancer
Hospital Quality Reporting (PCHQR) Program

In section VIII.B. of the preamble of this proposed rule, we
discuss our proposed policies for the quality data reporting program
for PPS-exempt cancer hospitals (PCHs), which we refer to as the
PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program. The
PCHQR Program is authorized under section 1866(k) of the Act, which
was added by section 3005 of the Affordable Care Act. There is no
financial impact to PCH Medicare reimbursement if a PCH does not
submit data.
In section VIII.B.3.b. of the preamble of this proposed rule, we
are proposing to remove four web-based, structural measures: (1)
Oncology: Radiation Dose Limits to Normal Tissues (PCH-14/NQF
#0382); (2) Oncology: Medical and Radiation--Pain Intensity
Quantified (PCH-16/NQF #0384); (3) Prostate Cancer: Adjuvant
Hormonal Therapy for High Risk Patients (PCH-17/NQF #0390); and (4)
Prostate Cancer: Avoidance of Overuse of Bone Scan for Staging Low-
Risk Patients (PCH-18/NQF #0389), and two chart-abstracted, NHSN
measures: (5) Catheter-Associated Urinary Tract Infection (CAUTI)
Outcome Measure (PCH-5/NQF #0138) and (6) Central Line-Associated
Bloodstream Infection (CLABSI) Outcome Measure (PCH-4/NQF #0139)
beginning with the FY 2021 program year. In addition, in section
VIII.B.4. of the preamble of this proposed rule, we are proposing to
adopt one claims-based measure for the FY 2021 program year and
subsequent years: 30-Day Unplanned Readmissions for Cancer Patients
measure (NQF #3188). If

[[Page 20636]]

finalized, the PCHQR Program measure set would consist of 13
measures for the FY 2021 program. Further, in section XIV.B.4.b. of
the preamble of this proposed rule, we are proposing to adopt a new
time burden estimate, to be applied to structural and web-based tool
measures for the FY 2021 program year and subsequent years.
Specifically, we are proposing to adopt the estimate of 15 minutes
for reporting these types of measures, which is the time estimate
utilized by the Hospital IQR Program (80 FR 49762).
As explained in section XIV.B.4.c. of the preamble of this
proposed rule, we anticipate that these proposed new requirements
would reduce the overall burden on participating PCHs. If our
proposal to apply 15 minutes per measure as a burden estimate for
structural measures and web-based tool measures and our proposal to
remove the following web-based structural measures: (1) Oncology:
Radiation Dose Limits to Normal Tissues (PCH-14/NQF #0382); (2)
Oncology: Medical and Radiation--Pain Intensity Quantified (PCH-16/
NQF #0384); (3) Prostate Cancer: Adjuvant Hormonal Therapy for High
Risk Patients (PCH-17/NQF #0390); and (4) Prostate Cancer: Avoidance
of Overuse of Bone Scan for Staging Low-Risk Patients (PCH-18/NQF
#0389)) are finalized as proposed, we estimate a reduction of 1 hour
(or 60 minutes) per PCH (15 minutes per measure x 4 measures = 60
minutes), and a total annual reduction of approximately 11 hours for
all 11 PCHs (60 minutes x 11 PCHs/60 minutes per hour), as a result
of the proposed removal of these four measures.
We further anticipate that the proposed removal of the two NHSN
measures: (1) Catheter-Associated Urinary Tract Infection (CAUTI)
Outcome Measure (PCH-5/NQF #0138) and (2) Central Line-Associated
Bloodstream Infection (CLABSI) Outcome Measure (PCH-4/NQF #0139)
will result in a net burden decrease. If our proposal to remove the
CAUTI and CLABSI measures is finalized as proposed, we estimate an
annual burden reduction of 2,518 hours per PCH (1,259 hours x 2
measures = 2,518 hours) and an annual burden reduction of 27,698
hours across all 11 PCHs (2,518 hours x 11 PCHs = 27,698 hours).
We do not anticipate any increase in burden on the PCHs
associated with our proposal to adopt a claims-based measure into
the PCHQR Program beginning with the FY 2021 program year. This
measure is claims-based and does not require facilities to report
any additional data beyond that already submitted on Medicare
administrative claims for payment purposes. Therefore, we do not
believe that there is any associated burden with this proposal.
In summary, if our proposals to remove 6 measures are finalized
as proposed, we estimate a total burden reduction of 27,709 hours of
burden per year for all 11 PCHs (27,698 hours for the removal of the
CAUTI & CLABSI measures + 11 hours for the removal of the 4 web-
based, structural measures = 27,709 total hours), beginning with the
FY 2021 program year.

M. Effects of Proposed Requirements for the Long-Term Care Hospital
Quality Reporting Program (LTCH QRP)

Under the LTCH QRP, the Secretary reduces by 2 percentage points
the annual update to the LTCH PPS standard Federal rate for
discharges for an LTCH during a fiscal year if the LTCH has not
complied with the LTCH QRP requirements specified for that fiscal
year. Information is not available to determine the precise number
of LTCHs that will not meet the requirements to receive the full
annual update for the FY 2019 payment determination.
We believe that the burden and costs associated with the LTCH
QRP is the time and effort associated with complying with the
requirements of the LTCH QRP. We intend to closely monitor the
effects of this quality reporting program on LTCHs and to help
facilitate successful reporting outcomes through ongoing stakeholder
education, national trainings, and help desks.
We refer readers to section XIV.B.6. of the preamble of this
proposed rule for details discussing information collection
requirements for the LTCH QRP.

N. Effects of Proposed Requirements Regarding the Promoting
Interoperability Programs

In section VIII.D. of the preamble of this proposed rule, we are
proposing a new performance-based scoring methodology and changes to
the Stage 3 objectives and measures for eligible hospitals and CAHs
that attest to CMS under the Medicare Promoting Interoperability
Program. We also are proposing changes to the EHR reporting period
in CYs 2019 and 2020; the CQM reporting period and criteria for CY
2019; and to codify the policies for subsection (d) Puerto Rico
hospitals to participate in the Medicare Promoting Interoperability
Program for eligible hospitals, including policies previously
implemented through program instruction. We believe that, overall,
these proposals would reduce burden. We refer readers to section
XIV.B.9. of the preamble of this proposed rule for additional
discussion on the information collection effects associated with
these proposals.
In section VIII.D.12.a. of the preamble of this proposed rule,
we are proposing to amend 42 CFR 495.324(b)(2) and 495.324(b)(3) to
align with current prior approval policy for MMIS and ADP systems at
45 CFR 95.611(a)(2)(ii), and (b)(2)(iii) and (iv), and to minimize
burden on States. Specifically, we are proposing that the prior
approval dollar threshold in Sec. 495.324(b)(3) would be increased
to $500,000, and that a prior approval threshold of $500,000 would
be added to Sec. 495.324(b)(2). In addition, in light of these
proposed changes, we are proposing a conforming amendment to amend
the threshold in Sec. 495.324(d) for prior approval of
justifications for sole source acquisitions to be the same $500,000
threshold. That threshold is currently aligned with the $100,000
threshold in current 495.324(b)(3). Amending Sec. 495.324(d) to
preserve alignment with Sec. 495.324(b)(3) maintain the consistency
of our prior approval requirements. We believe that these proposals
also would reduce burden on States by raising the prior approval
thresholds and generally aligning them with the thresholds for prior
approval of MMIS and ADP acquisitions costs.
In section VIII.D.12.b. of the preamble of this proposed rule,
we are proposing to amend 42 CFR 495.322 to provide that the 90
percent FFP for Medicaid Promoting Interoperability Program
administration would no longer be available for most State
expenditures incurred after September 30, 2022. We are proposing a
later sunset date, September 30, 2023, for the availability of 90
percent enhanced match for State administrative costs related to
Medicaid Promoting Interoperability Program audit and appeals
activities, as well as costs related to administering incentive
payment disbursements and recoupments that might result from those
activities. States would not be able to claim any Medicaid Promoting
Interoperability Program administrative match for expenditures
incurred after September 30, 2023. We do not believe that these
proposals would impose any additional burdens on States. We refer
readers to section XIV.B.9. of the preamble of this proposed rule
for additional discussion on the information collection effects
associated with these proposals.

O. Alternatives Considered

This proposed rule contains a range of policies. It also
provides descriptions of the statutory provisions that are
addressed, identifies the proposed policies, and presents rationales
for our decisions and, where relevant, alternatives that were
considered.
For example, as discussed in section II.F.2.d. of the preamble
of this proposed rule, section II.H.5.a. of the preamble of this
proposed rule, and section II.A.4.g. of the Addendum to this
proposed rule, we believe that, in the context of the pending new
technology add-on payment applications for two CAR T-cell therapy
drugs, there may be merit in the suggestions from the public to
create a new MS-DRG for the assignment of procedures involving the
utilization of CAR T-cell therapy drugs and cases representing
patients who receive treatment involving CAR T-cell therapy as an
alternative to our proposed MS-DRG assignment to MS-DRG 016 for FY
2019, or the suggestions to allow hospitals to utilize an
alternative CCR specific to procedures involving CAR T-cell therapy
drugs for purposes of outlier payments, new technology add-on
payments, if approved, and payments to IPPS excluded cancer
hospitals. We are considering these alternatives for FY 2019 and are
seeking public comment on them.
We also are inviting comments on how these payment alternatives
would affect access to care, as well as how they affect incentives
to encourage lower drug prices, which is a high priority for this
Administration. In addition, we are considering alternative
approaches and authorities to encourage value-based care and lower
drug prices. We solicit comments on how the payment methodology
alternatives may intersect and affect future participation in any
such alternative approaches.
As discussed in section II.A.4.g. of the Addendum to this
proposed rule, the impact

[[Page 20637]]

of an alternative CCR specific to procedures involving CAR T-cell
therapy drugs is dependent on the relationship between the CCR that
would otherwise be used and the alternative CCR used. For
illustrative purposes, we discussed an example where if a hospital
charged $400,000 for a procedure involving the utilization of the
CAR T-cell therapy drug described by ICD-10-PCS code XW033C3, the
application of a hypothetical CCR of 0.25 results in a cost of
$100,000 (=$400,000 * 0.25), while the application of a hypothetical
CCR of 1.00 results in a cost of $400,000 (=$400,000 * 1.0).
The impact of the creation of a separate MS-DRG for procedures
involving the utilization of CAR T-cell therapy drugs and cases
representing patients receiving treatment involving CAR T-cell
therapy would be dependent on the relative weighting factor
determined for the separate MS-DRG. We are inviting public comments
on the most appropriate approach for determining the relative
weighting factor under this alternative, such as an approach based
on taking into account an appropriate portion of the average sales
price (ASP) for these drugs, or other approaches. We note that our
proposed relative weighting factor for MS-DRG 016 for FY 2019 can be
found in Table 5 associated with this proposed rule (which is
available via the internet on the CMS website).
As discussed in section VIII.A.5.b.(9) of the preamble of this
proposed rule, in the context of removing seven eCQMs from the
Hospital IQR Program for the CY 2020 reporting period/FY 2022
payment determination and subsequent years, we considered proposing
to remove these seven eCQMs 1 year earlier, beginning with the CY
2019 reporting period/FY 2021 payment determination. Our analyses
indicated no estimated change in average reporting burden between
these two options. We interpret the lack of difference is due to
very few hospitals choosing the seven eCQMs proposed for removal.
Because the alternatives considered do not impact the collection of
information for hospitals, we do not expect these alternatives to
affect the reporting burden on hospitals associated with the
Hospital IQR Program. We considered these alternatives and are
seeking public comment on them.
As discussed in section IV.I.4.b. of the preamble of this
proposed rule, in the context of scoring hospitals for purposes of
the Hospital VBP Program for the FY 2021 program year and subsequent
years, we analyzed two domain weighting options based on our
proposals to remove 10 measures and the Safety domain from the
Hospital VBP Program. As an alternative to our proposal to weight
the three remaining domains as Clinical Outcomes domain (proposed
name change)--50 percent; Person and Community Engagement domain--25
percent; and Efficiency and Cost Reduction domain--25 percent, we
considered weighting each of the three remaining domains equally,
meaning each of the three domains would be weighted as one-third of
a hospital's Total Performance Score (TPS), beginning with the FY
2021 program year. As discussed in section IV.I.4.b. of the preamble
of this proposed rule, we also considered keeping the current domain
weighting (25 percent for each of the four domains--Safety, Clinical
Outcomes (proposed name change), Person and Community Engagement,
and Efficiency and Cost Reduction--with proportionate reweighting if
a hospital has sufficient data on only three domains), which would
require keeping at least one or more of the measures in the Safety
domain and the Safety domain itself. As summarized in section
IV.I.4.b.(3) of the preamble of this proposed rule, to understand
the potential impacts of the proposed domain weighting on hospitals'
TPSs, we conducted analyses using FY 2018 program data that
estimated the potential impacts of our proposed domain weighting
policy to increase the weight of the Clinical Outcomes domain from
25 percent to 50 percent of a hospital's TPS and an alternative
weighting policy we considered of equal weights whereby each domain
would constitute one-third (1/3) of a hospital's TPS. The table
below provides an overview of the estimated impact on hospitals' TPS
by certain hospital characteristics and as they would compare to
actual FY 2018 TPSs, which include scoring on four domains,
including the Safety domain, and applying proportionate reweighting
if a hospital has sufficient data on only three domains.

Comparison of Estimated Average TPSs and Unweighted Domain Scores *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed
Actual FY 2018 Actual FY 2018 increased
Actual FY 2018 average person average Actual FY 2018 weighting of Alternative
Hospital characteristic average and community efficiency and average TPS (4 clinical care weighting:
clinical care engagement cost reduction domains) \+\ domain: estimated
domain score domain score domain score estimated average TPS
average TPS
--------------------------------------------------------------------------------------------------------------------------------------------------------
All Hospitals **....................................... 43.2 33.5 18.8 37.4 34.6 31.8
Bed Size:
1-99............................................... 33.4 46.0 35.7 44.6 37.2 38.4
100-199............................................ 42.2 34.5 21.0 39.2 35.0 32.6
200-299............................................ 44.5 27.9 12.9 34.4 32.4 28.4
300-399............................................ 48.2 27.3 10.0 33.3 33.4 28.5
400+............................................... 50.9 26.9 7.6 31.9 34.1 28.5
Geographic Location:
Urban.............................................. 46.8 30.7 13.7 35.7 34.5 30.4
Rural.............................................. 33.7 40.5 31.7 41.9 34.9 35.3
Safety Net Status ***:
Non-Safety Net..................................... 42.7 35.4 19.0 37.9 34.9 32.4
Safety Net......................................... 45.1 25.7 18.1 35.6 33.5 29.6
Teaching Status:
Non-Teaching....................................... 39.9 36.7 22.9 39.4 34.9 33.2
Teaching........................................... 48.7 27.9 11.8 34.1 34.3 29.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Analysis based on FY 2018 Hospital VBP Program data.
** Only eligible hospitals are included in this analysis. Excluded hospitals (for example, hospitals not meeting the minimum domains required for
calculation, hospitals receiving three or more immediate jeopardy citations in the FY 2018 performance period, hospitals subject to payment reductions
under the Hospital IQR Program in FY 2018, and hospitals located in the state of Maryland) were removed from this analysis.
+ Based on current policies, which includes the Safety domain, and proportionate reweighting for hospitals with sufficient data on only three domains.
*** For purposes of this analysis, `safety net' status is defined as those hospitals with top 10 percentile of Disproportionate Share Hospital (DSH)
patient percentage from the FY 2018 IPPS/LTCH PPS final rule impact file: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-Items/FY2018-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending.

[[Page 20638]]

The table below provides a summary of the estimated impacts on
average TPSs and payment adjustments for all hospitals,\410\
including as they would compare to actual FY 2018 program results
under current domain weighting policies.
---------------------------------------------------------------------------

\410\ Only eligible hospitals are included in this analysis.
Excluded hospitals (for example, hospitals not meeting the minimum
domains required for calculation, hospitals receiving three or more
immediate jeopardy citations in the FY 2018 performance period,
hospitals subject to payment reductions under the Hospital IQR
Program in FY 2018, and hospitals located in the state of Maryland)
were removed from this analysis.

--------------------------------------------------------------------------------------------------------------------------------------------------------
Summary of estimated impacts on
average TPS and payment adjustments Actual (4 domains) + Proposed increased weight for Equal weighting alternative (3
using FY 2018 program data clinical outcomes (3 domains) domains)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total number of hospitals with a 2,808............................... 2,701............................... 2,701.
payment adjustment.
Number of hospitals receiving a 1,597 (57 percent).................. 1,209 (45 percent).................. 1,337 (50 percent).
positive payment adjustment (percent).
Average positive payment adjustment 0.60 percent........................ 0.58 percent........................ 0.70 percent.
percentage.
Estimated average positive payment $128,161............................ $233,620............................ $204,038.
adjustment.
Number of hospitals receiving a 1,211 (43 percent).................. 1,492 (55 percent).................. 1,364 (50 percent).
negative payment adjustment (percent).
Average negative payment adjustment -0.41 percent....................... -0.60 percent....................... -0.57 percent.
percentage.
Estimated average negative payment $169,011............................ $189,307............................ $200,000.
adjustment.
Number of hospitals receiving a 341 (21 percent).................... 134 (11 percent).................... 266 (20 percent).
positive payment adjustment with a
composite quality score * below the
median (percent).
Average TPS........................... 37.4................................ 34.6................................ 31.8.
Lowest TPS receiving a positive 34.6................................ 35.9................................ 30.9.
payment adjustment.
Slope of the linear exchange function. 2.8908851882........................ 2.7849297316........................ 3.2405954322.
--------------------------------------------------------------------------------------------------------------------------------------------------------
+ Based on current policies, which includes the Safety domain, and proportionate reweighting for hospitals with sufficient data on only three domains.
* ``Composite quality score'' is defined as a hospital's TPS minus the hospital's weighted Efficiency and Cost Reduction domain score.

We also refer readers to section I.H.6.b. of Appendix A of this
proposed rule for a detailed discussion regarding the estimated
impacts of the proposed domain weighting and equal weighting
alternative on hospital percentage payment adjustments. Because the
alternatives considered do not impact the collection of information
for hospitals, we do not expect these alternatives to affect the
reporting burden on hospitals. We considered these alternatives and
are seeking public comment on them.
As discussed in section IV.J.5. of the preamble of this proposed
rule, in the context of scoring hospitals for the purposes of the
HAC Reduction Program, we analyzed two alternative scoring options
to the current methodology for the FY 2020 program year and
subsequent years. The alternative scoring methodologies considered
are an Equal Measure Weights methodology, which would remove the
domains and assign equal weight to each measure for which a hospital
has a score, and a Variable Domain Weighting methodology, which
would vary the weighting of Domain 1 and 2 based on the number of
measures in each domain. We are considering these alternative
approaches to allow the HAC Reduction Program to continue to fairly
assess all hospitals' performance under the Program.
We simulated results under each scoring approach using FY 2018
HAC Reduction Program data. We compared the percentage of hospitals
in the worst-performing quartile in FY 2018 to the percentage that
would be in the worst-performing quartile under each scoring
approach. The table below provides a high-level overview of the
estimated impact of these approaches on several key groups of
hospitals.

------------------------------------------------------------------------
Equal measure Variable
Hospital group \a\ weights domain weights
(percent) (percent)
------------------------------------------------------------------------
Teaching hospitals: 100 or more 2.4 1.6
residents (N=248)......................
Safety-net \b\ (N=644).................. 0.6 0.8
Urban hospitals: 400 or more beds 2.2 1.1
(N=360)................................
Hospitals with 100 or fewer beds -1.8 -0.9
(N=1,169)..............................
Hospitals with a measure score for:
Zero Domain 2 measures (N=188)...... 0.0 0.0
One Domain 2 measure (N=269)........ -4.2 -1.9
Two Domain 2 measures (N=225)....... -0.8 -0.4
Three Domain 2 measures (N=198)..... -2.5 -2.5
Four Domain 2 measures (N=253)...... -0.4 0.4
Five Domain 2 measures (N=2,022).... 1.0 0.5
------------------------------------------------------------------------
\a\ The number of hospitals in the given hospital group for FY 2018 is
specified in parenthesis in this column (for example, N=248).
\b\ Hospitals are considered safety-net hospitals if they are in the top
quintile for DSH percent.

[[Page 20639]]

weighting approach would increase estimated total penalties by
$19,061,086, over $11 million more than the alternative weighting
approach considered. The table below displays the results of our
analysis in FY 2013 dollars, FY 2019 dollars, and as a percentage
difference.

----------------------------------------------------------------------------------------------------------------
Total HAC reduction
program penalty Percentage Difference from FY
Scenario amount (FY 2019 difference from FY 2018 (FY 2019
dollars) * 2018 dollars) *
----------------------------------------------------------------------------------------------------------------
FY 2018 HAC Reduction Program--Before Proposed $441,684,337 N/A N/A
Weighting Change.............................
Variable Domain Weights....................... 449,270,149 1.7 $7,585,812
Equal Measure Weights......................... 460,745,424 4.3 19,061,086
----------------------------------------------------------------------------------------------------------------
* Estimated change in total penalties applied using FY 2013 payments annualized to FY 2019 payment dollars.

After consideration of the current policy, Equal Measure Weights
and Variable Domain Weighting methodologies, we are seeking public
comment on these approaches. Because the alternatives considered do
not impact the collection of information for hospitals, we do not
expect these alternatives to affect the reporting burden on
hospitals associated with the HAC Reduction Program.

P. Reducing Regulation and Controlling Regulatory Costs

Executive Order 13771, titled Reducing Regulation and
Controlling Regulatory Costs, was issued on January 30, 2017. This
proposed rule, if finalized, is considered an E.O. 13771
deregulatory action. We estimate that this rule generates $72
million in annualized cost savings, discounted at 7 percent relative
to fiscal year 2016, over a perpetual time horizon. We discuss the
estimated burden and cost reductions for the Hospital IQR Program in
section XIV.B.3. of the preamble of the proposed rule, and estimate
that the impact of these proposed changes is a reduction in costs of
approximately $21,585 per hospital annually or approximately
$71,233,624 for all hospitals annually. We note that in section
VIII.A.5.c.(1). of the preamble of this proposed rule, we are
proposing to remove the hospital-acquired infection (HAI) measures
from the Hospital IQR Program and, therefore, discontinue validation
of these measures under the Hospital IQR Program. However, these
measures will remain in the HAC Reduction Program and, therefore, we
are proposing to begin validation of these measures under the HAC
Reduction Program using the same processes and information
collection requirements previously used under the Hospital IQR
Program. As a result, the net costs reflected in the table below for
the HAC Reduction Program do not constitute a new information
collection requirement on participating hospitals, but a transition
of the HAI measure validation process from one program to another
based on our efforts to reduce measure duplication across programs.
We discuss the estimated burden and cost impacts for the proposed
transition of HAI data validation from the Hospital IQR Program to
the HAC Reduction Program in section XIV.B.7. of the preamble of the
proposed rule. We discuss the estimated burden and cost reductions
for the PCHQR Program in section XIV.B.4. of the preamble of this
proposed rule, and estimate that the impact of these proposed
changes is a reduction in costs of approximately $92,145 per PCH
annually or approximately $1,013,595 for all participating PCHs
annually. We discuss the estimated burden and cost reductions for
the proposed LTCH QRP measure removals in section XIV.B.6. of the
preamble of this proposed rule, and estimate that the impact of
these proposed changes is a reduction in costs of approximately
$1,148 per LTCH annually or approximately $482,469 for all LTCHs
annually. Also, as noted in section I.R. of this Appendix, the
regulatory review cost for this proposed rule is $8,809,182.

------------------------------------------------------------------------
Amount of costs
Section of the proposed rule Description or savings
------------------------------------------------------------------------
Section XIV.B.3. of the ICRs for the Hospital ($71,233,624)
preamble. IQR Program.
Section XIV.B.4. of the ICRs for the PCHQR (1,013,595)
preamble. Program.
Section XIV.B.6. of the ICRs for the LTCH QRP (482,469)
preamble.
Section XIV.B.7. of the ICRs for the HAC 1,580,256
preamble. Reduction Program *.
------------------
Total..................... ..................... (72 million)
------------------------------------------------------------------------
* We note that the net costs reflected in this table for the HAC
Reduction Program do not constitute a new information collection
requirement on participating hospitals, but a transition of the HAI
measure validation process from one program to another based on our
efforts to reduce measure duplication across programs.

Q. Overall Conclusion

1. Acute Care Hospitals

Overall, acute care hospitals are estimated to experience an
increase of 3.4 percent, or approximately $4.1 billion, in their
combined operating and capital payments as modeled for this proposed
rule. Approximately 3.2 percentage points of this estimated increase
is due to the proposed change in operating payments, including
uncompensated care payments (discussed in sections I.G. and I.H. of
this Appendix), approximately 0.1 percentage points is due to the
proposed change in capital payments (discussed in section I.I of
this Appendix), and approximately 0.1 percentage points is due to
the proposed change in low-volume hospital payments (discussed in
section I.H of this Appendix).
Table I of section I.G. of this Appendix also demonstrates the
estimated redistributional impacts of the IPPS budget neutrality
requirements for the proposed MS-DRG and wage index changes, and for
the proposed wage index reclassifications under the MGCRB.
We estimate that hospitals would experience a 1.7 percent
increase in capital payments per case, as shown in Table III of
section I.I. of this Appendix. We project that there would be a $146
million increase in capital payments in FY 2019 compared to FY 2018.
The discussions presented in the previous pages, in combination
with the remainder of this proposed rule, constitute a regulatory
impact analysis.

2. LTCHs

Overall, LTCHs are projected to experience a decrease in
estimated payments per discharge in FY 2019. In the impact analysis,
we are using the proposed rates, factors, and policies presented in
this proposed rule based on the best available claims and CCR data
to estimate the change in payments under the LTCH PPS for FY 2019.
Accordingly, based on the best available data for the 409 LTCHs in
our database, we estimate that overall FY 2019 LTCH PPS payments
would decrease approximately $5 million relative to FY 2018 as a
result of the proposed payment rates and factors presented in this
proposed rule.

[[Page 20640]]

R. Regulatory Review Costs

If regulations impose administrative costs on private entities,
such as the time needed to read and interpret a rule, we should
estimate the cost associated with regulatory review. Due to the
uncertainty involved with accurately quantifying the number of
entities that would review the proposed rule, we assumed that the
total number of timely pieces of correspondence on last year's
proposed rule would be the number of reviewers of the proposed rule.
We acknowledge that this assumption may understate or overstate the
costs of reviewing the rule. It is possible that not all commenters
reviewed last year's rule in detail, and it is also possible that
some reviewers chose not to comment on the proposed rule. For those
reasons, and consistent with our approach in the FY 2018 IPPS/LTCH
PPS final rule (82 FR 38585), we believe that the number of past
commenters would be a fair estimate of the number of reviewers of
the proposed rule. We welcome any public comments on the approach in
estimating the number of entities that will review this proposed
rule.
We also recognized that different types of entities are in many
cases affected by mutually exclusive sections of the proposed rule.
Therefore, for the purposes of our estimate, and consistent with our
approach in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38585), we
assume that each reviewer read approximately 50 percent of the
proposed rule. We welcome public comments on this assumption.
We have used the number of timely pieces of correspondence on
the FY 2018 proposed rule as our estimate for the number of
reviewers of this proposed rule. We continue to acknowledge the
uncertainty involved with using this number, but we believe it is a
fair estimate due to the variety of entities affected and the
likelihood that some of them choose to rely (in full or in part) on
press releases, newsletters, fact sheets, or other sources rather
than the comprehensive review of preamble and regulatory text. Using
the wage information from the BLS for medical and health service
managers (Code 11-9111), we estimate that the cost of reviewing the
proposed rule is $105.16 per hour, including overhead and fringe
benefits (https://www.bls.gov/oes/current/oes_nat.htm). Assuming an
average reading speed, we estimate that it would take approximately
19 hours for the staff to review half of the proposed rule. For each
IPPS hospital or LTCH that reviews this proposed rule, the estimated
cost is $1,998 (19 hours x $105.16). Therefore, we estimate that the
total cost of reviewing this proposed rule is $8,809,182 ($1,998 x
4,409 reviewers).

II. Accounting Statements and Tables

A. Acute Care Hospitals

As required by OMB Circular A-4 (available at https://
obamawhitehouse. archives.gov/omb/circulars_a-004_a-4/ and https://
georgewbush-whitehouse.archives.gov/omb/circulars/a004/a-4.html), in
the following Table V., we have prepared an accounting statement
showing the classification of the expenditures associated with the
provisions of this proposed rule as they relate to acute care
hospitals. This table provides our best estimate of the change in
Medicare payments to providers as a result of the proposed changes
to the IPPS presented in this proposed rule. All expenditures are
classified as transfers to Medicare providers.
As shown below in Table V., the net costs to the Federal
Government associated with the proposed policies in this proposed
rule are estimated at $4.1 billion.

Table V--Accounting Statement: Classification of Estimated Expenditures
Under the IPPS From FY 2018 to FY 2019
------------------------------------------------------------------------
Category Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers............ $4.1 billion.
From Whom to Whom......................... Federal Government to IPPS
Medicare Providers.
------------------------------------------------------------------------

B. LTCHs

As discussed in section I.J. of this Appendix, the impact
analysis of the proposed payment rates and factors presented in this
proposed rule under the LTCH PPS is projected to result in a
decrease in estimated aggregate LTCH PPS payments in FY 2019
relative to FY 2018 of approximately $5 million based on the data
for 409 LTCHs in our database that are subject to payment under the
LTCH PPS. Therefore, as required by OMB Circular A-4 (available at
https://obamawhitehouse. archives.gov/omb/circulars_a004_a-4/ and
https://georgewbush-whitehouse. archives.gov/omb/circulars/a004/a-4.html), in Table VI., we have prepared an accounting statement
showing the classification of the expenditures associated with the
provisions of this proposed rule as they relate to the changes to
the LTCH PPS. Table VI. provides our best estimate of the estimated
change in Medicare payments under the LTCH PPS as a result of the
proposed payment rates and factors and other provisions presented in
this proposed rule based on the data for the 409 LTCHs in our
database. All expenditures are classified as transfers to Medicare
providers (that is, LTCHs).
As shown in Table VI. below, the net savings to the Federal
Government associated with the policies for LTCHs in this proposed
rule are estimated at $5 million.

Table VI--Accounting Statement: Classification of Estimated Expenditures
From the FY 2018 LTCH PPS to the FY 2019 LTCH PPS
------------------------------------------------------------------------
Category Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers............ -$5 million.
From Whom to Whom......................... Federal Government to LTCH
Medicare Providers.
------------------------------------------------------------------------

III. Regulatory Flexibility Act (RFA) Analysis

The RFA requires agencies to analyze options for regulatory
relief of small entities. For purposes of the RFA, small entities
include small businesses, nonprofit organizations, and small
government jurisdictions. We estimate that most hospitals and most
other providers and suppliers are small entities as that term is
used in the RFA. The great majority of hospitals and most other
health care providers and suppliers are small entities, either by
being nonprofit organizations or by meeting the SBA definition of a
small business (having revenues of less than $7.5 million to $38.5
million in any 1 year). (For details on the latest standards for
health care providers, we refer readers to page 36 of the Table of
Small Business Size Standards for NAIC 622 found on the SBA website
at: https://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf.)
For purposes of the RFA, all hospitals and other providers and
suppliers are considered to be small entities. Individuals and
States are not included in the definition of a small entity. We
believe that the provisions of this proposed rule relating to acute
care hospitals will have a significant impact on small entities as
explained in this Appendix. For example, because all hospitals are
considered to be small entities for purposes of the RFA, the
hospital impacts described in this proposed rule are impacts on
small entities. For example, we refer readers to ``Table I.--Impact
Analysis of Proposed Changes to the IPPS for Operating Costs for FY
2019.'' Because we lack data on individual hospital receipts, we
cannot determine the number of small proprietary LTCHs. Therefore,
we are assuming that all LTCHs are considered small entities for the
purpose of the analysis in section I.J. of this Appendix. MACs are
not considered to be small entities because they do not meet the SBA
definition of a small business. Because we acknowledge that many of
the affected entities are small entities, the analysis discussed
throughout the preamble of this proposed rule constitutes our
regulatory flexibility analysis. This proposed rule contains a range
of proposed policies. It provides descriptions of the statutory
provisions that are addressed, identifies the proposed policies, and
presents rationales for our decisions and, where relevant,
alternatives that were considered.
In this proposed rule, we are soliciting public comments on our
estimates and analysis of the impact of our proposals on those small
entities. Any public comments that we receive and our responses will
be presented throughout the final rule.

IV. Impact on Small Rural Hospitals

Section 1102(b) of the Social Security Act requires us to
prepare a regulatory impact analysis for any proposed or final rule
that may have a significant impact on the operations of a
substantial number of small rural hospitals. This analysis must
conform to the provisions of section 604 of the RFA. With the
exception of hospitals located in certain New England counties, for
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is

[[Page 20641]]

located outside of an urban area and has fewer than 100 beds.
Section 601(g) of the Social Security Amendments of 1983 (Pub. L.
98-21) designated hospitals in certain New England counties as
belonging to the adjacent urban area. Thus, for purposes of the IPPS
and the LTCH PPS, we continue to classify these hospitals as urban
hospitals. (We refer readers to Table I in section I.G. of this
Appendix for the quantitative effects of the policy changes under
the IPPS for operating costs.)

V. Unfunded Mandates Reform Act Analysis

Section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L.
104-4) also requires that agencies assess anticipated costs and
benefits before issuing any rule whose mandates require spending in
any 1 year of $100 million in 1995 dollars, updated annually for
inflation. In 2019, that threshold level is approximately $146
million. This proposed rule would not mandate any requirements for
State, local, or tribal governments, nor would it affect private
sector costs.

VI. Executive Order 13175

Executive Order 13175 directs agencies to consult with Tribal
officials prior to the formal promulgation of regulations having
tribal implications. This proposed rule contains provisions
applicable to hospitals and facilities operated by the Indian Health
Service or Tribes or Tribal organizations under the Indian Self-
Determination and Education Assistance Act and, thus, has tribal
implications. Therefore, in accordance with Executive Order 13175
and the CMS Tribal Consultation Policy (December 2015), CMS will
consult with Tribal officials on these Indian-specific provisions of
the proposed rule prior to the formal promulgation of this rule.

VII. Executive Order 12866

In accordance with the provisions of Executive Order 12866, the
Executive Office of Management and Budget reviewed this proposed
rule.

Appendix B: Recommendation of Update Factors for Operating Cost Rates
of Payment for Inpatient Hospital Services

I. Background

Section 1886(e)(4)(A) of the Act requires that the Secretary,
taking into consideration the recommendations of MedPAC, recommend
update factors for inpatient hospital services for each fiscal year
that take into account the amounts necessary for the efficient and
effective delivery of medically appropriate and necessary care of
high quality. Under section 1886(e)(5) of the Act, we are required
to publish update factors recommended by the Secretary in the
proposed and final IPPS rules. Accordingly, this Appendix provides
the recommendations for the update factors for the IPPS national
standardized amount, the hospital-specific rate for SCHs, and the
rate-of-increase limits for certain hospitals excluded from the
IPPS, as well as LTCHs. In prior years, we made a recommendation in
the IPPS proposed rule and final rule for the update factors for the
payment rates for IRFs and IPFs. However, for FY 2019, consistent
with our approach for FY 2018, we are including the Secretary's
recommendation for the update factors for IRFs and IPFs in separate
Federal Register documents at the time that we announce the annual
updates for IRFs and IPFs. We also discuss our response to MedPAC's
recommended update factors for inpatient hospital services.

II. Inpatient Hospital Update for FY 2019

A. Proposed FY 2019 Inpatient Hospital Update

As discussed in section IV.B. of the preamble to this proposed
rule, for FY 2019, consistent with section 1886(b)(3)(B) of the Act,
as amended by sections 3401(a) and 10319(a) of the Affordable Care
Act, we are setting the applicable percentage increase by applying
the following adjustments in the following sequence. Specifically,
the applicable percentage increase under the IPPS is equal to the
rate-of-increase in the hospital market basket for IPPS hospitals in
all areas, subject to a reduction of one-quarter of the applicable
percentage increase (prior to the application of other statutory
adjustments; also referred to as the market basket update or rate-
of-increase (with no adjustments)) for hospitals that fail to submit
quality information under rules established by the Secretary in
accordance with section 1886(b)(3)(B)(viii) of the Act and a
reduction of three-quarters of the applicable percentage increase
(prior to the application of other statutory adjustments; also
referred to as the market basket update or rate-of-increase (with no
adjustments)) for hospitals not considered to be meaningful
electronic health record (EHR) users in accordance with section
1886(b)(3)(B)(ix) of the Act, and then subject to an adjustment
based on changes in economy-wide productivity (the multifactor
productivity (MFP) adjustment), and an additional reduction of 0.75
percentage point as required by section 1886(b)(3)(B)(xii) of the
Act. Sections 1886(b)(3)(B)(xi) and (b)(3)(B)(xii) of the Act, as
added by section 3401(a) of the Affordable Care Act, state that
application of the MFP adjustment and the additional FY 2019
adjustment of 0.75 percentage point may result in the applicable
percentage increase being less than zero.
We note that, in compliance with section 404 of the MMA, in the
FY 2018 IPPS/LTCH PPS final rule (82 FR 38587), we replaced the FY
2010-based IPPS operating and capital market baskets with the
rebased and revised 2014-based IPPS operating and capital market
baskets effective with FY 2018.
In this FY 2019 IPPS/LTCH PPS proposed rule, in accordance with
section 1886(b)(3)(B) of the Act, we are proposing to base the
proposed FY 2019 market basket update used to determine the
applicable percentage increase for the IPPS on IGI's fourth quarter
2017 forecast of the 2014-based IPPS market basket rate-of-increase
with historical data through third quarter 2017, which is estimated
to be 2.8 percent. In accordance with section 1886(b)(3)(B) of the
Act, as amended by section 3401(a) of the Affordable Care Act, in
section IV.B. of the preamble of this FY 2019 IPPS/LTCH PPS proposed
rule, based on IGI's fourth quarter 2017 forecast, we are proposing
an MFP adjustment of 0.8 percent for FY 2019. We also are proposing
that if more recent data subsequently become available, we would use
such data, if appropriate, to determine the FY 2019 market basket
update and MFP adjustment for the final rule. Therefore, based on
IGI's fourth quarter 2017 forecast of the 2014-based IPPS market
basket and the MFP adjustment, depending on whether a hospital
submits quality data under the rules established in accordance with
section 1886(b)(3)(B)(viii) of the Act (hereafter referred to as a
hospital that submits quality data) and is a meaningful EHR user
under section 1886(b)(3)(B)(ix) of the Act (hereafter referred to as
a hospital that is a meaningful EHR user), we are proposing four
possible applicable percentage increases that could be applied to
the standardized amount, as shown in the table below.

----------------------------------------------------------------------------------------------------------------
Hospital Hospital Hospital did Hospital did
submitted submitted NOT submit NOT submit
quality data quality data quality data quality data
FY 2019 and is a and is not a and is a and is NOT a
meaningful EHR meaningful EHR meaningful EHR meaningful EHR
user user user User
----------------------------------------------------------------------------------------------------------------
Proposed Market Basket 2.8 2.8 2.8 2.8
Rate[dash]of[dash]Increase.................
Proposed Adjustment for Failure to Submit 0.0 0.0 -0.7 -0.7
Quality Data under Section
1886(b)(3)(B)(viii) of the Act.............
Proposed Adjustment for Failure to be a 0.0 -2.1 0.0 -2.1
Meaningful EHR User under Section
1886(b)(3)(B)(ix) of the Act...............
Proposed MFP Adjustment under Section -0.8 -0.8 -0.8 -0.8
1886(b)(3)(B)(xi) of the Act...............
Statutory Adjustment under Section -0.75 -0.75 -0.75 -0.75
1886(b)(3)(B)(xii) of the Act..............
Proposed Applicable Percentage Increase 1.25 -0.85 0.55 -1.55
Applied to Standardized Amount.............
----------------------------------------------------------------------------------------------------------------

[[Page 20642]]

B. Proposed Update for SCHs and MDHs for FY 2019

Section 1886(b)(3)(B)(iv) of the Act provides that the FY 2019
applicable percentage increase in the hospital-specific rate for
SCHs and MDHs equals the applicable percentage increase set forth in
section 1886(b)(3)(B)(i) of the Act (that is, the same update factor
as for all other hospitals subject to the IPPS). As discussed in
section IV.G. of the preamble of this proposed rule, section 205 of
the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA)
(Pub. L. 114-10) extended the MDH program through FY 2017 (that is,
for discharges occurring on or before September 30, 2017). Section
50205 of the Bipartisan Budget Act of 2018 (Pub. L. 115-123),
enacted on February 9, 2018, extended the MDH program for discharges
on or after October 1, 2017 through September 30, 2022.
As previously mentioned, the update to the hospital specific
rate for SCHs and MDHs is subject to section 1886(b)(3)(B)(i) of the
Act, as amended by sections 3401(a) and 10319(a) of the Affordable
Care Act. Accordingly, depending on whether a hospital submits
quality data and is a meaningful EHR user, we are proposing the same
four possible applicable percentage increases in the table above for
the hospital-specific rate applicable to SCHs and MDHs.

C. Proposed FY 2019 Puerto Rico Hospital Update

As discussed in the FY 2017 IPPS/LTCH PPS final rule (81 FR
56939), prior to January 1, 2016, Puerto Rico hospitals were paid
based on 75 percent of the national standardized amount and 25
percent of the Puerto Rico-specific standardized amount. Section 601
of Public Law 114-113 amended section 1886(d)(9)(E) of the Act to
specify that the payment calculation with respect to operating costs
of inpatient hospital services of a subsection (d) Puerto Rico
hospital for inpatient hospital discharges on or after January 1,
2016, shall use 100 percent of the national standardized amount.
Because Puerto Rico hospitals are no longer paid with a Puerto Rico-
specific standardized amount under the amendments to section
1886(d)(9)(E) of the Act, there is no longer a need for us to make
an update to the Puerto Rico standardized amount. Hospitals in
Puerto Rico are now paid 100 percent of the national standardized
amount and, therefore, are subject to the same update to the
national standardized amount discussed under section IV.B.1. of the
preamble of this proposed rule. Accordingly, for FY 2019, we are
proposing an applicable percentage increase of 1.25 percent to the
standardized amount for hospitals located in Puerto Rico.

D. Proposed Update for Hospitals Excluded From the IPPS for FY 2019

Section 1886(b)(3)(B)(ii) of the Act is used for purposes of
determining the percentage increase in the rate-of-increase limits
for children's hospitals, cancer hospitals, and hospitals located
outside the 50 States, the District of Columbia, and Puerto Rico
(that is, short-term acute care hospitals located in the U.S. Virgin
Islands, Guam, the Northern Mariana Islands, and America Samoa).
Section 1886(b)(3)(B)(ii) of the Act sets the percentage increase in
the rate-of-increase limits equal to the market basket percentage
increase. In accordance with Sec. 403.752(a) of the regulations,
RNHCIs are paid under the provisions of Sec. 413.40, which also use
section 1886(b)(3)(B)(ii) of the Act to update the percentage
increase in the rate-of-increase limits.
Currently, children's hospitals, PPS-excluded cancer hospitals,
RNHCIs, and short-term acute care hospitals located in the U.S.
Virgin Islands, Guam, the Northern Mariana Islands, and American
Samoa are among the remaining types of hospitals still paid under
the reasonable cost methodology, subject to the rate-of-increase
limits. In addition, in accordance with Sec. 412.526(c)(3) of the
regulations, extended neoplastic disease care hospitals (described
in Sec. 412.22(i) of the regulations) also are subject to the rate-
of-increase limits. As discussed in section VI. of the preamble of
this proposed rule, in the FY 2018 IPPS/LTCH PPS final rule, we
finalized the use of the percentage increase in the 2014-based IPPS
operating market basket to update the target amounts for children's
hospitals, PPS-excluded cancer hospitals, RNHCIs, and short-term
acute care hospitals located in the U.S. Virgin Islands, Guam, the
Northern Mariana Islands, and American Samoa for FY 2018 and
subsequent fiscal years. In addition, as discussed in section IV.A.
of the preamble of this proposed rule, the update to the target
amount for extended neoplastic disease care hospitals for FY 2019
would be the percentage increase in the 2014-based IPPS operating
market basket. Accordingly, for FY 2019, the rate-of-increase
percentage to be applied to the target amount for these children's
hospitals, cancer hospitals, RNHCIs, neoplastic disease care
hospitals, and short-term acute care hospitals located in the U.S.
Virgin Islands, Guam, the Northern Mariana Islands, and American
Samoa would be the FY 2019 percentage increase in the 2014-based
IPPS operating market basket. For this proposed rule, the current
estimate of the IPPS operating market basket percentage increase for
FY 2019 is 2.8 percent.

E. Proposed Update for LTCHs for FY 2019

Section 123 of Public Law 106-113, as amended by section 307(b)
of Public Law 106-554 (and codified at section 1886(m)(1) of the
Act), provides the statutory authority for updating payment rates
under the LTCH PPS.
As discussed in section V.A. of the Addendum to this proposed
rule, we are proposing to update the LTCH PPS standard Federal
payment rate by 1.15 percent for FY 2019, consistent with the
amendments to section 1886(m)(3) of the Act provided by section 411
of MACRA. In accordance with the LTCHQR Program under section
1886(m)(5) of the Act, we are proposing to reduce the annual update
to the LTCH PPS standard Federal rate by 2.0 percentage points for
failure of a LTCH to submit the required quality data. Accordingly,
we are proposing to establish an update factor of 1.0115 in
determining the LTCH PPS standard Federal rate for FY 2019. For
LTCHs that fail to submit quality data for FY 2019, we are proposing
to apply an annual update to the LTCH PPS standard Federal rate of -
0.85 percent (that is, the proposed annual update for FY 2019 of
1.15 percent less 2.0 percentage points for failure to submit the
required quality data in accordance with section 1886(m)(5)(C) of
the Act and our rules) by applying a proposed update factor of
0.9915 in determining the LTCH PPS standard Federal rate for FY
2019. (We note that, as discussed in section VII.D. of the preamble
of this proposed rule, the proposed update to the LTCH PPS standard
Federal payment rate of 1.15 percent for FY 2019 does not reflect
any proposed budget neutrality factors, such as the proposed offset
for the elimination of the LTCH PPS 25-percent threshold policy.)

III. Secretary's Recommendations

MedPAC is recommending an inpatient hospital update in the
amount specified in current law for FY 2019. MedPAC's rationale for
this update recommendation is described in more detail below. As
mentioned above, section 1886(e)(4)(A) of the Act requires that the
Secretary, taking into consideration the recommendations of MedPAC,
recommend update factors for inpatient hospital services for each
fiscal year that take into account the amounts necessary for the
efficient and effective delivery of medically appropriate and
necessary care of high quality. Consistent with current law,
depending on whether a hospital submits quality data and is a
meaningful EHR user, we are recommending the four applicable
percentage increases to the standardized amount listed in the table
under section II. of this Appendix B. We are recommending that the
same applicable percentage increases apply to SCHs and MDHs.
In addition to making a recommendation for IPPS hospitals, in
accordance with section 1886(e)(4)(A) of the Act, we are
recommending update factors for certain other types of hospitals
excluded from the IPPS. Consistent with our policies for these
facilities, we are recommending an update to the target amounts for
children's hospitals, cancer hospitals, RNHCIs, short-term acute
care hospitals located in the U.S. Virgin Islands, Guam, the
Northern Mariana Islands, and American Samoa and extended neoplastic
disease care hospitals of 2.8 percent.
For FY 2019, consistent with policy set forth in section VII. of
the preamble of this proposed rule, for LTCHs that submit quality
data, we are recommending an update of 1.15 percent to the LTCH PPS
standard Federal rate. For LTCHs that fail to submit quality data
for FY 2019, we are recommending an annual update to the LTCH PPS
standard Federal rate of -0.85 percent.

IV. MedPAC Recommendation for Assessing Payment Adequacy and Updating
Payments in Traditional Medicare

In its March 2018 Report to Congress, MedPAC assessed the
adequacy of current payments and costs, and the relationship between
payments and an appropriate cost base. MedPAC recommended an update
to the hospital inpatient rates in the amount specified in current
law. We refer readers to

[[Page 20643]]

the March 2018 MedPAC report, which is available for download at
www.medpac.gov, for a complete discussion on this recommendation.
Response: We agree with MedPAC, and consistent with current law,
we are proposing to apply an applicable percentage increase for FY
2019 of 1.25 percent, provided the hospital submits quality data and
is a meaningful EHR user, consistent with statutory requirements.
We note that, because the operating and capital prospective
payment systems remain separate, we are proposing to continue to use
separate updates for operating and capital payments. The proposed
update to the capital rate is discussed in section III. of the
Addendum to this proposed rule.

[FR Doc. 2018-08705 Filed 4-24-18; 4:15 pm]
BILLING CODE 4120-01-P

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